Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT ITEMS 2.02 AND 9.01 - Duff & Phelps Corp | a8kearningsreleaseq22012.htm |
FOR IMMEDIATE RELEASE |  |
DUFF & PHELPS REPORTS
2012 SECOND QUARTER RESULTS,
AND DECLARES QUARTERLY DIVIDEND
HIGHLIGHTS:
• | Quarterly revenues of $118.9 million including reimbursable expenses (representing a $28.0 million or 30.7% increase over the corresponding prior year quarter) and $114.5 million excluding reimbursable expenses (representing a $26.6 million or 30.3% increase over the corresponding prior year quarter) |
• | Adjusted EBITDA(1) of $21.1 million, representing a 18.5% margin and a $8.8 million or 71.0% increase over the corresponding prior year quarter |
• | Adjusted Pro Forma Net Income(1) of $0.25 per share, representing a $0.10 or 66.7% increase over the corresponding prior year quarter |
• | Declares a quarterly dividend of $0.09 per share of Class A common stock |
NEW YORK—July 24, 2012—Duff & Phelps Corporation (NYSE: DUF), a leading independent financial advisory and investment banking firm, today announced its second quarter 2012 financial results and declared a quarterly dividend.
Results
For the quarter ended June 30, 2012, revenues excluding reimbursable expenses increased $26.6 million or 30.3% to $114.5 million, compared to $87.9 million for the corresponding prior year quarter. Adjusted EBITDA(1) for the quarter was $21.1 million, representing 18.5% of revenues excluding reimbursable expenses, compared to $12.4 million for the corresponding prior year quarter, representing 14.1% of revenues excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $6.6 million, or $0.18 per share of Class A common stock on a fully diluted basis, compared to $3.4 million, or $0.12 per share for the corresponding prior year quarter. Adjusted Pro Forma Net Income(1) was $9.7 million, or $0.25 per share on a fully exchanged, fully diluted basis, compared to $5.8 million, or $0.15 per share, for the corresponding prior year quarter.
For the six months ended June 30, 2012, revenues excluding reimbursable expenses increased $47.9 million or 27.7% to $220.8 million, compared to $172.9 million for the corresponding prior year period. Adjusted EBITDA(1) for the period was $39.1 million, representing 17.7% of revenues excluding reimbursable expenses, compared to $25.1 million for the corresponding prior year period, representing 14.5% of revenues excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $10.5 million, or $0.31 per share of Class A common stock on a fully diluted basis, compared to $7.5 million, or $0.26 per share for the corresponding prior year period. Adjusted Pro Forma Net Income(1) was $18.2 million, or $0.47 per share on a fully exchanged, fully diluted basis, compared to $11.8 million, or $0.30 per share, for the corresponding prior year period.
“I am pleased that our second quarter revenue grew over 30% as compared to the corresponding prior year quarter,” commented Noah Gottdiener, chief executive officer. “The underlying characteristics of this growth included a 12% improvement in organic revenue and strong performance from our recent acquisitions. This top-line result was complemented by margin improvement, highlighting our focus on utilization and expense discipline."
"We will continue to deploy our strong balance sheet in support of new growth opportunities,” continued Mr. Gottdiener. “While the outlook remains uncertain for a recovery in large-scale M&A and restructuring, we expect second-half contributions from our non-cyclical service areas and our middle-market M&A business to provide revenue balance in this environment."
Declaration of Quarterly Dividend
The Company also announced today that its board of directors has declared a quarterly dividend of $0.09 per share on its outstanding Class A common stock. The dividend is payable on August 17, 2012 to shareholders of record on August 7, 2012. Concurrent with the payment of the dividend, the Company will also be distributing $0.09 per unit to holders of its New Class A Units.
_______________
(1) | Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. See definitions and disclosures herein. |
Earnings Call Webcast
As previously announced, Duff & Phelps will host a conference call today, July 24, 2012, at 5:00 p.m. EDT to discuss the Company's financial results. Interested parties can access the webcast for this call through http://ir.duffandphelps.com/.
About Duff & Phelps
As a leading global financial advisory and investment banking firm, Duff & Phelps balances analytical skills, deep market insight and independence to help clients make sound decisions. The firm provides expertise in the areas of valuation, transactions, financial restructuring, alternative assets, disputes and taxation, with more than 1,000 employees serving clients from offices in North America, Europe and Asia. Investment banking services in the United States are provided by Duff & Phelps Securities, LLC; Pagemill Partners; and GCP Securities, LLC. Member FINRA/SIPC. M&A advisory services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd. Duff & Phelps Securities Ltd. is authorized and regulated by the Financial Services Authority. For more information, visit www.duffandphelps.com. (NYSE: DUF)
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. We believe these measures provide a relevant and useful alternative measure of our ongoing profitability and performance. We believe the Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share, in addition to GAAP financial measures, provide a relevant and useful benchmark for investors, in order to assess our financial performance, ongoing operating results and comparability to other companies in our industry. These measures are utilized by our senior management to evaluate our overall performance.
