Q4 2019 Earnings Call
Good afternoon, everyone and thank you for joining us to discuss collectors universes financial results for the fourth quarter fiscal year ended.
Thirtyth 20 I T.
As reminder, this call is being recorded.
With us today from management are Joseph J., Orlando, President and Chief Executive Officer.
Joseph Wallace Senior Vice President and Chief Financial Officer.
Management will provide a brief overview of the quarter and then open up the call for your questions.
Comments made during today's call may contain statements regarding the company's expectations.
<unk> future financial performance, including forecasts and statements concerning business trends and profitability that are forward looking statements as defined in the private Securities Litigation Reform Act of 1985.
The company's actual results in the future may differ possibly materially from those forecast in this call due to a number of risks and uncertainties.
Certain of these risks and uncertainties. In addition to other risks are more fully described in the Companys filings with the Securities and Exchange Commission.
The forward looking statements are made only as of the date of todays conference call and the company undertakes no obligation to update or revise the forward looking statements, whether as a result of new information future events or otherwise.
And with that I'd like to turn the call over to Joseph Orlando Joe.
Thank you and welcome to today's fourth quarter conference call for fiscal 2019, I want to summarize the results for the quarter and then give you some commentary on the outlook going forward into our first fiscal quarter of 2020.
Collectors Universe finished Q4 with excellent overall results revenues in the fourth quarter were up year over year to 19.8 million for 17.5 million, a 16% increase from a year ago.
The 19.8 million dollar figure also established a new all time quarterly record for the company and the approximately 1.25 million units shipped set a new high watermark for Q4.
Like our record setting Q3 finish in March the Q4 results were a product of positive performances found within both major divisions as P.C.G.S. and P.S.A. improved from a year over year perspective.
Our primary division showed an increase of 9% and our overall coin business and 29% and our trading card and autograph business from the previous year.
Within the PCGS Division, our U.S. vintage and show services were down slightly at around 3% or 0.2 million combined.
PCGS bulk on the other hand was up approximately 48% or zero point $8 million for the quarter compared to Q4 last year, continuing the positive momentum generated in Q3.
In addition to processing more units versus Q4, and fiscal 2018 and similar to Q3 of this year. The customized packaging created by the PCGS team helped raise our Q4 bulk ASP over last year's ASP in the same quarter.
Overall, PCGS U.S. was up 8% or zero point $6 million versus last year in Q4.
PCGS International produced mixed overall results from a year over year perspective, our Shanghai operation was up nearly 50% an increase of about 0.5 million, while our Hong Kong in Paris offices were down slightly compared to the previous year, finishing a combined 0.2 million below the pace set last Q4, PCGS did finish the quarter with a robust international coin backlog entering Q1 interest in our services remains solid as we continue to Tinker with the international approach from us from a strategic standpoint.
Turning to our P.S. say in PSC DNA Division. This part of our business finished the quarter end fiscal year with another record top and bottom line performance in June .
The revenue figure of 7.6 million surpassed last year's record Q4, a 5.9 million a year over year increase of 1.7 million.
P S. A's record setting quarter included a new all time quarterly high for units shipped at slightly over 680000 collectibles.
This brought the annual total for fiscal 2019 to approximately 2.5 million collectibles another new record.
PSC is outstanding performance helped close out its ninth consecutive year of top and bottom line growth.
Furthermore, P.S.A. closed Q4 with the highest submission backlog in the divisions history, despite increasing its output in each of the last four quarters. This is a clear indication of the power of the PSC brand and the continued demand for our services.
The company continues to work on expanding operational capacity. So we can ultimately improve the extended turnaround times facing our customers.
Returning to our overall business gross profit margins were 59% for the quarter, which was up from 55% a year ago.
Our operating income for Q4 after noncash stock based compensation was 4.5 million compared to 2.2 million the previous year.
Income from continuing operations was $2.8 million for the fourth quarter of fiscal 2019, or 31 cents per diluted share, which is up from $1 million.11 per share in the prior year.
Now, let me turn it over to Joe Wallace for a more detailed review of our financial performance in Q4, Joe.
