Declares $0.20 per Share
Quarterly Cash Dividend
Financial Highlights for the three months
ended September 30, 2015:
- Net revenues of $25.6 million
- Net loss of $3.4 million, or $0.43 per share
- On September 1, 2015, completed the acquisition of MLV&
Co.
- Repurchased 483 thousand shares at a total cost of $10.9
million
- On October 19, 2015, FBR's Board approved an increase in the
Company's available repurchase authorization to 1.0 million
shares
FBR & Co. (NASDAQ:FBRC) ("FBR" or the "Company"), a leading
investment bank serving the middle market, today reported a net
loss of $3.4 million, or $0.43 per share, for the third quarter of
2015, compared to net income of $3.5 million, or $0.31 per diluted
share, for the third quarter of 2014 and net income of $2.9
million, or $0.32 per diluted share, for the second quarter of
2015. For the first nine months of 2015, FBR reported a net loss of
$3.1 million, or $0.37 per share, compared to net income of $16.1
million, or $1.36 per diluted share, for the same period in 2014.
"The market for new issue equities continued to be
challenging in the third quarter particularly within some of our
key industry sectors. Additionally, increased market
volatility added to the challenging conditions leading to a
difficult revenue quarter," said Richard J. Hendrix, chairman and
chief executive officer. "As we navigate this weak
environment, we continue to focus on our strategic efforts - adding
depth to our healthcare business, strengthening our equity capital
markets presence through the addition of a market-leading ATM
product offering, and continuing our accretive share buyback
program."
Pre-tax operating loss for the third quarter of
2015 was $6.3 million, compared to operating income of $3.3 million
for the third quarter of 2014 and $4.4 million for the second
quarter of 2015. Third quarter 2015 revenues were $25.6 million,
compared to $42.1 million for the third quarter of 2014 and $44.3
million for the second quarter of 2015.
For the first nine months of 2015, the Company's
pre-tax operating loss was $5.8 million on revenue of $96.9
million, compared to pre-tax operating income of $21.3 million on
revenue of $153.6 million for the same period in 2014.
Composition of Revenues
Investment Banking
Investment banking revenue was $14.8 million for
the third quarter of 2015, compared to $29.3 million for the third
quarter of 2014 and $29.7 million for the second quarter of
2015. Third quarter revenue was generated by 9 client
engagements, representing $1.2 billion in transaction value. For
the first nine months of 2015, investment banking revenue was $57.2
million, compared to $101.7 million for the same period of 2014.
The decline in the first nine month's revenue versus the prior year
primarily reflects the completion of fewer sole-managed private
transactions.
Institutional Brokerage
Net revenue generated in institutional brokerage,
inclusive of securities lending, was $13.2 million for the third
quarter of 2015, compared to $13.1 million for the third quarter of
2014 and $14.3 million for the second quarter of 2015. For the
first nine months of 2015, institutional brokerage revenue was
$41.2 million, compared to $42.9 million for the same period in
2014.
Investment Income, Net Interest Income and
Dividends
The Company recognized an investment loss,
including interest and dividends, of $2.4 million for the third
quarter of 2015, compared to a loss of $0.3 million for the third
quarter of 2014 and income of $0.3 million for the second quarter
of 2015. For the first nine months of 2015, investment loss,
including interest and dividends was $1.5 million, compared to
investment income of $9.0 million for the same period in
2014.
Expenses
Non-compensation fixed expenses for the third
quarter 2015 totaled $10.6 million, including a one-time expense of
$0.7 million related to the acquisition of MLV& Co., compared
to $10.0 million for the third quarter of 2014 and $9.6 million for
the second quarter of 2015.
Compensation and benefits expense for the third
quarter 2015 was $17.6 million, compared to $23.8 million for the
third quarter of 2014 and $24.3 million for the second quarter of
2015. The compensation-to-net revenue ratio was 69 percent in the
third quarter and 62 percent for the first nine months of
2015. This compares to 56 percent and 57 percent in comparable
periods in 2014.
Employees
At September 30, 2015, the Company had 304
full-time employees, compared to 293 at June 30, 2015 and 307
at September 30, 2014.
Share Repurchase Activity
During the third quarter, the Company repurchased
483 thousand shares of its common stock at an average price of
$22.51 per share. For the first nine months of 2015, FBR has
repurchased 1.6 million shares at an average price per share of
$23.84 for a total of $37.5 million.
Earlier this week, the Board approved an increase
in the Company's available repurchase authorization to a total of
1.0 million shares. This authorization represents approximately 14
percent of the Company's total outstanding shares. Since 2010, FBR
has repurchased 11.1 million shares returning capital of over $217
million to shareholders.
