A summary of JMP Group’s operating results for the quarter and six months ended
Quarter Ended |
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Six Months Ended |
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(in thousands, except per share amounts) |
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Total net revenues |
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Net income/(loss) attributable to |
|
( |
( |
( |
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||||||
Net income/(loss) attributable to |
|
( |
( |
( |
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||||||
Operating net income/(loss) |
|
( |
( |
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Operating net income/(loss) per share |
|
( |
( |
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Book value per share |
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Adjusted book value per share |
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|
For more information about operating net income, including a reconciliation to net income, and adjusted book value per share, including a reconciliation to book value per share, see the section below titled “Non-GAAP Financial Measures.”
“Our second-quarter operating earnings of
“While lagging the equity markets, leveraged loan prices also improved during the second quarter, and defaults remained below the level we assumed when recording a large negative mark on our CLO securities in the first quarter. As a result, the increased fair value of our CLO securities added
“Looking ahead,
Segment Results of Operations
A summary of JMP Group’s operating net income per share by segment for the quarter and six months ended
Quarter Ended |
|
Six Months Ended |
||||||||||||
($ as shown) |
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|
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|
|
|||||
Broker-dealer |
|
( |
( |
|
( |
|||||||||
Asset management: | ||||||||||||||
Asset management fee income |
(0.01) |
(0.02) |
(0.01) |
(0.02) |
(0.04) |
|||||||||
Investment income |
0.08 |
0.07 |
0.09 |
0.14 |
0.31 |
(1) |
||||||||
Total asset management |
0.07 |
0.05 |
0.07 |
0.12 |
0.28 |
|||||||||
Corporate costs |
(0.08) |
(0.07) |
(0.07) |
(0.15) |
(0.14) |
|||||||||
Operating EPS (diluted) |
|
( |
( |
|
|
(1) |
Includes a gain of |
Note: Due to rounding, numbers in columns above may not sum to totals presented. |
For more information about operating net income, including a reconciliation to net income, see the section below titled “Non-GAAP Financial Measures.”
Composition of Revenues
Investment Banking
Investment banking revenues were
A summary of the company’s investment banking revenues and transaction counts for the quarter and six months ended
Quarter Ended |
|
Six Months Ended |
||||||||||||||||||||
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||||||||||||||
($ in thousands) |
Count |
|
Revenues |
|
Count |
|
Revenues |
|
Count |
|
Revenues |
|
Count |
|
Revenues |
|
Count |
|
Revenues |
|||
Equity and debt origination |
22 |
|
17 |
|
25 |
|
39 |
|
42 |
|
||||||||||||
Strategic advisory and private placements |
5 |
7,026 |
4 |
6,069 |
3 |
5,408 |
9 |
13,095 |
9 |
10,498 |
||||||||||||
Total |
27 |
|
21 |
|
28 |
|
48 |
|
51 |
|
Brokerage
Net brokerage revenues were
Total capital markets revenues, which consist of net brokerage revenues produced by the institutional equities division in addition to equity and debt origination revenues generated by the investment banking division, were
Asset Management
Asset management fees were
A summary of the company’s client assets under management for the quarter ended
(in millions) |
|
|
|
|||||
Client assets under management (1) |
|
|
|
|||||
Assets under management by sponsored funds (2) |
5,102 |
5,136 |
5,109 |
|||||
Client assets under management, including sponsored funds |
|
|
|
(1) |
Includes assets managed by Harvest Capital Strategies, JMP Asset Management, and |
(2) |
Sponsored funds are asset management strategies in which |
Principal Transactions
Principal transactions generated a net realized and unrealized loss of
Net Interest Income
Net interest income was
Expenses
Compensation and Benefits
Compensation and benefits expense was
Non-Compensation Expense
Non-compensation expense was
Share Repurchase Activity
Personnel
At
Non-GAAP Financial Measures
In addition to the GAAP financial results presented in this press release,
Operating Net Income
Operating net income is a non-GAAP financial measure that (i) reverses compensation expense related to share-based awards and deferred compensation, (ii) excludes the impact of the early retirement of debt issued by
- the grant of restricted stock units and options;
- net deferred compensation, which consists of (a) deferred compensation awarded in a given period but recognized as a GAAP expense over the subsequent three years, less (b) GAAP expense recognized in a given period but already reflected in the operating income of a prior period; the purpose of this adjustment is to fully reflect compensation awarded in a given year, notwithstanding the timing of GAAP expense;
- the impairment of CLO equity recorded among principal transactions, as the company believes that the forecasted reduction in future cash flows will be mitigated by a change in the interest rate environment and that distributions will be larger than currently projected;
- one-time expenses associated with the redemption of senior notes due 2023 in the third quarter of 2019 and the resulting acceleration of the amortization of remaining capitalized issuance costs;
- one-time transaction costs related to the refinancing of notes issued by JMP Credit Advisors
CLO III ;
- amortization expense related to an intangible asset resulting from the repurchase of a portion of the management fees from JMP Credit Advisors
CLO III ;
- unrealized gains or losses on commercial real estate investments, adjusted for non-cash expenditures, including depreciation and amortization;
- unrealized mark-to-market gains or losses on the company’s strategic equity investments as well as certain warrant positions; and
- a combined federal, state and local income tax rate of 26% at the consolidated taxable parent company,
JMP Group .
