A-Mark Increases Investment in and becomes Majority Owner of Silver Gold Bull, a Leading Online Precious Metals Retailer in Canada
A-Mark Precious Metals (NASDAQ: AMRK) has increased its ownership stake in Silver Gold Bull Inc. (SGB), a leading online precious metals retailer in Canada, to 55.4% with an additional investment of $9.6 million. This acquisition enhances A-Mark's direct-to-consumer reach in the international market. Initially investing in 2014 and boosting its stake to 47.4% in 2022, A-Mark now holds a majority share. The option to increase ownership up to 70% has been extended to September 2025. For the fiscal year ending April 30, 2024, SGB reported net sales of $467.9 million, a gross profit of $20.8 million, and pre-tax income of $4.2 million. SGB also added 53,000 new customers and processed 105,000 orders. Employment agreements have been secured with key SGB management including President and Co-Founder Bob Belandis.
- A-Mark increased ownership in SGB to 55.4%, marking a majority stake.
- Investment of $9.6 million to enhance A-Mark's DTC footprint internationally.
- SGB reported net sales of $467.9 million for the fiscal year ending April 30, 2024.
- Gross profit of $20.8 million and pre-tax income of $4.2 million for SGB.
- SGB added 53,000 new customers, totaling 520,000 customers as of April 30, 2024.
- A-Mark's ownership option in SGB extended to September 2025.
- Gross profit margin of 4.4% and pre-tax income margin of 0.9% indicate low profitability.
Insights
A-Mark's decision to increase its stake in Silver Gold Bull (SGB) is a strategic move to bolster its international presence. The investment of approximately
SGB's financials reveal a robust performance with net sales of
Short-term gains might not be substantial for retail investors given the low-profit margins, but this acquisition could position A-Mark favorably for long-term growth. The extended option to increase ownership to 70% by September 2025 indicates A-Mark's confidence in SGB's growth trajectory and the sector's potential.
Market dynamics for precious metals, especially those sold online, have been favorable due to rising interest in alternative investments and inflation hedges. SGB's addition of 53,000 new customers, totaling 520,000, showcases a growing consumer base, reflecting strong market demand. However, maintaining customer acquisition and retention will be critical, especially with the competitive pricing and customer service promises made by SGB.
International expansion is a key driver here. By enhancing its DTC footprint in Canada and potentially other markets, A-Mark can diversify its revenue streams and mitigate risks associated with market and economic fluctuations in a single region. This strategy aligns well with global consumer trends towards online purchasing of investment assets.
Long-term outlook hinges on market conditions for precious metals and SGB’s ability to maintain its competitive edge through innovation and service quality. The significant volume of metals sold (7.85 million ounces of silver and 151,000 ounces of gold) indicates strong operational capacity, but scalability and efficiency will be fundamental to success.
EL SEGUNDO, Calif., June 24, 2024 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ: AMRK) (A-Mark), a leading fully integrated precious metals platform, has acquired an additional
Founded in 2009, SGB is a leading e-commerce precious metals retailer in Canada focused on providing online innovation, high-quality products, competitive pricing, and excellent customer service.
Transaction Summary
- A-Mark paid approximately
$9.6 million for an additional8% of the outstanding equity interest in SGB. - A-Mark’s previous option to increase its ownership interest in SGB has been reduced from
75% to70% . The option, previously set to expire in September 2024, has been extended to September 2025. - Employment agreements have been entered into with key SGB management, including Nikolas Morianos, Mihali Belandis and President and Co-Founder Bob Belandis.
SGB financial and operational highlights for the fiscal year ended April 30, 2024, include:
- Net sales of
$467.9 million , gross profit of$20.8 million (4.4% of net sales), and pre-tax income of$4.2 million (0.9% of net sales). - Sold more than 7.85 million ounces of silver and 151,000 ounces of gold
- Added approximately 53,000 new customers, for a total of 520,000 customers as of April 30, 2024
- Processed approximately 105,000 orders
Management Commentary
“Increasing our stake in SGB aligns with our strategy to expand internationally,” said A-Mark CEO Greg Roberts. “Since our 2014 investment, SGB has shown consistent growth in Canada and abroad. We aim to strengthen our partnership with SGB and may further increase our ownership in the company in the future.”
Bob Belandis commented: “This marks another milestone in our enduring partnership with A-Mark. Their previous investments have fueled significant growth for us. This additional backing positions us for further expansion in Canada and new markets.”