Yes, Thank you Joe.
I will now give a brief overview of the financial results for the fourth quarter and fiscal 19.
In the fourth quarter, the company generated record quarterly revenues of $19.8 million.
Earned record Q4 operating income of $4.5 million.
After tax income from continuing operations of $2.8 million or 31 cents per diluted share.
This compares to quarterly revenues of 17.1 million operating income of 2.2 million. After tax income from continuing operations of 1.0 million or 11 cents per diluted share in the fourth quarter fiscal 18.
For the fiscal year 19, the company generated record annual revenues of 72.5 million earned record operating income of 14.3 million. After tax income from continuing operations of 10.0 million or $1.11 cents per diluted share.
This compares to revenues of 68 point Fourmillion operating income of 9.0 million an after tax income from continuing operations of $6.1 million or 70 cents per diluted share for fiscal 18.
The higher tax revision in this year's fourth quarter as compared to earlier quarters of the year reflects a non cash valuation allowance established against deferred tax assets in China due to the uncertainty of realization.
Our tax payment rate continues to be about 25%.
The fourth quarter revenue increased to $2.7 million or 16% included increases up 1.7 million or 29% in cards in cards, and autographs and zero point $9 million or 9% in coins.
The cards and autographs increase represent record quarterly revenues for that business.
Because the corn increase included an 8% increase in U.S. revenues, which included improved revenue from modern coins and trade shows.
China corn revenues in Q4 increased by 0.5 million or 15% or 50% to about $1.4 million for the quarter.
The fiscal 19 revenue increase of $4.0 million or 6%.
Included a $5.4 million or two point or 25% increase in cards, and autographs and a $2.2 million or 7% increase in use corn revenues.
Partially offset by a 3.5 million decrease in China.
Due to the previously discussed absence of any significant banking channel revenues in fiscal 19.
The cards and autograph revenue increase represent record annual revenues of $26.4 million for that business.
The U.S. corn revenues increased for the year included higher trade shows and modern revenues.
In China, the non banking channel revenues were up 14% in fiscal 19.
As we continue to build our brands in that region.
Despite the net decrease in our coin revenues in fiscal 19, our coin business represented 57% of revenues reflects the continued importance of that business to our overall financial performance.
Are you asking business rebounded in fiscal 19, with a 7% increase over fiscal 18, and we will continue our efforts to maximize revenue opportunities in that business in China, We will continue to focus on growing or gone back in.
Thanks.
Just a moment, ladies and gentlemen, speaker has a unfortunately disconnected I will try and we dial back him.
These hold as we tried to read all back to the presenters.
Okay. It looks like we were disconnected. So I will just continue to work I think we got cut off so there could be some duplication.
I'll start off by commenting further on revenue fourth quarter revenue increase of 2.7 billion or 16%.
Included increases of urban excuse me 1.7 million or 29% in cards, and autographs and 0.9 billion or nine percentage points to cards and autographs increase represent record quarterly revenues for that business to coin increase includes an 8% increase in U.S. revenues, which include improved revenue from modern coins and trade shows.
China corn revenues in Q4 increased by zero point $5 million or 50% to about $1.4 million for the quarter.
The fiscal the fiscal 19 revenue increase of $4.0 million or 6% includes a $5.4 million or 25% increase in cards, and autographs and a 2.2 million or 7% increase in use corn revenues, partially offset by a $3.5 million decrease in China.
Due to the previously discussed absence of any significant banking channel revenues in fiscal 19.
The cards and autograph revenues increase represented a record annual revenues of $26.4 million for that business to us coin revenues increase for the year includes higher trade shows on modern revenues.
In China, the non banking channel revenues were up 14% of fiscal 19, as we continue to build our brands in that region.
Despite the net decrease in their coin revenues in fiscal 19, our coin business represented 57% of revenues reflects the continued importance of that business to our overall financial performance.
Our us coin business rebound in fiscal 19, with a 7% increase over fiscal 18, and we will continue our efforts to maximize revenue opportunities in that business.
In China, we will continue to focus on growing our non banking channel revenues at this time.
We do not expect to generate revenues from the banking channel in fiscal 20.
