A-Mark Precious Metals Inc (AMRK) 2023 Q2 法說會逐字稿

Good afternoon, and welcome to A-Mark Precious Metals Conference Call for the Fiscal Second Quarter ended December 31, 2022. My name is John, and I will be your operator this afternoon.

Before this call, A-Mark issued its results for the fiscal second quarter 2023 in a press release which is available in the Investor Relations section of the company's website at www.amark.com. You can find the link to the Investor Relations section at the top of the home page. Joining us for today's call are A-Mark's CEO, Greg Roberts; President, Thor Gjerdrum; and CFO, Kathleen Simpson-Taylor. Following their remarks, we will open the call to your questions.

Then before we conclude the 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 is being recorded and will be made available for replay via a link available in the Investor Relations section of A-Mark's website.

Now I would like to turn the call over to A-Mark's CEO, Mr. Greg Roberts. Sir, please proceed.

Thank you, and good afternoon, everyone. Thank you all for joining our call today. As you can see from our earnings release, the second quarter represented another solid quarter for A-Mark with diluted EPS of $1.35 and EBITDA of nearly $49 million with a 6% quarterly return on equity. We generated these results despite the subdued market conditions that we experienced during the latter half of the quarter. Demonstrating the strength of our fully integrated business model.

Our DTC segment continued to contribute significantly to our overall results, generating 57% of our consolidated gross profit for the quarter with 130 basis point increase in our DTC gross margin percentage year-over-year. Our total DTC customer base grew 15% year-over-year. New DTC customers for the quarter grew 230% year-over-year and active DTC customers for the quarter grew 30% year-over-year. Approximately 55% of the new customers were acquired from our BGASC asset purchase in October 2022. We are encouraged by the performance of the now fully integrated BGASC brand and the customer base that we acquired. Our DTC segment continues to grow and remains a key contributor to our overall business. We remain active in seeking opportunities to strategically enhance our business.

As we announced last month, we purchased a 12% minority interest in Texas Precious Metals or TPM a leading e-commerce precious metals retailer with a strong geographic presence in Texas. TPM has over 50,000 customers, and we look forward to supporting their growth through our 4-year extension of our exclusive supplier agreement. Last week, we also entered into a definitive agreement to acquire a 25% minority interest in Atkinsons Bullion & Coin, a leading online retailer of precious metals, bullion and coins based in the United Kingdom. This investment transaction is expected to close in the first quarter of calendar '23 and will expand our international footprint outside of North America.

Another key driver of our performance continues to be our minting business, which provides us with ongoing access to supply with production levels continuing at near record levels for the second quarter.

Now I'll turn it over to our CFO, Kathleen Simpson-Taylor, to walk you through our financials in more detail. Then President, Thor Gjerdrum will discuss our operating metrics. Afterwards, I'll provide a further update on our business and growth strategy and take your questions. Kathleen?

Thank you, Greg, and good afternoon, everyone. Our revenues for fiscal Q2 2023 increased 0.2% to $1.95 billion from $1.946 billion in Q2 of last year. The increase was due to an increase in silver ounces sold, partially offset by a decrease in gold ounces sold and lower average selling prices of gold and silver. The DTC segment contributed 23% of the consolidated revenue in fiscal Q2 2023 and 28% of the consolidated revenue in Q2 of last year. Revenue contributed by JMB represented 21% of the consolidated revenues for fiscal Q2 of 2023 compared to 25% in Q2 of last year.

For the 6-month period, our revenues decreased 3% to $3.85 billion from $3.96 billion in the same year ago period. The decrease was due to a decrease in gold ounces sold and lower average selling prices of gold and silver, partially offset by an increase in silver ounces sold. The DTC segment contributed 23% and 27% of the consolidated revenue for the 6 months ended December 31, 2022 and 2021, respectively. Revenue contributed by JMB represented 21% of the consolidated revenues for the 6-month period ended December 31, 2022, compared to 24% in the same year ago period.

