Q2 2023 A-Mark Precious Metals Inc Earnings Call

Good afternoon, and welcome to a Mark precious metals conference call for the fiscal second quarter ended December 31st 2022, My name is John and I'll be your operator this afternoon.

Before this call a mark issued its results for the fiscal second quarter 2023, and our press release, which is available on the Investor Relations section of the company's website at Www Dot <unk> 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 Thor.

Our drum and CFO Kathleen Simpson Taylor.

Following their remarks, we will open the call to your questions.

Then before we conclude the call I'll provide the necessary cautions 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 a link available in the Investor Relations section of a Mark's website.

Now I would like to turn the call over to a Mark's CEO Mr. Greg Roberts Sir Please proceed.

Thank you and good afternoon, everyone. Thank you all for joining our call today.

As you can see from our earnings release, the second quarter represented another solid quarter for a mark with diluted EPS of $1 35, an EBITDA of nearly $49 million.

With a 6% quarterly return on equity we.

We generated these results despite the subdued market conditions that we experienced during the latter half of the quarter demonstrating the strength of our fully integrated business model.

Our DTC segment continued to contribute significantly to our overall results generating 57% of our consolidated gross profit for the quarter with 130 basis point increase in our DTC gross margin percentage year over year.

Our total DTC customer base grew 15% year over year, new DTC customers for the quarter grew 230% year over year and active DTC customers for the quarter grew 30% year over year.

Approximately 55% of the new customers were acquired from our Bjs's asset purchased in October 2022.

We are encouraged by the performance of the now fully integrated <unk> brand.

And the customer base that we acquired.

Our DTC segment continues to grow and remains a key contributor to our overall business.

We remain active in seeking opportunities to strategically enhance our business as we announced last month, we purchased 12% minority interest in Texas precious metals or TPM.

Our leading e-commerce precious metals retailer with a strong geographic presence in Texas.

<unk> has over 50000 customers and we look forward to supporting their growth through our four year extension of our exclusive supplier agreement.

Last week, we also entered into a definitive agreement to acquire a 25% minority interest in Atkinson bullion and coin a leading online retailer of precious metals bullion coins based in the United Kingdom. This.

This investment transaction is expected to close in the first quarter of calendar 'twenty three and we will.

Expand our international footprint outside of North America.

Another key driver of our performance continues to be our minting business, which provides us with ongoing access to supply with production levels continuing at near record levels for the second quarter.

Now I'll turn it over to our CFO Kathleen Simpson Taylor to walk you through our financials in more detail.

Then president Thor <unk> will discuss discuss our operating metrics afterwards, I will provide a further update on our business and growth strategy and take your questions Kathleen.

Thank you, Greg and good afternoon, everyone.

Our revenues for fiscal Q2 2023 increased <unk>.

2% to $1 95 billion from 194 6 billion in Q2 of last year.

Increase was due to an increase in silver ounces sold partially offset by a decrease in gold ounces sold and lower average selling prices of gold and silver.

The DTC segment contributed 23% of the consolidated revenue in fiscal Q2, 2023, and 28% of consolidated revenue in Q2 of last year.

Revenue contributed by JMP represented 21% of the consolidated revenues for fiscal Q2 of 2023 compared to 25% in Q2 of last year.

For the six month period, our revenues decreased 3% to $3 85 billion from $3 96 billion in the same year ago period.

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

The DTC segment contributed 23% and 27% of the consolidated revenue for the six months ended December 31, 2022, and 2021, respectively.

Revenue contributed by JMP represented 21% of the consolidated revenues for the six months period ended December 31, 2022 compared to 24% in the same year ago period.

Gross profit for fiscal Q2, 2023 decreased 3% to $64 million or three 8% of revenue of $65 9 million or 339% of revenue in Q2 of last year.

The decrease in gross profit was due to lower gross profit earned from the wholesale sales and ancillary services and DTC segment.

Gross profit contributed by the DTC segment, representing 57% of the consolidated gross profit in fiscal Q2, 2023 compared to 56% in the same year ago period.

Gross profit contributed by J M. D represented 51% of the consolidated gross profit in fiscal Q2, 2023 compared to 45% in Q2 of last year.

For the six months period gross profit increased 15% to $140 6 million or $3, 65% of revenue from $121 9 million or 3.08% of revenue in the same year ago period.

