Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - EDELMAN FINANCIAL GROUP INC. | v239823_8k.htm |
| EX-99.2 - EXHIBIT 99.2 - EDELMAN FINANCIAL GROUP INC. | v239823_ex99-2.htm |
Exhibit 99.1
|
Contact: Rick Berry
Chief Financial Officer
600 Travis Street, Suite 5800
Houston, Texas 77002
713.993.4614
|
The Edelman Financial Group Reports Third Quarter Earnings
from Core Operations of $0.09 Per Share
HOUSTON, November 8, 2011 – The Edelman Financial Group Inc. (NASDAQ:EF) today reported third quarter earnings from core operations of $2.5 million, or $0.09 per share. It earned $0.03 per share from core operations in the prior year’s quarter and $0.10 per share in the second quarter of 2011.
The Company had a net loss from continuing operations of $1.6 million, or $0.06 per share, in the period just ended. It recorded net non-cash charges of $4.2 million, primarily from a final write off related to its former investment banking division which was sold in 2009.
George L. Ball, Chairman and Co-Chief Executive Officer, said, “Our assets under management fell to $17.0 billion from $18.8 billion three months earlier, reflecting difficult conditions in virtually every market. Our net new client assets grew nicely, especially in the large Edelman Financial Services and Global Financial Services units. However, those excellent inflows could not offset the damage of the markets themselves.”
Added Ric Edelman, President and Co-Chief Executive Officer, “We showed healthy growth in our new Edelman Financial Services offices. We have 30 of them, including eight opened in September. That expansion penalized earnings by $0.03 a share last quarter. Our first cluster of six offices in metropolitan New York opened in September 2009, earned $331,000 pretax last quarter, with client assets of $427 million, up 44% since the end of 2010. The entire effort is moving forward very well.”
For the first nine months of this year, the Company earned $9.9 million, or $0.33 per share, from core operations, compared to $4.0 million, or $0.14 per share, in the prior year period. Its overall earnings in the nine months of this year were $0.20 a share versus $0.24 a share in the 2010 period. The 2011 results include a non-core operating loss of $4.0 million, or $0.13 per share, primarily from net charges related to Madison Williams and Concept Capital, as described above. The 2010 period had non-core operating profits of $3.1 million, or $0.10 per share, reflecting gains from the Company’s investment portfolio.
Conference Call
The Company will host a conference call on Tuesday, November 8, 2011 to discuss third quarter 2011 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 30907965. 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) 843-7419 (U.S.), (630) 652-3042 (International) and entering the pass code 30907965#.
About The Edelman Financial Group
The Edelman Financial Group is a wealth management company that manages approximately $17.0 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. The Edelman Financial Group has approximately 530 employees in 21 states. Additional information is available at www.edelmanfinancial.com.
In addition to the historical information, this press release contains certain forward-looking and non-GAAP statements under federal securities laws. These statements concern The Edelman Financial 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. Non-GAAP information includes operating earnings, defined as earnings from continuing operations, adjusted for investment portfolio gains and losses. 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)
(unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Revenue
|
$ | 41,709 | $ | 36,932 | $ | 126,129 | $ | 118,453 | ||||||||
|
Expenses
|
37,798 | 34,158 | 114,127 | 108,679 | ||||||||||||
|
Net
|
3,911 | 2,774 | 12,002 | 9,774 | ||||||||||||
|
Equity in income (loss) of limited partnerships
|
(4,861 | ) | 1,525 | 4,677 | 5,599 | |||||||||||
|
Income (loss) from continuing operations before income taxes
|
(950 | ) | 4,299 | 16,679 | 15,373 | |||||||||||
|
(Provision) benefit for income taxes
|
801 | (1,157 | ) | (3,995 | ) | (4,567 | ) | |||||||||
|
Income (loss) from continuing operations, net of income taxes
|
(149 | ) | 3,142 | 12,684 | 10,806 | |||||||||||
|
Loss from discontinued operations, net of income taxes of
|
||||||||||||||||
|
$(213), $(470), $(762) and $(1,692) respectively
|
(333 | ) | (736 | ) | (1,193 | ) | (2,646 | ) | ||||||||
|
Net income (loss)
|
(482 | ) | 2,406 | 11,491 | 8,160 | |||||||||||
|
Less: Net income attributable to the noncontrolling interest
|
(1,500 | ) | (1,262 | ) | (6,794 | ) | (3,631 | ) | ||||||||
|
Net income (loss) attributable to The Edelman Financial Group Inc.
