FBR Reports Third Quarter Results
ARLINGTON, Va., Oct 23, 2012 (Menafn - GlobeNewswire via COMTEX) --FBR & Co. FBRC ("FBR" or the "Company"), a leading investment bank serving the middle market, today reported a net after-tax loss of 3.4 million, or 0.07 per share, for the third quarter of 2012 compared to a net after-tax loss of 26.1 million, or 0.43 per share, in the third quarter of 2011, and net after-tax earnings of 0.5 million or 0.01 per share in the second quarter of 2012. For the first nine months of 2012, the Company reported a net after-tax loss of 2.4 million compared to a net after-tax loss of 30.8 million for the first nine months of 2011.
Third quarter 2012 revenue from continuing operations was 23.9 million compared to 16.7 million in the third quarter of 2011 and 33.7 million for the second quarter of 2012.
As previously announced, the Company has entered into a definitive agreement to sell the assets related to the management of the entire family of FBR Funds. As a result, we now report asset management as a discontinued operation. For the third quarter of 2012, the Company's net after-tax loss from continuing operations was 4.3 million, or 0.09 per share, compared to a net after-tax loss of 26.4 million, or 0.43 per share, in the third quarter of 2011, and net after tax earnings of 0.3 million, or 0.01 per share for the second quarter of 2012. The Company's net after-tax earnings from its discontinued operations were 1.0 million for the third quarter of 2012 compared to net after-tax earnings of 0.3 million in the third quarter of 2011, and 0.2 million for the second quarter of 2012.
Third quarter 2012 total expenses from continuing operations were 29.5 million, compared to 42.7 million in the third quarter of 2011 and 33.4 million in the second quarter of 2012. Non-compensation fixed expenses from continuing operations in the third quarter of 2012 totaled 10.9 million, compared to 13.9 million in the third quarter of 2011 and 10.8 million in the second quarter of 2012.
Third Quarter Overview
--Investment banking revenue was 10.7 million compared to 5.0 million in
the third quarter of 2011 and 19.0 million in the second quarter of
2012. The third quarter's revenue was generated from 17 transactions
including 12 capital raises and 5 financial advisory engagements.
--Institutional brokerage generated net revenue of 11.3 million compared
to 19.4 million in the third quarter of 2011 and 12.3 million in the
second quarter of 2012.
--The Company recognized net investment income of 1.2 million compared to
a net investment loss of 9.2 million in the third quarter of 2011 and
net investment income of 1.1 million in the second quarter of 2012.
--The Company ended the third quarter with 247 employees in its continuing
operations compared to 408 at the end of the third quarter of 2011 and
259 at the end of the second quarter of 2012.
--The Company's results from discontinued operations reflect an increase
in mutual fund assets under management from 2.0 billion as of June 30,
2012 to 2.2 billion as of September 30, 2012. The shareholder vote to
approve the FBR Funds transaction is scheduled to be held on October
25th. Based on the current assets under management, the Company expects
to recognize a gain of approximately 25 million in the fourth quarter
upon the closing of the sale.
The Company periodically repurchased shares of its common stock during the quarter. During the third quarter, the Company repurchased approximately 174,000 shares of its common stock at an average purchase price of 3.07 per share. The Company continues to have Board authorization to repurchase up to 6.0 million shares. The total number of shares outstanding as of September 30, 2012 was 50.1 million. Shareholders' equity on September 30, 2012 was 207.2 million, of which 129.9 million was in cash. Book value per share was 4.14 on September 30, 2012.
"The third quarter was challenging as volume pressures persisted in our trading businesses and we did not execute any large investment banking transactions, a key part of our revenue mix," said Richard J. Hendrix, Chairman and Chief Executive Officer of FBR. "Expenses, however, remained at our new lower run rate and we anticipate a return to profitability in the fourth quarter."
Investors wishing to listen to the earnings call at 9:00 A.M. U.S. EDT, Wednesday, October 24, 2012, may do so via the Web or conference call at:
Webcast link: http://investor.shareholder.com/media/eventdetail.cfm?eventid=119317&CompanyID=FBCM&e=1&mediaKey=A638ADF35B185A230531194DBE6AEB85
Toll-free: 877.303.6433International: 224.357.2198Access code: 35818906
Replays of the earnings call will be available via webcast following the call.