The gross profit increase was due to higher gross profits earned from the wholesale sales and ancillary services and DTC segment.

Gross profit contributed by the DTC segment represented 56% of the consolidated gross profit in the six month period ended December 31, 2022 compared to 55% in the same year ago period.

Gross profit contributed by JMP represented 49% and 45% of consolidated gross profit for the six months ended December 31, 2022, and 2021, respectively.

SG&A expenses for fiscal Q2, 2023 increased 11% to $20 8 million from $18 7 million in Q2 of last year.

The increase was primarily due to an increase in compensation expense.

Including performance based accruals of one 5 million.

Higher advertising costs of $1 2 million, an increase in insurance costs of <unk> 8 million and an increase in computer related expenses of <unk> 3 million, partially offset by lower consulting and professional fees of $1 7 million.

For the six months period, SG&A expenses increased 9% to $38 6 million from $35 4 million in the same year ago period.

The increase was primarily due to an increase in compensation expense, including performance based accruals of $2 5 million.

Higher advertising costs of $1 9 million an increase in computer related expenses of <unk> 4 million an increase in insurance costs of <unk> 2 million, partially offset by lower consulting and professional fees of $2 3 million.

Depreciation and amortization expense for fiscal Q2, 2023 decreased 61% to $3 3 million from $8 3 million in Q2 of last year.

The decrease was primarily due to a $5 million decrease in amortization of acquired intangibles related to <unk>.

For the six month period, depreciation and amortization expense decreased 61% to $6 4 million from $16 5 million in the same year ago period.

The decrease was primarily due to a $10 1 million decrease in amortization of acquired intangibles related to the AMB.

Interest income for fiscal Q2, 2023 decreased 5% to $5 million from $5 3 million in Q2 of last year.

The aggregate decrease in interest income was primarily due to lower interest income earned by our secured lending segment offset by higher other finance product income.

For the six month period interest income decreased 7% to $10 1 million from $10 8 million in the same year ago period.

The aggregate decrease in interest income was primarily due to lower interest income earned by our secured lending segment and lower other finance product income.

Interest expense for fiscal Q2, 2023 increased 34% to $7 2 million from $5 4 million in Q2 of last year.

Increase was primarily driven by $1 2 million associated with the Companys trading credit facility and the Amcs note.

Including amortization of debt issuance costs.

Zero point $7 million related to product financing arrangements.

<unk> 2 million and interest associated with liabilities on borrowed metals.

And this was offset by a decrease of <unk> 2 million of loan servicing fees.

For the six months period interest expense increased 23% to $13 4 million from $10 9 million in the same year ago period.

The increase was primarily driven by $1 8 million associated with our trading credit facility and the Amcs note.

Including amortization of debt issuance costs.

<unk> 8 million related to finance product financing arrangements.

<unk> 3 million and interest associated with liabilities on borrowed metals.

And this was offset by a decrease of <unk> 4 million of loan servicing fees.

Earnings from equity method investments in Q2, 2023 increased 283% to $4 7 million from $1 2 million in the same year ago quarter.

The net increase was primarily due to our additional 40% ownership interest in silver Gold Bull, which was acquired in June 2022.

For the six months period earnings from equity method investments increased 171% to $7 3 million from $2 7 million in the same year ago period.

The net increase was primarily due to our additional 40% ownership interest in silver Gold Bull, which we acquired in June 2022.

Net income attributable to the company for the second quarter of fiscal 2023 totaled $33 5 million or $1 35 per diluted share.

This compares to net income attributable to the company of $31 8 million or $1 30 per diluted share in Q2 of last year.

As adjusted for the effect of the two for one stock split in June 2022.

Our diluted EPS for the fiscal second quarter of 2023 is based on weighted average diluted shares outstanding of $24 7 million compared with $24 4 million weighted average diluted shares outstanding during the second quarter of last year.

Adjusted for the effect of the two for one stock split that occurred in June 2022.

For the six months period net income attributable to the company totaled $78 6 million or $3 18 per diluted share, which compares to net income attributable to the company of $57 8 million or $2 39 per diluted share in the.

Same year ago period as adjusted for the effect of the two for one stock split that occurred in June 2022.

