A-Mark Precious Metals - Earnings Call - Q2 2016

Transcript

Speaker 0

Good afternoon, and welcome to A Precious Metals Conference Call for the Fiscal Second Quarter twenty sixteen Ended December 3135. My name is Manny, and I will be your operator this afternoon. Earlier today, A Mark issued the results of its fiscal second quarter twenty sixteen in a press release, which is available in the Investor Relations section of the company's website at www.amark.com. You can find a link to the Investor Relations section at the bottom of the homepage. Joining us on today's call are A Mark's CEO, Mr.

Greg Roberts COO, Mr. Thor Gerdrum and CFO, Mr. Carey Dickson. Following their remarks, we will open the call to your questions. Then before we conclude today's 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 will be recorded and it will be made available for replay via a link available in the Investor Relations section of the company's website. Now, I would like to turn the call over to Mark's CEO, Mr. Greg Roberts. Sir, please proceed.

Speaker 1

Thank you, Manny, and welcome, everyone. Thank you for joining us today. The results of our fiscal second quarter of twenty sixteen were in line with our expectations. As we discussed on our last call, the second quarter has historically been a slower period of the fiscal year for us in terms of customer demand. This is why we encourage investors to take a more long term view when evaluating the performance of our business.

Focusing on just the second quarter for right now, the slower period we experienced was reflected by a 42% reduction in trading ticket volume compared to that of the previous quarter. Revenue was down slightly compared to the same year ago quarter, largely due to the lower average spot prices for gold and silver, which was offset by greater ounce volumes. Our gross margins experienced some compression, which was due to a less favorable product mix that we believe to be largely temporary. Offsetting the typically slow quarter was a record number of shipments made from our new Las Vegas logistics facility. Our financing subsidiary, CFC also serviced a record number of loans, reflecting the growing number of borrowers in the marketplace seeking alternative financing.

During the quarter, we also strengthened our management team with the addition of Carrie Dixon as our new CFO. Cary has a deep understanding of consumer products gained from his tenure at Mattel Toys. He also brings a tremendous level of financial and capital markets experience, which will help us in our strategic initiatives to drive growth, profitable growth. Before I discuss more about our operational results and business outlook for the rest of the fiscal year, I'd like our COO, Thor Jerdrum to walk us through the financial details for the quarter and six months ended December 3135. Thor?

Hello?

Speaker 2

Excuse me, I apologize. I had it on mute. I'll start over. I apologize. Thank you, Greg, and good afternoon, everyone.

Thank you. Looking at our financial results for the fiscal second quarter ended December 3135, revenue totaled $1,530,000,000 which is down 1% from $1,540,000,000 in the same year ago quarter. This was driven primarily by an 8% decline in the average spot price for gold and a 10% decline in the average spot price for silver. The revenue decrease was partially offset by the increase in the total amount of gold ounces and silver ounces sold. The 26% increase in gold ounces sold and 27% increase in silver ounces sold during the quarter was driven by demand for our industrial products.

Our gross profit decreased 21% to $5,700,000 or 37 basis points or 0.3% of revenue from $7,200,000 or 0.47% of revenue in the same year ago quarter. The decrease in gross profit was primarily due to a higher percentage of sales of our industrial products, which carry a lower margin. Also, profit margin decreased due to lower premium spreads on our primary coin of our products, coupled with lower volatility and demand for precious metals. Altogether these factors resulted in a tightening of trading spreads and lower yields. The 25 decrease in trading ticket volume during the quarter as compared to the same year ago period was primarily due to the unusually high volumes experienced in the prior quarter as customers sold through their substantial inventory positions acquired in Q1 fiscal twenty sixteen.

