NEW
YORK, July 28, 2023 /PRNewswire/ -- Oppenheimer
Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported
a net loss of $9.4 million or
$(0.85) per share for the second
quarter of 2023, compared with a net loss of $3.9 million or $(0.32) per share for the second quarter of 2022.
Revenue for the second quarter of 2023 was $306.2 million, an increase of 29.1%, compared to
revenue of $237.2 million for the
second quarter of 2022.
Albert G. Lowenthal,
Chairman and CEO commented, "The growth in our total revenue
highlighted the ability of our diversified business mix to
successfully operate in a mixed but still growing economy. While
our operating businesses performed quite well, the Company's
overall results were adversely impacted by the accrual of a
significant legal reserve related to a previously disclosed matter.
We believe that this reserve will permit us to cover anticipated
costs related to the matter, even though the reserve created a net
loss for the quarter. During the quarter, the markets performed
better than expected, as the S&P 500 and Nasdaq continued to
advance upward in large part due to investor enthusiasm for
generative A.I. tech stocks. On the economic front, unemployment
hovered near historic lows and strong consumer spending on travel
and services continued to buoy the economy along with
increases in wages. The Federal Reserve continued its 15-month
tightening campaign, though at a moderated pace, owing to
encouraging inflationary trends and general reservations about
over-tightening in light of the earlier regional bank
failures.
These conditions strongly aided our Wealth Management
business, where interest sensitive margin interest and sweep
revenue registered large increases from the prior year and AUM
began approaching levels reached prior to last year's market
decline. The lack of speculative activity resulted in continued
lower transaction-based commission revenue. Capital Markets'
operating results showed modest improvement with higher M&A
advisory fees, equities underwriting and sales and trading revenue
offsetting lower fixed income underwriting revenue, as continued
uncertainty and higher interest rates limited issuances.
The Company's balance sheet and capital position remain
strong, with ample levels of liquidity. During the second quarter,
the Company purchased 96,135 shares (1%) of its Class A Stock at an
average price of $37.43 per share in
the open market under its share repurchase program. This resulted
in 10,884,575 shares of Class A Stock remaining outstanding at
June 30, 2023. The Company also
launched a "Dutch auction" tender offer during the quarter through
which it committed to repurchase an additional 437,183 shares at a
price of $40.00 per share. The
repurchase of shares in conjunction with the tender offer was
completed in July and after adjusting for shares repurchased under
the Tender Offer, there were 10,447,392 shares of Class A Stock
remaining outstanding at July 6,
2023. Both of these actions permitted us to reach record
levels in book value and tangible book value per share. We remain
confident in our businesses and ability to continue delivering
value to our stakeholders."
Summary Operating
Results (Unaudited)
|
('000s, except per
share amounts or otherwise indicated)
|
Firm
|
2Q-23
|
2Q-22
|
Revenue
|
$ 306,189
|
$ 237,222
|
Compensation
Expense
|
$ 187,224
|
$ 177,979
|
Non-compensation
Expense
|
$ 130,664
|
$
65,412
|
Pre-Tax
(Loss)
|
$ (11,699)
|
$
(6,169)
|
Income Tax
(Benefit)
|
$
(2,131)
|
$
(1,449)
|
Net (Loss)
(1)
|
$
(9,400)
|
$
(3,874)
|
(Loss) Per Share
(Basic) (1)
|
$
(0.85)
|
$
(0.32)
|
(Loss) Per Share
(Diluted) (1)
|
$
(0.85)
|
$
(0.32)
|
Book Value Per
Share
|
$
71.77
|
$
68.57
|
Tangible Book Value Per
Share (2)
|
$
56.29
|
$
53.62
|
Private
Client
|
|
|
Revenue
|
$ 201,245
|
$ 144,471
|
Pre-Tax
Income
|
$
20,794
|
$
38,800
|
Assets Under
Administration (billions)
|
$
113.2
|
$
104.0
|
Asset
Management
|
|
|
Revenue
|
$
22,198
|
$
24,315
|
Pre-Tax
Income
|
$
6,534
|
$
8,120
|
Assets Under Management
(billions)
|
$
41.2
|
$
37.1
|
Capital
Markets
|
|
|
Revenue
|
$
79,582
|
$
71,274
|
Pre-Tax
(Loss)
|
$ (14,051)
|
$ (17,935)
|
|
|
|
(1) Attributable to
Oppenheimer Holdings Inc
|
(2) Represents book
value less goodwill and intangible assets divided by number of
shares outstanding
|
Highlights
- Increased revenue for the second quarter of 2023 is primarily
driven by a rise in interest sensitive income, including margin
interest and bank deposit sweep income
- The second quarter 2023 net loss is primarily attributable to
an increase in non-compensation expenses, which was mostly driven
by the accrual of a significant legal reserve associated with a
previously disclosed matter
- Assets under administration and under management were both at
higher levels at June 30, 2023 when
compared with the same period last year, benefiting from market
appreciation and positive net asset flows
- The Company repurchased 96,135 shares of Class A Stock during
the second quarter of 2023 under its previously announced share
repurchase program, or approximately 1% of shares outstanding at
year-end
- The Company also launched a "Dutch auction" tender offer, which
resulted in the repurchase and retirement of an additional 437,183
shares of Class A non-voting common stock when the transaction
closed in July 2023
- Book value and tangible book value per share increased from the
prior year period primarily as a result of share repurchases
Private Client
Private Client reported revenue for the current quarter of
$201.2 million, 39.3% higher when
compared with the prior year period. Pre-tax income was
$20.8 million, compared with pre-tax
income of $38.8 million in the prior
year period. Financial advisor headcount at the end of the current
quarter was 964 compared to 990 at the end of the second quarter of
2022.