A reconciliation of JMP Group’s net income to its operating net income for the quarter and six months ended
Quarter Ended |
|
Six Months Ended |
||||||||
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to |
|
( |
( |
( |
|
|||||
Add back/(subtract): | ||||||||||
Income tax expense/(benefit) |
176 |
(7,239) |
(517) |
(7,063) |
(4,619) |
|||||
Income/(loss) before taxes |
1,300 |
(18,987) |
(1,629) |
(17,687) |
(662) |
|||||
Add back/(subtract): | ||||||||||
Share-based awards and deferred compensation |
(130) |
546 |
587 |
416 |
1,431 |
|||||
Impairment of CLO equity |
1,013 |
13,523 |
- |
14,536 |
- |
|||||
Early retirement of debt |
- |
89 |
- |
89 |
- |
|||||
Amortization of intangible asset – |
- |
- |
- |
- |
277 |
|||||
Unrealized (gain)/loss – real estate-related depreciation and amortization |
516 |
338 |
221 |
854 |
778 |
|||||
Unrealized mark-to-market (gain)/loss – strategic equity investments and warrants |
802 |
3,766 |
(121) |
4,568 |
(511) |
|||||
Operating income/(loss) before taxes |
3,501 |
(725) |
(942) |
2,776 |
1,313 |
|||||
Income tax expense/(benefit) |
910 |
(189) |
(245) |
722 |
341 |
|||||
Operating net income/(loss) |
|
( |
( |
|
|
|||||
Operating net income/(loss) per share: | ||||||||||
Basic |
|
( |
( |
|
|
|||||
Diluted (1) |
|
( |
( |
|
|
|||||
Weighted average shares outstanding: | ||||||||||
Basic |
19,582 |
19,532 |
20,772 |
19,557 |
21,028 |
|||||
Diluted (1) |
19,744 |
19,654 |
20,962 |
19,676 |
21,151 |
(1) |
On a GAAP basis, the weighted average number of diluted shares outstanding for the quarters ended |
Book Value per Share
At
(in thousands, except per share amounts) |
|
|
|
|||
Shareholders' equity |
|
|
|
|||
Accumulated unrealized loss – real estate-related depreciation and amortization |
16,132 |
15,750 |
14,759 |
|||
Adjusted shareholders' equity |
|
|
|
|||
Book value per share |
|
|
|
|||
Adjusted book value per share |
|
|
|
|||
Basic shares outstanding |
19,594 |
19,547 |
19,302 |
|||
Quarterly operating ROE (1) |
19.2% |
(3.8%) |
(3.4%) |
|||
LTM operating ROE (1) |
0.4% |
(4.4%) |
6.2% |
|||
Quarterly adjusted operating ROE (1) |
14.8% |
(3.0%) |
(2.9%) |
|||
LTM adjusted operating ROE (1) |
0.3% |
(3.6%) |
5.1% |
(1) |
Operating return on equity (ROE) equals operating net income divided by average shareholders’ equity. Adjusted operating ROE equals operating net income divided by average adjusted shareholders’ equity. For more information about operating net income, including a reconciliation to net income attributable to |
Conference Call
Cautionary Note Regarding Quarterly Financial Results
Due to the nature of its business, JMP Group’s quarterly revenues and net income may fluctuate materially depending on many factors, including: the size and number of investment banking transactions on which it advises; the timing of the completion of those transactions; the size and number of securities trades which it executes for brokerage customers; the performance of its asset management funds and inflows and outflows of assets under management; gains or losses stemming from sales of or prepayments on, or losses stemming from defaults on, loans underlying the company’s collateralized loan obligations; and the effect of the overall condition of the securities markets and economy as a whole. Accordingly, revenues and net income in any particular quarter may not be indicative of future results. Furthermore, JMP Group’s compensation expense is generally based upon revenues and can fluctuate materially in any quarter, depending upon the amount and sorts of revenue recognized as well as other factors. The amount of compensation and benefits expense recognized in a particular quarter may not be indicative of such expense in any future period. As a result, the company suggests that its annual results may be the most meaningful gauge for investors in evaluating the performance of its business.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, the anticipated effects of COVID-19 on the company’s business, results of operations and financial condition, and the potential timelines for reopening the economy and its improvement. Forward-looking statements reflect JMP Group’s current expectations or forecasts about future events, including beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. The words “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict” and similar expressions and their variants, as they relate to
