Thomas Weisel Partners Group, Inc. (NASDAQ: TWPG) today released
results for the three months ended June 30, 2009, reporting a net
loss of $10.2 million, or $0.31 per share, on net revenues of $48.3
million. In the three months ended June 30, 2008, the firm reported
a net loss of $10.1 million, or $0.31 per share, on net revenues of
$60.0 million. As of June 30, 2009, the firm's cash and cash
equivalents were $89.4 million.
For the six months ended June 30, 2009, the firm reported a net
loss of $34.1 million, or $1.05 per share, on net revenues of $91.4
million. This compares with the six months ended June 30, 2008,
when the firm reported a net loss of $27.9 million, or $0.85 per
share, on net revenues of $108.9 million.
Adjusting for the non-cash amortization of intangible assets
acquired in the purchase of Westwind Partners, the firm reported a
non-GAAP net loss of $8.5 million, or $0.26 per share, for the
three months ended June 30, 2009 and a non-GAAP net loss of $30.6
million, or $0.94 per share, for the six months ended June 30,
2009. A reconciliation of GAAP results to these non-GAAP measures
is discussed below under "Non-GAAP Financial Measures."
"Despite the continued challenges in the financial markets, we
have maintained our diverse product offerings and expanded sector
focus. We expect to realize the potential of our operating model as
the overall tone in the capital markets improves," commented Thomas
W. Weisel, Chairman and CEO of Thomas Weisel Partners.
Mr. Weisel continued, "Our strategic advisory revenues more than
doubled from the first quarter of the year and we are seeing a
significant increase in the number of engaged advisory assignments
as compared with the beginning of the year."
Lionel F. Conacher, President and COO of Thomas Weisel Partners
stated, "As we navigate through this challenging period, we have
managed the business prudently by taking out a significant amount
of fixed costs and we remain committed to maintaining a lower
expense base. In addition to the significant changes to our cost
structure, we have continued to strategically hire senior
professionals that will add leverage to our businesses."
Business Overview
-- Investment Banking Revenues. Investment banking revenues were $14.3
million in the second quarter of 2009 compared with $22.9 million in the
second quarter of 2008 and $11.0 million in the first quarter of 2009, a
decrease of 38% and an increase of 29%, respectively. Total transactions
for the second quarter of 2009 were 28 compared with 32 in the year-ago
quarter and 15 in the first quarter of 2009. The increase in revenues from
the first quarter of 2009 was primarily attributable to an increase in both
the number of, and revenue per transaction associated with, strategic
advisory deals.
-- Brokerage Revenues. Brokerage revenues were $27.7 million in the
second quarter of 2009 compared with $34.9 million in the second quarter of
2008 and $29.5 million in the first quarter of 2009, a 20% and 6% decrease,
respectively. Results in the second quarter of 2009 decreased from the
first quarter of 2009 mainly due to lower U.S. equity commissions as the
firm experienced a decline in client flow coupled with a slightly higher
trading loss ratio.
-- Asset Management Revenues. Asset management revenues were $6.4
million in the second quarter of 2009 compared with $1.9 million in the
second quarter of 2008 and $2.7 million in the first quarter of 2009.
Asset management revenues consisted of management fees of $3.3 million, net
realized and unrealized gains in warrants and other securities of $3.0
million and net unrealized private equity gains of $0.2 million.
-- Compensation and Benefits Expenses. Compensation and benefits
expenses were $30.1 million in the second quarter of 2009 compared with
$41.8 million in the second quarter of 2008 and $30.7 million in the first
quarter of 2009, a 28% and 2% decrease, respectively.
The non-GAAP compensation ratio, which is defined in note (1) below,
decreased to 62% in the second quarter of 2009 compared with the non-GAAP
ratio of 67% in the year-ago period and 68% in the first quarter of 2009.
A reconciliation between GAAP results and these non-GAAP measures is
discussed below under "Non-GAAP Financial Measures."
-- Non-compensation Expenses. Non-compensation expenses were $29.1
million in the second quarter of 2009 compared with $35.1 million in the
second quarter of 2008 and $35.4 million in the first quarter of 2009 a 17%
and 18% decrease, respectively. The decline from the year-ago quarter was
primarily attributable to firm-wide cost reduction initiatives.