We define Adjusted EBITDA as operating income before depreciation and amortization, equity-based compensation originating prior to our IPO and associated with grants of ownership units of D&P Acquisitions and stock options granted in conjunction with our IPO and other items which are generally not part of our ongoing operations, including but not limited to restructuring charges and acquisition related expenses. We define Adjusted Pro Forma Net Income as net income before equity compensation associated with grants of ownership units of D&P Acquisitions and stock options granted in conjunction with our IPO, and certain items which are generally not part of our ongoing operations, including but not limited to restructuring charges and acquisition related expenses, less pro forma corporate income tax applied at an assumed effective corporate tax rate. Adjusted Pro Forma Net Income per share consists of Adjusted Pro Forma Net Income divided by the fully dilutive weighted average number of the Company's Class A and Class B shares for the applicable period. These measures are reconciled in the tables below.
Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures which are not prepared in accordance with, and should not be considered a substitute for or superior to measurements required by GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies.
Reconciliation of Adjusted EBITDA | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
Net income attributable to Duff & Phelps Corporation | $ | 6,593 | $ | 3,424 | $ | 10,498 | $ | 7,537 | ||||||||
Net income attributable to noncontrolling interest | 1,146 | 2,223 | 2,932 | 4,601 | ||||||||||||
Provision for income taxes | 4,894 | 2,556 | 8,439 | 5,620 | ||||||||||||
Other expense/(income), net | 685 | 64 | 1,190 | 86 | ||||||||||||
Operating income | 13,318 | 8,267 | 23,059 | 17,844 | ||||||||||||
Depreciation and amortization | 4,348 | 2,567 | 8,245 | 5,056 | ||||||||||||
Equity-based compensation associated with Legacy Units and IPO Options(1) | (49 | ) | 56 | 22 | 473 | |||||||||||
Acquisition retention expenses | 2,444 | 297 | 4,487 | 379 | ||||||||||||
Restructuring charges | 239 | 904 | 1,418 | 904 | ||||||||||||
Transaction and integration costs | 844 | 272 | 1,879 | 466 | ||||||||||||
Adjusted EBITDA | $ | 21,144 | $ | 12,363 | $ | 39,110 | $ | 25,122 | ||||||||
Reconciliation of Adjusted Pro Forma Net Income | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
Net income attributable to Duff & Phelps Corporation | $ | 6,593 | $ | 3,424 | $ | 10,498 | $ | 7,537 | ||||||||
Net income attributable to noncontrolling interest | 1,146 | 2,223 | 2,932 | 4,601 | ||||||||||||
Equity-based compensation associated with Legacy Units and IPO Options(1) | (49 | ) | 56 | 22 | 473 | |||||||||||
Acquisition retention expenses | 2,444 | 297 | 4,487 | 379 | ||||||||||||
Restructuring charges | 239 | 904 | 1,418 | 904 | ||||||||||||
Transaction and integration costs | 844 | 272 | 1,879 | 466 | ||||||||||||
Loss from the write off of an investment(2) | — | — | 376 | — | ||||||||||||
Adjustment to provision for income taxes(3) | (1,495 | ) | (1,405 | ) | (3,401 | ) | (2,512 | ) | ||||||||
Adjusted Pro Forma Net Income, as defined | $ | 9,722 | $ | 5,771 | $ | 18,211 | $ | 11,848 | ||||||||
Fully diluted weighted average shares of Class A common stock | 35,076 | 28,067 | 32,514 | 28,095 | ||||||||||||
Weighted average New Class A Units outstanding | 3,961 | 10,947 | 6,506 | 11,038 | ||||||||||||
Pro forma fully exchanged, fully diluted shares outstanding | 39,037 | 39,014 | 39,020 | 39,133 | ||||||||||||
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding | $ | 0.25 | $ | 0.15 | $ | 0.47 | $ | 0.30 | ||||||||
_______________ | |
(1) | Represents elimination of equity-compensation expense from Legacy Units associated with ownership units of D&P Acquisitions ("Legacy Units") and stock options granted in conjunction with our IPO ("IPO Options"). See further detail in the notes to the condensed consolidated financial statements. |
(2) | Reflects a charge from the write off of a minority investment. The charge is reflected in "Other expense" on the Company's Condensed Consolidated Statement of Operations. |