With respect to our cards and autographs business, which ended in fiscal 19 with a backlog of cards to be authenticated and graded.
We expect continued growth in fiscal 20, as we continue to increase grading capacity.
The gross profit margins were 59% and 58% this year's fourth quarter and fiscal 19, as compared to 55% and 57% in the same period the prior year.
Those percentages reflect higher gross profit margins for both our coins and cards and autographs divisions due to the mix of collectibles authenticated and graded on higher fee is charged for certain services.
In addition, we achieved higher operating leverage for cards.
Due to the higher number of cards authenticated and graded.
As previously disclosed there can be variability in the gross profit margin due to the mix of revenues and the seasonality of our business.
On a quarterly basis during the three years ended June 19, our gross profit margins varied between 54% and 64%.
Selling and marketing expenses were 13% and 14% of revenues in this year's fourth quarter and fiscal 19 as compared to 14% and 15% in the same periods of fiscal 18 in dollar terms selling and marketing expenses were substantially unchanged and included higher costs in our growing cards and autographs business for the most part offset by savings in other parts of the business.
Dziennik DNA expenses represented about 23% and 24% of revenues in this year's fourth quarter fiscal 19, as compared to about 28% and 29% in last year's fourth quarter fiscal 18.
The dollar savings of $2.3 million in fiscal 19, primarily reflected one lower payroll related costs of zero point $8 million arising from staff reductions in the fourth quarter fiscal 18 and management changes in the company's coin division that occurred in the first half of the year, partially offset by increased management incentives due to the improved performance of our business in fiscal 19.
To the non recurrence this year up moving at lease exit costs on a pre litigation settlement for a combined savings of zero point $9 million and three lower non stock based compensation expenses zero point $4 million.
The resulting operating income of $4.5 million this year's fourth quarter, representing an operating margin of 23% and the $14.3 million for the year represented an operating margin of 20%.
Adjusting for non cash stock based compensation expense the operating margins were about 24% in the quarter and 21% of fiscal 19.
Turning to our balance sheet.
The company's cash position was $19.2 million at June 19, as compared to $10.6 million at June 18, and 15.7 million at March 19.
Net cash generated of $8.6 million in fiscal 19 included cash generated from continuing operations of 17.5 million, partially offset by cash dividends paid to stockholders of $6.5 million.
$1.8 million used for capital expenditures and capitalized software costs, and 0.6 million used to pay down the company's term loan.
On July 20, 319, we announced our quarterly cash dividend of 75 cents per share, which will be paid on August thirtyth to stockholders of record on August 16.
Just a brief comment on the new accounting rule that will impact us as disclosed in our 10-K that was filed with the SEC today, the new accounting rules for leases will require us to capitalize on our balance sheet effective July 119, right of use assets of about $10 million on a corresponding liability for the same amount.
Which about $2.3 million.
We'll be classified as a current liability.
The leases are mostly real estate related and we don't expect any material effect on our income statement.
These assets and liabilities will appear on our published balance sheet at September Thirtyth, 2019, and future quarters with that I'd like to thank you for your attention.
Thanks, Joe before we conclude I would like to make a few comments about the close of Q4 and the outlook moving forward into our first quarter of the fiscal year.
In a year of transition fiscal 2019 proved successful as collectors universe set a new annual revenue record. The achievement was driven primarily by a strong back half of the year in March collectors Universe said, a Q3 top line revenue record and a new operating income high not only for Q3, but for any quarter in company history.
In June the company, followed that strong performance with another one setting a new all time high for quarterly revenue and a Q4 operating income record. During the same month collectors universe also reached a new milestone eclipsing 75 million total item certified since inception.
Reaching the 75 million collectible certified milestone is a testament to the entire staff both current and former employees. In addition to the unparalleled power of our brands of course, none of this would be possible without the unwavering support of our customer base. This is as much of their achievement as it is ours and we can't thank them enough for helping US build this company as we look to the future and head towards the 100 million Mark our team is committed to not only enhancing the wonderful foundation that has taken us this far but to also seek new ways of expanding our services to further the ultimate vision of what collectors universe can be.
