Spectrum Group International, Inc. Announces Fiscal Third Quarter 2013 Financial Results

Spectrum Group International, Inc. Announces Fiscal Third Quarter 2013 Financial Results

IRVINE, Calif.--(BUSINESS WIRE)-- Spectrum Group International, Inc. (OTCQB:SPGZ) today announced financial results for the third quarter of fiscal year 2013, which ended March 31, 2013.


Highlights for the Three and Nine Months ended March 31, 2013:

  • Total revenue of $1.87 billion and $5.27 billion for the three and nine months ended March 31, 2013, respectively
    • Trading segment revenue of $1.83 billion and $5.13 billion for the three and nine months ended March 31, 2013, respectively
    • Collectibles segment revenue of $44.1 million and $143.1 million for the three and nine months ended March 31, 2013, respectively
  • Gross profit of $13.6 million and $35.2 million for the three and nine months ended March 31, 2013, respectively
  • Pre-tax income from continuing operations of $1.57 million and $1.43 million for the three and nine months ended March 31, 2013, respectively

Revenues for the three months ended March 31, 2013 increased $8.3 million, or 0.4%, to $1.87 billion from $1.86 billion in 2012. Revenues for the nine months ended March 31, 2013 decreased $977.4 million, or 15.6%, to $5.27 billion from $6.25 billion in 2012. Our trading segment revenues increased $9.2 million, or 0.5%, for the three months ended March 31, 2013 and decreased $969.7 million, or 15.9% for the nine months ended March 31, 2013. Our Collectibles segment revenues decreased $0.9 million, or 2.0%, for the three months ended March 31, 2013 and decreased $7.7 million, or 5.1%, for the nine months ended March 31, 2013. Our Trading business experienced a slight decrease in commodity prices and ounces sold for silver offset by an increase of ounces sold for gold during the three and the nine months ended March 31, 2013. Our Collectible segment revenues decreased primarily due to the Company shifting its March live wine auction to May. Numismatic sales increased $0.02 million, or 0.1% to $43.8 million for the three months ended March 31, 2013 from $43.7 million in 2012. For the nine months ended March 31, 2013, our Collectible segment revenues decreased by $7.7 million, or 5.1%, to $143.1 million from $150.8 million in 2012. Our numismatic business experienced weaker sales in the first quarter of fiscal 2013 compared to the first quarter of fiscal 2012, despite improvement in the second quarter. This was due in part to lower international hammer prices at auction impacting our commissions. Additionally, our wine revenues decreased by $0.9 million and $2.2 million for the three and nine month periods, respectively.

Gross profit for the three months ended March 31, 2013 increased $2.5 million, or 22.5%, to $13.6 million from $11.1 million in 2012. We experienced an increase in gross profit of $2.2 million, or 39.1%, to $7.7 million in our Trading segment. The increase is due to greater volatility in the commodity market impacting the spreads of silver and gold products during the period. Our Collectibles segment gross profit increased by $0.3 million, or 5.8%, to $5.8 million for the three months ended March 31, 2013 compared to the same period during 2012. The increase is due primarily to sales of a higher percentage of higher margin numismatic materials in the third quarter of fiscal 2013 as compared to the third quarter of fiscal 2012.

Pre-tax income from continuing operations for the three months ended March 31, 2013 was $1.6 million, as compared with pre-tax loss of $0.9 million for the comparable quarter in the prior fiscal year. Pre-tax income for the nine months ended March 31, 2013 was $1.4 million, compared to $4.8 million for the nine months ended March 31, 2012. The increase to pre-tax income in the three-month period is primarily due the increase in gross profit of $2.5 million described above. For the nine-month period, the decrease in pre-tax income is due to a $3.7 million decrease in interest income primarily from our Trading segment's financial service business.

More information regarding the Company's financial results for the quarter ended March 31, 2013 is set forth in the Company's Report on Form 10-Q, as filed with the Securities and Exchange Commission on May 14, 2013.

 
Three Months Ended
      Increase/     Increase/
March 31, March 31, (Decrease) (Decrease)
in thousands, except per share data (unaudited) 2013 2012 (1) $ %  
Revenues $ 1,869,594 $ 1,861,272 8,322 0.4 %
Gross profit 13,579 11,084 2,495 22.5 %
Operating expenses 13,089 13,083 6 0.0 %
Operating income (loss) 490 (1,999 ) 2,489 124.5 %
Pre-tax income (loss) from continuing operations 1,574 (942 ) 2,516 267.1 %
Income (loss) from continuing operations 1,049 (231 ) 1,280 554.1 %
Income (loss) from discontinued operations, net of tax, attributable to Spectrum Group International, Inc. 50 (252 ) 302 119.8 %
Net income (loss) 1,099 (483 ) 1,582 327.5 %
Less: net (income) loss attributable to non-controlling interests (347 ) (138 ) (209 ) -151.4 %
Net income (loss) attributable to Spectrum Group International, Inc. $ 752 $ (621 ) 1,373 221.1 %
Income (loss) per share attributable to Spectrum Group International, Inc.
Basic - continuing operations $ 0.02 $ (0.01 ) 0.03 300.0 %
Basic - discontinued operations $ $ (0.01 ) 0.01 100.0 %
Diluted - continuing operations $ 0.02 $ (0.01 ) 0.03 300.0 %
Diluted - discontinued operations $ $ (0.01 ) 0.01 100.0 %
Basic - net income (loss) $ 0.02 $ (0.02 ) 0.04 200.0 %
Diluted - net income (loss) $ 0.02 $ (0.02 ) 0.04 200.0 %

