Collectors Universe Reports Financial Results for Q1, 2017
03 November 2016 - 7:03AM
Collectors Universe, Inc. (NASDAQ:CLCT), a leading provider of
value-added authentication and grading services to dealers and
collectors of high-value collectibles, today announced financial
results for its first quarter of fiscal year 2017.
Operational and Financial Highlights:
- Revenues in the first quarter increased by $1.1 million, or 8%,
to $15.7 million from $14.6 million in last year’s first quarter.
That increase was driven by a $0.7 million, or 7%, increase in coin
service revenues and a $0.4 million, or 11%, increase in cards and
autograph service revenues.
- Coin revenues generated by our overseas operations increased by
$0.6 million or 64%, to 9% of consolidated revenues and 15% of PCGS
revenues, in this year’s first quarter, as compared to 6% of
consolidated revenues and 10% of PCGS revenues, in the same quarter
of last year. Revenues from our China operation increased by
$0.3 million or 65% in the quarter.
- The gross profit margin was, as expected, 61% in this year’s
first quarter, as compared to 65% in last year’s first quarter,
reflecting (i) a lower average service fee for coins earned in the
US resulting from the more competitive and focused marketing
program for modern coins that we introduced in January 2016 and
(ii) increased investment in China to increase capacity in
anticipation of higher revenue from the recently announced new
customer contract with Guojin Gold Co. Ltd.
- Operating income in this year’s first quarter was $2.8 million,
as compared to $3.2 million in last year’s first quarter,
reflecting higher operating expenses of $0.6 million, related to
business development costs, particularly in China and other IT
initiatives in support of our businesses.
- Income from continuing operations in this year’s first quarter
were $1.6 million or $0.19 per diluted share, as compared to $1.9
million or $0.23 per diluted share, in last year’s first
quarter.
- The Company’s cash position as of September 30, 2016 was $10.3
million, as compared to $11.9 million as of June 30, 2016. Net cash
used of $1.6 million included $2.0 million of cash generated from
continuing operations offset by $3.0 million used to pay cash
dividends to stockholders and $0.6 million used for capital
expenditures and capitalized software costs.
- On October 25, 2016, we announced our quarterly cash dividend
of $0.35 per share, which will be paid on November 25, 2016 to
stockholders of record on November 16, 2016.
Commentary and Outlook
Robert Deuster, Chief Executive Officer, stated, “The first
quarter of FY 2017 started with 8% top line growth over last year,
with solid gains in both our coin and sports card businesses. The
real strength was in our international operations where revenues
increased by 64% to 9% of our total revenues. Consistent with our
growth strategy we continued to invest in our China operations, in
order to handle the expected increased demand from a recently
awarded Guojin contract. This action did moderate our operating
income performance somewhat this quarter, but was necessary to
prepare us for what we believe will be a stronger overall
FY2017.
We are encouraged by the stronger than expected demand for our
services so far in the second quarter, which is our seasonally
slowest quarter of the year. We believe we are well positioned for
the upcoming start to the domestic and international modern coin
year, with expected stronger demand, starting in January 2017.”
Conference Call and Webcast
Collectors Universe will host a conference call to discuss
results on Wednesday, November 2, 2016 at 4:30 p.m. Eastern
Time/1:30 p.m. Pacific Time. Interested parties may
participate in the conference call by dialing 800-227-9428 or
785-830-1925, five to ten minutes prior to the initiation of the
call. A replay of the conference call will be available
through November 16, 2016 by dialing 888-203-1112 or 719-457-0820
and entering access code 4026979#. A live webcast of the
conference call will also be available on the Collectors Universe
website, www.collectorsuniverse.com under Investor Relations:
Events and Presentations. The webcast will be archived for 12
months.
