Q2 2022 A-Mark Precious Metals Inc Earnings Call

Speaker 1: Good afternoon. Welcome to AMARK Precious Metals Conference call for the fiscal second quarter ended December 31st, 2021. My name is Sheri and I will be your operator this afternoon.

Good afternoon, welcome to a mark precious metals conference call for the fiscal second quarter ended December 31st 2021. My name is Sherry and I will be your operator. This afternoon before this call a mark issued its results for the fiscal second quarter 2022 in our press release.

Speaker 1: Before this call, AMARK issued its results for the fiscal second quarter 2022 in a press release, which is available in the investor relations section of the company's website at www.amark.com. You can find a link to the investor relations section at the top of the home page.

Which is available in the Investor Relations section of the company's website at Www Dot a mark Dot Com you can find the link to the Investor Relations section at the top of the homepage joining us for today's call are a Mark's CEO , Greg Roberts President surcharge from N C.

Speaker 1: Joining us for today's call are AMARC CEO Greg Roberts, President Thor Jorjum, and CFO Kathleen Simpson-Taylor. Following their remarks, we will open up the call for your questions.

F O Kathleen Simpson Taylor following their remarks, we will open up the call for your questions. Then before we conclude the call I'll provide the necessary sorry questions regarding the forward looking statements made by management. During this call I would like to remind everyone that this call is being recorded and will be made available for.

Speaker 1: Then before we conclude the call, I'll provide the necessary questions regarding the forward-looking statements made by management during this call. I would like to remind everyone that this call is being recorded and will be made available for replay via the link available in the Best Relations section of the AMARC website. I would like to turn the call over to AMARC CEO , Mr. Greg Roberts. Please proceed.

Via the link available in the first relations section of the a Mark website now I would like to turn the call over to embark CEO Mr. Greg Roberts. Please proceed sir.

Speaker 2: Thank you, Sherry, and good afternoon to everyone. Thank you for joining our call today. As you can see from our earnings release, Q2 marked another solid quarter as AMARK delivered $31.8 million of net income and diluted EPS of $2.61 a share. We also generated $49 million of adjusted net income before provision for income taxes or $4.02 per diluted share.

Thank you Sherry and good afternoon to everyone. Thank you for joining our call today as you can see from our earnings release Q2 marked another solid quarter as any market delivered $31 8 million of net income and diluted EPS of $2 61 a share.

We also generated $49 million of adjusted net income before provision for income taxes of $4 two per diluted share are.

Speaker 2: Our Q2 results reflect the strength of our fully integrated precious metals platform, combined with the continuation of the favorable macro conditions that have benefited our business over the past several quarters. We continue to experience robust demand from both our retail and wholesale customers, along with ongoing supply constraints, which have resulted in continued higher premium spreads.

Our Q2 results reflect the strength of our fully integrated precious metals platform combined with the continuation of the favorable macro conditions that we have benefited.

Benefit our business over the past several quarters, we continue to experience robust demand from both our retail and wholesale customers along with ongoing supply constraints, which have resulted in continued higher premium spreads.

Speaker 2: Our fully integrated business model continues to provide us with steady access to product, enabling us to take advantage of favorable market conditions through our wholly owned and equity interests in private mints and our 30-plus year relationship with other supply sources.

Our fully integrated business model continues to provide us with steady access to product, enabling us to take advantage of favorable market conditions through our wholly owned and equity interests in private mints and our 30 plus year relationship with other supply sources.

Speaker 2: The unique strength of our model is evident in our Q2 performance, which included an 18% sequential increase in gross profit to $65.9 million, with our gross profit margin expanding by 61 basis points and an 8% return on equity.

The unique unique strength of our model is evident in our Q2 performance, which included an 18% sequential increase in gross profit was $65 9 million with our gross profit margin expanded by 61 basis points and an 8% return on equity.

Now I want to turn the call over to our CFO Kathleen Simpson Taylor.

Speaker 2: Now, I want to turn the call over to our CFOs, Kathleen Simpson-Taylor, and she will walk you through our financials in more detail. Then our President, Thor Jurdram, will come on to discuss our KPIs and operational metrics.

And she will walk you through our financials in more detail.

Then our president Thor <unk> will come on to discuss our Kpis and operational metrics.

Speaker 2: Afterwards, I will provide a further update on our business and growth strategy.

Afterwards, I will provide a further update on our business and growth strategy.

Kathleen take it away.

Thank you, Greg and good afternoon, everyone.

Speaker 3: Thank you, Greg, and good afternoon everyone. Our revenues for fiscal Q2 2022 increased 28% to $1.95 billion from $1.52 billion in Q2 of last year.

Revenues for fiscal Q2, 2022 increased 28% to $1 95 billion from $1 five 2 billion in Q2 of last year.

Speaker 3: The increase in revenues was due to an increase in gold and silver ounces sold, offset by lower average selling prices of gold and silver.

The increase in revenues was due to an increase in gold and silver ounces sold offset by lower average selling prices of gold and silver.

Speaker 3: J.M. Bullion, J.M.B., contributed $489.3 million of revenue to the quarter.

Bullion J M. D contributed 489.3 million of revenue to the quarter.

Speaker 3: For the six month period, our revenues increased 17% to 3.96 billion from 3.38 billion in the same year ago period. The increase in revenues was due to an increase in gold and silver ounces sold combined with higher average selling prices for silver offset by lower average selling prices for gold.

For the six month period, our revenues increased 17% to $3 96 billion from 3.38 billion in the same year ago period.

The increase in revenues was due to an increase in gold and silver ounces sold combined with higher average selling prices for silver.

By lower average selling prices for gold.

Speaker 3: JMB contributed $961.6 million of revenue to the six month period.

A M. B contributed 961.6 million of revenue to the six month period.

