Good afternoon, and welcome to A-Mark Precious Metals Conference Call for the Fiscal Second Quarter 2019 Ended December 31, 2018. My name is Jeremy, and I will be your operator this afternoon. Before this call, A-Mark issued its results for the fiscal second quarter of 2019 in a press release, which is available on the Investor Relations section of the company’s website at www.amark.com. You can find the link to the Investor Relations section at the top of the homepage. Joining us for today’s call are A-Mark’s CEO, Greg Roberts; President, Thor Gjerdrum; and CFO, Cary Dickson. Following their remarks, we will open the call to your questions. Then, before we conclude the call, I’ll provide the necessary cautions regarding the forward-looking statements made by management during this call. I would 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 A-Mark’s website. Now, I would like to turn the call over to A-Mark’s CEO, Mr. Greg Roberts. Sir, please proceed.

Thank you, Jeremy, and welcome everyone. Good afternoon. And thank you for joining us. In the second quarter we saw a continuation of the momentum we experienced in Q1, resulting in another solid quarter for A-Mark. These results were driven in part by the favorable market conditions in the precious metals market, where we saw continued price volatility, which produced higher demand and supply constraints. In fact, the number of silver ounces we sold in the quarter was up 10% sequentially and 68% year-over-year to over 20 million ounces, our highest level in nearly two years. A-Mark's vertically integrated structure and especially our mid-teen capabilities through SilverTowne Mint, gave us a key and sustainable competitive advantage plan by enabling us to meet the surge in demand. I'll talk more about our business segments, operational highlights and outlook in a bit. But first I'd like to invite our CFO, Cary Dickson to walk us through the financial details for the quarter and first six months of the year. Then our President, Thor Gjerdrum will review our key performance metrics. And finally, I will come back on to provide an update on our execution of strategy in each of our business segments, as well as discuss our strategic initiatives and outlook for the rest of fiscal 2019. Cary, take it away.

Thank you, Greg and good afternoon everyone. Turning to our financial results for the fiscal second quarter and the first six months ended December 31, 2018. Our revenues for the fiscal Q2, 2019 decreased 35% to $1.1 billion from $1.68 billion in a same year ago quarter. For the first six months of the year, our revenues decreased 31% to $2.67 billion from $3.84 billion in the same period last year. The decrease for both the fiscal second quarter and the first six-months of 2019 was mainly due to lower forward sale and lower gold and silver prices which were offset by an increase in the total amount of gold and silver ounces sold. Gross profit for the fiscal second quarter of 2019 decreased 7% to $8.3 million or 0.6% revenue from $8.9 million or 0.53% of revenue in Q2 of last year. For the first six months period, our gross profit increased 4% to $16.8 million or 0.63% of revenue from $16.2 million or 0.42% of revenue in the same year ago period. The decrease in gross profit for the second quarter of 2019 compared to Q2 of last year was primarily related to lower trading profits of our Wholesale Trading and Ancillary Services segment and decrease gross profit from our Direct Sales segment. The increase in gross profit for the six-month period is primarily due to improved gross profit of our Wholesale Trading and Ancillary segment offset by lower trading profits and gross profit from our Direct Sales segment. Turning to our expenses; selling general and administrative expenses for the fiscal year quarter of 2019 decreased 13% to 18% or $8.1 million from $9.3 million in Q2 of last year. The decrease was primarily related to lower operating expenses incurred our Direct Sales segment of $1.5 million and…

Thanks, Cary. Turning your key operational metrics of the fiscal second quarter of 2019, we sold 440,000 ounces of gold during the quarter, which was down 80% of the prior quarter, but 17% for fiscal Q2 of last year. Turning to silver, as Greg mentioned, we sold 20 million ounces, which was up 10% from the prior quarter and up 68% from Q2 of last year. Looking at our second metric, Wholesale Trading ticket volume increased 3% to 33,007 tickets from the prior quarter and increased 9% from Q2 of last year. The third key metric, we evaluate is inventory turnover, defined as the cost of sales during the period divided by the average inventory during the period. Our inventory turnover ratio for the second quarter was 3.9, which is down from 5.5 in the prior and from 5.2 in Q2 of last year. Finally, the number of secured loan at the end of the quarter totaled 1,931 which is up 13% from the prior quarter but down 32% from Q2 of last year. This year-over-year decrease was due to lower metal price in the first quarter of fiscal 2019 which lowered the customer’s collateral value leading to loans being liquidated. As of December 31, 2018 the dollar value of our CFC loan portfolio totaled $104.8 million, which is up 28% from prior quarter and 8% year-over-year. That includes my prepared remarks. I’ll now turn it back over to Greg to talk about progress we’ve been making in the product, we’ve been making on our key operational initiatives. Greg?