About Collectors Universe
Collectors Universe, Inc. is a leading provider of value-added
services to the high-value collectibles markets. The Company
authenticates and grades collectible coins, trading cards, event
tickets, autographs and memorabilia (“collectibles”). The
Company also compiles and publishes authoritative information about
United States and world coins, collectible trading cards and sports
memorabilia (“collectibles”), and operates its CCE dealer-to-dealer
Internet bid-ask market for certified coins and its Expos trade
show and conventions business. This information is accessible
to collectors and dealers at the Company's website,
http://www.collectorsuniverse.com and is also published in
print.
Cautionary Statements Regarding Forward Looking
Information
This news release contains statements regarding our
expectations, beliefs or views about our future financial
performance and trends in our business and in our markets, which
constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward looking
statements can often be identified by the use of words such as
"believe," "expect," "anticipate," "intend," "plan," "estimate,"
"project," or future or conditional verbs such as "will," "would,"
"should," "could," or "may."
Due to a number of risks and uncertainties to which our business
and our markets are subject, our future financial performance may
differ, possibly significantly, from expectations regarding our
future financial performance that are expressed in, or that may be
implied or inferred from the discussion of our operating results in
this news release. Those risks and uncertainties, and their
possible impact on our future financial performance, include, but
are not limited to, the following: our continued dependence on our
coin business which historically has generated more than 60% of our
consolidated revenues and a substantial portion of our operating
income , making our operating results more vulnerable to conditions
that could adversely affect or cause stagnation in the prices of
precious metals and collectible coins; the risks that the economic
recovery may stall, or that domestic or international economic
conditions may deteriorate as a result of events outside of our
control, that could lead to reductions in the demand for our
collectibles authentication and grading services and, consequently,
in our revenues and operating results; the risk that the weakness
or volatility of economic conditions in the United States and
worldwide will lead to longer-term changes in the spending habits
of consumers and in the availability and use of credit by smaller
businesses, such as collectibles dealers, to fund purchases of
collectibles, which could lead to longer-term declines in
collectibles commerce and, therefore, in the demand for our
services; the risks that claims under our coin and trading card
authentication and grading warranties will increase substantially
and that the warranty reserves we maintain for such claims, will,
prove to be inadequate, which could cause our gross margin and
operating results to decline or cause us to incur operating losses;
the risk that our strategies of offering new services and expanding
our collectibles authentication and grading business into new
geographic areas, such as Europe and Asia will not be successful in
enabling us to improve our profitability or may even cause us to
incur significant losses; the risks and added complexity of
conducting business overseas; the risk that it may become necessary
for us to reduce the amount of, or suspend or discontinue the
payment of cash dividends in the future, due to conditions or
circumstances outside of our control, such as adverse economic or
market conditions, as well as our future financial performance and
the cash needs of our business in the future.
Additional information regarding these risks and other risks and
uncertainties to which our business is subject is contained in Item
1A, entitled “Risk Factors”, in our Annual Report on Form 10-K for
our fiscal year ended June 30, 2016 which we filed with the
Securities and Exchange Commission on August 30, 2016 and readers
of this news release are urged to review the discussion of those
risks and uncertainties in that Report. Also, our actual
financial results in the future may differ from those currently
expected due to additional risks and uncertainties of which we are
not currently aware or which we do not currently view as, but in
the future may become, material to our business or operating
results. Due to these risks and uncertainties, readers are
cautioned not to place undue reliance on the forward-looking
statements contained in this news release or in our Annual or
Quarterly Reports filed with the Securities and Exchange
Commission, which speak only as of their respective dates. We
also disclaim any obligation to update or revise any of the
forward-looking statements contained in this news release or in our
Annual Report on Form 10-K, as a result of new information, future
events or otherwise, except as may be required by law or NASDAQ
rules.
