Collectors Universe, Inc. (NASDAQ: CLCT), a leading provider of
value-added authentication and grading services to dealers and
collectors of collectibles, today announced financial results for
its first quarter of fiscal year 2019.
Operational and Financial Highlights:
- The Company’s first quarter revenues of $17.5 million,
operating income of $2.8 million and cash of $12.2 million at
September 30, 2018, represented the best overall performance from
the past twelve months.
- Revenues in the first quarter were $17.5 million as compared to
the quarterly record of $19.8 million in last year’s first quarter
and $17.1 million in the fourth quarter of fiscal 2018. The revenue
decrease in this year’s first quarter was primarily driven by an
increase of $1.0 million, or 20%, in cards and autograph revenues
offset by a $3.0 million, decrease in China coin revenues.
- The China revenue decrease reflected the absence of revenues
from the Banking Channel partially offset by an increase of $0.7
million in the non-banking channel revenues in China, as we
continue to build brand awareness in that region for long-term
success.
- The gross profit margin was 59% in this year’s first quarter as
compared to 62% in last year’s first quarter and 55% in fourth
quarter of fiscal 2018. There can be variability in our gross
profit margin due to seasonality and the mix of revenues. During
fiscal 2018, our quarterly gross profit margin varied between 54%
and 62%.
- The resulting operating income in the first quarter was $2.8
million as compared to $4.5 million in last year’s first quarter
and included a decrease of $0.3 million in operating expenses in
this year’s first quarter. Income from continuing operations
in this year’s first quarter was $2.1 million or $0.24 per diluted
share, as compared to $3.6 million, or $0.41 per diluted share, in
last year’s first quarter. In this year’s first quarter, the
tax provision reflected an on-going 21% federal tax rate as
compared to the 35% that applied to the first quarter of last
year.
- The Company’s cash position as of September 30, 2018 was $12.2
million, as compared to $10.6 million as of June 30, 2018. Net cash
generated of $1.6 million in the quarter included cash generated
from continuing operations of $3.9 million partially offset by $1.8
million used to pay cash dividends to stockholders and $0.5 million
used for capital expenditures and capitalized software costs.
- On October 23, 2018, we announced our quarterly cash dividend
of $0.175 per share, which will be paid on November 30, 2018 to
stockholders of record on November 16, 2018.
Commentary and Outlook
Joseph J. Orlando, Chief Executive Officer, stated,
“Overall, Q1 represented the strongest quarter of
the last four from a bottom line and cash flow perspective. While
the company did experience a year-over-year decline in quarterly
revenues, it is important to note that the reduction can be
attributed to the absence of banking channel revenue in China.
Outside of that area of our business, several of the remaining
parts of the business finished with solid performances or set
quarterly records.”
Orlando continued, “The PCGS US vintage and show services
continued to perform well, as both revenue figures were up versus
last year. In fact, the PCGS vintage service established a new Q1
revenue record. Our PCGS bulk service was down versus last year’s
record-setting Q1, but up against its most recent Q4 performance.
The balance of the PCGS international business produced mixed
results. Our Hong Kong office finished with record Q1 revenues,
while our Paris office was down primarily as a result of moving the
major PCGS Paris coin grading event into Q2.”
“The PSA and PSA/DNA business set yet another all-time revenue
record for the division. It was the first time the services
eclipsed the $6 million quarterly revenue mark, beating last year’s
record figure by over $1 million, a 20% increase year-over-year. It
was also the ninth consecutive Q1 where PSA has surpassed the
revenue mark from the previous year Q1. While our units-shipped
totals raised the bar once again, the incoming submission pace
continues to be unprecedented. New backlog records were reached in
Q1, which means our focus on adding capacity continues.”
“Looking forward, it is imperative that we take advantage of
prime revenue-generating opportunities in markets that remain
robust as we deal with weaker modern coin markets domestically and
internationally, which is part of a typical cycle in our
industry.”
