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| 8-K - FORM 8-K FILING DOCUMENT - FBR & Co. | document.htm |
EXHIBIT 99.1
FBR Reports Fourth Quarter and Full Year 2010 Financial Results
ARLINGTON, Va., Feb. 23, 2011 (GLOBE NEWSWIRE) -- FBR Capital Markets Corporation (Nasdaq:FBCM) ("FBR" or the "Company"), a leading investment bank serving the middle market, today reported net after-tax earnings of $3.1 million, or $0.05 per diluted share, for the quarter ended December 31, 2010. These results compare to net after-tax earnings of $17.2 million, or $0.26 per diluted share, in the fourth quarter of 2009 and a net after-tax loss of $6.6 million, or $0.10 per diluted share in the third quarter 2010.
For the year ended December 31, 2010, FBR Capital Markets reported a net after-tax loss of $37.6 million, or $0.59 per share (diluted), compared to a net after-tax loss of $27.7 million, or $0.46 per share (diluted), in 2009.
Fourth quarter 2010 net revenues were $75.3 million compared to $123.8 million for the fourth quarter of 2009 and $57.4 million in the third quarter 2010.
Fourth quarter 2010 non-compensation fixed expenses, including $1.2 million of nonrecurring facilities-related charges, were $19.1 million, compared to $24.9 million in the fourth quarter of 2009 and $17.2 million in the third quarter 2010. The Company's compensation and benefits expense as a percentage of net revenues was 62.4% for the fourth quarter 2010.
2010 Operational Overview
- For the 2010 fiscal year, net revenue was $246.6 million compared to $292.2 million in 2009.
- Investment banking revenue was $118.3 million in 2010 compared to $138.7 million in 2009.
- Institutional brokerage generated net revenue of $100.1 million for 2010, compared to $133.1 million in 2009.
- Mutual fund assets under management as of December 31, 2010 were $1.6 billion compared to $1.3 billion at the end of 2009 and revenues increased from $13.2 million to $14.1 million over the same period.
- Non-compensation fixed expenses for 2010 were $75.0 million compared to $90.4 million in 2009.
- The Company ended 2010 with a total employee headcount of 501, down from 595 at the end of 2009.
As of December 31, 2010, shareholders' equity totaled $291.5 million, with $236.1 million held in cash, and the Company's book value per share was $4.60.
"During the fourth quarter we saw meaningful contributions from our energy and diversified industrials groups as well as continued leadership in financial services. We executed important transactions in each of our capital markets groups, reinforcing the progress we are making in the diversification of our business mix and extending the relationship life cycle with our clients," said Richard J. Hendrix, President and Chief Executive Officer of FBR Capital Markets. "Additionally, with expenses continuing to trend in the right direction, we believe the Company is well positioned for a return to profitability in 2011."
Investors who wish to listen to the earnings call at 9:00 A.M. U.S. EST, Thursday, February 24, 2011, may do so via the Web or conference call at:
Webcast link:
http://investor.shareholder.com/media/eventdetail.cfm?mediaid=46185&c=FBCM&mediakey=A64EF4FE32A6062E8B24C23ECAA49514&e=0
Conference call dial-in number (domestic, toll-free): 877.303.6433
Conference call dial-in number (international): 224.357.2198
Conference call code: 40572498
Replays of the earnings call will be available via webcast following the call.
FBR Capital Markets Corporation (Nasdaq:FBCM) provides investment banking, merger and acquisition advisory, institutional brokerage, and research services through its subsidiary FBR Capital Markets & Co. FBR Capital Markets focuses capital and financial expertise on the following industry sectors: consumer; diversified industrials; energy & natural resources; financial institutions; insurance; real estate; and technology, media & telecom. FBR Fund Advisers, Inc., a subsidiary of FBR Capital Markets Corporation, provides clients with a range of investment choices through The FBR Funds, a family of mutual funds. FBR Capital Markets is headquartered in the Washington, D.C. metropolitan area with offices throughout the United States and in London. For more information, please visit www.fbr.com.
Statements in this release concerning future performance, developments, events, market forecasts, revenues, expenses, earnings, run rates and any other guidance on present or future periods constitute forward-looking statements. These forward-looking statements are subject to a number of factors, risks and uncertainties that might cause actual results to differ materially from stated expectations or current circumstances. These factors include, but are not limited to, the effect of demand for public and private securities offerings, activity in the secondary securities markets, interest rates, the risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions. For a discussion of these and other risks and important factors that could affect FBR Capital Markets' future results and financial condition, see "Risk Factors" in Part I, Item 1A and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009; and other items throughout the Company's Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Financial data follow.
