clct20171103_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 2, 2017

 

COLLECTORS UNIVERSE, INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware

1-34240

33-0846191

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

  

  

  

1921 E. Alton Avenue, Santa Ana, California

92705

(Address of principal executive offices)

(Zip Code)

 

 

Registrant’s telephone number, including area code: (949) 567-1234

 

N/A

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition

    

On November 2, 2017, Collectors Universe, Inc. (the “Company”) issued a press release announcing its consolidated financial results for its first quarter of fiscal year 2018, which ended on September 30, 2017. A copy of that press release is attached as Exhibit 99.1 to, and by this reference is incorporated into, this Current Report on Form 8-K.

 

In accordance with General Instruction B.2 of Form 8-K, information in Item 2.02 and Item 7.01 of this Report, and Exhibit 99.1 hereto, are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information or such Exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”).

 

Item 9.01

Financial Statements and Exhibits.

 

(d)     Exhibits.

 

Exhibit No.

 

Description

99.1

 

Press release issued November 2, 2017 by Collectors Universe, Inc. announcing its consolidated financial results for its first quarter of fiscal year 2018, ended September 30, 2017.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  

  

 COLLECTORS UNIVERSE, INC.

 

 

 

  

  

 

Dated: November 6, 2017

By:

  /s/ JOSEPH J. WALLACE

     
 

  

Joseph J. Wallace, Chief Financial Officer

     

  

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.

 

Description

99.1

 

Press release issued on November 2, 2017 by Collectors Universe announcing its consolidated financial results for the first quarter of fiscal 2018, ended September 30, 2017.

 

ex_98999.htm

 

Exhibit 99.1

 

 

 

 

Collectors Universe Reports Record Revenues for Q1, 2018

Revenue up 25% and Operating Income up 63% in the quarter

NEWPORT BEACH, CA – November 2, 2017 — Collectors Universe, Inc. (NASDAQ: CLCT), a leading provider of value-added authentication and grading services to dealers and collectors of collectibles, today announced financial results for its first quarter of fiscal year 2018.

 

Operational and Financial Highlights:

 

 

On October 9, 2017, Joseph J. Orlando was appointed Chief Executive Officer of the Company.

 

 

Revenues in the first quarter increased by $4.0 million, or 25%, to a record $19.8 million from $15.7 million in last year’s first quarter. That increase was driven by a $3.5 million, or 35%, increase in coin service revenues and a $0.6 million, or 15%, increase in cards and autograph service revenues.

 

 

Coin revenues generated by our international operations increased by $3.4 million or 226%, to 25% of consolidated revenues in this year’s first quarter, as compared to 9% of consolidated revenues in the same quarter of last year. Revenues from our China operation increased by $3.2 million or 365% in the quarter.

 

 

The gross profit margin was 62% in this year’s first quarter as compared to 61% in last year’s first quarter, reflecting the increase and mix of revenues in the quarter.

 

 

Operating income increased by 63% to a first quarter record of $4.5 million as compared to $2.8 million in last year’s first quarter. Our operating margins increased to 23% of revenues from 18% of revenues in last year’s first quarter.

 

 

Income from continuing operations in this year’s first quarter was $3.6 million or $0.41 per diluted share, as compared to $1.6 million or $0.19 per diluted share, in last year’s first quarter and benefited from a lower tax provision reflecting excess tax benefits, primarily associated with the vesting of LTIP shares in the quarter.

 

 

The Company’s cash position as of September 30, 2017 was $10.2 million, as compared to $9.8 million as of June 30, 2017. Net cash generated of $0.4 million included cash generated from continuing operations of $4.2 million and borrowings of $1.0 million under our term loan partially offset by $3.0 million used to pay cash dividends to stockholders and $1.7 million used for capital expenditures and capitalized software costs.

 

 

In September 2017, the Company obtained a five-year $3.5 million unsecured loan, primarily to fund the Company’s share of the construction and related facility costs in connection with our new business operations and headquarters facility.

 

 

On October 24, 2017, we announced our quarterly cash dividend of $0.35 per share, which will be paid on November 24, 2017 to stockholders of record on November 15, 2017.

 

Commentary and Outlook

 

Joseph Orlando, Chief Executive Officer stated, “After finishing fiscal 2017 with record annual results, Collectors Universe was able to keep the momentum going with an unprecedented revenue performance in the first quarter of 2018. Virtually every segment of the business achieved all-time highs in revenue, resulting in the most profitable Q1 on record at the Company. Perhaps most impressive is the fact that these record results were achieved during a quarter that has traditionally been one of our two slowest of the fiscal year. The combination of the consistent performance from our U.S. based services with the breakthrough quarter internationally propelled the numbers to new levels.”

 

 

 

 

Collectors Universe, Inc.

