DGSE Companies, Inc. Announces Record Revenues of $44,082,960 for Fiscal 2006

DGSE Companies, Inc. (Nasdaq:DGSE), which wholesales, retails and auctions fine watches, jewelry, diamonds, precious metal and rare coin products via traditional and Internet channels, today announced operating results for the year ended December 31, 2006.

Earnings

Basic and diluted earnings per share for Fiscal 2006 were $.12 versus basic and diluted earnings per share of $.10 per share in fiscal 2005. Net Income increased 26 percent to $611,245 from $485,212 in fiscal 2005

Net Income was $84,000 in the Fourth Quarter of 2006 versus $163,000 in the Fourth Quarter of 2005. Fourth Quarter 2006 basic and diluted earnings were $.02 versus $.03 per share in the Fourth Quarter of 2005.

Both the Fourth Quarter and Fiscal Year Net Income include a net after-tax reserve that reduced net income in the amount of approximately $128,000 or $.03 per share relating to the pending acquisition of Superior Galleries, Inc. (SPGR.OB). Upon the closing of the transaction, which is anticipated to occur in the Second Quarter of 2007, the reserve will be reversed and included in the net acquisition cost of the transaction.

Revenues

Total Revenues for Fiscal 2006 were $44,082,906. This represents a 23.7 percent increase over Fiscal 2005 total revenues of $35,638,571.

Total Revenues for the Fourth Quarter of 2006 were $12,207,000. Fourth Quarter 2005 Revenues of $14,906,000.

Performance Metrics & Liquidity

EBITDA (earnings before interest, taxes, depreciation and amortization) was $1,479,000 in 2006. This represents a 30 percent increase over $1,191,000 in 2005.

Shareholders equity at year-end 2006 was $6,677,360 or $1.36 per share. This represents an increase of 10 percent versus $6,071,121 or $1.24 per share.

"Fiscal 2006 was a year of important developments for DGSE," noted William H. Oyster, President and Chief Operating Officer of DGSE Companies, Inc. Mr. Oyster continued, "We invested significant capital in all of our businesses and reached definitive agreements to acquire one of the largest rare coin businesses in the United States. With the closing of the acquisition of Superior Galleries, Inc. which is anticipated to occur in the Second Quarter of 2007, DGSE will expand its platform further. We continue to explore interesting opportunities to expand our core businesses. Our financial metrics continue to improve with shareholders equity growing, revenues and earnings expanding and our revenue sources continuing to diversify. We are confident that our shareholders may look forward to the continuation of these trends."

DGSE Companies, Inc. wholesales and retails jewelry, diamonds, fine watches and precious metal bullion products and rare coins to domestic and international customers through its Dallas Gold and Silver Exchange and Charleston Gold and Diamond Exchange subsidiaries and well as through the internet. DGSE also owns Fairchild International, Inc., one of the largest vintage watch wholesalers in the country. In addition to its retail facilities, the Company operates live Internet auctions which can be accessed at www.dgse.com. Real-time price quotations and real-time order execution in precious metals are provided on another DGSE web site at www.USBullionExchange.com. Wholesale customers can access our full vintage watch inventory through the restricted site at www.FairchildWatches.com..

The Company is headquartered in Dallas, Texas and its common stock trades on The Nasdaq Stock Market® under the symbol "DGSE".

This press release includes statements which may constitute ‘forward-looking" statements, usually containing the words "believe", "estimate", ‘project", "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company’s products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. In addition to the results presented in accordance with Generally Accepted Accounting Principles throughout this press release, DGSE has presented non-GAAP financial measures as EBITDA. The Company believes that these non-GAAP measures, viewed in addition to and not in lieu of the Company’s reported GAAP results, provide useful information to investors because they are an integral part of the Company’s internal evaluation of operating performance. In addition, they are measures that DGSE uses to evaluate management’s effectiveness. DGSE’s non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

(All data in thousands except per share data)

 

 

Year ended December 31,

Quarter ended December 31,

2006 

2005 

2006 

2005 

Revenue

$

44,083 

$

35,640 

$

12,207 

$

14,906 

Net Income

$

611 

$

485 

$

84 

$

163 

Per Share – Basic

and Diluted

$

.12 

$

.10 

$

.02 

$

.03