Investor Relations

Irvine, CA, February 13, 2012 – Spectrum Group International, Inc. (SPGZ.PK) today announced financial results for the second quarter of fiscal year 2012, which ended December 31, 2011. 

Highlights for the Three and Six Months ended December 31, 2011:

• Total revenue increased $415.7 million to $2.13 billion and $1.18 billion to $4.39 billion, respectively, for the three and six months ended December 31, 2011, as compared with the same periods last year.

• Trading segment revenue increased $435.2 million to $2.09 billion and $1.17 billion to $4.28 billion, respectively, for the three and six months ended December 31, 2011, as compared with the same periods last year.

• Collectibles segment revenue decreased $19.6 million to $39.5 million and increased $4.6 million to $111.7 million, respectively, for the three and six months ended December 31, 2011, as compared with the same periods last year.

• Gross profit decreased $4.6 million to $11.1 million and increased $7.9 million to $32.4 million, respectively, for the three and six months ended December 31, 2011, as compared with the same periods last year.

• Pre-tax income from continuing operations decreased $7.8 million to a loss of $1.9 million and increased $3.4 million to $6.0 million, respectively, for the three and six months ended December 31, 2011, as compared with the same periods last year.

Revenues for the three months ended December 31, 2011 increased $415.7 million, or 24.2%, to $2.13 billion from $1.71 billion in the year-ago quarter.  Revenues for the six months ended December 31, 2011 increased $1.18 billion, or 36.7%, to $4.39 billion from $3.21 billion in the year-ago quarter. Trading revenues increased $435.2 million, or 26.3%, for the three months ended December 31, 2011 and increased $1.17 billion, or 37.8%, for the six months ended December 31, 2011 compared with the same periods last year.  The increase is the result of higher precious metal prices during the three and six months ended December 31, 2011. Collectible segment revenues decreased $19.6 million, or 33.1%, for the three months ended December 31, 2011 and increased $4.6 million, or 4.3%, for the six months ended December 31, 2011.  A change in the auction calendar resulted in fewer auctions taking place during the second quarter as compared with the year-ago quarter. In addition, there was a special Hong Kong sale in the prior year’s second quarter which did not take place this year. The joint venture with Stack’s LLC along with strong first quarter demand for numismatics, philatelic, and wine products contributed to the overall increase for the six months ended December 31, 2011.

Gross profit for the three months ended December 31, 2011 decreased $4.6 million, or 29.5%, to $11.1 million, or a gross profit margin of 0.5%, from $15.7 million, or a gross profit margin of 0.9% in 2010.   There was a decrease in gross profit of $5.5 million, or 58.7%, to $3.9 million, or a gross profit margin of 9.9%, in the Collectibles segment, resulting from a reduced number of auctions during the second quarter and the sales of a higher percentage of certain lower margin numismatic materials, which affected the gross profit margin. Trading segment gross profit increased by $0.9 million, or 14.4%, to $7.2 million, or a gross profit margin of 0.3% for the three months ended December 31, 2011. 

Gross profit for the six months ended December 31, 2011 increased $7.9 million to $32.4 million, or a gross profit margin of 0.7%, from $24.5 million, or a gross profit margin of 0.8% in 2010. Trading and Collectibles segments contributed to this increase, with individual increases of $5.7 million and $2.2 million, respectively, during this period.

The increase in gross profit in the Trading segment was due primarily to higher precious metal prices during current three and six-month period as compared with the year-ago period. Gross profit from financing activities in the Trading segment increased during the three and six-month period as a result of continued expansion of the financing and liquidity services offered by the Trading business. 

The pre-tax loss from continuing operations for the three months ended December 31, 2011 was $1.9 million, as compared with pre-tax income of $5.9 million for the comparable quarter in the prior fiscal year.  Pre-tax income for the six months ended December 31, 2011 increased $3.4 million to $6.0 million from $2.5 million during the year-ago period. Included in operating expenses for the three and six months ended December 31, 2011 was a $2.1 million reserve in connection with the claim against M.F. Global, Inc. The decrease in pre-tax income for the three-month period is primarily due to fewer auctions in the Collectible segment and we sold a higher percentage of certain lower margin numismatic materials, which affected the gross profit margin as well as higher operating expenses. The increase in pre-tax income for the six-month period is primarily a result of the acquisition of Stack’s LLC and strong demands for precious metals. More information regarding the Company’s financial results for quarter ended December 31, 2011 is set forth in the Company’s Report on Form 10-Q, as filed with the Securities and Exchange Commission on February 13, 2012.

(1)    Adjusted to reflect Greg Martin Auctions, Inc. ("GMA") as discontinued operations.  See Note 2 of the Notes to Consolidated Financial Statements on Form 10-Q filed on February 13, 2012

(2)    The 2010 Consolidated Statement of Operations and related segment disclosures have been restated for certain errors. Such errors did not result in an adjustment to the Company's reported net income. See Note 1 of the Notes to Consolidated Financial Statements on Form 10-Q filed on February 13, 2012