Thank you, Thor. In addition to the heightened activity we've experienced in the precious metals market our financial success in the first half of 2019 was primarily due to higher sales volumes on both gold and silver products and increased finance product income from our Wholesale Trading and Ancillary Services segment and sustained reduction of SG&A expenses at our Direct Sales segment Goldline over the prior year period. In fact, the second quarter marked the most successful quarter for our Direct Sales segment since the quarter we acquired Goldline. The positive market conditions have translated to improve customer demand including strong sell-through of some of the new products we've introduced like the Mapleflex. In addition, during Q2 we paid off the Goldline credit facility which we had used to finance the Goldline acquisition and was our highest interest rate debt instrument. In our Secured Lending segment, we saw a number of loans outstanding grow 13% sequentially to 1931 at quarter end, hoping drive the overall value of our finance book to nearly $105 million. We are optimistic about our prospects for CFC especially given subsidiaries robust access to capital through our $100 million ABS. We are actively growing our finance portfolio and working to introduce new and innovative products which will benefit A-Mark through revenue diversification and the interest income that CFC provides. Shifting gears to our principal investments, which is comprised of majority and minority investments in leading privately held entities, including retail and Internet distributors, as well as the SilverTowne Mint. These investments provide us with incremental higher-margin revenue as well as it enhance our capabilities and reach throughout the industry. As you might imagine, we track and monitor our return on these investments very closely. We will look to increase our principal investments in these -- in…

Thank you. [Operator Instructions] Our first question comes from the line of Sarkis Sherbetchyan from B. Riley FBR. Please proceed with your question.

Hey, good afternoon and thanks for taking my question here.

Glad to have you.

Just wanted to first touch on the increased volatility that you're kind of seeing in the market and some of the robust demand for the physical products; maybe can you give us some color on what you're seeing with respect to the spreads currently?

The spreads particular in silver products are significantly higher. I would say that taking a product that we know very well, the SilverTowne one ounce products. The premium on those products has probably doubled in the last 60 days at the wholesale level. And so that's a significant improvement as well as it helps the P&L dramatically. I would say that the demand has increased as well as one of our competitors at the SilverTowne Mint is no longer with us. They've shut down. And that has cause there to be a bit of a supply constraint. And if you couple that with demand increases, you're going to see a rise in premium. On top of that the U.S. Mint in December had run out of 2018 dated product in anticipation of 2019 coins coming online, the 1st of January. So that added a little bit more stress to the supply chain. And then what we've been talking about for many quarters now is the volatility in the stock market, the uncertainty as it relates to the government being able to run not only efficiently but being able to manage a budget and keep the government open that certainly stirred up the appetite of many precious metals buyers to either purchase again or purchase for the first time. So, we had a real good combination in the first -- in December and then again in January and it’s translated into a very good environment for us.

Very good. Thanks for that. And can you maybe talk a little bit about what you're seeing on your Secured Lending side of the business. It seems like you’re maybe ramping up to produce more loans perhaps just given where the net interest income landed this quarter? Any additional color on that?

Sure. I think around towards the end of the first quarter we had a fairly significant drop in price in precious metals. If you look back it was either in August or September. And that had the effect of creating some margin calls in our in our loan book which led to some liquidation of the metal, which is why you saw a decrease in our loans as well as our overall loan book. I think we've come back from that and I think we’re very close to a new record in our loan book, up in the $105 million range. And that that's up from $82 million approximately. We dropped to in September of 2018. You can also look at the total number of loans that drop from June end of Q4 to the end of Q1. We went from 3500 loans down to about 1700 loans. We've gotten back a significant portion of them with prices rising back up and we’ve made great progress on bringing in a couple of new loan providers in the last 30 days, which we believe if not this quarter next quarter we should have new loan providers coming online. So we’re very focus on filling up the ABS facility with new loans and continuing to see new highs as it relates to the overall loan book. So the environment in December and January has been very good in this area and we’re – we see – we’re very positive of looking forward.

