A-Mark Precious Metals, Inc. (AMRK) on Q4 2021 Results - Earnings Call Transcript
Operator: Good afternoon, and welcome to A-Mark Precious Metals Conference Call for the Fiscal Fourth Quarter and Full Year ended June 30, 2021. My name is Laura, and I will be the operator this afternoon. Before this call, A-Mark issued its results for the fiscal fourth quarter and full year 2021 in a press release, which is available in the Investor Relations section of the company's website at www.amark.com. You can find the link to the Investor Relations section at the top of the homepage. Joining us for today our today's call are A-Mark's CEO, Greg Roberts; President, Thor Gjerdrum; CFO, Kathleen Simpson-Taylor; as well as JM Bullion's CEO, Michael Wittmeyer. 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.
Gregory N. Roberts: Thank you, Laura and good afternoon everyone, and thank you for joining our call today. As you can see from our earnings release we just reported, the fourth quarter marked a fantastic finish to a record and truly transformative year for A-Mark. During the quarter, we delivered $51 million in net income and diluted EPS of $4.28. We also generated a 28% sequential increase in gross profit with our overall gross profit margin at 4%. This outstanding performance is due to our best-in-class platform and continued strong market conditions. Greatly enhanced by our recent acquisition of JM Bullion, which had its first full quarter of contribution to A-Mark. In fact, $37.6 million or 43% of our gross profit and $24 million of our pre-tax earnings for the quarter were attributable to JM. For the full fiscal year, our net income was $159.6 million or $17.79 in diluted share with a 37% return on shareholder equity, excluding the non-recurring remeasurement gain related to the JM Bullion acquisition. We continue to see positive macro tailwinds benefiting our business. This sustained wholesale and retail demand for silver and gold products combined with ongoing supply constraints and volatility have resulted in continued higher premium spreads contributing to our excellent financial performance. The inherent synergies of our complimentary businesses have positioned us well and have allowed us to benefit greatly from the robust and favorable market dynamics we've experienced this fiscal year. We continue to be proactive in implementing our strategies to further grow the A-Mark business and capitalize on market opportunities. This has demonstrated not only by our expanded direct-to-consumer segment with our acquisition of JM Bullion in March, and our recently announced increased investment in Pinehurst Coin, but also through our improved access to precious metal and finished products supply through are now full ownership of SilverTowne Mint and our recent increased ownership of the Sunshine Mint. Over the last several years, our business has transformed, diversified and become even more vertically integrated, allowing us to enhance product offerings to our customers and outperform our competition. Now, I will turn the call over to our CFO, Kathleen Simpson-Taylor, to walk you through our financials in more detail. Then, A-Mark President, Thor Gjerdrum will discuss our KPIs. And finally, Michael Wittmeyer, CEO of JM Bullion will provide an update on our direct-to-consumer segment. After all of that, I will provide a further update on our business growth and strategy and take your questions. Kathleen?