('000s, except
otherwise indicated)
|
|
2Q-23
|
2Q-22
|
|
|
|
Revenue
|
$
201,245
|
$
144,471
|
Commissions
|
$
45,377
|
$
45,916
|
Advisory
Fees
|
$
78,811
|
$
83,085
|
Bank Deposit Sweep
Income
|
$
44,060
|
$
14,845
|
Interest
|
$
22,403
|
$
10,369
|
Other
|
$
10,594
|
$
(9,744)
|
|
|
|
Total
Expenses
|
$
180,451
|
$
105,671
|
Compensation
|
$
99,528
|
$
77,342
|
Non-compensation
|
$
80,923
|
$
28,329
|
|
|
|
Pre-Tax
Income
|
$
20,794
|
$
38,800
|
|
|
|
Compensation
Ratio
|
49.5 %
|
53.5 %
|
Non-compensation
Ratio
|
40.2 %
|
19.6 %
|
Pre-Tax
Margin
|
10.3 %
|
26.9 %
|
|
|
|
Assets Under
Administration (billions)
|
$
113.2
|
$
104.0
|
Cash Sweep Balances
(billions)
|
$
3.9
|
$
7.5
|
Revenue:
- Retail commissions were flat compared with the prior year
quarter due to continued lower retail trading activity
- Advisory fees decreased 5.1% from a year ago primarily due to
lower AUM during the billing period for the current quarter
when compared to the second quarter of last year
- Bank deposit sweep income increased $29.2 million or 197% from a year ago due to
higher short-term interest rates partially offset by lower cash
sweep balances
- Interest revenue approached record level and increased 116.1%
from a year ago due to higher short-term interest rates
- Other revenue increased primarily due to increases in the cash
surrender value of Company-owned life insurance policies, which
fluctuates based on changes in fair value of the policies'
underlying investments
Total Expenses:
- Compensation expenses increased 28.7% from a year ago primarily
due to higher share-based and deferred compensation costs
- Non-compensation expenses increased substantially
(185.7%) from a year ago primarily due to additional accrual
of a significant legal reserve associated with a previously
disclosed matter
Asset Management
Asset Management reported revenue for the current quarter of
$22.2 million, 8.7% lower when
compared with the prior year period. Pre-tax income was
$6.5 million, a decrease of 19.5%
compared with the prior year period.
('000s, except
otherwise indicated)
|
|
2Q-23
|
2Q-22
|
|
|
|
Revenue
|
$
22,198
|
$
24,315
|
Advisory
Fees
|
$
22,196
|
$
24,311
|
Other
|
$
2
|
$
4
|
|
|
|
Total
Expenses
|
$
15,664
|
$
16,195
|
Compensation
|
$
6,283
|
$
6,697
|
Non-compensation
|
$
9,381
|
$
9,498
|
|
|
|
Pre-Tax
Income
|
$
6,534
|
$
8,120
|
|
|
|
Compensation
Ratio
|
28.3 %
|
27.5 %
|
Non-compensation
Ratio
|
42.3 %
|
39.1 %
|
Pre-Tax
Margin
|
29.4 %
|
33.4 %
|
|
|
|
AUM
(billions)
|
$
41.2
|
$
37.1
|
Revenue:
- Advisory fees decreased 8.7% from a year ago due to reduced
management fees resulting from the lower net value of
billable AUM during the quarter
Assets under Management (AUM):
- AUM increased to $41.2 billion at
June 30, 2023, which is the basis for advisory fee billings
for July 2023
- The increase in AUM was comprised of higher asset values
of $3.7 billion on existing client
holdings and a net contribution of $0.4
billion in new assets
Total Expenses:
- Compensation expenses were down 6.2% from a year ago which was
primarily related to decreases in incentive compensation
- Non-compensation expenses were down 1.2% when compared to the
prior year period mostly due to lower external portfolio management
costs which are directly related to the decrease in
billable AUM, partially offset by higher communication and
technology expenses
Capital Markets
Capital Markets reported revenue for the current quarter of
$79.6 million, 11.7% higher when
compared with the prior year period. Pre-tax loss was
$14.1 million, compared with a
pre-tax loss of $17.9 million in the
prior year period.
