A-Mark Precious Metals, Inc. (NASDAQ:AMRK) Q4 2019 Earnings Conference Call Transcript

Sep 12, 2019 • 04:30 pm ET

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A-Mark Precious Metals, Inc. (NASDAQ:AMRK) Q4 2019 Earnings Conference Call Transcript

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Presentation
Executive
Cary Dickson

an increase in the total amount of silver ounces sold.

Forward sales represented $620 million of the $960 million decrease. For the full year, our revenues decreased 37% to $4.78 billion from $7.61 billion in the same year-ago period. The decrease is primarily due to lower forward sales representing approximately $2.8 billion of the aggregate change, lower gold and silver prices and lower gold ounces sold offset by an increase in the total amount of silver ounces sold. To further clarify the decrease in sales for the quarter and the full year, it is important to note that the Company fully hedges its inventories at all times, typically through a combination of forwards and futures contracts. Forward sales contracts executed for hedging purposes are required to be included in revenues where our future sales contract executed for similar purposes are not.

During the most recent fiscal year 2019, the Company entered into significantly fewer forward sales contracts for hedging purposes than in the previous fiscal year, which materially decreases revenues. In other words, the majority of our revenue decrease in fiscal 2019 is due to lower forward sales and not indicated of a material change in our physical sales traded for profit purposes. This is one of the primary reasons the Company considers ounce volumes to be a key metric performance and we remind investors to review both ounce volume trends as well as gross profit dollars to gain a more complete view of the Company's performance.

Gross profits for the fiscal Q4 2019 period increased 11% to $6.5 million or 0.6% of revenue from $5.8 million or 0.33% of revenue in Q4 of last year. The increase in gross profit was primarily due to improved gross profits from our wholesale trading and ancillary services and direct sales segments. For the full year, gross profit increased 9% to $32.0 million or 6.67% of revenue from $29.4 million or 0.39% of revenue in fiscal 2018. The increase in gross profit was primarily due to improved gross profits of our wholesale trading and ancillary segment and our direct sales segments offset by lower trading profits.

Turning to our expenses. SG&A expenses for fiscal Q4 of 2019 increased 10% to $8.4 million from $7.7 million in Q4 of last year. The increase was primarily due to higher compensation costs within the wholesale trading and ancillary services segments related primarily to the retention and filling a number of key management positions, non-recurring severance costs in our direct sales segment, partially offset by lower external consulting costs primarily in the IT and the finance area.

For fiscal 2019, SG&A expenses decreased 3% to $32.5 million from $33.4 million last year. The decrease is primarily due to a decrease in IT consulting related cost of $0.8 million, lower investigatory acquisition costs of $0.6 million, lower advertising costs of $0.8 million and lower legal costs of $0.4 million, which were partially offset by higher compensation costs of $1.3 million.

Interest income for fiscal Q4 of 2019 decreased