NEW YORK, April 27, 2018 /CNW/ - Oppenheimer Holdings
Inc. (NYSE: OPY) today reported net income of $6.7 million or $0.51 basic net income per share for the first
quarter of 2018 compared with a net loss of $4.8 million or $0.36 basic net loss per share for the first
quarter of 2017. Income before income taxes from continuing
operations was $9.6 million for the
first quarter of 2018 compared with a loss before income taxes from
continuing operations of $7.0 million
for the first quarter of 2017. Revenue from continuing operations
for the first quarter of 2018 was $234.5
million compared with revenue from continuing operations of
$213.3 million for the first quarter
of 2017, an increase of 10.0%.
|
Summary Operating
Results (Unaudited)
|
('000s, except Per
Share Amounts)
|
|
|
For the 3-Months
Ended
|
|
|
3/31/2018
|
|
3/31/2017
|
|
%
|
Revenue
|
|
$
|
234,530
|
|
$
|
213,261
|
|
10.0
|
Expenses
|
|
224,905
|
|
220,286
|
|
2.1
|
Income (Loss) Before
Income Taxes from Continuing Operations
|
|
9,625
|
|
(7,025)
|
|
*
|
Income
Taxes
|
|
2,916
|
|
(1,687)
|
|
*
|
Net Income (Loss)
from Continuing Operations
|
|
6,709
|
|
(5,338)
|
|
*
|
Net Income from
Discontinued Operations
|
|
—
|
|
587
|
|
(100.0)
|
Net Income (Loss
)
|
|
6,709
|
|
(4,751)
|
|
*
|
Less Net Income
Attributable to Non-Controlling Interest, Net of Tax
|
|
4
|
|
96
|
|
(95.8)
|
Net Income (Loss)
Attributable to Oppenheimer Holdings Inc.
|
|
$
|
6,705
|
|
$
|
(4,847)
|
|
*
|
|
|
|
|
|
Basic Net Income
(Loss) Per Share (1)
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
0.51
|
|
$
|
(0.40)
|
|
*
|
|
Discontinued
Operations
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net Income (Loss) Per
Share
|
|
$
|
0.51
|
|
$
|
(0.36)
|
|
*
|
|
|
|
|
|
Diluted Net Income
(Loss) Per Share (1)
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
0.48
|
|
$
|
(0.40)
|
|
*
|
|
Discontinued
Operations
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net Income (Loss) Per
Share
|
|
$
|
0.48
|
|
$
|
(0.36)
|
|
*
|
|
|
|
|
|
Weighted Average
Number of Common Shares Outstanding
|
|
|
|
|
|
Basic
|
|
13,240
|
|
13,399
|
|
(1.2)
|
|
Diluted
|
|
13,977
|
|
13,399
|
|
4.3
|
|
|
|
|
|
|
|
As
of
|
|
|
|
3/31/2018
|
|
12/31/2017
|
|
%
|
Book Value Per Share
(1)
|
|
$
|
40.04
|
|
$
|
39.55
|
|
1.2
|
Tangible Book Value
Per Share (1)(2)
|
|
$
|
27.20
|
|
$
|
26.74
|
|
1.7
|
(1)
|
Attributable to
Oppenheimer Holdings Inc.
|
(2)
|
Represents book value
less goodwill and intangible assets divided by number of shares
outstanding.
|
*
|
Percentage not
meaningful.
|
The S&P 500 index decreased 1.2% during the first quarter of
2018 as volatility increased in the equity markets for the first
time in several years. A continuing strong economy, low
unemployment, and lower individual and corporate tax rates were not
sufficient to offset uncertainty around interest rate increases,
threats of increased tariffs, and a potential trade war.
These factors as well as continued political uncertainty in
Washington dampened investor
enthusiasm during the period. The Federal Reserve raised
short-term interest rates by 25 basis points in March 2018, the sixth 25 basis point increase
since the Fed began raising rates in December 2015. The
increase in short-term interest rates coupled with low inflation
expectations led to a narrowing of the spread between the 2-Year
and the 10-Year Treasury Yields to lows not seen since the fourth
quarter of 2007.
Albert G. Lowenthal, Chairman and
CEO commented, "Our results continued to improve during the period
driven by increased investment banking activity, higher asset
management fee-based revenues, as well as higher fees from the
FDIC-insured bank deposit program. Retail and institutional
commission revenues declined overall for the period reflecting the
continued downward trend in the transaction-based business as
investors continued to show a preference for passive strategies
amid lower levels of focus on individual security selection and
lower turnover. Investment banking results were positively
impacted by increased participations in equities underwritings and
higher advisory fees from M&A transactions. The fee-based
business continued to perform well, driven by higher asset
valuations over the comparable period as clients continue to
embrace a managed product solution. Increases in short-term
interest rates continued to benefit our bank deposit fee
income. We are increasingly optimistic that these positive
trends will continue and that we can continue to build momentum for
our business."