Gross profit for fiscal Q2 2023 decreased 3% to $64 million or 3.28% of revenue from $65.9 million or 3.39% of revenue in Q2 of last year. The decrease in gross profit was due to lower gross profits earned from the wholesale sales and ancillary services and DTC segment. Gross profit contributed by the DTC segment represented 57% of the consolidated gross profit in fiscal Q2 2023 compared to 56% in the same year ago period. Gross profit contributed by JMB represented 51% of the consolidated gross profit in fiscal Q2 2023 compared to 45% in Q2 of last year.

For the 6-month period, gross profit increased 15% to $140.6 million or 3.65% of revenue from $121.9 million or 3.08% of revenue in the same year ago period. The gross profit increase was due to higher gross profits earned from the wholesale sales and ancillary services and DTC segment. Gross profit contributed by the DTC segment represented 56% of the consolidated gross profit in the 6-month period ended December 31, 2022, compared to 55% in the same year ago period. Gross profit contributed by JMB represented 49% and 45% of consolidated gross profit for the 6 months ended December 31, 2022 and 2021, respectively.

SG&A expenses for fiscal Q2 2023 increased 11% to $20.8 million from $18.7 million in Q2 of last year. The increase was primarily due to an increase in compensation expense, including performance-based accruals of $1.5 million, higher advertising costs of $1.2 million, an increase in insurance costs of $0.8 million and an increase in computer-related expenses of $0.3 million, partially offset by lower consulting and professional fees of $1.7 million.

For the 6-month period, SG&A expenses increased 9% to $38.6 million from $35.4 million in the same year ago period. The increase was primarily due to an increase in compensation expense, including performance-based accruals of $2.5 million, higher advertising costs of $1.9 million, an increase in computer-related expenses of $0.4 million, an increase in insurance costs of $0.2 million, partially offset by lower consulting and professional fees of $2.3 million.

Depreciation and amortization expense for fiscal Q2 2023 decreased 61% to $3.3 million from $8.3 million in Q2 of last year. The decrease was primarily due to a $5 million decrease in amortization of acquired intangibles related to JMB. For the 6-month period, depreciation and amortization expense decreased 61% to $6.4 million from $16.5 million in the same year ago period. The decrease was primarily due to a $10.1 million decrease in amortization of acquired intangibles related to JMB.

Interest income for fiscal Q2 2023 decreased 5% to $5 million from $5.3 million in Q2 of last year. The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment, offset by higher other finance product income. For the 6-month period, interest income decreased 7% to $10.1 million from $10.8 million in the same year ago period. The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment and lower other finance product income.

Interest expense for fiscal Q2 2023 increased 34% to $7.2 million from $5.4 million in Q2 of last year. The increase was primarily driven by $1.2 million associated with the company's trading credit facility and the AMCF Notes, including amortization of debt issuance costs, $0.7 million related to product financing arrangements, $0.2 million in interest associated with liabilities on borrowed metals, and this was offset by a decrease of $0.2 million of loan servicing fees.

For the 6-month period, interest expense increased 23% to $13.4 million from $10.9 million in the same year ago period. The increase was primarily driven by $1.8 million associated with our trading credit facility and the AMCF Note, including amortization of debt issuance costs, $0.8 million related to finance product financing arrangements, $0.3 million in interest associated with liabilities on borrowed metals, and this was offset by a decrease of $0.4 million of loan servicing fees.

Earnings from equity method investments in Q2 2023 increased 283%, to $4.7 million from $1.2 million in the same year ago quarter. The net increase was primarily due to our additional 40% ownership interest in Silver Gold Bull which was acquired in June 2022. For the 6-month period, earnings from equity method investments increased 171% to $7.3 million from $2.7 million in the same year ago period. The net increase was primarily due to our additional 40% ownership interest in Silver Gold Bull, which we acquired in June 2022.

Net income attributable to the company for the second quarter of fiscal 2023 totaled $33.5 million or $1.35 per diluted share. This compares to net income attributable to the company of $31.8 million or $1.30 per diluted share in Q2 of last year. As adjusted for the effect of the 2-for-1 stock split in June 2022. Our diluted EPS for the fiscal second quarter of 2023 is based on weighted average diluted shares outstanding of $24.7 million compared with $24.4 million weighted average diluted shares outstanding during the second quarter of last year. As adjusted for the effect of the 2-for-1 stock split that occurred in June 2022.

