NEW YORK, July 26, 2019 /CNW/ - Oppenheimer Holdings Inc.
(NYSE: OPY) (the "Company") today reported net income of
$12.4 million or $0.95 basic net income per share for the second
quarter of 2019 compared with net income of $8.9 million or $0.67 basic net income per share for the second
quarter of 2018. Income before income taxes was $17.4 million for the second quarter of 2019
compared with income before income taxes of $12.5 million for the second quarter of 2018.
Summary Operating
Results (Unaudited)
|
('000s, except Per
Share Amounts)
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
6/30/2019
|
|
|
6/30/2018
|
|
%
Change
|
|
6/30/2019
|
|
|
|
6/30/2018
|
|
|
%
Change
|
Revenue
|
$
|
250,935
|
|
$
|
242,556
|
|
3.5
|
|
$
|
502,705
|
|
|
$
|
477,086
|
|
|
5.4
|
Expenses
|
233,544
|
|
230,039
|
|
1.5
|
|
469,262
|
|
|
454,948
|
|
|
3.1
|
Income Before Income
Taxes
|
17,391
|
|
12,517
|
|
38.9
|
|
33,443
|
|
|
22,138
|
|
|
51.1
|
Income
Taxes
|
5,016
|
|
3,662
|
|
37.0
|
|
9,874
|
|
|
6,578
|
|
|
50.1
|
Net
Income
|
$
|
12,375
|
|
$
|
8,855
|
|
39.8
|
|
$
|
23,569
|
|
|
$
|
15,560
|
|
|
51.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.95
|
|
$
|
0.67
|
|
41.8
|
|
$
|
1.81
|
|
|
$
|
1.17
|
|
|
54.7
|
Diluted
|
$
|
0.89
|
|
$
|
0.63
|
|
41.3
|
|
$
|
1.70
|
|
|
$
|
1.11
|
|
|
53.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
|
As
of
|
|
|
|
|
|
|
6/30/2019
|
|
|
6/30/2018
|
|
%
Change
|
|
|
6/30/2019
|
|
|
|
12/31/2018
|
|
|
%
Change
|
Book Value Per
Share
|
$
|
43.84
|
|
$
|
40.61
|
|
8.0
|
|
$
|
43.84
|
|
|
$
|
41.81
|
|
|
4.9
|
Tangible Book Value
Per Share (1)
|
$
|
30.62
|
|
$
|
27.78
|
|
10.2
|
|
$
|
30.62
|
|
|
$
|
28.78
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding
|
|
|
|
Dividend Announcement
The Company announced an increase in its quarterly dividend from
$0.11 to $0.12 per share, a 9.1% increase, effective for
the second quarter of 2019 and payable on August 23, 2019 to holders of Class A non-voting
and Class B voting common stock of record on August 9, 2019.
Senior Secured Note Redemption Announcement
The Company also announced that it will be redeeming a total of
$50 million (25%) of its 6.75% Senior
Secured Notes due 2022 (the "Notes"). The Company has
delivered to the Trustee for the holders of the Notes a notice of
partial redemption, notifying the Trustee of the Company's intent
to redeem on August 25, 2019 (the
"Redemption Date") $50 million
aggregate principal amount of the outstanding Notes at a redemption
price equal to 103.375% ("Call Premium") of the principal amount of
the Notes to be redeemed, plus accrued and unpaid interest thereon
to the Redemption Date. The Company will incur $1.7 million in costs associated with paying the
Call Premium on the Notes during the third quarter of 2019. Upon
completion of the redemption, $150
million aggregate principal amount of the Notes will remain
outstanding. The redemption of 25% of the Notes will reduce
the Company's interest costs by $3.8
million annually.
Second Quarter 2019 Highlights
- Quarterly revenues in excess of $250
million
- Profit margin in Private Client Division of 26.8%
- Assets under management increased 5.2% to $30.2 billion at June 30,
2019, a record high, when compared to $28.7 billion at June 30,
2018
- Auction rate securities ("ARS") tender offer due to take place
in July 2019 will result in an
additional $20 million in liquidity
in the third quarter of 2019. As a result of the intent to
participate in the tender offer, the Company marked the relevant
ARS positions at their tender price at June
30, 2019 which resulted in:
-
- an unrealized loss of $2.4
million in the second quarter of 2019; and
- a reduction in "Level 3" securities to zero at June 30, 2019 for the first time in over a
decade
- Legal and regulatory costs declined by approximately 70% in the
second quarter of 2019 compared with the second quarter of 2018
- Book value per share of $43.84, a
record high
- The Company purchased 167,209 shares of OPY Class A non-voting
common stock under its share purchase program during the second
quarter of 2019 for $4.3 million at
an average share price of $25.82
During the second quarter of 2019, the major stock indices in
the U.S. increased 3.8% adding on to the 13.1% gains in the first
quarter of 2019. The equities markets had their best June in
decades while all three major indices closed near all-time highs.