SG and A expenses for the second quarter of fiscal twenty sixteen totaled $4,500,000 This was down 5% from $4,800,000 in the same year ago quarter. The decrease was due to lower performance based compensation accruals, offset by increased operational costs related to the Las Vegas logistics facility established to provide fulfillment services to customers. Our interest income increased 56% to $2,200,000 driven primarily by an increase in the size of our loan portfolio as well as improvement in certain finance products. The improvement in the value of loans loans outstanding, which resulted in a higher interest income, was due to an increase in the number of secured loans. In addition, fees earned related to our wholesale finance products increased compared to the same year ago quarter.

Our net income for the fiscal second quarter decreased 20% to 1,300,000 or $0.19 per diluted share from $1,700,000 or $0.24 per diluted share in the same year ago quarter. The decrease was primarily due to lower gross profit. Now turning to the balance sheet. At December 3135, we had $3,400,000 of cash on our balance sheet. Our access to capital remains strong with a total of $162,500,000 in draws from our lines of credit at quarter end.

Our maximum credit facility is currently $2.00 $5,000,000 We also have a product financing arrangement with $50,500,000 in draws in the quarter. This arrangement provides us with approximately 100,000,000 in additional inventory financing. Our tangible net worth totaled $55,000,000 or $7.8 per share on a fully diluted basis, which is up 13% from June 3035. And finally, as we announced last week, our Board of Directors increased A Mark's regular quarterly cash dividend to $07 per share for the previous $05 per share. The dividend will be paid to all stockholders of record as of February 1536.

The increase in the dividend reflects our board's continued confidence in our balance sheet and our ability to maximize shareholder value. Turning to our six months for fiscal twenty sixteen, our revenues increased 18% to $3,540,000,000 from $2,990,000,000 in the same period last year. The improvement was primarily due to an increase in the total number of gold ounces and silver ounces sold. A key contributor to the increase in demand was the volatility coupled with the decrease in commodity prices during fiscal Q1 twenty sixteen. Gross profit for the first half of fiscal twenty sixteen increased 56% to $20,100,000 or 0.57% of revenue.

This compares to $12,900,000 or 0.43% of revenue in the same year ago period. The increase in gross margin was due in part to higher premium spreads on the company's primary products, particularly during Q1 twenty sixteen. Our SG and A expenses increased 22% to 10,900,000 from $9,000,000 in the same year ago period. This was mainly because of increased performance based compensation accruals and the overall operational costs of the Las Vegas logistics center, which reduced in fiscal Q2 twenty sixteen. Interest income increased 43% to 4,100,000 from $2,900,000 in the same year ago period.

The increase was primarily due to an increase in the size of the company's loan portfolio as well as improvement in certain finance products. Finishing off with our net income for the six months of fiscal twenty sixteen, net income increased during the period 139% to $6,700,000 or $0.94 per diluted share from $2,800,000 or $0.40 per diluted share in the same period last year. The increase was primarily due to higher revenue and gross profits, which were offset by higher SG expenses. This completes the financial summary. Now I will turn the call over to Greg, who will go over our operational progress for the quarter and our outlook for the remainder of the year.

Greg?

Speaker 1

Thank you, Thor. When we reported the strong uptick in revenue and net income for the first quarter, we reminded everyone to not lose sight of the fact that our second quarter is traditionally a slower period for us. And as it turned out, this year's quarter was no different. While there was some volatility in the equity markets during our second quarter, this did not translate into a material increase in demand for precious metals. What typically occurs in the silver coin market this time of the year is many retail customers forego the purchase of precious metal products with the current year date in favor of waiting to purchase those with new dates.

So we approached end of calendar year 2015, many of our customers reduced their overall purchases of twenty fifteen dated products in anticipation of buying the twenty sixteen products. There were also a few unusual factors that contributed to the relatively slow quarter, including the fact our customer base reduced their purchasing due to excess inventory acquired during the previous quarter. Many of these customers were still adjusting to an overbought market during our fiscal Q2 and therefore didn't drive the same level of demand as they had in prior quarters. In contrast, our industrial customers ordered very high levels of silver and gold products in the of the quarter. This was the result of the unusually high consumer demand for product in the first quarter, which caused many of our mint customers to increase their orders for industrial products in the second quarter.