(3) | Represents an adjustment to reflect an assumed annual effective corporate tax rate of approximately 39.4% and 40.7% as applied to the six months ended June 30, 2012 and 2011, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. For the three months ended June 30, 2012, the pro forma tax rate of 39.7% reflects a true-up adjustment relating to the three months ended March 31, 2012. Assumes (i) full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company, (ii) the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at prevailing corporate rates and (iii) all deferred tax assets related to foreign operations are fully realizable. |
Disclosure Regarding Forward-Looking Statements
Statements in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this discussion are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us, or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and the risk factors section that are included in our Annual Report on Form 10-K for the year ended December 31, 2011 and any subsequent filings of our Quarterly Reports on Form 10-Q. The forward-looking statements included in this press release are made only as of the date this press release was issued. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Investor Relations
Marty Dauer, +1-212-871-7700
investor.relations@duffandphelps.com
Media Relations
Alex Wolfe, +1-212-871-9087
alex.wolfe@duffandphelps.com
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
Revenues | $ | 114,489 | $ | 87,886 | $ | 220,834 | $ | 172,932 | ||||||||
Reimbursable expenses | 4,422 | 3,074 | 7,020 | 4,966 | ||||||||||||
Total revenues | 118,911 | 90,960 | 227,854 | 177,898 | ||||||||||||
Direct client service costs | ||||||||||||||||
Compensation and benefits (includes $4,084 and $4,130 of equity-based compensation for the three months ended June 30, 2012 and 2011, respectively, and $10,129 and $9,065 for the six months ended June 30, 2012 and 2011, respectively) | 62,171 | 49,059 | 120,389 | 95,967 | ||||||||||||
Other direct client service costs | 2,429 | 1,480 | 5,313 | 2,909 | ||||||||||||
Acquisition retention expenses (includes $722 and $297 of equity-based compensation for the three months ended June 30, 2012 and 2011, respectively, and $1,444 and $379 for the six months ended June 30, 2012 and 2011, respectively) | 2,444 | 297 | 4,487 | 379 | ||||||||||||
Reimbursable expenses | 4,400 | 3,132 | 7,009 | 5,069 | ||||||||||||
71,444 | 53,968 | 137,198 | 104,324 | |||||||||||||
Operating expenses | ||||||||||||||||
Selling, general and administrative (includes $808 and $769 of equity- based compensation for the three months ended June 30, 2012 and 2011, respectively, and $1,863 and $2,292 for the six months ended June 30, 2012 and 2011, respectively) | 28,718 | 24,982 | 56,055 | 49,304 | ||||||||||||
Depreciation and amortization | 4,348 | 2,567 | 8,245 | 5,056 | ||||||||||||
Restructuring charges | 239 | 904 | 1,418 | 904 | ||||||||||||
Transaction and integration costs | 844 | 272 | 1,879 | 466 | ||||||||||||
34,149 | 28,725 | 67,597 | 55,730 | |||||||||||||
Operating income | 13,318 | 8,267 | 23,059 | 17,844 | ||||||||||||
Other expense/(income), net | ||||||||||||||||
Interest income | (5 | ) | (27 | ) | (33 | ) | (55 | ) | ||||||||
Interest expense | 217 | 91 | 371 | 148 | ||||||||||||
Other expense/(income) | 473 | — | 852 | (7 | ) | |||||||||||
685 | 64 | 1,190 | 86 | |||||||||||||
Income before income taxes | 12,633 | 8,203 | 21,869 | 17,758 | ||||||||||||
Provision for income taxes | 4,894 | 2,556 | 8,439 | 5,620 | ||||||||||||
Net income | 7,739 | 5,647 | 13,430 | 12,138 | ||||||||||||
Less: Net income attributable to noncontrolling interest | 1,146 | 2,223 | 2,932 | 4,601 | ||||||||||||
Net income attributable to Duff & Phelps Corporation | $ | 6,593 | $ | 3,424 | $ | 10,498 | $ | 7,537 | ||||||||
Weighted average shares of Class A common stock outstanding | ||||||||||||||||
Basic | 33,788 | 27,296 | 31,245 | 27,104 | ||||||||||||
Diluted | 35,076 | 28,067 | 32,514 | 28,095 | ||||||||||||
Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation | ||||||||||||||||
Basic | $ | 0.18 | $ | 0.12 | $ | 0.32 | $ | 0.27 | ||||||||
Diluted | $ | 0.18 | $ | 0.12 | $ | 0.31 | $ | 0.26 | ||||||||
Cash dividends declared per common share | $ | 0.09 | $ | 0.08 | $ | 0.18 | $ | 0.16 | ||||||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
QUARTERLY REVENUES BY SEGMENT
(In thousands)
(Unaudited)
2011 | 2012 | Q2 2012 vs 2011 | YTD 2012 vs 2011 | |||||||||||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Total | Dollar | Percent | Dollar | Percent | |||||||||||||||||||||||||||||||||||
Financial Advisory | ||||||||||||||||||||||||||||||||||||||||||||||
