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Collectors Universe Inc. Message Board

  • dbtunr dbtunr Aug 29, 2013 10:41 AM Flag

    outlook from transcript

    All-in-all, this was a very satisfying finish to fiscal 2013, and we entered fiscal 2014 with a strong backlog and new international market opportunities. Continuing the trend we saw last quarter, we see a record setting pace for the sales of gold and silver coins from the U.S. mint. Since I am reporting to you in late August, I will refer to the year-to-date July results from the U.S. mint not June numbers.

    Through July Gold Eagle bullion sales were up 82% from the same period last year and Silver Eagle bullion sales are up 50%. While this silver number is strong, it doesn’t reflect the real market demand out there since the U.S. mint is rationing coins and that program is still in effect. All of this bodes well for bulk coin grading activity at our PCGS business, which has remained strong since December 2012.

    This overall market demand for modern coins is lifting the overall market, but it’s also supported by a very active global market in vintage and rare coins as well. This active coin market in terms of the sales of rare and vintage coins at auction or between dealers is increasing levels of grading activity, occurring knowledge shows in expos and international venues.

    This is a welcome trend for us, as we realize strong margins that showed and see a good selection of rare and valuable coins. I will speak more about the grand opening of our new grading center in Shanghai last month in a minute. But overall grading of coins by our PCGS business at our own and national shows in the U.S. is tracking at above 45% growth rate year-over-year. Service revenues at our Paris and Hong Kong submission and grading centers is also up 30% year-over-year.

    Switching markets, I would like to discuss the performance of our PSA/DNA business. This last quarter was the 12th consecutive quarter-on-quarter growth quarter for our sports cards and autograph business. With our service revenue for grading sports cards and autographs growing 10% last year.

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    • more on outlook:

      Thanks Joe. Before we conclude, I'd like to make a few comments on our outlook in this fiscal year. We have entered 2014 with a strong coin market and backlog of submitted collectibles to be graded. The trend for the first half of the year appears to be stronger than this period that was evident in 2013.

      The modern coin market remains very active and if that continues into the fall, we should see continued year-over-year growth in our U.S. coin business. The addition of the Shanghai operation and stable growth that appears in Hong Kong centers will increase our exposure to service revenues from the international market and will begin the help to balance the dependency we have had only on the U.S. markets.

    • on China:

      On July 20, we opened our new office and grading center in Shanghai. It was a tremendous success. Along with our marketing and distribution partner, Shanghai Quanping Collectibles, principals from both companies celebrated the grand opening event with more than 400 collectors, dealers and guests in attendance. Coin submissions greatly exceeded expectations and we had a team of graders there to process these first-in country vintage and modern Chinese claims all throughout the following week.

      More than just hosting a grading event, our center in Shanghai has designed and staffed to accept coins from this point forward for processing in-country. Perhaps more indicative of the commitment we're making to this major numismatic market, we're also introducing a complete suite of online tools for collectors there in their native Mandarin language, including a PCGS web portal, and price guidance. Very soon, we will introduce in Mandarin our CoinFacts and Set Registry online databases as well.

      I am very excited about our start in China and its potential for us in the coming years. The level of collector interest there for coins, both modern and vintage is strong, and until now the PCGS brand of certification has not been available at all in-country because of the restrictions in place from moving Chinese coins of value or heritage out of country we've not been able to serve this market and develop our direct presence.

      Now we have a platform to build-off of, and a very strong distribution partner with an expansive dealer network in place. I'll report on future quarters on how this startup activity is progressing, including significant shows and examples of value realized from PCGS graded coins in the market.

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