Broadpoint Gleacher Securities Group, Inc. (NASDAQ: BPSG)
reported today financial results for the fourth quarter and for the
full year ended December 31, 2009. Broadpoint.Gleacher will hold a
conference call this morning, January 28, 2010, at 10:00 A.M. (EST)
(see Conference Call Information below) to discuss these
results.
Highlights of the full year and the fourth quarter include:
- Net revenues of $341.8 million
for the year ended December 31, 2009 increased 155 percent compared
to $134.3 million for 2008. Pre-tax profit of $61.5 million for the
year ended December 31, 2009 compared to a pre-tax loss of $14.8
million for 2008. Pre-tax margin was 18.0 percent for 2009. Revenue
per employee for 2009 was $1.159 million.
- Net revenues of $81.2 million
for the fourth quarter of 2009 increased 61 percent compared to
$50.6 million for the fourth quarter of 2008. Pre-tax profit of
$14.1 million for the fourth quarter of 2009 increased 666 percent
compared to $1.8 million in the fourth quarter of 2008. Pre-tax
margin was 17.4 percent for the fourth quarter of 2009 compared to
3.6 percent in the fourth quarter of 2008.
- Net profit was $55.4 million for
2009, or $0.53 diluted earnings per share, and net profit for the
quarter ended December 31, 2009 was $10.3 million, or $0.08 diluted
earnings per share.
- For the year ended December 31,
2009, Investment Banking revenues of $46.2 million increased 176
percent compared to $16.7 million for 2008. Fourth quarter
Investment Banking revenues were $15.5 million, an increase of 470
percent compared to $2.7 million in the prior year quarter.
- The Company received Financial
Services Authority approval to acquire ISM Capital, a London-based
capital markets advisory firm. The acquisition is expected to close
in the first quarter of 2010.
- Staffing was strengthened with
the Company increasing total head count 44 percent year over year,
with client-facing employees representing 71 percent of the
employee base. During the fourth quarter, head count increased by
16 people with key hires in Asset Based Investment Banking, CLO
Sales and Trading, and Finance.
Lee Fensterstock, Chief Executive Officer, said, “We are very
pleased with the progress across all of our businesses during 2009,
building upon the platform we established in 2008. We have much
work to do however to continue to build-out our firm and diversify
our earnings stream. While the fourth quarter reflected a slowdown
in fixed income, we fared somewhat better than many of our
competitors, and we continued our progress in growing investment
banking.”
Eric Gleacher, Chairman, said, “Our progress in developing our
investment banking business over the past seven months since
Gleacher Partners became a part of Broadpoint has gone well. Our
restructuring business continues producing strong results and our
M&A and capital markets backlogs have grown meaningfully. Our
goal is that our results in 2010 will reveal a balanced set of
completed transactions in all three areas, demonstrating solid
progress and growth in investment banking."
Highlights by business segment for the fourth quarter ended
December 31, 2009 and December 31, 2008
(In thousands)
Three Months Ended
Net Revenues by Business Segment
(includingnet interest income)
December 31,
2009
December 31,
2008
Broadpoint Descap 34,583 15,891 Debt Capital Markets
24,067 26,237 Equity Capital Markets 5,641 6,230 Investment Banking
12,692 2,419 Other $ 4,233 $ (218 ) Net revenues
(including net interest income) $ 81,216 $ 50,559
Pre-tax profit* $ 14,127 $ 1,844
*Includes stock-based compensation of: $ 5,090 $
1,929
Overview of Financial Results for the Quarters Ended December
31, 2009 and December 31, 2008
(In thousands except per share
amounts)
(Unaudited Condensed Consolidated
Statements of Operations)
Three Months EndedDecember 31,
2009 2008 Revenues: Principal
transactions $ 46,337 $ 37,933 Commissions 4,580 4,547 Investment
banking 15,497 2,720 Investment gains (losses) 2,018 (705 )
Interest income 14,855 8,159 Fees and other 1,589
2,118 Total revenues 84,876
54,772 Interest expense 3,660
4,213 Net revenues 81,216
50,559 Expenses (excluding interest): Compensation and
benefits* 53,705 40,125 Clearing, settlement and brokerage 1,332
918 Communications and data processing 2,831 1,966 Occupancy and
depreciation 2,326 1,395 Selling 1,958 655 Other
4,937 3,656 Total expenses (excluding
interest) 67,089 48,715 Profit
before income taxes 14,127 1,844
Income tax expense 3,875 19
Profit from continuing operations 10,252 1,825 Loss from
discontinued operations, net of taxes -
(11 ) Net profit $ 10,252 $ 1,814
Per share data:
Basic earnings: Continuing operations $ 0.09 $ 0.02 Discontinued
operations - - Net profit
$ 0.09 $ 0.02 Diluted earnings: Continuing operations
$ 0.08 $ 0.02 Discontinued operations -
- Net profit $ 0.08 $ 0.02 Weighted
average common and common
equivalent shares outstanding:
Basic 118,346 74,034 Diluted 126,171
81,509
*Compensation and benefits
detail:
Salary, bonus and benefits $ 45,663 $ 34,340 Earnout associated
with BNY transaction 2,952 3,856 Employee stock-based compensation
5,090 1,929 Total $
53,705 $ 40,125
Discussion of operating results for the fourth quarter of
2009 compared to the fourth quarter of 2008
Net revenues for the fourth quarter of 2009 were $81.2 million,
an increase of $30.7 million, or 61 percent, from $50.6 million in
the fourth quarter of 2008. Pre-tax profit from continuing
operations in the fourth quarter was $14.1 million compared to $1.8
million in the prior year quarter.