FBR & Co. 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 EndedNine Months Ended
September 30,September 30,
----------------------------------------------
2012201120122011
------------------------------------------
REVENUES:
Investment banking:
Capital raising 8,552 598 39,567 38,633
Advisory2,1914,4346,31512,968
Institutional brokerage:
Principal transactions4,0963,56414,35114,539
Agency commissions7,16915,81625,28649,024
Net investment income (loss)1,231(9,249)4,222(10,879)
Interest, dividends & other6501,4942,8253,743
------------------------------------------
Total revenues23,88916,65792,566108,028
EXPENSES:
Compensation and benefits14,82624,08049,55479,040
Professional services2,7032,6019,2949,238
Business development1,6442,0416,6488,524
Clearing and brokerage fees1,7463,5556,0309,543
Occupancy and equipment4,1424,29811,68314,759
Communications2,9564,0999,56412,268
Other operating expenses1,4502,0155,0766,222
------------------------------------------
Total expenses29,46742,68997,849139,594
------------------------------------------
Loss from continuing
operations before income
taxes(5,578)(26,032)(5,283)(31,566)
Income tax (benefit)
provision(1,262)387(1,240)97
------------------------------------------
Loss from continuing
operations, net of taxes(4,316)(26,419)(4,043)(31,663)
Income from discontinued
operations, net of taxes9592831,615895
------------------------------------------
Net loss (3,357) (26,136) (2,428) (30,768)
==========================================
Basic earnings per share:
Loss from continuing
operations, net of taxes (0.09) (0.43) (0.07) (0.51)
Income from discontinued
operations, net of taxes0.02--0.030.02
------------------------------------------
Net loss (0.07) (0.43) (0.04) (0.49)
==========================================
Diluted earnings per share:
Loss from continuing
operations, net of taxes (0.09) (0.43) (0.07) (0.51)
Income from discontinued
operations, net of taxes0.02--0.030.02
------------------------------------------
Net loss (0.07) (0.43) (0.04) (0.49)
==========================================
Weighted average shares -
basic50,18160,76254,07562,323
==========================================
Weighted average shares -
diluted50,18160,76254,07562,323
==========================================
FBR & CO.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
SeptemberDecember
30,31,
ASSETS20122011
----------------------
Cash and cash equivalents 129,893 135,792
Receivables:
Due from brokers, dealers and
clearing organizations2,5716,048
Customers5,4973,937
Other1,5756,854
Financial instruments owned, at
fair value121,719100,634
Other investments, at cost8,38825,744
Intangible assets, net1,8902,121
Furniture, equipment and
leasehold improvements, net4,4936,162
Prepaid expenses and other
assets7,95010,791
----------------------
Total assets 283,976 298,083
======================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Securities sold but not yet
purchased, at fair value 49,937 35,496
Accrued compensation and
benefits8,09515,760
Accounts payable, accrued
expenses and other liabilities14,19015,280
Due to brokers, dealers and
clearing organizations4,5106,250
----------------------
Total liabilities76,73272,786
----------------------
Shareholders' equity:
Common stock4955
Additional paid-in capital402,054412,551
Restricted stock units24,28729,013
Accumulated other comprehensive
(loss) income(377)19
Accumulated deficit(218,769)(216,341)
----------------------
Total shareholders' equity207,244225,297
----------------------
Total liabilities and
shareholders' equity 283,976 298,083
======================
Book Value per Share4.143.99
Shares Outstanding (in
thousands)50,11456,490
FBR & CO.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands)
(Unaudited)
Q-3 12Q-2 12Q-1 12Q-4 11Q-3 11
----------------------------------------------------
Revenues 23,889 33,732 34,945 24,199 16,657
Expenses:
Variable5,2638,7918,0185,0788,697
Fixed24,20424,61926,95433,00133,992
Impairment of goodwill------5,882--
----------------------------------------------------
(Loss) income from continuing
operations before income taxes(5,578)322(27)(19,762)(26,032)
Income tax (benefit) provision(1,262)157(327)387
----------------------------------------------------
(Loss) income from continuing
operations, net of taxes(4,316)307(34)(19,435)(26,419)
Income from discontinued
operations, net of taxes959184472554283
----------------------------------------------------
Net (loss) income (3,357) 491 438 (18,881) (26,136)
====================================================
Fixed expenses from continuing
operations 24,204 24,619 26,954 33,001 33,992
Less: Non-cash expenses11,9481,8041,8221,1951,587
Corporate transaction costs2646--429567--
Severance61--383,487442
----------------------------------------------------
Core fixed costs from continuing
operations3 21,549 22,815 24,665 27,752 31,963
====================================================
Statistical Data (Continuing
Operations)
Revenues per employee (annualized) 387 521 529 348 163
====================================================
Employee count247259264278408
====================================================
Net assets under management (in
millions)
Mutual funds 2,184.5 2,012.8 1,937.3 1,684.8 1,358.9
1Non-cash expenses include compensation costs associated with stock-based awards and
amortization of intangible assets.
2Corporate transaction costs include costs related to reductions in physical space and
restructuring costs.
3Core 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.
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SOURCE: FBR & Co.
(Logo:http://media.primezone.com/cache/8973/int/7132.jpg)
CONTACT: Media: Shannon Small
at 703.469.1190 or ssmall@fbr.com
Investors:Bradley J. Wright
at 703.312.9678 or bwright@fbr.com
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