FBR Reports Fourth Quarter and Full Year 2012 Financial Results
February 05 2013 - 4:20PM
FBR & Co. (Nasdaq:FBRC) ("FBR" or the "Company"), a leading
investment bank serving the middle market, today reported net
after-tax earnings of $32.1 million, or $0.60 per diluted share,
for the quarter ended December 31, 2012. These results compare to a
net after-tax loss of $18.9 million, or $0.33 per diluted share, in
the fourth quarter of 2011 and a net after-tax loss of $3.4
million, or $0.07 per diluted share, in the third quarter of 2012.
Pretax income from continuing operations for the quarter ended
December 31, 2012 was $9.2 million compared to a $19.8 million
pretax loss in the fourth quarter of 2011.
For the year ended December 31, 2012, FBR reported net after-tax
earnings of $29.7 million, or $0.54 per diluted share, compared to
a net after-tax loss of $49.6 million, or $0.82 per diluted share
in 2011. Pretax income from continuing operations for the year
ended December 31, 2012 was $3.9 million on revenue of $151.5
million compared with a $51.3 million pre-tax loss on revenue of
$132.2 million in 2011.
As previously announced, the Company completed the sale of the
assets related to the FBR Funds business in October and as a
result, FBR recognized income from discontinued operations, net of
taxes, of $23.1 million in the fourth quarter.
Fourth quarter 2012 revenue was $58.9 million compared to $24.2
million for the fourth quarter of 2011 and $23.9 million for the
third quarter of 2012. The year-over-year and quarter-over-quarter
increases were the result of significantly higher investment
banking revenues.
Fourth quarter 2012 total expenses were $49.7
million, compared to $44.0 million in the fourth quarter of 2011
and $29.5 million in the third quarter of 2012. The increase in
total expense quarter over quarter was primarily due to higher
compensation expense as a result of higher revenues. Excluding
non-recurring real estate consolidation expenses, non-compensation
fixed expenses from continuing operations in the fourth quarter of
2012 totaled $10.9 million, compared to $12.8 million in the fourth
quarter of 2011 and $10.2 million in the third quarter of 2012.
2012 Overview
- Investment banking revenue was $90.7 million in 2012 compared
to $58.1 million in 2011. These revenues result from the
completion of 56 transactions representing a total of $8.7 billion
in transaction volume.
- Institutional brokerage generated net revenue of $52.5 million
for 2012 compared to $78.5 million in 2011 as industry-wide
pressures continued throughout the year in this part of the
Company's business.
- Non-compensation fixed expenses for 2012 were $45.1 million
compared to $57.2 million in 2011, reflecting the Company's ongoing
focus on reducing fixed costs.
- The Company ended 2012 with 256 employees in its continuing
operations, down from 278 at the beginning of the year.
- As of December 31, 2012, shareholders' equity totaled $239.9
million, with $174.9 million held in cash, and the Company's
tangible book value per share was $4.80, up from $3.95 from the end
of 2011.
The Company periodically repurchased shares of its common stock
throughout the year. For the year ended, December 31, 2012,
the Company repurchased 7.5 million shares at an average price of
$2.80 per share. Subsequent to year end 2012, the Company has
repurchased an additional 1.9 million shares at an average price of
$4.00 per share. Following these recent purchases, the Company
continues to have Board authorization to purchase an additional 4.1
million shares.
Earlier today, the Company's Board of Directors approved a
1-for-4 reverse stock split effective February 28, 2013. Details
surrounding this corporate action will be covered in a separate
release.
"In 2012, we were able to clearly demonstrate the unique
strengths and thought leadership of our franchise by completing a
number of large, cutting edge transactions across several industry
sectors," said Richard J. Hendrix, Chairman and Chief Executive
Officer of FBR. "I want to thank everyone on our team for their
commitment and hard work on behalf of our clients in
2012. Through these efforts we were able to return to
full-year profitability and establish great momentum upon which to
build in 2013."
