Pzena Investment Management, Inc. (NYSE: PZN) reported the
following U.S. Generally Accepted Accounting Principles (GAAP) and
as adjusted basic and diluted net income and earnings per share for
the three and twelve months ended December 31, 2019 and 2018
(in thousands, except per-share amounts):
|
|
|
|
|
|
|
GAAP Basis |
|
GAAP Basis |
|
|
For the Three Months EndedDecember 31, |
|
For the Twelve Months EndedDecember 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
Basic Net Income |
|
$ |
(1,482 |
) |
|
$ |
2,537 |
|
|
$ |
8,462 |
|
|
$ |
13,794 |
|
Basic Earnings Per Share |
|
$ |
(0.08 |
) |
|
$ |
0.15 |
|
|
$ |
0.47 |
|
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income1 |
|
$ |
(5,913 |
) |
|
$ |
2,537 |
|
|
$ |
34,046 |
|
|
$ |
55,347 |
|
Diluted Earnings Per Share1 |
|
$ |
(0.08 |
) |
|
$ |
0.15 |
|
|
$ |
0.46 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Adjusted2 |
|
As Adjusted2 |
|
|
For the Three Months EndedDecember 31, |
|
For the Twelve Months EndedDecember 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
Basic Net Income |
|
$ |
3,801 |
|
|
$ |
2,783 |
|
|
$ |
13,745 |
|
|
$ |
14,040 |
|
Basic Earnings Per Share |
|
$ |
0.21 |
|
|
$ |
0.16 |
|
|
$ |
0.77 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income |
|
$ |
14,723 |
|
|
$ |
11,560 |
|
|
$ |
54,103 |
|
|
$ |
55,593 |
|
Diluted Earnings Per Share |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
|
$ |
0.73 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 During the three months ended December 31,
2018, the calculation of GAAP diluted earnings per share resulted
in an increase in earnings per share. Therefore, diluted net income
and diluted earnings per share are assumed to be equal to basic net
income and basic earnings per share.2 Please refer to Pages 5, 7,
8, and 12 of this release for more information on as adjusted items
and reconciliations to the GAAP financial measures.
GAAP diluted net income and GAAP diluted
earnings per share were $(5.9) million and $(0.08) respectively,
for the three months ended December 31, 2019, and $2.5 million
and $0.15, respectively, for the three months ended
December 31, 2018. GAAP diluted net income and GAAP diluted
earnings per share were $34.0 million and $0.46, respectively, for
the twelve months ended December 31, 2019, and $55.3 million
and $0.77, respectively, for the twelve months ended
December 31, 2018.
In evaluating the results of operations,
management also reviews adjusted measures of earnings, which are
adjusted to exclude accounting items that add a measure of
non-operational complexity which obscures the underlying
performance of the business. For the three and twelve months ended
December 31, 2019, earnings were adjusted to exclude
non-recurring Compensation and Benefits expenses related primarily
to the issuance of certain unit-based and other awards to a number
of the firm’s key contributors pursuant to the terms of our equity
incentive plans, in addition to costs related to certain employee
departures. As adjusted, diluted net income and as adjusted
diluted earnings per share were $14.7 million and $0.20,
respectively, for the three months ended December 31, 2019, and
$54.1 million and $0.73, respectively, for the twelve months ended
December 31, 2019. For the three and twelve months ended December
31, 2018, earnings were adjusted to exclude changes to the
deferred tax asset and corresponding liability to the Company's
selling and converting shareholders during the fourth quarter of
2018. As adjusted, diluted net income and as adjusted diluted
earnings per share were $11.6 million and $0.16, respectively, for
the three months ended December 31, 2018, and $55.6 million and
$0.77, respectively, for the twelve months ended December 31, 2018.
Management uses the as adjusted measures to assess the strength of
the underlying operations of the business. It believes the as
adjusted measures provide information to further analyze the
Company's operations between periods and over
time. Furthermore, management targets a cash dividend payout
ratio at approximately 60% to 70% of our as adjusted diluted net
income, subject to growth initiatives and other funding needs.