Kathleen Simpson-Taylor: Thank you, Greg, and good afternoon, everyone. Our revenues for fiscal Q4 2021 increased 31% to $2.18 billion from $1.6 billion in Q4 of last year. For the full fiscal year, our revenues increased 39% to $7.61 billion from $5.46 billion last fiscal year. The increase for both Q4 and the full year was primarily due to revenue from JMB combined with an increase in the total amount of gold and silver ounces sold and higher selling prices of gold and silver, which was partially offset by lower forward sales. JMB's revenues for the post-acquisition period totaled $672.2 million representing 9% of our full year revenue. Gross profit for fiscal Q4 2021 increased 211% to $87.1 million or 4% of revenue from $28 million or 1.68% of revenue in Q4 of last year. For the full fiscal year, gross profit increased 214% to $210.2 million or 2.76% of revenue from $67 million or 1.23% of revenue in the prior fiscal year. The increase in gross profit was primarily due to JMB which contributed 22% of the total gross profit for the full fiscal year combined with higher gross profits from the wholesale sales and ancillary services segment and also Goldline. SG&A expenses for fiscal Q4 2021 increased 144% to $25 million from $10.2 million in Q4 of last year. The increase was primarily due to $12.8 million of expenses incurred by JMB, of which $7.7 million is attributable to amortization expense, and overall increases in consulting costs of $0.5 million, compensation expense of $0.3 million and insurance costs of $0.7 million. For the full fiscal year, SG&A expenses increased 60% to $58.8 million from $36.8 million in fiscal 2020. The increase for the full fiscal year was primarily due to $14.5 million of expenses incurred by JMB, including $8.7 million of amortization expense, combined with acquisition costs of $2.6 million associated with the acquisition of JMB. The increased compensation expense, including performance based accruals of $2.4 million and higher insurance costs of $1.4 million. Interest income for fiscal Q4 2021 increased 60% to $5.2 million from $3.3 million in Q4 of last year. The increase in interest income was primarily due to higher interest income earned from our secured lending segment due to higher average monthly secured loan balances outstanding as compared to Q4 of fiscal 2020. And also higher other finance product income. For the full fiscal year, interest income decreased 13% to $18.5 million from $21.2 million in fiscal 2020. The decrease in interest income was primarily due to lower interest income earned by our secured lending segment due to lower average monthly secured loan balances outstanding as compared to the prior fiscal year. This was partially offset by higher other finance product income. Interest expense for fiscal Q4 2021 increased 45% to $5.2 million from $3.6 million in Q4 of last fiscal year. The increase in interest expense was primarily due to higher interest expense associated with a higher usage of our trading credit facility, product financing arrangement and liabilities on borrowed metals, and also increases in loan servicing fees related to the higher average secured loan balances as compared to Q4 fiscal 2020. For the full fiscal year, interest expense increased 5% to $19.9 million from $18.9 million in fiscal 2020. The full year increase in interest expense was primarily driven by higher interest expense associated with product financing arrangements, higher interest from liabilities on borrowed metals and this was partially offset by a reduction in loan servicing fees and less interest expense related to the company's trading credit facility. Net income attributable to the company for the fourth quarter of fiscal 2021 totaled $51.0 million or $4.28 per diluted share, which was a significant improvement from net income attributable to the company of $17.8 million or $2.49 per diluted share in Q4 of last year. Our diluted EPS for the quarter is based on the weighted average shares outstanding during the quarter, which totaled 11.9 million shares. This was compared with 7.2 million in weighted average shares outstanding during the fourth quarter of last year. Adjusted net income before provision for income taxes, a non-GAAP financial measure for Q4 fiscal 2021 totaled $72.3 million compared with $23 million for Q4 fiscal 2020. Our net income attributable to the company totaled $159.6 million or $17.79 per diluted share for fiscal year 2021 compared to net income attributable to the company of $30 million -- $30.5 million or $4.31 per diluted share for fiscal year 2020. Our diluted EPS for the fiscal year is based on the weighted average shares outstanding during the fiscal year, which totaled 9 million shares. And if not based on the 11.2 million shares outstanding at the end of the fiscal year. Our net income attributable to the company for fiscal year 2021 include the $26.3 million remeasurement gain in connection with the JMB acquisition. Excluding the remeasurement gain net income attributable to the company for fiscal year 2021 totaled $133.3 million. Adjusted net income before provision for income taxes, a non-GAAP financial measure for fiscal 2021 totaled $179.9 million compared with $40.8 million for fiscal 2020. Now turning to our balance sheet. At fiscal year-end we had $101.4 million of cash compared to $52.3 million at the end of the prior year. Our tangible net worth at the end of the fiscal year 2021 was $169.4 million, up from $91.0 million at the end of fiscal year 2020. I'm also pleased to announce that our Board of Directors approved the nonrecurring special dividend of $2 per common share. This special dividend will be paid on or about September 24, 2021 to stockholders of record as of September 20, 2021. That completes my financial summary. And now I'll turn the call over to Thor who will provide an update on our key performance metrics. Thor?
