Collectors Universe, Inc.
May 10, 2010
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Collectors Universe Reports Record Third Quarter Operating Income

Operating income of $2.5 million and EPS of $0.32 for the quarter

NEWPORT BEACH, Calif., May 10, 2010 /PRNewswire via COMTEX/ --Collectors Universe, Inc. (Nasdaq: CLCT), a leading provider of value-added authentication and grading services to dealers and collectors of high-value collectibles, today announced financial results for its third fiscal quarter and nine months ended March 31, 2010.

Overview

Continuing Operations Third Quarter and Nine Months of 2010

For the current third quarter, the Company reported net service revenues of $10.8 million, operating income of $2.5 million and after tax income from continuing operations of $2.4 million, or $0.32 per diluted share.  This compares to net service revenues of $9.3 million, operating income of $944,000 and an after tax income from continuing operations of $891,000, or $0.10 per diluted share for the third quarter of fiscal 2009. 

For the nine months ended March 31, 2010, the Company's net service revenues were $29.0 million, operating income was $5.8 million and after tax income from continuing operations was $5.8 million, or $0.76 per diluted share.  This compares to net service revenues of $26.2 million, operating income of $858,000 and an after tax loss from continuing operations of $192,000, or a loss of $0.02 per diluted share, for the nine months ended March 31, 2009.

Net Income Third Quarter and Nine Months of 2010

Net income for the third quarter and nine months of fiscal 2010 was $2.4 million or $0.31 per diluted share and $5.2 million or $0.68 per diluted share, respectively and included losses from discontinued operations of $68,000 for the quarter and $629,000 for the nine months ended March 31, 2010, primarily related to the Company's New York leases.  By comparison, the Company incurred net losses for the third quarter and nine months of fiscal 2009 of $4.8 million and $17.0 million, respectively.

Operational and Financial Highlights:


Michael McConnell, Chief Executive Officer, stated, "Our business planning over the last year, an improvement in the general economic conditions and most importantly, the ongoing commitment and dedication of our employees, each contributed to the Company's record operating income this quarter.  Core to our business is to continue to provide value-add products and services to our customers, such as PCGS Secure Plus introduced in March 2010."

Results of Operations of our Continuing Businesses

The net increases in revenues of $1.5 million in the current third quarter and $2.8 million in the nine months to March 31, 2010 were driven by revenue increases of $1.6 million for the quarter and $3.6 million for the nine months, in our coin grading and authentication business. The other revenues decline mainly reflects reductions in our stamp business in both the three and nine months ended March 31, 2010 and our trading cards and autographs business in the nine months ended March 31, 2010.    

The gross profit margin of 61% and 60% in the current year's third quarter and nine month periods, compared with 56% and 53% in the same periods of the prior year, reflects the benefits of operating leverage in our coin grading and authentication business as well as continued efforts to improve operational efficiency.

Operating expenses in the current third quarter and nine months were $4.1 million and $11.6 million compared to $4.3 million and $13.0 million for the same periods of the prior year and reflected lower G&A expenses for personnel and outside professional services partially offset by increased sales and marketing expenses for incentive compensation and costs of attending more trade shows in the current year.  G&A expenses in the prior year's third quarter and nine months included a $400,000 severance accrual for the Company's former CEO.  Stock-based compensation costs increased in the current third quarter and nine months to $238,000 and $733,000 compared to $25,000 and $398,000 for the same periods of the prior year, reflecting the recognition of performance based stock compensation expense.

The resulting operating income of $2.5 million and $5.8 million in the current year's third quarter and nine months represented 23% and 20% of revenues.  By comparison, the Company earned operating income of $944,000 or 10% of revenues and $858,000 or 3% of revenues for the same three and nine month periods of the prior year.

The income tax provisions in the current year's third quarter and nine months reflect an annual effective tax rate of 5% offset by a benefit that arose in the second quarter related to a change in the rules for alternative minimum taxes.  

