This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk06: Good afternoon and welcome to AMARC's Precision Metals Conference call for the fiscal third quarter ended March 31, 2024. My name is Matthew and I'll be your operator this afternoon. Before this call, AMARC issued its results for the fiscal third quarter 2024 in a press release which is available in the investor relations section of the company's website at .amarc.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 AMARC CEO Greg Roberts, President Thor Jerdrom, and CFO Kathleen Simpson Taylor. Following their remarks, we will open the call for your questions. Then before we conclude the call, I'll provide the necessary cautions regarding the forward looking statements made by management during the call. I'd 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 AMARC's website. Now I'd like to turn the call over to AMARC CEO, Mr. Greg Roberts. Sir, please proceed.
spk03: Thank you, Matthew, and good afternoon, everyone. Thanks for joining our call today. Our third quarter results continue to demonstrate the ability of our fully integrated platform to generate profitable results even in a difficult market environment. During the quarter, we faced a combination of softened demand, premium compression, and elevated gold and silver prices, which led our traditional buyers to become sellers and provided us with an opportunity to purchase more inventory. Despite the challenging environment, we delivered 21 cents per diluted share and generated $12.6 million in non-GAAP EBITDA, including one-time acquisition costs of $2.2 million. We also increased the -to-consumer number of new customers by an impressive 8% compared to last quarter. Consistent with our commitment to generate shareholder value, the company also repurchased a total of 204,396 shares of our common stock for $5 million during the quarter. As previously announced, we completed the acquisition of LPM Group Limited in February 2024 and have substantially completed the integration of LPM's business and operations with AMARC. LPM now has enhanced access to supplementary products and capital through AMARC to broaden their offerings and to promote future growth. Key technology upgrades have also been added to enhance LPM's logistics capabilities and to fully integrate LPM into AMGL's fulfillment and shipping system. JMB has also collaborated closely with LPM to develop processes aimed at enhancing and expanding LPM's e-commerce footprint. I am happy to report that a month and a half or so into this, we are very pleased with the results we have seen. We also continue to advance our logistics automation initiatives at our AMARC Global Logistics or AMGL facility in Las Vegas. These initiatives are designed to enhance our operational efficiency, enabling us to effectively manage a larger number of SKUs as well as increase volume, taking in and shipping out more packages, all the while minimizing operational costs. Now I will turn the call over to our CFO Kathleen Simpson-Taylor who will provide a more detailed overview of our financial performance. Then our President Thor-Jurdum will discuss our key operating metrics. Finally I will provide further insight into our business and growth strategy and happily take all of your questions. Kathleen?
spk01: Thank you, Greg, and good afternoon everyone. Our revenues for fiscal Q3 2024 increased 13% to $2.611 billion from $2.317 billion in Q3 of last year, excluding an increase of $622.1 million of forward sales, our revenues decreased $328.6 million or 20%, which was due to a decrease in gold and silver ounces sold, partially offset by higher average selling prices of gold and silver. The DTC segment contributed 13% and 23% of the consolidated revenue in the fiscal third quarters of 2024 and 2023 respectively. Revenue contributed by JMB represented 12% of the consolidated revenues for Q3 of 2024 compared to 20% in Q3 of last year. For the nine-month period, our revenues increased 16% to $7.174 billion from $6.167 billion in the same year-ago period, excluding an increase of $1.514 billion of forward sales, revenues decreased $506.9 million or 11%, which was due to a decrease in gold and silver in Q3 of last year. The DTC segment contributed 14% and 23% of the consolidated revenue for the nine months ended March 31, 2024 and 2023 respectively. Revenue contributed by JMB represented 13% of the consolidated revenues for the nine in the same year-ago period. Gross profit for fiscal Q3 2024 decreased 54% to $34.8 million or .33% of revenue from $75.5 million or .26% of revenue in Q3 of last year. The decrease in gross profit was due to lower gross profits earned from both the wholesale sales and ancillary services and DTC segment. Gross profit contributed by the DTC segment represented 52% of the consolidated gross profit in fiscal Q3 2024 compared to 57% in the same year-ago period. Gross profit contributed by JMB represented 45% of the consolidated gross profit in Q3 of last year. For the nine-month period, gross profit decreased 40% to $130.3 million or .82% of revenue from $216.1 million or .5% of revenue in the same year-ago period. The decrease in gross profit was due to lower gross profits earned from both the wholesale and ancillary services and DTC segment. Gross profit contributed by the DTC segment represented 47% of the consolidated gross profit for the nine months ended March 31, 2024 compared to 56% in the same year-ago period. Gross profit contributed by JMB represented 40% and 48% of the consolidated gross profit for the nine months ended March 31, 2024 and 2023 respectively. SG&A expenses for fiscal Q3 2024 decreased 4% to $22.9 million from $23.8 million in Q3 of last