Thomas Weisel Partners Group, Inc. (NASDAQ: TWPG) today released
results for the three months ended March 31, 2009, reporting a net
loss of $23.9 million, or $0.74 per share, on net revenues of $43.1
million. In the three months ended March 31, 2008, the firm
reported a net loss of $17.8 million, or $0.54 per share, on net
revenues of $48.9 million. As of March 31, 2009, the firm's cash
and cash equivalents were $90.6 million, reflecting a decline from
the year-end balance primarily a result of paying accrued 2008
compensation expenses in February 2009.
Adjusting for certain non-cash events related to its initial
public offering and the amortization of intangible assets acquired
in the purchase of Westwind Partners, the firm reported a non-GAAP
net loss of $22.1 million, or $0.69 per share, for the three months
ended March 31, 2009. A reconciliation between GAAP results and
these non-GAAP measures is discussed below under "Non-GAAP
Financial Measures."
"In the first quarter we realized the benefit of our sector
diversification and global capabilities. Despite the difficult
market in the U.S., our expansion into energy and metals &
mining, through the acquisition of Westwind Partners, led to
several successful transactions during the quarter as the demand
for base metals resulted in record prices for gold. Further, we
recognized continued improvement across our European and Canadian
platforms. As we move forward, we believe our sector exposure will
be critical to achieving profitability," said Thomas W. Weisel,
Chairman and CEO of Thomas Weisel Partners.
"In 2008 we moved aggressively to increase the value of our
franchise by reducing costs and headcount in certain areas and
opportunistically hiring and building in others. The uncertain and
difficult environment in which we operated in 2008 has continued
into 2009. Our first quarter results improved sequentially,
reflecting our concerted efforts to reduce our cost structure and
risk profile. We believe we have taken the appropriate actions to
preserve the capital of the firm and have positioned ourselves to
emerge as a market leader when capital markets activity returns,"
stated Lionel F. Conacher, President and COO of Thomas Weisel
Partners.
Business Overview
-- Investment Banking Revenues. Investment banking revenues decreased 4%
to $11.0 million in the first quarter of 2009 compared with $11.5 million
in the first quarter of 2008 and decreased 3% from $11.3 million in the
fourth quarter of 2008. Total transactions for the first quarter of 2009
were 15 compared with 23 in the year-ago quarter and 14 in the fourth
quarter of 2008. The decline in revenues was primarily attributable to
lower M&A activity due to the challenging market conditions.
Capital raising revenues were $8.6 million, 16% higher than the year-ago
period and 189% higher than in the fourth quarter of 2008. These revenues
were generated from 11 transactions versus 19 in the year-ago period and
six in the fourth quarter of 2008.
Strategic advisory revenues were $2.4 million, down 41% from the year-ago
period and down 71% from the fourth quarter of 2008. In the first quarter,
the firm completed four transactions, equaling the number from the year-ago
period and down from eight in the fourth quarter of 2008.
-- Brokerage Revenues. Brokerage revenues decreased 18% to $29.5 million
in the first quarter of 2009 compared with $36.1 million in the first
quarter of 2008 and increased 8% from $27.3 million in the fourth quarter
of 2008. In the first quarter, European results were strong, Canadian
results were flat, the core U.S. business was down, particularly in the
middle markets area, and Electronic Trading results declined due to
significant reductions in client assets.
-- Asset Management Revenues. Asset management revenues increased to
$2.7 million in the first quarter of 2009 compared with $0.3 million in the
first quarter of 2008 and increased from a loss of $7.0 million in the
fourth quarter of 2008. Management fees were $3.6 million in the first
quarter of 2009, which were offset by net declines in fair value
adjustments related to private equity and other securities of $0.9 million.
-- Compensation and Benefits Expenses. Compensation and benefits
expenses decreased 24% to $30.7 million in the first quarter of 2009
compared with $40.4 million in the first quarter of 2008 and increased 9%
from $28.1 million in the fourth quarter of 2008.
The non-GAAP compensation ratio, which is defined in note (2) below,
decreased to 68% compared with the non-GAAP ratio of 76% in the year-ago
period and increased from 66% in the fourth quarter of 2008. A
reconciliation between GAAP results and these non-GAAP measures is
discussed below under "Non-GAAP Financial Measures."
-- Non-compensation Expenses. Non-compensation expenses increased 1% to
$35.4 million in the first quarter of 2009 compared with $35.0 million in
the first quarter of 2008 and decreased 2% from $36.1 million in the fourth
quarter of 2008. The decline from the fourth quarter 2008 was due to firm-
wide cost reduction initiatives offset by certain significant items.