-- Provision for Taxes. The firm recorded a tax benefit of $0.7 million
or 6.5% effective tax rate in the second quarter of 2009. As of December
31, 2008, the firm recorded a full valuation allowance on its U.S. and U.K
deferred tax assets and, therefore, did not recognize a tax benefit on its
net loss in these tax jurisdictions.
-- Shareholders' Equity Position. As of June 30, 2009, shareholders'
equity and book value per share were $147.9 million and $4.67,
respectively, and tangible shareholders' equity and tangible book value per
share were $129.3 million and $4.08, respectively.
-- Headcount Reduction Balanced With Strategic New Hires. In the
beginning of July of this year, the firm reduced headcount by 6% bringing
total headcount to approximately 455 employees. The reduction was the
result of aligning operating expenses with the current revenue environment.
Over the past few months, the firm made six senior new hires, with four in
Investment Banking and two in Institutional Sales. Joseph ("Joe") Carey,
Les Franks, Zach Maurus and Geoff Cohen joined the Investment Banking team,
and Keith Mulcahy and Damian Lyons Lowe joined the Institutional Sales
team.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA
(Dollar amounts in thousands, except book value per share)
(Unaudited)
Three Months Ended June Six Months Ended June
30, 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenue Detail:
Investment banking
Capital raising $ 8,132 $ 13,854 $ 16,733 $ 21,242
Strategic advisory 6,136 9,085 8,561 13,193
----------- ----------- ----------- -----------
Total investment
banking 14,268 22,939 25,294 34,435
Brokerage 27,743 34,860 57,199 70,994
Asset management
Management fees 3,333 3,469 6,923 7,129
Private equity
realized and
unrealized gains and
(losses) - net 151 331 (1,698) (1,758)
Other securities
realized and
unrealized gains and
(losses) - net 2,961 (1,935) 3,945 (3,157)
----------- ----------- ----------- -----------
Total asset
management 6,445 1,865 9,170 2,214
Interest income 170 1,848 545 4,873
----------- ----------- ----------- -----------
Total revenues 48,626 61,512 92,208 112,516
----------- ----------- ----------- -----------
Interest expense (340) (1,498) (823) (3,578)
----------- ----------- ----------- -----------
Net revenues $ 48,286 $ 60,014 $ 91,385 $ 108,938
=========== =========== =========== ===========
Investment Banking
Transactions:
Capital raising 21 26 32 45
Strategic advisory 7 6 11 10
----------- ----------- ----------- -----------
Total transactions 28 32 43 55
----------- ----------- ----------- -----------
Average revenue per
transaction $ 508 $ 717 $ 587 $ 626
Other Metrics:
Non-GAAP compensation
ratio(1) 62.5% 67.2% 65.1% 71.1%
Non-compensation
ratio(2) 60.4% 58.5% 70.7% 64.3%
Assets under
management $ 1,337,341 $ 1,402,190 $ 1,337,341 $ 1,402,190
Shareholders' equity 147,870 350,255 147,870 350,255
Less: Other intangible
assets (18,601) (133,225) (18,601) (133,225)
----------- ----------- ----------- -----------
Tangible shareholders'
equity 129,269 217,030 129,269 217,030
=========== =========== =========== ===========
Common shares
outstanding(3) 31,689 31,288 31,689 31,288
Book value per share $ 4.67 $ 11.19 $ 4.67 $ 11.19
Tangible book value
per share $ 4.08 $ 6.93 $ 4.08 $ 6.93
(1) 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 62.3% and 69.6% for the three months ended June 30,
2009 and 2008, respectively, and 66.5% and 75.4% for the six months
ended June 30, 2009 and 2008, respectively.
(2) The firm's non-compensation ratio is the ratio of all expenses (other
than compensation and benefits expense and interest expense) to net
revenues.