- tables to follow -
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In Thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
September 30, |
|
|
2016 |
|
|
|
2015 |
|
Net revenues: |
|
|
|
Grading,
authentication and related services |
$ |
15,748 |
|
|
$ |
14,618 |
|
Cost of revenues: |
|
|
|
Grading,
authentication and related services |
|
6,138 |
|
|
|
5,147 |
|
Gross
profit |
|
9,610 |
|
|
|
9,471 |
|
Operating Expenses: |
|
|
|
Selling and
marketing expenses |
|
2,422 |
|
|
|
2,169 |
|
General and
administrative expenses |
|
4,414 |
|
|
|
4,107 |
|
Total
operating expenses |
|
6,836 |
|
|
|
6,276 |
|
Operating income |
|
2,774 |
|
|
|
3,195 |
|
Interest and other income,
net |
|
24 |
|
|
|
(26 |
) |
Income before provision
for income taxes |
|
2,798 |
|
|
|
3,169 |
|
Provision for income
taxes |
|
1,210 |
|
|
|
1,226 |
|
Income from continuing
operations |
|
1,588 |
|
|
|
1,943 |
|
Loss from discontinued
operations, net of income taxes |
|
(7 |
) |
|
|
(12 |
) |
Net income |
$ |
1,581 |
|
|
$ |
1,931 |
|
|
|
|
|
Net income per basic
share: |
|
|
|
Income from
continuing operations |
$ |
0.19 |
|
|
$ |
0.23 |
|
Income
(loss) from discontinued operations |
|
- |
|
|
|
- |
|
Net
income |
$ |
0.19 |
|
|
$ |
0.23 |
|
|
|
|
|
Net income per diluted
share: |
|
|
|
Income from
continuing operations |
$ |
0.19 |
|
|
$ |
0.23 |
|
Income
(loss) from discontinued operations |
|
(0.01 |
) |
|
|
- |
|
Net
income |
$ |
0.18 |
|
|
$ |
0.23 |
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
Basic |
|
8,474 |
|
|
|
8,434 |
|
Diluted |
|
8,561 |
|
|
|
8,534 |
|
Dividends declared per
common share |
$ |
0.35 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
|
|
|
|
Non-cash
stock-based compensation included above |
$ |
102 |
|
|
$ |
151 |
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In Thousands, except per share data) |
(Unaudited) |
|
|
|
|
ASSETS |
September 30, 2016 |
|
June
30, 2016 |
Current
assets: |
|
|
|
Cash
and cash equivalents |
$ |
10,344 |
|
|
$ |
11,967 |
|
Accounts receivable, net of allowance of $45 and $35 at September
30 and June 30, 2016, respectively |
|
3,464 |
|
|
|
3,883 |
|
Inventories, net |
|
2,070 |
|
|
|
1,835 |
|
Prepaid expenses and other current assets |
|
1,219 |
|
|
|
1,273 |
|
Total current assets |
|
17,097 |
|
|
|
18,958 |
|
|
|
|
|
Property
and equipment, net |
|
3,019 |
|
|
|
2,839 |
|
Goodwill |
|
2,083 |
|
|
|
2,083 |
|
Intangible assets, net |
|
1,734 |
|
|
|
1,762 |
|
Deferred
income tax assets |
|
2,229 |
|
|
|
2,229 |
|
Other
assets |
|
296 |
|
|
|
240 |
|
Non-current assets of discontinued operations |
|
79 |
|
|
|
79 |
|
Total
assets |
$ |
26,537 |
|
|
$ |
28,190 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
2,685 |
|
|
$ |
2,728 |
|
Accrued liabilities |
|
2,491 |
|
|
|
2,491 |
|
Accrued compensation and benefits |
|
2,375 |
|
|
|
3,414 |
|
Income taxes payable |
|
1,622 |
|
|
|
782 |
|
Deferred revenue |
|
2,560 |
|
|
|
2,563 |
|
Current liabilities of discontinued operations |
|
628 |
|
|
|
619 |
|
Total current liabilities |
|
12,361 |
|
|
|
12,597 |
|
|
|
|
|
Deferred
rent |
|
361 |
|
|
|
381 |
|
Non-current liabilities of discontinued operations |