Over the past year on management team made the decision to refocus and reinvest in the core of our business from our set registry program to customer service. This will continue into fiscal 2020.
In the coming months, we are making a concerted effort to increase our operational efficiency and improve our grading system, which includes enhancing our products and services with new technology.
At PCGS after Reacquiring the PCGS currency name in Q3 of fiscal 2019, the company recently announced that we intend to get back into the domestic grating business early next calendar year.
In the meantime, we will continue to provide international grading services, but under a new name PCGS Bank notes. The name that will also be used when the service is re launched domestically in the second half of fiscal 2020.
Not only will this help clear up any confusion around banknote grading in the marketplace, including the international business. This service will serve as a logical complement once again to PCGS is existing coin grading brand.
At PS say the momentum continues the market for PS a certified items is very strong as numerous record prices had been paid in recent months for high quality collectibles.
This includes everything from a Lou Gehrig signed photo inscribed Babe Ruth which sold for a record $480000 to a complete set of 1915 Crackerjack baseball cards, which sold for 1.4 million.
Earlier this month PSC attended the National Sports collectors Convention in Chicago, which is the single largest showcase for the industry. It turned out to be a blockbuster for the company and it helped produce a record week for say the PS a backlog as expected remains at record levels as well, while the domestic PSC business continues to grow PSC International is just beginning with very modest investments PS a recorded its best single month. This past June in Japan, as our brand continues to enjoy increased visibility in the region.
We will continue to approach the international part of our business in a very disciplined manner as we build our brand overseas.
Since launching phase one and two of our set registry achievement program for PCGS NPS say over the past several months our annual growth rates for new members and sets have both nearly doubled needless to say the response from existing users and new ones has been excellent. The set registry play such a key role in submission generation and the development of Brandloyalty. The more we improve the user experience the more activity and commerce it creates.
Looking ahead to fiscal 2020, the management team is committed to improving our company by reinvesting in our core businesses from operations to customer service to technology, while continuing to search for new potential revenue streams that could enhance our ability to grow in the years to Khan of course, all our expectations are governed by several factors not in our control such as the price of precious metals the market for collectibles and the overall state of the economic climate, primarily in the us and the possibility of changing international trade policies worldwide. Thank you for joining us today and I look forward to speaking with you next quarter now I would like to open the call to any questions you may have.
Course, if you'd like to ask a question. Please segment by pressing star one on your telephone keypad and if we're using a speaker phone. Please make sure mute function is turned off to allow your signal to reach our equipment.
Again press star one to pose a question, we'll pause for just a moment.
Take our first question from you in gun as a private investor. Please go ahead.
Yes Hello.
Congratulations on a on a great quarter and not just the.
So the gross margin had improved since last time to kind of the high fiftys.
Keith do you think you will be able to get that back into this I know, it's just it was sort of in the.
And the low Sixtys a couple of years ago do you think that's the level, but you will be targeting return to.
D do you think that.
You have the pricing power and the brand strength to be able to do that.
Thank you.
Yeah, I mean to answer the question absolutely we are definitely shooting for that range is.
Gross margin and I think we do have you know I think you've raised a really good point I think we can leverage our brand power a little bit better in certain areas of our company in relation to certain services that we offer and that's something that we're going to explore over the next fiscal year, but that would be the goal. Joe do you have anything to add to that.
No. It's I think Joe's comments are correct I mean.
Traditionally our P.S.A. cards, and autograph business has had a lower gross profit margin, but that actually gross profit margin is improving over time, and we're getting operating leverage in that business. So yeah, we're committed to the 6% to 60% or 60% plus overtime, but D. The lower than 60%. Although you know based upon rent higher higher and record revenues would reflects a mix issue that we're currently experiencing but longer term. Yeah. We are committed to the 60% or 6% plus gross profit margin.
Okay.
Can you do have a upon the kind of revenue growth management or you know to optimize the value that the from brings or.
How do you think about that.
[noise], how do I know exactly if you don't mind re asking the question you mean, what is our plan moving forward or are you talking specifically about yeah price well I think yeah, I think you've got a you got a super strong brand and you know it's just how do you think about how do you optimize the pricing to make sure that you are you getting the value you deserve out for that.