Thanks for that. I’ll hop back in the queue.

[Operator Instructions] Our next question comes from the line of Chris Sakai from Singular Research. Please proceed with your question.

Hi. Just had a question, mainly regarding your increase in pretax income. Just wanted to see over the last six months revenue has gone down, but it looks like pretax income has gone up. I just wanted to see what were the main drivers there to that increase? And also to see if you could comment on how sustainable are these drivers that are increasing the pretax income?

Well, I think as you can see our margins are up in the first six months and the volume has been down as it relates to topline. A lot of that has to do with the mix of futures and forwards in our mix of products. And so, we generally encourage people not to look at the topline, but to look at the number of ounces sold as well as our margin. I think that we’ve talked about before, a big driver has been the premium that we’re able to achieve on small silver products particularly one ounce coins and 10 ounce bars. That premium had a major shift in Q2, as I’ve described, it relates to the drop in price as well as some production issues and some supply problems at other manufacturers of silver products. But I would say that the majority of the increase in margin and the drop in topline really was not significant related to market conditions. I think our success in pretax was significant as it relates to just higher premiums in silver products as well as you can see, when we sell 20 million ounces a quarter, that's really good for us. When we sell 15 million ounces a quarter it’s not good for us. So I think that answer the question, but if not I can elaborate on anything I missed.

Okay. Yes. Thanks for that.

Next question.

[Operator Instructions] At this time, this concludes our question and answer session. And I’d now like to turn the call back over to Mr. Roberts for his closing remarks. Oh, I'm sorry we did just have one more question come in. Our next question comes from the line of Mitch Almy from Wedbush Securities. Please proceed with your questions.

Afternoon, Greg.

Hello, Mitch.

I had a couple of questions. First off, since you have the asset-backed facility in place, are you over time going to break out I guess the size of the loan book there and debt net interest margin?

Yes. I think ultimately we will get to that point. One of the challenges and that is that we -- the ABS doesn't reflect the entire portfolio that we have, not all of the loans that we -- that CFC has on its books right now are eligible for the ABS. The ABS has some specific requirements as it relates to straight bullion loans for example, so that numismatic loans which tend to be little bit higher interest rates are eligible for the ABS. The other factor with the ABS is we are also able to put A-Mark inventory into the ABS, so that flexibility we needed addresses times when our loan book may drop because of the drop in price that we’re able to also put inventory in the ABS. Now that may not be the most efficient cost of money to have inventory in there, but it fills the ABS and it does provide us with some flexibility. In a perfect world we would have a homogenous type of loan that fill the 100% of the ABS. And I think when we get to that point I think you might see us give a little more detail into how the ABS is performing. But right now it might be a little bit difficult and might actually be a little bit confusing. But I think we’re well on our way to hopefully getting to the point where we can have $100 million of straight vanilla bullion loans in the ABS and then I would say, we should then look to you explain a little bit more of how it's performing.

Sure. Thank you. Second question and this tie back to a couple things you mentioned earlier. You've been building a platform where you have the lending of Wholesale Trading. You have storage. You have shipping. You've got the manufacturing. And this quarter I guess it was a pretty good example of what happens; you got lower prices year-over-year, changing demand quarter-to-quarter revenues way off, gross profit off, significantly less and because you got so many moving parts of this company compared to most companies and the loan books up, I guess I'm asking you to give me the hypothetical best quarter that we’re going to see out there so that when we’re trying to analyze a company throughout the quarter and we see things happening we can have some idea which of those things, which of those metrics are positive for A-Mark and which ones would be less than positive? How all the different lines of your topline merge together? What is a peak experience for this company earnings wise?

