Attached files
| file | filename |
|---|---|
| 8-K - EDELMAN FINANCIAL GROUP INC. | v176610_8k.htm |
| EX-99.2 - EDELMAN FINANCIAL GROUP INC. | v176610_ex99-2.htm |
Exhibit 99.1
|
Contact:
Rick Berry
Chief
Financial Officer
600
Travis Street, Suite 5800
Houston,
Texas 77002
713.993.4614
|
Sanders
Morris Harris Group Reports Fourth Quarter Income
from
Continuing Operations of $0.17 Per Share
HOUSTON, March 8, 2010 –
Sanders Morris Harris Group Inc. (NASDAQ: SMHG) today reported fourth quarter
income from continuing operations of $4.9 million, or $0.17 per share. Revenue
was $58.8 million, up 21% from the fourth quarter of 2008. Income included $3.3
million of net after tax profit from non-recurring items. The loss from
discontinued operations, net of tax, was $1.8 million, or $0.06 per share,
during the fourth quarter 2009.
The
results compared to a loss from continuing operations of $57.1 million, or $2.03
per share, in the fourth quarter of 2008. The fourth quarter 2008 results
included non-cash after tax goodwill and other intangible assets impairment
charges of $35.3 million, due to the then-decline in the Company’s stock price
which caused its market capitalization to fall below the net book value of its
assets.
Client
assets increased from $8.6 billion at December 31, 2008 to $11.3 billion at
December 31, 2009, a 31% gain. Net new client assets added in the fourth quarter
were approximately $224 million, which were 2% of client assets at September 30,
2009.
Net
income from continuing operations was reduced by approximately $499,000, or
$0.02 per share, by the costs of expanding the Edelman Financial business beyond
its metropolitan Washington, D.C. hub. Six offices were opened in the greater
New York City metropolitan area in September 2009. Four others, in the New York
and Washington vicinities, have been opened thus far in 2010. An additional 14
are planned for this year, to be located in those two areas plus Boston,
Chicago, Detroit, and Miami.
Each
office has an average capital cost of approximately $250,000 and an expected
maximum cash burn of $500,000 before becoming cash flow positive, which is
estimated to occur between the 12th and 15th month of operation. After three
years, a branch – generally containing two financial planners and two support
persons – is projected to net over $500,000 of pretax profit before corporate
overhead. Ric Edelman, President of Sanders Morris Harris Group, said, “The
early results of our expansion offices are as, or a bit better than, expected.
We do not yet have enough metrics to claim proof of concept. However, all of the
financial planners, all of the offices and all of the data points to date are
progressing as we had hoped.”
At
year-end, the Company had $41.9 million of cash and equivalents, or $1.40 per
share. It has reduced its debt from $35 million at the beginning of 2009 to
$20.2 million at the end of the year. In addition, the Company has a remaining
balance of $79.5 million on receivables from Salient Partners, L.P. and
Endowment Advisers, L.P., the manager of The Endowment Fund, the largest
SEC-registered fund of hedge funds product for retail investors. The larger of
the receivables is payable at the greater of $12 million a year or 23% of the
distributions from Endowment Advisers. Sanders Morris Harris has a book value of
$7.50 per share including goodwill and $118.5 million of tangible book
value.
George
Ball, Chairman and Chief Executive Officer, said “Our operating results for the
quarter were good. We have reshaped the Company as a wealth manager. Market
fluctuations will obviously impact our fee revenues and therefore our net income
in the future. However, that revenue flow should have far less volatility than
before. We have exited the main part of our capital markets businesses and have
reduced our portfolio of other investments very significantly. Assuming the
markets are relatively stable and our marketing efforts continue to do well, we
should have strong earnings performance in 2010.” He added, “The costs of
growing Edelman Financial nationwide, although being expensed currently, are
quite modest, especially compared to the potential contribution. I think it is
an enormously promising opportunity for us. Our other units are also doing
well.”
The
Company earned $220,000, or $0.01 per share, from continuing operations during
the year ended December 31, 2009, compared to a loss of $20.3 million, or $0.75
per share, during the year ended December 31, 2008. The 2009 results reflect a
$9.8 million after tax goodwill and other intangible assets impairment charge.
Revenue was $184.1 million during 2009, compared to $171.9 million during the
prior year.
