A-Mark Precious Metals, Inc. (AMRK) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary reveals strong financial performance with increased gold sales and new customer growth, despite a decline in silver sales. The Q&A highlights positive market demand for gold and strategic acquisitions like Monex, aimed at enhancing operational efficiency and expanding market presence. Management's focus on cost synergies and logistics capacity further supports a positive outlook. However, some uncertainties regarding customer behavior and cost reduction timelines remain. Overall, the strong demand and strategic initiatives suggest a positive stock price movement over the next two weeks.

Key Financial Performance

Revenue $3.68 billion, a 36% increase from $2.72 billion in Q1 of last year. Excluding an increase of $561 million of forward sales, revenues increased $404 million or 27.6%. The increase was due to higher gold ounces sold, higher average selling prices of gold and silver, and acquisitions of SGI, Pinehurst, and AMS, partially offset by a decrease in silver ounces sold.

Gross Profit $72.9 million, a 68% increase from $43.4 million in Q1 of last year. This was primarily due to higher gross profits in both wholesale and direct-to-consumer segments, including contributions from acquisitions of SGI, Pinehurst, and AMS, partially offset by lower trading profits.

SG&A Expenses $59.8 million, a 125% increase from $26.6 million in Q1 of last year. The increase was due to higher compensation expenses ($19.5 million), advertising costs ($5.2 million), consulting and professional fees ($4.1 million), facilities expenses ($1.3 million), and bank and service credit fees ($1.2 million). The acquisitions of SGI, Pinehurst, and AMS also contributed to the increase.

Depreciation and Amortization $7.6 million, a 61% increase from $4.7 million in Q1 of last year. The increase was primarily due to amortization expenses from the step-up of intangible assets through acquisitions.

Interest Income $5.6 million, a 21% decrease from $7.1 million in Q1 of last year. The decrease was due to lower finance product income ($1 million) and lower interest income from the Secured Lending segment ($0.5 million).

Interest Expense $12.6 million, a 26% increase from $10 million in Q1 of last year. The increase was due to higher costs related to precious metal leases ($1.3 million), trading credit facility ($0.6 million), and product financing arrangements ($0.5 million).

Earnings from Equity Method Investments A loss of $0.9 million, a 257% decrease from a profit of $0.6 million in Q1 of last year. The decrease was due to lower earnings from equity method investees.

Net Loss Attributable to the Company $0.9 million or $0.04 per diluted share, compared to net income of $9 million or $0.37 per diluted share in Q1 of last year.

Adjusted Net Income Before Provision for Income Taxes $4.9 million, a 67% decrease from $14.8 million in Q1 of last year. This metric excludes depreciation, amortization, acquisition costs, and contingent consideration fair value adjustments.

EBITDA $14.3 million, a 20% decrease from $17.8 million in Q1 of last year.

Cash Balance $89.2 million as of September 30, compared to $77.7 million at the end of fiscal '25.

Nonrestricted Inventories $846.1 million as of September 30, compared to $794 million at the end of fiscal '25.

Gold Ounces Sold 439,000 ounces, a 10% increase from Q1 of last year and a 27% increase from the prior quarter.

Silver Ounces Sold 10.4 million ounces, a 49% decrease from Q1 of last year and a 34% decrease from the prior quarter.

New Customers in DTC Segment 69,400, a 25% increase from Q1 of last year and a 36% decrease from the prior quarter.

Total Customers in DTC Segment Approximately 4.3 million, a 37% increase from the prior year, driven by acquisitions of SGI, Pinehurst, and AMS, as well as organic growth.

Secured Loans 424 loans at the end of September, a 5% decrease from June 30, '25, and a 25% decrease from September 30, '24.

Secured Loans Receivable Balance $103.6 million at the end of September, a 10% increase from June 30, '25, and a 2% increase from September 30, '24.

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Operating Highlights

Acquisition of Monex Deposit Company: A-Mark acquired Monex, a major direct-to-consumer precious metals dealer, enhancing its DTC presence and operational synergies. Monex has $630 million in assets under custody.

Rebranding to gold.com: A-Mark announced a rebrand and relisting to gold.com, aligning with its leadership in precious metals and collectibles.

Expansion into Asia: The move to Asia with LPM has delivered significant contributions, indicating strong traction in the international market.

Growth in DTC customer base: The DTC segment saw a 37% year-over-year increase in total customers, driven by acquisitions and organic growth.

Integration of acquisitions: Successfully consolidated Pinehurst's operations with AMGL, automating processes and achieving economies of scale.

Increased production capacity: Ramped up production at mints to meet elevated demand, showcasing operational flexibility.

Focus on collectibles: Expanding into adjacent categories like wine, sports cards, and other collectibles to modernize asset management.

Positioning for long-term growth: Rebranding and acquisitions are part of a strategy to build a globally recognized precious metals platform.

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Risk or Challenges

Subdued Demand and Tight Premium Spreads: The company experienced subdued demand and historically tight premium spreads in July and August, which could negatively impact revenue and profitability.

Increased SG&A Expenses: SG&A expenses increased significantly by 125%, driven by higher compensation, advertising, consulting fees, and other costs, which could pressure margins.

Decreased Interest Income: Interest income decreased by 21%, primarily due to lower finance product income and reduced interest income from the Secured Lending segment, potentially impacting overall profitability.