-- Provision for Taxes. The firm recorded a negative 4% effective tax
rate in the first quarter of 2009 versus 33% in the first quarter of 2008
and negative 102% in the fourth quarter of 2008. The tax expense in the
first quarter of 2009 related entirely to the firm's Canadian operations.
As of December 31, 2008, the firm recorded a full valuation allowance on
its U.S. deferred tax assets and, therefore, did not recognize a tax
benefit on its U.S. loss.
-- Shareholders' Equity Position. As of March 31, 2009, shareholders'
equity and book value per share were $150 million and $4.76, respectively,
and tangible shareholders' equity and tangible book value per share were
$130 million and $4.13, respectively.
-- Senior Management Changes. The firm today announced that Ryan Stroub
is being appointed Chief Financial Officer and Shaugn Stanley, the firm's
current Chief Financial Officer, will cease serving in such capacity on or
about May 20, 2009, at which time Mr. Stanley will become Chief
Administrative Officer. Mr. Stanley will remain a Section 16 officer of
the firm.
Mr. Stanley will remain as Chief Financial Officer through a transition
period that will include the completion of the financial statements and the
filing of the firm's Form 10-Q for the quarter ended March 31, 2009. Mr.
Stanley will continue to be a valuable contributor on the operational side
of the business.
Mr. Stroub will assume the role of Chief Financial Officer upon completion
of the transition period. Mr. Stroub, who has worked closely with Mr.
Stanley over the last year, joined the firm in 2006 and has served as the
Chief Accounting Officer since 2008. Prior to joining the firm, Mr. Stroub
spent seven years with E*TRADE Financial Corporation serving as Corporate
Controller from 2002 to 2005.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA
(Dollar amounts in thousands, except book value per share)
(Unaudited)
Three Months Ended
March 31,
--------------------
2009 2008
--------- ---------
Revenue Detail:
Investment banking
Capital raising $ 8,601 $ 7,388
Strategic advisory 2,425 4,108
--------- ---------
Total investment banking 11,026 11,496
Brokerage 29,456 36,134
Asset management
Management fees 3,590 3,660
Private equity realized and unrealized gains and
(losses) - net (1,849) (2,089)
Other securities realized and unrealized gains and
(losses) - net 984 (1,222)
--------- ---------
Total asset management 2,725 349
Interest income 375 3,025
--------- ---------
Total revenues 43,582 51,004
--------- ---------
Interest expense (483) (2,080)
--------- ---------
Net revenues $ 43,099 $ 48,924
========= =========
Investment Banking Transactions:
Capital raising 11 19
Strategic advisory 4 4
--------- ---------
Total transactions 15 23
--------- ---------
Revenue per transaction(1) $ 735 $ 499
Other Metrics:
Non-GAAP compensation ratio(2) 67.9% 75.6%
Non-compensation ratio(3) 82.2% 71.5%
IPO equity award expense $ 163 $ 1,807
Shareholders' equity 150,032 357,250
Less: Other intangible assets (19,893) (117,714)
--------- ---------
Tangible shareholders' equity 130,139 239,536
========= =========
Common shares outstanding(4) 31,512 32,357
Book value per share $ 4.76 $ 11.04
Tangible book value per share $ 4.13 $ 7.40
(1) Generally, average revenue per investment banking
transaction is higher in the U.S. than in Canada.
(2) The firm's non-GAAP compensation ratio is the ratio of the
firm's compensation and benefits expenses (excluding expenses
relating to IPO equity awards) to net revenues (excluding
investment gains and losses attributable to investments in private
equity). Without excluding these amounts, the firm's ratio of
compensation and benefits expenses to net revenues is 71.2% and
82.6% for the three months ended March 31, 2009 and 2008,
respectively.
(3) The firm's non-compensation ratio is the ratio of all
expenses (other than compensation and benefits expenses and
interest expenses) to net revenues.
(4) Includes 6,639,478 exchangeable shares issued by TWP
Acquisition Company (Canada), Inc., the firm's wholly-owned
subsidiary. Each exchangeable share is exchangeable at any time
into a share of common stock of the firm, entitles the holder to
dividend and other rights substantially economically equivalent to
those of a share of common stock, and, through a voting trust,
entitles the holder to a vote along with shares of common stock on
matters presented to shareholders of the firm.
Non-GAAP Financial Measures
The firm has reported in this press release its net loss for the
three months ended March 31, 2009 on a non-GAAP basis by:
-- excluding $0.1 million of after-tax non-cash expense associated with
its initial grant of restricted stock units made in connection with its
initial public offering; and
-- excluding $1.7 million of after-tax non-cash expense associated with
the amortization of intangible assets acquired as a result of its
acquisition of Westwind Partners on January 2, 2008.
