GMAI Greg Manning Auctions (MM)

Greg Manning Auctions, Inc. (Nasdaq: GMAI) today announced financial results for the fiscal 2005 third quarter ended March 31, 2005. Net income in the third quarter rose 26% to $8.2 million, or $0.29 per diluted share, from $6.5 million, or $0.23 per diluted share, in the same period last year. Aggregate sales, which include inventory sales plus consignment sales, totaled $74.7 million in the third quarter versus $82.0 million in the fiscal third quarter of 2004. Revenue, which includes inventory sales plus commission income, was $55.7 million compared to $64.5 million in the third quarter last year. Pretax profit for the fiscal 2005 third quarter increased 49% to $13.2 million from $8.8 million in the same period a year ago. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) climbed 48% to $13.7 million, or $0.48 per diluted share, compared to $9.2 million, or $0.32 per diluted share, in the fiscal 2004 third quarter. Greg Manning, First Vice Chairman, CEO and President, stated, "Third quarter results reflect improved profitability from our direct supply agreement with Afinsa Bienes Tangibles, S.A. Gross profit in the third quarter grew to $21.7 million, or 39% of revenue, compared to $17.0 million, or 26% of revenue, last year. Revenue was down from a year ago due to lower inventory sales under our exclusive supply contract with Afinsa which we forecast will be made up in the current fourth quarter. As a result, we anticipate significantly stronger revenue in the fourth quarter than previously forecasted internally." In the third quarter, Greg Manning Auctions realized approximately $74.7 million in aggregate sales through its coin and stamp companies in North America, Europe and Asia versus $82.0 million last year. The Company's exclusive supply agreement with Afinsa contributed approximately $26 million in non-auction sales in the third quarter compared to $34.9 million in direct sales in the year-earlier period. For the nine months ended March 31, 2005, net income climbed 61% to $21 million from $13 million in the corresponding period a year earlier. Earnings per share on a fully diluted basis climbed 40% to $0.73 from $0.52 in the nine months ended March 31, 2004. Aggregate sales increased 15% to $210.7 million from $182.9 million in the previous nine-month period and revenue totaled $162.7 million compared to $152.2 million, an increase of 7%. Pretax profit for the nine months ended March 31, 2005 was $34.7 million compared to $18.3 million in the year-earlier period, an increase of 90%. EBITDA increased to $36.3 million, or $1.27 per diluted share, compared to $19.4 million, or $0.78 per diluted share. Larry Crawford, Chief Financial Officer, said, "As of March 31, the Company reported cash and cash equivalents of $29.8 million. Cash flow used in operations in the third quarter was approximately $2.1 million due primarily to a growth in inventories of approximately $3.4 million and a reduction of payables of approximately $5.5 million. We anticipate inventory levels dropping $7-9 million in the fourth quarter. For the nine months, cash flow from operations totaled $13.2 million and we remain on pace to achieve record operating cash for the fiscal year ending June 30, 2005. Our non-Afinsa core auction businesses continued to show strong growth with aggregate sales of consigned and owned inventory at auction for the nine month period ended March 31, 2005 increasing 38% to $69 million from $50 million in the same period last year. We will continue to seek strategic acquisitions that increase operating leverage in our core numismatic and philatelic businesses and add value to our expanding global platform." Manning concluded, "We anticipate a particularly strong finish to fiscal 2005. In the current fourth quarter, we expect solid contributions from our leading subsidiaries including Bowers & Merena, Ivy & Manning, Nutmeg Stamp Sales, John Bull Auctions in Hong Kong as well as Kohler Auctions in Germany and Corinphila in Switzerland. Demand remains robust in the global, multi-billion dollar coin and stamp collectible markets and we are uniquely positioned to capitalize on these positive trends as a result of our market expertise and worldwide reach. We are excited by our future prospects and anticipate a record performance for the fiscal year ending June 30." The company will host a conference call today, May 13, 2005 at 10:00 a.m. ET to discuss financial results, business developments and outlook. The conference call will be broadcast over the Internet as a "live" listen-only webcast. To listen, please go to www.gregmanning.com approximately 20 minutes before the conference call is scheduled to begin to register, as well as to download and install any necessary audio software. About Greg Manning Auctions, Inc. Greg Manning Auctions, Inc. is a global collectibles merchant and auction house network, with operations in North America, Europe and Asia and on the Internet. This network was