Transaction Advisors
Frye & Hsieh LLP and Fasken Martineau DuMoulin LLP acted as legal advisors to A-Mark.
MLT Aikins LLP acted as legal advisor to SGB.
About A-Mark Precious Metals
Founded in 1965, A-Mark Precious Metals, Inc. is a leading fully integrated precious metals platform that offers an array of gold, silver, platinum, palladium, and copper bullion, numismatic coins, and related products to wholesale and retail customers via a portfolio of channels. The company conducts its operations through three complementary segments: Wholesale Sales & Ancillary Services, Direct-to-Consumer, and Secured Lending. The company’s global customer base spans sovereign and private mints, manufacturers and fabricators, refiners, dealers, financial institutions, industrial users, investors, collectors, e-commerce customers, and other retail customers.
A-Mark’s Wholesale Sales & Ancillary Services segment distributes and purchases precious metal products from sovereign and private mints. As a U.S. Mint-authorized purchaser of gold, silver, and platinum coins since 1986, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has longstanding distributorships with other sovereign mints, including Australia, Austria, Canada, China, Mexico, South Africa, and the United Kingdom. The company sells more than 200 different products to e-commerce retailers, coin and bullion dealers, financial institutions, brokerages, and collectors. In addition, A-Mark sells precious metal products to industrial users, including metal refiners, manufacturers, and electronic fabricators.
Located in the heart of Hong Kong’s Central Financial District, LPM Group Limited (LPM), is one of Asia’s largest precious metals dealers. LPM was acquired by AM/LPM Ventures, LLC, a subsidiary of A-Mark. LPM offers a wide selection of products to its wholesale customers, through its retail showroom and 24/7 online trading platform, including recently released silver coins, gold bullion, certified coins, and the latest collectible numismatic issues.
Through its A-M Global Logistics subsidiary, A-Mark provides its customers with a range of complementary services, including managed storage options for precious metals as well as receiving, handling, inventorying, processing, packaging, and shipping of precious metals and coins on a secure basis. A-Mark’s mint operations, which are conducted through its wholly owned subsidiary Silver Towne Mint, enable the company to offer customers a wide range of proprietary coin and bar offerings and, during periods of market volatility when the availability of silver bullion from sovereign mints is often product constrained, preferred product access.
A-Mark’s Direct-to-Consumer segment operates as an omni-channel retailer of precious metals, providing access to a multitude of products through its wholly owned subsidiaries, JM Bullion and Goldline. JM Bullion is a leading e-commerce retailer of precious metals and operates eight separately branded, company-owned websites targeting specific niches within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, Gold.com, GoldPrice.org, SilverPrice.org, BGASC.com, and BullionMax.com. JMB also owns CyberMetals.com, an online platform where customers can purchase and sell fractional shares of digital gold, silver, platinum, and palladium bars in a range of denominations. Goldline markets precious metals directly to the investor community through various channels, including television, radio, and telephonic sales efforts. A-Mark also holds minority ownership interests in three additional direct-to-consumer brands.
The company operates its Secured Lending segment through its wholly owned subsidiary, Collateral Finance Corporation (CFC). Founded in 2005, CFC is a California licensed finance lender that originates and acquires loans secured by bullion and numismatic coins. Its customers include coin and precious metal dealers, investors, and collectors.
A-Mark is headquartered in El Segundo, CA and has additional offices and facilities in the neighboring Los Angeles area as well as in Dallas, TX, Las Vegas, NV, Winchester, IN, Vienna, Austria, and Hong Kong. For more information, visit www.amark.com.
A-Mark periodically provides information for investors on its corporate website, www.amark.com, and its investor relations website, ir.amark.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance, and investor presentations.
Company Contact:
Steve Reiner, Executive Vice President, Capital Markets & Investor Relations
A-Mark Precious Metals, Inc.
1-310-587-1410
sreiner@amark.com
Investor Relations Contacts:
Matt Glover and Greg Bradbury
Gateway Group, Inc.
1-949-574-3860
AMRK@gateway-grp.com
FAQ
What is A-Mark's current ownership percentage in Silver Gold Bull (SGB)?
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What were Silver Gold Bull's financial highlights for the fiscal year ending April 30, 2024?
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What is the expiration date for A-Mark's option to increase its ownership in SGB?
