A-MARK PRECIOUS METALS NASDAQ: AMRK NASDAQ: AMRK A-MARK PRECIOUS METALS. A Leader in Precious Metals Trading Since 1965

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1 A Leader in Precious Metals Trading Since 1965 Corporate Presentation September

2 Important Cautions Regarding Forward- Looking Statements This presentation contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forwardlooking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Such statements are based upon the current beliefs and expectations of A-Mark s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. The factors that could cause our actual results, performance or achievements to differ from those set forth in the forward-looking statements are discussed in more detail in Risk Factors in the Company s Prospectus filed as part of its Annual Report on Form 10-K. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Prospectus. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. The forwardlooking statements included in this presentation are made only as of the date of this presentation, and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise. A copy of this presentation is available in the Investor Relations section of A-Mark s website at 2

3 Key Stats () Stock Price (9/18/17) $17.03 Total Revenues (FY17) $6.99B 52 Week Low-High $14.75-$21.66 Avg. Daily Vol. (3 mo.) 21,369 Shares Outstanding 7.0M Float (est.) 4.0M Insider Holdings 44% Institutional Holdings 20% Market Cap $119.7M Bk. Value/Share (mrq) $8.44 Price/Book Value (mrq) 2.0x Date Founded 1965 Employee Count 127 Gross Profit (FY17) $31.3M Net Income (FY17) $7.1M Diluted EPS (FY17) $1.00 P/E (FY17) 17.0x Cash (mrq) $13.1M Total Assets (mrq) $478.5M Op. Lines of Credit $275.0M Spin-Off Mar Dividend Yield¹ 1.9% 30.3M 12.5M Gross Profit ($M) Net Income ($M) 27.4M 24.5M Gross Profit & Net Income 34.5M 8.3M 7.1M 9.3M 31.3M 7.1M Data sources: Yahoo! Finance, S&P Capital IQ, company estimates Figures in USD unless otherwise noted; (mrq) = most recent quarter as of June 30, ) The dividend yield is based on the company s current stock price and the anticipated annual dividend payout of $0.32 per common share. FY 13 FY 14 FY 15 FY 16 FY 17 3

4 What We Do We are a leading full-service dealer of precious metals, including gold and silver bullion Largest N. American physical metal merchant Official distributor for all major sovereign mints and largest distributor of bullion for U.S. and Royal Canadian mints Value-added products & services include: Exclusive custom coin programs Financing & liquidity vehicles Commercial counterpart hedging Storage and full service logistics Full service minting through majority investment in SilverTowne Mint (Aug. 2016) 4

5 Company History & Milestones 1972: U.S. Treasury Dept. grants A-Mark special gold dealing license 1965: A-Mark Coin Company incorporated 1999: #51 on Forbes list of largest private companies 2009: Established A- Mark Trading to sell goods and services in Europe Opened Vienna office and increased trading hours to 22/day 2014: Launched custom coin program platform Q3-15: Las Vegas Logistics Facility Opened Q2-17: Increased quarterly cash dividend 14% to $0.08 Q4-17: Acquired Goldline : A-Mark first company to buy U.S. Silver Certificates and then sell and trade them for U.S. Government Silver Bars 1981: A-Mark first mints its proprietary one-ounce silver bar 2006: Launched CFC subsidiary 1987: Named authorized dealer of Gold Eagle coins by US Mint, becoming one of its largest customers March 2014: Spin-off and listed on NASDAQ Global Select Q2-14: Added to Russell Micro Cap Index Q1-15: Initiated quarterly cash dividend Q1-17: Acquired majority stake in SilverTowne Mint 5

6 How We Address the Market Opportunity Products Services Our products include gold, silver, platinum and palladium for storage & delivery Coin & Bar: 200+ coin and bar products in a variety of weights, shapes & sizes for distribution One of eleven authorized buyers of the U.S. Mint s gold, silver and platinum products Official distributor for all major sovereign mints Developer & distributor of exclusive custom coin programs Industrial: Provider of materials to manufacturers and fabricators of precious metals products Minting: SilverTowne Mint produces private label bullion products and SilverTowne-branded products 6

