Thomas Weisel Partners Group, Inc. (NASDAQ: TWPG) today released
results for the three months and year ended December 31, 2009.
The firm reported a net loss of $13.7 million, or $0.42 per
share, for the fourth quarter of 2009 compared with a net loss of
$66.1 million, or $2.08 per share, for the fourth quarter of 2008.
For the year ended December 31, 2009, the firm reported a net loss
of $62.2 million, or $1.91 per share, compared with a net loss of
$203.3 million, or $6.29 per share, for the year ended December 31,
2008. The results for the fourth quarter and full year of 2008
include a valuation allowance on our deferred tax asset of $44.8
million or $1.38 per share and the results for the full year of
2008 also include a non-cash goodwill impairment charge of $92.6
million or $2.86 per share.
Total net revenues increased 91% to $60.1 million for the fourth
quarter of 2009 versus $31.5 million for the fourth quarter of
2008. For the year ended December 31, 2009, total net revenues were
$195.1 million, a 3% increase compared with $189.5 million for the
year ended December 31, 2008.
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 $12.9 million, or $0.39 per share, for the fourth
quarter of 2009 and a non-GAAP net loss of $56.3 million, or $1.73
per share, for the year ended December 31, 2009. A reconciliation
of GAAP results to these non-GAAP measures is discussed below under
"Non-GAAP Financial Measures."
"Our fourth quarter revenues were higher than any quarter in the
last two years and reflect a strong rebound in investment banking
revenues. Our broad sector exposure contributed to our results as
over 65% of total investment banking revenues in 2009 were derived
from the mining and technology sectors, which continue to remain
active. Additionally, as we look forward, the IPO calendar
continues to build and the number of mandates we've received has
increased significantly, which should positively improve results,"
said Thomas W. Weisel, Chairman and CEO of Thomas Weisel Partners.
"Throughout the last two years, we have taken the necessary steps
through opportunistic hires and significant expense reductions to
position the firm for future profitability. With the capital
markets environment improving and our focus on top-line growth, we
see this period as an inflection point in our business."
Business Overview
-- Investment Banking Revenues. Investment banking revenues were $30.3
million in the fourth quarter of 2009 compared with $11.3 million in the
fourth quarter of 2008 and $15.6 million in the third quarter of 2009, an
increase of 167% and 95%, respectively. Total transactions for the fourth
quarter of 2009 were 49 compared with 14 in the year-ago quarter and 23 in
the third quarter of 2009. The increase in revenues from the third quarter
of 2009 was attributable to a significant increase in the number of equity
capital raising transactions, as well as strategic advisory transactions
with larger values.
-- Brokerage Revenues. Brokerage revenues were $21.7 million in the fourth
quarter of 2009 compared with $27.3 million in the fourth quarter of 2008
and $24.3 million in the third quarter of 2009, a 20% and 10% decrease,
respectively. Revenues in the fourth quarter of 2009 decreased from the
third quarter of 2009 due to a decline in U.S. and Canadian equity
commissions, which primarily were impacted by lower market volumes.
-- Asset Management Revenues. Asset management revenues were $8.4 million
in the fourth quarter of 2009 compared with net losses of $7.0 million in
the fourth quarter of 2008 and revenues of $3.9 million in the third
quarter of 2009. Asset management revenues consisted of management fees of
$4.5 million, net realized and unrealized gains in warrants and other
securities of $3.1 million and net realized and unrealized private equity
gains of $0.8 million. Assets under management were $1.5 billion as of
December 31, 2009.
-- Compensation and Benefits Expenses. Compensation and benefits expenses
were $45.3 million in the fourth quarter of 2009 compared with $28.1
million in the fourth quarter of 2008 and $27.3 million in the third
quarter of 2009, a 61% and 66% increase, respectively.
The non-GAAP compensation ratio, which is defined in note (1) below,
increased to 76% in the fourth quarter of 2009 compared with the non-GAAP
ratio of 66% in the year-ago period and 63% in the third quarter of 2009.
For the full year, the non-GAAP compensation ratio was 68% versus 69% in
2008. A reconciliation of GAAP results to these non-GAAP measures is
discussed below under "Non-GAAP Financial Measures."
-- Non-compensation Expenses. Non-compensation expenses were $27.6 million
in the fourth quarter of 2009 compared with $36.1 million in the fourth
quarter of 2008 and $30.3 million in the third quarter of 2009, a decrease
of 24% from the year-ago quarter and 9% from the third quarter of 2009.
-- Provision for Taxes. The firm recorded a tax expense of $0.9 million in
the fourth quarter of 2009 related entirely to taxable income attributable
to the firm's Canadian operations. 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 in 2009.
