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
first quarter ended September 30, 2020.
First Quarter 2021
Year-over-Year Financial
Highlights:
- Revenues up 52% to a record $30.8
million versus $20.2 million
- Gross profit margin increased to
63% versus 60%
- Operating income increased 68% to a
record $7.8 million, or 25% of revenue, versus $4.6 million,
despite higher operating expenses (see below)
- Diluted EPS was $0.65 versus
$0.40
- Cash on hand was $36.7 million as
of September 30, 2020, up from $28.6 million on June 30, 2020
Management Commentary:
Joseph J. Orlando, President and Chief Executive
Officer, said, “We achieved another quarter of record performance
with revenue increasing over 50% both sequentially and
year-over-year to $30.8 million, primarily driven by significant
growth in our PSA division for trading cards, autographs and sports
memorabilia. Additionally, we set new quarterly records on both
earnings and cash generation, further highlighting the improving
operating leverage in our business. These results are a direct
reflection of the diligent work by our team over the past few years
to transform the business in a way that could enable the kind of
growth we achieved in the first quarter of fiscal 2021.
“The combination of increased throughput and
higher margins in our PSA division helped to drive our results in
the quarter, and we also expect it to be a material contributor to
our future growth. The substantial demand for these services and
the strength of the overall market have not shown signs of letting
up, which is why the recent opportunity to expand our operations
facility is well timed. Additionally, we were also pleased with the
performance of our coin business, PCGS, which surpassed last year’s
revenue results despite the previously mentioned headwinds related
to the pandemic. We’ve been quick to respond to these challenges by
hosting smaller domestic events and increasing our operational
capacity in China, resulting in revenue increasing in the region
during the quarter as well. Collectively, these actions and
dedicated efforts by the entire team have contributed to the
highest quarterly operating performance our Company has achieved in
its history.”
First Quarter Review
and Recent Announcements:
- Total revenues increased $10.6
million, or 52% year-over-year, to $30.8 million in the first
quarter of fiscal year 2021, driven by record momentum in
cards/autographs (PSA), which delivered a year-over-year revenue
increase of $10.5 million to $18.6 million, representing a 130%
growth rate. Overall coin revenues (PCGS) increased by $0.5 million
to $11.5 million, or 4% over the prior year period, which included
5% and 20% increases in U.S. and China coin revenues, respectively,
despite the COVID-19 challenges that continue to impact those
businesses. COVID-19 also led to the cancellation of the Company’s
Long Beach Expo trade show, resulting in a loss of revenue of
approximately $0.5 million compared to Q1 2020.
- Gross profit
margin increased to 63% from 60% in the first quarter of fiscal
year 2020 and primarily reflects improved average service fees in
the card/autographs business.
- Operating
expenses increased by $4.0 million over the prior year period to
$11.5 million, which included, (i) activist related professional
defense fees and board refreshment recruitment fees of $2.2
million, and (ii) higher non-cash stock-based compensation expense
of $0.9 million. Together, these expenses reduced operating income
by $3.1 million, or 10% of revenues, in the quarter.
- Operating income
in this year’s first quarter was $7.8 million, or 25% of revenues,
despite the higher operating expenses mentioned above, as compared
to $4.6 million, or 23% of revenues, in last year’s first
quarter.
- Net income
increased to $6.0 million, or $0.65 per diluted share, compared to
$3.6 million, or $0.40 per diluted share, in the prior-year
quarter.
- The Company’s
cash on hand as of September 30, 2020 was $36.7 million, compared
to $28.6 million as of June 30, 2020 and $21.3 million as of
September 30, 2019. In this year’s first quarter, the Company
generated $8.1 million of net cash, including cash generated from
operating activities of $11.7 million, partially offset by $1.6
million paid in cash dividends to our stockholders, $1.6 million in
capital expenditures and capitalized software costs, $0.2 million
to pay down the Company’s term loan, and $0.2 million used to
satisfy tax withholding obligations for vested shares.
- On October 1,
2020, the Company leased an additional 62,870 square feet of space,
adjacent to the existing operations and headquarter facility, which
doubles the square footage available to accommodate future
growth.
- On October 26,
2020 the Company announced its quarterly dividend of $0.175 per
share, which will be paid on November 27, 2020 to stockholders of
record on November 13, 2020.
Outlook
Orlando concluded, “As we enter the second
quarter, the record backlog in the PSA division will help moderate
any volatility in authentication and grading revenues, in what has
typically been the seasonally slowest quarter in our fiscal year.
We have visibility into this side of our business, which helps
support our efforts to begin staging our capacity expansion efforts
over the coming quarters. As throughput increases, the average ASP
in our PSA division could fluctuate due to changes in submission
mix. Additionally, the outlook for PCGS remains solid, but somewhat
tempered due to the near-term obstacles that are present in the
coin business with the ongoing absence of major tradeshows and
restricted international travel.
