Collectors Universe CEO: New software, Europe expansion will generate growth
Collectors Universe, Inc. (Nasdaq: CLCT) CEO Michael Haynes today said the company expects to benefit from a recent upgrade of its computer systems and a European expansion program.
The company, which provides authentication and grading services to dealers and collectors of high-value collectibles, diamonds and colored gemstones, said it hired a European business director. Haynes said Western Europe accounts for about 30% of worldwide demand for high-value coins.
“The European market offers significant opportunity for [professional coin grading service] growth,” he said during a midday conference call.
The company’s updated computer registry system may also stir up future growth, the chief executive said. Collectors Universe’ coin set registry program currently has 27,000 sets registered, but Haynes said existing demand could translate into more than 100,000 sets registered in the next two years. The Santa Ana, Calif.-based company’s sports card and stamp divisions should also benefit from the firms enhanced set registry software, he said.
The presidential dollars—coins made by the United States Mint—are “significantly” stimulating the coin collector market. He said these coins are creating new collectors that could continue collecting “for decades.” Collectors Universe is selling certified editions of the coins with special cases.
The president of Collectors Universe’ diamond segment is currently training a chain store that owns between 40 and 70 outlets, which is making a switch exclusively to its gem certification program. Haynes said he is also meeting with a large diamond distributor this week to discuss a similar arrangement.
“We’ve got things coming to the surface,” Haynes said. “We’re looking forward to a successful quarter.”
He said the company has currently enough cash available to fund its future growth needs.
Collectors Universe said before the opening that its fourth-quarter net loss was $0.8 million, or $0.10 a share, and below Wall Street expectations of earning $0.02 per share. On a year-over-year basis, the net loss for the three months ended June 30 was down 193%, from net income of $0.9 million, or $0.10 a share, a year earlier.
High promotion costs for its jewelry business helped cause the disparity in income results. A $1 million decrease in coin grading revenue due to fewer trade shows also hurt earnings. The firm upgraded its IT infrastructure as well, which added to operating expenses of $7 million during the quarter, up nearly 30% from $5.4 million in fourth quarter 2006.
Revenue for the fourth quarter was $10.7 million, compared with $10.6 million during the same period of 2006.
The company said it expects the 2007 holiday selling season to provide increased volume for its diamond-grading sector. Collectors Universe also plans to launch “a number of growth initiatives in the first two quarters of fiscal 2008,” the company said in a statement, “principally in our largest divisions in coins and sports cards.”
Collectors Universe will make a presentation at the Thomas Weisel Consumer Conference on September 25 at 2:40 p.m. ET, in New York City.
In midday trading, shares of the small cap are down $0.24, or 1.63%, at $14.46. Over the last 52 weeks, shares have fluctuated from $12.15 to $17.52.