('000s)
|
|
|
|
2Q-23
|
2Q-22
|
|
|
|
Revenue
|
$
79,582
|
$
71,274
|
|
|
|
Investment
Banking
|
$
18,749
|
$
14,699
|
Advisory
Fees
|
$
10,945
|
$
8,284
|
Equities
Underwriting
|
$
5,478
|
$
2,751
|
Fixed Income
Underwriting
|
$
1,867
|
$
3,259
|
Other
|
$
459
|
$
405
|
|
|
|
Sales and
Trading
|
$
60,216
|
$
55,978
|
Equities
|
$
34,453
|
$
37,126
|
Fixed
Income
|
$
25,763
|
$
18,852
|
|
|
|
Other
|
$
617
|
$
597
|
|
|
|
Total
Expenses
|
$
93,633
|
$
89,209
|
Compensation
|
$
61,255
|
$
67,172
|
Non-compensation
|
$
32,378
|
$
22,037
|
|
|
|
Pre-Tax
(Loss)
|
$
(14,051)
|
$
(17,935)
|
|
|
|
Compensation
Ratio
|
77.0 %
|
94.2 %
|
Non-compensation
Ratio
|
40.7 %
|
30.9 %
|
Pre-Tax
Margin
|
(17.7) %
|
(25.2) %
|
Revenue:
Investment Banking
- Advisory fees earned from investment banking activities
increased 32.1% compared with a year ago due to an increase
in M&A transactions
- Equities underwriting fees modestly increased by $2.7 million when compared with a year ago, when
IPO and secondary offerings were at historically low levels
industry-wide
- Fixed income underwriting fees were down 42.7% compared
with a year ago primarily driven by lower deal volumes during the
second quarter of 2023
Sales and Trading
- Equities sales and trading revenue decreased 7.2% compared with
a year ago due to reduced volumes as a result of lower market
volatility
- Fixed income sales and trading revenue increased by 36.7%
compared with a year ago primarily due to an increase in trading
income attributable to higher volumes
Total Expenses:
- Compensation expenses decreased 8.8% compared with a year ago
primarily due to decreased incentive compensation
- Non-compensation expenses were 46.9% higher than a year ago
primarily due to an increase in interest expense in financing
inventories
Other Matters
(In millions, except
number of shares and per share amounts)
|
|
2Q-23
|
2Q-22
|
Capital
|
|
|
Stockholders' Equity
(1)
|
$ 788.3
|
$ 779.7
|
Regulatory Net Capital
(2)
|
$ 417.5
|
$ 435.6
|
Regulatory Excess Net
Capital (2)
|
$ 394.7
|
$ 404.0
|
|
|
|
Common Stock
Repurchases
|
|
|
Repurchases
|
$
3.6
|
$
30.2
|
Number of
Shares
|
96,135
|
885,230
|
Average Price Per
Share
|
$ 37.43
|
$ 34.13
|
|
|
|
Period End
Shares
|
10,984,240
|
11,370,609
|
Effective Tax
Rate
|
18.2 %
|
23.5 %
|
|
|
|
(1)
Attributable to Oppenheimer Holdings Inc
|
(2)
Attributable to Oppenheimer & Co. Inc. broker-dealer
|
- The Board of Directors announced a quarterly dividend in the
amount of $0.15 per share payable on
August 25, 2023 to holders of Class A
non-voting and Class B voting common stock of record on
August 11, 2023
- Compensation expense as a percentage of revenue was lower at
61.1% during the current period versus 75.0% during the same period
last year due to revenue increasing by a higher rate than
compensation expenses
- The effective tax rate for the current period was 18.2%
compared with 23.5% for the prior year period and was impacted by
permanent items and nondeductible foreign losses
Company Information
Oppenheimer Holdings Inc., through its operating subsidiaries,
is a leading middle market investment bank and full service
broker-dealer that is engaged in a broad range of activities in the
financial services industry, including retail securities brokerage,
institutional sales and trading, investment banking (corporate and
public finance), equity and fixed income research, market-making,
trust services, and investment advisory and asset management
services. With roots tracing back to 1881, the Company is
headquartered in New York and has
92 retail branch offices in the United
States and 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, 2022 and Factors Affecting "Forward-Looking
Statements" in Part I, Item 2 in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2023.
