Collectors Universe, Inc.
COLLECTORS UNIVERSE INC (Form: 8-K, Received: 02/06/2017 10:02:18)

 



 

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): February 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))

 



 

 
 

 

 

Item 2.02     Results of Operations and Financial Condition

 

On February 2, 2017, Collectors Universe, Inc. (the “Company”) issued a press release announcing its consolidated financial results for its second quarter of fiscal year 2017, which ended on December 31, 2016. A copy of that press release is attached as Exhibit 99.1, 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 Exhibit 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 February 2, 2017   by Collectors Universe, Inc. announcing its consolidated financial results for its second quarter of fiscal year 2017, ended December 31, 2016.

 

 

 
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: February 6, 2017

By:

/s/ JOSEPH J. WALLACE

 

 

 

 

 

 

 

Joseph J. Wallace, Chief Financial Officer

 

 

 
S-1

 

 

EXHIBIT INDEX

 

 

Exhibit No.

 

Description

     

99.1

 

Press release issued on February 2, 2017 by Collectors Universe, Inc. announcing its consolidated financial results for the second quarter of fiscal 2017, ended December 31, 2016.

 

 

E-1

 

Exhibit 99.1

 

 

Collectors Universe Reports Record Operating Results for Second Quarter and First Half of Fiscal 2017

 

Revenues up 41% and Operating Income up 167% in the quarter

 

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

 

Operational and Financial Highlights :

 

 

Revenues in the second quarter increased by $5.2 million, or 41%, to a quarterly record of $17.9 million from $12.6 million in last year’s second quarter. That increase was driven by a $4.7 million, or 57%, increase in coin service revenues and a $0.5 million, or 15%, increase in cards and autograph service revenues. For the first half of fiscal 2017, revenues increased by $6.4 million, or 23%, to a first half record of $33.6 million. That increase was driven by a $5.4 million, or 30% increase in coin service revenues and a $1.0 million, or 13%, increase in cards and autograph service revenues. The coin revenue increases included increases of $3.1 million, or 547%, and $3.5 million, or 317%, in revenues in China, in the second quarter and first half, respectively.

 

 

Coin service revenues generated by our overseas operations, which are inclusive of the China revenues discussed above, increased by $3.2 million, or 306%, to $4.3 million, or 24%, of total revenues in this year’s second quarter, from $1.1 million, or 8%, of total revenues in last year’s second quarter. For the first half of the year, coin revenues from our overseas operations increased by $3.8 million, or 194%, to $5.8 million, or 17%, of total revenues, from $2.0 million, or 7%, of total revenues in last year’s first half.

 

 

The gross profit margin was 64% and 62% in this year’s second quarter and first half, as compared to 60% and 63% in the corresponding periods of the prior year. The improved gross profit margin in this year’s second quarter reflects changes in the mix of revenues and the overall increase in revenues in the quarter.

 

 

Operating income was a record $4.5million and $7.3 million in this year’s second quarter and first half, as compared to $1.7 million and $4.9 million in the corresponding periods of the prior year. Our operating margins increased to 25% and 22% in this year’s second quarter and first half, reflecting improved operating leverage as revenues increased.

 

 

Income from continuing operations was $2.9 million, or $0.34 per diluted share, and $4.5 million, or $0.53 per diluted share, in this year’s second quarter and first six months as compared to $1.0 million, or $0.12 per diluted share, and $2.9 million or $0.34, per share, in the corresponding periods of the prior year.

 

 

The Company’s cash position as of December 31, 2016 was $10.1 million, as compared to $12.0 million at June 30, 2016 and $10.3 million at September 30, 2016. Net cash used of $1.9 million in the first six months included $5.4 million of cash generated from continuing operations, offset by $6.0 million used to pay cash dividends to stockholders, $1.1 million used for capital expenditures and capitalized software costs and $0.2 million used for discontinued operations.

 

 

On January 10, 2017, the Company obtained a three year $10 million unsecured revolving line of credit from a commercial bank. Based on the Company’s financial performance over the 4 quarters ended December 31, 2016, we are entitled to borrow $10 million under the line of credit.

 

 

On January 23, 2017, we announced our quarterly cash dividend of $0.35 per share, which will be paid on February 24, 2017 to stockholders of record on February 15, 2017.

 

 

 
 

 

 

Collectors Universe, Inc.

Page 2  of 6

 

Commentary and Outlook

 

Robert Deuster, Chief Executive Officer, stated, “I am very pleased with the performance of our Company this last quarter and the first half of fiscal 2017. Our results and year to date momentum reflects our customers continued preference for our authentication and grading services and indicates very positive results from our investments in China and our capacity to serve customers in the US, across all our businesses. As I look forward to the second half of our fiscal year, I continue to see a positive market environment due to the recent release of the 2017 coins in the US and in China and due to our expanded capacity to serve customers, as well as maintaining our leadership position in authenticating and grading vintage collectibles.”