Financial Highlights
- Commission revenue was $83.4
million for the first quarter of 2018, a decrease of 3.8%
compared with $86.7 million for the
first quarter of 2017 due to lower transaction-based revenues in
both the retail and institutional businesses during the first
quarter of 2018.
- Advisory fees were $77.5 million
for the first quarter of 2018, an increase of 11.7% compared with
$69.4 million for the first quarter
of 2017 due to a higher level of client assets under management
("AUM").
- Investment banking revenue increased 56.5% to $28.2 million for the first quarter of 2018
compared with $18.0 million for the
first quarter of 2017 due to higher equity underwriting fees as
well as higher merger and acquisition advisory fees during the
first quarter of 2018.
- Bank deposit sweep income was $25.3
million for the first quarter of 2018, an increase of 79.1%
compared with $14.1 million for the
first quarter of 2017 due to higher short-term interest rates
during the first quarter of 2018.
- Interest revenue was $12.2
million for the first quarter of 2018, an increase of 15.7%
compared with $10.6 million for the
first quarter of 2017 due primarily to an increase in interest
revenue on margin extended to customers during the first quarter of
2018.
- Principal transactions revenue decreased 49.3% to $2.7 million for the first quarter of 2018
compared with $5.4 million for the
first quarter of 2017 due to lower trading income from corporate
and municipal bonds during the first quarter of 2018.
|
Business Segment
Results (Unaudited)
|
('000s)
|
|
|
|
|
|
|
|
|
For the 3-Months
Ended
|
|
|
3/31/2018
|
|
3/31/2017
|
|
%
|
Revenue
|
|
|
|
|
|
|
|
Private
Client
|
|
$
|
154,094
|
|
|
$
|
137,389
|
|
|
12.2
|
|
Asset
Management
|
|
17,644
|
|
|
18,666
|
|
|
(5.5)
|
|
Capital
Markets
|
|
61,529
|
|
|
55,903
|
|
|
10.1
|
|
Corporate/Other
|
|
1,263
|
|
|
1,303
|
|
|
(3.1)
|
|
|
|
234,530
|
|
|
213,261
|
|
|
10.0
|
Income (Loss)
Before Income Taxes from Continuing Operations
|
|
|
|
|
|
|
|
Private
Client
|
|
40,162
|
|
|
28,762
|
|
|
39.6
|
|
Asset
Management
|
|
3,718
|
|
|
3,711
|
|
|
0.2
|
|
Capital
Markets
|
|
(6,057)
|
|
|
(12,614)
|
|
|
(52.0)
|
|
Corporate/Other
|
|
(28,198)
|
|
|
(26,884)
|
|
|
4.9
|
|
|
|
$
|
9,625
|
|
|
$
|
(7,025)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
*
|
Percentage not
meaningful.
|
Private Client
Private Client reported revenue of $154.1
million for the first quarter of 2018, 12.2% higher than the
first quarter of 2017 due to increased advisory fee revenue from
higher AUM, higher fees earned on client deposits in the
FDIC-insured bank deposit program, and higher margin interest
revenue during the first quarter of 2018. Income before income
taxes was $40.2 million for the first
quarter of 2018, an increase of 39.6% compared with the first
quarter of 2017 due to the increases in revenue referred to above
during the first quarter of 2018.
- Client assets under administration were $84.9 billion at March 31,
2018 compared with $86.9
billion at December 31, 2017,
a decrease of 2.3%.
- Financial adviser headcount was 1,082 at the end of the first
quarter of 2018, down from 1,159 at the end of the first quarter of
2017. The decline in financial adviser headcount since the first
quarter of 2017 has resulted from the Company's attention to
adviser productivity. The decline in headcount also has been
impacted by retirements and normal attrition.
- Retail commissions were $51.1
million for the first quarter of 2018, a decrease of 1.4%
from the first quarter of 2017 due to reduced transaction volumes
from retail investors during the first quarter of 2018.
- Advisory fee revenue on traditional and alternative managed
products was $60.1 million for the
first quarter of 2018, an increase of 16.9% from the first quarter
of 2017 (see Asset Management below for further information). The
increase in advisory fees was due to the increase in the value of
AUM.
- Bank deposit sweep income was $25.3
million for the first quarter of 2018, an increase of 79.1%
compared with $14.1 million for the
first quarter of 2017 due to higher short-term interest rates
during the first quarter of 2018.
Asset Management
Asset Management reported revenue of $17.6 million for the first quarter of 2018, 5.5%
lower than the first quarter of 2017 due to a change in the method
of reporting management fees earned through an investment adviser
of alternative investments during the first quarter of 2018.