|
102 |
|
|
|
217 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $.001 par value; 3,000 shares authorized; no
shares issued or outstanding |
|
- |
|
|
|
- |
|
Common stock, $.001 par value; 20,000 shares authorized;
8,898 issued and outstanding at both September 30 and June 30,
2016. |
|
9 |
|
|
|
9 |
|
Additional paid-in capital |
|
80,744 |
|
|
|
80,642 |
|
Accumulated deficit |
|
(67,040 |
) |
|
|
(65,656 |
) |
Total stockholders’ equity |
|
13,713 |
|
|
|
14,995 |
|
Total liabilities and stockholders’ equity |
$ |
26,537 |
|
|
$ |
28,190 |
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In Thousands) |
(Unaudited) |
|
|
Three Months EndedSeptember
30, |
|
|
2016 |
|
|
|
2015 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net income |
$ |
1,581 |
|
|
$ |
1,931 |
|
|
Discontinued
operations |
|
7 |
|
|
|
12 |
|
|
Income from
continuing operations |
|
1,588 |
|
|
|
1,943 |
|
|
Adjustments to
reconcile income from continuing operations to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization expense |
|
420 |
|
|
|
341 |
|
|
Stock-based compensation expense |
|
102 |
|
|
|
151 |
|
|
Provision
for bad debts |
|
11 |
|
|
|
1 |
|
|
Provision
for inventory write-down |
|
22 |
|
|
|
9 |
|
|
Provision
for warranty |
|
174 |
|
|
|
107 |
|
|
Gain on
sale of property and equipment |
|
5 |
|
|
|
(4 |
) |
|
Change in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
408 |
|
|
|
(182 |
) |
|
Inventories |
|
(257 |
) |
|
|
(168 |
) |
|
Prepaid
expenses and other |
|
55 |
|
|
|
10 |
|
|
Other
assets |
|
(57 |
) |
|
|
(111 |
) |
|
Accounts
payable and accrued liabilities |
|
(199 |
) |
|
|
(55 |
) |
|
Accrued
compensation and benefits |
|
(1,039 |
) |
|
|
(1,829 |
) |
|
Income
taxes payable |
|
840 |
|
|
|
1,054 |
|
|
Deferred
revenue |
|
(3 |
) |
|
|
(236 |
) |
|
Deferred
rent |
|
(20 |
) |
|
|
(12 |
) |
|
Net cash
provided by operating activities of continuing operations |
|
2,050 |
|
|
|
1,019 |
|
|
Net cash
used in operating activities of discontinued businesses |
|
(122 |
) |
|
|
(157 |
) |
|
Net cash
provided by operating activities |
|
1,928 |
|
|
|
862 |
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Proceeds from sale of
business |
|
5 |
|
|
|
3 |
|
|
Capital expenditures |
|
(439 |
) |
|
|
(188 |
) |
|
Capitalized software |
|
(172 |
) |
|
|
(202 |
) |
|
Patents and other
intangibles |
|
39 |
|
|
|
(20 |
) |
|
Net cash
used in investing activities |
|
(567 |
) |
|
|
(407 |
) |
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Dividends paid to common
stockholders |
|
(2,984 |
) |
|
|
(3,046 |
) |
|
Net cash
used in financing activities |
|
(2,984 |
) |
|
|
(3,046 |
) |
|
|
|
|
Net decrease
in cash and cash equivalents |
|
(1,623 |
) |
|
|
(2,591 |
) |
Cash and cash
equivalents at beginning of period |
|
11,967 |
|
|
|
17,254 |
|
Cash and
cash equivalents at end of period |
$ |
10,344 |
|
|
$ |
14,663 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION: |
Income
taxes paid during the period |
$ |
369 |
|
|
$ |
165 |
|
Contact:
Joseph Wallace
Chief Financial Officer
Collectors Universe
949-567-1245
Email: jwallace@collectors.com
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