The markets benefited from expectations that the U.S. Federal
Reserve will decrease short-term interest rates in the near term. A
continued strong U.S. economy, record low unemployment, and
optimism around trade negotiations between the U.S. and
China helped fuel the rally in the
equities markets. The 10-year Treasury yield was 2.41% at the end
of the first quarter of 2019 and fell to 2.00% at the end of the
second quarter of 2019 due to expectations around the Fed's
loosening of monetary policy.
Albert G. Lowenthal, Chairman and
CEO commented, "We are pleased with the performance of the business
during the second quarter of 2019. Although our results were aided
by a strong equities market, the firm's core businesses performed
well and we believe that the strong underlying economic landscape
will continue to provide support for the growth objectives of the
firm. After the significant increases in the equities markets
during the first quarter of 2019, our asset management fees for the
second quarter increased 4.4%. Our investment banking business
performed well as a result of increased fees from advisory
assignments and equity underwritings and we are optimistic about
our business pipeline for the second half of 2019.
Our institutional equities commission business showed
improvement during the second quarter of 2019 as a result of strong
execution-driven commission growth in block trading and better
recognition and monetization of our high value research content.
Our operating results continue to benefit from the present level of
short-term interest rates as we continue to realize the effect of
interest rate hikes in 2018. However, our transaction-based
business in our Private Client Division declined during the period
reflecting an ongoing secular reduction in portfolio turnover as
clients continue to move to more passive investment strategies
through investments in exchange traded funds ("ETFs") and other
index related securities. We continue to be encouraged by the
significant decline in legal and regulatory costs during the period
as many of the investments in our compliance efforts continue to be
realized.
The strong operating results of the business and increased
liquidity from recent tenders for ARS help facilitate a reduction
of high cost outstanding debt by 25% and also give us the ability
to return additional capital to our shareholders through an
increase of our dividend. Our reduced leverage and continued high
level of liquidity will be advantageous as we look to expand our
business."
Business Segment
Results (Unaudited)
|
('000s)
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
6/30/2019
|
|
6/30/2018
|
|
%
Change
|
|
6/30/2019
|
|
6/30/2018
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Client
|
$
|
161,928
|
|
|
$
|
156,553
|
|
|
3.4
|
|
$
|
325,455
|
|
|
$
|
310,647
|
|
|
4.8
|
|
Asset
Management
|
18,622
|
|
|
17,706
|
|
|
5.2
|
|
35,208
|
|
|
35,350
|
|
|
(0.4)
|
|
Capital
Markets
|
71,819
|
|
|
68,206
|
|
|
5.3
|
|
142,780
|
|
|
129,735
|
|
|
10.1
|
|
Corporate/Other
|
(1,434)
|
|
|
91
|
|
|
*
|
|
(738)
|
|
|
1,354
|
|
|
*
|
|
Total
|
$
|
250,935
|
|
|
$
|
242,556
|
|
|
3.5
|
|
$
|
502,705
|
|
|
$
|
477,086
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
|
|
|
|
|
|
|
|
|
Private
Client
|
43,416
|
|
|
33,513
|
|
|
29.5
|
|
86,250
|
|
|
73,675
|
|
|
17.1
|
|
Asset
Management
|
5,318
|
|
|
3,958
|
|
|
34.4
|
|
7,560
|
|
|
7,676
|
|
|
(1.5)
|
|
Capital
Markets
|
(1,801)
|
|
|
(199)
|
|
|
(805.0)
|
|
(4,448)
|
|
|
(6,256)
|
|
|
28.9
|
|
Corporate/Other
|
(29,542)
|
|
|
(24,755)
|
|
|
(19.3)
|
|
(55,919)
|
|
|
(52,957)
|
|
|
(5.6)
|
|
Total
|
$
|
17,391
|
|
|
$
|
12,517
|
|
|
38.9
|
|
$
|
33,443
|
|
|
$
|
22,138
|
|
|
51.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Percentage not
meaningful.
|
Private Client
Private Client reported revenue of $161.9
million for the second quarter of 2019, 3.4% higher than the
second quarter of 2018 due to higher asset management fees, bank
deposit sweep income, and an increase in the cash surrender value
of Company-owned life insurance partially offset by lower retail
commissions during the second quarter of 2019. Income before
income taxes was $43.4 million for
the second quarter of 2019, an increase of 29.5% compared with the
second quarter of 2018 due to the aforementioned items and lower
legal and regulatory costs partially offset by higher interest
costs during the second quarter of 2019.
- Client assets under administration were $87.3 billion at June 30,
2019 compared with $80.1
billion at December 31, 2018,
an increase of 9.0%.
