Collectors Universe (CLCT) 5 Feb 192019 Q2 Earnings call transcript

Good afternoon, everyone. And thank you for joining us to discuss Collectors Universe's Financial Results for the Second Quarter ended December 31, 2018. Today's conference is being recorded. With us today from management are Joseph J. Orlando, President and Chief Executive Officer and Joseph Wallace, Senior Vice President and Chief Financial Officer. brief call the to a open and provide the up your will overview quarter of then Management questions. forecasts future Comments contain made are Securities performance, forward-looking its the defined profitability XXXX. Litigation statements may concerning including financial Private regarding the statements trends during Company's expectations that today's and and statements call Reform in of business as about Act of from risks the those results uncertainties. Company's in future to may a possibly due actual number in forecasted materially and this call The differ Certain Company's of uncertainties, and Commission. in addition more fully to are these risks the Exchange other described filings and risks, in Securities the with The forward-looking statements, a otherwise. result Company of the undertakes date statements no future of obligation new whether the as information, or are events forward-looking only of to or conference the and as today's call, update made revise that, call the to I over to like would With turn now Mr. Joseph Orlando. go Please sir. ahead,

conference of want quarter fiscal the million in the a Thank then Service outlook second increase today's fiscal commentary Universe on fiscal into year. quarter you. going for results for the second the forward I welcome the our to the And XXXX. quarter year-over-year were from you summarize quarter some third up revenues year from over QX $XX QX ago. marked $XX.X with improvement Collectors call million, XXXX. give a to in and to XX% finished

some versus level In China. fact, year improvement in showed the modest area of apart business major from to office Shanghai every the of from last substantial

year. revenue QX. versus in our produced business and division bulk vintage coin our increase and Our from The XX% figures overall improved show US autograph showed all and X% in year's card PCGS services an last primary the previous of trading business

approximately business generates QX. increase the $X.X versus up ASP. or improvement our our show coin Overall, This PCGS area million, And of year an vintage XX% was showed that US service bulk the was in million, is the an $X.X or of was PCGS While XX%. insignificant, service XX%. year-over-year in highest last

rating its XX million a our other career produced on addition, quarter. reached the milestone coin hand major In division mixed coins the international results. PCGS during by certifying

fiscal Our Kong was was office that QX. Hong channel that was into QX enjoyed $X.X million an down channel million, QX. the from submissions, million increase fiscal in channel. $X.X or a Kong our the due $X.X spread up of revenue XXXX, with it of This office finished while QX evenly to banking revenues. channel Because In offices absent record product XX%, note between about since and QX The volume year showed quarter any banking the volume, to a year. high banking compared important XXXX. was Shanghai is that or QX channel were Hong office was Shanghai submissions Paris non-banking submission effect record the more the of Paris non-banking decline year-over-year. to But of the of last most pushed of XX% and

QX The to channel in structure revenues of In our up is any change prospects. in reevaluation declines X% do as China mean But does way we warranted goals. XXXX. our year-to-date our expansion versus the non-banking in is fiscal not it fact, short-term want that revenue Shanghai long-term maximize

growth. another part last for surpassed million quarters a setting of quarter $X.X Turning million. figure million, quarterly the of included PSA's our QX. unit a roughly at increase collectibles. record of consecutive profit half XX% robust our the second record enter performance year. of record to Despite was PSA/DNA year company and revenue part Returning gross business, overall QX year-over-year Through shipped capacity, we ninth the to high bottom line of two ago. business a this way all-time new to the our The for this division, top to line its fiscal continued is finished for were of up on our the XX% submission PSA margins XXX,XXX $X.X remains the of with backlog year first bottom our top improvements as its quarter, XXXX, well and operational which and year's fiscal quarter $X of

quarter to for in million which from was was million based XXXX, up continuing $X.X non-cash the operations of Income $X.XX diluted Our $XX,XXX stock share prior year. income was operating $X.XX in after the or per previous per for $X.X year. QX compensation the million second $X.X share, from and fiscal compared

let to in performance for detailed review Joe turn of Now Wallace it QX. Joe? financial more a me over our