“With a great start to the new fiscal year, we
remain focused on the opportunity we have in front of us to grow
the business. To fully capitalize on that opportunity, we plan to
continue investing in our operations, in terms of personnel,
capacity and technology. Some of these actions will bear fruit
immediately, as we showcased in the first quarter, while others
will potentially be key contributors to the long-term evolution of
our Company, which can help drive increased shareholder value.”
Conference Call and Webcast
Collectors Universe will host a conference call
to discuss results on Monday, November 2, 2020 at 4:30 p.m. Eastern
Time/1:30 p.m. Pacific Time. Interested parties may participate in
the conference call by dialing 866-269-4260 or 323-289-6576, using
the confirmation code 5839052, five to ten minutes prior to the
initiation of the call. A replay of the conference call will be
available through November 16, 2020 by dialing 888-203-1112 or
719-457-0820 and entering access code 5839052#. A live webcast of
the conference call, as well as a company fact sheet for investors,
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 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 coins, and cards and
autographs businesses, which historically have generated more than
90% of our total consolidated revenues and a substantial portion of
our operating income, which make our operating results more
vulnerable to conditions that could adversely affect those
businesses, such as the volatility of precious metals prices that
could adversely affect our coin revenues; the risk that the
prolonged effects of COVID-19, and the business closures and travel
restrictions that have been imposed in response to that outbreak,
will adversely affect our revenues and operating performance, and
could cause us to incur operating losses and declines in cash
flows; 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 the continued effects of COVID-19 and resulting
adverse economic or market conditions, as well as our financial
performance and the cash needs of our business in the future; the
risk 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 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 profit margin
and operating results to decline or cause us to incur operating
losses; the risk that our strategies of offering services in newer
geographic areas, such as Europe and Asia, or potentially investing
in new lines of business, will not be successful in enabling us to
improve our profitability or may even cause us to incur significant
losses; and the risks and added complexity of conducting business
overseas.
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, 2020 which we filed
with the Securities and Exchange Commission on August 26, 2020.
Readers of this news release are urged to review the discussion of
those risks and uncertainties in that Report. Also, our 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 the
aforementioned risks and uncertainties, readers are cautioned not
to place undue reliance on the forward-looking statements
contained, implied or inferred, in this news release or in our
Annual or Quarterly Reports filed with the Securities and Exchange
Commission (the SEC), 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 or Quarterly Reports that we have filed with the SEC, as
a result of new information, future events or otherwise, except as
may be required by law or NASDAQ rules.
Contact:Shelton GroupLeanne K.
Sievers949-224-3874sheltonir@sheltongroup.com
- tables to follow -
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands, except per share
data)(Unaudited)
|
Three Months EndedSeptember
30, |
|
2020 |
|
2019 |
Net revenues |
$ |
30,785 |
|
$ |
20,210 |
Cost of revenues |
|
11,474 |
|
|
8,101 |
Gross
profit |
|
19,311 |
|
|
12,109 |
Operating expenses: |
|
|
|
Selling and marketing expenses |
|
2,269 |
|
|
2,633 |
General and administrative expenses |
|
9,233 |
|
|
4,839 |
Total operating expenses |
|
11,502 |
|
|
7,472 |
Operating income |
|
7,809 |
|
|
4,637 |
Interest
income and other expense, net |
|
18 |
|
|
71 |
Income
before provision for income taxes |
|
7,827 |
|
|
4,708 |
Provision for income taxes |
|
1,865 |
|
|
1,095 |
Net
Income |
$ |
5,962 |
|
$ |
3,613 |
|
|
|
|
Net
income per share: |
|
|
|
Basic |
$ |
0.66 |
|
$ |