Our diluted EPS for the six month period is based on weighted average diluted shares outstanding of $24 7 million compared with $24 2 million weighted average diluted shares outstanding during the same year ago period, which has been adjusted for the effect of the two for one stock split.

It occurred in June 2022.

Yeah.

Adjusted net income before provision for income taxes, a non-GAAP financial measure, which excludes acquisition expenses amortization and depreciation for Q2 fiscal 2023 totaled $46 5 million a decrease of 5%.

Compared to $49 million in the same year ago quarter.

Adjusted net income before provision for income taxes for the six months period totaled $107 7 million, a 20% increase from $98 1 million in the same year ago period.

EBITDA, a non-GAAP liquidity measure for Q2 fiscal 2023 totaled $48 7 million, a 1% decrease compared to $49 1 million in Q2 fiscal 2022.

EBITDA for the six month period totaled $110 9 million, a 23% increase compared to $90 1 million in the same year ago period.

Turning to our balance sheet at quarter end, we had $72 5 million of cash compared to $37 8 million at the end of last fiscal year 2022.

Our tangible net worth at the end of the quarter was $371 6 million up from $321 6 million at the end of the prior fiscal year.

Our Amcs notes have a maturity date of December 15, 2023, and are now reported as a current liability of $94 5 million on our balance sheet.

Finally, as we announced in a prior press release Amer sport of directors reaffirmed its previously announced regular quarterly cash dividend policy of <unk> 20 per common share, which the company paid in January .

It is expected that the next quarterly dividend will be declared and paid in April 2023.

The declaration of regular cash dividends in the future is subject to the determination each quarter by the board of directors based on a number of factors, including the company's financial performance.

<unk> cash resources cash requirements and the alternative uses of cash and our applicable covenants.

Covenants.

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

Thank you Kathleen.

Switching to our key operating metrics for the second quarter of fiscal 2023.

565000 ounces of gold in Q2 fiscal 'twenty 2023, which was down 10% from Q2 of last year as well as the previous quarter for the six month period, we sold $1 2 million ounces of gold, which was down 8% from a year ago period.

We sold 38 per 1 million ounces of silver in Q2 fiscal 2023, which was up 19% from Q2 of last year and up 6% from last quarter for the six month period, we sold $74 1 million ounces of silver, which was up 23% from the same year ago period.

The number of new customers in the DTC segment, which is defined as the number of customers that have registered or set up a new account or made a purchase for the first time. During the period was 131200 in Q2 fiscal 2023, which was up 230% for Q2 of last year and up 168%.

From last quarter, approximately 55% of the new customers in Q2 fiscal 2023 were attributable to the acquired customer lists of BG ASC in October 2022 to.

For the six months period, the number of new customers in the DTC segment was 180200, which was up 145% from 73600, new customers in the same year ago period proxy.

Approximately 40% of the new customers in the six month periods were attributable to the acquired customer lists of BG ASC in October 2022.

The number of total customers in the DTC segment at the end of second quarter was approximately $2 2 million, which was a 50% increase from the prior year.

Year over year increases in the customer base metrics were primarily due to organic growth of our <unk> customer base as well as the acquired customer lists of BG ASC in October of 2022.

DTC segment average order value, which represents the average dollar value of third party product orders, excluding accumulation program orders delivered to DTC segment customers. During Q2 fiscal 2023 was 2389, which was up $60 for Q2 fiscal 2022 through the six months.

Our GTC average order value was 2361, which was up $29 from the same year ago period.

For the second fiscal quarter, our inventory turn ratio was two four which is a 27% decrease from three three in Q2 of last year.

Six month period, our inventory turnover ratio was four five which was a 41% decrease from the six month period of last year.

Finally, the number of secured loans at the end of December totaled 1049, a decrease of 3% from September 32022, and a decrease of 56% from December 31, 2021, the dollar value of our loan portfolio at the end of December 2022 totaled $102 5 billion.

<unk>, which is up 17% from the end of September but down 19% from December 31 2021.

That concludes my prepared remarks, I'll now turn it over to Greg for closing remarks, great. Thank you Kathleen and Thor.

Our favorable favorable results for the quarter demonstrate the benefits of our fully integrated business platform to generate positive results even in more modest market conditions with the opportunity for outsized returns in periods of elevated demand and volatility.