Valuation Advisory | $ | 37,614 | $ | 32,604 | $ | 33,887 | $ | 39,046 | $ | 143,151 | $ | 39,490 | $ | 33,610 | $ | 73,100 | $ | 1,006 | 3.1 | % | 2,882 | 4.1 | % | |||||||||||||||||||||||
Tax Services | 7,547 | 15,128 | 9,572 | 8,698 | 40,945 | 5,488 | 13,035 | 18,523 | (2,093 | ) | (13.8 | )% | (4,152 | ) | (18.3 | )% | ||||||||||||||||||||||||||||||
Dispute & Legal Management Consulting | 13,436 | 13,005 | 18,319 | 22,032 | 66,792 | 14,675 | 19,979 | 34,654 | 6,974 | 53.6 | % | 8,213 | 31.1 | % | ||||||||||||||||||||||||||||||||
58,597 | 60,737 | 61,778 | 69,776 | 250,888 | 59,653 | 66,624 | 126,277 | 5,887 | 9.7 | % | 6,943 | 5.8 | % | |||||||||||||||||||||||||||||||||
Alternative Asset Advisory | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Valuation | 6,519 | 6,220 | 6,730 | 6,272 | 25,741 | 7,622 | 6,059 | 13,681 | (161 | ) | (2.6 | )% | 942 | 7.4 | % | |||||||||||||||||||||||||||||||
Complex Asset Solutions | 5,321 | 4,125 | 3,998 | 4,631 | 18,075 | 4,904 | 4,048 | 8,952 | (77 | ) | (1.9 | )% | (494 | ) | (5.2 | )% | ||||||||||||||||||||||||||||||
Due Diligence | 1,645 | 4,070 | 2,643 | 3,492 | 11,850 | 2,423 | 2,312 | 4,735 | (1,758 | ) | (43.2 | )% | (980 | ) | (17.1 | )% | ||||||||||||||||||||||||||||||
13,485 | 14,415 | 13,371 | 14,395 | 55,666 | 14,949 | 12,419 | 27,368 | (1,996 | ) | (13.8 | )% | (532 | ) | (1.9 | )% | |||||||||||||||||||||||||||||||
Investment Banking | ||||||||||||||||||||||||||||||||||||||||||||||
M&A Advisory | 1,450 | 1,853 | 5,741 | 16,568 | 25,612 | 9,354 | 14,953 | 24,307 | 13,100 | 707.0 | % | 21,004 | 635.9 | % | ||||||||||||||||||||||||||||||||
Transaction Opinions | 8,231 | 7,266 | 7,466 | 5,811 | 28,774 | 6,742 | 8,171 | 14,913 | 905 | 12.5 | % | (584 | ) | (3.8 | )% | |||||||||||||||||||||||||||||||
Global Restructuring Advisory | 3,283 | 3,615 | 3,672 | 12,430 | 23,000 | 15,647 | 12,322 | 27,969 | 8,707 | 240.9 | % | 21,071 | 305.5 | % | ||||||||||||||||||||||||||||||||
12,964 | 12,734 | 16,879 | 34,809 | 77,386 | 31,743 | 35,446 | 67,189 | 22,712 | 178.4 | % | 41,491 | 161.5 | % | |||||||||||||||||||||||||||||||||
Total Revenues (excluding reimbursables) | $ | 85,046 | $ | 87,886 | $ | 92,028 | $ | 118,980 | $ | 383,940 | $ | 106,345 | $ | 114,489 | $ | 220,834 | $ | 26,603 | 30.3 | % | $ | 47,902 | 27.7 | % | ||||||||||||||||||||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(In thousands, except headcount data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
Financial Advisory | ||||||||||||||||
Revenues (excluding reimbursables) | $ | 66,624 | $ | 60,737 | $ | 126,277 | $ | 119,334 | ||||||||
Segment operating income | $ | 13,298 | $ | 9,787 | $ | 23,604 | $ | 19,369 | ||||||||
Segment operating income margin | 20.0 | % | 16.1 | % | 18.7 | % | 16.2 | % | ||||||||
Alternative Asset Advisory | ||||||||||||||||
Revenues (excluding reimbursables) | $ | 12,419 | $ | 14,415 | $ | 27,368 | $ | 27,900 | ||||||||
Segment operating income | $ | 2,385 | $ | 3,302 | $ | 6,531 | $ | 6,524 | ||||||||
Segment operating income margin | 19.2 | % | 22.9 | % | 23.9 | % | 23.4 | % | ||||||||
Investment Banking | ||||||||||||||||
Revenues (excluding reimbursables) | $ | 35,446 | $ | 12,734 | $ | 67,189 | $ | 25,698 | ||||||||
Segment operating income/(loss) | $ | 5,439 | $ | (668 | ) | $ | 8,964 | $ | (668 | ) | ||||||
Segment operating income/(loss) margin | 15.3 | % | (5.2 | )% | 13.3 | % | (2.6 | )% | ||||||||
Totals | ||||||||||||||||
Revenues (excluding reimbursables) | $ | 114,489 | $ | 87,886 | $ | 220,834 | $ | 172,932 | ||||||||
Segment operating income | $ | 21,122 | $ | 12,421 | $ | 39,099 | $ | 25,225 | ||||||||
Net client reimbursable expenses | 22 | (58 | ) | 11 | (103 | ) | ||||||||||
Equity-based compensation from Legacy Units and IPO Options | 49 | (56 | ) | (22 | ) | (473 | ) | |||||||||
Depreciation and amortization | (4,348 | ) | (2,567 | ) | (8,245 | ) | (5,056 | ) | ||||||||
Acquisition retention expenses | (2,444 | ) | (297 | ) | (4,487 | ) | (379 | ) | ||||||||
Restructuring charges | (239 | ) | (904 | ) | (1,418 | ) | (904 | ) | ||||||||
Transaction and integration costs | (844 | ) | (272 | ) | (1,879 | ) | (466 | ) | ||||||||
Operating income | $ | 13,318 | $ | 8,267 | $ | 23,059 | $ | 17,844 | ||||||||
Average Client Service Professionals | ||||||||||||||||
Financial Advisory | 612 | 562 | 606 | 567 | ||||||||||||
Alternative Asset Advisory | 101 | 94 | 101 | 90 | ||||||||||||
Investment Banking | 291 | 128 | 297 | 129 | ||||||||||||