Increased Interest Expense: Interest expenses rose by 26%, driven by higher costs related to precious metal leases, trading credit facilities, and product financing arrangements, which could strain financial resources.

Loss from Equity Method Investments: Earnings from equity method investments turned into a loss of $0.9 million, a significant decline from a profit of $0.6 million in the prior year, indicating challenges in investment performance.

Net Loss Attributable to the Company: The company reported a net loss of $0.9 million compared to a net income of $9 million in the prior year, reflecting financial challenges.

Decline in Silver Sales: Silver sales volume dropped by 49% year-over-year, which could adversely affect revenue and market share.

Decline in Secured Loans: The number of secured loans decreased by 5% from the previous quarter and 25% year-over-year, potentially impacting the Secured Lending segment's performance.

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Guidance & Outlook

Acquisition of Monex Deposit Company: A-Mark announced the acquisition of Monex Deposit Company, a major direct-to-consumer precious metals dealer. This acquisition is expected to strengthen A-Mark's DTC presence by leveraging Monex's established brand, reputation, and customer base. Operational synergies are anticipated to enhance and streamline both organizations.

Rebranding and Relisting to gold.com: A-Mark is rebranding and transferring its listing to gold.com, with the official exchange transfer set for December 2. This move aims to modernize the corporate identity, strengthen category leadership, and position the company for long-term success in precious metals and collectibles.

Expansion into Adjacent Categories: A-Mark plans to expand into adjacent categories such as wine, sports cards, and other collectibles, aligning with growing investor interest in gold and silver.

Operational Integration and Efficiency: The company has successfully consolidated Pinehurst's operations with AMGL and automated initiatives. It is also rightsizing AMS to achieve additional savings and economies of scale.

International Expansion: A-Mark's move to Asia with LPM has delivered significant contributions, indicating strong future potential.

Market Demand and Premium Spreads: A-Mark experienced increased demand and expanded premium spreads in September and October, and the company is well-positioned to capitalize on a continuation of this elevated demand environment.

Production Capacity: The company has the ability to quickly ramp up production at its mints to meet increased demand, which has been beneficial in the second quarter.

Future Growth and Profitability: With the addition of Monex and recent acquisitions, A-Mark is better positioned to perform across all market environments and capitalize on periods of heightened volatility. The company remains confident in its long-term growth trajectory and ability to create lasting shareholder value.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What are your current thoughts on strategic M&A, and how should we think about areas of focus, such as domestic versus international, DTC, and precious metals versus other collectibles?

A:Gregory Roberts stated that the company is always looking for opportunities that align with their goals. They have digested recent acquisitions and are seeing benefits, particularly in Asia and the UK. While there are no immediate must-have geographical areas, they remain open to opportunities. The Monex transaction is a priority, and they aim to find synergies and manage costs effectively. The company continues to look for accretive deals.

Q:What are your thoughts on stablecoins and gold demand?

A:Gregory Roberts highlighted strong gold demand over the past 9-12 months, driven by central bank buying, particularly from China, India, and Russia. He noted that U.S. consumers were initially not motivated by higher spot prices but saw a shift in September and October, with increased demand and tighter supply. Premiums for gold and silver products have risen, and there has been a shift in customer behavior as spot prices reached new highs.

Q:What has changed in customer behavior regarding gold demand, and how sustainable is this change?

A:Gregory Roberts noted extreme volatility in customer behavior, with a rebound in September and October after a slow July and August. He attributed the change to macroeconomic factors, media focus on precious metals, and possibly FOMO (fear of missing out) due to record spot prices. While the sustainability of this trend is uncertain, the company has seen strong performance in recent months and will monitor customer behavior.

Q:When will the company start to synergize expenses from acquisitions, and when will this show up in the P&L?

A:Gregory Roberts stated that the company is focused on reducing redundancies and integrating operations to lower costs. They are relocating employees and consolidating operations to improve efficiency. While satisfied with recent performance, they aim to achieve cost reductions and increased profitability over time.

Q:Why did the company decide to acquire Monex in one full swoop rather than piecemeal?

A:Gregory Roberts explained that the Monex transaction had been in the works for years, and both sides agreed on a full acquisition due to the strategic fit and mutual benefits. Monex's model, which includes a significant storage component, complements A-Mark's business. The acquisition adds $600-$700 million in storage and aligns with the company's focus on growing storage services.

Q:Does it make sense to combine DTC brands under one umbrella, or is there greater value in maintaining multiple storefronts?

A:Gregory Roberts emphasized the value of individual brands, especially when there is low customer crossover. The company is launching gold.com as an umbrella brand to connect all DTC platforms while maintaining distinct identities. The new website and branding will provide a unified platform for customers to explore options within the ecosystem.

Q:How should investors think about logistics capacity given recent M&A activity?

A:Gregory Roberts highlighted the company's advanced logistics facility in Las Vegas, which can handle up to 100,000 packages per month. The facility has onboarded new clients and integrated operations from recent acquisitions, ensuring efficient capacity to meet growing demand. The company is well-positioned to maintain quick delivery times and leverage its logistics capabilities.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing the sustainability of recent changes in customer behavior, citing volatility and macroeconomic factors without providing a clear forecast. Additionally, while discussing cost synergies from acquisitions, the timeline for achieving significant cost reductions and their impact on profitability was not explicitly detailed.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

AMRK Transcript

A-Mark Precious Metals, Inc. (AMRK) Q1 2026 Earnings Call Transcript

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