year. The change was primarily due to a decrease in compensation expense, including performance-based schools of $2.2 million, a decrease in insurance costs of $0.9 million, and lower advertising costs of $0.4 million, which was partially offset by higher consulting and professional fees of $2.2 million related to M&A activities and an increase in information technology costs of $0.2 million. For the nine-month period, SG&A expenses increased 8% to $67.1 million from $62.4 million in the same year-ago period. The change was primarily due to an increase in consulting and professional fees of $4.8 million, including $2.8 million related to M&A activities, an increase in information technology costs of $0.8 million, and an increase in compensation expense, including performance-based schools of $0.4 million. This was partially offset by a decrease in insurance costs of $1.4 million. Depreciation and amortization expense for fiscal Q3 2024 decreased 12% to $2.9 million from $3.3 million in Q3 of last year. The change was primarily due to a $0.6 million decrease in amortization of acquired intangibles related to JMB. For the nine-month period, depreciation and amortization expense decreased 13% to $8.6 million from $9.8 million in the same year-ago period. The change was primarily due to a $1.7 million decrease in amortization of acquired intangibles related to JMB. Interest income for fiscal Q3 2024 increased 10% to $6.7 million from $6.1 million in Q3 of last year. The aggregate increase in interest income was primarily due to an increase in other finance product income of $0.1 million and an increase in interest income earned by our secured lending segment of $0.5 million. For the nine-month period, interest income increased 18% to $19.1 million from $16.2 million in the same year-ago period. The aggregate increase in interest income was primarily due to an increase in other finance product income of $1.6 million and an increase in interest income earned by our secured lending segment of $1.4 million. Interest expense for fiscal Q3 2024 increased 7% to $9.9 million from $9.2 million in Q3 of last year. The increase in interest expense was primarily due to an increase of $1.3 million associated with our trading credit facility due to an increase in interest rates as well as increased borrowings and an increase of $0.9 million related to product financing arrangements, partially offset by a decrease of $1.4 million related to the AMCF notes, including amortization of debt issuance costs due to the notes repayment in December 2023. For the nine-month period, interest expense increased 32% to $29.9 million from $22.6 million in the same year-ago period. The increase was primarily driven by an increase of $6.9 million associated with our trading credit facility due to an increase in interest rates as well as increased borrowings, an increase of $2.5 million related to product financing arrangements, partially offset by a decrease of $1.8 million related to the AMCF notes, including amortization of debt issuance costs due to their repayment in December 2023, as well as $0.3 million decrease in loan servicing fees. Losses from equity method investments in Q3 2024 increased 194% to $0.2 million from $0.1 million in the same year-ago quarter. For the nine-month period, earnings from equity method investments decreased 55% to $3.3 million from $7.3 million in the same year-ago period. The decrease in both periods was due to decreased earnings of our equity method investee. Net income attributable to the company for the third quarter of fiscal 2024 totaled $5.0 million or $0.21 per diluted share. This compares to net income attributable to the company of $35.9 million or $1.46 per diluted share in Q3 of last year. For the nine-month period, net income attributable to the company totaled $37.6 million or $1.56 per diluted share, which compares to net income attributable to the company of $114.5 million or $4.64 per diluted share in the same year-ago period. Adjusted net income before provision for income taxes, a non-GAAP financial performance measure, which excludes acquisition expenses, amortization, and depreciation, for Q3 fiscal 2024 totaled $11.6 million, a decrease of 76% compared to $49.2 million in the same year-ago quarter. Adjusted net income before provision for income taxes for the nine-month period totaled $60.1 million, a 62% decrease from $156.9 million in the same year-ago period. EBITDA, a non-GAAP liquidity measure for Q3 fiscal 2024 totaled $12.6 million, a 76% decrease compared to $52.3 million in Q3 fiscal 2023. EBITDA for the nine-month period totaled $68.2 million, a 58% decrease compared to $163.2 million in the same year-ago period. Turning to our balance sheet. At quarter end, we had $35.2 million of cash compared to $39.3 million at the end of fiscal 2023. Our non-restricted inventories totaled $579.4 million down from $66.4 million from $645.8 million at the end of fiscal 2023. And this was despite rising commodity prices, which drove an overall increase in our inventory value of over 10%, holding ounces constant from the fiscal year end. Our tangible net worth at the end of the quarter was $391.1 million, down from $436.8 million at the end of the prior fiscal year. The reduction is due to share repurchase activity and dividends paid combined with higher intangible assets from the LPM acquisition. AMARC's Board of Directors has continued to maintain the company's regular quarterly cash dividend program of 20 cents per common share. The most recent quarterly cash dividend was paid in April. It is expected that the next quarterly dividend will be paid in July 2024. 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?
spk02: Thank you, Kathleen. Looking at our key operating metrics for the third quarter of fiscal 2024, we sold 446,000 ounces of gold in Q3 fiscal 2024, which was down 32% from Q3 of last year and down 1% from the prior quarter. For the nine month period, we sold 1.4 million ounces of gold, which was down 25% from the same year-end period. We sold 25.7 million ounces of silver in Q3 fiscal 2024, which was down 30% from Q3 of last year and down 3% from last quarter. For the nine month period, we sold 82.7 million ounces of silver, which was down 26% from the same year-end 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 56,600 in Q3 fiscal 2024, which was down 13% from Q3 of last year but increased 8% from last quarter. For the nine month period, the number of new customers in the DTC segment was 148,200, which is down 40% from 244,900 new customers in the same year-end period. The number of total customers in the DTC segment at the end of the third quarter was approximately 2.5 million, which was an 11% increase from the prior year. The -over-year increase in total customers was due to organic growth of our J&B customer base as well as from acquired customer lists. The DTC segment average order value, which represents the average dollar value of products ordered, excluding accumulation program orders, delivered to DTC segment customers during Q3 fiscal 2024 was $2,133, which was down 13% from Q3 fiscal 2023 and down 4% from the prior quarter. For the nine month period, our DTC average order value was $2,253, which was down 6% from the same year-end period. For the fiscal third quarter, our inventory turn ratio was 2.3, which was a 4% decrease from 2.4 in Q3 of last year and a 21% increase from 1.9 in the prior quarter. For the nine month period, our inventory turnover ratio was 6.8, a 3% decrease from 7.0 in the same year-go period. Finally, the number of secured loans at the end of March totaled 675, a decrease of 30% from March 31, 2023, and a decrease of 6% from the end of December. While the number of secured loans decreased, our secured loan receivable balance increased over the same periods, bringing the value of our loan portfolio as of March 31, 2024 to 115.6 million, a 19% increase from March 31, 2023, and a 9% increase from December 31, 2023. That concludes my prepared remarks. I'll now turn it over to Greg. Great. We're going to close your remarks. Greg?
spk03: Thank you, Thor and Kathleen. We've made significant strides in our M&A growth strategy with our expansion into Asia through our acquisition of LPM. We are enthusiastic about the opportunities in the Asian market and continue to explore prospects to further expand our geographic presence and market reach that will create synergies with AMARC's fully integrated platform, including our reliable access to supply, successful logistics footprint, and strong customer relationships. Our commitment to generating stockholder value remains firm, and we are confident in AMARC's diversified and proven business model. That concludes my prepared remarks. Matthew?
spk06: Thank you. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Mike Baker from D.A. Davidson. Your line is live.
spk07: Hey, thanks guys. Just wondering if you could talk about what do you think, what in this environment caused the compression in the spreads to happen so much in the calendar first quarter? And can you talk about maybe what you saw throughout the quarter? By month, did it get worse as the month, as the quarter went on? Did it get better? Any early thoughts on the fourth quarter, the calendar second quarter, in terms of the spreads?
spk03: Sure. Yeah, I mean, I would start with just saying that probably the single biggest headwind for this particular quarter was a record number of days in the quarter that we saw all-time record prices in gold in particular. And I think it's important to note in our press release, we described a little bit that a lot of our customers that buy new product from us turned into sellers to A-mark. And I think it's important to note that A-mark is really the terminal physical metals destination for wholesale products seeking liquidity. And I think we have done a very good job in the quarter of balancing what we're buying back from the wholesale marketplace versus what we're selling. And I think our management of our inventory has been a key component of what we worked on in the quarter. And we balanced our inventory, we balanced our purchases and sales, and we also rotated out of inventory, which I mentioned last call, when we rotated out of inventory that we didn't feel gave us enough upside if the market was to turn around. And we liquidated that and we've held on to inventory on products that we think give us more opportunity. I can say that since probably January and February and most of March, we have started to see a shift and a reduction from what we're buying off of the wholesale market or buying back from customers versus what we're selling. So we have seen a bit of a shift there. But I think it's important to remember that there are generations of people whose grandparents or parents or even further back than that held gold for their family. And that you've gone through a period where many of the long-term holders of physical metals have been given the opportunity to monetize and create liquidity and sell material where everybody is in a profit position as it relates to your most generic lowest premium gold products. So I think that's something that we worked through. I think those sustained higher prices as we go through these periods, you're going to have waves of supply-demand imbalance. I think that as it relates to what we see today and where we are today versus where we were at March 31st and your question related to what we saw in the January, February, March period by month, I would say that going back to December, which we talked a little bit about on our last call, and January and February were probably three of the slowest months we've seen in a long time. I think the company performed very well. I think that as you look at how we worked through it, I've been doing this for almost 45 years or more. And there's not a whole lot that surprises me in the macro environment. And for the first time ever, when you have two months of really every day or every week, you have sustained new highs in spot prices, that's just something that we haven't seen before. I give a tremendous amount of credit to Thor and the Treasury team and Kathleen in managing our liquidity and making sure that we continue to be the dominant player. If there's metal seeking liquidity, AMARC wants to be the one to buy it. So I think we went through a number of, you know, a couple of months there where we were adjusting to the new dynamic. I can say that as we turn the calendar from March to April, some significant improvements that we saw both in demand as well as a slowdown in buybacks that we were buying back from wholesale customers. And we did see some expanding premiums in products that have continued throughout most of April and into May. I would say the most dramatic increase in premiums that we saw over the last five or six weeks from today has been the premium on U.S. Silver Eagles. And if anybody keeps track of premiums, looking at websites and checking that, you'll see a fairly noticeable increase. And as one of our more profitable products, any increase in premiums with Silver Eagles is welcome and is going to result in higher GP for us. And what we have seen in the last three or four weeks, as we have seen before when Silver Eagle premiums tend to rise, we've seen other Silver products, whether it be Maple Leafs or Britannias or even some of our Silver Town products that we make at our Mint in Indiana. We've seen some less dramatic but still increases in some of those products. I would say that we're still looking to see some premiums in gold products, although in the last week or 10 days we've seen Gold Eagles in particular have a fairly material move in their premium. So we are seeing the supply-demand imbalance get back in place to what we're used to. Very optimistic, very much looking forward to this quarter. I feel like April was...we performed very well and we were able to monetize a number of positions that we were able to take over the last six months. And I think you can look at Q3 as probably one of the worst quarters we're going to throw out there. We had our acquisition going on, we had some acquisition costs, and we had what I've just described in the marketplace. But we're looking for improvement going forward from here and feel pretty good about what we were able to accomplish in our Q3.
spk07: Well, thanks. Yeah, that's consistent with some of the data that we track. If I could follow up on one thing, and you sort of answered it there at the end where you said you were able to monetize positions that you've taken in the last six months. But can you just highlight or remind us all the products you were able to buy in the March quarter, how long does it take for that to usually flow through and ultimately presumably benefit you because of the inventory that you guys were able to take in?
spk03: Yeah, you know, it's not an exact science. I mean, and it doesn't happen overnight. We balance opportunistic inventory purchases all the time. In very good markets, we pay a lot more and we pay higher premiums because we have confidence we're going to sell them. And those opportunities that we take, they monetize over three to six months after we take the positions. I think that, you know, we view a lot of times as inventory purchase opportunities as, you know, what I would call, you know, options or call options, which is more familiar to the financial sector, where we pay a price and a premium to take a position. Most of the time, our, you know, opportunistic purchases that our trading teams make, you know, they turn out to be profitable, depending on how fast we sell them and how long we carry the product and how the carry builds up determines how profitable those trades are going to be. And like options, occasionally we'll buy inventory, we'll pay a premium and we will pay the carry and the trade doesn't work out. It happens all the time. You know, not frequently, but it does happen. And I view that a little bit as, you know, an expiring option that people buy all the time and they believe in something, they believe in a trade, and sometimes the option expires and it's not worth anything. You know, in our case, it's always worth the metal content, but we do sometimes lose on the premium and that's just the nature of our business. We're doing that hundreds of times a month and we're taking those positions. You know, trying to use our history, use our DTC segment to be the, to have the ability to take these positions and to move them is one of the great parts of our integrated business. And I can say that, you know, we are, we are really, we have a great deal of momentum and volume right now in picking up new customers in our DTC segment and the inventory opportunities that we've been able to buy has given us an opportunity to go out and acquire new customers. And I think, you know, when you look at 8% quarter over quarter as it relates to new customers that we put in the release, that's a very important number. And those customers that we're able to bring into our funnel are right now are most likely coming from, you know, new buyers new to the market, but we're also, we also believe we're taking market share right now and our inventory is allowing us to do that. And, you know, 56,000 new customers in the quarter at the DTC segment is a, you know, is a very, you know, important number for us and we have, we've tried and we've made sure that, you know, we're getting as many new customers as we can and the ability to move through some inventory with these customers. I'm just very optimistic about that and we're seeing that pay off and we've also had a surprising increase in towards the end of our, you know, towards the end of March and through all of April where we're using some of our opportunity inventory opportunities to reactivate customers that haven't bought in over a year. And we track those metrics and we've seen in what I consider a fairly strong headwind in the macro environment. We've been very pleased with the new customers as well as the older customers. We've been able to reactivate with some of our product offerings. So I, you know, I think that's, you know, that's positive and, you know, we continue to find purchase opportunities and we're very, very happy with our inventory at the moment.
spk07: Yep, great. Makes sense. I appreciate all the caller in time.
spk06: Sure. Thank you. Your next question is coming from Lucas Pipes from B Riley. Your line is live.
spk05: Thank you very much, operator. Good afternoon, everyone. I'd like to understand the kind of lower gross margin during the quarter a little bit better. Is it primarily related to the premium or is there kind of operational leverage coming through from the lower volume side to? Craig, if you could help me understand that a bit better and where you think those gross margins could revert to in the last fiscal quarter of the year and maybe next year, what would really appreciate any insights you could share? Thank you.
spk03: Yeah, I, you know, I think the gross margin percentage is a reflection of what it is in any business. It's, you know, it has to do with our cost of goods as well as our, you know, what we're able to sell sell material for. I think that, you know, my rather long explanation of what happened in the quarter really, really answers that question in that we have a fixed carry cost on our inventory that we book, you know, every month. And that carry is is going to affect what the gross profit margin is. And we have to obviously we have to achieve a profit over and above our carry cost. If premiums compress and, you know, we're selling something at a dollar premium that we we've historically sold at a dollar fifty premium. The gross profit margin, the gross profit in pure dollars is not only going to go down, but the gross profit percentage is going to be materially affected by that. I also think it's important to note that when we buy back product, we we oftentimes have to sell that product both in a wholesale level or at a retail level. So when you look at our business and you look at the DTC contribution, it's it's it's difficult for an outsider to really see what percentage of our product is being sold wholesale and what percentage is being sold retail. As we all know, if if we're selling a silver eagle on J.M. Bullion at, you know, four dollars and fifty cents premium over spot price, but we're but we're selling that on a wholesale level at three dollars and fifty cents. The more coins we can sell at J.M. Bullion, you know, the better our overall gross profit is going to be any coins we don't have to wholesale. We're going to make more money on. And that's a balancing act for us when we manage our inventory all the time is what percentage of product do we sell wholesale and what percentage do we hold and pay carry on so that we can achieve the ultimate DTC price for the product. I think that, you know, in a very, very good market, if you look back a year ago and you compare what happened a year ago versus what's happening in this quarter, you know, this year, I would say last year, 90 percent of our product that we sold was being sold through the DTC segment. I would say that that, you know, that number today, a much, much higher percentage is being sold wholesale and or monetized outside of our retailers. And that's going to affect the gross profit negatively as it relates to what we can do in the future. I think there's enough data on the company to really go back and you can see what we can achieve. We just talked about what we achieved last quarter a year ago, what we achieved last quarter just two months ago. I made comment that I thought, you know, the January, February, March period of calendar 24 was, you know, was what we would view as a kind of a low watermark. I feel like we are very optimistic and enthusiastic about what we've seen in the last four or five weeks. We'll see if that plays out in, you know, in May and June. But, you know, we know how much the company can generate. The company, you know, can generate huge amounts of money in a good market. The company continues to grow and grow through M&A and grow new customers and grow our credit facilities and our liquidity so that the company, if given the opportunity, the company could, you know, could do 50% more in top line sales if we were given the opportunity. So, you know, I've been doing this a long time and I can say that, you know, January and February were probably a little bit worse than I would have expected them to be if I was sitting in November, December. But we still performed and we still had a good return and I feel like, you know, we're optimistic about how this quarter is going.
spk05: Thank you. And just to follow up, can you expand on kind of those last four to five weeks? What do you think changed? Is it stronger demand, less supply? I just, and now you commented earlier on it too, but if you could maybe zero in on this, I would appreciate your insights.
spk03: You know, I will say that there are probably 100 factors that go into answering the question. I'll try to hit on the most basic ones. You know, if you see a high percentage of product being sold into the marketplace from retail investors who have stopped buying and have decided they're going to take their profits at these all time record spot prices, there's a whole period of reckoning for that retail customer. And I think that we went through a period in January and February where a high percentage of retail customers felt like it had the last 10 years where gold tried to make a new high and then it didn't do it and it fell back. I think you had a high percentage of retail customers selling back into the marketplace and monetizing, putting their money to work someplace else or just taking a profit. And you had a little bit of a herd mentality there. As gold continued to make new highs, what we've seen in the last five weeks is a reversal of that where you have not an increased demand, but you've had a similar demand, which has been going on the last couple of months. But what you've seen is a drop in the buybacks or the wholesale purchases. And as the premiums have dropped over the last four months, it's just become less profitable for people to make product, for sovereign mints to make product, for private mints to make product. And so you're slowly seeing a little bit of a decrease in the supply side of the equation. And that's causing us to see some premium increases. And as I pointed to, the Mint has been making the same amount of Silver Eagles and the allocation has been the same for the last five to six months. And what we've seen is premiums go up. So you can't attribute that to much anything other than, as I said, buyers increasing their demand for Silver Eagles and sellers stop maybe slowing down or not selling as many Silver Eagles into the marketplace. So I think it's a number of things, but I think that's what we've really seen is we've seen a slight slight uptick in demand, particularly the last few weeks of April. And we've seen less product that we're buying back from a wholesale standpoint.
spk05: That is that is very helpful. I appreciate that. Thank you and best of luck.
spk06: Thank you. Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Andrew Scott from Roth MKM. Your line is live.
spk04: Thank you for taking my question. Quick one for me with kind of the market and the state that's been slower over the last few months. Does that kind of open up a unique opportunity in the market? And yes, I mean, are you guys looking to be active? Yeah. But what
spk03: one word one word answer? Yes. I can say that, you know, after we close the LPM deal, you know, I probably got five calls of opportunities on the M&A side. I think, you know, I think it's important for everybody to remember how much how much liquidity a mark has, whether it be our book value, whether it be our tangible net worth, whether it be our our repo facilities, our lease lines, our dollar facilities. We have, you know, as I said before, we are the ultimate destination when people need to monetize inventory. But we are also are in the in the market looking for more deals and we and we don't have a tremendous amount of competition there. I think that, as I've said before, you know, as things slow down, it becomes harder to compete with a mark. And I've talked to a number of people who are, you know, are just interested in in exploring whether or not, you know, in a slower market, they might be able to do better with a mark than than competing with a mark. And that could be on the DTC side, the wholesale side, the international side. We are really well positioned and I can, you know, I think that the closing the LPM deal, as we as we talked about and as we did last quarter, you know, we're very pleased with with Charlie and his people in Hong Kong. You know, we're looking at at possible expansion in that region. We're taking a taking some taking a good look at the Singapore region. And, you know, that this little bit slower market in in the last six months, you know, just opens up opportunities. And I think it gives us a little bit more leverage to negotiate a better deal than we're going to be able to do when the markets are screaming and everybody's making millions of dollars. And it just makes it harder to negotiate a deal. So I think, as I said in the last call, we're going to continue to go with the, you know, with the four elements of how we deploy capital. And we're we're we're regularly looking at where we get the best return for our capital. And I feel like we're doing a really good job, whether it's buying back stock, you know, we know, we bought back, you know, a very good chunk of stock in this last quarter. As we just reported, I felt like we were opportunistic at the price we bought it at. We closed an M&A transaction. I'm very, very happy with that. We look to pay down debt if possible. And we we also look to make sure that we return value to shareholders through our dividends. And, you know, that that is a continual juggling act. We also, you know, we can throw in inventory, opportunistic inventory purchases for our capital. We can look at that, too. But but all of those things is, you know, I do spend a great deal of time talking to Thorne Kathleen and talking to the other team members here about, you know, just checking ourselves and regularly double checking. Are we spending our capital and investing our capital in areas that are going to, you know, create, you know, the best shareholder return, whether it be our Q4 right now or whether it be our Q4 three years from now? And we're very optimistic about this machine we've built. We think it's set up great to take advantage of all market conditions. As we've said before, we're a very lumpy business. And, you know, our biggest job here is to keep keep capital ready to deploy and and never get caught short and to make sure that that that that the machine is ready to take advantage of whatever the market gives us. And I feel great about what we know what we did last quarter. I know it may disappoint some people and I feel even better about what I've seen the end of March and what I've seen in April. So, you know, we're looking forward. We're actually looking forward to the next few quarters.
spk04: Thanks for that. And great to hear. Actually, just one more from me. So kind of in a, you know, rampant demand market, the mints, you know, how you leverage those assets, you push out product. But can you maybe speak to when when the market is quieter, how you're you're able to leverage these mints maybe in a different way?
spk03: Yeah, I mean, I think that, you know, both Sunshine and Silver Town are very adept at and we've we've built businesses there that are able to switch products very quickly. You know, we might be making 10 ounce silver bars one week. We might be making 100 ounce silver bars the next week. We can switch very quickly. And we're very good at that. And wherever the demand is at, we're going to fill it and we're going to fill it cheaper than anybody else. And that's what this vertically integrated model does. And, you know, we've seen that right now. Our ability to sell silver products through the DTC channel and our ability to make the products cheaper than than most anybody is is just part of our part of our advantage. And, you know, we're always viewing what we're going to make next week, what we're going to make next month. And I think we're very good at that.
spk04: Well, great. Thanks again. And I'll hop back into Q.
spk06: OK, thank you once again, everyone. If you have any questions or comments, please press star then one on your phone. Your next question is coming from Greg Gibbous from Northland Securities. Your line is live.
spk05: Hey, good afternoon, Greg, Kathleen Thorne. Thanks for taking the questions. You know, I think you kind of fairly addressed this kind of driving that software demand in Q1. And it's nice to hear that it's picking up at least in April. So I kind of wanted to direct my question first on the follow up. You know, being pretty attractive M&A opportunities is what it sounds like. Congrats on the expansion to Asia with LPM. Just wondering maybe if you could address how you're evaluating those markets. Like, are you seeing any markets that are more favorable than others? And what kind of makes sense? Because it sounds like there's some attractive opportunities there.
spk03: Yes, I mean, I think, you know, we look at we really look at M&A whether, you know, in three kind of sections, whether it be in our minting, whether it be in our wholesale trading or whether we see it in DTC. One thing about AMARC, we have to be thoughtful as it relates to not focusing on any one part of that segment too much because the three segments can then get a little out of whack. So I think LPM was a very intriguing opportunity for us because it combined retail in the region along with a good deal of wholesale business. So we kind of, you know, we kind of hit two areas there on that acquisition, which is good for us. You know, at this point, we feel like our minting, you know, our minting operations are able to keep up with demand. We're clearly expanding our logistics, which is also important that, you know, if we're selling, we're shipping 50,000 packages one month and we're going to ship 150,000 packages a year and a half from now because of our M&A growth in DTC, you know, we need to balance and make sure that we can still handle all of the, you know, all of the logistics side of things. So, you know, I think we're, you know, right now I can say that the areas that we see opportunity are focused on the wholesale and the DTC. And, you know, I think we're in a good position right now that we would take either. And it's just cutting the best deal and finding the best opportunity for us.
spk05: Perfect. Thanks. That's helpful. And, you know, wanted to dive a little deeper, you know, great, even though the challenging conditions, you know, to see the customer growth, I think 80 percent. You know, I think you talked about just kind of newer products or offerings that are attracting those customers. I'm curious, you know, what, if you could maybe discuss a little bit more on what kind of, you know, gaining traction with those new customers in terms of new product offerings or anything like that.