Thor Gjerdrum: Thank you, Kathleen. Looking at our key operational metrics for the fiscal fourth quarter and fiscal full year of 2021. We sold 772,000 ounces of gold in Q4, which was an increase of 15% from Q4 of last year, and consistent with the prior quarter. For the full fiscal year, we sold 2.7 million ounces of gold, which was up 26% from fiscal 2020. We sold $35.7 million ounces of silver in Q4 fiscal 2021, which was up 20% from Q4 of last year and up 8% from last quarter. For the full fiscal year, we sold 114.3 million ounces of silver, which was up 26% from fiscal 2020. Wholesale trading ticket volume, our second key metric which represents the total number of product orders processed decreased 26% to 33,335 tickets. From third quarter, they increased 23% from Q4 last year. For the full fiscal year, wholesale trading ticket volume increased 1% to 143,438 tickets compared to fiscal 2020. It is worth noting that average order size particularly increased 33% over the same year-ago period, driving an increase in overall revenue. The third key metric is inventory turnover, which is a measure of how quickly inventory have moved during the period. For the fourth quarter our inventory turnover ratio was 4.1, which is up 11% from 3.7 in the prior quarter, but was down 9% from 4.5 in Q4 of last year. For the full fiscal year, our inventory turnover ratio was 19.0, which was up 8% from 17.6 in fiscal 2020. And finally, the number of secured loans at the end of June totaled 1,881, an increase of 20% from the end of the March -- from the end of March and an increase of from June 30, 2020. The dollar value of our loan portfolio at the end of June totaled $113.0 million, which is a 12% from the end of March and up 77% from June 30, 2020. Typically the number of loans increases during periods of precious metals, rising precious metal prices and decreases during periods of declining precious metals prices. That conclude -- that concludes my prepared remarks. I will now turn it over to Michael to provide us with an update on the direct-to-consumer segment. Michael?
Michael Wittmeyer: Thank you, Thor. Now focusing on our retail business. Our direct-to-consumer segment delivered strong results for the fourth quarter, greatly benefiting from the first full quarter with JMD and the continued profitable results of Goldline. As Kathleen highlighted JMB contributed 22% to A-Mark's gross profit for the full fiscal year 2021. Overall retail market strength along with the JMB acquisition accelerated the growth in our DTC customer base with the addition of 84,300 new customers during the fiscal year, of which 80,500 were generated by JMB during the post acquisition period. Active DTC customers increased to 167,700 at the end of fiscal year '21 from 6,200 at the end of fiscal year '20. Total customers increased to 1.7 million at the end of fiscal year '21 from 158,000 at the end of fiscal year '20. 125 million of the total customers at the end of fiscal year '21 originated from JMB and 163,000 were from Goldline. DTC ticket volume grew to almost 332,000 in fiscal year '21, compared with approximately 18,500 in fiscal year '20. The integration of JMB into A-Mark is going very smoothly. As planned, JMB is now successfully leveraging, the enhanced access to the A-Mark supply chain and product portfolio and took a significant advantage in the precious metals e-commerce landscape. We continue to see opportunities to expand our DTC footprint as demonstrated by our recent increased investment in Pinehurst where we now hold a 49% ownership position. A-Mark has enjoyed a highly synergistic relationship with Pinehurst since its initial 10% investment in 2019. Pinehurst is a leading precious metals broker and one of the nation's largest e-commerce retailers of modern numismatic certified coins on eBay with an excess of 150,000 eBay customers on boarded over the last 36 months. We will continue to evaluate opportunistic investments within the DTC segment, specifically targeting value add brands that can provide A-Mark with a broader geographic or customer footprint. That concludes my update on the direct-to-consumer segment. I'll now turn it over to Greg. Greg?
Operator: Greg, are you there?