We have continued to face some macro headwinds to start the fiscal third quarter. As we are currently experienced a more subdued market environment. We continue.

To evaluate investment opportunities to expand our footprint both in the U S and in international markets to further grow our business and create value for our shareholders. We are prioritizing opportunities, which are synergistic for a mark and which are aligned with our business model.

We remain very optimistic that our proven business model and integrated platform will allow us to realize growth and profitability over the long term.

Operator.

Thank you at this time, we will be conducting a question and answer session. 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 you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Our first question comes from Tom Forte with D. A Davidson. Please proceed.

Great Greg answer some questions and I'll go one at a time.

When you talk about the macro headwinds.

How much of that is elevated prices for Golden silver is that partly yet or is it more than that I would appreciate any additional comments there.

Sure I think.

Exactly what you said I think the higher spot prices.

Cause some premium compression.

As well as some softening in demand I think November .

November 3rd Gold was at $635 an ounce.

It ended the year around 18 plus.

As of January 31, we were up to 90 to $130. So.

You had a fairly significant steady increase on the spot price and silver followed suit without really any of the pullbacks that we see that generally generate volatility or generate.

Increase.

Increased demand.

Now we did see Friday of last week, we did see a fairly significant drop in gold and silver.

We will see how that plays out through February , but I think that.

We do we have reached a point at this level in gold and silver that the market's really.

Looking to see whether or not we're going to get a breakout to the upside or whether we're going to get a pullback and I think we had.

Such extreme.

Such extreme demand and conditions.

Through our Q1 and through October and the first part of November of our Q2, but there was definitely to be expected.

<unk> prices rose without a pullback we expected to see a little softening in demand.

I also think the timing was a little bit.

Just there was a little bit of a timing issue at the end in December where we.

Had these these circumstances plus we had the new United States Mint product coming online first.

First of January So you had some supply coming into the market there as well as some of the other sovereign mint.

<unk> had product coming into the market in January so I think.

The business is functioning great everything is working but.

I do think that we had a little bit of supply and demand imbalance.

In December and January .

Great and then for my second of three questions.

On the M&A front can you do a quick compare and contrast on how you would describe your domestic strategy versus your international strategy. Given that you just did the <unk> you have plans to.

Make an acquisition of a UK assets.

Yes, I mean, I think North America is where our markets are we have the most the biggest footprint in Canada and the United States. So I think we will continue to.

Build our moat and look for acquisitions that are priced right and where we believe the people we're.

Talking to would be a good addition to our staff and.

<unk> business model.

Is that.

We havent, possibly looked at before but I don't think anything slows down in North America I think that we're excited.

To get a little more insight into.

Our first our first <unk>.

<unk> outside the U S or outside of North America, and I think the Atkinson's deal is something that we've been looking at really for six months six to nine months.

Getting to know the partners getting to know the business.

And then coming to an agreement where we have made this this purchase.

We also as part of that have an option to go up to just under 50%. So I think we'll digest that I think.

Our marketing guys in the DTC segment will be.

We'll be taking a close look at our concerns and seen what we know and what they know and how we can how we can meld those two together and then of course, we feel very strongly with the supplier agreement.

Our.

Access to inventory and access to products that Atkinson hasnt been able to offer in the past or at least not offer consistently we hope that that.

By moving some product over to the UK and given them quicker access to product for their customers and we think that will be a nice.

A nice opportunity for us too.

Trying to get a feel for what that market is and I think.

The principles that atkinson's are very open to our to our help and they are very much looking forward.

To see what we can do together.

Great. So last question so last quarter, you talked about Europe .

<unk> mint capacity and you talked about Europe .

I think in the silver ounces sold but at a high level can you talk about your big capacity today Silver town Sunshine Mint.

Sure.

I think both companies are or have have had a great start to the fiscal year. Both quarters were very strong in both businesses. I think we've we've found ways to squeeze more production out of out of both facilities and.

I think that everything is operating.

Probably.

90% to 100% of capacity right now we regularly go through different product.

Imbalances, and we shift production to items and products that we see demand shifts.

Or in products that we build up supply of.

We're currently still producing product.

Through February for the most part on orders that we took back in November and December . So we're we're trying to.

Catch up and get us get as much product that we have orders on right now.