Quarterly Dividend
The Board of Directors also declared a quarterly
cash dividend of $0.20 per common share to be paid November 27,
2015 to all shareholders of record as of the close of business on
November 2, 2015. It is the Company's expectation that it will
maintain a program of paying dividends on a quarterly basis,
subject to Board approval.
Balance Sheet
As of September 30, 2015, FBR continues to maintain
an unlevered and transparent balance sheet, with cash and cash
equivalents of $64.2 million, compared to $71.2 million as of June
30, 2015.
Shareholders' equity as of September 30, 2015 was
$223 million, and tangible book value per share was $28.47 based on
7.627 million shares outstanding, compared to shareholders' equity
of $235 million, and tangible book value per share of $28.52 as of
June 30, 2015.
Conference Call
Investors wishing to listen to the earnings call at
9:00 A.M. U.S. EDT, Wednesday, October 21, 2015, may do so via the
Web or conference call at:
Webcast
link: http://edge.media-server.com/m/p/n992nwcu
Conference call dial-in number (domestic,
toll-free): 855.425.4204
Conference call dial-in number (international):
484.756.4245
Access code: 48797153
About FBR
FBR & Co. (Nasdaq:FBRC) provides
investment banking, merger and acquisition advisory, institutional
brokerage, and research services through its subsidiaries FBR
Capital Markets & Co. and MLV & Co. FBR focuses capital and
financial expertise on the following industry sectors: consumer;
energy & natural resources; financial institutions;
healthcare; insurance; industrials; real estate; and technology,
media & telecom. FBR is headquartered in the Washington,
D.C. metropolitan area with offices throughout the United States.
For more information, please visit www.fbr.com.
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 risks associated with
merchant banking investments, the realization of gains and losses
on principal investments, available technologies, competition for
business and personnel, and general economic, political and market
conditions. Financial results may fluctuate substantially from
quarter-to-quarter depending on the number, size and timing of
completed transactions. We have experienced, and expect to
experience in the future, significant variations in our revenues
and results of operations and, as a result, are unlikely to achieve
steady and predictable earnings on a quarterly basis. 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, 2014; 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 follows.
FBR &
CO. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(Dollars in thousands, except per
share amounts) |
(Unaudited) |
|
|
|
|
|
|
Quarter Ended
September 30, |
Nine Months Ended
September 30, |
|
|
|
|
|
|
2015 |
2014 |
2015 |
2014 |
REVENUES: |
|
|
|
|
Investment banking: |
|
|
|
|
Capital raising |
$ 14,626 |
$ 27,137 |
$ 51,737 |
$ 95,765 |
Advisory |
150 |
2,152 |
5,442 |
5,947 |
Institutional brokerage |
11,176 |
11,946 |
35,860 |
41,680 |
Net investment income |
777 |
3,075 |
7,806 |
16,000 |
Interest |
8,394 |
4,861 |
23,387 |
5,415 |
Dividends & other |
168 |
226 |
631 |
806 |
Total revenues |
35,291 |
49,397 |
124,863 |
165,613 |
Interest expense |
9,711 |
7,300 |
27,932 |
12,060 |
Revenues, net of interest expense |
25,580 |
42,097 |
96,931 |
153,553 |
|
|
|
|
|
NON-INTEREST EXPENSES: |
|
|
|
|
Compensation and benefits |
17,604 |
23,771 |
59,835 |
87,141 |
Professional services |
2,835 |
3,663 |
9,647 |
11,025 |
Business development |
2,293 |
2,764 |
6,824 |
8,189 |
Clearing and brokerage fees |
1,438 |
1,155 |
3,997 |
3,516 |
Occupancy and equipment |
3,169 |
3,067 |
9,330 |
9,222 |
Communications |
2,532 |
2,873 |
8,119 |
8,621 |
Other operating expenses |
2,018 |
1,496 |
4,933 |
4,541 |
Total non-interest expenses |
31,889 |
38,789 |
102,685 |
132,255 |
|
|
|
|
|
(Loss) income before income taxes |
(6,309) |
3,308 |
(5,754) |
21,298 |
|
|
|
|
|
Income tax (benefit) provision |
(2,881) |
(193) |
(2,703) |
5,211 |
|
|
