Pzena Investment Management, Inc. (NYSE: PZN) (“PZN”) today
announced that it has entered into an agreement to become a private
company through a transaction in which holders of PZN Class A
common stock will receive $9.60 per share in cash. Under the
terms of the definitive agreement, PZN will merge with and into a
newly formed subsidiary of its operating company, Pzena Investment
Management, LLC (“PIM”), in an all-cash transaction that implies an
enterprise value for PZN of approximately $795 million. The
$9.60 per share price represents a premium of 49% to PZN’s closing
stock price on July 26, 2022, and a premium of approximately 46%
over the 90-calendar day volume weighted average price. PZN
plans to maintain its regular quarterly dividend of $0.03 per share
for the third quarter of 2022, which the Board declared earlier
today.
The Board of Directors of PZN formed a special
committee consisting of the independent and disinterested directors
of PZN (the “Special Committee”) to evaluate and negotiate the
definitive agreement. Following a robust negotiation process,
the Special Committee concluded unanimously that the proposed
transaction is in the best interests of the holders of PZN’s Class
A common stock. Acting upon the Special Committee’s recommendation,
the Board of Directors of PZN approved the transaction.
Upon completion of the transaction, Pzena
Investment Management will be a privately-held company owned by the
existing partners of PIM. All of Pzena Investment Management’s
leadership and investment professionals are anticipated to remain
in place and will retain substantially all of their equity interest
in the business.
“We are excited to begin this new chapter for
our firm after 15 years as a public company,” said CEO Richard
Pzena. “I would like to thank the Special Committee for its
work in reaching this agreement. We believe the transaction
is in the best interest of Pzena’s Class A stockholders, and will
enhance our ability to achieve investment excellence on behalf of
our clients.”
The transaction is expected to close in the
fourth quarter of 2022, subject to approval by PZN stockholders,
including a special approval of holders of a majority of the Class
A shares not held by persons who will remain as investors in PIM
following the closing, receipt of applicable regulatory approvals,
and other customary closing conditions.
In connection with the proposed transaction, PZN
entered into a voting agreement with certain members of PZN’s
management team, as a result of which all outstanding shares of
Class B common stock will be voted in favor of the transaction.
Ardea Partners LP and CastleOak Securities, L.P.
are acting as financial advisor, and Wachtell, Lipton, Rosen &
Katz is acting as legal advisor, to the Special Committee.
J.P. Morgan Securities LLC is acting as
exclusive financial advisor, and Milbank LLP is acting as legal
advisor, to Pzena Investment Management, LLC.
PZN reported the following U.S. Generally
Accepted Accounting Principles (GAAP) basic and diluted net income
and earnings per share for the three and six months ended June 30,
2022 and 2021 (in thousands, except per-share amounts):
|
|
|
GAAP Basis |
|
|
|
|
For the Three Months EndedJune 30, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
|
(unaudited) |
|
|
Basic Net Income |
|
$ |
2,523 |
|
|
$ |
4,603 |
|
| Basic Earnings per Share |
|
$ |
0.15 |
|
|
$ |
0.27 |
|
| |
|
|
|
|
|
|
| Diluted Net Income |
|
$ |
12,755 |
|
|
$ |
21,176 |
|
| Diluted Earnings per Share |
|
$ |
0.15 |
|
|
$ |
0.25 |
|
| |
|
|
|
|
|
|
|
|
|
GAAP Basis |
|
|
|
|
For the Six Months EndedJune 30, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
|
(unaudited) |
|
| Basic Net Income |
|
$ |
5,338 |
|
|
$ |
8,790 |
|
| Basic Earnings per Share |
|
$ |
0.31 |
|
|
$ |
0.51 |
|
| |
|
|
|
|
|
|
| Diluted Net Income |
|
$ |
26,245 |
|
|
$ |
40,906 |
|
| Diluted Earnings per Share |
|
$ |
0.31 |
|
|
$ |
0.49 |
|
| |
|
|
|
|
|
|
|
|
GAAP diluted net income and GAAP diluted
earnings per share were $12.8 million and $0.15, respectively, for
the three months ended June 30, 2022, and $21.2 million and
$0.25, respectively, for the three months ended June 30, 2021.