Total | 1,004 | 784 | 1,004 | 786 | ||||||||||||
End of Period Client Service Professionals | ||||||||||||||||
Financial Advisory | 612 | 552 | 612 | 552 | ||||||||||||
Alternative Asset Advisory | 103 | 97 | 103 | 97 | ||||||||||||
Investment Banking | 292 | 131 | 292 | 131 | ||||||||||||
Total | 1,007 | 780 | 1,007 | 780 | ||||||||||||
Revenue per Client Service Professional | ||||||||||||||||
Financial Advisory | $ | 109 | $ | 108 | $ | 208 | $ | 210 | ||||||||
Alternative Asset Advisory | $ | 123 | $ | 153 | $ | 271 | $ | 310 | ||||||||
Investment Banking | $ | 122 | $ | 99 | $ | 226 | $ | 199 | ||||||||
Total | $ | 114 | $ | 112 | $ | 220 | $ | 220 | ||||||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT—CONTINUED
(In thousands, except utilization, rate-per-hour and headcount data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
Utilization(a) | ||||||||||||||||
Financial Advisory | 71.5 | % | 67.6 | % | 73.2 | % | 71.3 | % | ||||||||
Alternative Asset Advisory | 56.0 | % | 61.5 | % | 58.0 | % | 61.7 | % | ||||||||
Rate-Per-Hour(b) | ||||||||||||||||
Financial Advisory | $ | 352 | $ | 363 | $ | 328 | $ | 338 | ||||||||
Alternative Asset Advisory | $ | 457 | $ | 515 | $ | 506 | $ | 522 | ||||||||
Revenues (excluding reimbursables) | ||||||||||||||||
Financial Advisory | $ | 66,624 | $ | 60,737 | $ | 126,277 | $ | 119,334 | ||||||||
Alternative Asset Advisory | 12,419 | 14,415 | 27,368 | 27,900 | ||||||||||||
Investment Banking | 35,446 | 12,734 | 67,189 | 25,698 | ||||||||||||
Total | $ | 114,489 | $ | 87,886 | $ | 220,834 | $ | 172,932 | ||||||||
Average Managing Directors | ||||||||||||||||
Financial Advisory | 95 | 93 | 93 | 93 | ||||||||||||
Alternative Asset Advisory | 23 | 25 | 23 | 25 | ||||||||||||
Investment Banking | 74 | 41 | 75 | 40 | ||||||||||||
Total | 192 | 159 | 191 | 158 | ||||||||||||
End of Period Managing Directors | ||||||||||||||||
Financial Advisory | 95 | 91 | 95 | 91 | ||||||||||||
Alternative Asset Advisory | 23 | 25 | 23 | 25 | ||||||||||||
Investment Banking | 73 | 43 | 73 | 43 | ||||||||||||
Total | 191 | 159 | 191 | 159 | ||||||||||||
Revenue per Managing Director | ||||||||||||||||
Financial Advisory | $ | 701 | $ | 653 | $ | 1,358 | $ | 1,283 | ||||||||
Alternative Asset Advisory | $ | 540 | $ | 577 | $ | 1,190 | $ | 1,116 | ||||||||
Investment Banking | $ | 479 | $ | 311 | $ | 896 | $ | 642 | ||||||||
Total | $ | 596 | $ | 553 | $ | 1,156 | $ | 1,095 | ||||||||
_______________ | |
(a) | The utilization rate for any given period is calculated by dividing the number of hours incurred by client service professionals who worked on client assignments (including internal projects for the Company) during the period by the total available working hours for all of such client service professionals during the same period, assuming a 40 hour work week, less paid holidays and vacation days. Utilization excludes client service professionals associated with certain property tax services due to the nature of the work performed and client service professionals from certain acquisitions prior to their transition to the Company's financial system. |
(b) | Average billing rate-per-hour is calculated by dividing revenues for the period by the number of hours worked on client assignments (including internal projects for the Company) during the same period. Financial Advisory revenues used to calculate rate-per-hour exclude revenues associated with certain property tax engagements. The average billing rate excludes certain hours from our acquisitions prior to their transition to the Company's financial system. |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
SUMMARY OF CLIENT SERVICE PROFESSIONALS
(Unaudited)
2011 | 2012 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | YTD | |||||||||||||||||
Average Client Service Professionals | ||||||||||||||||||||||||
Financial Advisory | 574 | 562 | 576 | 584 | 575 | 600 | 612 | 606 | ||||||||||||||||
Alternative Asset Advisory | 87 | 94 | 98 | 99 | 94 | 99 | 101 | 101 | ||||||||||||||||
Investment Banking | 129 | 128 | 147 | 213 | 158 | 302 | 291 | 297 | ||||||||||||||||
790 | 784 | 821 | 896 | 827 | 1,001 | 1,004 | 1,004 | |||||||||||||||||
End of Period Client Service Professionals | ||||||||||||||||||||||||
Financial Advisory | 571 | 552 | 580 | 590 | 605 | 612 | ||||||||||||||||||
Alternative Asset Advisory | 90 | 97 | 100 | 100 | 94 | 103 | ||||||||||||||||||
