Executive Summary / Key Takeaways

• A-Mark Precious Metals ($AMRK) is strategically transforming into a vertically integrated, diversified precious metals platform, leveraging opportunistic acquisitions and technological investments to enhance profitability and market share.
• Despite macroeconomic headwinds, including elevated precious metal prices leading to higher carry costs and subdued retail demand, the company reported $17.3 million in net income and $64.4 million in non-GAAP EBITDA for fiscal year 2025.
• Recent strategic acquisitions, including Spectrum Group International (SGI), Pinehurst Coin Exchange, and AMS Holdings, are expanding A-Mark's footprint into higher-margin collectible and luxury segments, while international expansion in Asia (LPM in Singapore) broadens its global reach.
• Significant investments in automation technology at the A-Mark Global Logistics (AMGL) facility in Las Vegas are enhancing operational efficiency, with an expected capacity increase of 50% to 75% in packages processed weekly without additional employees.
• Management remains cautiously optimistic about a shift in macro headwinds and is actively pursuing further accretive M&A opportunities, viewing slower markets as ideal for strategic growth that positions the company for "higher highs and higher lows" in future favorable environments.

A Fully Integrated Platform Poised for Evolution

A-Mark Precious Metals, Inc. ($AMRK), founded in 1965, has evolved from a foundational bullion and coin dealer into a fully integrated precious metals company. Its journey, marked by becoming an authorized purchaser for the U.S. Mint in 1986 and establishing global sovereign mint relationships by the early 1990s, laid the groundwork for its current expansive operations. Following its spin-off into a publicly traded entity in 2014, A-Mark embarked on a strategic path of vertical integration and service diversification. This strategy, which includes wholesale, direct-to-consumer (DTC), and secured lending segments, aims to create a robust ecosystem resilient to market fluctuations.

The company's overarching strategy is to grow its business volume, expand its global footprint, and enlarge its offering of complementary products and services. This is achieved by leveraging its integrated operations spanning trading, distribution, logistics, minting, storage, hedging, and financing. A-Mark's extensive and varied customer base, from financial institutions to individual collectors, underscores its broad market reach. The company views periods of slower market conditions as opportune times for strategic acquisitions, believing these allow for easier integration and long-term growth compared to acquisitions made during heated markets.

Technological Prowess and Operational Efficiency

A-Mark's competitive edge is significantly bolstered by its differentiated technology and operational innovations. The company has dedicated substantial resources to enhancing its technology platform across all business aspects. This includes developing new digital products, such as mobile interfaces for easier buying, selling, and storage of physical metal products.

A prime example of this technological differentiation is the A-Mark Global Logistics (AMGL) facility in Las Vegas. This state-of-the-art depository and distribution center utilizes autonomous processing, a core technological advancement designed to enhance operational efficiency and maintain premium quality control. Management reports that the AMGL facility's hardware upgrade is 95% complete, and once fully operational, it is expected to handle 50% to 75% more packages a week without requiring additional employees. This quantifiable benefit directly translates into significant cost savings and improved scalability, creating a substantial competitive moat.

Furthermore, the Direct-to-Consumer segment leverages internally developed search engine optimization (SEO) strategies and paid placements with major search engines to drive website traffic. The CyberMetals online platform, launched in April 2022, allows customers to purchase and sell fractional shares of digital gold, silver, platinum, and palladium bars, with the option to convert digital holdings to fabricated physical products. This innovation expands A-Mark's product offerings and caters to evolving customer preferences for digital accessibility. The SilverTowne Mint, a wholly-owned subsidiary, achieved ISO certification in March 2023, enabling its silver bullion products to be accepted into individual retirement accounts (IRAs), further broadening market access. These technological and operational advancements are crucial for A-Mark to maintain its competitive standing, reduce costs, and expand its market share in a dynamic industry.

Navigating a Shifting Competitive Landscape

A-Mark operates in a global and highly competitive precious metals industry, facing both direct and indirect rivals. Its integrated model, spanning wholesale, direct-to-consumer (DTC), and secured lending, provides a unique market position.