GAAP diluted net income and GAAP diluted earnings per share were
$26.2 million and $0.31, respectively, for the six months ended
June 30, 2022, and $40.9 million and $0.49, respectively, for
the six months ended June 30, 2021.
| Assets
Under Management (unaudited) |
|
| ($ billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Twelve Months Ended |
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
| Separately Managed Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
$ |
19.4 |
|
|
$ |
19.4 |
|
|
$ |
19.4 |
|
|
$ |
20.0 |
|
|
$ |
13.0 |
|
|
Inflows |
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.7 |
|
|
|
1.0 |
|
|
|
2.2 |
|
|
Outflows |
|
|
(0.7 |
) |
|
|
(0.3 |
) |
|
|
(0.7 |
) |
|
|
(2.2 |
) |
|
|
(2.7 |
) |
|
Net Flows |
|
|
(0.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1.2 |
) |
|
|
(0.5 |
) |
|
Market Appreciation/(Depreciation) |
|
|
(1.8 |
) |
|
|
0.1 |
|
|
|
0.5 |
|
|
|
(1.3 |
) |
|
|
7.0 |
|
|
Foreign Exchange1 |
|
|
(0.6 |
) |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
(1.1 |
) |
|
|
0.5 |
|
|
End of Period |
|
$ |
16.4 |
|
|
$ |
19.4 |
|
|
$ |
20.0 |
|
|
$ |
16.4 |
|
|
$ |
20.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sub-Advised Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period Assets |
|
$ |
30.7 |
|
|
$ |
30.5 |
|
|
$ |
26.9 |
|
|
$ |
30.2 |
|
|
$ |
16.4 |
|
|
Inflows |
|
|
0.7 |
|
|
|
1.2 |
|
|
|
3.1 |
|
|
|
4.4 |
|
|
|
8.1 |
|
|
Outflows |
|
|
(1.4 |
) |
|
|
(1.3 |
) |
|
|
(0.9 |
) |
|
|
(5.5 |
) |
|
|
(4.6 |
) |
|
Net Flows |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
2.2 |
|
|
|
(1.1 |
) |
|
|
3.5 |
|
|
Market Appreciation/(Depreciation) |
|
|
(3.3 |
) |
|
|
0.5 |
|
|
|
1.0 |
|
|
|
(1.8 |
) |
|
|
10.0 |
|
|
Foreign Exchange1 |
|
|
(0.6 |
) |
|
|
(0.2 |
) |
|
|
0.1 |
|
|
|
(1.2 |
) |
|
|
0.3 |
|
|
End of Period |
|
$ |
26.1 |
|
|
$ |
30.7 |
|
|
$ |
30.2 |
|
|
$ |
26.1 |
|
|
$ |
30.2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pzena Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period Assets |
|
$ |
2.7 |
|
|
$ |
2.6 |
|
|
$ |
2.9 |
|
|
$ |
2.9 |
|
|
$ |
2.1 |
|
|
Inflows |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.7 |
|
|
|
0.7 |
|
|
Outflows |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.7 |
) |
|
|
(0.9 |
) |
|
Net Flows |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
Market Appreciation/(Depreciation) |
|
|
(0.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
|
1.0 |
|
|
Foreign Exchange1 |
|
|
(0.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
End of Period |
|
$ |
2.5 |
|
|
$ |
2.7 |
|
|
$ |
2.9 |
|
|
$ |
2.5 |
|
|
$ |
2.9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period |
|
$ |
52.8 |
|
|
$ |
52.5 |
|
|
$ |
49.2 |
|
|
$ |
53.1 |
|
|
$ |
31.5 |
|
|
Inflows |
|
|
1.1 |
|
|
|
1.7 |
|
|
|
4.0 |
|
|
|
6.1 |
|
|
|
11.0 |
|
|
Outflows |
|
|
(2.2 |
) |
|
|
(1.7 |
) |
|
|
(1.8 |
) |
|
|
(8.4 |
) |
|
|
(8.2 |
) |
|
Net Flows |
|
|
(1.1 |
) |
|
|
— |
|
|
|
2.2 |
|
|
|
(2.3 |
) |
|
|
2.8 |
|
|
Market Appreciation/(Depreciation) |
|
|
(5.3 |
) |
|
|
0.6 |
|
|
|
1.5 |
|
|
|
(3.3 |
) |
|
|
18.0 |
|
|
Foreign Exchange1 |
|
|
(1.4 |
) |
|
|
(0.3 |
) |
|
|
0.2 |
|
|
|
(2.5 |
) |
|
|
0.8 |
|
|
End of Period |
|
$ |
45.0 |
|
|
$ |
52.8 |
|
|
$ |
53.1 |
|
|
$ |
45.0 |
|
|
$ |
53.1 |
|
1 Foreign exchange reflects the impact
of translating non-U.S. dollar denominated AUM into U.S. dollars
for reporting purposes.