|
$ | (1,982 | ) | $ | 1,144 | $ | 4,697 | $ | 4,529 | |||||||
|
Basic earnings (loss) per common share:
|
||||||||||||||||
|
Continuing operations
|
$ | (0.06 | ) | $ | 0.06 | $ | 0.20 | $ | 0.24 | |||||||
|
Discontinued operations
|
(0.01 | ) | (0.02 | ) | (0.04 | ) | (0.09 | ) | ||||||||
|
Net earnings (loss)
|
$ | (0.07 | ) | $ | 0.04 | $ | 0.16 | $ | 0.15 | |||||||
|
Diluted earnings (loss) per common share:
|
||||||||||||||||
|
Continuing operations
|
$ | (0.06 | ) | $ | 0.06 | $ | 0.20 | $ | 0.24 | |||||||
|
Discontinued operations
|
(0.01 | ) | (0.02 | ) | (0.04 | ) | (0.09 | ) | ||||||||
|
Net earnings (loss)
|
$ | (0.07 | ) | $ | 0.04 | $ | 0.16 | $ | 0.15 | |||||||
|
Weighted average shares outstanding:
|
||||||||||||||||
|
Basic
|
28,994 | 29,153 | 29,103 | 29,519 | ||||||||||||
|
Diluted
|
28,994 | 29,155 | 29,897 | 29,524 | ||||||||||||
|
Amounts attributable to The Edelman Financial Group Inc. common
|
||||||||||||||||
|
shareholders:
|
||||||||||||||||
|
Income (loss) from continuing operations, net of tax
|
$ | (1,649 | ) | $ | 1,880 | $ | 5,890 | $ | 7,175 | |||||||
|
Loss from discontinued operations, net of tax
|
(333 | ) | (736 | ) | (1,193 | ) | (2,646 | ) | ||||||||
|
Net income (loss)
|
$ | (1,982 | ) | $ | 1,144 | $ | 4,697 | $ | 4,529 | |||||||
|
GAAP to Non-GAAP Reconciliation
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30, 2011
|
September 30, 2011
|
|||||||||||||||
|
Net operating income from core operations:
|
Amount
|
Diluted EPS
|
Amount
|
Diluted EPS
|
||||||||||||
|
Income (loss) from continuing operations, net of tax, attributable to
|
||||||||||||||||
|
The Edelman Financial Group Inc.
|
$ | (1,649 | ) | $ | (0.06 | ) | $ | 5,890 | $ | 0.20 | ||||||
|
Adjustments:
|
||||||||||||||||
|
Madison Williams receivable write off
|
853 | 0.03 | 3,460 | 0.11 | ||||||||||||
|
Concept Capital business closure costs
|
422 | 0.02 | 726 | 0.02 | ||||||||||||
|
Investment portfolio losses (gains), net of tax
|
2,904 | 0.10 | (148 | ) | - | |||||||||||
|
Net operating income from core operations
|
$ | 2,530 | $ | 0.09 | $ | 9,928 | $ | 0.33 | ||||||||
|
Weighted average shares outstanding
|
28,994 | 29,897 | ||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30, 2010
|
September 30, 2010
|
|||||||||||||||
|
Net operating income from core operations:
|
Amount
|
Diluted EPS
|
Amount
|
Diluted EPS
|
||||||||||||
|
Income from continuing operations, net of tax, attributable to
|
||||||||||||||||
|
The Edelman Financial Group Inc.
