Envela Corp (ELA) 2016 Q2 法說會逐字稿

Greetings, and welcome to the DGSE Companies' second-quarter 2016 conference call. (Operator Instructions). As a reminder, this conference is being recorded.

各位來賓，歡迎參加DGSE公司2016年第二季業績電話會議。 （操作說明）提醒各位，本次會議正在錄音。

It is now my pleasure to introduce your host, Matthew Peakes, Chairman, CEO and President. Thank you, sir. You may begin.

現在我榮幸地向大家介紹主持人，董事長、執行長兼總裁馬修‧皮克斯先生。謝謝您，先生。您可以開始了。

Good afternoon, and thank you for joining us on our conference call to review the financial results of the second quarter and six months ended June 30, 2016. The call today will be hosted by myself and Mr. Nabil Lopez, the Company's Chief Financial Officer. Following our prepared remarks, there will be a formal question-and-answer session open to participants on the call.

下午好，感謝各位參加本次電話會議，共同回顧截至2016年6月30日的第二季及上半年的財務表現。本次電話會議由我本人和公司財務長納比爾·洛佩茲先生共同主持。在我們發言結束後，將進行正式的問答環節，歡迎各位與會者提問。

Before we get started, I'm going to review the Safe Harbor statement. Some of the information discussed in this call, particularly our revenue, operational targets, and our forward-looking business plans, is based on information as of today, August 15, 2016, and contains forward-looking statements that involve risk and uncertainty.

在正式開始之前，我先回顧一下「安全港聲明」。本次電話會議中討論的部分信息，特別是我們的收入、營運目標和前瞻性業務計劃，均基於截至2016年8月15日的信息，其中包含涉及風險和不確定性的前瞻性陳述。

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release we issued today, as well as DGSE's SEC filings.

實際結果可能與此類聲明中所述的結果有重大差異。有關這些風險和不確定性的討論，請參閱我們今天發布的盈利新聞稿中的前瞻性聲明披露以及DGSE向美國證券交易委員會提交的文件。

Regarding the agenda for today's call, first I'll give a brief summary of the second quarter. Second, Nabil Lopez, our CFO, will go over the financial results for the second quarter. I'll give a few closing remarks, and then Nabil and I will be glad to take your questions.

關於今天電話會議的議程，首先我將簡要概述第二季度的情況。其次，我們的財務長納比爾洛佩茲將詳細介紹第二季的財務表現。我將作總結發言，之後納比爾和我將樂於回答各位的問題。

We announced second-quarter sales increased by 3.7% to $15.5 million compared to the same quarter of last year, largely driven by bullion sales. We constantly evaluate the profitability of each store; and in June we closed our Chicago store, six months prior to the end of the lease.

我們宣布第二季銷售額年增3.7%，達到1,550萬美元，主要得益於貴金屬銷售的成長。我們會持續評估每家店的獲利能力；今年6月，我們提前六個月關閉了芝加哥門市，當時租約尚未到期。

The gold market experienced a steady decline in the price per ounce in 2015 but has rebounded in the first half of this year. However, it has been a challenging environment for jewelry sales.

2015年黃金市場價格持續下跌，但今年上半年反彈。然而，珠寶銷售環境卻充滿挑戰。

On June 20 of this year, we entered into a stock purchase agreement with Elemetal, LLC and NTR Metals, LLC which will cancel and forgive approximately $5.9 million of debt and bullion payable in exchange for both common stock and warrants to purchase common stock. The closing of the transaction is expected to take place following satisfaction of certain closing conditions, including obtaining the approval of the shareholders at the annual meeting to be held in the next few months. The preliminary proxy statement will be filed with the SEC within the next two weeks.

今年6月20日，我們與Elemetal, LLC和NTR Metals, LLC簽訂了股票購買協議，該協議將註銷並豁免約590萬美元的債務和應付金條，以換取普通股和認股權證。該交易預計將在滿足某些交割條件後​​完成，包括在未來幾個月舉行的年度股東大會上獲得股東批准。初步委託書將於未來兩週內提交給美國證券交易委員會（SEC）。

On July 27, we sold the property of our largest location for $2.25 million. We'll use the proceeds from the sale to fund the buildout of our new, much larger flagship location in North Dallas. We expect the new location to be open next month, allowing us to consolidate at least two existing stores.

