clct20190503_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): May 1, 2019

 

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.)

 

  

  

  

1610 East Saint Andrew Place, 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. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

CLCT

NASDAQ National Market

 



 

 

 

Item 2.02     Results of Operations and Financial Condition

 

On May 1, 2019, Collectors Universe, Inc. (the “Company”) issued a press release announcing its consolidated financial results for its third quarter of fiscal year 2019, which ended on March 31, 2019. 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 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 May 1, 2019 by Collectors Universe, Inc. announcing its consolidated financial results for its third quarter of fiscal year 2019, ended March 31, 2019.

 

2

 

 

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: May 3, 2019

By:

    /s/ JOSEPH J. WALLACE                                

     
 

  

Joseph J. Wallace, Senior Vice President and

Chief Financial Officer

 

S-1

 

 

EXHIBIT INDEX

 

 

Exhibit No.

 

Description

     

99.1

 

Press release issued on May 1, 2019 by Collectors Universe announcing its consolidated financial results for the third quarter of fiscal 2019, ended March 31, 2019.

 

E-1

 

ex_142926.htm

Exhibit 99.1

 

 

 

 

 

Collectors Universe Reports Record Operating Results for Q3, 2019

Revenues up 11% to Record Q3 levels

Operating Income up to an all-time new high of $4.8 million

 

NEWPORT BEACH, CA – May 1, 2019 — 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 third quarter of fiscal year 2019.

 

Q3 Financial Highlights:

 

 

Revenues up 11% to $19.5 million versus $17.5 million

 

Gross Profit Margin up to 60% versus 55%

 

Operating Margins up to 24% ($4.8 million) versus 11% ($2.0 million)

 

Cash at March 31, 2019 up to $15.7 million versus $12.4 million at December 31, 2018

 

Q3 and Nine Months Review:

 

 

In this year’s third quarter, revenues increased by 11% to a third quarter record of $19.5 million and operating income increased to a quarterly record of $4.8 million as compared to last year’s third quarter revenues of $17.5 million and operating income of $2.0 million. In addition to the 11% revenue increase, the improved operating income reflected a higher gross profit margin of 60% and a reduction of $0.8 million in operating expenses. Cash increased to $15.7 million at March 31, 2019 from $12.4 million at December 31, 2018 and $9.2 million at March 31, 2018.

 

 

The revenue increase in the quarter was comprised of a $1.3 million, or 24%, increase in cards and autographs revenues and a $0.9 million, or 10%, increase in US coin revenues. The cards and autographs revenues in the quarter represented a quarterly record for that business. Total coin revenues, which is inclusive of the overseas coin operations, increased by 7%, in the quarter.

 

 

The record revenues of $52.7 million in this year’s nine months included a $3.7 million or 24% increase in cards and autograph revenues and a 7% increase in US coin revenues. The cards and autographs revenues represented record nine months revenues for that business. Total revenues in the nine months were up $1.3 million or 3%, despite the revenue reduction in China of $3.9 million, due to the absence of banking channel revenues in China this year. Operating income for this year’s nine months increased by $3.1 million to $9.8 million from $6.7 million in last year’s nine months, mostly arising from the improved operating results in this year’s third quarter.

 

 

The gross profit margins were 60% and 58% in this year’s third quarter and nine months as compared to 55% and 58% in last year’s third quarter and nine months. The improved gross profit margin in this year’s third quarter, reflected higher gross profit margins in our coin and cards and autographs businesses, due to higher average service fees earned and a higher number of units authenticated and graded, in the quarter.

 

 

 

Collectors Universe, Inc.

Page 2 of 6

 

 

 

Income from continuing operations in this year’s third quarter was $3.6 million, or $0.40 per diluted share, as compared to $1.5 million, or $0.17, per diluted share in last year’s third quarter. For the nine months, income from continuing operations was $7.2 million, or $0.80 per diluted share, as compared to $5.2 million, or $0.58 per diluted share, in last year’s nine months.

 

 

The Company’s cash position as of March 31, 2019 was $15.7 million, as compared to $10.6 million as of June 30, 2018. Net cash generated of $5.1 million in this year’s nine months included cash generated from continuing operations of $11.9 million, partially offset by $4.9 million used to pay cash dividends to stockholders, $1.5 million used for capital expenditures and capitalized software costs and $0.4 million used to paydown the Company’s term loan.