In the wholesale and institutional segments, A-Mark competes with large precious metals firms and banks. Its long-standing relationships with sovereign mints, including over 35 years with the U.S. Mint, provide a significant competitive advantage in product sourcing and distribution. However, the wholesale segment has recently faced challenges due to lower premiums and an abundance of product in the marketplace, causing its numbers to "lag a little bit."

In the DTC segment, A-Mark's subsidiaries like JM Bullion compete with other online specialty retailers such as APMEX, SD Bullion, and Bullion Exchanges, as well as traditional coin stores and general online merchandisers like eBay (EBAY). Competition here is primarily driven by price, customer service (including same-day shipping), and product availability. A-Mark's internally developed SEO strategies and extensive customer base, now totaling 4.2 million, are critical differentiators. Management believes they possess "the best retail customer base out there right now at least in small fabricated silver and gold products."

Compared to streaming and royalty companies like Royal Gold (RGLD), Wheaton Precious Metals (WPM), and Franco-Nevada Corporation (FNV), A-Mark's direct engagement with customers and broader service ecosystem offer more immediate market access and customized services. While streaming companies benefit from lower operational risks and potentially stronger financial stability during market downturns due to their asset-light models, A-Mark's integrated approach allows for faster innovation cycles in retail products and greater control over the end-to-end customer experience. A-Mark's Secured Lending segment, through Collateral Finance Corporation (CFC), faces limited direct competition, benefiting from its access to capital, secure storage facilities, and expertise in bullion and numismatic collateral.

Against primary silver producer Pan American Silver (PAAS), A-Mark's non-mining, trading-focused model provides greater flexibility in sourcing and distribution, enabling faster market responsiveness. However, this also exposes A-Mark to supply chain dependencies, a vulnerability that PAAS's self-sufficiency mitigates. Indirect competitors, such as exchange-traded funds (ETFs) like SPDR Gold Shares (GLD) and online trading platforms, offer accessible alternatives for investors, potentially diverting market share from A-Mark's DTC segment. A-Mark's strategy to expand into higher-margin collectible and luxury segments through acquisitions like SGI and AMS is a direct response to diversify revenue streams and enhance profitability beyond traditional bullion trading.

Financial Performance and Strategic Momentum

A-Mark's fiscal year 2025 results reflect a period of strategic expansion amidst challenging market dynamics. For the year ended June 30, 2025, the company reported revenues of $10.98 billion, a 13.20% increase from $9.70 billion in the prior year. This growth was primarily driven by higher average selling prices of gold and silver and the impact of recent acquisitions, despite a decrease in gold ounces sold by 10.70% to 1.64 million ounces and silver ounces sold by 31.90% to 73.64 million ounces.

Gross profit increased by 21.70% to $210.92 million from $173.25 million in fiscal 2024. The overall gross margin percentage improved to 1.92% from 1.79%. Excluding forward sales, the gross margin percentage increased by 19 basis points to 3.22%, primarily due to increased retail market activity and higher premium spreads, partially offset by lower trading profits. This highlights the growing contribution of the DTC segment, which saw its gross profit increase by 50.60% to $125.04 million. The DTC segment also demonstrated robust customer growth, with new customers increasing by 57.20% to 1.13 million and total customers reaching 4.20 million, up 36.80%.

However, net income attributable to the company for fiscal year 2025 was $17.32 million, a significant decrease of 74.70% from $68.55 million in the prior year, resulting in diluted EPS of $0.71, down 75%. Non-GAAP adjusted net income before provision for income taxes decreased 34% to $53.1 million, and non-GAAP EBITDA decreased 40% to $64.4 million. This decline in profitability was largely influenced by increased selling, general, and administrative (SG&A) expenses, which rose 55% to $139.19 million, primarily due to higher compensation, consulting fees, advertising costs, and the integration of acquired businesses. Depreciation and amortization expense also more than doubled to $22.92 million due to intangible assets from recent acquisitions.