7 Custom Coin Products Competition in traditional sovereign mint and investment bar products has customers looking for unique & differentiated products A-Mark develops value-added precious metal products for key partners Provides A-Mark with a new product offering at strong margins, and opportunity to grow traditional product sales to these counterparts Custom coin programs represent incremental enhancement to gross profit Headed by A-Mark s CMO David Madge, a 20-year veteran of the Royal Canadian mint 7

8 How We Address the Market Opportunity Products Services We offer complementary services, including financing, liquidity vehicles, commercial counterpart hedging, storage, full service logistics & refinery financing Collateral Finance Corp. (CFC): Offer loans collateralized by numismatic and semi-numismatic coins and bullion to dealers, investors & collectors Collateralized with LTV ratios of 50-80% and fixed interest rates with short-term maturities Transcontinental Depository Services (TDS): Managed storage options for precious metals TDS growth is an indicator of growth in trading business Logistics Services: Turnkey inventory management and fulfillment for online retailers Minting: Complete full service capabilities from production all the way to distribution 8

9 Full-Service Logistics Facility Las Vegas Opened 17,000 sq. ft. facility in July 2015 Insourcing precious metals logistics, including fullservice inventory management and fulfillment Ability to offer customers high-margin services: Collateral Finance Corp. (CFC): Offers fully collateralized loans to dealers, investors & collectors Transcontinental Depository Services (TDS): Managed storage options for precious metals Consolidating wholesale services and long-term service contracts with customers Secured first IRA custody customer in FY Q1-17 Accelerating expansion of turnkey logistics services to more customers 9

10 Goldline International Asset Purchase Overview Aug. 2017: Acquired assets of Goldline, a leading direct marketer of precious metals to the investor community Since 2000, Goldline has sold $4B of physical precious metals to its customer base Summary and benefits: Net consideration: $6.4M over net tangible asset value Added a longstanding client base of 150,000+ clients and 1.2M client leads Added an expansive direct-to-client distribution model Enhanced A-Mark s marketing and technology capabilities and channels Significant upsell and cross-sell opportunities for A- Mark s services, like financing, logistics, IRA storage Acquisition significantly expands A-Mark s distribution network 10

11 Expanding Full Service Turn-Key Platform Future Growth Opportunities Full Service Logistics Automated Retail/Wholesale Delivery Storage for End Users & IRA Account Holders Platform Services Hedging of Precious Metals & FX Product Financing & Secured Lending Storage for Customers Retail & Support Proprietary and Built-to- Order Products Through SilverTowne Mint Bullion Products Custom Products Sovereign Mint Products Sourcing and Buyback of Products Wholesale Physical Product Sales & Purchases 11

12 CFC: Growing Finance Book Number of Loans Portfolio Value 2,138 2,375 $78.8M $80.9M $91.0M $89.4M 1,667 1,698 $63.3M $68.8M $56.2M 1, Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q

13 Sensitivity to Macro & Commodity Price A-Mark hedges its price exposure and therefore is not directly affected by changes in metals prices. However, macroeconomic factors can still have an effect: Macro Event Effect on A-Mark Contributing Factors Changes in Metal Prices Trading Volume Market Volatility No direct effect Positive/Negative Positive No direct effect due to hedging. However, large price increases or decreases are typically associated with changes in volumes and volatility, which do positively affect A-Mark. As volume goes up, A-Mark does more business, and therefore earns more revenue and gross profit. On lower volume, trading revenue decreases. As volatility increases, bid-ask spreads widen and A-Mark earns more from each transaction. A-Mark presents an alternative to precious metal ETFs, providing upside with market volatility, metal price increases & valueadded products Interest Rates Increase Positive As interest rates increase, AMRK's net interest income grows. Both interest expense and interest income go up together, but interest income tends to increase more (i.e., spreads widen). 13

14 Gold Price Volatility Historical Example July 1, 2014 Sept. 30, 2014 July 1, 2015 Sept. 30, 2015 $1,400 Gross Profit $5.7M Gross Margin 0.39% $1,400 Gross Profit $14.4M Gross Margin 0.72% $1,300 $1,300 $1,200 $1,200 $1,100 $1,100 $1,000 7/1/2014 7/31/2014 8/30/2014 9/29/2014 $1,000 7/1/2015 7/31/2015 8/30/2015 9/29/2015 Max: $1,339 Min: $1,212 Standard Deviation: % Decrease Max: $1,173 Min: $1,085 Standard Deviation: % Decrease Sharp increases or decreases in precious metal prices typically cause a short-term increase in demand and trading volume. A-Mark benefits from price volatility realizing increased trading spreads and increased gross margins. Data source: Capital IQ; COMEX Gold $ per troy oz. 14