Gross profit for fiscal Q2, 2022 increased 252% to $65 9 million or 3.39% of revenue from $18 8 million or one point to 3% of revenue in Q2 of last year.

Speaker 3: Gross profit for fiscal Q2 2022 increased 252% to 65.9 million or 3.39% of revenue from 18.8 million or 1.23% of revenue in Q2 of last year.

Speaker 3: The gross profit increase was due to higher gross profits earned from the wholesale sales and ancillary services and direct-to-consumer segments, including 29.7 million contributed by JMB.

The gross profit increase was due to higher gross profit earned from the wholesale sales and the ancillary services and direct to consumer segment, including $29 7 million contributed by J M D.

Speaker 3: For the six month period, gross profit increased 122% to 121.9 million or 3.08% of revenue from $54.9 million or 1.62% of revenue in the same year ago period.

For the six months period gross profit increased 122% to $121 9 million or 3.08% of revenue from $54 9 million or 1.62% of revenue in the same year ago period.

Speaker 3: The gross profit increase was due to higher gross profits earned from the wholesale sales and ancillary services and direct-to-consumer segments, including $54.4 million contributed by JMB.

The gross profit increase was due to higher gross profits earned from the wholesale sales and ancillary services and direct to consumer segment, including 54.4 million contributed by J M D.

Speaker 3: As expenses for fiscal 2022 increased 119% to 18.7M from 8.5M in Q2 of last year.

SG&A expenses for fiscal Q2, 2022 increased 119% to $18 7 million from $8 5 million in Q2 of last year. They.

Speaker 3: The increase was primarily due to $6.9 million of expenses incurred by JMB, $2.3 million of legal consulting and professional fees, increased compensation expense, including performance-based accruals of $0.9 million, and higher insurance costs of $0.1 million.

The increase was primarily due to $6 9 million of expenses incurred by J M. B $2 3 million of legal consulting and professional fees increased compensation expense, including performance based or cool of 0.9 million and higher insurance costs of 0.1.

Speaker 3: For the six month period, selling, general, and administrative expenses increased 96% to 35.4 million from 18 million in the same year ago period.

For the six months period, selling general and administrative expenses increased 96% to $35 4 million from 18 million in the same year ago period.

Speaker 3: The increase was primarily due to $12.9 million of expenses incurred by JMB, $2.8 million of legal, consulting, and professional fees, increased compensation expense, including performance-based accruals of $1.1 million, and higher insurance costs of $0.6 million.

The increase was primarily due to $12 9 million of expenses incurred by J M. D $2 8 million of legal consulting and professional fees.

Increased compensation expense, including performance based accruals of $1 1 million and higher insurance costs zero point $6 million.

Speaker 3: Depreciation and amortization expense for fiscal Q2 2022 increased 1,535% to $8.3 million from $0.5 million in Q2 of last year.

Depreciation and amortization expense for fiscal Q2, 2022 increased 1535% to $8 3 million from 0.5 million in Q2 of last year.

Speaker 3: For the six-month period, depreciation and amortization expense increased 1,543 percent to 16.5 million from 1 million in the same year-ago period. The increase was primarily due to amortization of the acquired intangibles related to J-M-C.

For the six month period, depreciation and amortization expense increased 1543% to $16 5 million from 1 million in the same year ago period.

The increase was primarily due to amortization of the acquired intangibles related to J M D.

Speaker 3: Interest income for fiscal Q2 2022 increased 16% to $5.3 million from $4.5 million in Q2 of last year.

Interest income for fiscal Q2, 2022 increased 16% to $5 3 million from $4 5 million in Q2 of last year for the six month period interest income increased 27% to $10 8 million from $8 5 million in the.

Speaker 3: For the six month period, interest income increased 27% to $10.8 million from $8.5 million in the same year ago period.

Same year ago period.

Speaker 3: The aggregate increase was primarily due to higher interest income earned by our secured lending segment and higher other finance product increase.

The aggregate increase was primarily due to higher interest income earned by our secured lending segment and higher other finance product income.

Speaker 3: Interest expense for fiscal 2022 increased 7% to 5.4 million from 5 million in Q2 of last fiscal year.

Interest expense for fiscal Q2, 2022 increased 7% to $5 4 million from $5 million in Q2 of last fiscal year.

Speaker 3: The increase was primarily driven by $0.3 million associated with our trading credit facility and notes payable, including amortization of debt issuance costs, $0.2 million of loan servicing fees, offset by a decrease of $0.1 million in interest associated with liabilities on borrowed metals.

The increase was primarily driven by 0.3 million associated with our trading credit facility and notes payable, including amortization of debt issuance costs, you're a point 2 million of loan servicing fees offset by a decrease of 0.1 million and interest associated.

The aided with liabilities on borrowed metals.

Speaker 3: For the six month period, interest expense increased 16.

For the six months period interest expense increased 16% to $10 9 million from $9 3 million in the same year ago period.

Speaker 3: 10.9 million from 9.3 million in the same year ago period.

Speaker 3: The increase was primarily driven by 0.8 million associated with our trading credit facility and notes payable, including amortization of debt issuance costs, 0.7 million related to product financing arrangements, 0.4 million of loan servicing fees, and 0.8 million of loan services.

The increase was primarily driven by 0.8 million associated with our trading credit facility and notes payable, including amortization of debt issuance costs.

0.7 million related to product financing arrangements.

0.4 million of loan servicing fees.

Speaker 3: offset by a decrease of 0.3 million in interest associated with liabilities on borrowed metals.

Offset by a decrease of 0.3 million and interest associated with liabilities on borrowed metals.

Speaker 3: Earnings from equity method investments in fiscal Q2 2022 decreased 48% to $1.2 million from $2.4 million in the same year ago quarter.