Yeah. It's a great question. So the risk of course, there's there's no magic answer to this but what we've exceeded what we've seen with P.S. say for example in PSC has gone through a pretty significant.
Sort of growth trajectory over the past almost a decade now and over the past nine years. When we've had nine consecutive years of top and bottom line growth in the division, we have raised prices and raise the SP every year for nine consecutive years, yet we have the biggest backlog in the history of our company. So there's never a it's not an exact science, but obviously, it's it's up to us to find that perfect balance between.
Price increases and you know and of course, not pushing it too hard in any one given year now on the PCGS side of the business.
I think we've learned a lot from the from the P.S.A. Division and I guess the way I would sum it up is as long as you're doing everything else well if you're if your service is great. The quality of your product is excellent. The marketing is going well all of the other things are going well I think you can ask for a little bit more I think in the past we've been a little bit reluctant to to utilize that leverage and so looking forward I think it's it's time for maybe one of our divisions to learn from the other in terms of.
Leveraging that brand power because that's something that look you know PCGS has been around for 33 years say 28.
We we were so entrenched in our markets and our products sell for such a premium price as long as we do it thoughtfully I don't think there's anything wrong with asking for a little bit more where appropriate. So there are certain.
Certain services that we offer where price is the real issue, especially as it relates to the lower dollar coins and cards you have to be very careful not to not to price yourself out of those markets, but there are other areas of our company, where we're talking about higher end high value items vintage items, where I think we could leverage our brand a little bit more so that's something that we're really looking at.
As we move forward next year.
All right. Thank you.
I'll take a first next question from Paul Silverstein.
At first New York. Please go ahead.
Hi, guys. Thank you very much for the other pool and the the question.
Just first of all a couple of questions a follow up.
On the capacity increase he just mentioned can you just give a little more color as to.
Number of heads or other metrics of.
What type of percentage increase you are expecting this year and then in the mid term to your grading capacity and I think you might be also implementing some sort of.
Technology around.
Improving and enhancing the.
Authentication and grading process and.
Kind of goes back to the gross margin question, but can you kind of just talk about.
How margins evolve relative to the capacity increase both technology onto our head count that's question one.
[noise] other two questions or just kind of around the revenue concentration in all the investigations that are going on with Pwc see if you can kind of just point to potential risks associated with the investigation any other type of commentary you have around that and are there any implications to warranty reserves on the balance sheet.
Thank you.
Got you so I'll I'll take a stab at question, one I think quite frankly, and I'll, let Joe Wallace chime in here as well I think it's probably a little too early to predict what impact.
Some of our.
Upcoming operational projects will have long term on margins. This is sort of were at the beginning stages of trying to figure out if we can incorporate certain kinds of technology at certain stages in the in the grading process.
And I guess figuring out how successful we are I guess is to be determined. So it's a little early for us to think speculate as to exactly how successful we will be there certainly there is there's room for improvement we.
Completely believe that and when we look at our what we're moving so many millions of units through the through the facility every year.
Any little gain you can make in terms of efficiency will really help a company, especially one of our size. We're a relatively small company overall, even though we are processing millions of units a year. So we there is no doubt in our minds that there are gains to be made but at this stage I think it would be improper for me or Joe or anybody here to guess exactly how much that would impact our company I will say this over the past year or so what we have done is gotten rid of the silo.
Or the silos that we had inside of our organization, where for example, PCGS had their own operation and PCGS had a separate operation. So this includes everything from receivers to sealers and so forth and what we've done over the past year is blended the operations together with the exception of grading of course like the actual expertises. So now we can move we're a lot more flexible if one part of the business gets hot weather that cards happens to be very hot right now at certain times of the year as Joe mentioned, there is a seasonality sometimes modern bulk and coins is very very busy we can move those people to one side or the other based on the demand so.
We believe we are getting some benefit there but in terms of looking forward I think it's a little premature to predict.
Percentage sort of benefit as far as the.
The other question that you had in regards to this investigation of the auctioneer in our industry.