Investors wishing to listen to the earnings call at
9:00 A.M. U.S. EST, Wednesday, February 6, 2013, may do so via the
Web or conference call at:
Webcast link:
http://investor.shareholder.com/media/eventdetail.cfm?eventid=124101&CompanyID=FBCM&e=1&mediaKey=A638ADF35B185A230531194DBE6AEB85
Conference call dial-in number (domestic,
toll-free): 877.303.6433 |
Conference call dial-in number
(international): 224.357.2198 |
Access code: 88745006 |
Replays of the earnings call will be available via webcast
following the call.
FBR & Co. (Nasdaq: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 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 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, 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.
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FBR &
CO. |
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CONSOLIDATED STATEMENTS
OF OPERATIONS |
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(Dollars and shares in
thousands, except per share amounts) |
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(Unaudited) |
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Quarter ended December
31, |
Year ended December
31, |
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2012 |
2011 |
2012 |
2011 |
REVENUES: |
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Investment banking: |
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Capital
raising |
$ 44,577 |
$ 4,229 |
$ 84,144 |
$ 42,862 |
Advisory |
210 |
2,316 |
6,525 |
15,284 |
Institutional brokerage: |
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Principal
transactions |
5,002 |
3,542 |
19,353 |
18,081 |
Agency
commissions |
7,833 |
11,352 |
33,119 |
60,376 |
Net investment income
(loss) |
684 |
1,215 |
4,906 |
(9,664) |
Interest, dividends &
other |
620 |
1,545 |
3,445 |
5,288 |
Total
revenues |
58,926 |
24,199 |
151,492 |
132,227 |
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EXPENSES: |
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Compensation and benefits |
33,118 |
20,768 |
82,672 |
99,808 |
Professional services |
3,545 |
2,391 |
12,839 |
11,629 |
Business development |
2,746 |
2,229 |
9,394 |
10,753 |
Clearing and brokerage
fees |
1,460 |
2,385 |
7,490 |
11,928 |
Occupancy and
equipment |
4,072 |
4,275 |
15,755 |
19,034 |
Communications |
2,989 |
4,134 |
12,553 |
16,402 |
Impairment of goodwill |
-- |
5,882 |
-- |
5,882 |
Other operating
expenses |
1,785 |
1,897 |
6,861 |
8,119 |
Total
expenses |
49,715 |
43,961 |
147,564 |
183,555 |
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Income (loss) from continuing
operations before income taxes |
9,211 |
(19,762) |
3,928 |
(51,328) |
Income tax provision
(benefit) |
162 |
(340) |
(1,078) |
(243) |
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Income (loss) from continuing
operations, net of taxes |
9,049 |
(19,422) |
5,006 |
(51,085) |
Income from discontinued
operations, net of taxes |
23,070 |
541 |
24,685 |
1,436 |
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Net income
(loss) |
$ 32,119 |
$ (18,881) |
$ 29,691 |
$ (49,649) |
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Basic earnings per
share: |
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Income (loss) from continuing
operations, net of taxes |
$ 0.18 |
$ (0.34) |
$ 0.09 |
$ (0.84) |
Income from discontinued
operations, net of taxes |
0.46 |
0.01 |
0.47 |
0.02 |
Net income (loss) |
$ 0.64 |
$ (0.33) |
$ 0.56 |
$ (0.82) |
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Diluted earnings per
share: |
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Income (loss) from continuing
operations, net of taxes |
$ 0.17 |
$ (0.34) |
$ 0.09 |
$ (0.84) |
Income from discontinued
operations, net of taxes |
0.43 |
0.01 |
0.45 |
0.02 |
Net income (loss) |
$ 0.60 |
$ (0.33) |
$ 0.54 |
$ (0.82) |
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Weighted average shares - basic |
50,181 |
56,446 |
53,096 |
60,841 |
Weighted average shares - diluted |
53,604 |
56,446 |
55,193 |
60,841 |
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FBR &
CO. |
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CONSOLIDATED BALANCE
SHEETS |
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(Dollars in thousands, except
per share amounts) |
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(Unaudited) |
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ASSETS |
December 31,
2012 |
December 31,
2011 |