_________________
(1) Adjusted to reflect discontinued operations.

 
Nine Months Ended
      Increase/     Increase/
March 31, March 31, (Decrease) (Decrease)
in thousands, except per share data (unaudited) 2013 2012 (1) $ %  
Revenues $ 5,270,750 $ 6,248,134 (977,384 ) -15.6 %
Gross profit 35,218 39,054 (3,836 ) -9.8 %
Operating expenses 35,851 43,318 (7,467 ) -17.2 %
Operating loss (633 ) (4,264 ) 3,631 85.2 %
Pre-tax income from continuing operations 1,430 4,787 (3,357 ) -70.1 %
Income (loss) from continuing operations (265 ) 2,655 (2,920 ) -110.0 %
Income (loss) from discontinued operations, net of tax, attributable to Spectrum Group International, Inc. (613 ) 60 (673 ) -1121.7 %
Net income (loss) (878 ) 2,715 (3,593 ) -132.3 %
Less: net (income) loss attributable to non-controlling interests 268 (1,158 ) 1,426 123.1 %
Net income (loss) attributable to Spectrum Group International, Inc. $ (610 ) $ 1,557 (2,167 ) -139.2 %
Income (loss) per share attributable to Spectrum Group International, Inc.
Basic - continuing operations $ $ 0.05 (0.05 ) -100.0 %
Basic - discontinued operations $ (0.02 ) $ (0.02 ) -100.0 %
Diluted - continuing operations $ $ 0.05 (0.05 ) -100.0 %
Diluted - discontinued operations $ (0.02 ) $ (0.02 ) -100.0 %
Basic - net income (loss) $ (0.02 ) $ 0.05 (0.07 ) -140.0 %
Diluted - net income (loss) $ (0.02 ) $ 0.05 (0.07 ) -140.0 %

_____________
(1) Adjusted to reflect discontinued operations.

About Spectrum Group International, Inc.

Spectrum Group International, Inc. (together with its subsidiaries, "we," the "Company" or "SGI") is a global trading and collectibles network. We are a trader of precious metals and an auctioneer of coins and wine, serving both collectors and dealers. We are also a merchant/dealer of certain collectibles. Our collectibles offerings span the price spectrum from modest to ultra-high end. Furthermore, we offer loans to coin dealers, collectors and investors backed by their precious metals, rare coins, and other collectibles as collateral.

Our Trading business is conducted through A-Mark Precious Metals, Inc. ("A-Mark") and its subsidiaries. A-Mark is a full-service precious metal trading company, and an official distributor for many government mints throughout the world. A-Mark products include gold, silver, platinum and palladium for storage and delivery in the form of coins, bars, wafers and grain, and our services include financing, leasing, consignment, hedging and various customized financial programs. A-Mark's subsidiary, Collateral Finance Corporation, provides financing on a wide array of bullion and numismatic products.

Our Collectibles business operates as an integrated network of leading companies concentrating on numismatic (coins) and rare and fine vintage wine. We have offices and auction houses in North America, Europe and Asia. In addition to traditional live auctions, we also conduct Internet and telephone auctions.

Spectrum Group's Collectibles companies in the numismatics field include Stack's Bowers Galleries (rare coin and currency auction house), Stack's Bowers and Ponterio (world and ancient coins and currency auction house), Teletrade (online coin auctions), and Spectrum Numismatics International (wholesale rare coin dealer), all based in Irvine, California. Spectrum Wine Auctions is engaged in the sale by auction of rare and fine vintage wine.

SAFE HARBOR STATEMENT

Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ are identified in our public filings with the Securities and Exchange Commission (SEC), and include the fact that we have disclosed that you should not rely upon our previously published financial statements and the fact that we have not filed all of our reports required by the Securities Exchange Act of 1934. More information about factors that could affect our business and financial results included in our public filings with the SEC, which are available on the SEC's website located at www.sec.gov.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

 

SPECTRUM GROUP INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
       
March 31, 2013 June 30, 2012 (1)
 
ASSETS
Current assets:
Cash and cash equivalents $ 28,083 $ 25,305
Receivables and secured loans, net — trading operations 86,009 127,995
Accounts receivable and consignor advances, net — collectibles operations 14,287 20,428
Inventory, net 133,147 157,849
Prepaid expenses and other assets 3,134 2,770
Deferred tax assets 13,192
Current assets of discontinued operations   8,273  
Total current assets 264,660 355,812
Property and equipment, net 13,260 11,710
Goodwill 5,986 6,765
Other purchased intangibles, net 6,522 7,157
Restricted cash 597 550
Income tax receivables 888 2,637
Deferred tax assets — non-current 2,486 1,207
Other assets 566 943
Non-current assets of discontinued operations   1,115  
Total assets $ 294,965   $ 387,896  
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and consignor payables $ 62,589 $ 95,787
Liability on borrowed metals 36,514 27,076
Obligation under product financing arrangement 9,821 15,576
Accrued expenses and other current liabilities 9,043 9,921
Income taxes payable 17,860
Lines of credit 78,561 92,669
Deferred tax liability 1,877
Debt obligations, current portion 365 154
Current liabilities of discontinued operations   8,224  
Total current liabilities 198,770 267,267
Deferred and other long-term tax liabilities 9,122 8,010
Debt obligations, net of current portion 6,138 6,574
Other long-term liabilities 697   168  
Total liabilities 214,727   282,019  
Commitments and contingencies    
Redeemable non-controlling interest 14   124  
Stockholders' equity:
Preferred stock, $.01 par value, authorized 10,000 shares; issued and outstanding: none
Common stock, $.01 par value, authorized 40,000 shares; issued and outstanding: 30,555 and 32,723 at March 31, 2013 and June 30, 2012, respectively 306

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