Investors should consider the as adjusted measures in addition to,
and not as a substitute for, financial measures prepared in
accordance with GAAP.
Net income for diluted earnings per share
generally assumes all operating company membership units are
converted into Company stock at the beginning of the reporting
period, and the resulting change to Company net income associated
with its increased interest in the operating company is taxed at
the Company's effective tax rate, exclusive of any prior period and
other adjustments. When this conversion results in an
increase in earnings per share or a decrease in loss per share,
diluted net income and diluted earnings per share are assumed to be
equal to basic net income and basic earnings per share for the
reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under
Management (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Separately Managed Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
$ |
13.7 |
|
|
$ |
13.9 |
|
|
$ |
14.6 |
|
|
$ |
12.6 |
|
|
$ |
15.0 |
|
Inflows |
|
|
1.3 |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
3.2 |
|
|
|
1.6 |
|
Outflows |
|
|
(0.3 |
) |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(2.0 |
) |
|
|
(1.8 |
) |
Net Flows |
|
|
1.0 |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
1.2 |
|
|
|
(0.2 |
) |
Market Appreciation/(Depreciation) |
|
|
1.7 |
|
|
|
(0.3 |
) |
|
|
(1.9 |
) |
|
|
2.6 |
|
|
|
(2.2 |
) |
End of Period |
|
$ |
16.4 |
|
|
$ |
13.7 |
|
|
$ |
12.6 |
|
|
$ |
16.4 |
|
|
$ |
12.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-Advised Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period Assets |
|
$ |
19.8 |
|
|
$ |
21.1 |
|
|
$ |
22.2 |
|
|
$ |
18.8 |
|
|
$ |
21.8 |
|
Inflows |
|
|
1.2 |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
3.0 |
|
|
|
3.0 |
|
Outflows |
|
|
(0.7 |
) |
|
|
(1.4 |
) |
|
|
(0.6 |
) |
|
|
(3.4 |
) |
|
|
(2.4 |
) |
Net Flows |
|
|
0.5 |
|
|
|
(1.0 |
) |
|
|
— |
|
|
|
(0.4 |
) |
|
|
0.6 |
|
Market Appreciation/(Depreciation) |
|
|
2.1 |
|
|
|
(0.3 |
) |
|
|
(3.4 |
) |
|
|
4.0 |
|
|
|
(3.6 |
) |
End of Period |
|
$ |
22.4 |
|
|
$ |
19.8 |
|
|
$ |
18.8 |
|
|
$ |
22.4 |
|
|
$ |
18.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pzena Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period Assets |
|
$ |
2.3 |
|
|
$ |
2.3 |
|
|
$ |
2.1 |
|
|
$ |
2.0 |
|
|
$ |
1.7 |
|
Inflows |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.4 |
|
|
|
0.9 |
|
Outflows |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.4 |
) |
|
|
(0.3 |
) |
Net Flows |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.6 |
|
Market Appreciation/(Depreciation) |
|
|
0.2 |
|
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
0.4 |
|
|
|
(0.3 |
) |
End of Period |
|
$ |
2.4 |
|
|
$ |
2.3 |
|
|
$ |
2.0 |
|
|
$ |
2.4 |
|
|
$ |
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
$ |
35.8 |
|
|
$ |
37.3 |
|
|
$ |
38.9 |
|
|
$ |
33.4 |
|
|
$ |
38.5 |
|
Inflows |
|
|
2.6 |
|
|
|
0.9 |
|
|
|
1.0 |
|
|
|
6.6 |
|
|
|
5.5 |
|
Outflows |
|
|
(1.2 |
) |
|
|
(1.7 |
) |
|
|
(0.9 |
) |
|
|
(5.8 |
) |
|
|
(4.5 |
) |
Net Flows |
|
|
1.4 |
|
|
|
(0.8 |
) |
|
|
0.1 |
|
|
|
0.8 |
|
|
|
1.0 |
|
Market Appreciation/(Depreciation) |
|
|
4.0 |
|
|
|
(0.7 |
) |
|
|
(5.6 |
) |
|
|
7.0 |
|
|
|
(6.1 |
) |
End of Period |
|
$ |
41.2 |
|
|
$ |
35.8 |
|
|
$ |
33.4 |
|
|
$ |
41.2 |
|
|
$ |
33.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Discussion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