Revenues from principal transactions and commissions were $50.9
million in the fourth quarter of 2009, an increase of $8.4 million,
or 20 percent, compared to the fourth quarter of 2008, due to
increased revenues in the Broadpoint Descap division of $12.9
million, which was partially offset by a decrease in the Debt
Capital Markets division of $4.4 million. Investment Banking
revenues increased $12.8 million over the fourth quarter of 2008 to
$15.5 million, primarily due to an increase in advisory fees.
Investment gains of $2.0 million increased $2.7 million over the
fourth quarter of 2008 due to an increase in the value of the
Company’s investment in the FATV fund. Net interest income
increased by $7.2 million over the fourth quarter of 2008 to $11.2
million in the fourth quarter of 2009, primarily due to coupon
interest generated on higher inventory levels at Broadpoint Descap.
Fees and other revenues of $1.6 million decreased by $0.5 million
compared to the fourth quarter of 2008, primarily due to a decrease
in payments received for equity research.
Non-interest expenses for the fourth quarter of 2009 of $67.1
million increased $18.4 million, or 38 percent, compared to $48.7
million in the fourth quarter of 2008. In the fourth quarter of
2009, compensation and benefits expense was $53.7 million, an
increase of 34 percent over the prior year quarter, primarily due
to an increase in net revenues of 61 percent. Clearing, settlement
and brokerage costs were $1.3 million, an increase of 45 percent
compared to the prior year quarter due to increased activity in the
Broadpoint Descap division. Communications and data processing
expense of $2.8 million increased by $0.9 million compared to the
fourth quarter of 2008 due to increased business activity in the
Broadpoint Descap division. Occupancy and depreciation expense
increased $0.9 million, or 67 percent, over the fourth quarter of
2008 to $2.3 million due to the leasing of additional office space.
Selling expense increased $1.3 million, or 199 percent, over the
fourth quarter of 2008 to $2.0 million due to an increase in sales
activity. Other expenses increased $1.3 million, or 35 percent,
over the fourth quarter of 2008 to $4.9 million in the fourth
quarter of 2009, primarily due to amortization of intangibles
related to the Gleacher acquisition and the implementation of a new
SIPC assessment fee.
