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| 8-K - FORM 8-K FILING DOCUMENT - FBR & Co. | document.htm |
EXHIBIT 99.1
FBR Reports Second Quarter Earnings
Board Increases Repurchase Authorization by an Additional Five Million Shares
ARLINGTON, Va., July 17, 2012 (GLOBE NEWSWIRE) -- FBR & Co. (Nasdaq:FBRC) ("FBR" or the "Company"), a leading investment bank serving the middle market, today reported net after-tax earnings of $0.5 million, or $0.01 per share, for the second quarter 2012 compared to a net after-tax loss of $2.7 million, or $0.04 per share, in the second quarter 2011 and after-tax earnings of $0.4 million or $0.01 per share in the first quarter of 2012. For the first half of 2012, the Company reported net after-tax earnings of $0.9 million, or $0.02 per share, compared to a net after-tax loss of $4.6 million, or $0.07 per share, for the first half of 2011.
On June 6, 2012, the Company entered into a definitive agreement to sell the assets related to the management of the entire family of ten FBR Funds. Based on the current level of assets under management, the Company would realize aggregate cash proceeds of approximately $30 million from this sale, although the actual amount paid to the Company will vary based on assets under management for each fund at the applicable measurement dates. The transaction is expected to close in the fourth quarter of 2012, subject to regulatory and fund shareholder approval.
The Company now reports its asset management business as discontinued operations as a result of its announced sale. For the second quarter of 2012, the Company's after-tax earnings from continuing operations were $0.3 million, or $0.01 per share, compared to a net after-tax loss of $3.0 million, or $0.05 per share, in the second quarter 2011 and break-even results for the first quarter 2012. The Company's net after-tax earnings from discontinued operations were $0.2 million for the second quarter of 2012 compared to net after-tax earnings of $0.2 million, or $0.01 per share, in the second quarter 2011 and $0.5 million, or $0.01 per share for the first quarter 2012.
Second quarter 2012 revenue from continuing operations was $33.7 million compared to $45.3 million in the second quarter 2011 and $34.9 million for the first quarter 2012. For the first half of 2012, revenue from continuing operations was $68.7 million compared to $91.4 million for the first half of 2011.
Second quarter 2012 total expenses from continuing operations were $33.4 million, compared to $48.4 million in the second quarter 2011 and $35.0 million in the first quarter 2012. Non-compensation fixed expenses from continuing operations in the second quarter 2012 totaled $10.8 million, compared to $15.5 million in the second quarter 2011 and $11.6 million in the first quarter 2012.
Second Quarter Overview
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Investment banking revenue was $19.0 million compared to $30.0 million in the second quarter 2011 and $16.2 million in the first quarter 2012. The second quarter's revenue was generated from 12 transactions including 8 capital raises and 4 financial advisory engagements.
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Institutional brokerage generated net revenue of $12.3 million compared to $21.1 million in the second quarter 2011 and $16.1 million in the first quarter 2012. Trading results were negatively impacted by the continuing industry-wide decline in trading volumes.
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The Company's results from discontinued operations reflect an increase in mutual fund assets under management from $1.9 billion as of March 31, 2012 to $2.0 billion as of June 30, 2012. Net income from discontinued operations of $0.2 million for the second quarter 2012 includes approximately $0.4 million of costs related to the pending sale transaction.
- The Company ended the second quarter with 259 employees in its continuing operations, down from 423 at the end of the second quarter 2011 and 264 at the end of first quarter 2012.
On July 17, 2012, the Company's Board increased its share repurchase authorization by 5 million shares of common stock. As a result, the Company now is authorized to repurchase up to 6.1 million shares. During the second quarter the Company repurchased 6.6 million shares of its common stock at an average purchase price of $2.75 per share and a total cost of $18.1 million, excluding fees and expenses. The total number of shares outstanding as of June 30, 2012 was approximately 50 million. Book value per share increased to $4.19 on June 30, 2012 from $4.01 on March 31, 2012. Shareholders' equity on June 30, 2012 was $209.6 million, of which $145.5 million was in cash.
"During the first half of 2012, FBR continued to deliver for clients, providing innovative ideas and executing on a number of important and complex transactions," said Richard J. Hendrix, Chairman and Chief Executive Officer of FBR. "Our earlier efforts to significantly reduce our cost structure are paying off by allowing us to be modestly profitable in these challenging market conditions and positioning us for meaningful profitability in a better revenue environment. The Company will continue to focus on driving value for shareholders though a combination of operating earnings and the accretive allocation of capital."