Financial Discussion
| Revenue
(unaudited) |
|
|
|
|
|
|
|
| ($ thousands) |
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2022 |
|
2022 |
|
2021 |
|
|
Separately Managed Accounts |
|
$ |
23,756 |
|
$ |
26,184 |
|
$ |
26,525 |
|
| Sub-Advised Accounts |
|
|
20,557 |
|
|
21,939 |
|
|
19,400 |
|
| Pzena Funds |
|
|
4,384 |
|
|
4,637 |
|
|
4,952 |
|
|
Total |
|
$ |
48,697 |
|
$ |
52,760 |
|
$ |
50,877 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
|
2022 |
|
2021 |
|
| Separately Managed Accounts |
|
|
|
$ |
49,940 |
|
$ |
51,072 |
|
| Sub-Advised Accounts |
|
|
|
|
42,496 |
|
|
36,028 |
|
| Pzena Funds |
|
|
|
|
9,021 |
|
|
9,648 |
|
|
Total |
|
|
|
$ |
101,457 |
|
$ |
96,748 |
|
| |
|
|
|
|
|
|
|
Revenue was approximately $48.7 million for the
second quarter of 2022, a decrease of 7.7% from $52.8 million for
the first quarter of 2022 and a decrease of 4.3% from $50.9 million
for the second quarter of 2021.
There were $0.7 million of performance fees
recognized during the second quarter of 2022, compared to $0.5
million of performance fees recognized during the first quarter of
2022 and less than $0.1 million of performance fees recognized
during the second quarter of 2021.
Average assets under management for the second
quarter of 2022 were $49.5 billion, decreasing 6.8% from $53.1
billion for the first quarter of 2022, and decreasing 3.9% from
$51.5 billion for the second quarter of 2021. The decrease from the
first quarter of 2022 and the second quarter of 2021 reflects
market depreciation and net outflows.
The weighted average fee rate was 0.393% for the
second quarter of 2022, decreasing from 0.397% for the first
quarter of 2022, and from 0.395% for the second quarter of
2021.
The weighted average fee rate for separately
managed accounts was 0.523% for the second quarter of 2022,
decreasing from 0.532% for the first quarter of 2022 and from
0.533% for the second quarter of 2021. The decrease from the first
quarter of 2021 primarily reflects the calculation methodology for
certain of our separately managed accounts which are based on the
value of AUM at a specific date during the quarter. The decrease
from the second quarter of 2021 primarily reflects a shift in
assets to certain strategies that typically carry lower fee
rates.
The weighted average fee rate for sub-advised
accounts was 0.286% for the second quarter of 2022, increasing from
0.285% for the first quarter of 2022, and from 0.270% for the
second quarter of 2021. The increase from the first quarter of 2022
and the second quarter of 2021 reflects an increase in performance
fees recognized during the second quarter of 2022. 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 second quarter of 2022 and
the first quarter of 2022, the Company recognized $0.7 million and
$0.5 million of performance fees, respectively, related to this
client relationship. During the second quarter of 2021, the Company
recognized a $1.0 million reduction in base fees related to this
client relationship. To the extent the three-year performance
record of this account fluctuates relative to its relevant
benchmark, the amount of base fees recognized may vary.