| FBR CAPITAL MARKETS CORPORATION | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (Dollars in thousands, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
|
Quarter ended December 31, |
Year ended December 31, |
||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||
| REVENUES: | |||||||||
| Investment banking: | |||||||||
| Capital raising | $ 30,518 | $ 83,458 | $ 98,768 | $ 121,007 | |||||
| Advisory | 6,378 | 4,990 | 19,505 | 17,716 | |||||
| Institutional brokerage: | |||||||||
| Principal transactions | 6,084 | 8,633 | 22,227 | 40,271 | |||||
| Agency commissions | 18,748 | 19,680 | 77,864 | 92,864 | |||||
| Asset management fees | 3,608 | 3,461 | 14,097 | 13,244 | |||||
| Net investment income | 9,123 | 1,626 | 9,218 | 1,577 | |||||
| Interest, dividends & other | 811 | 1,966 | 4,908 | 5,806 | |||||
| Total revenues | 75,270 | 123,814 | 246,587 | 292,485 | |||||
| Interest expense | -- | -- | -- | 252 | |||||
| Revenues, net of interest expense | 75,270 | 123,814 | 246,587 | 292,233 | |||||
| NON-INTEREST EXPENSES: | |||||||||
| Compensation and benefits | 46,962 | 73,337 | 182,430 | 193,017 | |||||
| Professional services | 3,007 | 8,952 | 18,529 | 23,971 | |||||
| Business development | 4,355 | 4,610 | 14,936 | 13,770 | |||||
| Clearing and brokerage fees | 3,238 | 3,101 | 13,129 | 13,945 | |||||
| Occupancy and equipment | 7,069 | 8,833 | 25,595 | 33,655 | |||||
| Communications | 4,847 | 5,693 | 20,067 | 21,304 | |||||
| Impairment of intangible assets | -- | -- | -- | 5,350 | |||||
| Other operating expenses | 3,165 | 4,121 | 13,563 | 16,210 | |||||
| Total non-interest expenses | 72,643 | 108,647 | 288,249 | 321,222 | |||||
| Income (loss) before income taxes | 2,627 | 15,167 | (41,662) | (28,989) | |||||
| Income tax benefit | (455) | (2,063) | (4,104) | (1,338) | |||||
| Net income (loss) | $ 3,082 | $ 17,230 | $ (37,558) | $ (27,651) | |||||
| Basic earnings (loss) per share | $ 0.05 | $ 0.27 | $ (0.59) | $ (0.46) | |||||
| Diluted earnings (loss) per share | $ 0.05 | $ 0.26 | $ (0.59) | $ (0.46) | |||||
| Weighted average shares - basic (in thousands) | 63,642 | 63,601 | 63,546 | 60,094 | |||||
| Weighted average shares - diluted (in thousands) | 65,672 | 66,854 | 63,546 | 60,094 | |||||
Non-GAAP Financial Measures
In addition to the financial results reported in accordance with generally accepted accounting principles (GAAP), the table below sets forth non-GAAP pre-tax core operating income (losses). This non-GAAP measurement is used by management to analyze and assess the results of the core capital markets and asset management operating units. In determining pre-tax core operating earnings (losses), FBR Capital Markets has excluded from GAAP financial results the following non-core operating items: (1) severance costs associated with reductions in headcount; (2) corporate transaction costs, which include costs related to reductions in physical space and costs associated with business combinations and acquisitions; and (3) net investment income (losses) from long-term investments. FBR Capital Markets has also excluded the following non-cash expenses: (1) compensation costs associated with stock-based awards; and (2) amortization of intangible assets. Management believes that this non-GAAP measurement assists investors in understanding the impact of these non-core items and non-cash expenses on the performance of the Company and provides additional clarity around the firm's forward earnings capacity and trend.
A limitation of utilizing this non-GAAP measure is that the GAAP accounting effects of these events do in fact reflect the underlying financial results of FBR Capital Markets' business and these effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes income (loss) before income taxes on a GAAP basis and core operating earnings (loss) before income taxes on a non-GAAP basis should be considered together.
The following table presents a reconciliation of the GAAP financial results to non-GAAP measurements discussed above (dollars in thousands).