The firm has also reported in this press release its basic and
diluted loss per share for the three months ended March 31, 2009 on
a non-GAAP basis by:
-- using a net loss of $22.1 million as the numerator of its non-GAAP
basic and diluted loss per share calculations, which amount is derived by
beginning with its GAAP net loss of $23.9 million and adjusting to exclude
(i) the after-tax non-cash expense associated with its initial grant of
restricted stock units of $0.1 million and (ii) the after-tax non-cash
expense associated with the amortization of intangible assets acquired as a
result of its acquisition of Westwind Partners of $1.7 million; and
-- using as the denominator of its non-GAAP basic and diluted loss per
share calculations the basic and diluted weighted average shares used,
respectively, as the denominator of its GAAP basic and diluted loss per
share calculations.
The firm views its grant of restricted stock units in connection
with its initial public offering and the expense associated with
the amortization of intangible assets acquired as a result of its
acquisition of Westwind Partners as non-cash events, and the firm's
management has utilized non-GAAP calculations of net revenue and
net loss and non-GAAP calculations of basic and diluted loss per
share that are adjusted in the manner described above as an
additional device to aid in understanding and analyzing the firm's
financial results in the three months ended March 31, 2009. The
firm's management believes that these non-GAAP measures will allow
for a better evaluation of the operating performance of its
business and facilitate meaningful comparison of its results in the
current period to those in prior periods and future periods. The
firm's reference to these measures should not, however, be
considered as a substitute for results that are presented in a
manner consistent with GAAP. These non- GAAP measures are provided
to enhance investors' overall understanding of the firm's current
financial performance and its prospects for the future.
Specifically, the firm's management believes that the non-GAAP
measures provide useful information to both management and
investors by excluding certain items that may not be indicative of
the firm's core operating results and business outlook.
A limitation of utilizing these non-GAAP measures of net revenue
and net loss and basic and diluted loss per share is that the GAAP
accounting effects of these events do in fact reflect the
underlying financial results of the firm's business, and these
effects should not be ignored in evaluating and analyzing the
firm's financial results. Therefore, management believes that both
the firm's GAAP measures of net revenue, net loss and basic and
diluted loss per share and these non-GAAP measures of the firm's
financial performance should be considered together.
A reconciliation of the firm's GAAP net loss to its non-GAAP net
loss for the three months ended March 31, 2009 is set forth below
(in millions):
Net loss $ (23.9)
Exclusion of the after-tax non-cash expense associated with
initial grant of restricted stock units 0.1
Exclusion of the after-tax non-cash expense associated with the
amortization of intangible assets acquired as a result of the
firm's acquisition of Westwind Partners 1.7
-------
Non-GAAP net loss $ (22.1)
=======
The firm calculates loss per share in accordance with FASB
Statement No. 128, Earnings per Share. Basic net loss and diluted
net loss per share is calculated by dividing net loss by the
weighted average number of common shares outstanding for the
period.
The following table sets forth the firm's GAAP basic and diluted
weighted average shares outstanding and its GAAP basic and diluted
net loss per share for the three months ended March 31, 2009, as
well as the non-GAAP net loss per share after applying the
adjustments described above:
Three Months
Ended March 31,
2009
-----------
Weighted average shares used in computation of net loss
Per share:
Basic (in thousands) 32,094
Diluted (in thousands) 32,094
Net loss per share:
Basic ($0.74)
Diluted ($0.74)
Non-GAAP net loss per share:
Basic ($0.69)
Diluted ($0.69)
The firm's non-GAAP compensation ratio is the ratio of the
firm's compensation and benefits expenses (excluding expenses
relating to IPO equity awards) to net revenues (excluding
investment gains and losses attributable to investments in
partnerships and other securities). Without excluding these
amounts, the firm's ratio of compensation and benefits expenses to
net revenues is 71.2% and 82.6% for the three months ended March
31, 2009 and 2008, respectively.
Compensation and benefits expenses $ 30.7
Exclusion of the pre-tax non-cash expense associated with
initial grant of restricted stock units 0.2
-----------
Non-GAAP compensation and benefits expenses $ 30.5
Net revenues $ 43.1
Exclusion of investment gains & losses in private equity (1.8)
-----------
Non-GAAP net revenues $ 44.9
Quarterly Earnings Conference Call
Thomas Weisel Partners will host its first quarter conference
call on Wednesday, April 29, 2009 at 5:00 p.m. Eastern time (2:00
p.m. Pacific time). The conference call may include forward-looking
statements, including guidance as to future results.