Interest expense increased by 16.90% to $46.20 million, driven by higher overall borrowings related to precious metal leases, the Trading Credit Facility, and product financing agreements. This reflects the "higher carry costs" associated with elevated spot prices and the impact of backwardation experienced in certain periods. The Secured Lending segment's interest income decreased by 6.70% to $10.67 million, with the number of secured loans outstanding falling by 24.30% to 445, and the loan portfolio balance decreasing by 19.03% to $94.04 million. Despite these headwinds, management noted an uptick in new loans and draws against existing loans in recent weeks, suggesting potential stabilization.

Liquidity and Capital Allocation

A-Mark's liquidity is robust, with approximately 78% of its assets being liquid as of June 30, 2025. The company's primary sources of liquidity include cash from operations, its Trading Credit Facility, and product financing arrangements. The Trading Credit Facility, recently amended in August 2025 to extend its maturity to September 30, 2027, and provide a revolving commitment of $422.5 million, is crucial for funding billions of dollars in annual precious metals transactions.

Cash provided by operating activities saw a substantial increase of $91.4 million to $152.3 million for fiscal year 2025, reflecting effective working capital management. While investing activities used $104.7 million, largely due to strategic acquisitions, and financing activities used $18.6 million, management is confident that current liquidity sources are sufficient to meet working capital needs, capital expenditures, investment requirements, and commitments for at least the next twelve months. The company's capital allocation strategy balances inventory reduction, managing interest expense, dividends, stock buybacks, and strategic acquisitions, with a focus on accretive deals during slower market periods.

Outlook and Risk Assessment

A-Mark's outlook is characterized by cautious optimism regarding a potential shift in macroeconomic headwinds. Management anticipates that ongoing integration and optimization efforts from recent acquisitions will yield significant cost efficiencies and operational leverage. The company is actively pursuing additional M&A opportunities, particularly in domestic markets, believing that slower market conditions present favorable valuations for accretive assets.

However, several risks persist. The precious metals market remains highly sensitive to global political conditions, world events, and macroeconomic uncertainty. Periods of backwardation, where future prices are lower than near-term spot prices, have disrupted profitability by increasing hedging costs. The uncertainty surrounding tariffs, particularly on precious metals imports, has also led to higher carry costs and market disruptions. While an exemption for precious metals from certain tariffs was announced, the broader trade policy landscape continues to create volatility.

The company also faces intense competition in its DTC segment, and the performance of its Secured Lending segment is tied to maintaining a sufficient loan portfolio. Compliance with a growing number of environmental reporting regulations (e.g., California SB 261 & SB 253, SEC rules, EU CSRD & CSDDD) and data privacy statutes (e.g., GDPR, CCPA) will require significant resources and attention, potentially increasing operational costs. Despite these challenges, A-Mark's diversified platform, strategic acquisitions, and technological investments are designed to position it for long-term value creation.

Conclusion

A-Mark Precious Metals is executing a deliberate and transformative strategy, evolving into a more diversified and integrated leader in the precious metals industry. By strategically acquiring businesses like SGI, Pinehurst, and AMS, and expanding its international presence through LPM, A-Mark is broadening its reach into higher-margin collectible and luxury segments. Coupled with significant investments in technological differentiators such as the AMGL facility's autonomous processing, which promises substantial operational efficiencies and scalability, the company is building a robust foundation for sustained growth.

While current macroeconomic headwinds, including elevated carry costs from high spot prices and market volatility, have impacted recent profitability, A-Mark's management views these periods as critical for opportunistic, accretive acquisitions. The company's commitment to a balanced capital allocation strategy, alongside its proven ability to generate positive results in challenging environments, underscores its long-term potential. As A-Mark continues to integrate its expanded portfolio and leverage its technological leadership, it is well-positioned to capitalize on future market shifts and deliver enhanced shareholder value, embodying a "coiled spring" ready for the next favorable market cycle.