DGSE's 2Q Revenue +3%, Loss Narrows to $1M

Aug 13, 2013 4:53 PM By Sandra Mardenfeld

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RAPAPORT... Revenue for DGSE Companies Inc. rose 3.3 percent year on year to $29.5 million for the second quarter that ended on June 30. Cost of goods sold increased 2.8 percent to $25.4 million. The company reported $2.7 million in cash and cash equivalents compared with $4.9 million a year ago. Total expenses and depreciation decreased 12.7 percent to $5.3 million and its net loss dropped to $1.1 million compared with $2.4 million a year ago.

Gross profit margin was steady at 14 percent. DGSE reported strong sales in bullion and at the wholesale watch division, which was offset by purchase declines for scraps and rare coins.

“We increased our revenue in the second quarter, historically our slowest seasonal quarter, and delivered approximately break-even results on an adjusted EBITDA basis, excluding non-recurring expenses, for the six-month period," said James Vierling, DGSE's CEO. "We managed this amid one of the most volatile precious metal environments in recent history, including unprecedented declines in gold prices. Margins in the quarter were impacted by a shift in product mix. We had higher bullion sales, which carry a lower gross margin. Our higher-margin jewelry business was slightly ahead of last year, while the scrap business declined, as falling gold prices are usually indicative of lower scrap buys. Our ability to operate essentially at a break-even level, even in this challenging environment, demonstrates the progress we have made in diversifying our revenue streams and reducing operating expenses.”

The company opened three new locations in the Dallas and Fort Worth metropolitan area, Atlanta and Charleston in 2013. "Relative to these retail location openings, our efforts to reduce operating expenses continue to be successful, as we decreased our total expenses by almost $800,000, even while incurring $342,000 in incremental operating expenses related to new stores opened in the last 12 months," said Vierling. "We remain focused on funding retail location openings from operating cash flow as we have done in the past.”

Tags: DGSE, Jewelry, Sandra Mardenfeld, scrap, second quarter, watches