Conference
Call
The
Company will host a conference call on Monday, March 8th to discuss fourth
quarter 2009 financial and operational results. The call will begin at 9:00 a.m.
Central Time, and is open to the public. To listen to the conference call, use
U.S. dial-in number (800) 447-0521 or International dial-in number (847)
413-3238 and enter pass code 26535178. It is recommended that listeners phone in
at least 10 minutes before the call is scheduled to begin to avoid delay. For
those unable to listen to the live call, a replay of the conference call in its
entirety will be available approximately two hours after its completion for 10
days by dialing (888) 843-8996 (U.S.), (630) 652-3044 (International) and
entering the pass code 26535178.
About
Sanders Morris Harris Group
Sanders
Morris Harris Group is a wealth/asset management company that manages
approximately $11.3 billion in client assets. Client assets include the gross
value of assets under management directly or via outside managers and assets
held in brokerage accounts for clients by outside clearing firms. Its corporate
philosophy of investment in common aligns its interests with those of its
clients. Sanders Morris Harris has 540 employees in 20 states. Additional
information is available at www.smhgroup.com.
Forward
Looking Statements
In
addition to the historical information, this press release contains certain
forward-looking statements under federal securities laws, including statements
regarding Sanders Morris Harris Group’s expected future business prospects,
revenue and income. These forward-looking statements are based upon current
expectations and involve certain risks and uncertainties that could cause actual
results to differ materially from any such statement. These risks and
uncertainties, many of which are beyond the Company's control, include but are
not limited to (1) trading volume in the securities markets; (2) volatility of
the securities markets and interest rates; (3) changes in regulatory
requirements that could affect the demand for the Company's services or the cost
of doing business; (4) general economic conditions, both domestic and foreign,
especially in the regions where the Company does business; (5) changes in the
rate of inflation and related impact on securities markets; (6) competition from
existing financial institutions and other new participants in the securities
markets; (7) legal developments affecting the litigation experience of the
securities industry; (8) successful implementation of technology solutions; (9)
changes in valuations of the Company’s trading and warrant portfolios resulting
from mark-to-market adjustments; (10) dependence on key personnel; (11) demand
for the Company's services; and (12) litigation and securities law liabilities.
The Company does not undertake any obligation to publicly update or revise any
forward-looking statements.
* *
*
Selected
Condensed Operating Information
(in
thousands, except per share amounts)
(unaudited)
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31,
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December
31,
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|||||||||||||||
|
2009
|
2008
|
2009
|
2008
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|||||||||||||
|
Revenue
|
$ | 58,805 | $ | 48,496 | $ | 184,146 | $ | 171,941 | ||||||||
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Expenses
|
45,385 | 108,967 | 179,480 | 212,296 | ||||||||||||
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Net
|
13,420 | (60,471 | ) | 4,666 | (40,355 | ) | ||||||||||
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Equity
in income (loss) of limited partnerships
|
(4,108 | ) | (7,925 | ) | (1,348 | ) | 38,631 | |||||||||
|
Gain
on step acquisition
|
- | - | 3,000 | - | ||||||||||||
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Income
(loss) from continuing operations before income taxes
|
9,312 | (68,396 | ) | 6,318 | (1,724 | ) | ||||||||||
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(Provision)
benefit for income taxes
|
(2,973 | ) | 11,231 | (986 | ) | (11,699 | ) | |||||||||
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Income
(loss) from continuing operations, net of income taxes
|
6,339 | (57,165 | ) | 5,332 | (13,423 | ) | ||||||||||
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Loss
from discontinued operations, net of income taxes of $1,075, $666, $3,646
and $3,007, respectively
|
(1,767 | ) | (1,288 | ) | (5,702 | ) | (4,974 | ) | ||||||||
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Net
income (loss)
|
4,572 | (58,453 | ) | (370 | ) | (18,397 | ) | |||||||||
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Less: Net (income) loss
attributable to the noncontrolling interest
|
(1,447 | ) | 115 | (5,112 | ) | (6,896 | ) | |||||||||
|
Net
income (loss) attributable to Sanders Morris Harris Group
Inc.