(3) Includes 6,539,478 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 June 30, 2009 on a non-GAAP basis by:
-- 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 June 30, 2009 on
a non-GAAP basis by:
-- using a net loss of $8.5 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 $10.2 million and adjusting to exclude
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 has reported in this press release its net loss for the
six months ended June 30, 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 $3.4 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 six months ended June 30, 2009 on a
non-GAAP basis by:
-- using a net loss of $30.6 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 $34.1 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 $3.4 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 the expense associated with the amortization of
intangible assets acquired as a result of its acquisition of
Westwind Partners as a non-cash event, 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 and six months ended June 30, 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
revenues, 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 June 30, 2009 is set forth below
(in millions):
Net loss $ (10.2)
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 $ (8.5)
=======
A reconciliation of the firm's GAAP net loss to its non-GAAP net
loss for the six months ended June 30, 2009 is set forth below (in
millions):
Net loss $ (34.1)
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 3.4
-------
Non-GAAP net loss $ (30.6)
=======
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 and
six months ended June 30, 2009, as well as the non-GAAP net loss
per share after applying the adjustments described above:
Three Months Ended Six Months Ended
June 30, 2009 June 30, 2009
------------------ ------------------
Weighted average shares used in
computation of net loss per share:
Basic (in thousands) 32,552 32,471
Diluted (in thousands) 32,552 32,471
Net loss per share:
Basic $(0.31) $(1.05)
Diluted $(0.31) $(1.05)
Non-GAAP net loss per share:
Basic $(0.26) $(0.94)
Diluted $(0.26) $(0.94)
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 62.3% and 69.6% for the three months ended June 30,
2009 and 2008, respectively, and 66.5% and 75.4% for the six months
ended June 30, 2009 and 2008, respectively.
Three Months Ended Six Months Ended
June 30, 2009 June 30, 2009
------------------ -------------------
(in millions)
Compensation and benefits expenses $ 30.1 $ 60.7
Exclusion of the pre-tax non-cash
expense associated with initial
grant of restricted stock units - 0.1
------------------ -------------------
Non-GAAP compensation and benefits
expense $ 30.1 $ 60.6
================== ===================
Net revenues $ 48.3 $ 91.4
Exclusion of investment (gains)
losses in private equity (0.2) 1.7
------------------ -------------------
Non-GAAP net revenues $ 48.1 $ 93.1
================== ===================
Quarterly Earnings Conference Call
Thomas Weisel Partners will host its second quarter conference
call on Wednesday, July 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, Ryan Stroub, by dialing (866) 746-9599
(domestic) or (702) 696-4728 (international). The confirmation code
for both the domestic and international lines is: 19214040.
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 August 14, 2009.
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.
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.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenues:
Investment banking $ 14,268 $ 22,939 $ 25,294 $ 34,435
Brokerage 27,743 34,860 57,199 70,994
Asset management 6,445 1,865 9,170 2,214
Interest income 170 1,848 545 4,873
--------- --------- --------- ---------
Total revenues 48,626 61,512 92,208 112,516
Interest expense (340) (1,498) (823) (3,578)
--------- --------- --------- ---------
Net revenues 48,286 60,014 91,385 108,938
========= ========= ========= =========
Expenses excluding interest:
Compensation and benefits 30,061 41,788 60,739 82,177
Brokerage execution,
clearance and account
administration 6,492 6,394 12,904 12,872
Communications and data
processing 4,417 5,735 9,055 11,599
Depreciation and amortization
of property and equipment 1,926 1,933 4,529 3,820
Amortization of other
intangible assets 2,933 4,371 5,866 7,731
Marketing and promotion 1,520 3,775 3,304 7,822
Occupancy and equipment 4,581 5,274 8,668 10,661
Other expenses 7,272 7,630 20,249 15,594
--------- --------- --------- ---------
Total expenses excluding
interest 59,202 76,900 125,314 152,276
--------- --------- --------- ---------
Loss before taxes (10,916) (16,886) (33,929) (43,338)
Provision for taxes (tax
benefit) (706) (6,759) 134 (15,406)
--------- --------- --------- ---------
Net loss $ (10,210) $ (10,127) $ (34,063) $ (27,932)
========= ========= ========= =========
Net loss per share:
Basic net loss per share $ (0.31) $ (0.31) $ (1.05) $ (0.85)
Diluted net loss per share $ (0.31) $ (0.31) $ (1.05) $ (0.85)
Weighted average shares used in
computation of per share data:
Basic weighted average
shares outstanding 32,552 32,519 32,471 32,754
Diluted weighted average
shares outstanding 32,552 32,519 32,471 32,754
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