Investment Banking | 127 | 131 | 149 | 303 | 294 | 292 | ||||||||||||||||||
788 | 780 | 829 | 993 | 993 | 1,007 | |||||||||||||||||||
2011 | 2012 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | YTD | |||||||||||||||||
Average Managing Directors | ||||||||||||||||||||||||
Financial Advisory | 94 | 93 | 91 | 90 | 92 | 92 | 95 | 93 | ||||||||||||||||
Alternative Asset Advisory | 26 | 25 | 25 | 24 | 25 | 23 | 23 | 23 | ||||||||||||||||
Investment Banking | 39 | 41 | 48 | 58 | 47 | 76 | 74 | 75 | ||||||||||||||||
159 | 159 | 164 | 172 | 164 | 191 | 192 | 191 | |||||||||||||||||
End of Period Managing Directors | ||||||||||||||||||||||||
Financial Advisory | 94 | 91 | 90 | 92 | 95 | 95 | ||||||||||||||||||
Alternative Asset Advisory | 26 | 25 | 25 | 24 | 23 | 23 | ||||||||||||||||||
Investment Banking | 39 | 43 | 50 | 76 | 73 | 73 | ||||||||||||||||||
159 | 159 | 165 | 192 | 191 | 191 | |||||||||||||||||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
June 30, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 49,283 | $ | 38,986 | ||||
Accounts receivable (net of allowance for doubtful accounts of $1,761 and $1,753 at June 30, 2012 and December 31, 2011, respectively) | 75,444 | 77,795 | ||||||
Unbilled services | 54,795 | 51,427 | ||||||
Prepaid expenses and other current assets | 11,493 | 8,257 | ||||||
Net deferred income taxes, current | 1,478 | 2,545 | ||||||
Total current assets | 192,493 | 179,010 | ||||||
Property and equipment (net of accumulated depreciation of $34,446 and $32,516 at June 30, 2012 and December 31, 2011, respectively) | 40,080 | 33,632 | ||||||
Goodwill | 194,643 | 192,970 | ||||||
Intangible assets (net of accumulated amortization of $30,290 and $25,626 at June 30, 2012 and December 31, 2011, respectively) | 35,980 | 40,977 | ||||||
Other assets | 13,108 | 13,942 | ||||||
Investments related to deferred compensation plan | 26,890 | 23,542 | ||||||
Net deferred income taxes, less current portion | 140,771 | 115,826 | ||||||
Total non-current assets | 451,472 | 420,889 | ||||||
Total assets | $ | 643,965 | $ | 599,899 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 5,562 | $ | 4,148 | ||||
Accrued expenses | 24,234 | 22,612 | ||||||
Accrued compensation and benefits | 22,691 | 41,518 | ||||||
Liability related to deferred compensation plan, current portion | 594 | 646 | ||||||
Deferred revenues | 5,842 | 4,185 | ||||||
Due to noncontrolling unitholders, current portion | 6,209 | 6,209 | ||||||
Total current liabilities | 65,132 | 79,318 | ||||||
Long-term debt | 22,500 | — | ||||||
Liability related to deferred compensation plan, less current portion | 26,396 | 23,083 | ||||||
Other long-term liabilities | 29,716 | 32,248 | ||||||
Due to noncontrolling unitholders, less current portion | 130,337 | 101,557 | ||||||
Total non-current liabilities | 208,949 | 156,888 | ||||||
Total liabilities | 274,081 | 236,206 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock (50,000 shares authorized; zero issued and outstanding) | — | — | ||||||
Class A common stock, par value $0.01 per share (100,000 shares authorized; 38,599 and 31,646 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively) | 386 | 316 | ||||||
Class B common stock, par value $0.0001 per share (50,000 shares authorized; 3,952 and 10,488 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively) | — | 1 | ||||||
Additional paid-in capital | 306,682 | 252,572 | ||||||
Accumulated other comprehensive income | 323 | 287 | ||||||
Retained earnings | 29,529 | 25,631 | ||||||
Total stockholders' equity of Duff & Phelps Corporation | 336,920 | 278,807 | ||||||
Noncontrolling interest | 32,964 | 84,886 | ||||||
Total stockholders' equity | 369,884 | 363,693 | ||||||
Total liabilities and stockholders' equity | $ | 643,965 | $ | 599,899 | ||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended | ||||||||
June 30, 2012 | June 30, 2011 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 13,430 | $ | 12,138 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 8,245 | 5,056 | ||||||
Equity-based compensation | 13,436 | 11,736 | ||||||
Bad debt expense | 445 | 1,347 | ||||||
Net deferred income taxes | 4,902 | 6,151 | ||||||
Other | 1,796 | 359 | ||||||
Changes in assets and liabilities providing/(using) cash, net of acquired balances: | ||||||||
Accounts receivable | 2,148 | (1,148 | ) | |||||
Unbilled services | (3,152 | ) | (18,317 | ) | ||||
Prepaid expenses and other current assets | (2,355 | ) | (285 | ) | ||||