The mints operated at full capacity during Q2 producing finished product to fulfill back orders from Q1, as well as building new dated inventory for calendar year 2016. So as the sovereign mints rush to catch up on their 2015 product supply and procure metals for 2016 production run, we saw a modest increase in demand, although still not enough to completely offset the decline from our other customer segments. An unusual increase in orders for our industrial products during the quarter adversely affected our overall margins, given that our industrial products typically carry the lowest margin, especially compared to our custom point products. However, it's important to note that this margin decline was due to a temporary product mix issue and not a reflection of our ability to effectively compete on price. As the market returns to normal supply levels and mint purchase orders begin to stabilize, we expect to see a rebound in margins.

Now looking at the actual numbers for gold and silver. The average spot price of gold during fiscal Q2 was $11.22 dollars per ounce. This was 2% lower than the prior quarter and 8% below the same year ago quarter. It's important to note today as gold is trading strong in the few weeks of the year and is near $1,200 for the time in quite some time. Silver prices experienced similar volatility and decline with the average spot price of $15.51 dollars in fiscal Q2, which was 2% lower from the previous quarter and 10% below the same year ago quarter.

While the prices of gold and silver were down, volume sales of gold and silver ounces were up from the year ago quarter. For fiscal Q2 twenty sixteen, our physical gold ounces sold were up 26% to 699,000 ounces and physical silver ounces sold were up 27% to 32,800,000 ounces. Trading ticket volume was down 25% to 16,805 tickets. Overall, the results for the quarter including the downward adjustment in demand were largely expected given the market oversupply conditions generated in the fiscal first quarter. But now in our current third fiscal quarter, we are seeing demand increasing as customers resume their normal buying activity and as we continue to make progress on our key operational initiatives.

One such initiative has been to expand our custom coin programs, which have invariably generated strong consumer interest due to the highly differentiated nature of our products. Because our custom coin programs contribute higher margins, we are working to expand their numbers, which currently total over 40 different programs. In fact, we plan to launch several new programs with our strategic partners in the half of the fiscal year. Along those lines, we're encouraged by the strong performance and execution of our strategic partners and we are making investments in their business to support their efforts. As a result, we expect to see a growing number of new additions to our product pipeline in the second half of fiscal twenty sixteen.

Our new Las Vegas logistics facility will be supporting this growth. We have now completed the full quarter of operational activity with our logistics operations now being fully integrated and operating at full capacity. As many of you know, this 17,000 square foot facility handles most of our precious metals logistics, offering full service inventory management and fulfillment as well as a complete suite of high margin ancillary services such as fully collateralized loans and storage solutions. As I mentioned earlier, our total number of packages shipped reached record levels in Q2 and we are excited to see continued progress in this burgeoning part of our business. To support and accelerate this progress, we are taking active measures to expand our presence in this facility and extend our turnkey logistics services to our customer base.

We are also working to make the facility more efficient so that we can ship more packages without significantly raising our operating expenses. To accomplish these objectives, we are consolidating our storage and logistics operations into the Las Vegas facility, where we will continue structure and take the necessary steps to raise the productivity and efficiency of our experienced staff. In addition, we recently signed a lease for the space directly adjacent to our facility to build out a service center for our storage and fully collateralized loan operations. This fully collateralized loan operation is an exciting and rapidly growing part of our value added services. It is overseen by our financial subsidiary, Collateral Finance Corp or CFC.

During the second quarter, we achieved a record number of new customers and loans outstanding. In fact, our number of secured loans increased to six seventy, while our total customers increased to six eighty five. The increases were driven by new fully collateralized loans and the acquisition of loan portfolios, as well as an increase in our product offerings. These results strengthen our resolve to scale this part of our business and diversify our organizational structure. Part of our diversification strategy also entails greater geographic diversity, particularly with the expansion of our marketing efforts in Europe.