Earnings from equity method investments in fiscal Q2, 2022 decreased 48% to $1 2 million from $2 4 million in the same year ago quarter.

Speaker 3: The change includes an increase in earnings of 0.7 million from our current equity method investment, offset by a decrease of 1.9 million related to JMB, a former equity method investment which is now reported by the company as a wholly owned subsidiary.

The change includes an increase in earnings of 0.7 million from our current equity method investment offset by a decrease of $1 9 million related to J M. B, a former equity method investment, which is now reported by the company that's a wholly owned subsidiary.

Speaker 3: For the six month period, earnings from equity method investments decreased 58% to 2.7 million from 6.5 million in the same year ago period.

For the six months period earnings from equity method investments decreased 58% to $2 7 million from $6 5 million in the same year ago period.

Speaker 3: The change includes an increase in earnings of 1.8 million from our current equity method investments offset by a decrease of 5.6 million related to JNB, a former equity method investment, which is now reported by the company as a wholly owned subsidiary.

The change includes an increase in earnings of $1 8 million from our current equity method investments offset by a decrease of $5 6 million related to J M. B, a former equity method investment, which is now reported by the company as a wholly owned subsidiary.

Speaker 3: Net income attributable to the company for the second fiscal quarter of 2022 totaled $31.8 million or $2.61 cents per diluted share. This compares to net income attributable to the company of $8.9 million or $1.16 cents per diluted share in Q2 of last year.

Net income attributable to the company for the second fiscal quarter of 2022 totaled $31 8 million or $2.61 per diluted share. This compares to net income attributable to the company of $8 9 million or $1 60.

<unk> per diluted share in Q2 of last year.

Speaker 3: Our diluted EPS for the fiscal 2nd quarter of 2022 is based on the weighted average shares outstanding of 12.2M, compared with 7.7M weighted average shares outstanding during the 2nd quarter of last year.

Our diluted EPS for the fiscal second quarter of 'twenty 'twenty. Two is based on the weighted average shares outstanding of $12 2 million compared with seven 7 million weighted average shares outstanding during the second quarter of last year.

Speaker 3: Adjusted net income before provision for income taxes, a non-GAAP financial measure, which excludes acquisition expenses, amortization, and depreciation.

Adjusted net income before provision for income taxes, and non-GAAP financial measure, which excludes acquisition expenses amortization and depreciation for Q2 fiscal 2022 totaled $49 million or $4 and cheese.

Speaker 3: For Q2, fiscal 2022 totaled $49 million, or $4.02 per diluted share.

<unk> per diluted share an improvement of $36 3 million compared to $12 7 million or $1.64 per diluted share for Q2 fiscal 2021 .

Speaker 3: and improvement of 36.3 million compared to 12.7 million or $1.64 per diluted share for Q2 fiscal 2021.

Speaker 3: The weighted average shares outstanding for the current fiscal quarter were 4.5 million higher than those outstanding in the prior year fiscal quarter.

The weighted average shares outstanding for the current fiscal quarter were $4 5 million higher than those outstanding in the prior year fiscal quarter.

Speaker 3: For the six month period, net income attributable to the company totaled $57.8 million or $4.78 per diluted share. This compares to net income attributable to the company of $32 million or $4.21 per diluted share in the same year ago period.

For the six months period net income attributable to the company totaled $57 8 million or $4.78 per diluted share.

As compared to net income attributable to the company of $32 million or $4.21 per diluted share in the same year ago period.

Speaker 3: Our diluted EPS for the six month period is based on weighted average shares outstanding of 12.1 million compared with 7.6 million weighted average shares outstanding during the same year ago period.

Our diluted EPS for the six month period is based on weighted average shares outstanding of $12 1 million compared with $7 6 million weighted average shares outstanding during the same year ago period.

Speaker 3: Adjusted net income before provision for income taxes, a non-GAAP financial measure, which excludes acquisition expenses, amortization, and depreciation, for the six-month period totaled $90.1 million, or $7.44 per diluted share, an improvement compared to $43.4 million, or $5.70 per diluted share, in the same year-ago period.

Adjusted net income before provision for income taxes, and non-GAAP financial measure, which excludes acquisition expenses amortization and depreciation for the six months period totaled $98 1 million or $7.44 per diluted share in it.

Improvement compared to $43 4 million or $5.70 per diluted share in the same year ago period.

Speaker 3: The weighted average shares outstanding for the 6 month period were 4.5 million higher than those outstanding in the prior year 6 month period.

The weighted average shares outstanding for the six months period were $4 5 million higher than those outstanding in the prior year's six month period.

Now turning to our balance sheet.

Speaker 3: At quarter end, we had $19.4 million of cash compared to $101.4 million at the end of fiscal year 2021.

At quarter end, we had $19 $4 million of cash compared to $101 4 million at the end of the school year 2021 our fiscal year 2021 cash balances were high due to our significant planned precious metals purchases in the first few days of July 2020.

Speaker 3: Our fiscal year 2021 cash balances were high due to our significant planned precious metals purchases in the first few days of July 2021, specifically due in part to the US mints release of a new bullion coin design on July 1st.

One specifically due in part to the U S mints release of a new bullion coin design on July 1st.

Speaker 3: Our tangible net worth at the end of the quarter was $226 million, up from $184.9 million at the end of the prior quarter.

Our tangible net worth at the end of the quarter was $226 million up from $184 9 million at the end of the prior quarter.

Speaker 3: Finally, as we announced in December , we closed our new three-year committed $350 million trading credit facility during the quarter, replacing our previous $280 million trading credit facility. The new credit facility is the largest in the company's history as we added a number of new lenders to expand our lender base, which provides additional lending capacity should we need it in the future.

Finally, as we announced in December we closed our new three year committed $350 million trading credit facility during the quarter, replacing our previous $280 million trading credit facility.

