CLCT

Collectors Universe, Inc. (CLCT)

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Collectors Universe, Inc (CLCT)

F2Q2013 Results Earnings Call

February 7, 2013 4:30 PM ET

Executives

Robert Deuster - Chief Executive Officer

Joe Wallace - Chief Financial Officer

Analysts

Adrian Day - Adrian Day Asset Management

Presentation

Operator

Good afternoon, everyone and thank you for joining us to discuss Collectors Universe financial results for the Second Quarter ended December 31, 2012. With us today from management are Robert Deuster, Chief Executive Officer and Joe Wallace, Chief Financial Officer. The management will provide a brief overview of the quarter, and then the call up to your questions.

Comments made during today's call may contain statements regarding the company's expectations about its future financial performance, including forecasts and statements concerning business trends and profitability that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

The company's actual results in the future may differ possibly materially from those forecast in this call due to a number of risks and uncertainties. Certain of these risks and uncertainties in addition to other risks are more fully described in the Company's filings with the Securities and Exchange Commission. The forward-looking statements are made only as of the date of today's conference and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

With that, I would now like to turn the call over to Robert Deuster. Robert?

Robert Deuster

Thank you, Karia. Welcome to today's second quarter conference call. I'd like to spend a few minutes discussing our business activity during the last quarter, some of the more significant events that had occurred and some commentary on the market outlook for the balance of the year, before I turn the call over to Joe to discuss the financial results.

We just finished our second quarter, which is seasonally our lowest quarter of the year. As expected the reduction in modern coin box submissions to us was evident until very late in the quarter when we saw a marked increase in activity in the coin bullion market. This uptrend continues today and will be reflected in our third quarter results.

Consequently when you look at the combined second quarter factors of lower gold prices during November and December, lower mint output of new coins evident earlier in the quarter especially when compared to the 2011 U.S. Mint's 25th Anniversary American Eagle Coin Program that was run back then and the holiday season in the U.S late last year. We experienced a lower than normal service revenue level in our PCGS business. But PCGS still represents 62% of our total service revenue for the quarter. At the same time we experienced continued growth in our PSA/DNA cards and autograph business and our certified coin exchange online business. They contributed 38% of the revenue up from 31% in the 2011 period. PSA/DNA alone grew 10% year-over-year.

These results show some of the balance we have in terms of our served market and the importance of some of the web based services we offer to coin and trading card customers. Since Collectors Universe maintains the largest database in the world for information on our certified coins, sports memorabilia and autographs, we provide collectors fee based as well as free access to up-to-date and important collectable and market data.

This not only brings them close to each other of their market of interest, but it provides critical valuation data for buying, selling or trading items. Since we have authenticated and graded more than 25 million coins and 20 million sports related collectables to-date, we maintain a population database that shows graded coins and cards by population and their rarity, supported by an up-to-date price guide of an item's latest estimated or realized market value.

There are also links to most items offered for sales for these items on eBay or from dealers. But this foundation and supporting information such as images and background facts about an item of interest our online tools make collecting or investing in collectables a safe and valuable activity. We consider the internet a crucial medium for our businesses to find, to communicate and build long-term relationships with our customers.

Our online community of customers relies on us to give them the information they need to excel in collecting and realize values for their item if they choose to sell or trade. The same community is also the source for the continuous expansion of our grading services to collectors.

Some of the more normal online tools we've provide our marketplace include a subscription base service called certified coin exchange providing dealers with the latest market price in an inventory available to buy or sale. A subscription based collector's corner service providing a listing of more than 75,000 collectable items available from dealers and collectors worldwide.

There are some web and mobile based applications that produce the most comprehensive access to collectable information, like for inflation a real time market pricing site that we maintain for precious metals and the melt value of coins. CoinFacts, this site gives you immediate access to image and background information on all PCGS graded coins.

Photograde an online image library of PCGS coins that assists collectors in estimating a grade for their coins before submission. And also a community that we have under our Set Registry online site. So it's an online resource for collectors of certified coins, trading cards and autographs and memorabilia to register their collectibles in sets and buy for recognition in the collectors community as having assembled important or valuable collections. There are currently 65,000 coin sets and 79,000 cards sets registered with us online today.

Read the rest of this transcript for free on seekingalpha.com