-- Capital. As of December 31, 2009, the firm's cash and cash equivalents
were $97.1 million, shareholders' equity and book value per share were
$131.3 million and $4.14, respectively, and tangible shareholders' equity
and tangible book value per share were $114.9 million and $3.63,
respectively.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA
(Dollar amounts in thousands, except book value per share)
(Unaudited)
Three Months Ended
December 31, Year Ended December 31,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenue Detail:
Investment banking
Capital raising $ 18,026 $ 2,979 $ 45,188 $ 28,183
Strategic advisory 12,277 8,360 25,977 35,122
----------- ----------- ----------- -----------
Total investment
banking 30,303 11,339 71,165 63,305
Brokerage 21,715 27,293 103,170 131,939
Asset management
Management fees 4,504 3,807 15,205 14,691
Private equity
realized and
unrealized gains and
(losses) - net 811 (9,280) (952) (13,414)
Other securities
realized and
unrealized gains and
(losses) - net 3,047 (1,532) 7,211 (8,397)
----------- ----------- ----------- -----------
Total asset
management 8,362 (7,005) 21,464 (7,120)
Interest income 170 640 913 7,341
----------- ----------- ----------- -----------
Total revenues 60,550 32,267 196,712 195,465
----------- ----------- ----------- -----------
Interest expense (433) (724) (1,656) (5,938)
----------- ----------- ----------- -----------
Net revenues $ 60,117 $ 31,543 $ 195,056 $ 189,527
=========== =========== =========== ===========
Investment Banking
Transactions:
Capital raising 43 6 92 59
Strategic advisory 6 8 23 23
----------- ----------- ----------- -----------
Total transactions 49 14 115 82
----------- ----------- ----------- -----------
Average revenue per
transaction $ 618 $ 810 $ 619 $ 772
Other Metrics:
Non-GAAP compensation
ratio(1) 76.4% 66.1% 68.0% 69.4%
Non-compensation
ratio(2) 46.0% 114.6% 62.8% 125.5%
Assets under
management $ 1,496,721 $ 1,342,066 $ 1,496,721 $ 1,342,066
Shareholders' equity $ 131,337 $ 171,901 $ 131,337 $ 171,901
Less: Other intangible
assets (16,401) (23,229) (16,401) (23,229)
----------- ----------- ----------- -----------
Tangible shareholders'
equity $ 114,936 $ 148,672 $ 114,936 $ 148,672
=========== =========== =========== ===========
Common shares
outstanding(3) 31,693 30,789 31,693 30,789
Book value per share $ 4.14 $ 5.58 $ 4.14 $ 5.58
Tangible book value
per share $ 3.63 $ 4.83 $ 3.63 $ 4.83
(1) The firm's non-GAAP compensation ratio is the ratio of the firm's
compensation and benefits expenses (excluding expenses associated with
the initial grant of restricted stock units) 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 75.4% and 89.2%
for the three months ended December 31, 2009 and 2008, respectively,
and 68.4% and 77.7% for the year ended December 31, 2009 and 2008,
respectively.
(2) The firm's non-compensation ratio is the ratio of total expenses (other
than compensation and benefits expenses and interest expense) to net
revenues.
(3) Includes 6,236,948 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 and
basic and diluted loss per share for the three months ended
December 31, 2009 on a non-GAAP basis by:
-- adjusting its GAAP net loss of $13.7 million 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 $0.8
million;
-- using its non-GAAP net loss of $12.9 million as the numerator of its
non-GAAP basic and diluted loss per share calculations; 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 and
basic and diluted loss per share for the year ended December 31,
2009 on a non-GAAP basis by:
-- adjusting its GAAP net loss of $62.2 million 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 $5.8 million;
-- using its non-GAAP net loss of $56.3 million as the numerator of its
non-GAAP basic and diluted loss per share calculations; 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.
A reconciliation of the firm's GAAP net loss to its non-GAAP net
loss for the three months and year ended December 31, 2009 is set
forth below (in millions):
Three Months
Ended Year Ended
December 31, December 31,
2009 2009
------------ ------------
(in millions)
Net loss $ (13.7) $ (62.2)
Exclusion of the after-tax non-cash expense
associated with the 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 0.8 5.8
------------ ------------
Non-GAAP net loss $ (12.9) $ (56.3)
============ ============
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 and year ended December 31,
2009, as well as the non-GAAP net loss per share after applying the
adjustments described above:
Three Months
Ended Year Ended
December 31, December 31,
2009 2009
------------ ------------
(in millions)
Weighted average shares used in computation of
net loss per share:
Basic (in thousands) 32,789 32,515
Diluted (in thousands) 32,789 32,515
Net loss per share:
Basic $ (0.42) $ (1.91)
Diluted $ (0.42) $ (1.91)
Non-GAAP net loss per share:
Basic $ (0.39) $ (1.73)
Diluted $ (0.39) $ (1.73)
The firm's non-GAAP compensation ratio is the ratio of the
firm's compensation and benefits expenses (excluding expenses
relating to the initial grant of restricted stock units) 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 75.4% and 89.2% for the three months ended December 31,
2009 and 2008, respectively, and 68.4% and 77.7% for the year ended
December 31, 2009 and 2008, respectively.