I can answer it very short and sweet we don't believe that there is anything.
Of a material nature for for our company to be concerned with of course any negative publicity that our industry's receive.
Or have to deal with is.
Not something that we like to see but it's a it's sort of a part of I'm sure every industry that there's going to be a net negative news from time to time, but I think.
If you look at the last four months or so which is about that at the time that that this.
Sort of new story broke on on this company I mean are receiving has actually gone up the prices for PSC certified items remains.
Terrific.
And the demand is there. So we don't we don't anticipate anything of any meaning as a result of this.
Got it.
I'm just reading through the 10-K and understanding that the warranty and provisioning process is there any type of risk associated with historical grading and kind of.
I guess, the a kind of a questionable practices up you feel you're looking at.
Questionable practices as it relates to outside submitters.
Well I mean, you know when you read through kind of the blogs of what's what's some collectors are speculating and I'm not a collective by any means I am just kind of reading kind of all the news involve.
Yeah, there's a question of.
Whether or not or basically who's kind of.
Breaking into the boxes changing.
Changing the GOR upgrading the cards, you know kind of a.
For a better grade and then re submitting.
And potentially getting a.
Higher grade and I think it's associated with higher valued cards to a certain extent, so I'm, just wondering whether or not the warranty.
The warranty associated with that could potentially be something where you're auditor's or are you know.
Requiring higher provisioning.
To answer the question. This is what I would say is that you know with PCGS of course, I mentioned earlier they've been around for 33 years with PS say 28 years now and we've created of course over 75 million combined items. There is nothing but what I would describe as unique to this investigation of this auction here. This is the same exact battle that we deal with every day. So there is I guess the the way I would characterize this is none of this is really new news, it's not news to us it's not news to the industry that these types of things go on so there's nothing really out of the ordinary from that perspective about the investigation versus any other year in our history. So I again, Joe Wallace is welcome to chime in here. If he has something to add but we don't view this as a as a special sort of warranty issue versus any other day in the lives of collectors universe.
Great that's great to hear so just kind of just wrap it up so when you talk about revenue concentration I think it's 11% of sales as Pwc you see one of the top five customers in that number and is there business turning down because of this investigation.
Well there are certainly not one of the larger customers in that top five customer base Thats correct.
Okay.
Okay. Thank you very much.
Okay.
Well take our next question from Tyler Johnson as a private Investor. Please go ahead.
Hi, Thank you for taking my call.
My question is in regards to our you where the two former PSC.
And.
Fraud that is occurring for your company regarding the trimmed cards and had been rated higher than they should be.
I couldn't understand the question could you. Please repeat the question you broke up there for a moment we couldn't understand the question.
Hi, Yes. My question is about the two former PSC employees that were implicated in the investigation for the trimmed cards that are great at higher than they should be are you aware of that.
I'm not aware of anything you're talking about here.
So you're not aware of the PSC employees that have been implicated in the investigation. The trim card that we dare card you guys mentioned before you're not aware of any of that information we would ask the moderator to please move on from this this color. Thank you.
Well take our next question from Ken chose ski as a private investor and private Investor. Please go ahead.
Hi, Thanks, Thanks for taking the question, maybe I'll, maybe I'll just try it another way I'm just wondering if you could disclose what.
Percentage of your your card businesses sports card related.
Just because it seems like a lot of the the fraud was concentrated there so.
If you know people are trying to handicap, what the what the risk is around.
Yeah, right around grade in the sports card.
Area I think that would be helpful for investors.
Well if you if you listen to our call we disclosed in every detail the exact percentage of our our last fiscal year between coins and cards.
And all of our divisions. So I think I think we covered all of that so if you have another question. We are happy to answer it well I was thinking because you guys you guys do non sports related cards as well so presumably.
So if a collector is focusing on cards, it's going to be you know theres, obviously like focusing on and other stuff and then you have sports card. So I was just wondering you know within the 90% of trading cards and autographs that's card related how much is sports cards specifically.
We don't break it out.
By percentage of genre, if that's what you're getting at and I'm, sorry, I misunderstood your question from before.