While activity in this region has been fairly static during the second quarter, we see signs of a number of growth opportunities in this highly underserved market, especially as more Europeans look to precious metals as a viable strategy for preserving capital. We continue to look and recruit senior sales traders in order to expand our trading and logistics presence in Europe. Finally, we are actively pursuing complementary strategic partnerships and accretive acquisitions that will help us expand our geographical footprint and capabilities. We believe A Mark is in a strong position to grow both organically and through acquisition and we are focused on delivering this growth through the competitive advantage and versatility of our unique business model. Looking ahead to the remainder of the year, we continue to be cautiously optimistic with the expectation of easily beating our full year results for fiscal twenty fifteen.

We believe the success of our growth initiatives will continue to establish A Mark as one of the world's leading diversified precious metals trading companies. Now with that, we're ready to open the call for your questions. Operator, please provide the appropriate instructions.

Speaker 0

Thank you. We will now be conducting a question and answer session. And our question is from Juan Mota of B. Riley. Please go ahead.

Speaker 3

Guys. Good afternoon. Thanks for taking the question. And you made a comment, Greg, about the rise in the commodity prices so far this calendar year. Can you also comment on what you're seeing in terms of volatility in premium spreads?

Speaker 1

Sure. Generally, we see a little more immediate reaction from our customers when we have a drop in price. Historically, as prices rise, the premiums tend to compress temporarily. And historically, after the last over the last couple of years, most rallies particularly the price of gold have been short lived and the gold has reacted negatively shortly thereafter. I think that we're seeing a little bit different overall activity in the last few weeks in particular.

If you look at since the end of twenty fifteen calendar year, gold is up almost $100 from December of last year and it's been a fairly steady increase and it seems to us to be much healthier. And I think we look at it a little bit as a coiled spring compressed. Personally, I feel that there's a lot more going on macro economically today than maybe there was six months ago. In particular in Europe, we feel that Europe is struggling. The bank stock index over there of European banks is down significantly in the last six weeks.

And I think we see Europe as a prime opportunity for some increased activity in the next few months. We also look at $1,200 as a psychological barrier, which we haven't been able to get through in recent months. The macroeconomic conditions and a price above $1,200 we believe would bode very well. It's also important to remember that a lot of our gold products are priced in percentages. So a higher gold price reflects more dollars made per ounce by A Mark, as well as a number of our finance products are tied to value.

So we like volatility. We also like long term growth and a rise in the price of metals. And I think in just the last week or so, have started to see a significant increase in our activity. And one note from the data we look at and some of the information we can see, there does appear to be a slight shift in the difference of gold buyers versus silver buyers. And we're seeing a little higher gold volume versus silver.

And generally, this is indicative of a more healthy buyer and a little more larger institutional or a larger level buyer than someone who's just buying silver. So I think there are particularly in the last couple of weeks with what we've seen in The U. S. Equity markets, the Japanese European market, we're very optimistic that we're moving into a more active period.

Speaker 3

Okay, very good. And in regards to retail demand, could we see I mean based on what you're seeing right now, retail demand as strong as we did in the summer of last year if these conditions in the market continue?

Speaker 1

Well, I think the first quarter of last I mean, I'm sorry, our first quarter of fiscal year 'sixteen saw unusual circumstances where you had historically a very slow period in the summer coming off of a previous year, which was one of the slowest periods we've seen during the summer months. So you had a lack of supply naturally just due to those historical numbers, so that you had a lack of ounces produced, particularly in silver. And then you couple that with in early July of last year, you had significant and sharp drop in the price of silver as well as gold down to some very low numbers we hadn't seen for a while. That created a very immediate response and disrupted the supply and demand equation. So you saw some very some circumstances that created some higher premiums as well as huge volumes, which we saw in Q1 results.

I think what we're seeing today as we look at the market is a much different scenario. You're seeing sentiment to higher precious metals. You're seeing negative interest rates in Japan. You're seeing the prospect of either more quantitative easing or possibly negative interest rates in Europe. These are things that are very positive for precious metals.