The weighted average fee rate for Pzena funds
was 0.672% for the second quarter of 2022, decreasing from 0.695%
for the first quarter of 2022, and from 0.681% for the second
quarter of 2021. The decrease from the first quarter of 2022
primarily reflects an increase in assets to certain strategies that
typically carry lower fee rates. The decrease from the second
quarter of 2021 primarily reflects an increase in expense
reimbursements.
Total operating expenses were $24.1 million for
the second quarter of 2022, decreasing from $26.1 million for the
first quarter of 2022, and increasing from $23.0 million for the
second quarter of 2021. The decrease in compensation and benefits
expense from the first quarter of 2022 primarily reflects expenses
recognized in the first quarter associated with tax payments and
the Company's employee profit sharing and savings plan, which
generally do not recur during the year. The increase in general and
administrative expenses from the first quarter of 2022 primarily
reflects an increase in occupancy costs and travel and
entertainment expense. The decrease in compensation and benefits
expense from the second quarter of 2021 reflects a decrease in
compensation and the market performance of strategies tied to the
Company’s deferred compensation obligation. The increase in general
and administrative expenses from the second quarter of 2021
primarily reflects an increase in professional fees and occupancy
costs. The increase in occupancy costs for the second quarter of
2022 is due to the extension and expansion of the Company's New
York office lease.
| Operating Expenses
(unaudited) |
|
|
|
|
|
|
|
| ($ thousands) |
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2022 |
|
2022 |
|
2021 |
|
|
Compensation and Benefits Expense |
|
$ |
18,426 |
|
$ |
21,186 |
|
$ |
19,035 |
|
| General and Administrative
Expense |
|
|
5,718 |
|
|
4,945 |
|
|
3,920 |
|
|
Operating Expenses |
|
$ |
24,144 |
|
$ |
26,131 |
|
$ |
22,955 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
|
2022 |
|
2021 |
|
| Compensation and Benefits
Expense |
|
|
|
$ |
39,612 |
|
$ |
38,170 |
|
| General and Administrative
Expense |
|
|
|
|
10,663 |
|
|
7,616 |
|
|
Operating Expenses |
|
|
|
$ |
50,275 |
|
$ |
45,786 |
|
As of June 30, 2022, employee headcount was
142, decreasing from 143 at March 31, 2022, and increasing from 125
at June 30, 2021.
The operating margin was 50.4% for the second
quarter of 2022, compared to 50.5% for the first quarter of 2022,
and 54.9% for the second quarter of 2021.
Other income/ (expense) was expense of approximately $7.6
million for the second quarter of 2022, income of $0.1 million for
the first quarter of 2022, and $1.7 million for the second quarter
of 2021.
Other income/ (expense) primarily reflects the
fluctuations in the gains/ (losses) and other investment income
recognized by the Company on its direct equity investments, the
majority of which are held to satisfy obligations under its
deferred compensation plan. Other income/ (expense) also
includes a portion of gains/ (losses) and other investment income
recognized by external investors on their investments in investment
partnerships that the Company consolidates, which are offset in net
income attributable to non-controlling interests.
| Other Income/ (Expense)
(unaudited) |
|
|
|
|
|
|
|
|
|
| ($ thousands) |
|
|
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
Net Interest and Dividend Income |
|
$ |
756 |
|
|
$ |
462 |
|
|
$ |
261 |
|
| Gains/ (Losses) and Other
Investment Income |
|
|
(8,196 |
) |
|
|
(245 |
) |
|
|
1,369 |
|
| Other Income/ (Expense) |
|
|
(184 |
) |
|
|
(139 |
) |
|
|
100 |
|
|
GAAP Other Income/ (Expense) |
|
|
(7,624 |
) |
|
|
78 |
|
|
|
1,730 |
|
| Outside Interests of Investment
Partnerships1 |
|
|
2,174 |
|
|
|
(844 |
) |
|
|
(249 |
) |
|
As Adjusted Other Income/ (Expense), Net of Outside Interests |
|
$ |
(5,450 |
) |
|
$ |
(766 |
) |
|
$ |
1,481 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
For the Six Months Ended |
|
|
|
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
| Net Interest and Dividend
Income |
|
|
|
|
$ |
1,218 |
|
|
$ |
458 |
|
| Gains/ (Losses) and Other
Investment Income |
|
|
|
|
|
(8,441 |
) |
|
|
5,469 |
|
| Other Income/ (Expense) |
|
|
|
|
|
(323 |
) |
|
|
158 |
|
|
GAAP Other Income/ (Expense) |
|
|
|
|
|
(7,546 |
) |
|
|
6,085 |
|
| Outside Interests of Investment
Partnerships1 |
|
|
|
|
|
1,330 |
|
|
|
(443 |
) |
|
As Adjusted Other Income/ (Expense), Net of Outside Interests |
|
|
|
|
$ |
(6,216 |
) |
|
$ |
5,642 |
|
1 Represents the non-controlling interest allocation of
the (income)/ loss of the Company's consolidated investment
partnerships to its external investors.