Overview of Financial Results for the Year Ended December
31, 2009 and December 31, 2008
(In thousands except per share
amounts)
(Unaudited Condensed Consolidated
Statements of Operations)
Years Ended December 31,
2009 2008 Revenues: Principal transactions $ 230,011
$ 97,032 Commissions 19,745 6,529 Investment banking 46,156 16,696
Investment gains (losses) 5,698 (1,115 ) Interest income 49,439
21,946 Fees and other 6,368 3,925
Total revenues 357,417 145,013 Interest expense
15,572 10,712 Net revenues
341,845 134,301 Expenses (excluding
interest): Compensation and benefits* 235,798 111,678 Clearing,
settlement and brokerage 4,631 2,794 Communications and data
processing 10,509 9,245 Occupancy and depreciation 8,381 6,259
Selling 5,499 3,099 Restructuring - 4,315 Other
15,482 11,717 Total expenses (excluding
interest) 280,300 149,107 Profit
(loss) before income taxes 61,545
(14,806 ) Income tax expense 6,220
2,424 Profit (loss) from continuing operations 55,325
(17,230 ) Profit (loss) from discontinued operations, net of taxes
28 (132 ) Net profit (loss) $
55,353 $ (17,362 )
Per share data:
Basic earnings: Continuing operations $ 0.57 $ (0.25 ) Discontinued
operations - - Net profit (loss)
$ 0.57 $ (0.25 ) Diluted earnings: Continuing
operations $ 0.53 $ (0.25 ) Discontinued operations -
- Net profit (loss) $ 0.53 $
(0.25 ) Weighted average common and common
equivalent shares outstanding:
Basic 96,834 69,296 Diluted 104,233
69,296
*Compensation and benefits
detail:
Salary, bonus and benefits $ 204,630 $ 95,906 Earnout associated
with BNY transaction 17,194 7,380 Employee stock-based compensation
13,974 8,392 Total $
235,798 $ 111,678
Discussion of operating results for the year ended December
31, 2009 compared to the year ended December 31, 2008
For the year ended December 31, 2009 net revenues from
continuing operations were $341.8 million, an increase of $207.5
million, or 155 percent, from $134.3 million for the year ended
December 31, 2008. The Company reported a pre-tax profit from
continuing operations of $61.5 million for the year ended December
31, 2009 compared to a pre-tax loss of $14.8 million for the year
ended December 31, 2008.
Revenues from principal transactions and commissions for the
year ended December 31, 2009 increased $146.2 million, or 141
percent, to $249.8 million compared to the year ended December 31,
2008 due to increased revenues in the Broadpoint Descap division of
$76.4 million, the Debt Capital Markets division, which commenced
operations in March 2008, of $59.3 million, and the Equities
division of $10.6 million. Investment Banking revenues increased
$29.5 million over the prior year to $46.2 million due to an
increase in advisory fees. Investment gains of $5.7 million
increased $6.8 million over the prior year due to an increase in
the value of the Company’s investment in the FATV fund. Net
interest income increased by $22.6 million over the prior year to
$33.9 million, primarily due to coupon interest generated on higher
inventory levels at Broadpoint Descap. Fees and other revenues of
$6.4 million increased by $2.4 million over the prior year,
primarily due to an increase in payments received for equity
research in our Equity division.
Non-interest expenses for the year ended December 31, 2009 of
$280.3 million increased $131.2 million, or 88 percent, compared to
$149.1 million for the year ended December 31, 2008. Compensation
and benefits expense was $235.8 million, an increase of 111 percent
over the prior year due to an increase in net revenues of 155
percent and an increase in headcount. Clearing, settlement and
brokerage costs were $4.6 million, an increase of 66 percent,
compared to the prior year due to the addition of the Debt Capital
Markets division and increased volumes at the Broadpoint Descap
division. Communications and data processing expense of $10.5
million increased by $1.3 million over the prior year due to the
addition of the Debt Capital Markets division and an increase in
activity and headcount in the Broadpoint Descap division. Occupancy
and depreciation expense increased $2.1 million, or 34 percent,
over the prior year to $8.4 million due to the leasing of
additional office space. Selling expense increased $2.4 million, or
77 percent, over the prior year to $5.5 million, primarily due to
an increase in sales activity. The Company’s restructuring was
completed at the end of the third quarter of 2008 and as a result
no restructuring charges were incurred during 2009, compared to the
$4.3 million in restructuring charges incurred in 2008. Other
expenses increased $3.8 million, or 32 percent, over the prior year
to $15.5 million due to costs associated with the Gleacher
acquisition, the amortization of intangibles related to the Amtech
and Gleacher acquisitions and the implementation of a new SIPC
assessment fee.
