GMAI Greg Manning Auctions (MM)

Greg Manning Auctions, Inc. (Nasdaq: GMAI) today announced financial results for the fourth quarter and fiscal year ended June 30, 2005. Net income for the year was a record $38.3 million, or $1.33 per diluted share, compared to $29.4 million, or $1.14 per diluted share, in fiscal 2004. Revenue, which includes inventory sales plus commission income, totaled $240.3 million in fiscal 2005 compared to $212.9 million in the corresponding period a year ago, an increase of 13%. Aggregate sales, which include inventory sales plus consignment sales, rose 21% to $313.2 million in fiscal 2005 from $258.4 million in the previous fiscal year. Net income in fiscal 2005 included a tax benefit of $4.5 million resulting from the divestiture of a certain non-core art investment. Net income in fiscal 2004 included a one-time tax credit of $4.9 million resulting from a change in deferred tax valuation. Excluding these non-recurring events, net income for the fiscal year ended June 30, 2005 was $33.8 million, or $1.18 per diluted share, compared to net income of $24.5 million, or $0.95 per diluted share, in the previous fiscal year. The diluted weighted average common shares outstanding for the year ended June 30, 2005 was approximately 28,688,000 shares compared to 25,787,000 shares for the prior year. In the fourth quarter, revenue rose 28% to $77.6 million from $60.7 million in the same period last year. Aggregate sales increased 36% to $102.6 from $75.5 million in the fiscal 2004 fourth quarter. Fourth quarter results reflect improved profitability from our direct supply agreement with Afinsa Bienes Tangibles, S.A. Gross profit net income in the quarter was $17.3 million, or $0.60 per diluted share, compared to $16.3 million, or $0.57 per diluted share. Excluding the aforementioned tax benefits, net income in the 2005 fourth quarter was $12.8 million, or $0.45 per diluted share, compared to $11.4 million, or $0.40 per diluted share, in the fiscal 2004 fourth quarter. Greg Manning, First Vice Chairman, President and Chief Executive Officer, said, "We are pleased to announce another record year for Greg Manning Auctions. Our ability to drive sales through our core expertise in the multi-billion dollar philatelic and numismatic collectible markets combined with complementary, strategic acquisitions led to record earnings per share of $1.33 on a fully diluted basis, including the impact of a one-time tax benefit. The synergies from our various businesses including Spectrum Numismatics, Bowers & Merena, Ivy & Manning, Nutmeg Stamp, H.R. Harmer of New York, John Bull Stamp Auctions in Hong Kong, Kohler Auctions in Germany, Corinphila in Switzerland, Internet auctions and more, have significantly strengthened our global operating platform and opportunities for future growth. "In addition, the acquisition of A-Mark Precious Metals (APM) in July 2005 positions GMAI as the leading vertically integrated distributor, wholesaler and retailer of collectibles in the world. APM provides strong cross-selling opportunities for our numismatic business and increases the company's annual revenue run rate to approximately $2.8 billion. With this acquisition, Greg Manning Auctions now operates a total of 18 businesses located in North America, Europe and Asia." Esteban Perez, Chairman of the Board, added, "The execution of our business plan has led to a record financial performance for the third consecutive year. The strong organic growth achieved through the integration of our coin and stamp businesses as well as accretive acquisitions has provided strong returns for our shareholders with additional potential for significant long-term growth." Gross profit for fiscal 2005 increased to $90 million, or 37% of revenue, compared to $61.5 million, or 29% of revenue, in the prior year. The company's exclusive supply agreement with Afinsa Bienes Tangibles, SA of Madrid, Spain, the company's majority shareholder, contributed approximately $123.3 million in non-auction sales for the year ended June 30, 2005, compared to $102.2 million in direct sales in fiscal 2004. Pretax profit for the year rose 67% to $54.3 million from $32.6 million in the same period a year ago. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) climbed 64% to $56.7 million, or $1.98 per diluted share, compared to $34.5 million, or $1.34 per diluted share, in fiscal 2004. Larry Crawford, Chief Financial Officer, said, "In addition to another year of record net income, aggregate sales, and revenue, our company ended fiscal 2005 in the strongest financial position in its history. As of June 30, 2005 the company reported a cash position of $54.3 million cash. Cash flow from operations totaled $42.2 million for the year ended June 30 as inventory leveled off from the previous quarter, as planned, and as collections of accounts receivable substantially improved during the period. "Our financial results reflect our unique standing as one of the leading collectible companies in the world. Demand for rare coins and stamps remains robust, and we expect to increase our market share as we continue to expand our global presence. For the current fiscal year, we anticipate continued benefits from our strong operating leverage and look forward to the successful integration of APM, and delivering another year of record performance on behalf of our shareholders." Greg Manning Auctions will host a conference call on Wednesday, September 14, 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. A replay of the web cast will be available for 30 days. 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, 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, John Bull Auctions, Ltd. in Hong Kong, Superior Sports Auctions, Bowers & Merena Auctions, North American Certified Trading 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; 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. The recent acquisition of A-Mark Precious Metals, Inc., a full service precious metals trading company, positions GMAI as a leading vertically integrated distributor, wholesaler and retailer in the collectibles market. 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 Twelve Months Ended June 30, (thousands except per share data) (Unaudited) Three Months Twelve Months Ended June 30, Ended June 30, 2004 2005 2004 2005 ------- -------- -------- -------- Aggregate Sales $75,452 $102,550 $258,383 $313,244 Operating Revenues Sales of inventory $19,303 $ 23,142 $ 97,688 $ 99,309 Sales of inventory - related party 36,687 48,204 102,215 123,348 Commissions earned 4,693 6,226 12,987 17,657 ------- -------- -------- -------- Total Revenues 60,683 77,572 212,890 240,314 Cost of merchandise sold 20,466 20,920 65,150 91,515 Cost of merchandise sold- related party 16,581 24,962 86,249 58,830 ------- -------- -------- -------- Gross profit 23,636 31,690 61,491 89,969 Operating Expenses General and Administrative 4,215 6,577 13,517 16,501 Salaries and Wages 3,096 3,573 10,271 13,142 Depreciation and Amortization 321 331 915 1,187 Marketing 1,372 1,504 2,981 4,282 ------- -------- -------- -------- Total Operating Expenses 9,004 11,985 27,684 35,112 ------- -------- -------- -------- Operating Income (Loss) 14,632 19,705 33,807 54,857 ------- -------- -------- -------- Other Income (Expense) (16) 97 - (305) Interest Income 94 311 259 973 Interest Expense (356) (473) (946) (1,231) Impairment of investment in investee - - (500) - ------- -------- -------- -------- Income before income taxes 14,354 19,640 32,620 54,294 Provision for income taxes (1,977) 2,342 3,254 16,019 ------- -------- -------- -------- Net Income $16,331 $ 17,298 $ 29,366 $ 38,275 ======= ======== ======== ======== EBITDA $15,031 $ 20,442 $ 34,481 $ 56,712 ======= ======== ======== ======== Three Months Twelve Months Ended June 30, Ended June 30, Earnings per Share Schedule 2004 2005 2004 2005 ----------------------------------- ------- ------- ------- ------- Net Income $16,331 $17,298 $29,366 $38,275 ======= ======= ======= ======= EBITDA $15,031 $20,442 $34,481 $56,712 ======= ======= ======= ======= Basic Earnings (Loss) per Share Weighted average shares outstanding 27,030 27,514 23,985 27,423 ======= ======= ======= ======= Basic earnings (loss) per share $ 0.60 $ 0.63 $ 1.22 $ 1.40 ======= ======= ======= ======= EBITDA earnings (loss) per share $ 0.56 $ 0.74 $ 1.44 $ 2.07 ======= ======= ======= ======= Diluted Earnings (Loss) per Share Weighted average shares outstanding 28,802 28,653 25,787 28,688 ======= ======= ======= ======= Diluted earnings (loss) per share $ 0.57 $ 0.60 $ 1.14 $ 1.33 ======= ======= ======= ======= EBITDA earnings (loss) per share $ 0.52 $ 0.71 $ 1.34 $ 1.98 ======= ======= ======= ======= Three Months Twelve Months Ended June 30, Ended June 30, EBITDA Reconciliation Schedule 2004 2005 2004 2005 ----------------------------------- ------- ------- ------- ------- Net Income (Loss): $16,331 $17,298 $29,366 $38,275 Plus: Interest expense 356 471 946 1,231 Provision for income taxes (1,977) 2,342 3,254 16,019 Depreciation 321 331 915 1,187 ------- ------- ------- ------- EBITDA $15,031 $20,442 $34,481 $56,712 ======= ======= ======= ======= *T