Separately Managed Accounts |
|
$ |
20,250 |
|
|
$ |
18,548 |
|
|
$ |
18,324 |
|
Sub-Advised Accounts |
|
|
14,197 |
|
|
|
14,651 |
|
|
|
14,832 |
|
Pzena Funds |
|
|
3,981 |
|
|
|
3,866 |
|
|
|
3,243 |
|
Total |
|
$ |
38,428 |
|
|
$ |
37,065 |
|
|
$ |
36,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2019 |
|
2018 |
Separately Managed Accounts |
|
|
|
|
|
$ |
76,210 |
|
|
$ |
77,144 |
|
Sub-Advised Accounts |
|
|
|
|
|
|
58,911 |
|
|
|
64,155 |
|
Pzena Funds |
|
|
|
|
|
|
15,625 |
|
|
|
12,280 |
|
Total |
|
|
|
|
|
$ |
150,746 |
|
|
$ |
153,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue was $38.4 million for the fourth quarter
of 2019, an increase of 3.7% from $37.1 million for the third
quarter of 2019, and an increase of 5.6% from $36.4 million for the
fourth quarter of 2018.
For the fourth quarter of 2019 there were no
performance fees recognized, compared to $0.3 million for the third
quarter of 2019, and $0.3 million for the fourth quarter of 2018.
Performance fees are included in the total revenue amounts.
Average assets under management for the fourth
quarter of 2019 were $38.1 billion, increasing 5.8% from $36.0
billion for the third quarter of 2019, and increasing 5.5% from
$36.1 billion for the fourth quarter of 2018. The increase from the
third quarter of 2019 and the fourth quarter of 2018 reflects
market appreciation and net inflows.
The weighted average fee rate was 0.404% for the
fourth quarter of 2019, decreasing from 0.412% for the third
quarter of 2019, and remaining flat from 0.404% for the fourth
quarter of 2018.
The weighted average fee rate for separately
managed accounts was 0.541% for the fourth quarter of 2019,
decreasing from 0.543% for the third quarter of 2019, and remaining
flat from 0.541% for the fourth quarter of 2018. The decrease from
the third quarter of 2019 was primarily driven by a shift in assets
to strategies that typically carry lower fee rates.
The weighted average fee rate for sub-advised
accounts was 0.273% for the fourth quarter of 2019, decreasing from
0.292% for the third quarter of 2019, and decreasing from 0.289%
for the fourth quarter of 2018. The decrease from the third quarter
of 2019 and fourth quarter of 2018 reflects an increase in assets
in larger client relationships that generally carry lower fee rates
and a decrease in performance fees recognized. In addition, certain
accounts related to one retail client relationship have fulcrum fee
arrangements. These fee arrangements require a reduction in
the base fee or allow for a performance fee if the relevant
investment strategy underperforms or outperforms, respectively, the
agreed-upon benchmark over the contract's measurement period, which
extends to three years. During the fourth quarter of 2019,
third quarter of 2019, and fourth quarter of 2018, we recognized a
$0.8 million, $0.5 million, and $0.2 million reduction in base
fees, respectively. To the extent the three-year performance
records of the accounts fluctuate relative to their relevant
benchmark, the amount of base fees recognized may vary.
The weighted average fee rate for Pzena funds
was 0.690% for the fourth quarter of 2019, increasing from 0.680%
for the third quarter of 2019, and increasing from 0.644% for the
fourth quarter of 2018. The increase from the third quarter of 2019
and fourth quarter of 2019 reflects a shift in assets to strategies
and products that typically carry higher fee rates.