The Company recognized income tax expense of $2.5 million for
the second quarter of 2022, $8.2 million for the first quarter of
2022, and $2.6 million for the second quarter of 2021. The decrease
in income tax expense from the first quarter of 2021 reflects a
$5.9 million expense associated with a change in estimate of
uncertain tax positions due to a change in interpretation of
administrative rulings recognized during the first quarter of
2021.
Details of the income tax expense are shown below:
| Income Tax Expense
(unaudited) |
|
|
|
|
|
|
|
| ($ thousands) |
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
|
| |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2022 |
|
2022 |
|
2021 |
|
|
Corporate Income Tax Expense |
|
$ |
1,141 |
|
$ |
1,111 |
|
$ |
1,520 |
|
| Unincorporated and Other Business
Tax Expense |
|
|
1,349 |
|
|
7,114 |
|
|
1,055 |
|
|
Income Tax Expense |
|
$ |
2,490 |
|
$ |
8,225 |
|
$ |
2,575 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
For the Six Months Ended |
|
| |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
|
2022 |
|
2021 |
|
| Corporate Income Tax Expense |
|
|
|
$ |
2,252 |
|
$ |
3,020 |
|
| Unincorporated and Other Business
Tax Expense |
|
|
|
|
8,463 |
|
|
1,921 |
|
|
Income Tax Expense |
|
|
|
$ |
10,715 |
|
$ |
4,941 |
|
Details of the net income attributable to non-controlling
interests of the Company's operating company and consolidated
subsidiaries are shown below:
| GAAP Non-Controlling
Interests (unaudited) |
|
|
|
|
|
|
|
|
|
| ($ thousands) |
|
|
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
|
| |
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
Operating Company Allocation |
|
$ |
14,090 |
|
|
$ |
14,823 |
|
|
$ |
22,225 |
|
| Outside Interests of Investment
Partnerships1 |
|
|
(2,174 |
) |
|
|
844 |
|
|
|
249 |
|
| GAAP Net Income Attributable to
Non-Controlling Interests |
|
$ |
11,916 |
|
|
$ |
15,667 |
|
|
$ |
22,474 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
For the Six Months Ended |
|
| |
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
| Operating Company Allocation |
|
|
|
|
$ |
28,913 |
|
|
$ |
42,873 |
|
| Outside Interests of Investment
Partnerships1 |
|
|
|
|
|
(1,330 |
) |
|
|
443 |
|
| GAAP Net Income Attributable to
Non-Controlling Interests |
|
|
|
|
$ |
27,583 |
|
|
$ |
43,316 |
|
1 Represents the non-controlling interest allocation of
the income/ (loss) of the Company's consolidated investment
partnerships to its external investors.
Today, the Company's Board of Directors approved
a quarterly dividend of $0.03 per share of its Class A common
stock. The following dates apply to the dividend:
Record Date:
August 5, 2022
Payment Date:
August 19, 2022
In light of PZN’s entry into the transaction
agreement described above, PZN’s second quarter 2022 earnings
conference call (previously scheduled for 10:00 a.m. ET, Wednesday,
July 27, 2022) is cancelled.