created in September 2003 when GMAI and Auctentia, S.L. effectively integrated their auction businesses, creating a GMAI-AUCTENTIA global collectibles auction network. In North America, GMAI is a leading traditional and e-commerce - Internet, interactive telephone, and Internet and live simulcast - auctioneer and merchant/dealer of collectibles. Coins, stamps and sports cards are offered at www.gregmanning.com and www.teletrade.com. Its operations include the Greg Manning Auctions division, Ivy & Manning Philatelic Auctions, H.R. Harmer of New York, Greg Manning Galleries, Spectrum Numismatics, Teletrade, Nutmeg Stamp Sales, Superior Sports Auctions, Bowers & Merena Galleries and Kingswood Coin Auctions. In Europe, the leading auction houses affiliated with the network are Auctentia Subastas of Madrid, Spain (operating under the name "Afinsa Auctions"); Corinphila Auktionen of Zurich, Switzerland (65% owned by GMAI); and the Koehler group of auction companies of Berlin (66.67% owned by GMAI) and Wiesbaden, Germany. GMAI also owns GMAI Auctentia Central de Compras (CdC) of Madrid, Spain, which is engaged in the sale, marketing and production of owned and third-party collectibles, with an emphasis on specialized philatelic material. Both GMAI and CdC currently act as exclusive supplier of collectibles - primarily stamps and coins - on a worldwide basis to Afinsa Bienes Tangible, S.A. of Madrid, Spain, one of the world leaders in marketing tangible investment products, and GMAI's majority shareholder. 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 GMAI's filings with the Securities and Exchange Commission, including GMAI's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, prospectuses and other documents that GMAI has filed with the Commission. In particular, any statement related to GMAI's expected revenues or earnings or GMAI'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. GMAI 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. -0- *T GREG MANNING AUCTIONS, INC. Condensed Consolidated Statements of Operations For the Three and Nine Months Ended March 31, (thousands except per share data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2004 2005 2004 2005 ------- ------- ------- ------- Aggregate Sales $81,977 $74,687 $182,931 $210,694 Operating Revenues Sales of inventory $25,977 $25,185 $ 78,385 $ 76,167 Sales of inventory - related party 34,883 26,027 65,528 75,144 Commissions earned 3,645 4,500 8,294 11,431 ------- ------- -------- -------- Total Revenues 64,505 55,712 152,207 162,742 Cost of merchandise sold 23,724 23,168 68,742 70,595 Cost of merchandise sold- related party 23,780 10,868 45,611 33,868 ------- ------- ------- -------- Gross profit 17,001 21,676 37,854 58,279 Operating Expenses General and Administrative 4,681 3,827 9,302 9,924 Salaries and Wages 2,479 3,101 7,175 9,569 Depreciation and Amortization 224 299 594 856 Marketing 670 1,062 1,610 2,778 ------- ------- ------- -------- Total Operating Expenses 8,054 8,289 18,681 23,127 ------- ------- ------- -------- Operating Income (Loss) 8,947 13,387 19,173 35,152 ------- ------- ------- -------- Other Income (Expense) (8) (270) 15 (402) Interest Income 80 268 165 662 Interest Expense (213) (234) (590) (758) Impairment of investment in investee - - (500) - ------- ------- ------- -------- Income before income taxes 8,806 13,151 18,263 34,654 Provision for income taxes 2,287 4,963 5,231 13,677 ------- ------- ------- -------- Net Income $ 6,519 $ 8,188 $ 13,032 $ 20,977 ======= ======= ======= ======== EBITDA $ 9,243 $13,684 $ 19,447 $ 36,268 ======= ======= ======= ======== Three Months Ended Nine Months Ended March 31, March 31, Earnings per Share Schedule 2004 2005 2004 2005 --------------------------- -------- ------- ------- ------- Net Income $ 6,519 $ 8,188 $13,032 $20,977 ======== ======= ======= ======= EBITDA $ 9,243 $13,684 $19,447 $36,268 ======== ======= ======= ======= Basic Earnings (Loss) per Share Weighted average shares outstanding 26,492 27,438 22,997 27,393 ======= ======= ======= ======= Basic earnings (loss) per share $ 0.25 $ 0.30 $ 0.57 $ 0.77 ====== ======= ======= ======= EBITDA earnings (loss) per share $ 0.35 $ 0.50 $ 0.85 $ 1.33 ======== ======= ======= ======= Diluted Earnings (Loss) per Share Weighted average shares outstanding 28,808 28,668 24,957 28,692 ======= ======= ======= ======= Diluted earnings (loss) per share $ 0.23 $ 0.29 $ 0.52 $ 0.73 ======= ======= ======= ======= EBITDA earnings (loss) per share $ 0.32 $ 0.48 $ 0.78 $ 1.27 ======== ====== ======= ====== Three Months Ended Nine Months Ended March 31, March 31, EBITDA Reconciliation Schedule 2004 2005 2004 2005 ------------------------------ ------- ------ ------- ------ Net Income (Loss): $ 6,519 $ 8,188 $13,032 $20,977 Plus: Interest expense 213 234 590 758 Provision for income taxes 2,287 4,963 5,231 13,677 Depreciation 224 299 594 856 -------- ------ ------- ------ EBITDA $ 9,243 $13,684 $19,447 $36,268 ======== ====== ======= ====== *T