For the 6-month period, net income attributable to the company totaled $78.6 million or $3.18 per diluted share which compares to net income attributable to the company of $57.8 million or $2.39 per diluted share in the same year ago period as adjusted for the effect of the 2-for-1 stock split that occurred in June 2022.

Our diluted EPS for the 6-month period is based on weighted average diluted shares outstanding of $24.7 million compared with $24.2 million weighted average diluted shares outstanding during the same year ago period, which has been adjusted for the effect of the 2-for-1 stock split that occurred in June 2022.

Adjusted net income before provision for income taxes, a non-GAAP financial measure, which excludes acquisition expenses, amortization and depreciation for Q2 fiscal 2023 totaled $46.5 million, a decrease of 5% compared to $49 million in the same year ago quarter. Adjusted net income before provision for income taxes for the 6-month period totaled $107.7 million, a 20% increase from $90.1 million in the same year ago period. EBITDA, a non-GAAP liquidity measure for Q2 fiscal 2023 totaled $48.7 million, a 1% decrease compared to $49.1 million in Q2 fiscal 2022. EBITDA for the 6-month period totaled $110.9 million, a 23% increase compared to $90.1 million in the same year ago period.

Turning to our balance sheet. At quarter end, we had $72.5 million of cash compared to $37.8 million at the end of last fiscal year 2022. Our tangible net worth at the end of the quarter was $371.6 million, up from $321.6 million at the end of the prior fiscal year. Our AMCF Notes have a maturity date of December 15, 2023, and are now reported as a current liability of $94.5 million on our balance sheet.

Finally, as we announced in a prior press release, A-Mark’s Board of Directors reaffirmed its previously announced regular quarterly cash dividend policy of $0.20 per common share which the company paid in January. It is expected that the next quarterly dividend will be declared and paid in April 2023. The declaration of regular cash dividends in the future is subject to the determination each quarter by the Board of Directors based on a number of factors, including the company's financial performance, available cash resources, cash requirements and the alternative uses of cash and our applicable bank covenants. That completes my financial summary.

Now I will turn the call over to Thor, who will provide an update on our key operating metrics. Thor?

Thank you, Kathleen. Looking at our key operating metrics for the second quarter of fiscal 2023. We sold 565,000 ounces of gold in Q2 fiscal 2023, which was down 10% from Q2 of last year as well as the previous quarter. For the 6-month period, we sold 1.2 million ounces of gold, which was down 8% from the year ago period. We sold 38.1 million ounces of silver in Q2 fiscal 2023, which was up 19% from Q2 of last year and up 6% from last quarter. For the 6-month period, we sold 74.1 million ounces of silver, which was up 23% from the same year ago period.

The number of new customers in the DTC segment, which is defined as the number of customers that have registered or set up a new account or made a purchase for the first time during the period was 131,200 in Q2 fiscal 2023, which is up 230% from Q2 of last year and up 168% from last quarter. Approximately 55% of the new customers in Q2 fiscal 2023 were attributable to the acquired customer list of BGASC in October 2022. For the 6-month period, the number of new customers in the DTC segment was 180,200, which is up 145% from 73,600 new customers in the same year ago period. Approximately 40% of the new customers in the 6-month period were attributable to the acquired customer list of BGASC in October 2022.

The number of total customers in the DTC segment at the end of the second quarter was approximately 2.2 million, which was a 50% increase from the prior year. The year-over-year increases in the customer base metrics were primarily due to organic growth of our JMB customer base as well as the acquired customer list of BGASC in October of 2022. The DTC segment average order value, which represents the average dollar value of third-party product orders, excluding accumulation program orders delivered to DTC segment customers during Q2 fiscal 2023 was $2,389 which is up $16 from Q2 of fiscal 2022. (inaudible) For the 6-month period, our DTC average order value was $2,361, which is up $29 from the same year ago period.