What we do we do grade a tremendous amount of non sports cards as well over the past 12 months, we upgraded several hundred thousand.
Pokey Mon magic, the gathering and that sort of and those sorts of things and MPS say last year. We in total and most of this is card. Some of it is autograph. Some of it is tickets original photos and other things that we provide services for we processed in the neighborhood of 2.5 million items I would say several hundred thousand of that was one of the non sports variety, but we don't we don't literally break it out by genre in our in our detail here.
Okay. Okay. That's helpful.
And then just say just another follow up I guess when you think about this whole trimming scandal I mean, what what do you think is missing in your grading and authentication process that prevented the graders from actually identifying these these trend cards and I guess what.
If anything can you do to address the loopholes that you know certain collectors are are taking advantage of today.
Well, we don't view this as being any loophole on our end and we think that in the overall scheme of our business that some of this has been blown.
Way out of proportion.
But.
Yes, we are very confident in the services that we provide and very confident in the grading staff that we have and so and so is the public as I mentioned.
Over the past several months our business if anything has increased so it kind of tells you what the overall marketplace things of our grading services and the quality of our product.
Right, Okay, and then if I could just sneak one last one here.
You guys continue to generate a lot of cash flows. So if you look at the increase in cash and cash or last two quarters about 3 million.
Over $3 million in each of the last two quarters and it's obviously been pretty strong so.
Can you talk about what your capital allocation plans are for the company going forward and if you're planning on using some of that cash to invest internationally. What are what are some of the milestones that you're trying to head say over the next three to five years.
Well, we don't have I wouldn't say that we have any.
Defined milestones as it relates to cash and I think our our capital.
Allocations have been pretty consistent over the last few years. We are looking since we did have a very positive year in terms of cash generation and we have a very strong cash position right. Now we are looking at some new verticals. We are looking at expanding some of our services internally some of our core businesses and we're looking very hard at that over the next.
Fiscal year.
And depending on where we decide to spend the money will also dictate how we how we view our current dividend and the and the level that it sits at but we are in the process of determining what to do.
With some of the cash.
If indeed, we determined that its excess but we don't have a defined number that we say well its if its under this or over this we can or cannot do anything. So we're we're taking a good hard look at that we think it's time to start thinking about.
Where collectors universe or what it looks like five 810 years down the road. So we're it's something it's very very fresh on our minds.
Right, Okay, and then if I could just sleep sneak one one last one in here within the coin segment. I mean, you guys had some nice unit growth in the quarter was actually up 9%.
Versus a negative for the prior six quarters. So if I was wondering if there is talk about.
Where you see that that unit unit growth going over the next call. It three to five years, because if you just look over the last 10 years or so you guys have had decent.
Unit growth over time, so just wondering if that's sustainable over the medium to long term.
It is very hard to predict unit growth over a three to five year period, but what I can say is this that the opportunity in the US is on modern coins, because that's where literally the volume is and so what you've seen over the past couple of quarters versus certainly in fiscal 19 versus fiscal 18 is some improvement in that area. So when you look at PCGS and their performance in Q3 and Q4 a lot of that success was an improvement in the modern bulk coin area. So that.
When it comes to modern bulk coins, we have some control over the packaging and presentation of those coins. So the more creative we can get the more our product appeals to the ultimate consumer the better. We can do we are also on some level at the mercy of what the mint produces and if they produce a coin that resonates with collectors, we have a better opportunity to capitalize on that from an international perspective.
If you're if you remove the couple of quarters I guess it would have been Q1 of fiscal 18, I believe in Q2 of fiscal 17.
Those were we had.
Very big surges in international coin growth because of the banking channel revenue that we've discussed in the past where they they are more like into isolated projects than a sustainable sort of business. So we had this these big surges of revenue in those two quarters, but the base business seems to be gaining more traction and that's more of the traditional collecting community versus banking channel revenue. So the real opportunity domestically for coin is in modern if people have vintage coins to grade we will receive limits much like on the PSC side of our business. If somebody has a high end Babe Ruth item, whether it's an autograph a card something like that at this point because of our brand strength. We don't have to go out and ask for those types of submissions they sort of naturally come to us, but you do have to be very competitive on modern and modern is where the volume is so.