Total operating expenses were $43.7 million for
the fourth quarter of 2019, increasing from $19.9 million for the
third quarter of 2019, and increasing from $17.4 million for the
fourth quarter of 2018. The increase in operating expenses
from the third quarter of 2019 and fourth quarter of 2018 reflects
increases in both Compensation and Benefits and General and
Administrative expenses. Included in operating expenses in the
fourth quarter of 2019 is approximately $22.7 million in
compensation and benefits expenses, relating to the one-time
issuance of certain unit-based and other awards to a number of the
firm’s key contributors pursuant to the terms of our equity
incentive plans in addition to costs related to certain employee
departures. Excluding these non-recurring expenses, Compensation
and Benefits expense was relatively flat from the third quarter of
2019 and increased from the fourth quarter of 2018 reflecting
increases in headcount and compensation. The increase in General
and Administrative expense from the third quarter of 2019 reflects
increases in professional fees and data and systems expenses. The
increase from the fourth quarter of 2018 also reflects an increase
in occupancy costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
Compensation and Benefits
Expense |
|
$ |
38,889 |
|
|
$ |
16,012 |
|
|
$ |
13,899 |
|
General and Administrative
Expense |
|
|
4,787 |
|
|
|
3,905 |
|
|
|
3,549 |
|
Operating Expenses |
|
$ |
43,676 |
|
|
$ |
19,917 |
|
|
$ |
17,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2019 |
|
2018 |
Compensation and Benefits
Expense |
|
|
|
|
|
$ |
88,109 |
|
|
$ |
61,419 |
|
General and Administrative
Expense |
|
|
|
|
|
|
16,973 |
|
|
|
13,405 |
|
Operating Expenses |
|
|
|
|
|
$ |
105,082 |
|
|
$ |
74,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2019, employee headcount
was 115, down from 119 at September 30, 2019, and up from 106 at
December 31, 2018.
The operating margin was (13.7%) for the fourth
quarter of 2019, compared to 46.3% for the third quarter of 2019,
and 52.1% for the fourth quarter of 2018. The as adjusted operating
margin for the fourth quarter of 2019 was 45.5%.
Other income/ (expense) was income of $3.2
million for the fourth quarter of 2019, income of less than $0.1
million for the third quarter of 2019, and loss of $3.0 million for
the fourth quarter of 2018.
Other income/ (expense) primarily reflects the
fluctuations in the gains/ (losses) and other investment income
recognized by the Company on its direct equity investments, the
majority of which are held to satisfy obligations under its
deferred compensation plan. Other income/ (expense) also
includes a portion of gains/ (losses) and other investment income
recognized by external investors on their investments in investment
partnerships that the Company consolidates, which are offset in net
income attributable to non-controlling interests. Excluding the
outside interests of the Company's investment partnerships, other
income/ (expense) was income of $2.9 for the fourth quarter of
2019, income of less than $0.1 million for third quarter of 2019,
and loss of $2.9 million for the fourth quarter of 2018.