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$ | 3,125 | $ | (58,338 | ) | $ | (5,482 | ) | $ | (25,293 | ) | |||||
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Basic
income (loss) per common share:
|
||||||||||||||||
|
Continuing
operations
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$ | 0.17 | $ | (2.03 | ) | $ | 0.01 | $ | (0.75 | ) | ||||||
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Discontinued
operations
|
(0.06 | ) | (0.04 | ) | (0.20 | ) | (0.19 | ) | ||||||||
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Net income
(loss)
|
$ | 0.11 | $ | (2.07 | ) | $ | (0.19 | ) | $ | (0.94 | ) | |||||
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Diluted
income (loss) per common share:
|
||||||||||||||||
|
Continuing
operations
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$ | 0.17 | $ | (2.03 | ) | $ | 0.01 | $ | (0.75 | ) | ||||||
|
Discontinued
operations
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(0.06 | ) | (0.04 | ) | (0.20 | ) | (0.19 | ) | ||||||||
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Net income
(loss)
|
$ | 0.11 | $ | (2.07 | ) | $ | (0.19 | ) | $ | (0.94 | ) | |||||
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Weighted
average shares outstanding:
|
||||||||||||||||
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Basic
|
28,676 | 28,129 | 28,402 | 26,972 | ||||||||||||
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Diluted
|
28,718 | 28,129 | 28,402 | 26,972 | ||||||||||||
|
Amounts
attributable to Sanders Morris Harris Group Inc.
common
shareholders:
|
||||||||||||||||
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Income (loss) from continuing
operations, net of tax
|
$ | 4,892 | $ | (57,050 | ) | $ | 220 | $ | (20,319 | ) | ||||||
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Discontinued operations, net of
tax
|
(1,767 | ) | (1,288 | ) | (5,702 | ) | (4,974 | ) | ||||||||
|
Net income
(loss)
|
$ | 3,125 | $ | (58,338 | ) | $ | (5,482 | ) | $ | (25,293 | ) | |||||
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31, 2009
|
December
31, 2009
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|||||||||||||||
|
2009
GAAP to Non-GAAP Reconciliation:
|
Amount
|
Diluted
EPS
|
Amount
|
Diluted
EPS
|
||||||||||||
|
Income
from continuing operations, net of tax, attributable to Sanders Morris
Harris Group Inc.
|
$ | 4,892 | $ | 0.17 | $ | 220 | $ | 0.01 | ||||||||
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Addback:
|
||||||||||||||||
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Goodwill and other intangible
assets impairment charges, net of tax
|
- | - | 9,813 | 0.35 | ||||||||||||
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Investment impairment, net of
tax
|
2,183 | 0.08 | 2,362 | 0.08 | ||||||||||||
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Gain on sale of discontinued
operations, net of tax
|
(5,464 | ) | (0.19 | ) | (5,913 | ) | (0.21 | ) | ||||||||
|
Net
operating income
|
$ | 1,611 | $ | 0.06 | $ | 6,482 | $ | 0.23 | ||||||||
|
Weighted
average shares outstanding:
|
28,718 | 28,402 | ||||||||||||||
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
December
31, 2008
|
December
31, 2008
|
|||||||||||||||
|
2008
GAAP to Non-GAAP Reconciliation:
|
Amount
|
Diluted
EPS
|
Amount
|
Diluted
EPS
|
||||||||||||
|
Loss
from continuing operations, net of tax, attributable to Sanders Morris
Harris Group Inc.
|
$ | (57,050 | ) | $ | (2.03 | ) | $ | (20,319 | ) | $ | (0.75 | ) | ||||
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Addback:
|
||||||||||||||||
|
Goodwill and other intangible
assets impairment charges, net of tax
|
35,274 | 1.25 | 34,448 | 1.28 | ||||||||||||
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Investment portfolio (gains)
losses, net of tax
|
6,192 | 0.22 | (21,553 | ) | (0.80 | ) | ||||||||||
|
Net
operating loss
|
$ | (15,584 | ) | $ | (0.56 | ) | $ | (7,424 | ) | $ | (0.27 | ) | ||||
|
Weighted
average shares outstanding:
|
28,129 | 26,972 | ||||||||||||||
|
Balance
sheet data:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$ | 41,926 | ||||||||||||||
|
Other
tangible net assets
|
76,615 | |||||||||||||||
|
Tangible net
assets
|
$ | 118,541 | ||||||||||||||
|
Sanders
Morris Harris Group Inc. shareholders' equity
|
$ | 224,194 | ||||||||||||||