- Financial adviser headcount was 1,036 at the end of the second
quarter of 2019, down from 1,083 at the end of the second quarter
of 2018. The decline in financial adviser headcount since the
second quarter of 2018 has resulted from the Company's emphasis on
adviser productivity as well as retirements and attrition.
- Retail commissions were $47.1
million for the second quarter of 2019, a decrease of 4.8%
from the second quarter of 2018.
- Advisory fee revenue on traditional and alternative managed
products was $62.1 million for the
second quarter of 2019, an increase of 3.8% from the second quarter
of 2018 (see Asset Management below for further information). The
increase in advisory fees was due to an increase in assets under
management ("AUM") at March 31, 2019
as a result of the increase in the equities markets and net new
assets during the first quarter of 2019.
- Bank deposit sweep income was $31.8
million for the second quarter of 2019, an increase of 10.3%
compared with $28.9 million for the
second quarter of 2018 due to higher short-term interest rates
during the second quarter of 2019.
Asset Management
Asset Management reported revenue of $18.6 million for the second quarter of 2019,
5.2% higher than the second quarter of 2018 due to higher AUM at
March 31, 2019, which is the basis
for advisory fees earned during the second quarter of 2019, as a
result of the increase in the equities markets and net new assets
during the first quarter of 2019. Income before income taxes
was $5.3 million for the second
quarter of 2019, an increase of 34.4% compared with the second
quarter of 2018 due to higher AUM at March
31, 2019.
- Advisory fee revenue on traditional and alternative managed
products was $18.6 million for the
second quarter of 2019, an increase of 6.3% from the second quarter
of 2018 primarily due to higher AUM at March
31, 2019.
-
- Advisory fees are calculated based on the value of client AUM
at the end of the prior quarter which totaled $29.5 billion at March 31,
2019 ($28.2 billion at
March 31, 2018) and are allocated
between the Private Client and Asset Management business
segments.
- AUM increased 5.2% to $30.2
billion at June 30, 2019, a
record high, compared with $28.7
billion at June 30, 2018,
which is the basis for advisory fee billings for the third quarter
of 2019. The increase in AUM was comprised of asset appreciation of
$0.6 billion and a positive net
contribution of assets of $0.9
billion.
Capital Markets
Capital Markets reported revenue of $71.8
million for the second quarter of 2019, 5.3% higher than the
second quarter of 2018 primarily due to higher investment banking
fees. Loss before income taxes was $1.8
million for the second quarter of 2019 compared with loss
before income taxes of $0.2 million
for the second quarter of 2018.
- Institutional equities commissions increased 6.9% to
$24.8 million for the second quarter
of 2019 compared with the second quarter of 2018 due to strong
execution-driven commission growth in block trading and better
recognition and monetization of our high value research
content.
- Advisory fees earned from investment banking activities
increased 62.5% to $13.0 million for
the second quarter of 2019 compared with $8.0 million for the second quarter of 2018 due
to an increase in mergers and acquisitions transactions during the
second quarter of 2019.
- Equities underwriting fees increased modestly to $15.3 million for the second quarter of 2019
compared with $15.2 million for the
second quarter of 2018 as the Company participated in more
transactions with lower economics due to a decrease in the number
of lead managed deals during the second quarter of 2019.
- Revenue from taxable fixed income decreased marginally to
$15.2 million during the second
quarter of 2019 from $15.3 million
during the second quarter of 2018 due to lower trading income in
taxable fixed income products partially offset by higher
institutional fixed income commissions.
- Revenue from public finance and municipal trading decreased to
$4.7 million during the second
quarter of 2019 from $5.7 million
during the second quarter of 2018 due to lower commission income
partially offset by higher municipal trading income during the
second quarter of 2019.
Compensation and Related Expenses
Compensation and related expenses totaled $155.8 million during the second quarter of 2019,
an increase of 2.6% compared with the second quarter of 2018. The
increase was due to higher salaries, production, and incentive
compensation costs partially offset by lower share-based and
traders' compensation costs during the second quarter of 2019.
Compensation and related expenses as a percentage of revenue was
62.1% during the second quarter of 2019 compared with 62.6% during
the second quarter of 2018.
Non-Compensation Expenses
Non-compensation expenses were $77.8
million during the second quarter of 2019, a decrease of
0.5% compared with $78.2 million
during the second quarter of 2018 due primarily to higher interest
costs and communication and technology costs partially offset by
lower legal and regulatory costs during the second quarter of
2019.
Provision for Income Taxes
The effective income tax rate from continuing operations for the
second quarter of 2019 was 28.8%, slightly lower when compared with
29.3% for the second quarter of 2018. The effective rate reflects
the Company's estimate of the annual effective tax rate adjusted
for certain discrete items.
Balance Sheet and Liquidity
- At June 30, 2019, total equity
was $563.6 million, a record
high, compared with $545.3
million at December 31,
2018.