0.40 |
Diluted |
$ |
0.65 |
|
$ |
0.40 |
Weighted
average shares outstanding: |
|
|
|
Basic |
|
9,027 |
|
|
8,973 |
Diluted |
|
9,120 |
|
|
9,060 |
Dividends declared per common share |
$ |
0.175 |
|
$ |
0.175 |
|
|
|
|
Note: |
|
|
|
Non-cash stock-based compensation included above |
$ |
1,140 |
|
$ |
264 |
|
|
|
|
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In Thousands, except per share data)(Unaudited)
ASSETS |
September 30, 2020 |
|
June 30, 2020 |
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
36,731 |
|
|
$ |
28,640 |
|
Accounts receivable, net of allowance of $121 and $98 at September
30, and June 30, 2020, respectively |
|
2,770 |
|
|
|
2,324 |
|
Inventories, net |
|
2,468 |
|
|
|
2,512 |
|
Prepaid expenses and other current assets |
|
1,817 |
|
|
|
1,872 |
|
Total current assets |
|
43,786 |
|
|
|
35,348 |
|
|
|
|
|
Property
and equipment, net |
|
7,472 |
|
|
|
6,762 |
|
Operating lease right-of-use assets |
|
7,915 |
|
|
|
8,214 |
|
Goodwill |
|
1,625 |
|
|
|
1,625 |
|
Intangible assets, net |
|
2,519 |
|
|
|
2,446 |
|
Deferred
income tax assets |
|
623 |
|
|
|
623 |
|
Other
assets |
|
468 |
|
|
|
464 |
|
Total assets |
$ |
64,408 |
|
|
$ |
55,482 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
3,748 |
|
|
$ |
3,381 |
|
Accrued liabilities |
|
4,308 |
|
|
|
2,713 |
|
Accrued compensation and benefits |
|
4,783 |
|
|
|
4,854 |
|
Current portion of long-term debt |
|
750 |
|
|
|
750 |
|
Operating lease liabilities, current |
|
2,270 |
|
|
|
2,274 |
|
Income taxes payable |
|
1,986 |
|
|
|
1,142 |
|
Deferred revenue |
|
6,376 |
|
|
|
4,968 |
|
Total current liabilities |
|
24,221 |
|
|
|
20,082 |
|
|
|
|
|
Long
Term Debt |
|
750 |
|
|
|
938 |
|
Operating lease liabilities, non-current |
|
9,141 |
|
|
|
9,450 |
|
|
|
|
|
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; 9,299 and
9,240 issued and outstanding at September 30, and June 30, 2020,
respectively. |
|
9 |
|
|
|
9 |
|
Additional paid-in capital |
|
89,820 |
|
|
|
88,918 |
|
Accumulated deficit |
|
(59,533 |
) |
|
|
(63,915 |
) |
Total stockholders’ equity |
|
30,296 |
|
|
|
25,012 |
|
Total liabilities and stockholders’ equity |
$ |
64,408 |
|
|
$ |
55,482 |
|
|
|
|
|
|
|
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(In Thousands)(Unaudited)
|
Three Months Ended
September 30, |
|
|
2020 |
|
|
|
2019 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
5,962 |
|
|
$ |
3,613 |
|
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities: |
|
|
|
Depreciation and amortization expense |
|
806 |
|
|
|
710 |
|
Stock-based compensation expense |
|
1,140 |
|
|
|
264 |
|
Non-cash lease expense |
|
(14 |
) |
|
|
(141 |
) |
Provision (recovery) for bad debts |
|
23 |
|
|
|
8 |
|
Provision for inventory write-down |
|
15 |
|
|
|
2 |
|
Provision for warranty |
|
238 |
|
|
|
41 |
|
Change in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(469 |
) |
|
|
(294 |
) |
Inventories |
|
30 |
|
|
|
(156 |
) |
Prepaid expenses and other |
|
52 |
|
|
|
(13 |
) |
Other assets |
|
(3 |
) |
|
|
6 |
|
Accounts payable and accrued liabilities |
|
1,734 |
|
|
|
713 |
|
Accrued compensation and benefits |
|
(72 |
) |
|
|
(1,081 |
) |
Income taxes payable |
|
843 |
|
|
|
680 |
|
Deferred revenue |
|
1,408 |
|
|
|
(16 |
) |
Net cash provided by operating activities |
|
11,693 |
|
|
|
4,336 |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Capital expenditures |
|
(1,207 |
) |
|
|
(211 |
) |
Capitalized software |
|
(381 |
) |
|
|
(279 |
) |
Net cash used in investing activities |
|
(1,588 |
) |
|
|
(490 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Repayments under Term Loan |
|
(188 |
) |
|
|
(188 |
) |
Dividends paid to common stockholders |
|
(1,588 |
) |
|
|
(1,583 |
) |
Payments for retirement of common stock |
|
(238 |
) |
|
|
- |
|
Net cash used in financing activities |
|
(2,014 |
) |
|
|
(1,771 |
) |
|
|
|
|
Net increase in cash and cash
equivalents |
|
8,091 |
|
|
|
2,075 |
|
Cash and cash equivalents at
beginning of period |
|
28,640 |
|
|
|
19,225 |
|
Cash and cash equivalents at
end of period |
$ |
36,731 |
|
|
$ |
21,300 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
Interest paid during the
period |
$ |
26 |
|
|
$ |
35 |
|
Income taxes paid during the
period |
$ |
1,022 |
|
|
$ |
376 |
|
|
|
|
|
|
|
|
|
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