Gregory N. Roberts: Thank you, Michael. In addition to delivering outstanding financial results for the fiscal year, we have made significant progress executing our strategic initiatives and growth plan for A-Mark. Our successful execution of this plan has furthered A-Mark's position as a leading full service provider to the precious metals market, and fully integrated precious metals platform. The strategic highlight of the year was of course, our acquisition of JM Bullion. In just the 6 months since the acquisition, we have realized significant momentum on our post acquisition plans and integration activities. JM continues to outperform and has exceeded our expectations. We are looking forward to working closer with Pinehurst coins after increasing our related investment with them last month and adding them to our direct-to-consumer portfolio. Goldline had its most profitable year since the A-Mark acquisition, which also contributed to the success of the direct-to-consumer segment during the fiscal year. We continue to employ marketing programs and initiatives which result in customer conversion and drive profitability. As mentioned earlier on the call, we continue to benefit from our full ownership of the SilverTowne Mint, which has provided us with better price stability as well as access to silver products during periods of supply constraints. Our capital investment in two famous tunnels of the Mint have improved product quality and increased available capacity to over $800,000 additional -- 800,000 additional ounces per week. Our increased investment in Sunshine Mint during the fourth quarter has also improved our access to precious metal supply, and allows us to work even closer with our long standing partner. We believe A-Mark now has the two best private minting properties in North America. Turning to our logistics operation. Fiscal 2021 was a record year for AM Global Logistics. We shipped over 1.1 million packages, representing an increase of nearly 60% from fiscal 2020. We continue to evaluate growth opportunities for our facilities at AMGL. Our secured lending segment was profitable in the fourth quarter, and our loan portfolio has increased and rebounded from the lower fiscal 2020 year-end balances which resulted from the temporary drop in precious metal prices we saw in March 2020. As Thor mentioned, we have over 1,800 loans outstanding as of June 30, 2021. Looking ahead, we are very optimistic and remain confident that our favorable competitive position, vertically integrated platform, our ever expanding customer increased its -- expanded customer base and diversified business model, will continue to help us capitalize our near-term opportunities and realize continued growth and profitability over the long-term. Operator?
Operator: Thank you sir. Our first question comes from the line of Thomas Forte with DA Davidson. You may proceed with your question.
Tom Forte: Great, thank you. Congratulations, Greg, and team on an excellent quarter and excellent fiscal year. So one question, one follow-up, and then I might get back in queue for additional ones. So Greg, I anticipate that I'll be getting questions from investors tomorrow on your capital allocation decisions. How should we think about when you decide to make minority interests as you increased in providence? And then how should we think about one time dividends as you announced another one time dividend this quarter?
Gregory N. Roberts: I think we follow the same decision making tree that we always have. But as it relates to acquisitions, and I think you were referring to the Pinehurst acquisition, or increased ownership that we announced, I think that was a timing situation. And I think a lot of our minority initial investments in companies that we feel confident about where they're going, I think it has a lot to do with timing and a little less to do with capital allocation. I think that we try to take a look at all of our opportunities, whether it be an acquisition, whether it be a dividend, whether it be the need for increased capital, because of inventory, or opportunistic purchases that we can make and we try to look out over the near-term and the short-term, and then we make a decision. I think that in this case, we got to the end of the fiscal year and we looked at what we generated just like we did last year, and we looked at what we thought we had on the horizon as opportunities for capital and we made a decision that we thought the $2 special dividend was appropriate. I think, as everybody knows by now, that's follow the company. We deal in a very volatile market and our capital needs go up and down on an hourly basis or a daily basis. And that's just the world we live in. So, I think we try to be very conservative and careful. We had a great opportunity earlier in the year to raise a little capital for the JM Bullion acquisition, not knowing at that time how the next quarter or two was going to perform. And we made the -- we thought was the right decision at the time. Looking at our results for this fiscal year, obviously, it was outstanding. We felt that we had a little bit of excess capital that we could return to shareholders and that's what we decided to do. But I think as it relates to acquisitions, the company has -- always has three or four things we're looking at. And in this quarter, we felt our best opportunities were with the increased ownership in Sunshine as well as the willingness and the enthusiasm of Pinehurst to increase our ownership with them. I think it's interesting that Pinehurst really their enthusiasm for getting more involved with A-Mark was not only selfish. Selfish, on Pinehurst part that they felt that their business is going to grow faster and do better, being on the A-Mark team, but also it is confidence in what we're doing overall at A-Mark and it is request and enthusiasm to take some stock and be a part of A-Mark was just a great combination and a great opportunity for us and we moved very quickly on that opportunity when it was available to us.