|
|
|
Net (loss) income |
$ (3,428) |
$ 3,501 |
$ (3,051) |
$ 16,087 |
|
|
|
|
|
Basic (loss) earnings per share |
$ (0.43) |
$ 0.34 |
$ (0.37) |
$ 1.51 |
Diluted (loss) earnings per share |
$ (0.43) |
$ 0.31 |
$ (0.37) |
$ 1.36 |
|
|
|
|
|
Weighted average shares - basic |
7,899 |
10,171 |
8,266 |
10,642 |
Weighted average shares - diluted |
7,899 |
11,419 |
8,266 |
11,798 |
Cash dividends per common share |
$ -- |
$ -- |
$ 0.20 |
$ -- |
|
|
FBR &
CO. |
CONSOLIDATED BALANCE
SHEETS |
(Dollars in thousands, except per
share amounts) |
(Unaudited) |
|
|
|
ASSETS |
September 30,
2015 |
December 31,
2014 |
|
|
|
Cash and cash equivalents |
$ 64,196 |
$ 108,962 |
Receivables: |
|
|
Securities borrowed |
760,190 |
594,674 |
Due from brokers, dealers and clearing
organizations |
89,256 |
94,489 |
Customers |
3,707 |
3,349 |
Other |
7,812 |
5,227 |
Financial instruments owned, at fair
value |
115,660 |
166,047 |
Other investments, at cost |
7,000 |
7,000 |
Goodwill and intangibles |
5,858 |
4,921 |
Furniture, equipment and leasehold
improvements, net |
15,427 |
15,388 |
Deferred tax assets, net of valuation
allowance |
31,654 |
28,648 |
Prepaid expenses and other assets |
5,161 |
6,392 |
Total assets |
$ 1,105,921 |
$ 1,035,097 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Liabilities: |
|
|
Securities loaned |
$ 759,364 |
$ 595,717 |
Securities sold but not yet purchased, at
fair value |
82,553 |
121,310 |
Accrued compensation and benefits |
19,587 |
34,571 |
Accounts payable, accrued expenses and other
liabilities |
21,451 |
23,093 |
Total liabilities |
882,955 |
774,691 |
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
Common stock |
7 |
8 |
Additional paid-in capital |
266,918 |
302,720 |
Restricted stock units |
35,811 |
34,353 |
Accumulated other comprehensive income |
-- |
44 |
Accumulated deficit |
(79,770) |
(76,719) |
Total shareholders' equity |
222,966 |
260,406 |
|
|
|
Total liabilities and
shareholders' equity |
$ 1,105,921 |
$ 1,035,097 |
|
|
|
|
|
|
Book Value per Share |
$29.23 |
$29.18 |
|
|
|
Tangible Book Value per
Share |
$28.47 |
$28.63 |
|
|
|
Shares Outstanding (in
thousands) |
7,627 |
8,923 |
|
|
FBR &
CO. |
Financial &
Statistical Supplement - Operating Results |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
Q-3 15 |
Q-2 15 |
Q-1 15 |
Q-4 14 |
Q-3 14 |
Revenues, net of interest expense |
$ 25,580 |
$ 44,256 |
$ 27,095 |
$ 28,572 |
$ 42,097 |
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
Variable |
5,712 |
17,094 |
5,414 |
4,560 |
13,214 |
Fixed |
26,178 |
22,764 |
25,524 |
27,950 |
25,575 |
|
|
|
|
|
|
Income (loss) before income taxes |
(6,309) |
4,398 |
(3,843) |
(3,938) |
3,308 |
Income tax provision (benefit) |
(2,881) |
1,499 |
(1,321) |
(4,870) |
(193) |
|
|
|
|
|
|
Net income (loss) |
$ (3,428) |
$ 2,899 |
$ (2,522) |
$ 932 |
$ 3,501 |
|
|
|
|
|
|
Return on equity (trailing twelve
months) |
-0.9% |
1.8% |
3.3% |
6.2% |
8.6% |
|
|
|
|
|
|
Fixed expenses |
$ 26,178 |
$ 22,764 |
$ 25,524 |
$ 27,950 |
$ 25,575 |
Less: Non-cash expenses1 |
2,373 |
1,134 |
2,398 |
2,593 |
2,406 |
Corporate transaction costs2 |
691 |
-- |
-- |
1,132 |
-- |
Core fixed costs3 |
$ 23,114 |
$ 21,630 |
$ 23,126 |
$ 24,225 |
$ 23,169 |
|
|
|
|
|
|
|
|
|
|
|
|
Statistical Data |
|
|
|
|
|
Revenues per employee (annualized) |
$ 337 |
$ 604 |
$ 374 |
$ 381 |
$ 548 |
|
|
|
|
|
|
Employee count |
304 |
293 |
290 |
300 |
307 |
|
|
|
|
|
|
|
|
|
|
|
|
1 Non-cash expenses include
compensation costs associated with stock-based awards and
amortization of intangibles. |
|
|
|
|
|
|
2 Corporate transaction
costs in Q3 2015 include non-recurring costs related to a business
combination and in Q4 2014 include non-recurring costs related to
moving into new office space. |
|
|
|
|
|
|
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 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 Hawkins
703.469.1190
shawkins@fbr.com
Investors:
Linda E. Eddy
703.312.9715
leddy@fbr.com
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