Income before income taxes was $3.7
million for the first quarter of 2018, an increase of 0.2%
compared with the first quarter of 2017.
- Advisory fee revenue on traditional and alternative managed
products was $17.4 million for the
first quarter of 2018, a decrease of 3.3% from the first quarter of
2017. Advisory fees are calculated based on the value of AUM at the
end of the prior quarter which totaled $28.3
billion at December 31, 2017
($24.8 billion at December 31, 2016) and are allocated to the
Private Client and Asset Management business segments.
- AUM increased 9.3% to $28.2
billion at March 31, 2018
compared with $25.8 billion at
March 31, 2017. AUM at March 31, 2018 is the basis for advisory fee
billings for the second quarter of 2018. The increase in AUM was
comprised of asset appreciation of $1.3
billion and net contributions of assets of $1.1 billion.
Capital Markets
Capital Markets reported revenue of $61.5
million for the first quarter of 2018, 10.1% higher than the
first quarter of 2017 primarily due to higher equities underwriting
and merger and acquisition advisory fees partially offset by lower
institutional equities and fixed income commissions during the
first quarter of 2018. Loss before income taxes was
$6.1 million for the first quarter of
2018, compared with a loss before income taxes of $12.6 million for the first quarter of 2017
primarily due to a charge related to a value-added tax assessment
levied by the Israel VAT Authority in the first quarter of
2017.
- Institutional equities commissions decreased 3.3% to
$23.2 million for the first quarter
of 2018 compared with the first quarter of 2017 as higher
volatility during late January and early February of 2018 was not
enough to offset lower client trading activity in March of
2018.
- Advisory fees from investment banking activities increased
23.6% to $8.9 million in the first
quarter of 2018 compared with the first quarter of 2017 due to
higher fees earned on completed mergers and acquisitions
transactions during the first quarter of 2018.
- Equity underwriting fees increased 347.1% to $15.2 million for the first quarter of 2018
compared with the first quarter of 2017 due to the Company's
increased focus on equity issuance leading to higher equity
underwriting activity during the first quarter of 2018.
- Revenue from Taxable Fixed Income decreased 15.4% to
$12.1 million for the first quarter
of 2018 compared with the first quarter of 2017 due to concerns
around a rising interest rate environment which led to decreased
institutional fixed income activity during the first quarter of
2018.
- Public Finance and Municipal Trading revenue decreased 52.0% to
$2.4 million for the first quarter of
2018 compared with the first quarter of 2017 due to lower municipal
income trading revenue amid more volatile markets.
Compensation and Related Expenses
Compensation and related expenses (including salaries,
production and incentive compensation, share-based compensation,
deferred compensation, and other benefit-related items) totaled
$153.1 million during the first
quarter of 2018, an increase of 6.4% compared with the first
quarter of 2017. Higher production-related, incentive, and
share-based compensation expenses were partially offset by lower
deferred compensation costs during the first quarter of 2018.
Compensation and related expenses as a percentage of revenue was
65.3% during the first quarter of 2018 compared with 67.5% during
the first quarter of 2017.
Non-Compensation Expenses
Non-compensation expenses were $71.8
million during the first quarter of 2018, a decrease of 6.0%
compared with $76.4 million during
the first quarter of 2017 primarily due to a charge related to a
value-added tax assessment levied by the Israel VAT Authority in
the first quarter of 2017 as well as lower legal and regulatory
costs partially offset by higher interest costs during the first
quarter of 2018.
Income Taxes
The effective income tax rate from continuing operations for the
first quarter of 2018 was 30.3% (tax expense) compared with 24.0%
(tax benefit) for the first quarter of 2017 and reflects the
Company's estimate of the annual effective tax rate adjusted for
certain discrete items. The low estimated effective tax rate for
the first quarter of 2018 is due to the lower Federal tax rate of
21% (versus 35%) as a result of the passage of the Tax Cuts and
Jobs Act ("TCJA") in December 2017
offset by foreign income inclusion and larger non-deductible
expenses related to items such as entertainment, fringe benefits,
regulatory fines and penalties, and limitations around the
deductibility of executive compensation under the TCJA.
Balance Sheet and Liquidity
- At March 31, 2018, total equity
was $530.5 million compared with
$523.9 million at December 31, 2017.
- At March 31, 2018, book value per
share was $40.04 (compared with
$39.55 at December 31, 2017) and tangible book value per
share was $27.20 (compared with
$26.74 at December 31, 2017).
- The Company's level 3 assets, primarily auction rate
securities, were $87.5 million at
March 31, 2018 (compared with
$87.6 million at December 31, 2017).