Income from continuing operations of $2.4 million or $0.32 per diluted share in the current year's third quarter, and $5.8 million or $0.76 per diluted share for the nine months end March 31, 2010, reflects improved operating results and, in the case of the per share amounts, also reflects a reduction in the number of shares outstanding as a result of our repurchase of 1.75 million shares in the July 2009 Dutch Auction Tender Offer.

Financial Condition

At March 31, 2010, cash and cash equivalents totaled $19.8 million compared with $23.9 million at June 30, 2009.  Net cash used of $4.1 million in the nine month period was comprised of cash generated from continuing operations of $7.4 million and the collection of a note receivable of $2.4 million offset by the repurchase of shares in the Dutch Auction Tender Offer for cash of $8.9 million, the payment of dividends to stockholders totaling $3.7 million and cash expenses of $1.0 million for our discontinued operations.  

Outlook

McConnell continued, "Our goal is to finish this fiscal year with strength.  We will build upon the current momentum, maintain a sharp focus on costs and operational efficiency and continue to put in place initiatives to drive growth and profit for Fiscal 2011.  Further, the increase in our dividend demonstrates our commitment to capital management and shareholder returns."

Conference Call and Webcast

Collectors Universe will host a conference call to discuss results on Monday, May 10, 2010 at 4:30 p.m.  Eastern Time/1:30 p.m. Pacific Time.  Interested parties may participate in the conference call by dialing 877-941-0844 or 480-629-9645, five to ten minutes prior to the initiation of the call.  A replay of the conference call will be available through May 24, 2010, by dialing 800-406-7325 or 303-590-3030 and entering access code 4294707#.  A live webcast of the conference call will also be available on the Collectors Universe website, www.collectors.com, under Investor Relations: Earnings Conference Calls.  The webcast will be archived for 12 months.

About Collectors Universe

Collectors Universe, Inc. is a leading provider of value added services to the high-value collectibles markets. The Company authenticates and grades collectible coins, trading cards, event tickets, autographs, memorabilia and stamps ("collectibles").  The Company also compiles and publishes authoritative information about United States and world coins, collectible trading cards and sports memorabilia, collectible stamps, 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 web site, http://www.collectors.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 our expected financial performance as set forth in the forward looking statements contained in this news release.  Information regarding those risks and uncertainties, and their possible impact on our future financial performance, include, but are not limited to, our continued and increased dependence on our coin business which generated 64% of our consolidated revenues and substantially all of our operating income in the nine months ended March 31, 2010, the risk that economic conditions in the United States will not improve for some time and may even deteriorate further, which could result in reductions in the demand for our collectible grading services and, consequently, in our revenues; the risk that the current economic recession and credit crisis 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 risk that our strategy to offer new services in our continuing collectibles markets will not be successful in enabling us to improve our profitability or may even cause us to incur significant losses; and the risk that the commercial real estate market in New York City will deteriorate further, in which case we may not be able to sublease the offices and laboratory facilities in New York City formerly occupied by our jewelry businesses within the time periods and for the rents currently expected, which would cause our net rental payment obligations to be significantly higher than currently expected leading to reductions in cash flows and additional losses from discontinued operations in future periods.

Additional information regarding these risks and information regarding other risks and uncertainties to which our business is subject is contained in our Annual Report on Form 10-K for our fiscal year ended June 30, 2009 and our Quarterly Report on Form 10-Q for the third quarter ended March 31, 2010 filed with the Securities and Exchange Commission today.   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, which speak only as of their respective dates.  We also disclaim any obligation to update or revise any of the forward-looking statements 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
(unaudited)

 
 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 
 

2010

 

2009

 

2010

 

2009

 

Net revenues

$  10,790

 

$  9,315

 

$  28,971

 

$  26,160

 

Cost of revenues

4,204

 

4,111

 

11,576

 

12,264

 

Gross profit

6,586

 

5,204

 

17,395

 

13,896

 

Operating expenses:

               

Selling and marketing expenses

1,449

 

1,033

 

3,785

 

3,275

 

General administrative expenses

2,602

 

3,227

 

7,814

 

9,763

 

Total operating expenses

4,051

 

4,260

 

