So we are definitely in tune. Silver Gold Bull specifically at the moment is working in Canada and we continue to look for opportunities where A-Mark or Silver Gold Bull can participate in any domestic needs that Costco may have. In general, I think Costco’s entry into the precious metals market has the potential to expand the overall market. As a trusted retailer, Costco could introduce new investors to the benefits of owning precious metals, thereby contributing to the growth of our overall industry. So, I believe that is a positive. I think that Costco’s widespread presence and accessibility can just make precious metals more convenient for a broader demographic. And I think the move allows consumers to explore and purchase precious metals during their routine shopping experience.
I’ve heard different numbers, but I think Costco has over 140 million members across North America and Canada. So obviously, we see this as a large opportunity to bring new customers into a marketplace we have been excited about for a long time. I think that any time that you see a new demographic or a new group of people in our marketplace, it does give A-Mark and our DTC an opportunity to try to take advantage of that. To this point, what we’ve seen is Costco is limiting the amount of ounces that a customer can buy. They seem to be using this currently as a way to increase membership in their different membership programs, and I think that’s good for us. Talking to the guys at Silver Gold Bull and from their reports of actually having some pop-up stores in Canada.
To this point, they’ve been very optimistic and they’re very positive about their interactions with the Costco customers and the customer’s interest in learning more about precious metals. So I think this is very good for us. I think it really creates a terrific opportunity for A-Mark’s DTC segment and their companies, in that if a customer is limited in buying 5 ounces of gold from Costco or 1 ounce of gold at a time from Costco. If the customer is educated and wants to buy more, we hope very much that they will find their way to one of our DTC brands. So that’s how we see it as an opportunity for A-Mark.
Brandon Coffin : And then just a follow-up. Where exactly do you see those potential future opportunities coming first? Would that be maybe to the wholesale arm or something with the men’s where Costco is potentially buying and selling SilverTowne and Sunshine products?
Greg Roberts: I think that Costco in Canada has already started to sell Sunshine products. So that answers that question. And I think that we view, Costco, if it continues and it’s long-term, I think we will be able to service them across a number of our platforms and our businesses, whether it be Private Mint products, whether it be wholesale, whether it be storage and logistics. We’re ready to except the challenge if COSCO wants our involvement and we think we’re well positioned for that right now.
Operator: The next question is coming from Sy Jacobs from Jacobs Asset Management.
Sy Jacobs: So I wanted to drill down on the sort of LPM accretion calculation. So this past quarter, which was a slow quarter, you A-Mark as it stands had about a 1.2% EBITDA margin, it’s been as high as I think triple of that in previous quarters. Given what you said earlier about the mix of retail to wholesale being somewhat similar to A-Mark’s, is it fair or conservative or aggressive to apply that range of EBITDA margins and good and bad environments to the $400 million of revenue, average revenue you’re acquiring from LPM? And then I’ve got two follow-ups to that.
Greg Roberts: As you can tell from our performance, it’s a little bit of a moving target. LPM was significantly had better margins in 2021 and 2022 than they had in 2023. As we looked at the opportunity and as we looked at the acquisition and the price that we ended up paying, we think that our cash and stock down at $41 million was a very fair entry point for us with $11.5 million of tangible net worth. And we did negotiate and we put a little bit of any further payout on this transaction that it’s pay for performance. So we were very in tune with giving the sellers an opportunity that if the market turns or if things get better that they would participate with us and each time we worked on the structure and changed the structure or negotiated the structure, we were of the position that if we pay out all of the earn out numbers and the performance needed for all of those earn out numbers, we would be very happy to pay it out.
It would validate the purchase and it would be a very good acquisition for us. So I think that part of the challenge in looking at this transaction, and I know it’s what you’re thinking and what you’re focused on, is how do we look at what’s normal and what can we expect and it comes a little bit with market conditions. But I think our belief is that we can add revenue as well as hopefully expand their margin a little bit. But for the most part, I think this is a business that is going to have closer to probably 2% EBITDA margins, so maybe a little bit higher than that, as you’re trying to compare them. So, I do think the margins are a little bit higher than A-Mark wholesale, let’s say. And if we can expand their retail and we can grow their retail, I don’t see any reason why we couldn’t — those incrementally increased revenue dollars at the DTC level wouldn’t be more in line or will be more in line with what our current DTC margins are.
Sy Jacobs: So one little follow-up question on that. You talked about sort of revenue synergies getting more wallet share or mind share of their purchases for A-Mark wholesale. Is there an opportunity for SilverTowne and Sunshine to become suppliers? I don’t know how much how many SilverTowne bars they sell in Hong Kong. But might that become like a part of their menu whereas it wasn’t before?