 

Conference Call and Webcast

 

Collectors Universe will host a conference call to discuss results on Thursday, February 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 888-600-4871 or 913-312-1491, five to ten minutes prior to the initiation of the call. A replay of the conference call will be available through February 16, 2017 by dialing 888-203-1112 or 719-457-0820 and entering access code 6564303#. 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 high-value 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, 2016 which we filed with the Securities and Exchange Commission on August 30, 2016 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

December 31,

   

Six Months Ended

December 31,

 
   

2016

   

2015

   

2016

   

2015

 

Net revenues

  $ 17,862     $ 12,636     $ 33,610     $ 27,254  

Cost of revenues

    6,475       5,010       12,614       10,156  

Gross profit

    11,387       7,626       20,996       17,098  

Operating expenses:

                               

Selling and marketing expenses

    2,327       2,040       4,748       4,209  

General and administrative expenses

    4,549       3,897       8,963       8,004  

Total operating expenses

    6,876       5,937       13,711       12,213  

Operating income

    4,511       1,689       7,285       4,885  

Interest income and other expense, net

    (96 )     (15 )     (72 )     (42 )

Income before provision for income taxes

    4,415       1,674       7,213       4,843  

Provision for income taxes

    1,491       679       2,701       1,906  

Income from continuing operations

    2,924       995       4,512       2,937  

Loss from discontinued operations, net of income taxes

    (2 )     (6 )     (10 )     (17 )

Net income

  $ 2,922     $ 989     $ 4,502     $ 2,920  
                                 

Net income per basic share:

                               

Income from continuing operations

  $ 0.34     $ 0.12     $ 0.53     $ 0.35  

Loss from discontinued operations

    -       -       -       -  

Net income per basic share

  $ 0.34     $ 0.12     $ 0.53     $ 0.35  
                                 

Net income per diluted share:

                               

Income from continuing operations

  $ 0.34     $ 0.12     $ 0.53     $ 0.34  

Loss from discontinued operations

    -       -       -       -  

Net income per diluted share

  $ 0.34     $ 0.12     $ 0.53     $ 0.34  
                                 

Weighted average shares outstanding:

                               

Basic

    8,478       8,441       8,476       8,438  

Diluted

    8,578       8,549       8,569       8,541  

Dividends declared per common share

  $ 0.35     $ 0.35     $ 0.70     $ 0.70  

 

 
 

 

   

Collectors Universe, Inc.

Page 5 of 6

   

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except per share data)

(Unaudited)  

 

 

December 31,

2016

   

June 30,

2016

 
ASSETS                

Current assets:

               

Cash and cash equivalents

  $ 10,097     $ 11,967  

Accounts receivable, net of allowance of $60 and $35 at December 31, 2016 and June 30, 2016, respectively

    4,506       3,883  

Inventories, net

    2,347       1,835  

Prepaid expenses and other current assets

    1,188       1,273  

Total current assets

    18,138       18,958  
                 

Property and equipment, net

    3,032       2,839  

Goodwill

    2,083       2,083  

Intangible assets, net

    1,798       1,762  

Deferred income tax assets

    2,229       2,229  

Other assets

    287       240  

Non-current assets of discontinued operations

    79       79  

Total assets

  $ 27,646     $ 28,190  

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 2,392     $ 2,728  

Accrued liabilities

    2,725       2,491  

Accrued compensation and benefits

    3,319       3,414  

Income taxes payable

    1,615       782  

Deferred revenue

    2,867       2,563  

Current liabilities of discontinued operations

    624       619  

Total current liabilities

    13,542       12,597  
                 

Deferred rent

    337       381  

Non-current liabilities of discontinued operations

    -       217  
                 

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; 8,921 and 8,898 issued and outstanding at December 31, 2016 and June 30, 2016, respectively.

    9       9  

Additional paid-in capital

    80,852       80,642  

Accumulated deficit

    (67,094 )     (65,656 )

Total stockholders’ equity

    13,767       14,995  

Total liabilities and stockholders’ equity

  $ 27,646     $ 28,190  

 

 

 
 

 

 

Collectors Universe, Inc.

Page 6 of 6

 

COLLECTORS UNIVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

   

Six Months Ended

December 31,

 
   

2016

   

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 4,502     $ 2,920  

Discontinued operations

    10       17  

Income from continuing operations

    4,512       2,937  

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

               

Depreciation and amortization expense

    830       699  

Stock-based compensation expense

    210       291  

Provision for bad debts

    26       1  

Provision for inventory write-down

    29       42  

Provision for warranty

    336       224  

Gain on sale of property and equipment

    5       (2 )

Change in operating assets and liabilities:

               

Accounts receivable

    (650 )     362  

Inventories

    (541 )     (188 )

Prepaid expenses and other

    85       (51 )

Other assets

    (46 )     (141 )

Accounts payable and accrued liabilities

    (372 )     (657 )

Accrued compensation and benefits

    (95 )     (1,724 )

Income taxes payable

    832       382  

Deferred revenue

    305       293  

Deferred rent

    (44 )     (28 )

Net cash provided by operating activities of continuing operations

    5,422       2,440  

Net cash used in operating activities of discontinued businesses

    (240 )     (199 )

Net cash provided by operating activities

    5,182       2,241  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Proceeds from sale of business

    9       9  

Capital expenditures

    (726 )     (292 )

Capitalized software

    (371 )     (371 )

Patents and other intangibles

    (5 )     (26 )

Net cash used in investing activities

    (1,093 )     (680 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Dividends paid to common stockholders

    (5,959 )     (6,021 )

Net cash used in financing activities

    (5,959 )     (6,021 )
                 

Net decrease in cash and cash equivalents

    (1,870 )     (4,460 )

Cash and cash equivalents at beginning of period

    11,967       17,254  

Cash and cash equivalents at end of period

  $ 10,097     $ 12,794  
                 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

               

Income taxes paid during the period

  $ 1,857     $ 1,513