Investors wishing to listen to the earnings call at 9:00 A.M. U.S. EDT, Wednesday, July 18, 2012, may do so via the Web or conference call at:
Webcast link:
http://investor.shareholder.com/media/eventdetail.cfm?eventid=115875&CompanyID=FBCM&e=1&mediaKey=A638ADF35B185A230531194DBE6AEB85
Conference call dial-in number (domestic, toll-free): 877.303.6433
Conference call dial-in number (international): 224.357.2198
Conference call code: 97730817
Replays of the earnings call will be available via webcast following the call.
FBR & Co. (Nasdaq:FBRC) provides investment banking, merger and acquisition advisory, institutional brokerage, and research services through its subsidiary FBR Capital Markets & Co. FBR 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 & Co., provides clients with a range of investment choices through The FBR Funds, a family of mutual funds. FBR is headquartered in the Washington, D.C. metropolitan area with offices throughout the United States. For more information, please visit www.fbr.com.
The FBR & Co. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6405
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 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's 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, 2011; 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 & CO. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
|
Quarter ended June 30, |
Six months ended June 30, |
|||||||
| 2012 | 2011 | 2012 | 2011 | |||||
| REVENUES: | ||||||||
| Investment banking: | ||||||||
| Capital raising | $ 16,841 | $ 22,925 | $ 31,015 | $ 38,035 | ||||
| Advisory | 2,118 | 7,074 | 4,124 | 8,534 | ||||
| Institutional brokerage: | ||||||||
| Principal transactions | 3,753 | 5,139 | 10,255 | 10,975 | ||||
| Agency commissions | 8,567 | 15,953 | 18,117 | 33,208 | ||||
| Net investment income (loss) | 1,090 | (7,209) | 2,991 | (1,630) | ||||
| Interest, dividends & other | 1,363 | 1,392 | 2,175 | 2,249 | ||||
| Total revenues | 33,732 | 45,274 | 68,677 | 91,371 | ||||
| EXPENSES: | ||||||||
| Compensation and benefits | 16,880 | 27,792 | 34,728 | 54,960 | ||||
| Professional services | 3,759 | 2,783 | 6,591 | 6,637 | ||||
| Business development | 2,444 | 3,186 | 5,004 | 6,483 | ||||
| Clearing and brokerage fees | 1,900 | 3,314 | 4,284 | 5,988 | ||||
| Occupancy and equipment | 3,499 | 5,553 | 7,541 | 10,461 | ||||
| Communications | 3,063 | 3,964 | 6,608 | 8,169 | ||||
| Other operating expenses | 1,865 | 1,852 | 3,626 | 4,207 | ||||
| Total expenses | 33,410 | 48,444 | 68,382 | 96,905 | ||||
| Income (loss) from continuing operations before income taxes | 322 | (3,170) | 295 | (5,534) | ||||
| Income tax provision (benefit) | 15 | (213) | 22 | (290) | ||||
| Income (loss) from continuing operations, net of taxes | 307 | (2,957) | 273 | (5,244) | ||||
| Income from discontinued operations, net of taxes | 184 | 230 | 656 | 612 | ||||
| Net income (loss) | $ 491 | $ (2,727) | $ 929 | $ (4,632) | ||||
| Basic earnings per share: | ||||||||
| Income (loss) from continuing operations, net of taxes | $ 0.01 | $ (0.05) | $ 0.01 | $ (0.08) | ||||
| Income from discontinued operations, net of taxes | -- | 0.01 | 0.01 | 0.01 | ||||
| Net income (loss) | $ 0.01 | $ (0.04) | $ 0.02 | $ (0.07) | ||||
| Diluted earnings per share: | ||||||||
| Income (loss) from continuing operations, net of taxes | $ 0.01 | $ (0.05) | $ 0.01 | $ (0.08) | ||||
| Income from discontinued operations, net of taxes | -- | 0.01 | 0.01 | 0.01 | ||||
| Net income (loss) | $ 0.01 | $ (0.04) | $ 0.02 | $ (0.07) | ||||
| Weighted average shares - basic | 55,495 | 62,726 | 55,938 | 63,116 | ||||
| Weighted average shares - diluted | 57,254 | 62,726 | 57,225 | 63,116 | ||||
| FBR & CO. | ||||
| CONSOLIDATED BALANCE SHEETS | ||||
| (Dollars in thousands, except per share amounts) | ||||
| (Unaudited) | ||||
| ASSETS |
June 30, 2012 |
December 31, 2011 |
||
| Cash and cash equivalents | $ 145,534 | $ 135,792 | ||
| Receivables: | ||||
| Due from brokers, dealers and clearing organizations | 11,665 | 6,048 | ||
| Customers | 4,492 | 3,937 | ||