The new credit facility is the largest in our company's history as we added a number of new logos to the Standalone lender base, which provides additional lending capacity should we need it in the future.

Speaker 3: We believe this reflects the strong performance of our business and our capital partners confidence in our vertically integrated model.

We believe this reflects the strong performance of our business on our capital partners confidence in our vertically integrated model.

Speaker 3: That completes my financial summary. Now I will turn the call over to Thor, who will provide an update on our key performance metrics. Thor?

That completes my financial summary, now I will turn the call over to Thor, who will provide an update on our key performance metrics Thor.

Speaker 4: Thank you Kathleen looking at our operational metrics for the fiscal second quarter and first six months of 2022.

Thank you Kathleen looking.

Looking at our operational metrics for the fiscal second quarter for six months of 2022, we sold 631000 ounces of gold in fiscal Q2, which was up 32% from Q2 of last year, but down 6% from last quarter for the six month period, we sold one 3 million ounces of gold, which was up 8% from the same here.

Speaker 4: We sold 631,000 ounces of gold in fiscal Q2, which is up 32% from Q2 of last year, but down 6% from last year.

Speaker 4: the six month period we sold 1.3 million ounces of gold which was up 8% from the same year ago.

We're in that period.

Speaker 4: sold 32 million ounces of silver in fiscal 2022, which is 51% from Q2 of last year and about 14% from last year.

We sold 32 million ounces of silver in fiscal Q2, 2022, which was up 51% for Q2 of last year and up 14% from last quarter.

Speaker 4: for the six month period, we sold 60.1 million ounces of silver, which is at 32% in the same year.

The six month period, we sold $60 1 million ounces of silver, which was up 32% from the same year ago period.

Speaker 4: Wholesale trading ticket volume, which represents the total number of product orders processed by our trading desk, decreased 10% to 26,809 from QQ of last year, but increased 3% from QQ of last year, and increased 3.5% from QQ of last year.

Wholesale trading ticket volume, which represents the total number of product orders processed by our treat us decreased 10% to 26809 from Q2 of last year, but increased 3% for the first quarter of fiscal 2022.

Speaker 4: the six month period wholesale ticket volume decreased 19.

The six month period wholesale ticket volume decreased 19% to 52887 in the same year ago period for the second fiscal quarter. Our inventory turnover ratio was three three which was a 3% increase from three <unk> to Q2 of last year and a 13% decrease from $3.

Speaker 4: to 52,887 from the same year ago.

Speaker 4: for the second fiscal quarter. Our inventory turnover ratio was 3.3, which is a 3% increase from 3.2 in Q2 of last year, and a 13% decrease from 3.8 in the prior quarter. For the six month period, our inventory turnover ratio was 7.6, which is down 4% from the year ago period.

In the prior quarter for the six months period, our inventory turnover ratio was seven six which was down 4% from the year ago period.

Speaker 4: I'd like to also share some of the key metrics from our direct to consumer segment this quarter. The total number of active customers in the quarter increased by 87,100 compared with the prior year's second quarter and increased by 201,700 for the six month period. The number of customers sold with 1.9 million at the end of December 2021 compared with 160,300 at the end of December 20.

I can also share some of the key message from our direct to consumer segment. This quarter with the total number of active customers in the quarter increased by 87100 compared with the prior year second quarter and increased by 201700 for the six month period.

In total the number of customers totaled $1 9 million at the end of December 2021, compared with 160300 at the end of December 'twenty.

Speaker 4: The increase in these metrics is mainly attributed to the addition of the GMB customer.

The increase in these metrics is mainly attributable to the addition of Virginia customer base.

Speaker 4: Finally, the number of secured loans at the end of December totaled 2,393, an increase of 15% in the prior quarter and an increase of 81% from December 20th.

Finally, the number of secured loans at the end of December totaled 2393 and <unk>.

It's a 15% to the prior quarter and an increase of 81% from December 2020.

Speaker 4: The dollar value of the total loan portfolio at the end of December , total 126.3 million, which is up 14% for prior quarter and up 32% from Q2 of last year. Typically, the number of loans increased during periods of rising precious metals prices and decreased during periods of declining prices.

Our value of the total loan portfolio at the end of December totaled $126 3 million, which is up 14% from prior quarter and up 32% for Q2 of last year typically the number of loans increased during periods of rising precious metal prices and decreased during periods of declining versus off prices that concludes my prepared remarks.

Speaker 4: That concludes my prepared remarks, and I'll turn it over to Greg for closing.

I will now turn it over to Greg for closing remarks.

Speaker 2: Thank you, Thor. As we approach the one year anniversary of our acquisition of Jambullion, I am thrilled and encouraged by the continued strength and momentum of our combined companies.

Thank you Thor.

As we approach the one year anniversary of our acquisition of Dzhambul again, I'm thrilled and encouraged by the continued strength and momentum of our combined companies.

Speaker 2: JMB continues to execute well and grow its customer base, contributing approximately 25% of our revenue and 45% of our gross profit during the quarter.

<unk> continues to execute well and grow its customer base contributing approximately 25% of our revenue and 45% of our gross profit during the quarter. We are optimistic about our DTC prospects, including the forthcoming rollout of JMP cyber metals.

Speaker 2: We are optimistic about our DTC prospects, including the forthcoming rollout of JMB's cybermetals.

Our innovative <unk>.

Speaker 2: online platform that digitalizes large gold, silver and platinum bars and allows consumers to buy and sell fractional shares in a range of denominations.

<unk> platform, the Digitalized as large gold silver platinum bars, and allows consumers to buy and sell fractional shares in a range of denomination.

Speaker 2: with the option to convert these holdings into physical coin and bar in the future.

With the option to convert these holdings into physical coin and bar in the future.