7月27日，我們以225萬美元的價格出售了旗下最大門市的物業。我們將把出售所得用於在北達拉斯建造規模更大的新旗艦店。新店預計下個月開業，屆時我們將能夠整合至少兩家現有門市。

With that, I will now turn the call over to Nabil for a more detailed look at the second-quarter 2016 financial results. Nabil?

接下來，我將把電話交給納比爾，讓他更詳細地分析2016年第二季的財務表現。納比爾？

Thanks, Matthew, and welcome to everyone on the call today. For the quarter ended June 30, 2016, revenue from continuing operations were $15.5 million, a 3.7% increase compared to $14.9 million in the quarter ended June 30, 2015, as jewelry and scrap sales trended downward while DGSE's bullion sales saw an increase as compared to the prior year. The decrease in the scrap sale is consistent with industry-wide trends.

謝謝馬修，也歡迎各位參加今天的電話會議。截至2016年6月30日的季度，持續經營業務收入為1,550萬美元，較2015年同期（截至2015年6月30日）的1,490萬美元成長3.7%。收入成長的原因是珠寶和廢料銷售額呈下降趨勢，而DGSE的金銀條塊銷售額較上年同期有所增長。廢料銷售額的下降與產業整體趨勢一致。

Gross profit from continuing operations for the quarter decreased $287,000 from $2.3 million to $2.6 million (sic - see press release, "to $2.3 million compared to $2.6 million in the prior year quarter"). Gross profit as a percentage of revenue decreased from 17.2% to 14.7%. The overall gross profit decrease was driven by lower sales in our jewelry and scrap categories. We are working to increase the jewelry margins by discounting less at the point of purchase.

本季持續經營業務的毛利從230萬美元降至260萬美元（原文如此，請參閱新聞稿，「與去年同期相比降至230萬美元」）。毛利率從17.2%降至14.7%。毛利整體下降主要受珠寶和廢料類銷售下滑的影響。我們正努力透過減少銷售折扣來提高珠寶的利潤率。

Selling, general, and administrative expenses for continuing operations increased $60,000 or 2% in the quarter ended June 30, 2016, to $2.6 million compared to $2.5 million in the prior-year quarter. The increase is primarily due to costs associated with the proposed transaction with Elemetal, LLC and NTR Metals LLC, of approximately $85,000; and approximately $70,000 related to the acceleration of rent expense with the closing of the Chicago store.

截至2016年6月30日止季度，持續經營業務的銷售、一般及行政費用增加6萬美元，增幅2%，達到260萬美元，而上年同期為250萬美元。該增長主要歸因於與Elemetal, LLC和NTR Metals LLC擬議交易相關的約8.5萬美元費用；以及關閉芝加哥門市而加速支付的約7萬美元租金費用。

Depreciation and amortization increased 34% to $110,000 compared to $82,000 for the same period in the prior year. The increase was due to the write-off of assets formerly utilized in Chicago.

折舊和攤提費用較上年同期增加34%，達11萬美元，而上年同期為8.2萬美元。成長的原因是註銷了先前在芝加哥使用的資產。

The loss from continuing operations for the second quarter was $537,000 or $0.04 per share compared to a loss from continuing operations of $132,000 or $0.01 per share in the year-ago quarter. The Company reported a net loss in the second quarter of approximately $537,000 or $0.04 per diluted share compared to a net loss of approximately $90,000 or $0.01 per share in the prior-year quarter.

第二季持續經營業務虧損53.7萬美元，即每股虧損0.04美元，去年同期持續經營業務虧損13.2萬美元，即每股虧損0.01美元。該公司第二季淨虧損約53.7萬美元，即每股攤薄虧損0.04美元，去年同期淨虧損約9萬美元，即每股虧損0.01美元。

Turning to the year-to-date financials, in the six months ended June 30, 2016, revenues were $27.3 million, down $500,000 or 2% compared to $27.8 million in the same period last year. The decrease, again, is primarily due to the continued industry-wide weakness in the scrap metal transaction and jewelry sales. Bullion sales have increased approximately 19% as compared to the prior-year period.