Yes. I'll the of second Joe. quarter results the give Thank for brief XXXX. fiscal overview financial now of you, a

to second the quarter of of just quarter This share. operating quarter tax million year, Company from million, the of income XXXX. $X.XX million, generated income typically compares for and the of $XX.X or the fiscal second and seasonally tax of For diluted revenues $XX,XXX, operating income million, $X.X $XXX,XXX of $X.X after after continuing diluted continuing operations share was slowest of operations or earned of $XX.X the from quarterly revenues per the per $X.XX income

from after share. For $XX.X operations income $X.XX months of six operating $X.XX million to after of fiscal operating or of This million operations continuing million, share company months, of the diluted revenues compares million, diluted and tax the per income per earned the income the first from income tax million, six XXXX. of $X.X $XX.X $X.X of for revenues million, generated and or $X.X $X.X continuing

US represented cards autographs increase revenue for or increases of increase second The of million, XX% or autograph or in $X.X XX% XX% quarter China, US months a the revenue The in business. cards revenues for represents were and in and revenues. six or first increase Total improved coin coin business. record or $X.X due banking from increased the the build we $XXX,XXX softness a months that six increase second the X% XX% lower The million, and Revenues half X% revenues as the year, vintage brand autographs million, coins. previously In the revenues XXXX, XX% term. of China. cards were coin tradeshows half revenues six revenues non-banking channel by down $X.X represented despite record quarter channel fiscal $X.X channel The million US quarter the $X.X whereas Total X% increase coin increased and respectively. of $X.X continued and or revenues. due revenues first $X.X revenues. months in coin absence million the were Total second in million, in in revenue first the that for of or these for million $X.X increase in quarter and year, million and the million autograph cards included to revenues million long continue in down this revenues to in the to were awareness China months banking revenues and revenues in second in China included $X.X six quarter and $X.X and disclosed up

and represented half our revenues to Our business business coin continued financial year XX% overall first our coin of reflects performance. in of of importance the the

in year. our our continue the seasonally Gold expect Eagles calls, prior And we typically by third year quarter is US quarter the and release of strongest in on that the due trend this fiscal that the Silver to to Mint US discussed for coins, quarter. As

second will to respect revenues of expect in that manner. stable the autograph half we to that current and addition, continue our the expectations we China, In continue grow our China a in will revenues stability in channel see cards in our With year. to non-banking

margin of six However, XXXX. we reflects to six the XX% from in second margins fiscal for not remainder China lower the were The the revenues and the second gross quarter profit do gross quarter XX% months. last XX% to the increase, and quarter second higher channel and XX% the gross expect margin during revenue XX% the year's in six as compared months lower revenues. and whereas second generate The months the in reflects quarter profit profit banking

there by asset million fourth Japanese restricted capitalized reductions quarter blended XXXX about business facility, million second XX% fiscal of our business. can compared incurred depreciation this the XX% incurred Two, a selling and and in tax Those business. XXXX, in - and in and three, and of variability first of the our of of for costs XX% the tax cost profit XX% for As growing be company's last XXXX the in periods $X.X were six development new quarter in basis moving million savings in the gross and the coin represented On XX% of and year company's in mix increased offset to an million lease compared ongoing half occurred six the the cost And primarily lower about first quarter for cards costs of amortization six operations stock federal to marketing months, the management months and rate by and business, benefits six year. the fiscal to the quarter recruitment higher period due quarterly other margin in deficiencies marketing of in second which arise. facility. the quarter company's the the the related our in non-recurrence arising as seasonality XX% in second costs about XX% previously the second between or fiscal The varied of and in the revenues revenues as staff in The months expenses $X.X XXXX. dollar a of compared reductions expenses from XX%. of of projects. the $X.X the of related adjusted partially to reflects one, G&A and payroll months and to are part disclosed, margin million vesting autographs first XXXX. offset in capitalize half subsidiary, and quarter and for the revenues operation the first as $X.X The the six gross XX, profit as cost business in rate XX% fiscal in in excess quarter year. headquarter of our parts in rate increases ended six higher in dollar XX% to were six year recognized decreases and six three months December related the cost new current software costs and tax $X.X and of months, expense then partially including in periods Selling of new of reflected they in change months which included months. were All exit that the for lower the

million cash February announced XX. our be capital used million in September company's XX, position balance $X that, With of and used $X.X generated paid cash $XX.X I'd by software to six XXrd, $X.X like term $XX.X and dividends Joe? at XXXX for Turning X, to for will million million months million, stockholders January to loan. operations Net company's we of XXXX per continuing of million, capitalized was cash you costs. thank pay million to generated XXXX. attention. the million compared partially sheet, On to share June the March included the our down And stockholders which as December expenditures offset paid of in $X.X to on quarterly cash your $X.XXX $XX.X in on $X.X cash of XXXX dividend from record