So I think it's a complete shift from an environment the last six months where you had the Fed raising rates and you had an anticipation that rates were going higher, which could be negative for gold in particular and that's kind of reversed in the last few weeks. So I think it's a different animal, but I think it's and I think that what we've historically seen when we see a fairly steady run up in the price of gold specifically is that A Mark will see reaction and the activity due to that move a little bit slower and it'll take a little bit longer than what we see, or immediately when we have a significant drop in price. So that answers your question or to be more specific.

Speaker 3

No, that's very helpful. Just a couple more and I'll jump off queue. Regarding the industrial demand for the mains, is that something that you expect will be more balanced in the third fiscal quarter and the March?

Speaker 1

Yes, I think that was again as I tried to explain earlier, across a lot of our industrial customers, the price of 400 ounce gold bars or the price of industrial products had become fairly cheap compared to historical numbers. And we saw a sharp uptick in demand for large, large quantities of gold in large bars. That's a very as I said, that's a very low margin product for us. You can look at it one of two ways. I mean, you can look at it that the buying was because the demand was there in and you had a lot of our customers kind of rebuilding their stock in that product.

Or you could also look at it as our when we start to sell larger quantities of large bar products, it can also indicate a shift in sentiment where more institutional buyers of gold who aren't buying one ounce gold coins, they're buying 400 ounce gold bars, That uptick in that specific product can also mean a little bit more activity in gold general and that is what we think we're seeing right now. So it's kind of a combination, I believe, of industrial customers who may believe that the price is moving higher, as well as mints or other people who are breaking large bars down into smaller fabricated product.

Speaker 3

Okay, got it. And then my last question is regarding the custom products. Are there any programs specifically that make you get you more excited for the balance of the year?

Speaker 1

I think we've got three or four really cool products that we're working on. So far initial orders and initial demand for those products, the orders have strong. And we believe that these products continue to offer an opportunity for A Mark to take market share and grow this segment of our business. So we're very happy with that. And we're going to continue to develop those products over the next two to three quarters and try to increase our suite of unique products.

Speaker 4

Okay.

Speaker 3

Can you mention what products those are right now or is that something that we'll

Speaker 1

talk about we're ready to announce them, we'll announce announce them.

Speaker 3

Thank you very much.

Speaker 0

Thank you. And the next question is from Robert Maltby of Singular Research. Please go ahead.

Speaker 4

Hi, Greg. Hi, Thor. How you guys doing?

Speaker 1

Great. Robert, how are you?

Speaker 4

Good. Enjoying the sunshine out here in Southern California for a Hey, I wanted to ask you if regarding the interest income, I saw that that was up very nicely. Firstly, is the trend there or the outlook for the next twelve months or so as a contributor to your revenue line? And then also I don't know if you do this, but can you provide any type of color to your segment breakout between your various lines, be it industrial, logistics, warehousing and custom products?

Speaker 1

Let me start with the interest income. We do differentiate in our 10 Q, our collateralized loan book as well as the number of loans that we currently have and we're very enthusiastic about this part of our business. And if you just look at the numbers and you kind of get to that area of the queue, our loan book has grown significantly in the last twelve months and has picked up even stronger in the last three to six months. And the number of loans, the loan value, the quality of the loans, we're very enthusiastic about. And we believe that this is an area that we've talked about in the past that is one of our ancillary products, that is a higher margin product that helps our trading desk, it helps our storage business, it helps our logistics business and it's a very fast growing part of our business.

And we have focused specifically on marketing this product and we were out there aggressively pricing to get loans. Have a nice program in place right now where we have a party who is creating some loans and then we're actually buying those loans, that loan portfolio, which is helping us to grow the overall book. But I see that as we're very excited and enthusiastic The numbers are quite impressive and looking out as we've discussed before, growing some of these steady everyday income producing businesses will be great to grow our core business and take a little bit of the volatility and changes off of our core products or our trading desk. As far as the segment reporting, Thor, Carey, do you guys want to answer that question?