 

 

On April 22, 2019, we announced our quarterly cash dividend of $0.175 per share, which will be paid on May 31, 2019 to stockholders of record on May 17, 2019.

 

Management Commentary and Outlook:

 

Joseph J. Orlando, President and Chief Executive Officer, stated, Q3 is typically our seasonally-strongest quarter of the fiscal year and, in 2019, it proved to be just that. The strong revenue figure coupled with continued progress in streamlining our business resulted in our best operating results for any quarter in Company history. Furthermore, our cash position improved from $12.4 million at the end of Q2 in December to $15.7 million at the end of Q3.”

 

Orlando continued, “The PCGS US vintage and trade show revenues were up a combined $0.5 million year-over-year, while our bulk services were up about $0.4 million versus last year’s Q3. Part of the growth in PCGS Bulk was aided by a successful Apollo 11 coin-grading program that generated thousands of these popular commemorative coins for submission. The creative packaging designed by the PCGS team helped raise our Q3 Bulk ASP over last year’s ASP. PCGS International produced mixed results. Our Hong Kong office finished the quarter with record Q3 revenues, up 25% versus last year, while our Shanghai and Paris offices were down slightly, but remained relatively flat compared to the previous year.”

 

“The PSA and PSA/DNA business set another all-time revenue quarterly record for the division and eclipsed last year’s Q3 revenue by roughly $1.3 million, a 24% increase year-over-year. Based on the first three quarters of fiscal 2019, this part of our company is expected to close out its ninth consecutive year of top and bottom line growth. The PSA backlog remains at record levels heading into Q4. The Company is currently revamping our existing space to expand operational capacity, so we can ultimately improve the extended turnaround times facing our customers.”

 

“The management team is focused on improving the fundamentals of our Company and refining our international strategy, while exploring new potential revenue streams that could enhance our growth prospects in the future.”

 

 

Conference Call and Webcast

 

Collectors Universe will host a conference call to discuss results on Wednesday, May 1, 2019 at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time. Interested parties may participate in the conference call by dialing 334-323-0522 or 877-260-1479, five to ten minutes prior to the initiation of the call. A replay of the conference call will be available through May 15, 2019 by dialing 888-203-1112 or 719-457-0820 and entering access code 4988871#. 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."

 

 

 

Collectors Universe, Inc.

Page 3 of 6

 

 

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 , which make 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 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 financial performance and the cash needs of our business in the future.

 

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, 2018 which we filed with the Securities and Exchange Commission on August 30, 2018, 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, implied or inferred, 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 Orlando

President and Chief Executive Officer

949-567-1170

Email: jorlando@collectors.com 

 

Joseph Wallace

Senior Vice President and Chief Financial Officer

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

March 31,

   

Nine Months Ended

March 31,

 
   

2019

   

2018

   

2019

   

2018

 

Net revenues

  $ 19,471     $ 17,512     $ 52,670     $ 51,328  

Cost of revenues

    7,827       7,818       21,982       21,745  

Gross profit

    11,644       9,694       30,688       29,583  

Operating expenses:

                               

Selling and marketing expenses

    2,509       2,513       7,803       7,688  

General and administrative expenses

    4,370       5,195       13,079       15,148  

Total operating expenses

    6,879       7,708       20,882       22,836  

Operating income

    4,765       1,986       9,806       6,747  

Interest and other income (expense), net

    (4 )     116       (146 )     107  

Income before provision for income taxes

    4,761       2,102       9,660       6,854  

Provision for income taxes

    1,202       630       2,489       1,678  

Income from continuing operations

    3,559       1,472       7,171       5,176  

Income from discontinued operations, net of income taxes

    -       2       -       89  

Net income

  $ 3,559     $ 1,474     $ 7,171     $ 5,265  
                                 

Net income per basic share:

                               

Income from continuing operations

  $ 0.40     $ 0.17     $ 0.80     $ 0.60  

Income from discontinued operations

    -       -       -       0.01  

Net income per basic share

  $ 0.40     $ 0.17     $ 0.80     $ 0.61  
                                 

Net income per diluted share:

                               

Income from continuing operations

  $ 0.40     $ 0.17     $ 0.80     $ 0.58  

Income from discontinued operations

    -       -       -       0.01  

Net income per diluted share

  $ 0.40     $ 0.17     $ 0.80     $ 0.59  
                                 

Weighted average shares outstanding:

                               

Basic

    8,938       8,703       8,936       8,651  

Diluted

    8,966       8,902       8,958       8,855  

Dividends declared per common share

  $ 0.175     $ 0.175     $ 0.525     $ 0.875  

 

 

 

Collectors Universe, Inc.