Conference Call and Webcast
Collectors Universe will host a conference call to discuss
results on Thursday, November 1, 2018 at 4:30 p.m. Eastern
Time/1:30 p.m. Pacific Time. Interested parties may
participate in the conference call by dialing 785-424-1798 or
877-830-2631, five to ten minutes prior to the initiation of the
call. A replay of the conference call will be available
through November 15, 2018 by dialing 888-203-1112 or 719-457-0820
and entering access code 2625970#. 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 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 , which make 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, 2018 which we filed with the
Securities and Exchange Commission on August 30, 2018 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.
Contact:Joseph OrlandoChief Executive
Officer949-567-1170Email: jorlando@collectors.com Joseph
WallaceChief Financial Officer949-567-1245 Email:
jwallace@collectors.com
- tables to follow -
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands, except per share
data)(Unaudited)
|
Three Months EndedSeptember
30, |
|
2018 |
|
2017 |
Net revenues |
$ |
17,495 |
|
$ |
19,753 |
|
Cost of revenues |
|
7,202 |
|
|
7,450 |
|
Gross
profit |
|
10,293 |
|
|
12,303 |
|
Operating
expenses: |
|
|
|
Selling
and marketing expenses |
|
2,808 |
|
|
2,754 |
|
General
and administrative expenses |
|
4,658 |
|
|
5,027 |
|
Total
operating expenses |
|
7,466 |
|
|
7,781 |
|
Operating income |
|
2,827 |
|
|
4,522 |
|
Interest income and
other expense, net |
|
3 |
|
|
31 |
|
Income before provision
for income taxes |
|
2,830 |
|
|
4,553 |
|
Provision for income
taxes |
|
699 |
|
|
919 |
|
Income from continuing
operations |
|
2,131 |
|
|
3,634 |
|
Loss from discontinued
operations, net of income taxes |
|
- |
|
|
(1 |
) |
Net income |
$ |
2,131 |
|
$ |
3,633 |
|
|
|
|
|
Net income per basic
share: |
|
|
|
Income from continuing
operations |
$ |
0.24 |
|
$ |
0.42 |
|
Loss from discontinued
operations |
|
- |
|
|
- |
|
Net
income per basic share |
$ |
0.24 |
|
$ |
0.42 |
|
|
|
|
|
Net income per diluted
share: |
|
|
|
Income from continuing
operations |
$ |
0.24 |
|
$ |
0.41 |
|
Loss from discontinued
operations |
|
- |
|
|
- |
|
Net
income per diluted share |
$ |
0.24 |
|
$ |
0.41 |
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
Basic |
|
8,933 |
|
|
8,573 |
|
Diluted |
|
8,962 |
|
|
8,765 |
|
Dividends declared per
common share |
$ |
0.175 |
|
$ |
0.35 |
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands, except per share data)(Unaudited)
ASSETS |
September 30, 2018 |
|
June
30, 2018 |
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
12,194 |
|
|
$ |
10,581 |
|
Accounts
receivable, net of allowance of $69 and $80 at September 30, 2018
and June 30, 2018, respectively |
|
2,334 |
|
|
|
2,608 |
|
Inventories, net |
|
2,512 |
|
|
|
2,579 |
|
Prepaid
expenses and other current assets |
|
1,621 |
|
|
|
1,965 |
|
Total
current assets |
|
18,661 |
|
|
|
17,733 |
|
|
|
|
|
Property and equipment,
net |
|
8,190 |
|
|
|
8,378 |
|
Goodwill |
|
2,083 |
|
|
|
2,083 |
|
Intangible assets,
net |
|
2,183 |
|
|
|
2,319 |
|
Deferred income tax
assets |
|
1,223 |
|
|
|
1,222 |
|
Other assets |
|
464 |
|
|
|
479 |
|
Total
assets |
$ |
32,804 |
|
|
$ |
32,214 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
2,329 |
|
|
$ |
2,487 |
|
Accrued
liabilities |
