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

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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)20132012 (1)$% 
Revenues$1,869,594$1,861,2728,3220.4%
Gross profit13,57911,0842,49522.5%
Operating expenses13,08913,08360.0%
Operating income (loss)490(1,999)2,489124.5%
Pre-tax income (loss) from continuing operations1,574(942)2,516267.1%
Income (loss) from continuing operations1,049(231)1,280554.1%
Income (loss) from discontinued operations, net of tax, attributable to Spectrum Group International, Inc.50(252)302119.8%
Net income (loss)1,099(483)1,582327.5%
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)1,373221.1%
Income (loss) per share attributable to Spectrum Group International, Inc.
Basic - continuing operations$0.02$(0.01)0.03300.0%
Basic - discontinued operations$$(0.01)0.01100.0%
Diluted - continuing operations$0.02$(0.01)0.03300.0%
Diluted - discontinued operations$$(0.01)0.01100.0%
Basic - net income (loss)$0.02$(0.02)0.04200.0%
Diluted - net income (loss)$0.02$(0.02)0.04200.0%

_________________
(1) Adjusted to reflect discontinued operations.

 
Nine Months Ended
   Increase/  Increase/
March 31,March 31,(Decrease)(Decrease)
in thousands, except per share data (unaudited)20132012 (1)$% 
Revenues$5,270,750$6,248,134(977,384)-15.6%
Gross profit35,21839,054(3,836)-9.8%
Operating expenses35,85143,318(7,467)-17.2%
Operating loss(633)(4,264)3,63185.2%
Pre-tax income from continuing operations1,4304,787(3,357)-70.1%
Income (loss) from continuing operations(265)2,655(2,920)-110.0%
Income (loss) from discontinued operations, net of tax, attributable to Spectrum Group International, Inc.(613)60(673)-1121.7%
Net income (loss)(878)2,715(3,593)-132.3%
Less: net (income) loss attributable to non-controlling interests268(1,158)1,426123.1%
Net income (loss) attributable to Spectrum Group International, Inc.$(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, 2013June 30, 2012 (1)
 
ASSETS
Current assets:
Cash and cash equivalents$28,083$25,305
Receivables and secured loans, net — trading operations86,009127,995
Accounts receivable and consignor advances, net — collectibles operations14,28720,428
Inventory, net133,147157,849
Prepaid expenses and other assets3,1342,770
Deferred tax assets13,192
Current assets of discontinued operations 8,273 
Total current assets264,660355,812
Property and equipment, net13,26011,710
Goodwill5,9866,765
Other purchased intangibles, net6,5227,157
Restricted cash597550
Income tax receivables8882,637
Deferred tax assets — non-current2,4861,207
Other assets566943
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 metals36,51427,076
Obligation under product financing arrangement9,82115,576
Accrued expenses and other current liabilities9,0439,921
Income taxes payable17,860
Lines of credit78,56192,669
Deferred tax liability1,877
Debt obligations, current portion365154
Current liabilities of discontinued operations 8,224 
Total current liabilities198,770267,267
Deferred and other long-term tax liabilities9,1228,010
Debt obligations, net of current portion6,1386,574
Other long-term liabilities697 168 
Total liabilities214,727 282,019 
Commitments and contingencies  
Redeemable non-controlling interest14 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, respectively306
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