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Cash and cash equivalents |
$ 174,925 |
$ 135,792 |
Receivables: |
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Due from brokers, dealers and
clearing organizations |
4,670 |
6,048 |
Customers |
2,579 |
3,937 |
Other |
10,902 |
6,854 |
Financial instruments owned, at fair
value |
121,404 |
100,634 |
Other investments, at cost |
8,388 |
25,744 |
Intangible assets, net |
-- |
2,121 |
Furniture, equipment and leasehold
improvements, net |
3,693 |
6,162 |
Prepaid expenses and other assets |
6,883 |
10,791 |
Total
assets |
$ 333,444 |
$ 298,083 |
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LIABILITIES AND SHAREHOLDERS'
EQUITY |
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Liabilities: |
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Securities sold but not yet purchased, at
fair value |
$ 56,929 |
$ 35,496 |
Accrued compensation and benefits |
19,075 |
15,760 |
Accounts payable, accrued expenses and other
liabilities |
13,878 |
15,280 |
Due to brokers, dealers and clearing
organizations |
3,698 |
6,250 |
Total liabilities |
93,580 |
72,786 |
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Shareholders' equity: |
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Common stock |
49 |
55 |
Additional paid-in capital |
402,631 |
413,224 |
Employee stock loan receivable, including
accrued interest |
(307) |
(673) |
Restricted stock units |
25,235 |
29,013 |
Accumulated other comprehensive (loss)
income |
(1,094) |
19 |
Accumulated deficit |
(186,650) |
(216,341) |
Total shareholders' equity |
239,864 |
225,297 |
Total liabilities
and shareholders' equity |
$ 333,444 |
$ 298,083 |
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Book Value per Share |
$4.80 |
$3.99 |
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Shares Outstanding (in
thousands) |
50,022 |
56,490 |
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FBR &
CO. |
Financial &
Statistical Supplement - Operating Results |
(Dollars in thousands) |
(Unaudited) |
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Q-4 12 |
Q-3 12 |
Q-2 12 |
Q-1 12 |
Q-4 11 |
Revenues |
$ 58,926 |
$ 23,889 |
$ 33,732 |
$ 34,945 |
$ 24,199 |
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Expenses: |
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Variable |
24,693 |
5,263 |
8,791 |
8,018 |
5,078 |
Fixed |
25,022 |
24,204 |
24,619 |
26,954 |
33,001 |
Impairment of goodwill |
-- |
-- |
-- |
-- |
5,882 |
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Income (loss) from continuing operations
before income taxes |
9,211 |
(5,578) |
322 |
(27) |
(19,762) |
Income tax provision (benefit) |
162 |
(1,262) |
15 |
7 |
(327) |
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Income (loss) from continuing operations, net
of taxes |
9,049 |
(4,316) |
307 |
(34) |
(19,435) |
Income from discontinued operations, net of
taxes |
23,070 |
959 |
184 |
472 |
554 |
Net income (loss) |
$ 32,119 |
$ (3,357) |
$ 491 |
$ 438 |
$ (18,881) |
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Fixed expenses from continuing
operations |
$ 25,022 |
$ 24,204 |
$ 24,619 |
$ 26,954 |
$ 33,001 |
Less: Non-cash expenses1 |
2,000 |
1,948 |
1,804 |
1,822 |
1,195 |
Corporate transaction costs2 |
867 |
646 |
-- |
429 |
567 |
Severance |
-- |
61 |
-- |
38 |
3,487 |
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Core fixed costs from continuing
operations3 |
$ 22,155 |
$ 21,549 |
$ 22,815 |
$ 24,665 |
$ 27,752 |
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Statistical Data (Continuing
Operations) |
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Revenues per employee (annualized) |
$ 921 |
$ 387 |
$ 521 |
$ 529 |
$ 348 |
Employee count |
256 |
247 |
259 |
264 |
278 |
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1 Non-cash expenses include
compensation costs associated with stock-based awards and
amortization of intangible assets. |
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2 Corporate transaction
costs include costs related to reductions in physical space and
restructuring costs. |
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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 and severance costs on
the performance of the Company. |
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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 Small
703.469.1190
ssmall@fbr.com
Investors:
Bradley J. Wright
703.312.9678
bwright@fbr.com
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