Page 2 of 6

 

Mr. Orlando further stated, “As we move forward into what is usually our slowest quarter of the year for our core businesses, the foundation is being laid for future growth as we move our California operations into a new facility. This new space will give our staff the opportunity to increase capacity and improve operational efficiency. With millions of collectibles flowing through our doors each year, it is imperative that we continue to find ways of improving the customer experience, which includes returning their submissions in a timely manner.”      

 

Conference Call and Webcast

 

Collectors Universe will host a conference call to discuss results on Thursday, November 2, 2017 at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Interested parties may participate in the conference call by dialing 877-830-2636 or 785-424-1802, five to ten minutes prior to the initiation of the call. A replay of the conference call will be available through November 16, 2017 by dialing 888-203-1112 or 719-457-0820 and entering access code 7398676#. A live webcast of the conference call will also be available on the Collectors Universe website, www.collectorsuniverse.com under Investor Relations: Events and Presentations. The webcast will be archived for 12 months.

 

About Collectors Universe

 

Collectors Universe, Inc. is a leading provider of value-added services to the collectibles markets. The Company authenticates and grades collectible coins, trading cards, event tickets, autographs and memorabilia (“collectibles”). The Company also compiles and publishes authoritative information about United States and world coins, collectible trading cards and sports memorabilia (“collectibles”), and operates its CCE dealer-to-dealer Internet bid-ask market for certified coins and its Expos trade show and conventions business. This information is accessible to collectors and dealers at the Company's website, http://www.collectorsuniverse.com and is also published in print.

 

Cautionary Statements Regarding Forward Looking Information

 

This news release contains statements regarding our expectations, beliefs or views about our future financial performance and trends in our business and in our markets, which constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements can often be identified by the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or future or conditional verbs such as "will," "would," "should," "could," or "may."

 

Due to a number of risks and uncertainties to which our business and our markets are subject, our future financial performance may differ, possibly significantly, from expectations regarding our future financial performance that are expressed in, or that may be implied or inferred from the discussion of our operating results in this news release. Those risks and uncertainties, and their possible impact on our future financial performance, include, but are not limited to, the following: our continued dependence on our coin business which historically has generated more than 60% of our consolidated revenues and a substantial portion of our operating income , making our operating results more vulnerable to conditions that could adversely affect or cause stagnation in the prices of precious metals and collectible coins; the risks that the economic recovery may stall, or that domestic or international economic conditions may deteriorate as a result of events outside of our control, that could lead to reductions in the demand for our collectibles authentication and grading services and, consequently, in our revenues and operating results; the risk that the weakness or volatility of economic conditions in the United States and worldwide will lead to longer-term changes in the spending habits of consumers and in the availability and use of credit by smaller businesses, such as collectibles dealers, to fund purchases of collectibles, which could lead to longer-term declines in collectibles commerce and, therefore, in the demand for our services; the risks that claims under our coin and trading card authentication and grading warranties will increase substantially and that the warranty reserves we maintain for such claims, will, prove to be inadequate, which could cause our gross margin and operating results to decline or cause us to incur operating losses; the risk that our strategies of offering new services and expanding our collectibles authentication and grading business into new geographic areas, such as Europe and Asia will not be successful in enabling us to improve our profitability or may even cause us to incur significant losses; the risks and added complexity of conducting business overseas; the risk that it may become necessary for us to reduce the amount of, or suspend or discontinue the payment of cash dividends in the future, due to conditions or circumstances outside of our control, such as adverse economic or market conditions, as well as our future financial performance and the cash needs of our business in the future.

 

 

 

 

Collectors Universe, Inc.

Page 3 of 6

 

Additional information regarding these risks and other risks and uncertainties to which our business is subject is contained in Item 1A, entitled “Risk Factors”, in our Annual Report on Form 10-K for our fiscal year ended June 30, 2017 which we filed with the Securities and Exchange Commission on August 31, 2017 and readers of this news release are urged to review the discussion of those risks and uncertainties in that Report. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release or in our Annual or Quarterly Reports filed with the Securities and Exchange Commission, which speak only as of their respective dates. We also disclaim any obligation to update or revise any of the forward-looking statements contained in this news release or in our Annual Report on Form 10-K, as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.

 

Contact:

Joseph Wallace

Chief Financial Officer

Collectors Universe

949-567-1245

Email: jwallace@collectors.com

 

 

 

- tables to follow -  

 

 

 

 

Collectors Universe, Inc.