Condensed Consolidated Statements of Financial
Condition (In thousands except per share and share amounts)
(Unaudited Consolidated Statements of Financial Condition)
December 31, December 31,
As of 2009 2008 Assets Cash and cash equivalents $
24,997 $ 7,377 Cash segregated for regulatory purposes 100 470
Receivables from: Brokers, dealers and clearing agencies 19,797
3,465 Others 16,425 4,722 Securities owned, at fair value 979,701
618,822 Investments, at fair value 19,326 15,398 Office equipment
and leasehold improvements, net 3,069 1,691 Goodwill 105,694 23,283
Intangible assets 19,263 8,239 Other assets 25,132
10,804 Total Assets $ 1,213,504
$ 694,271 Liabilities Payables to:
Brokers, dealers and clearing agencies $ 690,815 $ 511,827 Others
14,180 2,788 Securities sold, but not yet purchased, at fair value
72,988 15,228 Accounts payable 2,202 2,172 Accrued compensation
70,728 31,939 Accrued expenses and income taxes payable 7,989 6,178
Mandatorily redeemable preferred stock 24,419
24,187 Total Liabilities 883,321
594,319 Commitments and Contingencies
Subordinated debt 1,197 1,662
Shareholders’ Equity Preferred stock; $1.00 par value;
authorized 1,500,000 shares; issued 1,000,000 (Mandatorily
Redeemable) Common stock; $.01 par value; authorized 200,000,000
and 100,000,000 shares, respectively; issued 125,056,247 and
81,556,246 shares, respectively; and outstanding 124,506,292 and
79,829,492 shares, respectively 1,251 815 Additional paid-in
capital 410,617 236,824 Deferred compensation 534 954 Accumulated
deficit (82,709 ) (138,062 ) Treasury stock, at cost (549,955
shares and 1,726,754 shares, respectively) (707 )
(2,241 ) Total Shareholders’ Equity
328,986 98,290 Total Liabilities and
Shareholders’ Equity $ 1,213,504 $ 694,271
Income Tax Note
The effective tax rate for the three-months ended December 31,
2009 was 27.4 percent. The effective rate was impacted by a
re-measurement of our deferred tax assets, partially offset by a
change in estimate of our state tax rate and other items.
The effective tax rate for the year ended December 31, 2009 was
10.1 percent. This rate reflects a net tax benefit of $23.0 million
primarily related to our release of the deferred tax valuation
allowance during the year, partially offset by a re-measurement of
certain deferred tax assets and provision to return adjustments.
Excluding these items, the effective rate for the year would have
been 47.5 percent. The effective rate for the year-ended December
31, 2009 was also impacted by a change in estimate of our state tax
rate and other items.
Non-GAAP Financial Measures
Revenue per employee, stated previously in this press release,
may be viewed as a non-GAAP financial measure. We calculate this
number by dividing our net revenue for the year by the average
number of employees during the period. Our net revenue per average
number of employees during 2009 calculated using our net revenues
of $341.8 million, and an average of 295 employees, was $1.159
million.
Conference Call Information
The Company will hold a conference call today, January, 28 at
10:00 A.M. (EST). This call will be webcast and can be accessed on
the Investor Relations portion of the Company’s website at
www.bpsg.com, as well as being distributed through Thomson
StreetEvents Network. Individual investors can listen to the call
at www.earnings.com, Thomson’s individual investor portal, powered
by StreetEvents. Institutional investors can access the call via
Thomson StreetEvents (www.streetevents.com), a password protected
event management site. To participate on the call, please dial
888.680.0865 for domestic calls or 617.213.4853 for international
calls, participant passcode 82645480 or request the
Broadpoint.Gleacher earnings call. For those who cannot listen to
the live broadcast, a recording of the call will be available for
seven days following the call by dialing 888.286.8010 for domestic
calls or 617.801.6888 for international calls, participant passcode
57339724.
About Broadpoint.Gleacher
Broadpoint Gleacher Securities Group, Inc. (NASDAQ: BPSG) is an
independent investment bank that provides corporations and
institutional investors with strategic, research-based investment
opportunities, capital raising, and financial advisory services,
including merger and acquisition, restructuring, recapitalization
and strategic alternative analysis services. The Company offers a
diverse range of products through the Debt Capital Markets,
Investment Banking and Broadpoint DESCAP divisions of Broadpoint
Capital, Inc., its Equity Capital Markets subsidiary, Broadpoint
AmTech, and FA Technology Ventures Inc., its venture capital
subsidiary. For more information, please visit www.bpsg.com.
Forward Looking Statements
This press release contains "forward-looking statements." These
statements are not historical facts but instead represent the
Company's belief regarding future events, many of which, by their
nature, are inherently uncertain and outside of the Company's
control. The Company's forward-looking statements are subject to
various risks and uncertainties, including the conditions of the
securities markets, generally, and acceptance of the Company's
services within those markets and other risks and factors
identified from time to time in the Company's filings with the
Securities and Exchange Commission. It is possible that the
Company's actual results and financial condition may differ,
possibly materially, from the anticipated results and financial
condition indicated in its forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking
statements. The Company does not undertake to update any of its
forward-looking statements.
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