Audi it out to our customers.

But I think that will keep a close eye on the again the supply and demand in the product mix.

We will we will okay.

We will keep an eye on our overall inventory and how how that forward book is looking at on product.

Thank you for taking my questions Greg.

The next question comes from Lucas pipes with B Riley. Please proceed.

Thank you very much operator, and good afternoon, everyone. I also want to ask about the M&A strategy and specifically with the recent investment in the UK is that it may be a sign that that Europe is higher up on the priority list internationally or should we should we maybe not not to go that far but thank you very much for your color.

Yes, I mean, I think any investment we make outside of the U S. Whether it be in Europe or in the U K I think it comes with a different set of challenges I think that.

We need a good partner in those areas because the nuance of the business, although very similar we're selling very much very many of the same products I think the nuance of the consumer is something that <unk> hasn't had exposure to.

To the level of detail, we hope to see from the Atkinson's investment.

And I do believe that the that the U K in particular as it relates to.

Online.

E Commerce platforms.

Is there is a little bit less competition in my mind and there's a few more players in North America.

Think that the businesses in that.

The evolution of the businesses in the U K.

Are probably a little bit behind.

What we see and what we are able to execute here in North America. So I think opportunity wise, it's a very big market.

Certainly the UK is dominated by the Royal Mint.

And the Royal Mint is a big player there so.

Although we are a big distributor of the Royal Mint here in North America.

We believe that the UK presence and the relationship with the Royal Mint.

Has a lot of potential for us to continue to grow our business over there. So I think thats, probably the players as well as I said the sovereign mint.

It is very.

Interesting to us and the UK.

Doesn't mean that we haven't looked at or we arent looking at other opportunities in other places outside of North America, but I do believe that this was something that we identified as I said six to nine months ago. We knew we wanted to do it and we did focus specifically on this target.

Diligence seeing the partner's diligently and the founders of the employees the model and.

We came away.

We signed the definitive agreement last week, we came away feeling that this was a good decision, albeit a little slower process than maybe.

We had an in the B JSC the TPM investment.

We are very happy with with the results in and the deal we were able to cut him and I think both sides feel theres a lot of opportunity in the U K.

That's very helpful. Thank you for that color and speaking of sovereign Mint I think you mentioned that there were a couple of new products that.

That may have had an impact on premiums here earlier. This year did I hear that right can you elaborate on that and is that something more seasonal or or or is it is it potentially structural that theres more supply. Thank you for your color on that.

Sure.

I don't know.

Xactly, what you're referring to but I'll try to answer what I think what I think the question is we went through a period.

Through our Q1 and the first first part of Q2.

Period of extreme supply constraints from the U S mint, both in gold and silver and I think I've talked about it before we haven't hadn't really seen supply constraint on the U S Gold Eagles.

In quite some time in the silver constraints continued.

So we did benefit from that in Q1, and we also benefited from that.

At the beginning of Q2 in October .

I do believe that the.

The higher premiums that we experienced in those periods were a direct result of.

The supply constraint.

It does appear that as we as we move into Q3 and as we.

Turned the calendar 2023, and all of the minutes or are now producing.

Bullion dated 2023.

We've absorbed.

A significant amount of new inventory from that date change.

It's.

We've been able to manage it we've been able to digest it.

We are set up very well I believe if we get back into a supply constraints constraints situation or if we have.

A demand increase I think a mark in our DTC are very well positioned with plenty of inventory.

It does appear from from what I'm hearing that the U S.

<unk> mint as it relates to silver Eagles in particular at least through the first six months of 'twenty three.

We will continue to be on allocation and I believe that that will continue to limit the amount of silver Eagles that are coming into the marketplace over the next six months. So we'll see how that plays out we'll see how the how the demand matches up with that.

But.

That's what we're hearing from the U S Mint right now.

I very much appreciate the color I'll jump back in queue for now thank you and best of luck.

Once again, if you have a question or a comment please indicate so by pressing star one. The next question is coming from Andrew Scott with Roth MKS. Please proceed.

Good afternoon, and thanks for taking my questions.

First one here you Devin.

Two a little bit but.

Please.

Part D 130 basis point gross margin expansion in the DTC business is just kind of wondering if that was.