Other assets | 356 | (381 | ) | |||||
Accounts payable and accrued expenses | 835 | (8,223 | ) | |||||
Accrued compensation and benefits | (13,041 | ) | (22,674 | ) | ||||
Deferred revenues | 1,656 | 1,520 | ||||||
Other liabilities | (4,987 | ) | 83 | |||||
Net cash provided by/(used in) operating activities | 23,714 | (12,638 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (7,150 | ) | (4,012 | ) | ||||
Business acquisitions, net of cash acquired | (1,400 | ) | (5,891 | ) | ||||
Purchases of investments | (2,550 | ) | (3,250 | ) | ||||
Net cash used in investing activities | (11,100 | ) | (13,153 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving line of credit | 30,000 | — | ||||||
Repayments of revolving line of credit | (7,500 | ) | — | |||||
Net proceeds from sale of Class A common stock | 49,244 | — | ||||||
Redemption of noncontrolling unitholders | (58,972 | ) | — | |||||
Dividends | (6,645 | ) | (5,012 | ) | ||||
Repurchases of Class A common stock | (5,226 | ) | (13,649 | ) | ||||
Payments of contingent consideration related to acquisitions | (1,682 | ) | — | |||||
Distributions and other payments to noncontrolling unitholders | (1,636 | ) | (2,378 | ) | ||||
Proceeds from exercises of stock options | 16 | 267 | ||||||
Excess tax benefit from equity-based compensation | 561 | 911 | ||||||
Net cash used in financing activities | (1,840 | ) | (19,861 | ) | ||||
Effect of exchange rate on cash and cash equivalents | (477 | ) | 1,799 | |||||
Net increase/(decrease) in cash and cash equivalents | 10,297 | (43,853 | ) | |||||
Cash and cash equivalents at beginning of year | 38,986 | 113,328 | ||||||
Cash and cash equivalents at end of period | $ | 49,283 | $ | 69,475 | ||||
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, 2012 | ||||||||||||
As Reported | Adjustments | Adjusted Pro Forma | ||||||||||
Revenues | $ | 114,489 | $ | — | $ | 114,489 | ||||||
Reimbursable expenses | 4,422 | — | 4,422 | |||||||||
Total revenues | 118,911 | — | 118,911 | |||||||||
Direct client service costs | ||||||||||||
Compensation and benefits | 62,171 | 47 | (1) | 62,218 | ||||||||
Other direct client service costs | 2,429 | — | 2,429 | |||||||||
Acquisition retention expenses | 2,444 | (2,444 | ) | — | ||||||||
Reimbursable expenses | 4,400 | — | 4,400 | |||||||||
71,444 | (2,397 | ) | 69,047 | |||||||||
Operating expenses | ||||||||||||
Selling, general and administrative | 28,718 | 2 | (1) | 28,720 | ||||||||
Depreciation and amortization | 4,348 | — | 4,348 | |||||||||
Restructuring charges | 239 | (239 | ) | — | ||||||||
Transaction and integration costs | 844 | (844 | ) | — | ||||||||
34,149 | (1,081 | ) | 33,068 | |||||||||
Operating income | 13,318 | 3,478 | 16,796 | |||||||||
Other expense/(income), net | ||||||||||||
Interest income | (5 | ) | — | (5 | ) | |||||||
Interest expense | 217 | — | 217 | |||||||||
Other expense/(income) | 473 | — | 473 | |||||||||
685 | — | 685 | ||||||||||
Income before income taxes | 12,633 | 3,478 | 16,111 | |||||||||
Provision for income taxes | 4,894 | 1,495 | (3) | 6,389 | ||||||||
Net income | 7,739 | 1,983 | 9,722 | |||||||||
Less: Net income attributable to noncontrolling interest | 1,146 | (1,146 | ) | — | ||||||||
Net income attributable to Duff & Phelps Corporation | $ | 6,593 | $ | 3,129 | $ | 9,722 | ||||||
Pro forma fully exchanged, fully diluted shares outstanding | 39,037 | |||||||||||
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | $ | 0.25 | ||||||||||
See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, 2011 | |||||||||||
As Reported | Adjustments | Adjusted Pro Forma | |||||||||
Revenues | $ | 87,886 | $ | — | $ | 87,886 | |||||
Reimbursable expenses | 3,074 | — | 3,074 | ||||||||
Total revenues | 90,960 | — | 90,960 | ||||||||
Direct client service costs | |||||||||||
Compensation and benefits | 49,059 | 55 | (1) | 49,114 | |||||||
Other direct client service costs | 1,480 | — | 1,480 | ||||||||
Acquisition retention expenses | 297 | (297 | ) | — | |||||||
Reimbursable expenses | 3,132 | — | 3,132 | ||||||||
53,968 | (242 | ) | 53,726 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative | 24,982 | (111 | ) | (1) | 24,871 | ||||||
Depreciation and amortization | 2,567 | — | 2,567 | ||||||||
Restructuring charges | 904 | (904 | ) | — | |||||||
Transaction and integration costs | 272 | (272 | ) | — | |||||||
28,725 | (1,287 | ) | 27,438 | ||||||||
Operating income | 8,267 | 1,529 | 9,796 | ||||||||