Details of other income/ (expense) are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/ (Expense)
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
Net Interest and Dividend
Income |
|
$ |
361 |
|
|
$ |
431 |
|
|
$ |
332 |
|
Gains/ (Losses) and Other
Investment Income |
|
|
2,738 |
|
|
|
(342 |
) |
|
|
(3,386 |
) |
Change in Liability to Selling
and Converting Shareholders1 |
|
|
— |
|
|
|
— |
|
|
|
87 |
|
Other Income/ (Expense) |
|
|
114 |
|
|
|
(75 |
) |
|
|
(34 |
) |
GAAP Other Income/ (Expense) |
|
|
3,213 |
|
|
|
14 |
|
|
|
(3,001 |
) |
Change in Liability to Selling
and Converting Shareholders1 |
|
|
— |
|
|
|
— |
|
|
|
(87 |
) |
Outside Interests of Investment
Partnerships2 |
|
|
(274 |
) |
|
|
(4 |
) |
|
|
221 |
|
As Adjusted Other Income/ (Expense) Net of Outside Interests |
|
$ |
2,939 |
|
|
$ |
10 |
|
|
$ |
(2,867 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2019 |
|
2018 |
Net Interest and Dividend
Income |
|
|
|
|
|
$ |
1,431 |
|
|
$ |
841 |
|
Gains/ (Losses) and Other
Investment Income |
|
|
|
|
|
|
4,236 |
|
|
|
(3,530 |
) |
Change in Liability to Selling
and Converting Shareholders1 |
|
|
|
|
|
|
— |
|
|
|
87 |
|
Other (Expense)/ Income |
|
|
|
|
|
|
(60 |
) |
|
|
(56 |
) |
GAAP Other Income/ (Expense) |
|
|
|
|
|
|
5,607 |
|
|
|
(2,658 |
) |
Change in Liability to Selling
and Converting Shareholders1 |
|
|
|
|
|
|
— |
|
|
|
(87 |
) |
Outside Interests of Investment
Partnerships2 |
|
|
|
|
|
|
(444 |
) |
|
|
208 |
|
As Adjusted Other Income/ (Expense) Net of Outside Interests |
|
|
|
|
|
$ |
5,163 |
|
|
$ |
(2,537 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Reflects the change in the liability to the
Company’s selling and converting shareholders associated with the
deferred tax asset generated by the Company’s initial public
offering and subsequent unit conversions.2 Represents the
non-controlling interest allocation of the income of the Company's
consolidated investment partnerships to its external
investors.
The Company recognized income tax expenses of
$1.6 million for the fourth quarter of 2019, $0.2 million for the
third quarter of 2019, and $2.1 million for the fourth quarter of
2018. The third quarter of 2019 income tax expense reflects a
$1.6 million benefit associated with the reversal of uncertain tax
position liabilities and interest related to unincorporated and
other business tax expenses due to the expiration of the statute of
limitations. Tax expense for the fourth quarter of 2019 also
includes the impact of $22.7 million of non-recurring expenses.
Corporate tax expense for the fourth quarter of 2019 as adjusted
was $1.4 million.
Details of the income tax expense are shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
Corporate Income Tax Expense |
|
$ |
968 |
|
|
$ |
1,124 |
|
|
$ |
993 |
|
Change due to Prior Period
Adjustments1 |
|
|
— |
|
|
|
— |
|
|
|
333 |
|
Unincorporated and Other Business
Tax Expense |
|
|
674 |
|
|
|
(878 |
) |
|
|
775 |
|
GAAP Income Tax Expense |
|
$ |
1,642 |
|
|
$ |
246 |
|
|
$ |
2,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2019 |
|
2018 |
Corporate Income Tax Expense |
|
|
|
|
|
$ |
4,508 |
|
|
$ |
4,667 |
|
Change due to Prior Period
Adjustments1 |
|
|
|
|
|
|
— |
|
|
|
333 |
|
Unincorporated and Other Business
Tax Expense |
|
|
|
|
|
|
1,287 |
|
|
|
2,778 |
|
GAAP Income Tax Expense |
|
|
|
|
|
$ |
5,795 |
|
|
$ |
7,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Reflects the impact of a prior period
adjustment to the deferred tax asset established as part of the
Company’s initial public offering and subsequent unit conversions
recognized during the fourth quarter of 2018.