Tom Forte: Great. And for my follow-up question, it might be too much to say that one of the unexpected benefits of JM Bullion has been how you've improved the marketing efforts, maybe search engine optimization for Goldline. And then I also wanted to see if you can give me an update on your current thoughts on, you've talked before about doing a digital gold offering?
Gregory N. Roberts: Yes. As it relates to JM and their willingness and helpfulness as it relates to the whole A-Mark company, I can't say enough for Michael and his team and everybody and how they've just integrated into our culture and into what A-Mark is trying to achieve. And I haven't -- obviously, there's only so many hours in the day and Michael and I talk all the time about how to best allocate that time. But certainly JM Bullions willingness to help Goldline, or any other needs we have from them as it relates to some of their expertise is they've been very generous with their time. And they've been very fair and very much a team player as it relates to prioritizing the use of their tech team and what their tech team can accomplish. We're just -- we are very happy to have them on board as it relates to the digital currency, Michael, do you want to take this and give Tom just a little update on where we're at on our new product?
Michael Wittmeyer: Yes, of course. So we're making significant progress on this. I don't know that we're ready to get into all the details on this call today. But we're several months into this project now. And it's really the top priority on my plate, spending a lot of my time personally on this project, and I think we're very enthusiastic about what we're going to come out with. And you'll hear more about it soon, for sure.
Tom Forte: Wonderful. All right. So I'll get back in the queue. I have some more questions.
Gregory N. Roberts: Thanks.
Operator: Our next question comes from the line of Andrew Scutt with ROTH Capital Partners. You may proceed with your question.
Andrew Scutt: Good afternoon. Thanks for taking my questions. I feel like a broken record. But I also want to congratulate you on another strong quarter. So my first question is focused on the direct-to-consumer offerings. Guys have spoken in the past that the synergies, you can realize with the services that A-Mark provides. But now that you have multiple channels, direct-to-consumer channels, are there any other synergies that you guys might be able to realize across the different DTC platforms maybe be it consumer data or pushing through certain inventory through certain channels? Any comments there would be great.
Gregory N. Roberts: Sure. I mean, one of the greatest things about having these retail facing businesses is that, I get the opportunity to really see trends quickly, and to try to assess trends as it relates to the different customer demographics and the different types of customers. And, I mean, I think that's a big synergy that you can't really quantify, but I think that it, it certainly helps us to better understand and forecast how the market is performing. I think we have seen over the last 6 months, we've seen different indicate -- different indicators coming from just different customer bases. And I think in the last few weeks, Goldline has been indicating to us that their customer base has been reenergized and has been very active, particularly in the last 30 days. And I think that we've seen -- again, we had a little bit of a slowdown in July, but that has picked back up in August and September. And again, I think we see some data and some trends that are very good for us. I think, as it relates to sharing of data, I don't think we've formalized anything there yet. But certainly communicating with the guys at JM and what they're seeing and being able to test products and see how products work, whether it be with the entire JM bass or with a -- just a slice of the JM base. I think it is helping A-Mark as a whole to understand better what a consumer is looking for and what they're demanding. And certainly, as it relates to getting all of our DTC companies to row in the same direction, and I think the ability to work together to offer the same product or a similar product, and then just have that power to move through larger quantities of products and just have the confidence and comfort level that we can do it is really been very helpful to just managing the overall business, whether it be our traders or for on the banking side of the business and cash flow and management, it's -- there's just been just a number of things that, that we found to be just very useful in managing the business.
Andrew Scutt: Great. Thank you very much. Quick follow-up here and I apologize if I missed this in the opening remarks. But can you talk to the breakout in ticket volumes between the wholesale core business and direct-to-consumer so we can understand that the trends in both businesses?