Other expense/(income), net | |||||||||||
Interest income | (27 | ) | — | (27 | ) | ||||||
Interest expense | 91 | — | 91 | ||||||||
Other expense/(income) | — | — | — | ||||||||
64 | — | 64 | |||||||||
Income before income taxes | 8,203 | 1,529 | 9,732 | ||||||||
Provision for income taxes | 2,556 | 1,405 | (3) | 3,961 | |||||||
Net income | 5,647 | 124 | 5,771 | ||||||||
Less: Net income attributable to noncontrolling interest | 2,223 | (2,223 | ) | — | |||||||
Net income attributable to Duff & Phelps Corporation | $ | 3,424 | $ | 2,347 | $ | 5,771 | |||||
Pro forma fully exchanged, fully diluted shares outstanding | 39,014 | ||||||||||
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | $ | 0.15 | |||||||||
See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended June 30, 2012 | ||||||||||||
As Reported | Adjustments | Adjusted Pro Forma | ||||||||||
Revenues | $ | 220,834 | $ | — | $ | 220,834 | ||||||
Reimbursable expenses | 7,020 | — | 7,020 | |||||||||
Total revenues | 227,854 | — | 227,854 | |||||||||
Direct client service costs | ||||||||||||
Compensation and benefits | 120,389 | 43 | (1) | 120,432 | ||||||||
Other direct client service costs | 5,313 | — | 5,313 | |||||||||
Acquisition retention expenses | 4,487 | (4,487 | ) | — | ||||||||
Reimbursable expenses | 7,009 | — | 7,009 | |||||||||
137,198 | (4,444 | ) | 132,754 | |||||||||
Operating expenses | ||||||||||||
Selling, general and administrative | 56,055 | (65 | ) | (1) | 55,990 | |||||||
Depreciation and amortization | 8,245 | — | 8,245 | |||||||||
Restructuring charges | 1,418 | (1,418 | ) | — | ||||||||
Transaction and integration costs | 1,879 | (1,879 | ) | — | ||||||||
67,597 | (3,362 | ) | 64,235 | |||||||||
Operating income | 23,059 | 7,806 | 30,865 | |||||||||
Other expense/(income), net | ||||||||||||
Interest income | (33 | ) | — | (33 | ) | |||||||
Interest expense | 371 | — | 371 | |||||||||
Other expense/(income) | 852 | (376 | ) | (2) | 476 | |||||||
1,190 | (376 | ) | 814 | |||||||||
Income before income taxes | 21,869 | 8,182 | 30,051 | |||||||||
Provision for income taxes | 8,439 | 3,401 | (3) | 11,840 | ||||||||
Net income | 13,430 | 4,781 | 18,211 | |||||||||
Less: Net income attributable to noncontrolling interest | 2,932 | (2,932 | ) | |||||||||
Net income attributable to Duff & Phelps Corporation | $ | 10,498 | $ | 7,713 | $ | 18,211 | ||||||
Pro forma fully exchanged, fully diluted shares outstanding | 39,020 | |||||||||||
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | $ | 0.47 | ||||||||||
See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended June 30, 2011 | ||||||||||||
As Reported | Adjustments | Adjusted Pro Forma | ||||||||||
Revenues | $ | 172,932 | $ | — | $ | 172,932 | ||||||
Reimbursable expenses | 4,966 | — | 4,966 | |||||||||
Total revenues | 177,898 | — | 177,898 | |||||||||
Direct client service costs | ||||||||||||
Compensation and benefits | 95,967 | (178 | ) | (1) | 95,789 | |||||||
Other direct client service costs | 2,909 | — | 2,909 | |||||||||
Acquisition retention expenses | 379 | (379 | ) | — | ||||||||
Reimbursable expenses | 5,069 | — | 5,069 | |||||||||
104,324 | (557 | ) | 103,767 | |||||||||
Operating expenses | ||||||||||||
Selling, general and administrative | 49,304 | (295 | ) | (1) | 49,009 | |||||||
Depreciation and amortization | 5,056 | — | 5,056 | |||||||||
Restructuring charges | 904 | (904 | ) | — | ||||||||
Transaction and integration costs | 466 | (466 | ) | — | ||||||||
55,730 | (1,665 | ) | 54,065 | |||||||||
Operating income | 17,844 | 2,222 | 20,066 | |||||||||
Other expense/(income), net | ||||||||||||
Interest income | (55 | ) | — | (55 | ) | |||||||
Interest expense | 148 | — | 148 | |||||||||
Other expense/(income) | (7 | ) | — | (7 | ) | |||||||
86 | — | 86 | ||||||||||
Income before income taxes | 17,758 | 2,222 | 19,980 | |||||||||
Provision for income taxes | 5,620 | 2,512 | (3) | 8,132 | ||||||||
Net income | 12,138 | (290 | ) | 11,848 | ||||||||
Less: Net income attributable to noncontrolling interest | 4,601 | (4,601 | ) | — | ||||||||
Net income attributable to Duff & Phelps Corporation | $ | 7,537 | $ | 4,311 | $ | 11,848 | ||||||
Pro forma fully exchanged, fully diluted shares outstanding | 39,133 | |||||||||||
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | $ | 0.30 | ||||||||||
See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.
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