Details of the net income attributable to non-controlling
interests of the Company's operating company and consolidated
subsidiaries are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Controlling Interests
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2019 |
|
2019 |
|
2018 |
Operating Company Allocation |
|
$ |
(2,469 |
) |
|
$ |
13,434 |
|
|
$ |
11,533 |
|
Outside Interests of Investment
Partnerships1 |
|
|
274 |
|
|
|
4 |
|
|
|
(221 |
) |
GAAP Net Income Attributable to
Non-Controlling Interests |
|
$ |
(2,195 |
) |
|
$ |
13,438 |
|
|
$ |
11,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2019 |
|
2018 |
Operating Company Allocation |
|
|
|
|
|
$ |
36,570 |
|
|
$ |
54,733 |
|
Outside Interests of Investment
Partnerships1 |
|
|
|
|
|
|
444 |
|
|
|
(208 |
) |
GAAP Net Income Attributable to
Non-Controlling Interests |
|
|
|
|
|
$ |
37,014 |
|
|
$ |
54,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Represents the non-controlling interest
allocation of the income of the Company's consolidated investment
partnerships to its external investors.
The operating company allocation as adjusted for
the impact of the $22.7 million in non-recurring expenses during
the fourth quarter of 2019 was $14.5 million.
On January 28, 2020, the Company's Board of
Directors approved a year-end dividend of $0.46 per share of its
Class A common stock. The following dates apply to the
dividend:
Record Date: |
|
February 14, 2020 |
|
|
|
Payment Date: |
|
February 28, 2020 |
During the last twelve months, inclusive of the
dividend noted above, the Company declared total dividends of $0.55
per share of its Class A common stock.
Fourth Quarter 2019 Earnings Call
Information
Pzena Investment Management, Inc. (NYSE: PZN)
will hold a conference call to discuss the Company's financial
results and outlook at 10:00 a.m. ET, Wednesday, February 5,
2020. The call will be open to the public.
Webcast Instructions: To gain access to the
webcast, which will be "listen-only," go to the Events page in the
Investor Relations area of the Company's website,
www.pzena.com.
Teleconference Instructions: To gain access to
the conference call via telephone, U.S. callers should dial
844-378-6482; Canada callers should dial 855-669-9657;
international callers should dial 412-317-5106. Please
reference the Pzena Investment Management call.
Replay: The conference call will be available
for replay through February 19, 2020, on the web using the
information given above.
About Pzena Investment Management
Pzena Investment Management, LLC, the firm's
operating company, is a value-oriented investment management
firm. Founded in 1995, Pzena Investment Management has built
a diverse, global client base. More firm and stock
information is posted at www.pzena.com.
Forward-Looking Statements
This press release may contain, in addition to
historical information, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities and Exchange Act of 1934, as
amended. Forward-looking statements provide the Company’s current
views, expectations, or forecasts of future events and performance,
and include statements about our expectations, beliefs, plans,
objectives, intentions, assumptions and other statements that are
not historical facts. Words or phrases such as “anticipate,”
“believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project” or similar words
or phrases, or the negatives of those words or phrases, may
identify forward-looking statements, but the absence of these words
does not necessarily mean that a statement is not
forward-looking.
Among the factors that could cause actual
results to differ from those expressed or implied by a
forward-looking statement are those described in the sections
entitled “Risk Factors” and “Management's Discussion and Analysis
of Financial Condition and Results of Operations” in the Company's
Annual Report on Form 10-K, as filed with the SEC on March 8, 2019
and in the Company's Quarterly Reports on Form 10-Q as filed with
the SEC. In light of these risks, uncertainties, assumptions,
and factors, actual results could differ materially from those
expressed or implied in the forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date stated, or if no date
is stated, as of the date of this release.
The Company is not under any obligation and does
not intend to make publicly available any update or other revisions
to any forward-looking statements to reflect circumstances existing
after the date of this release or to reflect the occurrence of
future events even if experience or future events make it clear
that any expected results expressed or implied by those
forward-looking statements will not be realized.