Gregory N. Roberts: Yes, we did -- we haven't talked about that. I'd say that, that information is really well articulated in our case. And I think if you go into the DTC segment in RK, I'd say that's, that's probably where you'll find the exact numbers. I don’t -- I hesitate a little bit on some of these user and customer numbers and breaking them down. I see things more as a whole, and I just don't want to miss stuff and give you information that turns out to be different. So that -- those specific numbers I'd point to RK.
Andrew Scutt: Great. Well do. Just last quick one for me before I hop in the queue. Back in -- on your last earnings call, you guys talked about getting the new equipment, it's SilverTowne, up and running close to max capacity, hopefully by June or July. So can you just provide an update on how that's gone over the quarter?
Gregory N. Roberts: Yes, we talked about that a little bit earlier on the opening remarks. Both of our flameless tunnels are functioning and working at SilverTowne. The guys at SilverTowne have just done a great job. Brent McCormick, who really is the operations guy there and Jamie Meadows. They've got these new machines online. And we've been able, since probably the middle of July, we've been able to add 800,000 ounces of silver product a week coming out of there. So it's been great. I'm sorry, 800,000 ounces a month. So it's been it's been great. And JM has a number of these products coming out of the flameless tunnel on their side. And it's the -- we have a great product, 100 ounce pony bar, which is getting made in the flameless tunnel. We have a 10 ounce pony bar that's on the JM side and they've been very well received from the retail customers. So couldn't be happier with the quick installation. It's a quite a job to get all of the ingredients just right in these machines. And guys at SilverTowne men have done a great job.
Andrew Scutt: Awesome. Thanks again for the color and I'll hop back in the queue.
Operator: Our next question comes from the line of Richard Greulich with REG Capital Advisors. You may proceed with your question.
Richard Greulich: Thank you. So regarding the digital currency initiative, I'm a little scratching my head a little bit. Is this likely to take the form of a gold or precious metals backed digital currency?
Gregory N. Roberts: Michael, do you want to try to explain a little better what were what our first stages are on this product and what we're doing?
Michael Wittmeyer: Sure. So it's effectively going to allow customers to invest in digital representation in gold and silver. We're looking at a variety of products will be able to offer and I think I don't want to overstep here and speak too much on essentially a very slick digital platform that will allow people to do this in a very low cost and convenient fashion. Just something we're very excited about putting out.
Richard Greulich: Will that -- I'm sorry, will that evolve those people's ownership or is it going to be simply a derivative?
Michael Wittmeyer: No, it will. The idea of the product is that, whether it's on the phone or on the desktop, that customers can take advantage of small purchases. The goal will be segregated and they'll own a piece of a bar and we also will match that with what we’re looking at now is some quarterly opportunities for customers that own a piece of a bar to convert those holdings into physical metal when they want to do that and it allows them to save on. On shipping, it allows them also to move the physical small products, physical products into a storage account, if I chose to. But it's kind of an opportunity for some talent accumulation, but whatever fraction of an ounce they might want to do in gold or 63 ounces of silver and then the application, the app, and the presentation on the phone will allow somebody to really see up to the minute, what’s the value of that product is and how many ounces they own. It will allow us to be in communication what the customer and offer them opportunities if they like to convert into physical. It allows somebody to buy multiple ounces over months and months. And then have just one single conversion and shipping opportunity to take possession or like I said, they could store it in at a -- at TDS, which is our storage business. And then, we believe that this will be the foundation of other products we can add. We've, talked about the ability to create a credit card off of this using your holdings. We're in the very initial stages of that. But we just -- we think it's going to be just a great opportunity to give consumers a different option to buying physical and having it shipped to their house in the next day.
Richard Greulich: Critical to that is going to be your reputation, in terms of the storage and etcetera. And when I think that's a great opportunity, because very few people have such a long history as you've had.
Gregory N. Roberts: And we -- I mean, we have a great track record. I mean, TDS has hundreds of millions of dollars of product currently that we're storing for customers. And so, we do have a built in logistics business, which you know about as well as the storage business, which has been storing metal for customers. We also have at AMGR. We haven't talked about it a lot. But we're an authorized IRA depository for a number of the IRA trustees. So we've had a great reputation for protecting and managing customers assets. So I think it's a -- along with the other custody work we do and the storage we do, this is just a great opportunity for us to expand.
