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| FBR Announces Third Quarter 2011 Financial Results |
ARLINGTON, Va., Oct 26, 2011 (GlobeNewswire via COMTEX) -- FBR & Co. (Nasdaq:FBRC) ("FBR" or the "Company"), a leading investment bank serving the middle market, today reported a net after-tax loss of $26.1 million, or $0.43 per share, for the quarter ended September 30, 2011. These results compare to a net after-tax loss of $6.6 million, or $0.10 per share, in the third quarter 2010 and a net after-tax loss of $2.7 million, or $0.04 per share in the second quarter 2011. For the first nine months of 2011, the after-tax loss was $30.8 million compared to a $40.6 million after-tax loss for the first nine months of 2010. The Company's pre-tax loss for the third quarter 2011 was $25.8 million compared to a pre-tax loss of $7.6 million in the third quarter 2010 and pre-tax loss of $2.9 million in the second quarter 2011. Third quarter 2011 net revenue was $20.1 million compared to $57.4 million for the third quarter 2010 and $49.2 million in the second quarter 2011. Net revenue for the third quarter by business area was as follows:
-- $5.0 million in investment banking generated from seven transactions
reflecting a significant industry-wide decline in capital raising
activity. This compares to $29.8 million in the third quarter 2010 and
$30.0 million in the prior quarter. $4.4 million of third quarter 2011
banking revenue was generated from advisory services.
-- $19.4 million in institutional brokerage, down from $23.4 million and
$21.1 million in the third quarter 2010 and the second quarter 2011,
respectively. Equities, including options, remained flat quarter over
quarter at $20.9 million compared to $20.6 million in the third quarter
2010 and $20.7 million in the prior quarter.
-- $3.6 million in asset management, compared to $3.3 million in the third
quarter 2010 and $3.9 million in the second quarter of this year. Assets
under management were $1.36 billion at the end of the third quarter 2011
compared to $1.45 billion at the end of the third quarter 2010 and $1.64
billion as of June 30, 2011.
-- In addition, the Company reported a $9.3 million net investment loss
which included unrealized mark-to-market losses of $6.6 million in
merchant banking portfolio holdings and other investment positions.
For the third quarter of 2011, total non-interest expenses were $45.9 million compared to $65.0 million in the third quarter 2010 and $52.1 million in the second quarter 2011. Non-compensation fixed expenses in the third quarter of 2011 totaled $14.8 million, compared to $17.2 million in third quarter of 2010 and $16.5 million in the second quarter of 2011. The Company ended the quarter with 426 employees compared to 501 at the beginning of the year. Through the previously announced Self-Tender Offer completed in August, the Company repurchased 6.1 million shares at a purchase price of $2.55 per share. As of September 30, 2011, shareholders' equity totaled $243.3 million and the Company's book value per share was $4.31 compared to $4.57 at the end of the prior quarter and $4.60 at the end of 2010. "Based on our expectations that market conditions will continue to be volatile for some time, we have recently taken steps that will result in an over 35% reduction in our fixed costs," said Richard J. Hendrix, President and Chief Executive Officer of FBR. "This restructuring positions the franchise to more consistently deliver profitability and long-term value for shareholders and employees. Importantly, it also fully preserves the most valuable part of our franchise -- the talent and ability to execute complex lead-managed equity offerings targeted to institutional investors." Investors who wish to listen to the earnings call at 9:00 A.M. U.S. EDT, Thursday, October 27, 2011, may do so via the Web or conference call at: Conference call dial-in number (toll-free): 877.303.6433 Conference call dial-in number (local): 224.357.2198 Conference call code: 12303330 Webcast link: http://investor.shareholder.com/media/eventdetail.cfm?eventid=99384&CompanyID=FBCM&e=1&mediaKey=A638ADF35B185A230531194DBE6AEB85 Replays of the earnings call will be available via webcast following the call. FBR & Co. (Nasdaq:FBRC) ("FBR") 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, 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 and in London. 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 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. 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, 2010; 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 Nine months ended
September 30, September 30,
2011 2010 2011 2010
----------- ---------- ----------- -----------
REVENUES:
Investment banking:
Capital raising $ 598 $ 23,118 $ 38,633 $ 68,250
Advisory 4,434 6,671 12,968 13,127