Contact: Gary Bachman, 212-583-0225 or bachman@pzena.com.
|
PZENA INVESTMENT MANAGEMENT, INC. |
|
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION(in thousands) |
|
|
|
|
|
|
As of |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
52,480 |
|
|
$ |
38,099 |
|
Restricted Cash |
|
|
1,036 |
|
|
|
1,028 |
|
Due from Broker |
|
|
149 |
|
|
|
64 |
|
Advisory Fees Receivable |
|
|
32,887 |
|
|
|
32,590 |
|
Investments |
|
|
55,934 |
|
|
|
50,470 |
|
Prepaid Expenses and Other Assets |
|
|
4,876 |
|
|
|
6,099 |
|
Right-of-use Assets |
|
|
13,860 |
|
|
|
— |
|
Deferred Tax Asset |
|
|
32,683 |
|
|
|
37,232 |
|
Property and Equipment, Net of Accumulated |
|
|
|
|
|
|
|
|
Depreciation of $4,765 and $3,724, respectively |
|
|
5,547 |
|
|
|
5,394 |
|
TOTAL ASSETS |
|
$ |
199,452 |
|
|
$ |
170,976 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses |
|
$ |
44,713 |
|
|
$ |
37,266 |
|
Due to Broker |
|
|
40 |
|
|
|
360 |
|
Liability to Selling and Converting Shareholders |
|
|
28,652 |
|
|
|
32,389 |
|
Lease Liabilities |
|
|
14,235 |
|
|
|
— |
|
Deferred Compensation Liability |
|
|
3,600 |
|
|
|
1,845 |
|
Other Liabilities |
|
|
2 |
|
|
|
108 |
|
TOTAL LIABILITIES |
|
|
91,242 |
|
|
|
71,968 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Total Pzena Investment Management, Inc.'s Equity |
|
|
31,444 |
|
|
|
33,002 |
|
Non-Controlling Interests |
|
|
76,766 |
|
|
|
66,006 |
|
TOTAL EQUITY |
|
|
108,210 |
|
|
|
99,008 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
199,452 |
|
|
$ |
170,976 |
|
|
|
|
|
|
|
|
|
|
|
PZENA INVESTMENT MANAGEMENT, INC. |
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(in
thousands, except share and per-share amounts) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUE |
|
$ |
38,428 |
|
|
$ |
36,399 |
|
|
$ |
150,746 |
|
|
$ |
153,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
Expense |
|
|
38,889 |
|
|
|
13,899 |
|
|
|
88,109 |
|
|
|
61,419 |
|
General and Administrative
Expense |
|
|
4,787 |
|
|
|
3,549 |
|
|
|
16,973 |
|
|
|
13,405 |
|
TOTAL OPERATING EXPENSES |
|
|
43,676 |
|
|
|
17,448 |
|
|
|
105,082 |
|
|
|
74,824 |
|
Operating Income |
|
|
(5,248 |
) |
|
|
18,951 |
|
|
|
45,664 |
|
|
|
78,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income |
|
|
3,213 |
|
|
|
(3,001 |
) |
|
|
5,607 |
|
|
|
(2,658 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Taxes |
|
|
(2,035 |
) |
|
|
15,950 |
|
|
|
51,271 |
|
|
|
76,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense |
|
|
1,642 |
|
|
|
2,101 |
|
|
|
5,795 |
|
|
|
7,778 |
|
Consolidated Net Income |
|
|
(3,677 |
) |
|
|
13,849 |
|
|
|
45,476 |
|
|
|
68,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Income Attributable to
Non-Controlling Interests |
|
|
(2,195 |
) |
|
|
11,312 |
|
|
|
37,014 |
|
|
|
54,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Pzena
Investment Management, Inc. |
|
$ |
(1,482 |
) |
|
$ |
2,537 |
|
|
$ |
8,462 |
|
|
$ |
13,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share - Basic and
Diluted Attributable to Pzena Investment Management, Inc. Common
Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for Basic Earnings per
Share1 |
|
$ |
(1,482 |
) |
|
$ |
2,537 |
|
|
$ |
8,462 |
|
|
$ |
13,794 |
|
Basic Earnings per Share1 |
|
$ |
(0.08 |
) |
|
$ |
0.15 |
|
|
$ |
0.47 |
|
|
$ |
0.78 |
|
Basic Weighted Average Shares
Outstanding |
|
|
17,783,818 |
|
|
|
17,460,942 |
|
|
|
17,945,686 |
|
|
|
17,678,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for Diluted Earnings
per Share1 |
|
$ |
(5,913 |
) |
|
$ |
2,537 |
|
|
$ |
34,046 |
|
|
$ |
55,347 |
|
Diluted Earnings per Share1 |
|
$ |
(0.08 |
) |
|
$ |
0.15 |
|
|
$ |
0.46 |
|
|
$ |
0.77 |
|
Diluted Weighted Average Shares
Outstanding |
|
|
74,112,012 |
|
|
|
71,945,413 |
|
|
|
74,199,308 |
|
|
|
71,934,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 During the three months ended December 31,
2018, the calculation of GAAP diluted earnings per share resulted
in an increase in earnings per share. Therefore, diluted net income
and diluted earnings per share are assumed to be equal to basic net
income and basic earnings per share.