Disclosure Information
About
Consolidated Statements of Financial Condition (Unaudited) |
||||
(in thousands) |
|
|
||
Assets | ||||
Cash and cash equivalents |
|
|
||
Restricted cash and deposits |
1,287 |
1,287 |
||
Marketable securities owned |
60,064 |
73,101 |
||
Other investments |
22,693 |
35,309 |
||
Loans held for investment, net of allowance for loan losses |
1,147 |
1,210 |
||
Other assets |
74,473 |
69,720 |
||
Total assets |
|
|
||
Liabilities and Shareholders' Equity | ||||
Liabilities: | ||||
Marketable securities sold, but not yet purchased |
|
|
||
Accrued compensation |
16,420 |
30,253 |
||
Bond payable, net of issuance costs |
80,720 |
82,584 |
||
Note payable |
10,610 |
6,812 |
||
Other liabilities |
41,083 |
45,392 |
||
Total liabilities |
151,250 |
168,896 |
||
Shareholders' Equity: | ||||
56,188 |
61,688 |
|||
Non-redeemable non-controlling interest |
(555) |
(327) |
||
Total equity |
55,633 |
61,361 |
||
Total liabilities and shareholders' equity |
|
|
Consolidated Statements of Operations (Unaudited) |
||||||||
Quarter Ended |
|
Six Months Ended |
||||||
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
Revenues: | ||||||||
Investment banking |
|
|
|
|
||||
Brokerage |
5,645 |
4,657 |
9,832 |
9,192 |
||||
Asset management fees |
1,712 |
2,354 |
3,428 |
4,057 |
||||
Principal transactions |
(48) |
1,423 |
(17,600) |
6,711 |
||||
Gain/(loss) on sale and payoff of loans |
- |
(21) |
- |
(38) |
||||
Net dividend income |
10 |
293 |
237 |
589 |
||||
Other income |
912 |
793 |
1,847 |
758 |
||||
Non-interest revenues |
29,826 |
27,235 |
33,964 |
50,884 |
||||
Interest income |
1,890 |
2,772 |
4,104 |
17,063 |
||||
Interest expense |
(1,723) |
(1,939) |
(3,505) |
(12,712) |
||||
Net interest income |
167 |
833 |
599 |
4,351 |
||||
Gain/(loss) on repurchase or early retirement of debt |
- |
- |
697 |
- |
||||
Total net revenues |
29,993 |
28,068 |
35,260 |
55,235 |
||||
Non-interest expenses: | ||||||||
Compensation and benefits |
22,386 |
19,945 |
38,599 |
37,167 |
||||
Administration |
1,067 |
2,748 |
3,289 |
4,677 |
||||
Brokerage, clearing and exchange fees |
647 |
733 |
1,281 |
1,434 |
||||
Travel and business development |
54 |
1,347 |
976 |
2,368 |
||||
Managed deal expenses |
950 |
1,334 |
1,538 |
1,867 |
||||
Communications and technology |
1,085 |
1,127 |
2,214 |
2,180 |
||||
Occupancy |
1,194 |
1,409 |
2,393 |
2,832 |
||||
Professional fees |
731 |
821 |
1,621 |
2,277 |
||||
Depreciation |
397 |
311 |
945 |
608 |
||||
Other |
208 |
5 |
208 |
500 |
||||
Total non-interest expense |
28,719 |
29,780 |
53,064 |
55,910 |
||||
Net income/(loss) before income tax |
1,274 |
(1,712) |
(17,804) |
(675) |
||||
Income tax expense/(benefit) |
176 |
(517) |
(7,063) |
(4,619) |
||||
Net income/(loss) |
1,098 |
(1,195) |
(10,741) |
3,944 |
||||
Less: Net income/(loss) attributable to non-redeemable non-controlling interest |
(26) |
(83) |
(117) |
(13) |
||||
Net income/(loss) attributable to |
|
( |
( |
|
||||
Net income/(loss) attributable to |
||||||||
Basic |
|
( |
( |
|
||||
Diluted |
|
( |
( |
|
||||
Weighted average common shares outstanding: | ||||||||
Basic |
19,582 |
20,772 |
19,557 |
21,028 |
||||
Diluted |
19,744 |
20,772 |
19,557 |
21,151 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200729005885/en/
Investor Relations Contact
(415) 835-8978
apalmer@jmpg.com
Media Relations Contacts
(646) 722-6528
zach@dlpr.com
(646) 808-3611
michael@dlpr.com
Source: