NEW YORK, Feb. 8 /PRNewswire-FirstCall/ -- Escala Group, Inc. today announced financial results for the fiscal 2006 second quarter and six months ended December 31, 2005.
Net income for the second quarter was $10.1 million, or $0.35 per diluted share, compared with net income of $7.7 million, or $0.27 per diluted share, for the second quarter of fiscal 2005. These figures reflect an increase of 32.0% in net income and 30% in diluted earnings per share. In calculating earnings per share, the diluted weighted average common shares outstanding for the second quarter of fiscal 2006 was 28,963,000 compared with 28,760,000 for the corresponding quarter of fiscal 2005.
For the first half of fiscal 2006, net income rose 52% to $19.4 million in fiscal 2006 compared with $12.8 million for the same period in fiscal 2005. Diluted earnings per share grew 49% to $0.67 in the first half of fiscal 2006, versus $0.45 in the corresponding period in fiscal 2005.
Total revenues, which include inventory sales plus commission income, were $877.1 million for the second quarter of fiscal 2006, versus $58.9 million for the same quarter in fiscal 2005. Aggregate sales, which include inventory sales plus consignment sales and commission income, were $894.5 million, versus $70.8 million for the same quarterly fiscal comparisons.
Total revenues in the first half of fiscal 2006 were $1.4 billion, compared with $107.0 million during the first half of fiscal 2005. Aggregate sales for the same period increased to $1.5 billion in fiscal 2006, versus $136.0 million in fiscal 2005. The growth in total revenues for the second quarter and the first half of fiscal 2006 is largely due to the acquisition of A-Mark Precious Metals completed on July 15, 2005.
Gross profit in the second quarter of fiscal 2006 increased $7.9 million, or 41%, to $27.3 million, from $19.4 million for the comparable period in fiscal 2005. The increase in gross profit is largely attributable to related-party sales to Afinsa.
In Collectibles, Escala recorded a 20% increase in revenues to $70.8 million for the three months ended December 31, 2005, from $58.9 million for the same period in fiscal 2005. The gross profit percentage for the second quarter of fiscal 2006 increased to 36% versus 33% for the second quarter of 2005. Aggregate sales from auction operations increased 33% to $54.6 million for the first half of fiscal 2006 from $41.1 million for the comparable period in fiscal 2005.
Jose Miguel Herrero, President and Chief Executive Officer commented, "We are pleased with Escala's strong financial performance which is due to both acquisitions as well as organic growth. The second quarter continued to receive the benefit of the Company's strategic acquisition of A-Mark Precious Metals, and we are seeing solid demand in our core businesses of stamps and coins.
"As we continue to build on our aggregation strategy," Mr. Herrero continued, "Escala achieved one of its stated goals of expanding into arts and antiques in the second quarter by completing the acquisition of Greg Martin Auctions, the specialty arms, military and Western memorabilia auction house based in San Francisco, on October 14, 2005. Greg Martin Auctions conducted a successful arms and Native American auction in the second quarter, and they will be holding a key auction of the Howard Collection on the East Coast in the fourth quarter. This relationship demonstrates the power of our group network -- a diverse collectibles product offer that can be deployed in the appropriate market for the collector."
Management will conduct a conference call to discuss second-quarter and six-months fiscal 2006 earnings results at 9:00 a.m. EST Thursday, February 9, 2006. US participants should dial 800-257-6607, and international participants should dial +303-205-0066. The reservation number for the conference call is 11051403. The call can also be accessed via the Internet live or as a replay. Investors may access the webcast through the Investor Relations section of Escala Group's corporate website at http://www.escalagroup.com/.
The conference call will be archived for replay on the above website for 5 days following the call.
About Escala Group, Inc.
Escala Group is a global federation of leading companies in the collectibles market with operations in North America, Europe and Asia as well as on the Internet. The company operates through a number of subsidiaries that specialize in various sectors of the collectibles markets, and is comprised of three business areas: auctions, merchant/dealer operations and trading.
Escala Group's North American operations include Greg Manning Auctions division, Ivy & Manning Philatelic Auctions, Greg Manning Galleries, Greg Martin Auctions, Spectrum Numismatics, Teletrade, Nutmeg Stamp Sales, Superior Sports Auctions, Bowers and Merena Auctions, and Kingswood Coin Auctions, and H.R. Harmer. In Europe, the leading auction houses affiliated with the network are Auctentia Subastas (Afinsa Auctions) of Madrid, Spain, Corinphila Auktionen of Zurich, Switzerland, and the Koehler group of auction companies of Berlin and Wiesbaden, Germany. In Asia, Escala's auctions operations are conducted through John Bull Stamp Auctions, Ltd, the oldest philatelic auction house in Hong Kong.
Merchant/dealer activities are conducted through Greg Manning Auctions and Central de Compras Coleccionables, S.L. of Madrid, which act as exclusive suppliers of collectibles -- primarily stamps and coins -- on a worldwide basis to Afinsa Bienes Tangibles, S.A. of Madrid, Spain, and through Spectrum Numismatics International, one of the largest wholesalers of rare coins in the U.S. Afinsa is Escala Group's majority shareholder.
The trading activities of Escala Group are conducted through A-Mark Precious Metals, one of the largest private sellers of bullion coins and bullion gold, silver and platinum to the wholesale marketplace.
SAFE HARBOR STATEMENT
Statements in this press release that relate to 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 may cause such differences include changes in market conditions, changes in economic environment, competitive factors and the other factors discussed in the "forward-looking information" or "risk factors" sections included in Escala Group's filings with the Securities and Exchange Commission, including Escala Group's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, prospectuses and other documents that Escala Group has filed with the Commission. In particular, any statement related to Escala Group's expected revenues or earnings or Escala Group's being well positioned for future profitability and growth are forward-looking statements.
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. Escala Group 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.
(CCBN-ESCL)
- Financial Tables Follow -
ESCALA GROUP, INC.
Condensed Consolidated Statements of Earnings
For the Three and Six Months Ended December 31, 2005
(thousands except per share data)
(Unaudited)
Three Months ended Six Months ended
December 31, December 31,
2005 2004 2005 2004
Aggregate Sales $894,518 $70,765 $1,471,176 $136,007
Operating revenues
Sales -- trading $806,237 $- $1,300,539 $-
Sales of inventory 21,298 28,012 41,653 50,982
Sales of inventory --
related party 45,580 27,499 85,715 49,117
Commissions earned 3,936 3,429 8,140 6,931
Total revenues 877,051 58,940 1,436,047 107,030
Cost of merchandise sold
Cost of sales -- trading 804,356 - 1,297,453 -
Cost of merchandise sold 18,920 26,639 36,572 47,427
Cost of merchandise sold --
related party 26,445 12,860 47,269 23,000
Gross profit 27,330 19,441 54,753 36,603
Operating expenses
General and administrative 5,739 2,439 11,950 6,097
Salaries and wages 4,178 3,152 8,895 6,468
Depreciation and amortization 556 281 964 557
Marketing 862 917 1,839 1,716
Total operating expenses 11,335 6,789 23,648 14,838
Operating income 15,995 12,652 31,105 21,765
Other income (expense)
Interest income 570 132 898 394
Interest expense (459) (237) (798) (524)
Other (4) (111) (41) (132)
Earnings before income taxes 16,102 12,436 31,164 21,503
Provision for income taxes 5,921 4,781 11,641 8,714
Minority interest -- related party 79 - 95 -
Net income $10,102 $7,655 $19,428 $12,789
EBITDA $17,038 $12,954 $32,831 $22,584
Three Months ended Six Months ended
December 31, December 31,
Earnings per Share Schedule 2005 2004 2005 2004
Net Income $10,102 $7,655 $19,428 $12,789
Basic Earnings per Share
Weighted average shares outstanding 27,778 27,389 27,736 27,363
Basic earnings per share $0.36 $0.28 $0.70 $0.47
Diluted Earnings per Share
Weighted average shares outstanding 28,963 28,760 28,877 28,695
Diluted earnings per share $0.35 $0.27 $0.67 $0.45
EBITDA Reconciliation Schedule
Net Income: $10,102 $7,655 $19,428 $12,789
Plus:
Interest expense 459 237 798 524
Provision for income taxes 5,921 4,781 11,641 8,714
Depreciation 556 281 964 557
EBITDA 17,038 12,954 32,831 22,584