All interested parties are invited to listen to Thomas Weisel
Partners' Chairman and Chief Executive Officer, Thomas W. Weisel,
President and Chief Operating Officer, Lionel F. Conacher, and
Chief Financial Officer, Shaugn S. Stanley, by dialing (866)
746-9599 (domestic) or (702) 696-4728 (international). The
confirmation code for both the domestic and international lines is:
95288543.
A live audio webcast of the call, as well as the company's
results, will be available through the Investor Relations/Webcasts
section of the company's website, www.tweisel.com, which can also
be accessed directly at:
http://www.tweisel.com/AboutUs/InvestorRelations/Webcasts. To
listen to the live audio webcast of the call, please go to the
website at least 15 minutes early to register, download and install
any necessary audio software.
For those who cannot listen to the live broadcast, a replay of
the conference call will be available through the above-referenced
website beginning one hour following the completion of the call
through May 15, 2009.
About Thomas Weisel Partners Group, Inc.
Thomas Weisel Partners Group, Inc. is an investment bank,
founded in 1998, focused principally on the growth sectors of the
economy. Thomas Weisel Partners generates revenues from three
principal sources: investment banking, brokerage and asset
management. The investment banking group is comprised of two
disciplines: corporate finance and strategic advisory. The
brokerage group provides equity and convertible debt securities
sales and trading services to institutional investors, and offers
brokerage, advisory and cash management services to high-net-worth
individuals and corporate clients. The asset management group
consists of: private equity, public equity and distribution
management. Thomas Weisel Partners is headquartered in San
Francisco with additional offices in Baltimore, Boston, Calgary,
Chicago, Denver, New York, Portland, Silicon Valley, Toronto,
London and Zurich. For more information, please visit
www.tweisel.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, which
are subject to risks, uncertainties and assumptions about us. In
some cases, you can identify these statements by forward-looking
words such as "may", "might", "will", "should", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "optimistic",
"potential", "future" or "continue", the negative of these terms
and other comparable terminology. These statements are only
predictions based on our current expectations about future events.
There are important factors that could cause actual results, level
of activity, performance or achievements or other events or
circumstances to differ materially from the results, level of
activity, performance or achievements expressed or implied by these
forward-looking statements. These factors include, but are not
limited to, the state of the financial markets and the economy,
particularly as they relate to the growth sectors that the firm is
focused on, Thomas Weisel Partners' ability to implement its
strategic initiatives and achieve the expected benefits of the
acquisition of Westwind Partners, retain its professionals, as well
as other competitive, economic, political, and market conditions
and fluctuations, government and industry regulation, risks
relating to the acquisition of Westwind Partners, including the
effect of the completion of the transaction on the companies'
business relationships, operating results and business generally
and other factors. Some of the other factors are those that are
discussed in Item 1A - "Risk Factors" in our Annual Report on Form
10-K for the year ended December 31, 2008 and in our Quarterly
Reports on Form 10-Q filed with the SEC thereafter. We do not
assume responsibility for the accuracy or completeness of any
forward-looking statement and you should not rely on
forward-looking statements as predictions of future events. We are
under no duty to update any of these forward-looking statements to
conform them to actual results or revised expectations.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March
31,
-------------------------
2009 2008
----------- -----------
Revenues:
Investment banking $ 11,026 $ 11,496
Brokerage 29,456 36,134
Asset management 2,725 349
Interest income 375 3,025
----------- -----------
Total revenues 43,582 51,004
Interest expense (483) (2,080)
----------- -----------
Net revenues 43,099 48,924
----------- -----------
Expenses excluding interest:
Compensation and benefits 30,678 40,389
Brokerage execution, clearance and account
administration 6,412 6,478
Communications and data processing 4,638 5,864
Depreciation and amortization of property and
equipment 2,603 1,887
Amortization of other intangible assets 2,933 3,360
Marketing and promotion 1,784 4,047
Occupancy and equipment 4,087 5,387
Other expense 12,977 7,964
----------- -----------
Total expenses excluding interest 66,112 75,376
----------- -----------
Loss before taxes (23,013) (26,452)
Provision for taxes (tax benefit) 840 (8,647)
Net loss $ (23,853) $ (17,805)
=========== ===========
Net loss per share:
Basic net loss per share $ (0.74) $ (0.54)
Diluted net loss per share $ (0.74) $ (0.54)
Weighted average shares used in computation of
per share data:
Basic weighted average shares outstanding 32,094 32,989
Diluted weighted average shares outstanding 32,094 32,989
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