Speaker 2: The Cybermetals product remains on track for commercial release later this month and we're eager to begin marketing this innovative offering.

Cyber metals product remains on track for commercial release later this month and we are eager to begin marketing this innovative offering.

Speaker 2: to our many J.M. Bullion customers and to the broader Precious Metals community.

To our many JM volume customers and to the broader precious metals community.

Speaker 2: Our DTC performance remains strong with 21% growth in gross profit and almost a full percentage point increase in our gross profit margin compared to the prior quarter.

Our DTC performance remains strong with 21% growth in gross profit and almost a full percentage point increase in our gross profit margin compared to the prior quarter.

Speaker 2: Favorable business trends have continued into the third quarter, keeping us optimistic about our outlook.

Favorable business trends have continued into the third quarter, keeping us optimistic about our outlook.

Speaker 2: Our DTC and wholesale segments continue to benefit from their access to AMARK's supply chain, including our wholly owned subsidiary Silvertown Mint.

Our DTC and wholesale segments continued to benefit from their access to a mark supply chain, including our wholly owned subsidiary silver kind of men.

Speaker 2: The performance of the mint remains strong, which is critically important in periods such as these where we see sovereign mint struggle to meet demand due to supply chain constraints.

The performance of the men remained strong which is critically important in periods such as these where we see sovereign mints struggle to meet demand due to supply chain constraints.

Speaker 2: During the second quarter, the mint produced on average 625,000 ounces of silver per week, which is up an amazing 58% from the same year ago period.

During the second quarter. The Mint produced on average 625000 ounces of silver per week, which is up an amazing 58% from the same year ago period.

Speaker 2: We continue to evaluate and invest in capital to expand our mint capacity.

We continue to evaluate and invest in capital to expand our capacity.

Speaker 2: and expect our February production to be in excess of 750,000 ounces of silver per week.

And expect our February production to be in excess of 750000 ounces of silver per week.

Speaker 2: Finally, we continue to evaluate strategic opportunities that can further augment our capabilities and drive strong results for our shareholders over the long run.

Finally, we continue to evaluate strategic opportunities that can further augment our capabilities and drive strong results for our shareholders over the long run.

Operator.

Speaker 1: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Tom Forte with DA Davison. Please proceed.

Thank you if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before.

For pressing the start he is our first question is from Tom Forte with D. A Davidson. Please proceed.

Speaker 5: Great, so Greg and team congrats in a great quarter. I have a couple questions. I'll go one at a time

Great So Greg and team congrats on a great quarter.

Couple of questions I'll go one at a time.

Speaker 5: So Greg, we talk a lot about things that impact interest and precious metals. I wanna talk about market volatility. So you had two days in a row there where I think that Dow is up or down more than 1,000 points.

So Greg we talked a lot about things that impact it.

Kristin precious metals.

I wanted to talk about market volatility. If you had two days in a row, there where I think the Dow was up or down more than 1000 points. How should we think about market volatility and how that may or may not be impacting our interest in precious metals. That's my first question.

Speaker 5: How should we think about market volatility and how that may or may not be impacting interest in precious models? That's my first question.

Speaker 2: Okay, yeah, thank you, Tom. We had, you know, we've clearly started to see some more volatility in the equity markets the last few weeks and I will say that, you know, any

Okay, Yeah. Thank you Tom.

We had you know we've clear.

Clearly started to see some more volatility in the equity markets in the last few weeks in and I will say that.

You know any any.

Speaker 2: uncertainty or fear or changing of, you know,

Uncertainty or fear or changing of you know the way assets are deployed for people.

Speaker 2: The way assets are deployed for people certainly affect

Certainly affect the <unk>.

Speaker 2: you know, the precious metals market and you know, we're a direct recipient of that, obviously.

Precious metals market and you know, we're a direct recipient of that obviously.

Speaker 2: Different conditions create different circumstances. Some conditions create institutional buying at an ETF level or at a big bar level. Certain things affect.

You know different conditions create different circumstances, you know some conditions create institutional buying at an ETF level or at a a big bar level certain certain things affect individuals and in our DTC segment, and how theyre going to view that information and whether that's <unk>.

Speaker 2: You know, individuals in our DPC segment and how they're going to view that information and whether that's going to cause them to buy or sell or hold and.

Going to cause them to buy or sell or hold and we.

Speaker 2: You know we did as we expected over the couple of weeks that you've described you know recently we did see

We did as we expected over the couple of weeks that you've described recently.

We did see.

Speaker 2: an increased level of activity and we saw a burst of interest from our customer base, particularly in the last two weeks when you had a significant drop in gold and silver in a two to three day period. That was positive for our demand from our customer base and it was good to see.

An increased level of activity.

And we saw a.

A burst of of interest from our customer base, particularly.

You know in the last two weeks when you had a significant drop in gold and silver.

In a two to three day period.

That was positive for our demand from our customer base.

And it was good to see.

Speaker 2: of the expanding customer base react as we would expect.

The expanding customer base react.

We would expect.

Speaker 2: slow rising prices of gold and silver.

Slow rising prices of Golden Silver don't create the exact same result.

Speaker 2: don't create the exact same result or the exact same, you know.

The result, or the exact same.

Change.

Speaker 2: change in behavior from the customers, but it's still good for us because it is a more affirmation that precious metals are in demand at all levels.

Change in behavior from the customers, but it's still good for us because it.

It is a you know more.

Affirmation that precious metals are in demand.

At all levels.

Speaker 2: So I think we see that our business model is performing as expected and the volatility is good for us. And as we've always said before, a drop in price really motivates our customers to...

So I think you know we we we see that our business model is performing as expected and the volatility is good for us.

And you know as.

As we've always said before.

A drop in price.

Really motivates our customers to buy the dip.