|
$ | 1,880 | $ | 0.06 | $ | 7,175 | $ | 0.24 | ||||||||
|
Adjustments:
|
||||||||||||||||
|
Investment portfolio gains, net of tax
|
(903 | ) | (0.03 | ) | (3,127 | ) | (0.10 | ) | ||||||||
|
Net operating income from core operations
|
$ | 977 | $ | 0.03 | $ | 4,048 | $ | 0.14 | ||||||||
|
Weighted average shares outstanding
|
29,155 | 29,524 | ||||||||||||||
|
Balance sheet data:
|
||||||||||||||||
|
Cash and cash equivalents
|
$ | 43,566 | ||||||||||||||
|
Other tangible net assets
|
67,768 | |||||||||||||||
|
Tangible net assets
|
111,334 | |||||||||||||||
|
Shareholders' equity
|
$ | 257,089 | ||||||||||||||
Selected Condensed Operating Information
(in thousands)
(unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Mass Affluent
|
$ | 22,919 | $ | 18,205 | $ | 67,171 | $ | 52,887 | ||||||||
|
Other Wealth Management
|
18,075 | 12,177 | 56,471 | 38,267 | ||||||||||||
|
Wealth Management Total
|
40,994 | 30,382 | 123,642 | 91,154 | ||||||||||||
|
Prime Brokerage Services
|
- | 5,082 | - | 23,594 | ||||||||||||
|
Corporate Support and Other
|
715 | 1,468 | 2,487 | 3,705 | ||||||||||||
|
Total
|
$ | 41,709 | $ | 36,932 | $ | 126,129 | $ | 118,453 | ||||||||
|
Income (loss) from continuing operations
before equity in income (loss) of limited partnerships and income taxes:
|
||||||||||||||||
|
Mass Affluent
|
$ | 6,261 | $ | 3,756 | $ | 17,063 | $ | 11,875 | ||||||||
|
Other Wealth Management
|
6,396 | 3,675 | 19,238 | 12,776 | ||||||||||||
|
Wealth Management Total
|
12,657 | 7,431 | 36,301 | 24,651 | ||||||||||||
|
Prime Brokerage Services
|
- | (226 | ) | - | 526 | |||||||||||
|
Corporate Support and Other
|
(8,746 | ) | (4,431 | ) | (24,299 | ) | (15,403 | ) | ||||||||
|
Total
|
$ | 3,911 | $ | 2,774 | $ | 12,002 | $ | 9,774 | ||||||||
|
Equity in income (loss) of limited partnerships:
|
||||||||||||||||
|
Mass Affluent
|
$ | - | $ | - | $ | - | $ | - | ||||||||
|
Other Wealth Management
|
(2,399 | ) | 453 | 399 | 1,480 | |||||||||||
|
Wealth Management Total
|
(2,399 | ) | 453 | 399 | 1,480 | |||||||||||
|
Prime Brokerage Services
|
- | - | - | - | ||||||||||||
|
Corporate Support and Other
|
(2,462 | ) | 1,072 | 4,278 | 4,119 | |||||||||||
|
Total
|
$ | (4,861 | ) | $ | 1,525 | $ | 4,677 | $ | 5,599 | |||||||
|
Income (loss) from continuing operations
before income taxes:
|
||||||||||||||||
|
Mass Affluent
|
$ | 6,261 | $ | 3,756 | $ | 17,063 | $ | 11,875 | ||||||||
|
Other Wealth Management
|
3,997 | 4,128 | 19,637 | 14,256 | ||||||||||||
|
Wealth Management Total
|
10,258 | 7,884 | 36,700 | 26,131 | ||||||||||||
|
Prime Brokerage Services
|
- | (226 | ) | - | 526 | |||||||||||
|
Corporate Support and Other
|
(11,208 | ) | (3,359 | ) | (20,021 | ) | (11,284 | ) | ||||||||
|
Total
|
$ | (950 | ) | $ | 4,299 | $ | 16,679 | $ | 15,373 | |||||||
|
Net (income) loss attributable to the noncontrolling interest:
|
||||||||||||||||
|
Mass Affluent
|
$ | (1,502 | ) | $ | (902 | ) | $ | (4,095 | ) | $ | (2,850 | ) | ||||
|
Other Wealth Management
|
(339 | ) | (535 | ) | (3,929 | ) | (1,235 | ) | ||||||||
|
Wealth Management Total
|
(1,841 | ) | (1,437 | ) | (8,024 | ) | (4,085 | ) | ||||||||
|
Prime Brokerage Services
|
- | - | - | - | ||||||||||||
|
Corporate Support and Other
|
341 | 175 | 1,230 | 454 | ||||||||||||
|
Total
|
$ | (1,500 | ) | $ | (1,262 | ) | $ | (6,794 | ) | $ | (3,631 | ) | ||||