Institutional brokerage:
Principal transactions 3,564 5,595 14,539 16,143
Agency commissions 15,816 17,850 49,024 59,116
Asset management fees 3,552 3,346 11,447 10,489
Net investment (loss) income (9,336) 47 (10,952) 95
Interest, dividends & other 1,506 767 3,755 4,097
----------- ---------- ----------- -----------
Total revenues 20,134 57,394 119,414 171,317
NON-INTEREST EXPENSES:
Compensation and benefits 25,563 41,433 84,074 135,468
Professional services 2,772 3,869 9,617 15,522
Business development 2,315 2,809 9,547 10,581
Clearing and brokerage fees 3,555 2,824 9,543 9,891
Occupancy and equipment 4,503 5,905 15,427 18,526
Communications 4,247 5,082 12,700 15,220
Other operating expenses 2,942 3,065 9,177 10,398
----------- ---------- ----------- -----------
Total non-interest expenses 45,897 64,987 150,085 215,606
----------- ---------- ----------- -----------
Loss before income taxes (25,763) (7,593) (30,671) (44,289)
Income tax provision
(benefit) 373 (982) 97 (3,649)
----------- ---------- ----------- -----------
Net loss $ (26,136) $ (6,611) $ (30,768) $ (40,640)
=========== ========== =========== ===========
Basic and diluted loss per
share $ (0.43) $ (0.10) $ (0.49) $ (0.64)
=========== ========== =========== ===========
Weighted average shares -
basic and diluted 60,762 63,547 62,323 63,508
=========== ========== =========== ===========
FBR & CO.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
September December
30, 31,
ASSETS 2011 2010
----------- -----------
Cash and cash equivalents $ 120,814 $ 236,077
Receivables:
Due from brokers, dealers and
clearing organizations 13,086 15,463
Customers 3,975 10,280
Other 7,021 11,635
Financial instruments owned, at
fair value 134,009 86,400
Other investments, at cost 25,744 45,224
Goodwill 5,882 5,882
Intangible assets, net 2,237 2,583
Furniture, equipment and
leasehold improvements, net 6,922 9,741
Prepaid expenses and other
assets 9,112 8,182
----------- -----------
Total assets $ 328,802 $ 431,467
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Securities sold but not yet
purchased, at fair value $ 49,974 $ 55,444
Accrued compensation and
benefits 15,646 53,305
Accounts payable, accrued
expenses and other liabilities 14,564 23,904
Due to brokers, dealers and
clearing organizations 5,299 7,323
----------- -----------
Total liabilities 85,483 139,976
----------- -----------
Shareholders' equity:
Common stock 55 62
Additional paid-in capital 411,476 423,935
Restricted stock units 29,299 34,239
Accumulated other comprehensive
loss (51) (53)
Accumulated deficit (197,460) (166,692)
----------- -----------
Total shareholders' equity 243,319 291,491
----------- -----------
Total liabilities and
shareholders' equity $ 328,802 $ 431,467
=========== ===========
Book Value per Share $4.31 $4.60
Shares Outstanding (in
thousands) 56,452 63,354
FBR & CO.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands)
(Unaudited)
Q-3 11 Q-2 11 Q-1 11 Q-4 10 Q-3 10
----------- ---------- ---------- ---------- ----------
Revenues, net of interest
expense $ 20,134 $ 49,182 $ 50,098 $ 75,270 $ 57,394
Non-interest expenses:
Variable 10,272 14,974 15,860 29,683 21,329
Fixed 35,625 37,146 36,208 42,960 43,658
----------- ---------- ---------- ---------- ----------
(Loss) income before income
taxes (25,763) (2,938) (1,970) 2,627 (7,593)
Income tax provision
(benefit) 373 (211) (65) (455) (982)
----------- ---------- ---------- ---------- ----------
Net (loss) income $ (26,136) $ (2,727) $ (1,905) $ 3,082 $ (6,611)
=========== ========== ========== ========== ==========
Fixed expenses $ 35,625 $ 37,146 $ 36,208 $ 42,960 $ 43,658
Less: Non-cash expenses1 1,927 2,459 2,352 4,255 4,766
Corporate transaction
costs2 -- 986 -- 1,302 --
Severance 442 -- 806 549 646
----------- ---------- ---------- ---------- ----------
Core fixed costs3 $ 33,256 $ 33,701 $ 33,050 $ 36,854 $ 38,246
=========== ========== ========== ========== ==========
Statistical Data
Net revenues per employee
(annualized) $ 189 $ 444 $ 431 $ 601 $ 459
=========== ========== ========== ========== ==========
Employee count 426 443 465 501 500
=========== ========== ========== ========== ==========
Net assets under management
(in millions)
Mutual funds $ 1,358.9 $ 1,635.3 $ 1,689.4 $ 1,582.7 $ 1,445.4
Hedge and private equity
funds 3.7 4.1 4.2 4.3 6.0
----------- ---------- ---------- ---------- ----------
Total $ 1,362.6 $ 1,639.4 $ 1,693.6 $ 1,587.0 $ 1,451.4
=========== ========== ========== ========== ==========
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.
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.
This news release was distributed by GlobeNewswire, www.globenewswire.com SOURCE: FBR & Co. CONTACT: Media: Shannon Small 703.469.1190 ssmall@fbr.com Investors: Bradley J. Wright 703.312.9678 fbrcir@fbr.com |
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