Richard Greulich: Great. Thank you for your work.
Gregory N. Roberts: Thank you.
Operator: Our next question comes from the line of Tom Forte with DA Davidson. You may proceed with your question.
Tom Forte: Great. Three quick follow ups. Greg, I don't know if the better way to phrase this is, but with the integration of JM Bullion, should we think of it as higher, lows through your earnings per share in periods of low interest in precious metals? Or should we think of it as less volatility in earnings per share when we compare maybe your performance in one quarter as peak interest and performance in another quarter with moderate interest? And then two more after that one?
Gregory N. Roberts: I mean, I think that we're now 90 days or 120 days away from the last time we talked to you guys. And I think we're, as you can tell from the tone of our voice and what Michael had to say and everything, I think we’re super optimistic, that a very large transaction and a very, something new to AMR has gone as well as it has. And I think part of that is our increased comfort level. That Yes, I believe that, that the lows that we saw 2 or 3 years ago, are not indicative of what this company would do in the exact same environment. Now, I don't know if you can ever replicate the exact same environment from 3 years ago. I doubt it. But I do believe that our lows will be higher and our highs will be higher. And to answer your question, I mean anytime that we are spreading out product to the retail investor across a million and a half or 2 million users or more, I believe that is going to create less volatility in our earnings. And it's going to help us a little bit better in forecasting how we look at things going forward, which is just a luxury. We didn't have a few years ago, we -- we were much more one dimensional 5 years ago. Today, we're very multi dimensional. And I think that, as I said, Before, I highlighted some of the data that we're getting, I just believe that whether it would be inventory management, or the ability to create product overnight, and address consumers needs immediately before they go someplace else, is just huge. I mean, I was on a call today, we've now implemented twice a week meetings with JM Bullion, A-Mark and some others, it relates to inventory and product management and development. And we talked about products today, on the call this morning that we believe A-Mark will have on their webs, I mean, Cambodia will have on your website for sale within 10 days. That's just something that A-Mark never had before. I mean, we created products, but it could be months before we knew whether or not those products were going to be successful or not. And a lot of it was just a marketing tuition without a lot of data. JM and Pinehurst and Goldline really give us the opportunity to do tests and to test enthusiasm with customers before we run off and make 300,000 units of something. So that tech team at JM and their ability to do tests and help us understand, what they think the product will sell out at or what? How many they need is just all new to us. So to answer your question. Yes and yes.
Tom Forte: Excellent. All right. So second of three. Can you give us your current thoughts on international expansion for your e-commerce efforts?
Gregory N. Roberts: I can tell you that we have a couple of things that we are -- past the point of being curious and we're looking at, at some international opportunities. As we speak, it's not a surprise. We talked about this back in March and February when we were doing our roadshow. And I think that certainly the combination of A-Mark and JM Bullion and Pinehurst and Goldline and the other companies that we have minority interest in. People are responding very positively to wanting to kind of get on the A-Mark train. And so we are seeing opportunities. We're welcoming any inquiries, where I think that the team that I have here with Michael and others at A-Mark, and quickly assessing opportunities that look good to us, that we think have not only long-term, financial benefits, but also great human resources, which is the first thing we really look at, is making sure that the human element of any acquisition fits with the A-Mark culture and what we're trying to do here. But I think our ability to assess quickly and for the team that's on those projects to work quickly. We're very enthusiastic about that. And, yes, we are looking at a couple of international opportunities.
Tom Forte: Great. And then I saved probably the most important for last. I think I could ask the question in a word, but I'll, instead -- I'll go with a phrase. How should we think about inflation and the impact it's having on your business?