Oppenheimer Holdings
Inc
|
Condensed
Consolidated Income Statements (Unaudited)
|
('000s, except
number of shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
June
30,
|
|
For the Six Months
Ended
June
30,
|
|
|
2023
|
|
2022
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
$
88,544
|
|
$
94,378
|
|
(6.2)
|
|
$
175,241
|
|
$
192,699
|
|
(9.1)
|
|
Advisory
fees
|
101,015
|
|
107,405
|
|
(5.9)
|
|
201,559
|
|
223,171
|
|
(9.7)
|
|
Investment
banking
|
19,978
|
|
16,653
|
|
20.0
|
|
57,943
|
|
55,123
|
|
5.1
|
|
Bank deposit sweep
income
|
44,060
|
|
14,845
|
|
196.8
|
|
92,969
|
|
19,199
|
|
384.2
|
|
Interest
|
27,320
|
|
11,789
|
|
131.7
|
|
52,261
|
|
21,306
|
|
145.3
|
|
Principal transactions,
net
|
16,253
|
|
1,258
|
|
1,192.0
|
|
29,743
|
|
3,622
|
|
721.2
|
|
Other
|
9,019
|
|
(9,106)
|
|
*
|
|
18,152
|
|
(11,870)
|
|
*
|
|
Total
revenue
|
306,189
|
|
237,222
|
|
29.1
|
|
627,868
|
|
503,250
|
|
24.8
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
related expenses
|
187,224
|
|
177,979
|
|
5.2
|
|
393,516
|
|
364,010
|
|
8.1
|
|
Communications and
technology
|
22,783
|
|
20,896
|
|
9.0
|
|
45,223
|
|
42,481
|
|
6.5
|
|
Occupancy and equipment
costs
|
16,440
|
|
14,554
|
|
13.0
|
|
32,341
|
|
29,244
|
|
10.6
|
|
Clearing and exchange
fees
|
5,927
|
|
6,242
|
|
(5.0)
|
|
12,190
|
|
12,218
|
|
(0.2)
|
|
Interest
|
17,467
|
|
3,628
|
|
381.4
|
|
30,609
|
|
6,140
|
|
398.5
|
|
Other
|
68,047
|
|
20,092
|
|
238.7
|
|
106,639
|
|
41,113
|
|
159.4
|
|
Total
expenses
|
317,888
|
|
243,391
|
|
30.6
|
|
620,518
|
|
495,206
|
|
25.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Income
(Loss)
|
(11,699)
|
|
(6,169)
|
|
89.6
|
|
7,350
|
|
8,044
|
|
(8.6)
|
Income taxes provision
(benefit)
|
(2,131)
|
|
(1,449)
|
|
47.1
|
|
2,454
|
|
2,986
|
|
(17.8)
|
Net Income
(Loss)
|
$
(9,568)
|
|
$
(4,720)
|
|
102.7
|
|
$
4,896
|
|
$
5,058
|
|
(3.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss
attributable to non-
controlling interest, net of tax
|
(168)
|
|
(846)
|
|
(80.1)
|
|
(321)
|
|
(360)
|
|
(10.8)
|
Net income (loss)
attributable to
Oppenheimer Holdings Inc
|
$
(9,400)
|
|
$
(3,874)
|
|
142.6
|
|
$
5,217
|
|
$
5,418
|
|
(3.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
share attributable to Oppenheimer Holdings Inc
|
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.85)
|
|
$
(0.32)
|
|
165.6
|
|
$
0.47
|
|
$
0.44
|
|
6.8
|
|
Diluted
|
$
(0.85)
|
|
$
(0.32)
|
|
165.6
|
|
$
0.44
|
|
$
0.41
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
11,016,430
|
|
11,980,115
|
|
(8.0)
|
|
11,054,306
|
|
12,222,527
|
|
(9.6)
|
|
Diluted
|
11,016,430
|
|
11,980,115
|
|
(8.0)
|
|
11,911,379
|
|
13,141,538
|
|
(9.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period end number of
common
shares outstanding
|
10,984,240
|
|
11,370,609
|
|
(3.4)
|
|
10,984,240
|
|
11,370,609
|
|
(3.4)
|
* Percentage not
meaningful
|
Media Contact:
oppenheimer@haventower.com
View original
content:https://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2023-earnings-301887959.html
SOURCE Oppenheimer Holdings Inc.