15 Physical Gold & Silver Ounces Sold Physical Gold Ounces Sold Physical Silver Ounces Sold 40M 896K 699K 662K 711K 772K 26M 33M 27M 26M 555K 530K 579K 22M 23M 21M 290K 14M Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q

16 Competitive Advantages 50+ years of trading & delivering precious metals A-Mark is one of only eleven companies authorized to buy gold, silver and platinum from the U.S. Mint U.S. Mint requires an entity to meet certain capitalization, purchase size and tenure requirements A-Mark is able to purchase coins directly from the U.S. Mint and resell at a markup Longstanding relationships with large financial institutions provides high barrier to entry Our balance sheet & access to capital allows us to offer financing tools competitors cannot A-Mark is one of only eleven companies authorized to purchase gold, silver and platinum from the U.S. Mint 16

17 Diverse Global Customer Base Our global customer base includes a diverse list of coin and metal dealers, investors, collectors, mines, manufacturers, refiners, jewelers, brokerages & central banks Financial Industrial Wholesale/Retail Large Financial Institutions Customers Sovereign Mints, Dental Products & Building Material Companies Resellers of Bullion Products via Internet, Radio & Print 17

18 Multiple Growth Opportunities A-Mark is focused on growing through the volume of business, geographic presence, and scope of complementary products and services Offer more auxiliary services to increase customer retention & drive incremental revenue Grow custom coin programs through new value-added products for key customers Expand European and Asian operations by hiring experienced sales professionals and expanding logistics and financing products in foreign markets Expand Logistics Services and capacity through new facility in Las Vegas which opened July 2015 Leverage our captive sourcing supplier (Silvertown Mint) to capitalize on market opportunities when they arise Expand A-Mark s distribution network through Goldline Complementary and accretive acquisitions to expand geographical and customer footprint 18

19 Financial Performance Gross Profit Interest Income Net Income $34.5M $31.3M $12.6M $27.4M $24.5M $5.6M $6.1M $8.8M $8.3M $7.1M $9.3M $7.1M % 0.40% 0.51% 0.45% Gross Margin 0.09% 0.10% 0.13% 0.18% Interest Income Margin 0.14% 0.12% 0.14% 0.10% Net Margin 19

20 Balance Sheet & Liquidity $13.1M in cash $275M trading credit facility Net borrower and typically pay down balances daily to minimize interest expense Strong liquidity allows us to purchase precious metals from suppliers and use for operating cash flow purposes Feb. 2017: increased quarterly dividend 14% to $0.08 per share Tangible net worth: $60.1 million or $8.44 per diluted share $Millions Select Balance Sheet Items June 30, 2017 Cash $13.1 Inventories $284.7 Total assets $478.5 Lines of credit $180.0 Product financing $135.3 Total liabilities $405.5 Total stockholders equity $

21 Key Takeaways Leading full-service dealer of precious metals Largest N. American physical metal merchant and distributor of bullion for U.S. and Royal Canadian mints Consistently profitable in all macro market environments True countercyclical stock and alternative to ETFs, providing upside with market volatility, metal price increases and value-added products Building platforms to capture and service the online retail bullion marketplace Strategic acquisition of Goldline added large client base and distribution, along with significant upsell opportunities Gross Profit & Net Income Gross Profit ($M) Net Income ($M) 34.5M 31.3M 30.3M 27.4M 24.5M 12.5M 8.3M 9.3M 7.1M 7.1M FY 13 FY 14 FY 15 FY 16 FY 17 21

22 Contact Us Thor Gjerdrum, President 2121 Rosecrans Avenue, Suite 6300 El Segundo, Ca Tel: (310) Liolios Group, Inc. Matt Glover Najim Mostamand, CFA Newport Beach, Ca Tel: (949) A-Mark Precious Metals 2121 Rosecrans Avenue, Suite 6300 El Segundo, Ca