Speaker 2: And then we get, you know, great action, you know, for a couple of days. And then we get, you know, what I call kind of aftershocks after the earthquake, we get, we get some continued interest. And we did, we did see that in the last couple of weeks, which is what we would have expected on on the volatility that that we saw. I think from a macro perspective.

And then we get.

Great action you know for a couple of days and then we get you know what I call kind of aftershocks. After the earthquake, we get we get some continued interest in and we did we did see that in the last couple of weeks.

Is what we would have expected on the volatility that we saw and I think from a macro perspective.

Speaker 2: that they're just, personally, I see what seems to be a lot of repositioning and a lot of change in attitude towards all different asset classes and any shift or any behavioral change at a macro level is generally gonna create, you know, more so on MSW

They're just personally I see what seems to be a lot of repositioning and a lot of change in attitude towards.

You know all different.

Asset classes and in any shift or any any behavioral change at a macro level is generally going to create.

You know interest at our level.

Speaker 5: Great. And then the second question, and then I'll try to limit myself to three is a lot of investors I talked to, we debate inflation, and in 2022, if precious metals have a different role, as far as hedging cryptocurrency, if that's taken some of the shine off gold from a hedging standpoint. So I guess my question for you is, do you feel like today?

Great and then the second question and then I'll try to limit myself to three is.

A lot of investors I talked to we debate inflation and in 2022, if precious metals have a different role as far as hedging.

Crypto currency, if that's taken some of the shine off gold from a hedging standpoint.

So I guess my question for you is do you feel like today.

Youth.

Speaker 5: use of or perception of precious metals as a hedge for inflation feels materially different from you or different to you versus times in the past. And I'd love to get your perspective if you feel like crypto has in any way, shape or form replaced gold as a hedge.

Use of our perception of precious metals as a hedge for inflation it feels materially different from you or different to you versus times in the past and I'd love to get your perspective, if you feel like crypto has has in any way shape or form.

Replace gold.

As a hedge.

Speaker 2: I mean, based on crypto's performance when the Dow and the NASDAQ dropped last two weeks ago, I would say that they're uncorrelated to precious metals, which was the first time I really...

I mean based on Cryptos performance, when the Dow and the NASDAQ dropped last two weeks ago, and I would say that there are uncorrelated to precious metals, which is the first time I really.

Speaker 2: I ever remember seeing crypto follow what the equities were doing. So I think every situation is different, but certainly for us, we saw Bitcoin get down to 36,000 and it almost tracked VInazDeck.

I ever remember seeing crypto follow what the equities were doing so.

Every situation is different but certainly for us.

We saw a bitcoin and get down to 36000 is almost tracked track the Nasdaq.

Speaker 2: very closely, which would indicate to me that you had a risk off a situation going on. And I thought that after the initial drop of $50 and gold from 18, 50, to 1800, I really felt that gold and silver held up really well. And in the last week or so since then, they seem to be very, very strong, related to maybe

Very closely which would indicate to me that you had a risk off situation going on.

And I thought that after the initial drop of $50 and gold from 18 15 to 1800, I really felt that gold and silver held up really well and you know in the last week or so since then they seem to be very very strong related to maybe.

Speaker 2: situation where in the past we might see them drop a little further. So I do believe the underlying inflation fear and the underlying risk off.

A situation where in the past.

We might see them drop a little further so I do believe the the underlying inflation fear and the underlying risk off.

Our strategy is is good for gold and I think gold's holding up very well, where we're seeing we're seeing.

Speaker 2: Good for goal and I think goal-toting up very well. We're seeing that.

That you know.

Pretty predominantly.

Speaker 5: Great last question, the next border on the Ford's death in the West Cyber Metal. The Jambillion acquisition has been amazing. What are your current thoughts today? I'm potential additional strategic M&A, both USC Commerce International and any other vertically integrated type asset that may have been of interest. High levels, of course.

Great last question in the next quarter I look forward to asking you about cyber metals.

Jan Boolean acquisition has been amazing what are your current thoughts thoughts today on potential additional strategic M&A.

Our U S E Commerce International and.

Any other.

Vertically integrated type of asset that may be of interest are high level of course.

Speaker 2: Yeah, I mean, I think that the amazing thing that I see over the last

Yeah.

I think that the amazing thing that I see over the last.

Speaker 2: three to four months and back into the quarter we're reporting right now. Is the continued pace of our new client?

Three to four months and back into the quarter. We're reporting right. Now is the continued pace of our new client.

Speaker 2: on boarding at the DTC level and can lead.

Onboarding at the D. T C level and can be first purchased by some of those clients the size of those first purchases.

Speaker 2: by some of those clients, the size of those first purchases. You know, if you're looking for things that are different, and then I see different from where we were a year ago, or two years ago, the new client onboarding.

If you are looking for things that are different and then I see different from where we were a year ago or two years ago.

The new new clients.

Onboarding.

Speaker 2: you know, specifically at the DTC level and, you know, more specifically at the JNB level continues to really outperform my expectations from a year ago and we did the JNB in acquisition.

Specifically at the DTC level and more.

More specifically at the J M. B level continues to to really outperformed my expectations from a year ago. When we did the JM Boolean acquisition.

Speaker 2: I think we're way ahead of kind of what our projections were on new clients and I think we're talking a little bit about this.

I think we're way ahead of kind of what our projections were on new clients and I think for talked a little bit about this.

Speaker 2: you know, just a piece of new clients. Now, obviously we...

Just the pace of new clients now obviously, we you know.

Speaker 2: you know in the year ago quarter we didn't have

In the year ago quarter, we didn't have.

Speaker 2: a DTC Jambolian that was bringing in new clients. But we continue to average three to four thousand new clients at Jambolian every week. And the

A DTC J M bullion that was bringing in new clients, but we continue to average three to 4000, new clients had JM bullion every week and the the there's always a few new buyers that.