For the second fiscal quarter, our inventory turn ratio was 2.4, which is a 27% decrease from 3.3 in Q2 of last year. For the 6-month period, our inventory turnover ratio was 4.5 which was a 41% decrease from the 6-month period of last year. Finally, the number of secured loans at the end of December totaled 1,049, a decrease of 3% from September 30, 2022, and a decrease of 56% from December 31, 2021. The dollar value of our loan portfolio at the end of December 2022 totaled $102.5 million, which is up 17% from the end of September, but down 19% from December 31, 2021.

That concludes my prepared remarks. I'll now turn it over to Greg for closing remarks. Greg?

Thank you, Kathleen and Thor. Our favorable results for the quarter demonstrate the benefits of our fully integrated business platform to generate positive results even in more modest market conditions with the opportunity for outsized returns in periods of elevated demand and volatility. We have continued to face some macro headwinds to start the fiscal third quarter as we are currently experiencing a more subdued market environment.

We continue to evaluate investment opportunities to expand our footprint, both in the U.S. and in international markets to further grow our business and create value for our shareholders. We are prioritizing opportunities which are synergistic for A-Mark and which are aligned with our business model. We remain very optimistic that our proven business model and integrated platform will allow us to realize growth and profitability over the long term. Operator?

Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from Tom Forte with D.A. Davidson.

Great. So Greg, I have 2 questions. I'll go one at a time. When you talk about the macro headwinds, how much of that is elevated prices for gold and silver? Is that partly it? Or is it more than that? I appreciate any additional comments there?

Sure. I think exactly what you said. I think the higher spot prices has caused some premium compression as well as some softening in demand. I think November 3, gold was at $1,635 an ounce. It ended the year around $1,800 plus. And as of January 31, we were up to $1,930.So -- you had a fairly significant steady increase on the spot price and silver followed suit without really any of the pullbacks that we see that generally generate volatility or generate increased demand. Now we did see a Friday of last week, we did see a fairly significant drop in gold and silver, and we'll see how that plays out through February.

But I think that we do -- we have reached a point at this level in gold and silver that the market is really looking to see whether or not we're going to get a breakout to the upside or whether we're going to get a pull back. And I think we had such extreme demand and conditions through our Q1 and through October and the first part of November of our Q2, that there was definitely to be expected if spot prices rose without a pullback, we expected to see a little softening in demand. I also think the timing was a little bit just -- there was a little bit of timing issue at the -- in December, where we had these circumstances plus we had the new United States mint product coming online, the first of January. So you had some supply coming into the market there as well as some of the other sovereign mints had product coming into the market in January.

So I think the business is functioning great. Everything is working. But I do think that we had a little bit of supply and demand imbalance in December and January.

Great. And then for my second of 3 questions. On the M&A front, can you do a quick compare and contrast on how you would describe your domestic strategy versus your international strategy, given that you just did the -- or you have plans to make an acquisition of the U.K. assets?

Yes. I mean -- I think North America is where our markets are. We have the most -- the biggest footprint in Canada and the United States. So I think we will continue to build our moat and look for acquisitions that are priced right and where we believe the people we're talking to would be a good addition to our staff and business model ideas that we haven't possibly looked at before, but I don't think anything slows down in North America.

I think that we're excited to get a little more insight into our first investment outside the U.S. or outside of North America. And I think the Atkinson deal is something that we've been looking at really for 6 to 9 months. Getting to know the partners, getting to know the business and then come into an agreement where we have made this purchase. And we also, as part of that, have an option to go up to just under 50%. So I think we'll digest that.

I think our marketing guys in the DTC segment will be taking a close look at Atkinson's and seeing what we know and what they know and how we can meld those 2 together. And then, of course, we feel very strongly with the supplier agreement that are access to inventory and access to products that Atkinson hasn't been able to offer in the past or at least not offer consistently, we hope that by moving some product over to the U.K. and giving them quicker access to product for their customers. And we think that will be a nice opportunity for us to kind of get a feel for what that market is. And I think the principles at Atkinson's are very open to our help, and they're very much looking forward to seeing what we can do together.