從年初至今的財務數據來看，截至2016年6月30日的六個月內，公司營收為2,730萬美元，較去年同期的2,780萬美元減少50萬美元，降幅為2%。收入下降的主要原因仍然是廢金屬交易和珠寶銷售持續疲軟，這是整個行業普遍存在的問題。相比之下，金銀條的銷售額較上年同期成長了約19%。

Gross profit in the first six months of 2006 (sic - 2016) was $4.4 million or 16.2% of revenue which was down $471,000 from $4.9 million or 17.6% of revenue in the prior-year period. The overall gross profit decrease was driven by lower sales in our jewelry and scrap categories. Bullion sales were up compared to the prior year.

2006年上半年（原文誤寫為2016年上半年）毛利為440萬美元，佔營業收入的16.2%，較上年同期的490萬美元（佔營業收入的17.6%）減少了47.1萬美元。毛利整體下降主要是由於珠寶和廢料類別的銷售下降。金銀條塊的銷售額較上年同期成長。

Selling, general, and administrative expenses decreased $200,000 or 4% to $5.2 million compared to $5.4 million in the prior-year period. The overall decrease was -- in SG&A was achieved primarily through the continued efforts to reduce expenses at all levels, including store-level operating expenses, corporate overhead, and advertising expense despite recognizing approximately $175,000 of costs associated with the expenses related to the proposed transaction with Elemetal, LLC and NTR Metals, LLC and approximately $70,000 related to the acceleration of rent expense associated with the closing of Chicago.

銷售、一般及行政費用較上年同期減少20萬美元，降幅4%，至520萬美元，去年同期為540萬美元。銷售、一般及行政費用的整體下降主要得益於公司持續努力降低各層級的費用，包括門市營運費用、公司管理費用和廣告費用。儘管確認了與擬議的與Elemetal, LLC和NTR Metals, LLC的交易相關的約17.5萬美元成本，以及與芝加哥門市關閉相關的約7萬美元加速租金支出，但仍實現了整體成本的下降。

The loss from continuing operations for the six months ended June 30, 2016, was $1.2 million or $0.10 per share compared to a loss from continuing operations of $933,000 or $0.07 per share last year. The Company reported a net loss in the six months ended June 30, 2016, of $1.2 million or $0.10 per share compared to a net loss of $889,000 or $0.07 per share last year.

截至2016年6月30日的六個月，公司持續經營業務虧損120萬美元，即每股虧損0.10美元，而上年同期持續經營業務虧損為93.3萬美元，即每股虧損0.07美元。公司報告稱，截至2016年6月30日的六個月淨虧損為120萬美元，即每股虧損0.10美元，而去年同期淨虧損為88.9萬美元，即每股虧損0.07美元。

As of June 30, 2016, DGSE had cash and cash equivalents of approximately $1.1 million compared to $1.8 million at December 31, 2015. Stockholders' equity decreased 30.7% to $2.7 million at June 30, 2016, compared to $3.9 million at December 31, 2015.

截至 2016 年 6 月 30 日，DGSE 的現金及現金等價物約為 110 萬美元，而截至 2015 年 12 月 31 日為 180 萬美元。截至 2016 年 6 月 30 日，股東權益下降 30.7% 至 270 萬美元，截至 2015 年 12 月 31 日為 390 萬美元。

At June 30, 2016, and December 31, 2015, the outstanding balance on the Company's credit facility with NTR Metals, LLC was $2.3 million.

截至 2016 年 6 月 30 日及 2015 年 12 月 31 日，本公司與 NTR Metals, LLC 之間的信貸安排的未償餘額為 230 萬美元。

And now I'll turn it back over to Matthew for some additional comments.

現在我把麥克風交還給馬修，讓他補充一些看法。

Thanks, Nabil. While pleased with the increase in revenues during the second quarter, we are working on initiatives to increase both sales and margin while containing expenses in the very difficult environment for our industry.

謝謝納比爾。雖然我們對第二季營收成長感到滿意，但鑑於目前產業環境極其艱難，我們正在努力採取措施，在控製成本的同時，提高銷售額和利潤率。

Construction of the new store is moving right along, and we expect to have the store open next month, putting us in a prime retail location. The size and layout of the new location allows for operational improvements internally, which means an improved customer experience.

新店建設進展順利，預計下個月即可開業，屆時我們將佔據黃金零售地段。新店的規模和佈局有利於內部營運的改進，進而提升顧客體驗。

As you may have read in our last 8-K filing, this will be Nabil's last day with DGSE. As Controller, Nabil played a key role in leading the Company through the restatement and regulatory issues of years past. With that knowledge and history, I was appreciative of his willingness and desire to step into the role of CFO when the position was vacated last year.