Speaker 2: There's always a few new buyers that are making six figure and up purchases as a first time purchase that we're getting that first purchase from them at a much higher level. So I think as it relates to M&A and where we're looking right now, I think that what we're seeing from the Jamboyan metrics is giving us confidence that there are other potential acquisitions out there R&D partner.

Our making six figure and in App purchases is a first first time purchase that we're getting that first purchase from them at a much higher level. So I think as it relates to M&A and where we're looking right now.

What we're seeing from from the Gymboree and metrics is giving us confidence that.

There are other potential acquisitions out there that.

Speaker 2: will have a slightly different demographic.

We will have a slightly different demographic.

Speaker 2: and that will bring new customers to the platform. And...

And that that will bring new customers to the platform.

And we were we're looking at that very closely and I think we're encouraged by some of the opportunities that we're looking at but.

Speaker 2: We were looking at that very closely and I think we're encouraged by some of the opportunities that we're looking at.

Speaker 2: but I think that more than anything.

But I think that you know more.

More than anything.

Speaker 2: We really feel that we have a really good handle right now on

We really feel that we have a really good handle right now on and.

Speaker 2: on a new client acquisition and that the pace of new clients is continuing, which gives us confidence and gives us, you know, encourages us to continue to seek opportunities for us on the M&A.

On new client acquisition and that the pace of new clients is continuing.

Gives us confidence and gives US you know encourage encourages us to continue to seek opportunities for us on the M&A side.

Speaker 5: Great, so thank you, Greg. Thank you, Thor, Kathleen, and Michael, great quarter.

Great. Thank you Craig Thank you Kathleen and Michael Great quarter.

Thank you.

Speaker 1: As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Andrew Scott with Ross Capital Partners. Please proceed.

As a reminder, the star one on your telephone keypad, if he would like to ask a question.

Our next question is from Amtrust, Andrew Scott with Roth Capital Partners. Please proceed.

Speaker 6: I think I can grasp on another strong order and thanks for taking my questions. The first question is, so with the sovereignments kind of ramping up production compared to last year, can you speak down that will, you know, impactoring inventory management and pricing strategies at all as supply continues to come back online?

Hey, guys congrats.

Our strong quarter and thanks for taking my questions.

First question peers with the sovereign mints kind of ramping up production compared to last year can you speak to how that will impact your inventory management and pricing strategies at all in China supply continues to come back online.

Yeah.

Speaker 2: I mean, we still are dealing with supply constraints from the sovereign mint. I don't know of any mint that's operating it, anywhere close to what they were pre-COVID. So I think that, you know, we're, as you can see from some of my commentary, we're continuing not only at the Silver Town Mint level, but at the Sunshine Mint level to increase our capacity to fill the demand. And so...

I mean, we we still are dealing with supply constraints from the sovereign mints I don't I don't know of any mint, that's operating at anywhere close to what they were pre COVID-19 . So I think that.

You know we're.

As you can see from.

Some of my commentary, we're continuing not only at the silver con mid level, but at the Sunshine met level to to increase our capacity to fill the demand.

Speaker 2: And we aren't seeing huge numbers out of the US men. I mean, the US men I think made about 5 million ounces of silver in January for the date change. I mean, I've seen production there in January as high as 8 million in years past. So I think as much as they tried, there still is a lack of silver eagle supply.

And we aren't seeing.

Huge numbers out of the U S Mint I mean in the U S. Mint I think made about 5 million ounces of silver.

In January for the date change I've.

I've seen production there in January as high as $8 million in years past, So I think as much as they tried.

There still is a lack of silver eagle supply and <unk>.

Speaker 2: Secondly, probably our second biggest supplier, the Royal Canadian men, continues to struggle with meeting the demand that we could use. And what we're seeing in very pronounced is particularly in the fractional coins on the gold side that all they can do is make one ounce gold coins. And the concept of making quarter ounce or 10 ounce coins is just, they're not even trying. So I think that...

Secondly, our probably our second biggest supplier that the Royal Canadian Mint continues to struggle with meeting the demand that we could use and where we're seeing it very pronounced is just particularly in the fractional coins.

On the gold side that that you just do it.

All they can do is make one ounce gold coins.

The concept of making quarter ounce or 10 pounds coins is is just that.

We're not even trying so.

Thank you.

Speaker 2: our cyber metals platform when it comes online, giving people the ability to buy a quarter ounce of gold, or a 10 ounce of gold on cyber metals, and then down the road converting into physical, I think is setting up very well for us. And the premiums on some of the fractional gold coins are just very high what we do get, we sell it at very high premiums. So, I...

You know.

Our our cyber metals platform when it comes online, giving people the ability to buy a quarter ounce of gold or a 10 pounds of gold on cyber metals, and then down the road converting into physical I think is setting up very well for us.

And the premiums on some of the fractional gold coins or just you know very high what we do get we sell it at very high premiums so.

You know I.

Speaker 2: I don't see any indications right now that the sovereign mints are...

I don't see any indications right now.

The sovereign mints are.

Okay.

Speaker 2: are on a path to get back to where they were before. So I think that it can be frustrating at times because sometimes we have customers that only want to buy those products and they don't want to buy private mint products. On the other hand, we have a number of clients that just want whatever we can get them. So we're just trying to...

Are on a path to get back to where they were before so I think that it.

It can be frustrating at times, because sometimes we have customers that only want to buy those products and they don't want to buy private mint products on the other hand, we have a number of you know.

Clients that just one whatever we can get them so.

We're just trying to prepare for all outcomes.

Great. Thanks for the additional color there.

Speaker 6: Great, thanks for the additional color there. Kind of bouncing off that question, you do bring up cyber metals. You guys have about two months of beta testing to provide any color or anything you may have learned. The next step to get it launched over the next month and maybe any expectations you have given how the prior two months went.