Great. So last question. So last quarter, you talked about your mint capacity, and you talked about -- you had a very significant increase, I think, in the silver ounces sold. But at a high level, can you talk about your mix capacity today, SilverTowne and Sunshine Mint ?

Sure. I think both companies have had a great start to the fiscal year. Both quarters were very strong in both businesses. I think we've found ways to squeeze more production out of both facilities. And I think that everything is operating probably 90% to 100% of capacity right now. We regularly go through different product imbalances, and we shift production to items and products that we see demand shifts in or in products that we build up supply of. We're currently still producing product through February for the most part on orders that we took back in November and December. So we're trying to catch up and get as much product that we have orders on right now out to our customers.

But I think that we'll keep a close eye on the, again, the supply and demand and the product mix, and we will -- and we'll keep an eye on our overall inventory and how that forward book is looking on product.

The next question comes from Lucas Pipes with B. Riley.

Thank you very much, operator, and good afternoon, everyone. I also want to ask about the M&A strategy and specifically with the recent investment in the U.K. Is that maybe a sign that Europe is higher up on the priority list internationally? Or should we maybe not go that far?

Yes. I mean I think any investment we make outside of the U.S., whether it be in Europe or in the U.K. I think it comes with just a different set of challenges. I think that -- we need a good partner in those areas because the nuance of the business, although very similar, we're selling very much -- very many of the same products. I think the nuance of the consumer is something that A-Mark hasn't had exposure to the level of detail we hope to see from the Atkinson investment.

And I do believe that the U.K. in particular, as it relates to online e-commerce platforms is there's a little bit less competition in my mind, and there's a few more players in North America. And I think that the businesses and the evolution of the businesses in the U.K. are probably a little bit behind what we see and what we are able to execute here in North America. So I think opportunity-wise, it's a very big market.

Certainly, the U.K. is dominated by the Royal Mint and the Royal Mint is a big player there. So although we are a big distributor of the Royal Mint here in North America, we believe that the U.K. presence and the relationship with the Royal Mint has a lot of potential for us to continue to grow our business over there. So I think that's probably the players as well, as I said, the sovereign mint is very interesting to us in the U.K.

It doesn't mean that we haven't looked at or we aren't looking at other opportunities in other places outside of North America. But I do believe that this was something that we identified, as I said, 6 to 9 months ago. We knew we wanted to do it, and we did focus specifically on this target, diligence in the partners, diligence and the founders, the employees, the model. And we came away as we signed the definitive agreement last week, we came away feeling that this was a good decision, albeit a little slower process than maybe we had in the BGASC or the TPM investment earlier this year. We are very happy with the results and the deal we were able to cut. And I think both sides feel there's a lot of opportunity in the U.K.

That's very helpful. And speaking of sovereign mint. I think you mentioned that there were a couple of new products that may have had an impact on premiums here earlier this year. Can you -- did I hear that right? Can you elaborate on that? And is that something more seasonal? Or is it potentially structural that there's more supply?

Sure. I don't know exactly what you're referring to, but I'll try to answer what I think the question is. We went through a period -- through our Q1 and the first part of Q2 a period of extreme supply constraint from the U.S. mint, both in gold and silver. And I think I've talked about it before. We hadn't really seen supply constraint on the U.S. Gold Eagles in quite some time. and the silver constraints continued. So we did benefit from that in Q1, and we also benefited from that at the beginning of Q2 in October. I do believe that the higher premiums that we experienced in those periods were a direct result of a supply constraint. It does appear that as we move into Q3 and as we turn the calendar to 2023 and all the mints are now producing bullion date in 2023.

We've absorbed a significant amount of new inventory from that date change. It's -- we've been able to manage it. We've been able to digest it. We are set up very well, I believe, if we get back into a supply-constrained situation or if we have a demand increase, I think A-Mark and our DTC are very well positioned with plenty of inventory. It does appear from what I'm hearing that the U.S. mint as it relates to Silver Eagles in particular, at least through the first 6 months of '23 will continue to be on allocation. And I believe that, that will continue to limit the amount of Silver Eagles that are coming into the marketplace over the next 6 months.