Forward-looking Statements
Certain statements and information contained in
this release may be considered “forward-looking statements,” such
as statements relating to management's views with respect to future
events and financial performance. 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. Such forward-looking statements
are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from historical
experience or from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions in the markets
in which PZN operates; new federal or state governmental
regulations; PZN’s ability to effectively operate, integrate and
leverage any past or future strategic initiatives; statements
regarding the merger and related matters; the ability to meet
expectations regarding the timing and completion of the merger; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement; the failure
to obtain PZN stockholder approval of the transaction or the
failure to satisfy any of the other conditions to the completion of
the transaction; risks relating to the financing required to
complete the transaction; the effect of the announcement of the
transaction on the ability of PZN to retain and hire key personnel
and maintain relationships with its customers, vendors and others
with whom it does business, or on its operating results and
businesses generally; risks associated with the disruption of
management’s attention from ongoing business operations due to the
transaction; significant transaction costs, fees, expenses and
charges; the risk of litigation and/or regulatory actions related
to the transaction; and other factors detailed in PZN’s Annual
Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (the “SEC”) for the fiscal year ended December 31, 2021
and PZN’s other filings with the SEC, which are available at
http://www.sec.gov and on PZN’s website at investors.pzena.com.
Additional Information and Where to Find It
In connection with the proposed merger
transaction, PZN will file with the SEC and furnish to PZN’s
stockholders a proxy statement and other relevant documents.
This press release does not constitute a solicitation of any vote
or approval. PZN stockholders are urged to read the proxy statement
when it becomes available and any other documents to be filed with
the SEC in connection with the proposed merger or incorporated by
reference in the proxy statement because they will contain
important information about the proposed merger.
Investors will be able to obtain a free copy of
documents filed with the SEC at the SEC’s website at
http://www.sec.gov. In addition, investors may obtain a free
copy of the Company’s filings with the SEC from the investors
section of PZN’s website at https://www.pzena.com or by directing a
request to: Pzena Investment Management, Inc., 320 Park Avenue, 8th
Floor, New York, NY 10022, (212) 355-1600, info@pzena.com.
Participants in the
Solicitation
PZN, its directors and certain of its officers
and employees, may be deemed to be participants in the solicitation
of proxies from PZN stockholders in connection with the proposed
transaction. Information about the Company's directors and
executive officers is set forth in the Company's definitive proxy
statement for its 2022 annual meeting of stockholders filed with
the SEC on April 4, 2022. To the extent the holdings of PZN
securities by PZN’s directors and executive officers have changed
since the amounts set forth in the proxy statement for its 2021
annual meeting of stockholders, such changes have been or will be
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC. These documents may be obtained free of charge at
the SEC's web site at www.sec.gov and on the Investor Relations
page of PZN’s website located at https://investors.pzena.com.
Additional information regarding the interests of participants in
the solicitation of proxies in connection with the proposed merger
will be included in the proxy statement and other relevant
materials PZN may file with the SEC.
Contact: Jessica Doran, 212-355-1600 or
doran@pzena.com.
|
PZENA INVESTMENT MANAGEMENT, INC. |
|
|
|
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION |
|
(in thousands) |
| |
| |
|
As of |
|
| |
|
June 30, |
|