Dividend Announcement
The Company today announced a quarterly dividend in the amount
of $0.11 per share payable on
May 25, 2018 to holders of Class A
non-voting and Class B voting common stock of record on
May 11, 2018.
Company Information
Oppenheimer Holdings Inc., through its operating subsidiaries,
is a leading middle market investment bank and full service
broker-dealer that provides a wide range of financial services
including retail securities brokerage, institutional sales and
trading, investment banking (both corporate and public finance),
research, market-making, trust, and investment management.
With roots tracing back to 1881, the firm is headquartered in
New York and has 92 retail branch
offices in the United States and
has institutional businesses located in London, Tel
Aviv, and Hong Kong.
Forward-Looking Statements
This press release includes certain "forward-looking statements"
relating to anticipated future performance. For a discussion
of the factors that could cause future performance to be different
than anticipated, reference is made to Factors Affecting
"Forward-Looking Statements" and Part 1A – Risk Factors in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2017.
|
Oppenheimer
Holdings Inc.
Consolidated
Statements of Operations (Unaudited)
|
('000s, except Per
Share Amounts)
|
|
|
For the 3-Months
Ended
|
|
|
3/31/2018
|
|
|
3/31/2017
|
|
%
|
REVENUE
|
|
Commissions
|
$
|
83,407
|
|
$
|
86,717
|
|
(3.8)
|
|
Advisory
fees
|
77,548
|
|
69,409
|
|
11.7
|
|
Investment
banking
|
28,210
|
|
18,021
|
|
56.5
|
|
Bank deposit sweep
income
|
25,297
|
|
14,126
|
|
79.1
|
|
Interest
|
12,227
|
|
10,565
|
|
15.7
|
|
Principal
transactions, net
|
2,726
|
|
5,373
|
|
(49.3)
|
|
Other
|
5,115
|
|
9,050
|
|
(43.5)
|
|
Total
revenue
|
234,530
|
|
213,261
|
|
10.0
|
EXPENSES
|
|
Compensation and
related
expenses
|
153,104
|
|
143,878
|
|
6.4
|
|
Communications and
technology
|
18,688
|
|
17,706
|
|
5.5
|
|
Occupancy and
equipment costs
|
15,428
|
|
15,272
|
|
1.0
|
|
Clearing and exchange
fees
|
6,096
|
|
5,854
|
|
4.1
|
|
Interest
|
8,963
|
|
5,356
|
|
67.3
|
|
Other
|
22,626
|
|
32,220
|
|
(29.8)
|
|
Total
expenses
|
224,905
|
|
220,286
|
|
2.1
|
Income (Loss) before
income taxes from continuing operations
|
9,625
|
|
(7,025)
|
|
*
|
Income
taxes
|
2,916
|
|
(1,687)
|
|
*
|
Net income (loss)
from continuing operations
|
6,709
|
|
(5,338)
|
|
*
|
|
|
|
|
Discontinued
operations
|
|
|
|
Income from
discontinued operations
|
—
|
|
976
|
|
(100.0)
|
Income
taxes
|
—
|
|
389
|
|
(100.0)
|
Net income from
discontinued operations
|
—
|
|
587
|
|
(100.0)
|
|
|
|
|
Net income
(loss)
|
6,709
|
|
(4,751)
|
|
*
|
Less net income
attributable to non-controlling interest, net of tax
|
4
|
|
96
|
|
(95.8)
|
Net income (loss)
attributable to Oppenheimer Holdings Inc.
|
$
|
6,705
|
|
$
|
(4,847)
|
|
*
|
|
|
|
|
|
Basic net income
(loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
Continuing
operations
|
$
|
0.51
|
|
$
|
(0.40)
|
|
*
|
|
Discontinued
operations
|
—
|
|
0.04
|
|
(100.0)
|
|
Net income (loss) per
share
|
$
|
0.51
|
|
$
|
(0.36)
|
|
*
|
Diluted net income
(loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
Continuing
operations
|
$
|
0.48
|
|
$
|
(0.40)
|
|
*
|
|
Discontinued
operations
|
—
|
|
0.04
|
|
(100.0)
|
|
Net income (loss) per
share
|
$
|
0.48
|
|
$
|
(0.36)
|
|
*
|
Weighted Average
Number of Common Shares Outstanding
|
|
|
|
|
Basic
|
13,240
|
|
13,399
|
|
(1.2)
|
|
Diluted
|
13,977
|
|
13,399
|
|
4.3
|
|
(1)
|
Certain prior period
amounts have been reclassified to conform to the current period
presentation.
|
*
|
Percentage not
meaningful.
|
View original
content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-first-quarter-2018-earnings-and-announces-quarterly-dividend-300637802.html
SOURCE Oppenheimer Holdings Inc.