So we'll see how that plays out. We'll see how the demand matches up with that but that's what we're hearing from the U.S. mint right now.

(Operator Instructions) The next question is coming from Andrew Scutt with ROTH MKM.

The first one here, you dive into a little bit, but please kind of just pick apart the 130 basis point gross margin expansion in the DTC business. I was just kind of wondering if that was more just the market environment or maybe improvements in the operating model?

I think for the most part, it had to do again with what I just discussed, which is we did see some extreme premium advantage to the model in Q1 and to start Q2. I think that, that is reflective of our ability to move a lot of metal, both at the wholesale level and at our DTC segment. And I think we enjoyed those -- that premium expansion for a while. And as I discussed, we've seen a little bit of compression or erosion of that premium in December and January. But I don't think there was any anything specific within our model as it relates to expenses or anything else. I think it was pretty much driven by demand. And then as I said, some significant supply chain and supply constraints at the sovereign mint level.

Great. My second one here, kind of shifting gears. The CFC loan book. You guys talked to the increase in the loan book but also -- and not simultaneously, there is a decline in loans outstanding. So can you just kind of talk to the demand you're seeing in the business? And then maybe any updates on the partnerships with the collectibles group would be great as well.

Sure. I think that the loan book, as we've talked about many times in the past, the loan book tends to increase when you have rising prices and we tend to have loans paid off, and we tend to lose loans when you have sudden drops or significant drops in the spot price of metal. This would be on the bullion loans in particular. I think that on the numismatic loans and the sports card loans that we've started to invest in, it's not quite as volatile. And I think that the CFC loan book is going to have the ups and downs. I do believe also that we've seen a significant increase in a higher cost of funds as it relates to our credit facility with the rising rates over the last 4 to 5 months, and it's been -- our cost of funds has gone up and we will start to expand our -- or raise our interest rates to our borrowers.

But generally, we saw in the last 2 quarters, a little faster increase in our cost of funds than we did in our ability to charge more to the customers. I think we've also -- as it relates to the CGC arrangement, that's -- we are focused right now on trying to increase our book on the more collectible side of things and the more numismatic or cards as opposed to the straight bullion loans, which we have pulled back a little bit on over the last 3 to 4 months, and we see a little bit better margin potential in the collectible loans. So we're going to be focused on that. And we've seen some nice increase in that, which has offset some of the drop on the bullion loans.

Next question comes from Greg Gibas with Northland Securities.

Greg, Kathleen and Thor, thanks for taking my questions. I guess first, if I could follow up on the subdued market conditions. How much of kind of those headwinds were from lack of volatility in the market, do you think, versus maybe that increase in supply that you talked about?

Yes. I mean I think, again, I do point to the rise in spot prices, and I think that, that is a significant issue. And we've always talked about how volatility is good for us. But when prices tend to rise and there's uncertainty as to really what's causing it or where it's going. I think that's going to cause a little bit of pullback in demand. And I just think that it's natural. We had a pretty good run on silver in particular, over the last year plus from about $18 up to about $25, so you also have some people taking profits, and we tend to have a little bit higher buybacks when spot prices are up. So that's going to affect the supply. You also have had a situation where we were very active forward selling a lot of our SilverTowne and Sunshine product in September and October, and a lot of that product is now coming into the marketplace as we deliver it in January and February.

And I think that not everybody in the marketplace hedges their position like we do, so if you have wholesalers that maybe bought product from us back September, October at lower spot prices, they're going to be selling that product back into the marketplace when they take delivery of it. So I think there's a number of factors that are going into this, but I would say the higher spot prices are probably the #1 issue. And then with that, a little slowing in demand. And again, these things are very expected by us. We go through these periods all the time. And we believe that operationally, the business is handling it. Our liquidity, all of our business operations, logistics, everything is performing well.

But we are in a volatile business, and we've experienced this before. But I do think, as I said before, the combination of December slowed down a little bit, rise in prices, more product coming into the marketplace in January. I think that has had an effect. And throughout January, as I said, the price of gold and silver continued to pretty much head up and then stagnate in a pretty tight range until Friday, when we saw a pullback. And as in most cases, we did see a pickup in demand from our DTC segment on Friday and over the weekend and this morning.