Page 4 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, except per share data)

(Unaudited)

 

   

Three Months Ended

September 30,

 
   

2017

   

2016

 

Net revenues

  $ 19,753     $ 15,748  

Cost of revenues

    7,450       6,138  

Gross profit

    12,303       9,610  

Operating expenses:

               

Selling and marketing expenses

    2,754       2,422  

General and administrative expenses

    5,027       4,414  

Total operating expenses

    7,781       6,836  

Operating income

    4,522       2,774  

Interest income and other expense, net

    31       24  

Income before provision for income taxes

    4,553       2,798  

Provision for income taxes

    919       1,210  

Income from continuing operations

    3,634       1,588  

Loss from discontinued operations, net of income taxes

    (1 )     (7 )

Net income

  $ 3,633     $ 1,581  

Net income per basic share:

               

Income from continuing operations

  $ 0.42     $ 0.19  

Loss from discontinued operations

    -       -  

Net income per basic share

  $ 0.42     $ 0.19  
                 

Net income per diluted share:

               

Income from continuing operations

  $ 0.41     $ 0.19  

Loss from discontinued operations

    -       (0.01 )

Net income per diluted share

  $ 0.41     $ 0.18  
                 

Weighted average shares outstanding:

               

Basic

    8,573       8,474  

Diluted

    8,765       8,561  

Dividends declared per common share

  $ 0.35     $ 0.35  

 

 

 

 

Collectors Universe, Inc.

Page 5 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except per share data)

(Unaudited) 

 

 

 

 

September 30,

2017

   

June 30,

2017

 
ASSETS                

Current assets:

               

Cash and cash equivalents

  $ 10,207     $ 9,826  

Accounts receivable, net of allowance of $78 and $77 at September 30, 2017 and June 30, 2017, respectively

    3,682       3,615  

Inventories, net

    2,845       2,722  

Prepaid expenses and other current assets

    1,460       1,661  

Total current assets

    18,194       17,824  
                 

Property and equipment, net

    6,401       3,163  

Goodwill

    2,083       2,083  

Intangible assets, net

    2,287       2,183  

Deferred income tax assets

    2,864       2,864  

Other assets

    393       413  

Non-current assets of discontinued operations

    79       79  

Total assets

  $ 32,301     $ 28,609  

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 3,048     $ 2,660  

Accrued liabilities

    2,264       1,652  

Accrued compensation and benefits

    2,903       4,373  

Income taxes payable

    951       664  

Deferred revenue

    2,719       2,676  

Current liabilities of discontinued operations

    267       391  

Total current liabilities

    12,152       12,416  
                 

Deferred rent

    2,349       276  

Long Term Debt

    1,000       -  
                 

Commitments and contingencies (Note 10)

               
                 

Stockholders’ equity:

               

Preferred stock, $.001 par value; 3,000 shares authorized; no shares issued or outstanding

    -       -  

Common stock, $.001 par value; 20,000 shares authorized; 8,921issued and outstanding at September 30, 2017 and June 30, 2017, respectively.

    9       9  

Additional paid-in capital

    85,172       84,948  

Accumulated deficit

    (68,381 )     (69,040 )

Total stockholders’ equity

    16,800       15,917  

Total liabilities and stockholders’ equity

  $ 32,301     $ 28,609  

 

 

 

 

Collectors Universe, Inc.

Page 6 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

   

Three Months Ended

September 30,

 
   

2017

   

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 3,633     $ 1,581  

Discontinued operations

    1       7  

Income from continuing operations

    3,634       1,588  

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:

               

Depreciation and amortization expense

    442       420  

Stock-based compensation expense

    224       102  

Provision for bad debts

    (1 )     11  

Provision for inventory write-down

    0       22  

Provision for warranty

    113       174  

Gain on sale of property and equipment

    0       5  

Change in operating assets and liabilities:

               

Accounts receivable

    (69 )     408  

Inventories

    (123 )     (257 )

Prepaid expenses and other

    201       55  

Other assets

    22       (57 )

Accounts payable and accrued liabilities

    885       (199 )

Accrued compensation and benefits

    (1,470 )     (1,039 )

Income taxes payable

    287       840  

Deferred revenue

    43       (3 )

Deferred rent

    (33 )     (20 )

Net cash provided by operating activities of continuing operations

    4,155       2,050  

Net cash used in operating activities of discontinued businesses

    (126 )     (122 )

Net cash provided by operating activities

    4,029       1,928  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Proceeds from sale of business

    4       5  

Capital expenditures

    (1,401 )     (439 )

Capitalized software

    (274 )     (172 )

Patents and other intangibles

    (4 )     39  

Net cash used in investing activities

    (1,675 )     (567 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Proceeds from borrowings

    1,000       -  

Dividends paid to common stockholders

    (2,973 )     (2,984 )

Net cash used in financing activities

    (1,973 )     (2,984 )
                 

Net decrease in cash and cash equivalents

    381       (1,623 )

Cash and cash equivalents at beginning of period

    9,826       11,967  

Cash and cash equivalents at end of period

  $ 10,207     $ 10,344  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

               

Interest paid during the period

  $ 6     $ -  

Income taxes paid during the period

  $ 632     $ 369  

Leasehold Improvements contributed by Landlord

  $ 2,106     $ -