More just the market environment and our maybe our improvements in the operating model.

I think that it.

I think for the most part.

It had to do again with what I just I just discussed which is we did see some extreme premium advantage to the model in Q1 and to start Q2.

I think that that.

Is reflective of our ability to move.

Lot of metal.

Both at the wholesale level and at our DTC segment, and I think we enjoyed those those that premium expansion for a while and as I discussed we see.

A little bit of compression or erosion of that premium.

In December and January but I don't think there was any anything.

Specific within our model as it relates to expenses or or or anything else. I think it was was pretty much driven by.

Demand and then as I said.

Some significant supply chain and supply constraints at the sovereign mint alone.

Great. Thanks for that my second one here kind of shifting gears the CFC loan book.

Talk to the increase in the loan book by Austin and simultaneously there is.

Decline in <unk> loans outstanding. So can you just kind of talk to the demand youre seeing in the business.

Maybe any updates on the partnerships.

The collectibles group would be great as well.

Sure I think that.

The loan book as we've talked about many times in the past the loan book tends to increase when you have.

Rising prices.

And we tend to to have loans paid off and we tend to lose loans. When you have sudden drops or significant drops in the spot price of metal this would be on the bullion loans in particular.

I think that on the the numismatic loans in the sports card loans that we've started to.

To invest in its not quite as volatile.

And I think that the.

The CFC loan book is going to have the ups and downs I do believe also that we have seen a significant increase in a higher cost of funds as it relates to our credit facility.

With the rising rates over the last four to five months and it's been our cost of funds has gone up.

And we will we will start to.

Expand our.

Our Reyes.

Reyes R R.

Our interest rates to our borrowers.

But generally.

We saw in the last two quarters, a little faster increase in our cost of funds than we did in our ability to charge more to the customers.

I think we've also.

As it relates to the CGC arrangement.

We are focused right now on trying to increase our book on the more collectible side of things and the numismatic or cards as opposed to the straight bullion loans, which we have pulled back a little bit on.

Over the last three to four months and we see a little bit better margin potential in the collectible loans. So we're going to be focused on that and we've we've seen some some nice increase in that which has offset some of the the drop on the volume of loans.

Thank you for the details and I appreciate taking my questions.

Sure.

Our next question comes from Greg Davis with Northland Securities. Please proceed.

Great. Thanks, Hey, Greg Kathleen a door thanks for taking the questions.

First if I could follow up on the subdued market conditions.

How much of kind of those.

Headwinds, where we're from lack of volatility in the market do you think versus maybe the.

Increase in supply that you've talked about.

Yeah, I mean, I think again I do point to the rise in spot prices and I think that that is that is a significant cigna.

A significant issue and we've always talked about how volatility is good for us.

But but when prices tend to rise.

And there is uncertainty as to really what's causing it or where it's going I think I think that that's going to cause a little bit of pullback in demand and I. Just think that it's natural you know we had a pretty good run on silver in particular over the last year plus from about $18 up to about $25.

You also have some people taking profits and we tend to have a little bit higher buybacks when.

When spot prices are up so that's going to affect the supply. You also have had a situation where we were very active forward selling a lot of our silver town and Sunshine product in September and October .

A lot of that product is now coming into the marketplace as we deliver it in January and February and I think that.

Not everybody in the marketplace hedges their position like we do so if you if you have wholesalers that may be.

<unk> bought product from Us back September October at lower spot prices.

We're going to be.

Selling that product back into the marketplace when.

When they take delivery of it so I think there's a number of factors that are going into this but I would say the higher spot prices are probably the number the number one issue and then with that a little slowing in demand.

And again. These are these these things are very.

Expected by US we go through these periods all the time.

<unk>.

We believe that operationally the business is handling it with our liquidity all of our all of our business operations logistics everything is performing well, but we are in a volatile business and we we have we've experienced this before but I do.

I think as I said before the combination of December .

Slow down a little bit.

Rising prices.

More product coming into the marketplace in January .

I think that has had a effect and throughout January as I said, the price of Goldman silver continued to pretty much.

Head up and then stagnate in a pretty tight range until Friday, when we saw a pullback and.

In most cases, we do.

Did see a pickup in demand from our DTC segment on Friday and over the weekend and this morning. So.

Putting it all together, it's hard for me to say exactly what.