spk03: Yeah, I mean, I think, you know, if you register at the J&Boleon site, you know, I think you'll see what we're offering. I think you'll, you know, you'll see we run a Thursday special on products that we believe, you know, are going to attract and be interesting to our customer base as well as attract new customers. You know, we've been doing that now for probably eight to ten weeks, and it's been very beneficial for us. I think that, you know, we don't, you know, we move through old inventory that we've had. We use DTC to move through old inventory. We move through new custom products. You know, we had an opportunity with a Canadian company, Silvercrest Mines, that we did a JV with them to create a one ounce silver round. And, you know, Silvercrest is a company in Mexico that has a single mine in Mexico. And it's a company that's been doing what I think to be a really good company that I've talked to the principals there and the management there. And, you know, we sold a Silvercrest one ounce silver round that we developed for Silvercrest on J&Boleon right now. It's being offered and it's a new product. We've never done a mine product before. Silvercrest bought a number of coins from AMARC, which they're just carrying on their balance sheet for their business and for their shareholders if they want to ever distribute it. And, you know, that's something that we were able to whip up fairly quickly. And it went on sale last Thursday and it's been very successful. We could do a sovereign product. We could do, you know, a private min product. We try to vary what we're offering and then see how the customers respond.
spk05: Great,
spk03: that's
spk05: helpful. I guess last one for me, and sorry if you maybe already addressed this, I've been jumping between a few calls. But, you know, Greg, I know you previously commented on, you know, Costco and how other kind of, you know, can be a benefit to the whole industry and just drive interest in new customers that haven't considered it before, just getting in front of a new audience. You know, just given it's kind of been in the news and there's been a lot of success with them selling that in stores. I'm curious if you have any updated thoughts on that, Greg, or if it's kind of the same.
spk03: You know, I think it would be the same. I think anytime you're introducing a new demographic or a new group of people to precious metals, that's ultimately going to be great for AMARC. I, you know, I understand that there's some numbers thrown out there that, you know, are, you know, seem very high to me. I've seen some numbers that, you know, are, you know, what I would say is very optimistic on sales just based on my position in the marketplace. And I feel like I touch a lot of transactions. You know, I would say that it's good for the market. I think, you know, we are ultimately, as we, our job is to attract customers, retail customers to our DTC segment. The more customers that are out there that are Googling buy silver or buy gold or whatever they're Googling, you know, they're going to find our DTC brands. And our job is to make sure that we take care of them and we are the best company out there as it relates to customer service, whether we're there for liquidity, if a customer wants to sell back their product. And if, you know, if anybody wants us to do third party shipping for them, we're very happy to do that also. You know, we're there to see the market grow. And ultimately, I believe AMARC will be one of the better, bigger beneficiaries of an expanding market. So, you know, I feel the same way I did last quarter.
spk06: Got it. Appreciate the thoughts, Greg. 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.
spk03: Thank you, everybody. Once again, I appreciate being on the call and supporting AMARC and learning and understanding what we're doing here and to all the employees of AMARC around the world. Appreciate what they're doing. And again, thanks everybody for their support. Have a great rest of the day.
spk06: Before we conclude today's call, I'd like to provide a 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 marks future plans, objectives, expectations, performance, events, and the like. These are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. These include statements regarding expectations with respect to the dividend declarations, the amount or timing of any future dividends, future macroeconomic conditions, and the demand for precious metal products and the company's ability to effectively respond to changing economic conditions. 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, including the inability to identify suitable or available acquisition or investment opportunities, greater than anticipated costs incurred to the execute of the strategy, the inability to successfully integrate recently acquired businesses, changes in the current international political climate, which historically has favorably contributed to demand and volatility in the precious metal markets, but also poses certain risks and uncertainties for the company, particularly in recent periods, potential adverse effects of the current problems in the national and global supply chains, increased competition for the company'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, changes in consumer demand and preferences for precious metal products generally, potential negative effects that inflationary pressures may have on our businesses, the ability to expand capacity at Silver Town Mint, the failure of our investee companies to maintain or address the preference of their customer bases, general risks of doing business in the commodity markets, and the strategic, business, economic, financial, political, and governmental risks and other risk factors described in the company's public filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements. Finally, I'd like to remind everyone that a recording of today's call will be available for replay via a link in the Investors section of the company's website. Thank you for joining us today for AMARC's earnings call. You may now disconnect.
Disclaimer