|
PZENA INVESTMENT MANAGEMENT, INC. |
|
GAAP TO AS ADJUSTED RECONCILIATIONS(in
thousands, except share and per-share amounts) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GAAP Net Income/ (Loss) |
|
$ |
(1,482 |
) |
|
$ |
2,537 |
|
|
$ |
8,462 |
|
|
$ |
13,794 |
|
Change due to Non-Recurring Compensation and Benefits Expense |
|
|
5,283 |
|
|
|
— |
|
|
|
5,283 |
|
|
|
— |
|
Change due to Prior Period Adjustments |
|
|
— |
|
|
|
246 |
|
|
|
— |
|
|
|
246 |
|
As Adjusted Net Income |
|
$ |
3,801 |
|
|
$ |
2,783 |
|
|
$ |
13,745 |
|
|
$ |
14,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Shares
Outstanding |
|
|
17,783,818 |
|
|
|
17,460,942 |
|
|
|
17,945,686 |
|
|
|
17,678,874 |
|
GAAP Basic Earnings per
Share |
|
$ |
(0.08 |
) |
|
$ |
0.15 |
|
|
$ |
0.47 |
|
|
$ |
0.78 |
|
Change due to Non-Recurring Compensation and Benefits Expense |
|
|
0.29 |
|
|
|
— |
|
|
|
0.30 |
|
|
|
— |
|
Change due to Prior Period Adjustments |
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
As Adjusted Basic Earnings per
Share |
|
$ |
0.21 |
|
|
$ |
0.16 |
|
|
$ |
0.77 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income for Diluted
Earnings per Share |
|
$ |
(5,913 |
) |
|
$ |
11,314 |
|
|
$ |
34,046 |
|
|
$ |
55,347 |
|
Change due to Non-Recurring Compensation and Benefits Expense |
|
|
20,636 |
|
|
|
— |
|
|
|
20,057 |
|
|
|
— |
|
Change due to Prior Period Adjustments |
|
|
— |
|
|
|
246 |
|
|
|
— |
|
|
|
246 |
|
As Adjusted Net Income for
Diluted Earnings per Share |
|
$ |
14,723 |
|
|
$ |
11,560 |
|
|
$ |
54,103 |
|
|
$ |
55,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Shares
Outstanding |
|
|
74,112,012 |
|
|
|
71,945,413 |
|
|
|
74,199,308 |
|
|
|
71,934,144 |
|
GAAP Diluted Earnings per
Share |
|
$ |
(0.08 |
) |
|
$ |
0.16 |
|
|
$ |
0.46 |
|
|
$ |
0.77 |
|
Change due to Non-Recurring Compensation and Benefits Expense |
|
|
0.28 |
|
|
|
— |
|
|
|
0.27 |
|
|
|
— |
|
Change due to Prior Period Adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
As Adjusted Diluted Earnings per
Share |
|
$ |
0.20 |
|
|
$ |
0.16 |
|
|
$ |
0.73 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A PDF accompanying this announcement is available
at http://ml.globenewswire.com/Resource/Download/10bceec3-f42a-45db-9bd9-5489e0a56c58
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