|
1,921 |
|
|
|
1,998 |
|
Accrued
compensation and benefits |
|
2,668 |
|
|
|
3,401 |
|
Current
portion of long-term debt |
|
750 |
|
|
|
562 |
|
Income
taxes payable |
|
1,005 |
|
|
|
312 |
|
Deferred
revenue |
|
2,998 |
|
|
|
3,213 |
|
Total
current liabilities |
|
11,671 |
|
|
|
11,973 |
|
|
|
|
|
Deferred rent |
|
3,785 |
|
|
|
3,535 |
|
Long Term Debt |
|
2,250 |
|
|
|
2,438 |
|
|
|
|
|
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; 9,060 and 9,015
issued and outstanding at September 30, and June 30, 2018,
respectively. |
|
9 |
|
|
|
9 |
|
Additional paid-in capital |
|
86,632 |
|
|
|
86,369 |
|
Accumulated deficit |
|
(71,543 |
) |
|
|
(72,110 |
) |
Total
stockholders’ equity |
|
15,098 |
|
|
|
14,268 |
|
Total
liabilities and stockholders’ equity |
$ |
32,804 |
|
|
$ |
32,214 |
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In Thousands)(Unaudited)
|
Three Months
Ended September 30, |
|
2018 |
|
2017 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net income |
$ |
2,131 |
|
|
$ |
3,633 |
|
|
Discontinued
operations |
|
- |
|
|
|
1 |
|
|
Income from continuing
operations |
|
2,131 |
|
|
|
3,634 |
|
|
Adjustments to
reconcile income from continuing operations to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization expense |
|
742 |
|
|
|
442 |
|
|
Stock-based compensation expense |
|
263 |
|
|
|
224 |
|
|
Provision
for bad debts |
|
(6 |
) |
|
|
(1 |
) |
|
Provision
for inventory write-down |
|
4 |
|
|
|
- |
|
|
Provision
for warranty |
|
112 |
|
|
|
113 |
|
|
Change in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
277 |
|
|
|
(69 |
) |
|
Inventories |
|
64 |
|
|
|
(123 |
) |
|
Prepaid
expenses and other |
|
418 |
|
|
|
201 |
|
|
Other
assets |
|
14 |
|
|
|
22 |
|
|
Accounts
payable and accrued liabilities |
|
(126 |
) |
|
|
885 |
|
|
Accrued
compensation and benefits |
|
(731 |
) |
|
|
(1,470 |
) |
|
Income
taxes payable |
|
693 |
|
|
|
287 |
|
|
Deferred
revenue |
|
(215 |
) |
|
|
43 |
|
|
Deferred
rent |
|
250 |
|
|
|
(33 |
) |
|
Net cash
provided by operating activities of continuing operations |
|
3,890 |
|
|
|
4,155 |
|
|
Net cash
used in operating activities of discontinued businesses |
|
- |
|
|
|
(126 |
) |
|
Net cash
provided by operating activities |
|
3,890 |
|
|
|
4,029 |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Capital
expenditures |
|
(297 |
) |
|
|
(1,401 |
) |
|
Capitalized
software |
|
(194 |
) |
|
|
(274 |
) |
|
Proceeds from sale of
business |
|
- |
|
|
|
4 |
|
|
Patents and other
intangibles |
|
- |
|
|
|
(4 |
) |
|
Net cash
used in investing activities |
|
(491 |
) |
|
|
(1,675 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Borrowings under Term
Loan |
|
- |
|
|
|
1,000 |
|
|
Dividends paid to
common stockholders |
|
(1,786 |
) |
|
|
(2,973 |
) |
|
Net cash
used in financing activities |
|
(1,786 |
) |
|
|
(1,973 |
) |
|
|
|
|
Net
decrease in cash and cash equivalents |
|
1,613 |
|
|
|
381 |
|
Cash and
cash equivalents at beginning of period |
|
10,581 |
|
|
|
9,826 |
|
Cash and
cash equivalents at end of period |
$ |
12,194 |
|
|
$ |
10,207 |
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
Interest paid during the
period |
$ |
37 |
|
|
$ |
6 |
|
Income taxes paid
during the period |
$ |
6 |
|
|
$ |
632 |
|
Leasehold Improvements
contributed by landlord |
$ |
- |
|
|
$ |
2,106 |
|
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