| Other | 2,757 | 6,854 | ||
| Financial instruments owned, at fair value | 70,763 | 100,634 | ||
| Other investments, at cost | 27,674 | 25,744 | ||
| Intangible assets, net | 1,890 | 2,121 | ||
| Furniture, equipment and leasehold improvements, net | 5,275 | 6,162 | ||
| Prepaid expenses and other assets | 9,318 | 10,791 | ||
| Total assets | $ 279,368 | $ 298,083 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Liabilities: | ||||
| Securities sold but not yet purchased, at fair value | $ 36,195 | $ 35,496 | ||
| Accrued compensation and benefits | 11,535 | 15,760 | ||
| Accounts payable, accrued expenses and other liabilities | 14,214 | 15,280 | ||
| Due to brokers, dealers and clearing organizations | 7,781 | 6,250 | ||
| Total liabilities | 69,725 | 72,786 | ||
| Shareholders' equity: | ||||
| Common stock | 49 | 55 | ||
| Additional paid-in capital | 400,730 | 412,551 | ||
| Restricted stock units | 24,298 | 29,013 | ||
| Accumulated other comprehensive (loss) income | (22) | 19 | ||
| Accumulated deficit | (215,412) | (216,341) | ||
| Total shareholders' equity | 209,643 | 225,297 | ||
| Total liabilities and shareholders' equity | $ 279,368 | $ 298,083 | ||
| Book Value per Share | $4.19 | $3.99 | ||
| Shares Outstanding (in thousands) | 50,092 | 56,490 | ||
| FBR & CO. | ||||||||||
| Financial & Statistical Supplement - Operating Results | ||||||||||
| (Dollars in thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Q-2 12 | Q-1 12 | Q-4 11 | Q-3 11 | Q-2 11 | ||||||
| Revenues | $ 33,732 | $ 34,945 | $ 24,199 | $ 16,657 | $ 45,274 | |||||
| Expenses: | ||||||||||
| Variable | 8,791 | 8,018 | 5,078 | 8,697 | 13,097 | |||||
| Fixed | 24,619 | 26,954 | 33,001 | 33,992 | 35,347 | |||||
| Impairment of goodwill | -- | -- | 5,882 | -- | -- | |||||
| Income (loss) from continuing operations before income taxes | 322 | (27) | (19,762) | (26,032) | (3,170) | |||||
| Income tax provision (benefit) | 15 | 7 | (327) | 387 | (213) | |||||
| Income (loss) from continuing operations, net of taxes | 307 | (34) | (19,435) | (26,419) | (2,957) | |||||
| Income from discontinued operations, net of taxes | 184 | 472 | 554 | 283 | 230 | |||||
| Net income (loss) | $ 491 | $ 438 | $ (18,881) | $ (26,136) | $ (2,727) | |||||
| Fixed expenses from continuing operations | $ 24,619 | $ 26,954 | $ 33,001 | $ 33,992 | $ 35,347 | |||||
| Less: Non-cash expenses1 | 1,804 | 1,822 | 1,195 | 1,587 | 2,091 | |||||
| Corporate transaction costs2 | -- | 429 | 567 | -- | 986 | |||||
| Severance | -- | 38 | 3,487 | 442 | -- | |||||
| Core fixed costs from continuing operations3 | $ 22,815 | $ 24,665 | $ 29,215 | $ 33,256 | $ 33,701 | |||||
| Statistical Data (Continuing Operations) | ||||||||||
| Revenues per employee (annualized) | $ 521 | $ 529 | $ 348 | $ 163 | $ 428 | |||||
| Employee count | 259 | 264 | 278 | 408 | 423 | |||||
| Net assets under management (in millions) | ||||||||||
| Mutual funds | $ 2,012.8 | $ 1,937.3 | $ 1,684.8 | $ 1,358.9 | $ 1,635.3 | |||||
| 1 Non-cash expenses include compensation costs associated with stock-based awards and amortization of intangible assets. | ||||||||||
| 2 Corporate transaction costs include costs related to reductions in physical space and restructuring costs. | ||||||||||
| 3 Core fixed costs is a non-GAAP measurement used by management to analyze and assess the Company's fixed operating costs. Management believes that this non-GAAP measurement assists investors in understanding the impact of the items noted in footnotes 1 and 2 and severance costs on the performance of the Company. | ||||||||||
| A limitation of utilizing this non-GAAP measure is that the GAAP accounting effects of these items do in fact reflect the underlying financial results of the Company and these effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes fixed expenses on a GAAP basis and core fixed costs on a non-GAAP basis should be considered together. | ||||||||||
CONTACT: Media: Shannon Small at 703.469.1190 or ssmall@fbr.com
Investors: Bradley J. Wright at 703.312.9678 or bwright@fbr.com