We're making a concerted effort on the coin side to build that that domestic modern business as best we can and then on the international side as Joe Wallace commented on earlier, while we don't anticipate any banking channel revenue.
Anytime soon we are trying to build the base business up as much as we can.
Okay great.
All right. Thanks, Thanks, a lot for taking the questions and congrats on the corner.
Thank you.
Once again, if youd like to ask a question. Please press star one well now take for a last question from Bobby New Red Red any from BB and management. Please go ahead.
Hey, guys.
Thanks for taking the question.
Real quick about this pwc and trimming sandal.
I wasn't clear to me based on the answers to earlier questions have you guys noticed a drop off in business from that.
From that auction house in particular.
How do we know that Theres a.
I'm not following how do we know that there is a drop off from that auction house, but.
Peter No no no.
I don't think you heard me properly has there been.
A drop off in business from Pwc since end of May beginning of June .
We could certainly look at the records, but I would say that certainly over the last couple of months there.
There has been.
I would say virtually no business.
And I'll leave it at that Guy So I I think because they were.
Go ahead.
Im sorry, let me just go ahead.
That's right before I close this issue I mean, we as Joe said earlier, you know the the level of submissions that we continue to see the P.S.A. cards business is is continues to be very very strong backer backlog is actually higher now than it was back in June .
In terms of our warranty we take a very conservative view in terms of the warranty and what our expectation is in terms of our balance sheet. So I think this whole trimming issue desk. We spent a lot of time talking about today is really something that we don't consider our material to our business.
We'd probably just like to leave it at that in terms of any additional questions on the subject.
Okay, well, let me add just kind of dance around a little bit the.
If the if the if the card grading business continues to grow and then one of these formally large customers has basically gone to zero revenue who's who's picking that up.
Is it is it individual collectors or other dealers I mean, where's where's the growth coming from when.
When you have this there's kind of a vacuum created by one of your large customers.
Well I think that Thats maybe.
The.
The issue is that there is an idea I guess at least coming from your question that in some ways that whether its the pwc see company that you're referring to or really any other company that they they make up such a large percentage of submissions that we should be concerned one thing that is very interesting about the PSC business and it's a little bit different than the PCGS business. In this way is that the submissions are spread out quite a bit we do have some larger customers I don't think I would define pwc see as being I mean, Joe has already commented on it earlier in the call. They don't fit into that what we would consider at collectors universe, a large customer anyway.
But there is so we don't anticipate any impact whatsoever.
From from Pwc see weather.
No matter what happens to them as part of this investigation, we're not concerned about it and like Joe said, our current backlog is at record levels and continues to be at record levels.
Regardless of Pwc see his personal business. So our submissions are spread out in such a way that we are not dependent on one submitter or another for our for the PSC business to grow in the future, which I think is what you were getting too are we concerned about.
Our ability to grow minus a customer or two or three and the answer is no.
Got it.
Pardon me.
So [laughter].
The.
And I don't want to bother you guys have this too much but it seems like.
Some kind of change needs to happen in regards to.
Ensuring that trim cards don't get authenticated.
Yes, I think you touched on a little bit earlier HM.
In terms of implying some new technologies.
Can you talk a little bit about I mean, one of the things that's kind of being discussed on hobby massive or just computerized grading and now.
You know.
Humans.
Our inherently flawed in that sense like it it's hard to to maybe pick up on some of them in Asia, especially women. According to my calculations the graders, but car dealers get about 75 seconds to great each card right.
So and I might be wrong about its just rough rough calculation.
Are you what kind of technologies are you looking at going forward in terms of and are you do you know.
Eventually going to try to take this out of human hands and computerized cardratings specifically.
We have no plans on taking grading out of human hands.
Got it.
Okay.
Alright, Thanks for your time guys I appreciate it.
Good.
There appear to be no further questions. That's how I'd like to turn the conference back to the presenters. Please go ahead.
We would like to thank everyone for joining us today for the call and look forward to speaking with you in next quarter.
Thank you. Thank you.
Okay.