I know we don't generally break that out.

Speaker 2

Yeah, well, of all, we are a single segment reporter for SEC reporting purposes. And so when you talk about things like industrial and coin and bar, are more specifically what we call our product types. And we don't typically provide a breakdown of those although as Greg said, I will say the interest income you actually said revenue, the interest income is all reported as an interest income line and it consists of the CFC and the finance products such as repo that we have on the A Mark side of the business. So it's not a revenue line, the interest is separately captured as a line item on the face of the financials and as Greg said, there's some details available throughout our Q. But in regards to the product types, we don't typically provide breakdowns in that regard.

Speaker 4

I have a follow-up question to that, regarding the interest in the leverage for the secured loan business, can you provide some type of color as to the clientele and maybe any concentrated exposures to areas everybody's worried about?

Speaker 2

Sure. Loan business is very unique and let me break it into two pieces. CFC, all the CFC loans are fully secured and subject to margin call. So for example, the bullion loans that we make to clients, we are physically holding the gold and silver in an armored insured facility. So we perfect our security interest through physical possession and as well as filing a UCC and should the value of metal shift, have the right to margin call our customers and so as LTVs fall, we will actually put our customers in a margin call.

On the A Mark side, all of the things we do there are subject to margin call or they are fully hedged financing instruments. So they're either fully hedged so that there is no market risk or they are subject to margin call and we margin call customers based on the closing spot price daily. So all those positions are tightly managed and fully secured at all times.

Speaker 4

Great. And Greg, you mentioned the negative interest rates and the volatility it's been for the equity market quite a challenging quarter. Obviously, Japan just went negative and it may not be too much longer before a part of Europe does as well. And who knows, maybe even at some point here in The U. S.

Just depending. I'm just wondering what type of flow through you're seeing now in business volumes, how it's being impacted by these trends and maybe, I don't know if you would have any type of forecast based on a scenario of more negative interest rates.

Speaker 1

I think looking out the next two to three years, negative interest rate environment or a lower interest rate environment, if you look back to 02/2008, 2009 was very, very active for us. You had I was watching something this morning on CNBC, nobody is saying that there's another housing bubble out there or there's another banking crisis. But I was very surprised as I looked at the overall index of foreign banks. There's an ETF for that now. I think it's down almost 20% for the year.

And you have somebody like Deutsche Bank, who is kind of a de facto Central Bank of Germany and it's they're not painting a rosy picture right now as it relates to their capital reserves or their outlook and their stock too is down significantly. We feel we're fully prepared for any kind of crisis in Europe and we believe that we're set up pretty good for a if there is a problem over there. We're kind of getting the best of both worlds right now in that if interest rates were to become significantly higher and that there was inflation, that would be good for our business. I think that what you're seeing in Japan and what you're seeing with this just inability to get the markets going and get the economies going is also good for us. General, when gold is very cheap to hold and you have volatility in either the Euro or the Yen or the Dollar, gold is very safe currency and gold tends to hold its value very well.

So if you're talking about paying a bank to hold your money and you don't know for sure how that bank is going to perform, gold is a very good alternative. So that's good for us. To what extent and how it's going to affect our specific numbers and our ounce counts and everything else, that would not be good for us to speculate on right now. But I think we're definitely checking the boxes right now. There's definitely good things on the precious metal side of the ledger and we're looking forward to the next six to twelve months.

Speaker 4

Terrific. And finally, when you think of A Mark and the positioning overall

Speaker 2

in

Speaker 4

the secular upside, speaking of so called market share, wallet share, what have you. In terms of looking at that and the various products that contribute to that like the loans, the warehousing and the various customized products. Your path there, your trajectory, the long term set growth rate there based on I guess current saturation levels over the course of the next several years. Can you give us any color on that or what you might expect or have goals for?