Kind of bouncing off that question you did bring up cyber metals I guess in about two months and beta testing can you provide any color on anything you may have learned from.

The next steps to get it launched over the next month and maybe any expectations you have.

You didn't have the prior two months.

Speaker 2: Yeah, I mean, we have about 40 people in the beta right now testing the platform. I've been on there myself. I've you know, down a number of trades. I think it is a fantastic product. I think that the guys at Jamboy and the tech people, Andrea and Al, it's just a great job.

Yes, I mean, we have about 40 people in the beta right now testing the platform.

I've been on there myself.

You go down the number of trades I think it is a fantastic product I think that the guys are JM boy in the tech people.

Andrea and Al just a great job.

Speaker 2: And we were very pleased with the results and from the people that have been testing to this point.

We.

We were very pleased with with the results and from the people that have been testing to this point.

Speaker 2: We're very happy with what we're hearing from them and getting a lot of good comments and a lot of good input. And we're very excited to look to launch this to our first set of...

We.

We were very happy with what we're hearing from them and.

You know getting a lot of good comments and a lot of good input.

And we're very excited too to look to launch this to our first.

Set of chosen jam balloon customers on a commercial level probably around the first week of March So we're very close to.

Speaker 2: chosen Jambillion customers on a commercial level, probably around the first week of March. So we're very close to rolling this out. And right now I think it's a-

You're rolling this out and right now I think.

It's exceeded my expectations.

Speaker 6: Truth here, you guys, if I could be back in the last one for me, just for the sake of central marketing and the direct consumer, you just maybe provide some puts and takes there. And then also on that, you guys want to look like the 2022 coins in early January , and just, as there have been strong appetite from...

Street here you guys have any feedback and then a last one from me.

Great.

Sequential margin increase in our direct to consumer can you just maybe provide some some puts and takes there and then also.

On that you guys just launched it looks like the 2022 wins in early January and just.

Has there been strong appetite from.

Speaker 6: From Jan Boot, Jan Boet and consumers are for the new coins. I don't make that.

From JMP gambling consumers have with the new coins.

Yeah.

Speaker 2: Yes, we have seen good demand on the 2022 points from the US meant, which is we expect that every January .

Yes.

We know.

We have seen good demand on the 2022 points from the U S Mint, which is we expect that every January .

Speaker 2: Clearly this year the demand has exceeded the supply we've been out in the marketplace buying from other authorized purchasers and buying extra coins in the secondary market. So we need more coins for our customers at the DTC level. And we've been doing that. As it relates to the...

Clearly this year the demand has exceeded the supply we've been out in the marketplace buying from other authorized purchasers and buying extra coins in the secondary market. So we you know we need more coins for our customers at the D. T C level.

And we've been doing that and as it relates to the to the sequential increase in margin.

Speaker 2: sequential increase in margin at the DTC level. I think that's a reflection of the premiums we're getting. And obviously we're very pleased with that right now and you can see the results so we'll.

At the DTC level I think that's fair.

A reflection of the premiums we're getting and.

Obviously, we're very pleased with that right now and you can see the results sogou.

We're going to continue to try to.

Speaker 2: outsell the supply if we can, as long as we do that, margins are going to be good.

Outsell the supply if we can as long as we as we do that.

Margins are going to be good.

Speaker 1: As a reminder, just start one on your telephone keypad. If you would like to ask a question, we will pause for a brief moment to pull for any final question.

As a reminder, it is star one on your telephone keypad, if he would like to ask a question we will pause for a brief moment to poll for any final questions.

Okay.

Speaker 1: At this time, this concludes our question and answer session. I would now like to turn the call over to Mr. Roberts for his closing remarks.

At this time. This concludes our question and answer session I would now like to turn the call over to Mr. Roberts for his closing remarks.

Speaker 2: Thank you very much. I'd like to thank our many shareholders for joining the call today. Continued, thank you for your interest and continued support. And many thanks to our employees for their dedication and commitment to A-Mark's success. And we look forward to keeping you apprised of A-Mark's progress in the future.

Thank you very much I'd like to thank our many shareholders for joining the call. Today are continued thank you for your interest and continued support and many thanks to our employees for their dedication and commitment to <unk> success, and we look forward to keeping you apprised of a mark's progress in the future.

Speaker 1: Before we conclude today's call, I would like to provide a Mark St. Harper statement that includes important questions regarding forward-looking statements made during this call. During today's call, there were forward-looking statements made regarding future events. Statements that relate a Mark's future plans, objective expectations, performance events, and the like are forward-looking statements within the meeting to the private securities litigation reform act of 1995.

Before we conclude today's call I would like to provide a Mark's safe Harbor statement that includes important questions regarding forward looking statements made during this call. During today's call. There were forward looking statements made regarding future events statements that really.

Future plans objectives expectations performance, and then and the like are forward looking statements within the meaning to the private Securities Litigation Reform Act of 1995.

Speaker 1: the Securities in Exchange Act of 1934. Future events, risk and uncertainties individually are in aggregate because actual results to differ materially from those expressed or implied in these statements.

The Securities and Exchange Act of 1934, future events risks and uncertainties individually or in aggregate could cause actual results to differ materially from those expressed or implied in these statements.

Speaker 1: Factors that can close actual rules to differ the following, the failure to execute company as gross strategy as planned. Greater than anticipated, it occurred to execute this strategy. Changes in the current domestic or international political climate increase competition for a Mark's higher margin services.

Factors that could cause actual results to differ.

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Other than anticipated costs incurred to execute this strategy changes in the current domestic or international political climate increased competition for a Mark's higher margin services, which could depress pricing the failure of the company's business model to respond to changes.

Speaker 1: which could depress pricing the failure of the company's business model too.

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