正如您在我們上一份8-K文件中讀到的，今天是納比爾在DGSE的最後一天。作為財務總監，納比爾在帶領公司應對過去幾年的財務報表重述和監管問題方面發揮了關鍵作用。鑑於他豐富的經驗和過往成就，我非常感謝他願意在去年財務長職位空缺時接任這一職位。

I would like to take a moment to thank him for his years of service. And on behalf of the DGSE team, we wish him the best in his future endeavors.

我謹藉此機會感謝他多年來的服務。我謹代表DGSE團隊，祝福他未來一切順利。

In the interim, we've engaged Steve Patterson of Capital CFO Partners as acting Chief Financial Officer. Steve has a tremendous background both as a CPA and having served as a CFO for several public companies. We are glad to have him, and know he will be a great asset to DGSE. Welcome, Steve.

在此期間，我們已聘請 Capital CFO Partners 的 Steve Patterson 擔任代理財務長。 Steve 擁有豐富的經驗，既是註冊會計師，也曾擔任多家上市公司的財務長。我們很高興他能加入我們，相信他將成為 DGSE 的寶貴財富。歡迎 Steve！

This concludes our prepared remarks, and we would now like to open the call to take your questions.

我們的演講稿到此結束，現在我們想開放提問環節，請各位提問。

(Operator Instructions). [Morris Sorovski], Private Investor.

（操作說明）。 [莫里斯·索羅夫斯基]，私人投資者。

I was just curious, on the store in Chicago, was there any mortgage on the store? What was the actual net proceeds?

我只是好奇，芝加哥那家店有房貸嗎？實際淨收益是多少？

The store in Chicago was actually a leased location, so there were no proceeds from that sale. The sale was here in Dallas. It was our Reeder Road location. The proceeds, net of fees, was approximately $650,000.

芝加哥那家店實際上是租的，所以那次出售並沒有帶來任何收益。出售的地點在達拉斯，是我們位於里德路（Reeder Road）的店面。扣除手續費後，淨收益約為65萬美元。

Okay, and I was just curious: after the new store opens up in Dallas, how many other stores are left? I kind of lost track.

好吧，我只是好奇：達拉斯新店開幕後，還剩下多少家分店？我都數不清了。

We will have the store in Charleston. And then we will have four here in the Metroplex, depending on how quickly we are able to roll in a couple of other stores, which we plan to do.

我們將在查爾斯頓開設一家門市。然後，根據我們開設其他幾家門市的速度（我們計劃這樣做），我們將在達拉斯-沃斯堡都會區開設四家門市。

Okay. And just lastly, the last few months, gold basically went up from around $1,050 to $1,300. I was just curious, how come you didn't see an increase in your scrap metal business?

好的。最後一點，過去幾個月，黃金價格基本上從每盎司1050美元左右上漲到了1300美元。我只是好奇，為什麼你的廢金屬回收業務沒有成長？

That's a great question. I can't really tell you why people aren't walking in the door. We see a pretty consistent flow of traffic, but the volatility seems to drive bullion purchases and sales more than scrap.

問得好。我也說不準為什麼沒人進店。客流量一直比較穩定，但市場波動似乎對貴金屬的買賣影響更大，而不是廢棄物。

Okay, thank you.

好的，謝謝。

(Operator Instructions). It appears we have no additional questions at this time, so I'd like to pass the floor back over to management for any additional concluding comments.

（操作說明）。目前看來我們沒有其他問題了，所以我想把發言權交還給管理階層，請他們做最後的總結性發言。

Thank you for joining us today. We look forward to giving you an update during our next call, which will be in mid-November when we'll be discussing our third-quarter results. This concludes our second-quarter 2016 conference call.

感謝您今天參加我們的電話會議。我們期待在下次電話會議上向您報告最新情況，下次電話會議將於11月中旬舉行，屆時我們將討論第三季業績。本次2016年第二季電話會議到此結束。

Thank you. Ladies and gentlemen, once again, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.

謝謝。女士們、先生們，今天的電話會議到此結束。感謝各位的參與，現在可以掛斷電話了。