Speaker 1

I'll go back to what we've said in the past. Our job is to build capacity and to build distribution and to make sure we have bank lines in place, that we have storage facilities to store metal, that we have the logistic capability of getting that metal delivered to customers efficiently. I think everything we're doing is setting up for capacity to be able to take advantage of opportunities and imbalances in our market from a supply and demand standpoint. And I believe that today A Mark is better positioned than we were in just September of last year. I mean, we had a tremendous quarter in our Q1, but we also left some money on the There was still some business to be done in the last couple of weeks of September that we didn't have quite enough capacity to do it.

I think if the circumstances were to repeat themselves the same today, I think we've built more capacity in the last six months. So I believe we would take advantage of those opportunities. And when we have product or we have capacity or we have lending capabilities that our competitors don't in times of tight supply or in times of lack of liquidity, A Mark's capacity and ability to write this business really allows us to take market share and to grow the business. And that's what we're trying to do. That's been our kind of motto and philosophy for the last couple of years and I'm very we're very optimistic and very satisfied that we have greater capacity today than we did six months ago, a year ago, two years ago.

So we're just trying to position ourselves because it's impossible to predict what's going to happen tomorrow. We don't know what's going to happen in a lot of different areas that affect our market, the price of gold, supply and demand. But as long as we're able to build capacity and we're able to grow our what we're doing, it's good for us. We accomplished a lot in the second quarter. As we've said, we increased our investment in one of our strategic partners.

We believe they're on track and they're growing from distribution standpoint. We're actively growing our credit facility and we're growing our lines of credit so that we have liquidity when gold is at $1,400 or whether gold is at $1,100 we want to make sure that we have the capacity to do the business and we've worked on that. And then through our logistics and storage facility, we've really built a machine that can get product delivered almost anywhere in the world. So we're very enthusiastic about that.

Speaker 4

For taking my questions, Greg and Thor. I'll go back in the queue now. Thank you.

Speaker 0

Thank you. We have another question from the line of Juan Molto of B. Riley. Please go ahead.

Speaker 3

Hey, guys. A follow-up question. Can you provide an update as what you're seeing regarding sovereign mint allocations? Find news on The U. S, but not so much on the others.

Speaker 2

The mix continues to be on allocation. As you said on The U. S. Side, that is generally the case with the others as well.

Speaker 3

But it sounds like you guys are confident regarding the supply you can acquire for any type of rising demand that is unexpected?

Speaker 1

I think we've taken some steps over the last six months and the last three months in particular to ensure that our allocation and pipeline of gold and silver products is at a greater capacity than it was six months ago.

Speaker 3

Okay, perfect. That's all I have. Thank you very much.

Speaker 0

Thank you. Okay, everyone. It appears we have no further questions at this time. I would like to turn it back over to management for any additional comments.

Speaker 1

Thanks to everyone for joining us today. I want to thank our investors for their continued support as we continue to build A Mark into the global leader in precious metals trading. We look forward to updating you on our next call. Operator?

Speaker 0

Before we conclude today's call, I would like to provide A Mark's Safe Harbor statement that includes important cautions regarding forward looking statements made during this call. During today's call, there were forward looking statements made regarding future events. Statements that relate 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 in the aggregate could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ may include the following: the failure to execute our growth strategy as planned greater than anticipated costs incurred to execute the strategy changes in the current international political climate, has favorably contributed to demand and volatility in the precious metals market increased competition for our higher margin services, which could depress pricing the failure of our business model to respond to changes in the market environment as anticipated general risks of doing business in the commodities markets and other business, 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, planned and similar expressions and variations thereof identify certain of such forward looking statements, which speak only as of the date on which they were made. Additionally, any statements related to further 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 would like to remind everyone that a recording of today's call will be made available for replay via a link available in the Investors section of the company's website.

Thank you for joining us today for the presentation. You may now disconnect, have a wonderful day.