What one factor maybe is more important than another.

But.

To me this is kind of how we operate here, we're used to have volatility and as we've seen before.

We and we said it all we say it all the time.

And great conditions, we're able to have outsized returns as well as do well when we have more subdued subdued levels. So.

So it seems.

Thanks.

Pretty standard to me.

Right great very helpful.

And if I could follow up you are you already touched on this a little bit but that new supply from the mint in January .

Have they given any indications in terms of.

Alright.

Plans for maybe minting production levels going forward or new products.

The idea of that.

I mean, the U S mint is not ever.

Likely to give us specifics or details and in many cases I don't know that they even know what their production is going to be because there's so many factors that affect.

How many.

One ounce gold American Eagles, and one ounce silver Eagles, they can produce I can say that.

Part of the benefit we had in Q1 and into Q2.

As I said before for the first time, there was a significant.

Lack of.

U S American Gold Eagles, one ounce and we got to a point, where there was virtually no new fractional gold coins being made.

And that did Abbas a very positive effect on the premium and the demand for that product.

They are now back on gold.

There is no allocation and they have they'll make as much gold as we can we can order. So that was a fairly major change as we turned into January that Goldman off allocation.

And is available for immediate delivery now as it relates to the silver Eagles, we've been through these periods for the last two years of pretty much constant allocation where.

Where the demand continues.

Has exceeded what they can make.

And again.

<unk>.

They sometimes aren't great at predicting what they can make but from what we have heard throughout the next coming months and probably six months.

They will be on allocation on silver Eagles out a number that.

We've we've been seen consistently now over the last 12 months. So I don't see any any big increase on a on a monthly basis going forward.

The market did they did did have a fairly large.

Production buildup for the turn of the calendar and in January we saw about the number of coins that we were predicting on the silver side.

And then that was absorbed by the marketplace and again now as I said it. It appears they are they're going to be back on a more regular allocation.

Kind of underperforming what they need.

Okay got it thats helpful.

And I know it's still early.

But but wanted to ask just how the performance maybe a PGA ASC.

Is trending relative to your expectations, and perhaps Texas precious metals as well.

Theres always a little uncertainty when youre.

Can you hear me Theyre, making a new investment so if theres any color you can share there that'd be helpful.

I mean, I would just really differentiate between the two of the first being the Bgs C. We bought 100% of the platform I think we are.

Our guys are tech guys at JM bullion really outperformed expectations.

We're able to integrate the platform and transfer the platform to the J M. Bullion site very quickly with very little disruption to the customer facing experience.

<unk> if you go on that site right now it's running.

On on the JM platform and I really don't I don't know that the customers have bjs's, even saw any difference other than just a significant increase in product availability that we have been able to add to the site.

As it relates to the performance after we close the deal.

We've exceeded expectations I think.

The number of larger orders have been.

<unk>.

Welcome by US probably we've seen some bigger orders that we werent expecting and I think that customer base as we as we were hoping it does appear that it's.

It functions a little independently of our other DTC customers and it does seem to have its own little ecosystem, which is what we were hoping to see so very very positive news out of <unk>.

And then as it relates to Texas precious metals, it's a little different animal in that we just took a 12% stake there.

There is still really running the company they are still making the decisions we have a little closer relationship with them in a little more understanding on how we can help them by supplying a little bit more product, which will increase demand at the moc wholesale level and.

I think so far that's been going very well.

I have a list of things that <unk> discussed with the management there about different ways that we might be able to help each other.

<unk>.

We'll be we'll be looking to.

To act on those and in the months ahead, but but again. This is this is.

A very entry level get to know you 12%.

We're not.

Other than getting financials from them.

We will be we will be accounting for them on the cost basis of accounting. So we won't be integrating the numbers and you won't be seeing the numbers and our other investment category.

I think they are different but they both to us offer good opportunities and I think specifically as I mentioned in neuro, we mentioned in the press release.

We're very interested and very curious about the Texas centric customer base of Texas precious metals.

And to see how that how to value that and how it functions.

Get to know get to know the customers and get to know our new managed management partners.

As we move forward.

Makes sense, thanks for taking the questions.

The next question comes from Carter Dunlap with Dunlap equity management. Please proceed.

Hi.