So putting it all together, it's hard for me to say exactly what one factor maybe is more important than another. But to me, this is kind of how we operate here. We're used to volatility and as we've seen before. We -- and we say it all the time, in great conditions, we're able to have outsized returns as well as do well when we have more subdued levels. So it seems -- everything seems pretty standard to me.

Right. Right. Very helpful. And if I could follow up, you already touched on this a little bit, but that new supply from the mint in January. Have they given any indications in terms of their plans for maybe minting production levels going forward on new products? Any idea of that?

I mean the U.S. mint is not ever likely to give us specifics or details. And in many cases, I don't know that they even know what their production is going to be because there are so many factors that affect how many -- 1 ounce gold American Eagles and 1 ounce Silver Eagles they can produce. I can say that part of the benefit we had in Q1 and into Q2, as I said before, for the first time, there was a significant lack of U.S., American Gold Eagles 1 ounce, and we got to a point where there was virtually no new fractional gold coins being made. And that did have a very positive effect on the premium and the demand for that product was positively affected for us.

They are now back on gold where there is no allocation and they have -- they'll make as much gold as we can order. So that was a fairly major change as we turned into January. The gold went off allocation and is available for immediate delivery now.

As it relates to the Silver Eagles, we've been through these periods for the last 2 years of pretty much constant allocation where the demand continues and has exceeded what they can make. And again, I feel like they sometimes aren't great at predicting what they can make. But from what we have heard throughout the next coming months and probably 6 months, they will be on allocation on Silver Eagles at a number that we've been seeing consistently now over the last 12 months. So I don't see any big increase on a monthly basis going forward, but the market did -- they did have a fairly large production built up for the turn of the calendar. And in January, we saw about the number of coins that we were predicting on the silver side. And then that was absorbed by the marketplace. And again, now, as I said, it appears they're going to be back on a more regular allocation kind of underperforming what they need.

Okay. Got it. That's helpful. And I know it's still early, but I wanted to ask just how the performance maybe of BGASC is trending relative to your expectations? And perhaps Texas Precious Metals as well. I know there's always a little uncertainty when you're changing hands and you're making a new investment. So if there's any color you can share there, that would be helpful.

I mean I would just really differentiate between the 2. The first being the BGASC, we bought 100% of the platform. I think we -- our guys -- our tech guys at JM Bullion really outperformed expectations. They were able to integrate the platform and transfer the platform to the JM Bullion site very quickly with very little disruption to the customer-facing experience. The BGASC if you go on that site right now, it's running on the JM platform. And I really -- I don't know that the customers of BGASC even saw any difference other than just a significant increase in product availability that we've been able to add to the site.

As it relates to the performance after we closed the deal, we've exceeded expectations. I think the number of larger orders have been welcome by us. Probably, we've seen some bigger orders that we weren't expecting. And I think that customer base as we were hoping, it does appear that it's it functions a little independently of our other DTC customers, and it does seem to have its own little ecosystem, which is what we were hoping to see. So very, very positive news out of BGASC.

And then as it relates to Texas Precious Metals, it's a little different animal and that we just took a 12% stake there. They're still really running the company. They're still making the decisions. We have a little closer relationship with them and a little more understanding on how we can help them by supplying a little bit more product which will increase demand at the A-Mark wholesale level. And I think so far, that's been going very well. I have a list of things that discussed with the management there about different ways that we might be able to help each other. And we'll be looking to act on those in the months ahead.

But again, this is a very entry level, get to know you 12%, and we're not -- other than getting financials from them, we'll be accounting for them on the cost basis accounting. So we won't be integrating the numbers, and you won't be seeing the numbers in our other investment category.

So I think they're different, but they both to us, offer good opportunities. And I think specifically, as I mentioned and early mentioned in the press release, we're very interested and very curious about the Texas-centric customer base at Texas Precious Metals and to see how that -- how to value that and how it functions and get to know the customers and get to know our new management partners as we move forward.