Three Months
Ended Year Ended
December 31, December 31,
2009 2009
------------ -------------
(in millions)
Compensation and benefits expenses $ 45.3 $ 133.4
Exclusion of the pre-tax non-cash expense
associated with the initial grant of
restricted stock units - 0.2
------------ -------------
Non-GAAP compensation and benefits expense $ 45.3 $ 133.2
============ =============
Net revenues $ 60.1 $ 195.1
Exclusion of investment (gains) losses in
private equity (0.8) 0.9
------------ -------------
Non-GAAP net revenues $ 59.3 $ 196.0
============ =============
Three Months
Ended Year Ended
December 31, December 31,
2008 2008
------------- -------------
(in millions)
Compensation and benefits expenses $ 28.1 $ 147.2
Exclusion of the pre-tax non-cash expense
associated with the initial grant of
restricted stock units 1.1 6.3
------------- -------------
Non-GAAP compensation and benefits expense $ 27.0 $ 140.9
============= =============
Net revenues $ 31.5 $ 189.5
Exclusion of investment (gains) losses in
private equity 9.3 13.4
------------- -------------
Non-GAAP net revenues $ 40.8 $ 202.9
============= =============
The firm's non-compensation expenses are calculated by adjusting
its total expenses to exclude interest minus compensation and
benefits expenses.
Three Months
Ended Year Ended
December 31, December 31,
2009 2009
------------- -------------
(in millions)
Total expenses excluding interest $ 72.9 $ 255.9
Less compensation and benefits expenses 45.3 133.4
------------- -------------
Non-compensation expenses $ 27.6 $ 122.5
============= =============
Three Months
Ended Year Ended
December 31, December 31,
2008 2008
------------- -------------
(in millions)
Total expenses excluding interest $ 64.3 $ 385.1
Less compensation and benefits expenses 28.2 147.2
------------- -------------
Non-compensation expenses $ 36.1 $ 237.9
============= =============
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. Additionally,
the firm views the exclusion of its grant of restricted stock units
from compensation and benefits expense as a non-GAAP compensation
and benefits expense and the exclusion of investment gains and
losses in its private equity portfolios from net revenues as
non-GAAP net revenues for calculating the firm's non-GAAP
compensation ratio. The firm's management has utilized non-GAAP
calculations of its compensation ratio, net revenues 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 and year ended December 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 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 and these non-GAAP measures of the firm's
financial performance should be considered together.
Quarterly Earnings Conference Call
Thomas Weisel Partners will host its fourth quarter and fiscal
year 2009 earnings results conference call on Tuesday, January 26,
2010 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: 50048326.
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 broadcast will be available through the above-referenced
website beginning one hour following the completion of the call
through February 12, 2010.
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, Dallas, Denver, New York, Portland, 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 Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues:
Investment banking $ 30,303 $ 11,339 $ 71,165 $ 63,305
Brokerage 21,715 27,293 103,170 131,939
Asset management 8,362 (7,005) 21,464 (7,120)
Interest income 170 640 913 7,341
---------- ---------- ---------- ----------
Total revenues 60,550 32,267 196,712 195,465
Interest expense (433) (724) (1,656) (5,938)
---------- ---------- ---------- ----------
Net revenues 60,117 31,543 195,056 189,527
========== ========== ========== ==========
Expenses excluding
interest:
Compensation and benefits 45,304 28,140 133,355 147,186
Brokerage execution,
clearance and account
administration 6,184 6,769 25,211 27,102
Communications and data
processing 4,264 5,094 17,490 22,195
Depreciation and
amortization of property
and equipment 1,495 2,063 7,859 7,784
Amortization of other
intangible assets 1,404 3,690 9,934 15,254
Goodwill impairment - - - 92,597
Marketing and promotion 3,473 2,764 8,860 13,915
Occupancy and equipment 3,995 8,260 19,869 26,509
Other expenses 6,815 7,498 33,279 32,537
---------- ---------- ---------- ----------
Total expenses
excluding interest 72,934 64,278 255,857 385,079
---------- ---------- ---------- ----------
Loss before taxes (12,817) (32,735) (60,801) (195,552)
Provision for taxes 907 33,406 1,377 7,700
---------- ---------- ---------- ----------
Net loss $ (13,724) $ (66,141) $ (62,178) $ (203,252)
========== ========== ========== ==========
Net loss per share:
Basic net loss per share $ (0.42) $ (2.08) $ (1.91) $ (6.29)
Diluted net loss per
share $ (0.42) $ (2.08) $ (1.91) $ (6.29)
Weighted average shares
used in computation of per
share data:
Basic weighted average
shares outstanding 32,789 31,825 32,515 32,329
Diluted weighted average
shares outstanding 32,789 31,825 32,515 32,329
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