December 31, |
|
|
|
|
2022 |
|
2021 |
|
| |
|
(unaudited) |
|
|
|
| ASSETS |
|
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
49,412 |
|
$ |
81,133 |
|
|
Restricted Cash |
|
|
2,215 |
|
|
1,056 |
|
|
Due from Broker |
|
|
157 |
|
|
55 |
|
|
Advisory Fees Receivable |
|
|
36,855 |
|
|
41,127 |
|
|
Investments |
|
|
80,762 |
|
|
95,506 |
|
|
Prepaid Expenses and Other Assets |
|
|
15,713 |
|
|
5,836 |
|
|
Right-of-use Assets |
|
|
55,311 |
|
|
10,014 |
|
|
Deferred Tax Asset |
|
|
21,969 |
|
|
25,886 |
|
|
Property and Equipment, Net of Accumulated |
|
|
|
|
|
|
Depreciation of $7,633 and $7,086, respectively |
|
|
4,990 |
|
|
3,687 |
|
|
TOTAL ASSETS |
|
$ |
267,384 |
|
$ |
264,300 |
|
| |
|
|
|
|
|
| LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts Payable and Accrued Expenses |
|
$ |
35,456 |
|
$ |
44,167 |
|
|
Due to Broker |
|
|
51 |
|
|
— |
|
|
Securities Sold Short |
|
|
241 |
|
|
237 |
|
|
Liability to Selling and Converting Shareholders |
|
|
24,679 |
|
|
24,679 |
|
|
Lease Liabilities |
|
|
65,396 |
|
|
10,323 |
|
|
Deferred Compensation Liability |
|
|
3,604 |
|
|
6,840 |
|
|
TOTAL LIABILITIES |
|
|
129,427 |
|
|
86,246 |
|
| |
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Total Pzena Investment Management, Inc.'s Equity |
|
|
37,407 |
|
|
42,588 |
|
|
Non-Controlling Interests |
|
|
100,550 |
|
|
135,466 |
|
|
TOTAL EQUITY |
|
|
137,957 |
|
|
178,054 |
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
267,384 |
|
$ |
264,300 |
|
|
PZENA INVESTMENT MANAGEMENT, INC. |
|
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except share and per-share
amounts) |
| |
| |
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
| |
|
June 30, |
|
|
June 30, |
|
| |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
| |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
$ |
48,697 |
|
|
$ |
50,877 |
|
|
$ |
101,457 |
|
|
$ |
96,748 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
| Compensation and Benefits
Expense |
|
|
18,426 |
|
|
|
19,035 |
|
|
|
39,612 |
|
|
|
38,170 |
|
| General and Administrative
Expense |
|
|
5,718 |
|
|
|
3,920 |
|
|
|
10,663 |
|
|
|
7,616 |
|
|
TOTAL OPERATING EXPENSES |
|
|
24,144 |
|
|
|
22,955 |
|
|
|
50,275 |
|
|
|
45,786 |
|
| Operating Income |
|
|
24,553 |
|
|
|
27,922 |
|
|
|
51,182 |
|
|
|
50,962 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income/ (Loss) |
|
|
(7,624 |
) |
|
|
1,730 |
|
|
|
(7,546 |
) |
|
|
6,085 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income Before Taxes |
|
|
16,929 |
|
|
|
29,652 |
|
|
|
43,636 |
|
|
|
57,047 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income Tax Expense |
|
|
2,490 |
|
|
|
2,575 |
|
|
|
10,715 |
|
|
|
4,941 |
|
| Consolidated Net Income |
|
|
14,439 |
|
|
|
27,077 |
|
|
|
32,921 |
|
|
|
52,106 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Less: Net Income Attributable to
Non-Controlling Interests |
|
|
11,916 |
|
|
|
22,474 |
|
|
|
27,583 |
|
|
|
43,316 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income Attributable to Pzena
Investment Management, Inc. |
|
$ |
2,523 |
|
|
$ |
4,603 |
|
|
$ |
5,338 |
|
|
$ |
8,790 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per Share - Basic and
Diluted Attributable to Pzena Investment Management, Inc. Common
Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income for Basic Earnings per
Share |
|
$ |
2,523 |
|
|
$ |
4,603 |
|
|
$ |
5,338 |
|
|
$ |
8,790 |
|
| Basic Earnings per Share |
|
$ |
0.15 |
|
|
$ |
0.27 |
|
|
$ |
0.31 |
|
|
$ |
0.51 |
|
| Basic Weighted Average Shares
Outstanding |
|
|
16,969,301 |
|
|
|
17,255,593 |
|
|
|
17,159,027 |
|
|
|
17,248,045 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income for Diluted Earnings
per Share |
|
$ |
12,755 |
|
|
$ |
21,176 |
|
|
$ |
26,245 |
|
|
$ |
40,906 |
|
| Diluted Earnings per Share |
|
$ |
0.15 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.49 |
|
| Diluted Weighted Average Shares
Outstanding |
|
|
85,293,053 |
|
|
|
84,336,569 |
|
|
|
85,985,519 |
|
|
|
83,932,385 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PDF
available: http://ml.globenewswire.com/Resource/Download/57e08059-e392-49dc-951d-5ab8cc965d0d
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