Page 5 of 6

 

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except per share data)

(Unaudited) 

 

 

 

 

ASSETS

 

March 31,

2019

   

June 30,

2018

 

Current assets:

               

Cash and cash equivalents

  $ 15,716     $ 10,581  

Accounts receivable, net of allowance of $74 and $80 at March 31, 2019 and June 30, 2018, respectively

    2,552       2,608  

Inventories, net

    2,294       2,579  

Prepaid expenses and other current assets

    1,698       1,965  

Total current assets

    22,260       17,733  
                 

Property and equipment, net

    7,703       8,378  

Goodwill

    2,083       2,083  

Intangible assets, net

    2,301       2,319  

Deferred income tax assets

    1,222       1,222  

Other assets

    467       479  

Total assets

  $ 36,036     $ 32,214  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 2,405     $ 2,487  

Accrued liabilities

    1,685       1,998  

Accrued compensation and benefits

    3,134       3,401  

Current portion of long-term debt

    750       562  

Income taxes payable

    1,195       312  

Deferred revenue

    3,704       3,213  

Total current liabilities

    12,873       11,973  
                 

Deferred rent

    3,824       3,535  

Long-Term Debt

    1,875       2,438  
                 

Commitments and contingencies

               
                 

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; 9,148 and 9,015 issued and outstanding at March 31, 2019 and June 30, 2018, respectively.

    9       9  

Additional paid-in capital

    87,088       86,369  

Accumulated deficit

    (69,633 )     (72,110 )

Total stockholders’ equity

    17,464       14,268  

Total liabilities and stockholders’ equity

  $ 36,036     $ 32,214  

  

 

 

Collectors Universe, Inc.

Page 6 of 6

 

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

   

Nine Months Ended

March 31,

 
   

2019

   

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 7,171     $ 5,265  

Discontinued operations

    -       (89 )

Income from continuing operations

    7,171       5,176  

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

               

Depreciation and amortization expense

    2,132       1,612  

Stock-based compensation expense

    720       951  

Provision for bad debts

    5       14  

Provision for inventory write-down

    143       389  

Provision for warranty claims

    402       343  

Loss on sale of property and equipment

    6       95  

Deferred income taxes

    -       365  

Change in operating assets and liabilities:

               

Accounts receivable

    51       953  

Inventories

    142       (596 )

Prepaid expenses and other

    339       51  

Other assets

    11       (64 )

Accounts payable and accrued liabilities

    (577 )     (168 )

Accrued compensation and benefits

    (267 )     (1,096 )

Income taxes payable

    883       (496 )

Deferred revenue

    492       884  

Deferred rent

    289       63  

Net cash provided by operating activities of continuing operations

    11,942       8,476  

Net cash used in operating activities of discontinued businesses

    (12 )     (228 )

Net cash provided by operating activities

    11,930       8,248  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Capital expenditures

    (749 )     (3,626 )

Capitalized software

    (787 )     (720 )

Proceeds from sale of business

    12       6  

Proceeds from sale of property and equipment

    18       -  

Patents and other intangibles

    -       (7 )

Net cash used in investing activities

    (1,506 )     (4,347 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

(Repayments) Borrowings under term loan

    (375 )     3,000  

Dividends paid to common stockholders

    (4,914 )     (7,548 )

Net cash used in financing activities

    (5,289 )     (4,548 )
                 

Net increase (decrease) in cash and cash equivalents

    5,135       (647 )

Cash and cash equivalents at beginning of period

    10,581       9,826  

Cash and cash equivalents at end of period

  $ 15,716     $ 9,179  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

               

Interest paid during the period

  $ 119     $ 39  

Income taxes paid during the period

  $ 1,735     $ 1,542  

Leasehold Improvements contributed by landlord

  $ -     $ 2,949