| Quarter ended | Quarter ended | Year ended | ||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | |||||
| 2010 | 2010 | 2010 | 2009 | 2010 | 2009 | |||
| Net revenues before net investment income/loss | $ 66,147 | $57,347 | $ 66,147 | $122,188 | $237,369 | $290,656 | ||
| GAAP pre-tax income (loss) | $ 2,627 | $ (7,593) | $ 2,627 | $ 15,167 | $ (41,662) | $ (28,989) | ||
| Non-core items: | ||||||||
| Severance | 549 | 646 | 549 | 183 | 6,461 | 1,153 | ||
| Corporate transaction costs | 1,302 | -- | 1,302 | 2,590 | 1,488 | 4,864 | ||
| Net investment loss, MBS | -- | -- | -- | -- | -- | 1,043 | ||
| Net investment income, long-term investments | (9,123) | (47) | (9,123) | (1,626) | (9,218) | (2,620) | ||
| Non-cash expenses: | ||||||||
| Impairment of intangible assets | -- | -- | -- | -- | -- | 5,350 | ||
| Stock compensation expense | 4,139 | 4,650 | 4,139 | 5,117 | 19,003 | 19,802 | ||
| Amortization of intangibles | 116 | 116 | 116 | 220 | 448 | 1,487 | ||
| Non-GAAP pre-tax core operating (loss) income | $ (390) | $ (2,228) | $ (390) | $ 21,651 | $ (23,480) | $ 2,090 | ||
| FBR CAPITAL MARKETS CORPORATION | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| (Dollars in thousands, except per share amounts) | |||||
| (Unaudited) | |||||
| ASSETS | 31-Dec-10 | 31-Dec-09 | |||
| Cash and cash equivalents | $ 236,077 | $ 275,506 | |||
| Receivables: | |||||
| Due from brokers, dealers and clearing organizations | 15,463 | 96,477 | |||
| Customers | 10,280 | 6,425 | |||
| Other | 11,635 | 9,326 | |||
| Financial instruments owned, at fair value | 86,400 | 104,124 | |||
| Other investments, at cost | 45,224 | 33,974 | |||
| Goodwill and intangible assets, net | 8,465 | 8,424 | |||
| Furniture, equipment and leasehold improvements, net | 9,741 | 15,172 | |||
| Prepaid expenses and other assets | 8,182 | 6,897 | |||
| Total assets | $ 431,467 | $ 556,325 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Liabilities: | |||||
| Securities sold but not yet purchased, at fair value | $ 55,444 | $ 51,669 | |||
| Accrued compensation and benefits | 53,305 | 72,537 | |||
| Accounts payable, accrued expenses and other liabilities | 23,904 | 22,452 | |||
| Due to brokers, dealers and clearing organizations | 7,323 | 90,168 | |||
| Total liabilities | 139,976 | 236,826 | |||
| Shareholders' equity: | |||||
| Common stock | 62 | 64 | |||
| Additional paid-in capital | 423,935 | 428,661 | |||
| Restricted stock units | 34,239 | 19,979 | |||
| Accumulated other comprehensive loss | (53) | (71) | |||
| Accumulated deficit | (166,692) | (129,134) | |||
| Total shareholders' equity | 291,491 | 319,499 | |||
| Total liabilities and shareholders' equity | $ 431,467 | $ 556,325 | |||
| Book Value per Share | $4.60 | $5.00 | |||
| Shares Outstanding (in thousands) | 63,354 | 63,908 | |||
| FBR CAPITAL MARKETS CORPORATION | ||||||||||
| Financial & Statistical Supplement - Operating Results | ||||||||||
| (Dollars in thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Q-4 10 | Q-3 10 | Q-2 10 | Q-1 10 | Q-4 09 | ||||||
| Revenues, net of interest expense | $ 75,270 | $ 57,394 | $ 69,706 | $ 44,217 | $ 123,814 | |||||
| Non-interest expenses: | ||||||||||
| Variable | 29,683 | 21,329 | 30,169 | 21,642 | 55,196 | |||||
| Fixed | 42,960 | 43,658 | 51,692 | 47,116 | 53,451 | |||||
| Income (loss) before income taxes | 2,627 | (7,593) | (12,155) | (24,541) | 15,167 | |||||
| Income tax (benefit) provision | (455) | (982) | 13,612 | (16,279) | (2,063) | |||||
| Net income (loss) | $ 3,082 | $ (6,611) | $ (25,767) | $ (8,262) | $ 17,230 | |||||
| Fixed expenses | $ 42,960 | $ 43,658 | $ 51,692 | $ 47,116 | $ 53,451 | |||||
| Less: Non-cash expenses | 4,255 | 4,766 | 5,134 | 5,296 | 5,337 | |||||
| Corporate transaction costs | 1,302 | -- | -- | 186 | 2,590 | |||||
| Severance | 549 | 646 | 4,296 | 970 | 183 | |||||
| Core fixed costs | $ 36,854 | $ 38,246 | $ 42,262 | $ 40,664 | $ 45,341 | |||||
| Statistical Data | ||||||||||
| Net revenues per employee (annualized) | $ 601 | $ 459 | $ 479 | $ 296 | $ 832 | |||||
| Employee count | 501 | 500 | 582 | 598 | 595 | |||||
| Net assets under management (in millions) | ||||||||||
| Mutual funds | $ 1,582.7 | $ 1,445.4 | $ 1,373.5 | $ 1,497.3 | $ 1,317.9 | |||||
| Hedge and private equity funds | 4.3 | 6.0 | 6.4 | 6.7 | 9.3 | |||||
| Total | $ 1,587.0 | $ 1,451.4 | $ 1,379.9 | $ 1,504.0 | $ 1,327.2 | |||||
CONTACT: Media: Shannon Small
703.469.1190
ssmall@fbr.com
Investors: Bradley J. Wright
703.469.1080
fbcmir@fbr.com