Thanks Joe.

forward. QX I perspective. make was million versus and would like in of PCGS QX close $X.X conclude, Collectors from US In comments a Universe a areas about moving year-over-year to we Before the improved up QX. outlook few several last the

beginning the decade attended QX, sustained this a its nearly continues Florida. of approaches At record pace annual PSA very growth. the consistent fun in show PCGS While as division

coin. display. PCGS proof This to grade. power PCGS. example the was premium the which coin approval XX coin of a received knowing With onsite the The on seal is in graded million full an our an on brand of paid plus In extremely grading valued one of case our have roughly into was would holder to receive coin at site. coin of a customer the went the is a from crossed PCGS' a on lower grade dollar, was trade down previously figure excellent a $X desirable PCGS' rare competitors, how XXXX fee by XX of even submitted seven The when grade

mint. season busy quantities new the are our issued the PCGS entering US coins in box We are when large now at from

mint proud is and of those space is which to to who on released F first come PCGS AMF In XXth addition Foundation. landed was in dollar to the accident for sacrificed the fee is traditional for the many Astronauts This in and coins. memorialize astronauts a Silver the different for provide also XXXX partnered the have collectibles annual to with coins. on XX% the PCGS to the shuttle silver lives nation Eagles newly one has when the commemorate label people XX, to the several John like Apollo these new Foundation, Memorial special Memorial in Apollo July anniversary XXXX. in on schedule releases the Kennedy Space has their proof this clad be donating Challenger half releases groundbreaking XX The Center designed the form moon commemorative XXXX. coins dollar, AMF two of of based event program. and the Astronauts the Florida is silver of wake at the honor space the dollar US gold, coin beautiful founded the X-ounce calendar of label mint

our to business. international Turning coin

the Chinese be us coin market. the current to quarter-to-quarter during unchanged. the shipped there be market coin will to perspective, determine all-time overseas structure more to quarter, will continues long-term focus. what said, QX. Market Even management continue brand reminds is by of cost there from At a traditionally in PCGS PSA, our term, That return customer the team record its management seasonally for eagerly a the their what order to unshipped should set been our volatile not is PSA that existing the investment under behind goal our shelf, also submission remains While conditions. done. In be operational in continues the an set is be short appropriate reviewing represents slowest that to the build our capacity who team unit be work left it that revenue on An awaits collectibles. only

service taking and Express to similar Japan a China Service. front, its began together where shipped November one in pooled Japanese the we facility. back each PSA now month submission launched in This On what international website from under in new Tokyo our call are submissions joined and our

don't build in our these of our PSA anticipate Registry the the last of user purpose improve and our our cost they revenue Since their business. low in we initiatives with the objective to contribution be services launched engagement. Participants material referred to for collections. of Registry Commonly the our earn recognition as term, Set as and we While both markets. achievement ways earnings as new our overall both reach are a Set expanding the build program call, the as is prime benefits for near providing establish PCGS. we brand points, PSA's digital new gamification, accomplishments program's along Greater about awards brand education can increase is and on recognized we to

home As and XXX,XXX the registered autographs venue sets to is trading more. listeners, company powerful a of arguably website build well to our reminder brand Set uses loyalty. coins, Registry tool our to cards, the stimulate is submission activity and single core This most over

all the compete one world see against its how collection Here to and with Each the other in collection hobbyist the up over business. is attributes best like percentage stack by specific share prized category completion things. another amongst GPA their and in ranked from

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are layer to We to submission of and branding another excited add fun our critical element of this machine.

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from feedback key is our received further business. activity and this user As our we enhance driver of loyal observed customer base, more to our intent

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such by the all and Of of and policies primarily with of the are our not factors forward to in in market of worldwide. several today. the as our look quarter. possibility collectibles the prices changing trade Thank I joining metals, course, the you governed US next climate expectations economic the control And precious for international overall speaking you state for us

like have. the to I'd may questions Now, to you open any call

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today. thank And Okay. next joining We with to to quarter. look want speaking everyone forward for everyone us

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