Gregory N. Roberts: I said a little bit last call. I mean, I think I'm only more committed to this inflation cycle not being transitory. I was talking to somebody today that imports product from China. And they were telling me that they had 400 containers of product stuck in China. They had to pay 4x as much to store it. And a year and a half ago, they were paying $8,000 to ship a container from China. And today they're paying $32,000 a container. And they've had to raise prices on their product. And there's been no pushback from the consumer. So, that I -- that was pretty strong. I also spoke to somebody else who told me, they were on the board of a bank back in 1979, in 1980. And the Fed came to them and said, this inflation is only transitory use the same exact words. And then, overnight rates prior to 200 basis points. So I -- my crystal ball is not 100%, but I don't buy this inflation just going to go away next quarter.
Tom Forte: Okay, I saw a chart today that said, used cars are up 42%. The price of used cars are up 42%, since the first of the year. And out of this list of 10 things, I think that the lowest anything went up was 10%. And out of this list of 10 things, I buy all of them. So I read those 10% of 42% in 9 months. So I don't know what that exactly means. But it sounds like inflation to me.
Tom Forte: Me too. All right. Thank you, Greg.
Operator: Our next question comes from the line of Andrew Scutt with ROTH Capital Partners. You may proceed with your question.
Andrew Scutt: Last one for me. So for a while with the lending business you're talking about getting the loan portfolio back over $100 million, which we hit in March. We had another good quarter growth. In June, can you guys just talk to kind of where you see the business going from here on in particular with the whole new pool of consumers you guys can market to with the addition of JM Bullion?
Gregory N. Roberts: Yes, we're looking at a number of finance options for customers at JM. We've tested a few, kind of beta tests we've done. I think that right now, I would say that we're comfortable with the growth of our loan book. And we're cautiously optimistic across a number of new initiatives we've done from our lending business that we're seeing, good responses. For whatever reason, I would just say that in the current environment and the current price of precious metals, I would say that we are seeing a little slower growth than maybe we have seen in the past. Gold and silver have been fairly stagnant for quite some time. I mean, if you look, absent a big drop we had a few weeks ago, where gold was down 100 bucks on a Sunday night and silver was down $1, I think, on which those drops have now rebounded. The drops were great for our business. We had a great couple of weeks following that. But overall prices have been fairly range bound. And we've still been able to do quite well, but as it relates to the lending side, I think that we're just not seeing quite as fast a growth as maybe we saw a few years ago. But we’re testing other marketing opportunities, we're testing other slightly different products. We've -- we're investigating a couple of other opportunities, we think might be out there to assist our customers in purchasing more product. So, we're working on it. And we're happy, we did continue to be above $100 million. I think we had a week in the last couple months where we were up near 115 million in total loans. So that was a good number for us to print. And other than that pretty status quo in our business.
Operator: At this time, this concludes our question-and-answer session. I would now like to turn this call back over to Mr. Roberts for closing remarks.
Gregory N. Roberts: Thank you very much. I'd like to thank all the shareholders for joining the call today. Your interest and support is greatly appreciated. Many thanks to all of our employees at A-Mark and their commitment and dedication to our success. And we look forward to keeping you apprised of A-Marks progress. And we look forward to keeping you apprised of A-Mark's progress in the next month or two. So thank you all for joining us.
Operator: Before we conclude today's call, I'd like to provide A-Mark's Safe Harbor statement that includes important caution regarding forward-looking statements made during this call. During today's call, there were forward-looking statements made regarding future events. Statements that relate to A-Mark's future plans, objectives, expectations, performance, events, and the like are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties individually or any 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 company's growth strategy as planned, greater than anticipated costs incurred to execute the strategy, changes in the current domestic and international political climate; increased competition for A-Mark's higher margin services, which could depress pricing. The failure of the company's business model to respond to changes in the market environment as anticipated, general risks of doing business in the commodity markets and other businesses; economic, financial and governmental risks as described in the company's public filings with the Securities and Exchange Commission. The words should, believe, estimate, expect intend, anticipate foresee, plan, and similar expressions are variations thereof identify certain of such forward-looking statements, which speak only as of the date on which they're 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'd like to remind everyone that a recording of today's call will be available for replay via link in the Investor Section of the company's website. Thank you for joining us today for A-Mark's earnings call. You may disconnect your lines at this time.