- At June 30, 2019, book value per
share was $43.84 (compared with
$41.81 at December 31, 2018) and tangible book value per
share was $30.62 (compared with
$28.78 at December 31, 2018), both at record highs.
- As discussed above, on August 25,
2019, the Company will be redeeming a total of $50 million (25%) of its
Notes.
- The Company's level 3 assets were $nil at June 30, 2019 (compared with $21.8 million at December
31, 2018). The decline in level 3 assets was the result of
ARS issuer tender offer announcements and the resulting marking of
the ARS positions held by the Company to the tender price during
the three months ended June 30,
2019.
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 94 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, 2018.
|
|
|
Oppenheimer
Holdings Inc
|
|
Consolidated
Income Statement (Unaudited)
|
('000s, except
number of shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
6/30/2019
|
|
|
6/30/2018
|
|
|
%
Change
|
|
6/30/2019
|
|
|
6/30/2018
|
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
$
|
80,896
|
|
|
$
|
82,850
|
|
|
(2.4)
|
|
$
|
160,305
|
|
|
$
|
166,257
|
|
|
(3.6)
|
|
Advisory
fees
|
80,707
|
|
|
77,270
|
|
|
4.4
|
|
154,354
|
|
|
154,818
|
|
|
(0.3)
|
|
Investment
banking
|
32,006
|
|
|
27,904
|
|
|
14.7
|
|
60,049
|
|
|
56,114
|
|
|
7.0
|
|
Bank deposit sweep
income
|
31,830
|
|
|
28,853
|
|
|
10.3
|
|
65,798
|
|
|
54,150
|
|
|
21.5
|
|
Interest
|
13,550
|
|
|
13,056
|
|
|
3.8
|
|
26,277
|
|
|
25,283
|
|
|
3.9
|
|
Principal
transactions, net
|
3,045
|
|
|
6,400
|
|
|
(52.4)
|
|
14,483
|
|
|
9,126
|
|
|
58.7
|
|
Other
|
8,901
|
|
|
6,223
|
|
|
43.0
|
|
21,439
|
|
|
11,338
|
|
|
89.1
|
|
Total
revenue
|
250,935
|
|
|
242,556
|
|
|
3.5
|
|
502,705
|
|
|
477,086
|
|
|
5.4
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
155,783
|
|
|
151,871
|
|
|
2.6
|
|
316,138
|
|
|
304,975
|
|
|
3.7
|
|
Communications and
technology
|
20,499
|
|
|
17,997
|
|
|
13.9
|
|
40,585
|
|
|
36,685
|
|
|
10.6
|
|
Occupancy and
equipment costs
|
15,573
|
|
|
14,901
|
|
|
4.5
|
|
30,846
|
|
|
30,329
|
|
|
1.7
|
|
Clearing and exchange
fees
|
5,678
|
|
|
5,780
|
|
|
(1.8)
|
|
11,010
|
|
|
11,876
|
|
|
(7.3)
|
|
Interest
|
13,192
|
|
|
10,909
|
|
|
20.9
|
|
26,178
|
|
|
19,872
|
|
|
31.7
|
|
Other
|
22,819
|
|
|
28,581
|
|
|
(20.2)
|
|
44,505
|
|
|
51,211
|
|
|
(13.1)
|
|
Total
expenses
|
233,544
|
|
|
230,039
|
|
|
1.5
|
|
469,262
|
|
|
454,948
|
|
|
3.1
|
Income before income
taxes
|
17,391
|
|
|
12,517
|
|
|
38.9
|
|
33,443
|
|
|
22,138
|
|
|
51.1
|
Income
taxes
|
5,016
|
|
|
3,662
|
|
|
37.0
|
|
9,874
|
|
|
6,578
|
|
|
50.1
|
Net
income
|
$
|
12,375
|
|
|
$
|
8,855
|
|
|
39.8
|
|
$
|
23,569
|
|
|
$
|
15,560
|
|
|
51.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.95
|
|
|
$
|
0.67
|
|
|
41.8
|
|
$
|
1.81
|
|
|
$
|
1.17
|
|
|
54.7
|
|
Diluted
|
$
|
0.89
|
|
|
$
|
0.63
|
|
|
41.3
|
|
$
|
1.70
|
|
|
$
|
1.11
|
|
|
53.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
12,976,235
|
|
|
13,248,812
|
|
|
(2.1)
|
|
12,998,168
|
|
|
13,244,245
|
|
|
(1.9)
|
|
Diluted
|
13,861,753
|
|
|
14,050,573
|
|
|
(1.3)
|
|
13,857,616
|
|
|
14,005,556
|
|
|
(1.1)
|
View original
content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2019-earnings-and-announces-increase-of-quarterly-dividend-and-intent-to-redeem-50-million-of-6-75-senior-secured-notes-due-2022--300891540.html
SOURCE Oppenheimer Holdings Inc.