Next question comes from Carter Dunlap with Dunlap Equity Management.

I realize it's early, but can you glean anything from the cyber experience you've had in terms of how those customers react to either metal volatility or anything else? And what's the progress, if any, in terms of sort of becoming programmatic buyers every month?

Yes. I think we've -- We've brought on a couple of new people to focus on marketing for CyberMetals in the last quarter. We are seeing what we think is positive growth. There's no doubt in our mind that the new customers coming into CyberMetals are more than likely going to be younger and they're more than likely not to be existing JM customers, although we do get some crossover. I do believe this platform is a different demo, and I think it is a great way for us to introduce CyberMetals buyers to the physical metals ownership that we have at JM. So I think we've seen that.

Certainly, we are promoting, and we -- as we had talked about earlier, when we were developing this platform, we believe that people getting on a regular monthly or quarterly purchase plan where it's just automatic. We're seeing some positive feedback from customers there. And I think as would be expected, with spot prices rising, as I discussed earlier, we have seen some redemptions and people actually trading metal back to us on the platform at a little bit higher level.

So again, it's going to be slow and steady. We feel good about our marketing plan and how we're going out there to find new customers. But to this point, I'm pleased with it, and I think it's -- the platform is behaving better than expected as it relates to functionality. We just need to find the sweet spot for what we're paying for new customers and how we're attracting new customers to the platform.

(Operator Instructions) We have a follow-up coming from Lucas Pipes with B. Riley. Please proceed.

When I look at the operating metrics, gold ounces sold, silver ounces sold. So we saw an increase in silver ounces and the decrease in gold. And I have some intuition on why that is, but it would be great to get the explanation for that?

I think that our ounces sold always I caveat it with the -- there's a number of products that go into that. So I think the timing, many times can affect that number. I think that you have to always remember that when we report or when we're looking internally at ounces sold, you not only have the wholesale ounces sold a fabricated product and the wholesale -- and the retail ounces sold DTC wise on fabricated product. That also encompasses our sales to the U.S. Mint and other mints, SilverTowne, Sunshine of big bars, 1,000-ounce bars and 100 ounces and 400-ounce gold bars.

So depending on timing and demand, you can see those numbers vary. And you can see imbalance between gold and silver, they don't always go up and they don't always go down because you have demand side both at the wholesale and the industrial level as well as at the DTC level. So in looking at the numbers, I think you probably -- gold and the rising spot price certainly has -- probably had a little bit effect on our gold ounces sold whereas silver, we continue to pump a lot of metal out of our private mints as well as supply the U.S. Mint as they were gearing up to have their 2023 launch of the Silver Eagle. So that's pretty -- it's a pretty high altitude answer, but I don't see anything specific as to why we sold less gold and we sold more silver.

I'll add a facetious comment. If Congress doesn't come to an agreement on the debt ceiling and the U.S. Mint set $1 trillion platinum coin, I think JM Bullion has recommended itself for the distribution. So again, best of luck.

Well, we'll wait to see how all those things play out. We'll try -- I must try not to count on anything because in this business, I've learned after 40 years, I shouldn't get to settle in on what I think is going to happen. I should just make sure I'm ready to react to whatever might happen.

Yes. Well, there might be more volatility. But again, best of luck.

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Roberts for his closing remarks.

Thank you very much. I'd like to thank our many shareholders for joining the call today. Thank you for your interest and continued support. Many thanks to our employees for their dedication and commitment to A-Mark's success, and we look forward to keeping you apprised of A-Mark's further progress. Thank you very much for joining.

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 include the following: The failure to execute the company's growth strategy as planned; greater-than-anticipated costs incurred to execute this strategy; changes in the current domestic and international political climate; increased competition for A-Mark's higher-margin services, which could depress pricing; the failure of the company's business model to respond to changes in the market environment as anticipated; general risk of doing business in the commodity 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, plan and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future 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 available for replay via link in the Investors section of the company's website. Thank you for joining us today for A-Mark's earnings call. You may now disconnect.