It's early but can you glean anything from the cyber experience you've had in terms of how those customers react to either metal volatility or anything else and.

What what.

What progress if any in terms of sort of becoming programmatic buyers every months.

Yep.

I think we've we brought on a couple of new people to focus on marketing for cyber metals in the last quarter.

We are seeing what we think is positive growth.

There is no doubt in our mind that the cost of the new customers coming into cyber metals are more than likely going to be younger and they're more than likely not to be existing JM customers. Although we do get some crossover. So I do believe this platform is has a different demo and I think it is a great way for us to introduce cyber metal by.

Here's to the physical metals.

Ownership that we have at JM. So I think we've we've seen that certainly we are promoting and we as we had talked about earlier when we were developing this platform we believe that Pete.

People getting on to.

Our regular monthly or quarterly.

Purchase plan, where its just automatic.

Seeing some positive some positive feedback from customers, there and I think as would be expected.

With spot prices rising as I discussed earlier, we have seen some redemptions and people actually trading metal back to us on the platform at a little bit higher level. So.

Again, it's going to be slow and steady.

We feel good about our marketing plan and how we're going out there to find new customers.

But but but but to this point I am pleased with it and I think it's the platform is behaving better than expected as it relates to functionality we.

We just need to.

Need to find to.

Find the sweet spot for what we're paying for new customers and how we're attracting new customers to the platform.

Thank you.

If there are any remaining questions. Please press star one we have a follow up coming from Lucas pipes with B Riley. Please proceed.

Thank you very much for taking my follow up question.

When I look at the operating metrics gold ounces sold silver ounces sold so we saw an increase in silver ounces and a decrease in gold and.

I have some intuition on why that is but would be would be great to get the explanation for that thank you very much.

I think that our ounces sold always I caveat it with the there's a number of products that go into that so I think the timing many times can affect that number.

I think that you have to always remember that when we report or when we're looking internally at ounces sold.

Not only have the wholesale ounces sold of fabricated product and the wholesale and the retail ounces sold DTC wise on fabricated product that also encompasses our sales to the U S Mint and other mint silver town Sunshine of big bars thousand ounce bars and hundred ounces 400.

<unk> gold bars, so depending on timing and demand.

You can see.

Those numbers vary and you can see.

Imbalance between gold gold and silver don't always go up and they don't always go down because you have demand demand side, both at the wholesale and the industrial level as well as at the DTC level. So in looking at the numbers.

I think you probably.

Gold and a rising spot price certainly has probably had a little bit effect on our gold ounces sold.

Silver we continue to pump a lot of metal out of our private mints as well as supply the U S. Mint as they were gearing up to have their 2023 launch of the silver Eagle. So.

It's pretty it's a pretty high altitude answer, but I don't I don't see anything specific.

As to why we sold less gold and we sold more silver.

Thank you very much for the color now all our latter facetious comment if Congress doesn't come to an agreement on the debt ceiling and the.

The U S mint.

<unk> one trillion dollars platinum coin I think JM volume has recommended itself with the distributions again at some point.

Well, we'll wait to see how all of those things play out we'll.

Try not to count on anything because in this business I've learned after 40 years.

I Shouldnt get.

Two settlement of what I think is going to happen I should just make sure I'm ready to react to whatever might happen.

While there might be more volatility, but again best of luck.

Okay. Thank you.

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

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

Before we conclude today's call I would like to provide a Mark's safe Harbor statement that includes important cautions 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.

<unk> future plans objectives expectations performance events and alike are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and the Securities Exchange Act of $19 34.

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 include the following the failure to execute the companys growth strategy as planned.

Greater than anticipated costs incurred to execute this strategy.

Changes in the current domestic and international political climate increased competition for a Mark's higher margin services, which could depress pricing.

<unk> of the company's business model to respond to changes in the market environment as anticipated Gen.

General risks of doing business in the commodity markets and other business economic financial and governmental risks as described in the Companys public filings with the Securities and Exchange Commission.

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 date 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.

The company undertakes no obligation to publicly update or revise any forward looking statements readers are cautioned not to place undue reliance on these forward looking statements.

Finally, I would like to remind everyone that a recording of today's call will be available for replay via a link in the investors section of the company's website.

For joining us today for a Mark's earnings call you may now disconnect.