11,599

 

13,038

 

Operating income

2,535

 

944

 

5,796

 

858

 

Interest and other income, net  

35

 

56

 

87

 

269

 

Income before provision for income taxes

2,570

 

1,000

 

5,883

 

1,127

 

Provision for income taxes

129

 

109

 

54

 

1,319

 

Income (loss) from continuing operations

2,441

 

891

 

5,829

 

(192)

 

Loss from discontinued operations, net of loss on sales of discontinued  businesses, net of income taxes

(68)

 

(5,679)

 

(629)

 

(16,818)

 

Net income (loss)

$  2,373

 

$  (4,788)

 

5,200

 

$  (17,010)

 
                 

Net income (loss) per basic share:

               

Income (loss) from continuing operations

$  0.33

 

$  0.10

 

$  0.78

 

$  (0.02)

 

Loss from discontinued operations

(0.01)

 

(0.63)

 

(0.08)

 

(1.85)

 

Net income (loss)

$  0.32

 

$  (0.53)

 

$  0.70

 

$  (1.87)

 
                 

Net income (loss) per diluted share:

               

Income (loss) from continuing operations

$  0.32

 

$  0.10

 

$  0.76

 

$  (0.02)

 

Loss from discontinued operations

(0.01)

 

(0.63)

 

(0.08)

 

(1.85)

 

Net income (loss)

$  0.31

 

$  (0.53)

 

$  0.68

 

$  (1.87)

 
                 

Weighted average shares outstanding:

               

Basic

7,420

 

9,083

 

7,459

 

9,103

 

Diluted

7,676

 

9,108

 

7,620

 

9,103

 

Dividends declared per common share

$  0.25

 

$  0.23

 

$  0.50

 

$  0.23

 
               


COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except per share data)
(unaudited)

 
 

March 31,

 

June 30,

 

ASSETS

2010

 

2009

 

Current assets:

       

Cash and cash equivalents

$  19,772

 

$  23,870

 

Accounts receivable, net of allowance of $57 at March 31, 2010 and $63 at June 30, 2009

1,791

 

1,252

 

Inventories, net

535

 

497

 

Prepaid expenses and other current assets

820

 

868

 

Refundable income taxes

248

 

-

 

Customer notes receivable

-

 

2,340

 

Notes receivable from sale of net assets of discontinued operations

119

 

212

 

Current assets of discontinued operations

29

 

102

 

Total current assets

23,314

 

29,141

 
         

Property and equipment, net

1,086

 

1,174

 

Goodwill

2,826

 

2,626

 

Intangible assets, net

2,270

 

2,776

 

Notes receivable from sale of net assets of discontinued operations

166

 

300

 

Other assets

284

 

74

 

Non-current assets of discontinued operations

182

 

182

 
 

$  30,128

 

$  36,273

 

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Current liabilities:

       

Accounts payable

$  1,219

 

$  1,051

 

Accrued liabilities

1,427

 

1,344

 

Accrued compensation and benefits

1,557

 

1,341

 

Income taxes payable

259

 

252

 

Net deferred income tax liability

71

 

60

 

Deferred revenue

2,278

 

1,883

 

Current liabilities of discontinued operations

1,418

 

1,827

 

Total current liabilities

8,229

 

7,758

 
         

Deferred rent

300

 

220

 

Net deferred income tax liability

197

 

208

 

Non-current liabilities of discontinued operations

3,317

 

3,308

 

Commitments and contingencies

       
         

Stockholders' equity:

       

Preferred stock, $.001 par value; 3,000 shares authorized, none issued or  outstanding

-

 

-

 

Common stock, $.001 par value; 20,000 shares authorized; 7,683 and 9,158 issued and outstanding at March 31, 2010 and at June 30, 2009, respectively

8

 

9

 

Additional paid-in capital

67,781

 

75,957

 

Accumulated deficit

(49,704)

 

(51,187)

 

Total stockholders' equity

18,085

 

24,779

 
 

$  30,128

 

$  36,273

 


SOURCE Collectors Universe, Inc.