I think December was really good for us. And I think January has been pretty good for us. I think that the piece that is really throwing off our numbers continues to be the performance of Goldline. And I think that that is much much better than it was a year ago or even two quarters ago, three quarters ago. I feel very positive and optimistic about where Goldline is today versus just six months ago, say, two calls ago. A lot of that is everybody's hard work as well as December -- we saw for the first time in December we saw a lot of volatility in the stock market. We saw the issues with the government shutdown. And we saw for the very first time that those factors really energized the Goldline customer base and we saw some numbers and some responses to marketing and advertising that we had not seen in the time we've owned Goldline. So I think for the first time we really saw some validation as to what Goldline can do if you had a sustained six months or one year or even a few years. But I would say what we haven't seen yet to answer your question is we haven't seen a full quarter of where we had three months of all 12 cylinders firing at the same time. But I can tell you that you're going to get some crossover between December and January where you have a quarter split there. But those two months were particularly good for us. And now February what’s happened is you had the price of silver and gold go up. And it's good because it helps our loan portfolio and it helps us to write more loans and it helps our interest income, but the market needs to adjust a little bit to -- people want to buy silver at 14 bucks and they want to buy gold 1200, but is there enough crisis on the horizon and enough carryover to keep that enthusiasm with gold at 1300 and silver at 15 bucks. That something we’re going to have to see over the next few months. But we definitely -- if you had to tell me what environment would what I wish for? I would wish for what happened in December where there was a major shift in risk-off and there was a major push towards safer assets. I think you saw some people actually for the first time talk on TV and in the newspapers that are we at the end of the cycle. And is the Dow really going to go up another 20% from here or is it going to go down 30%. When you hear that and you start to have that uncertainty and I know, Mitch, you're on the other side just a little bit, but on the equity side, but that kind of fear really drives our business and drives our activity.

Okay.

Did I get there or…?

Yes, you did. It’s sobering. No. yes, you did. Thank you.

Yes. I mean, we’re not shy about saying we are a safer countercyclical investment. I mean, we’re – and if you can see if you go back and look at the last 10 years of A-Mark, we perform better when there's at least a little bit of doubt in other areas of investment.

One final question, do you have -- now it's been a year and a half or so since you bought SilverTowne. Do you have any…?

Since we bought SilverTowne or Goldline?

SilverTowne.

Yes. It’s probably been two years now.

Two years.

But go ahead.

Since you’re planning on making more acquisitions, do you have any sort of metric on an ROI on that investment you can give us at this point?

I mean, I think that there probably has not been a tremendous ROI to this point. We've – SilverTowne Mint is going to suffer when they're producing. I think that the very low that we got at SilverTowne was about 150,000 ounces a week of output and at a 150,000 ounces a week SilverTowne is going to lose money. I think that it's a -- we look at it as an insurance policy to be prepared when other producers that we buy from aren’t able to produce for whatever reason and we're seeing that this last month and this month in that a number of other suppliers of ours are not producing or producing significantly less. As an example, we are on a wholesale level today, we can't deliver SilverTowne product. I think our first delivery date available right now is probably around March 15th. So, if you're ordering from us today we will deliver product March 15 from SilverTowne. A number of SilverTowne competitors are further out than that right now. And we have ramped up as we’ve said, we’ve ramped up from 150,000 ounces a week at a low to 300,000 ounces a week we should be producing next week at SilverTowne and at 300,000 a week SilverTowne is definitely profitable and that's an ROI that we’d be happy with. So, do we do we get to 400,000 ounces a week and they're still demanding and the premiums continue to be where they're at now? We’ll see. But as you can imagine I mean, I try not to get into specific numbers, but you we’re probably carrying $0.20 to $0.25 more per ounce in premium today than we were six months ago. And that's a significant amount of income at 1 million ounces a month as opposed to…

Thanks. Yes. That’s good. I had never asked. Thanks for the clarity.

[Operator Instructions] 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.

Thank you for joining us today. We appreciate the continued support and we look forward to giving you more updated information on our next call. And I think that does it. Jeremy?

Before we conclude today's call, I would like to provide A-Mark’s 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-Mark’s future plans, objectives, expectations, performance, events and the like are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. 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 as planned; greater-than-anticipated costs incurred to execute the strategy; changes in the current domestic and international political climate; increased competition for A-Mark’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; general risks of doing business in the commodity markets; and other business, economic, financial and governmental risks as described in the company’s public filings with the Securities and Exchange Commission. The words should, believe, estimate, expect, intend, anticipate, foresee, plan and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Finally, I would 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 A-Mark’s fiscal second quarter of 2019 Earnings Call. You may now disconnect.