TIDMTAM
RNS Number : 3588M
Titanium Asset Management Corp
15 August 2011
Titanium Asset Management Corp.
Reports 2011 Second Quarter Results
Milwaukee, WI, August 15, 2011 - Titanium Asset Management Corp.
(AIM - TAM) today reported results for the second quarter ended
June 30, 2011.
Highlights for the second quarter are as follows:
-- Managed assets decreased slightly from $8,457.4 million to
$8,402.5 million during the second quarter of 2011 primarily
reflecting net asset outflows from one equity strategy, offset in
part by market gains.
-- Average managed assets of $8,430.0 million for the second
quarter of 2011 were substantially unchanged relative to the
$8,457.0 million for the same period last year. Investment
management fee revenues were $5,113,000 for the second quarter of
2011, a 0.7% increase over investment management fee revenues of
$5,076,000 for the same period last year primarily due to a
marginally higher average fee rate. For the year to date periods,
average managed assets of $8,328.3 were also substantially
unchanged relative to the $8,390.8 million for the same period last
year. Investment management fee revenues were also marginally
higher at $10,160,000 for the first half of 2011, compared to
$10,020,000 for the first half of 2010.
-- Distributed assets decreased by 10.3% from $908.5 million to
$814.7 million during the second quarter of 2011 reflecting
referred client redemptions market losses.
-- Average distributed assets of $861.6 million for the second
quarter of 2011 were 11.5% lower than the $973.9 million for the
same period last year reflecting significant redemptions in the
fourth quarter of 2010 and the first half of 2011. Referral fee
revenues were $347,000 for the second quarter of 2011, a 43.6%
decrease from referral fee revenues of $615,000 for the second
quarter of 2010 reflecting both the lower average distributed
assets and a 36.2% decrease in our average referral fees due to a
decrease in the hedge fund adviser's fees. For the year to date
periods, average distributed assets were 10.9% lower at $872.5
million for 2011 compared to $978.7 million for 2010. The decrease
reflecting the redemptions incurred in the fourth quarter of 2010
and the first half of 2011. Referral fee revenues were $742,000 for
the first half of 2011, a 39.3% decrease from referral fee revenues
of $1,222,000 for the first half of 2010 reflecting both the lower
average distributed assets and a 32.2% decrease in our average
referral fees due to a decrease in the hedge fund adviser's
fees.
-- Adjusted EBITDA(1) of $259,000 for the second quarter of 2011
compared to an Adjusted EBITDA deficit of $549,000 for the same
period last year. Adjusted EBITDA(1) of $190,000 for the first half
of 2011 compared to an Adjusted EBITDA deficit of $1,240,000 for
the same period last year. The improvements in EBITDA primarily
reflect the structural cost reductions achieved in 2010, the
elimination of severance costs incurred in the 2010 periods, offset
in part by the decrease in referral fee revenue.
-- Net investment income of $89,000 for the second quarter of
2011 compared to $404,000 for the same period last year. Net
investment income of $464,000 for the first half of 2011 compared
to $719,000 for the same period last year.
-- Net loss of $1,073,000, or $0.05 per diluted common share,
for the second quarter of 2011 compared to a net loss of $816,000,
or $0.04 per diluted common share, for the second quarter of 2010.
Net loss of $5,510,000, or $0.27 per diluted common share, for the
first half of 2011 compared to a net loss of $2,086,000, or $0.10
per diluted common share, for the first half of 2010.
(1) See the table below for a definition of Adjusted EBITDA, a
non-GAAP financial measure. The table provides a description of
this non-GAAP financial measure and a reconciliation to the most
directly comparable GAAP measure.
For further information please contact:
Titanium Asset Management Corp.
Robert Brooks, CEO 312-335-8300
Seymour Pierce Ltd
Jonathan Wright +44 20 7107 8000
Assets Under Management
Assets under management of $8.4 billion at June 30, 2011 were
higher than the $8.1 billion reported at December 31, 2010 due to
both positive net flows and positive investment returns. The
following table presents summary activity for 2011 and 2010
periods.
Three Months
Ended 2011 Six Months Ended 2011
June 30, vs. June 30, vs.
----------------------
(in millions) 2011 2010 2010 2011 2010 2010
---------- ---------- ------ ---------- ---------- ------
Annual Activity:
Beginning
balance $ 8,457.4 $ 8,498.1 $ 8,125.0 $ 8,151.4
Inflows 373.5 320.6 870.1 833.7
Outflows (550.6) (462.0) (817.7) (791.7)
---------- ---------- ---------- ----------
Net flows (177.1) (141.4) 52.4 42.0
---------- ---------- ---------- ----------
Market
value
change 122.2 59.1 225.1 222.4
---------- ---------- ---------- ----------
Ending
balance $ 8,402.5 $ 8,415.8 $ 8,402.5 $ 8,415.8
========== ========== ========== ==========
Average Assets
Under
Management $ 8,430.0 $ 8,457.0 -0.3% $ 8,328.3 $ 8,390.8 -0.7%
Average Fee
Rate (basis
points) 24.3 24.0 1.2% 24.4 23.9 2.1%
The principle factors affecting our net flows during the periods
ended June 30, 2011 and 2010 include the following:
-- Net flows for the 2011 period were negatively impacted by the
loss of several equity accounts managed under a quantitative
strategy. These accounts totaled approximately $125 million and
represented substantially all the accounts managed under this
strategy. The loss of these accounts is not expected to have a
significant impact on profitability as they were subject to a
significant revenue sharing arrangement with the portfolio
manager.
-- Multiemployer pension and welfare plans represent
approximately 33% of our client base, and these plans have been
faced with a challenging economic environment over the last several
years due to the equity market collapse of 2008 and general
business conditions that affect their contribution and withdrawal
levels. These factors have led to increased levels of outflows from
our fixed income strategies throughout the last several years. Net
outflows from multiemployer pension and welfare plans were
approximately $26 million for the three months ended June 30, 2011
compared to approximately $46 million for the prior year period.
For the six month year-to-date periods, net outflows from
multiemployer pension and welfare plans were approximately $3
million in 2011, compared to net inflows of approximately $16
million in 2010, which included the addition of a significant new
real estate client.
-- Inflows and outflows are also significantly affected by the
timing of tax receipts and disbursements for several public entity
accounts that we manage. While these flows can fluctuate
significantly from period to period, they do not have a significant
impact on our overall fees due to low or fixed fee rates.
Market value changes reflect our investment performance. Fixed
income assets comprised approximately 89% of our total assets under
management at June 30, 2011. Fixed income returns as measured by
the Barclay's Aggregate Index were 2.3% for the three months ended
June 30, 2011 and 2.7% for the year-to-date period ended June 30,
2011 (for the comparable 2010 periods the returns were 1.8% and
5.3%, respectively). For the six months ended June 30, 2010,
approximately 80% of our fixed income assets with defined
performance benchmarks outperformed their respective
benchmarks.
Equity assets comprised approximately 9% of our total assets
under management at June 30, 2011. Equity returns as measured by
the S&P 500 Index were 0.1% for the three months ended June 30,
2011 and 6.0% for the year-to-date period ended (for the comparable
2010 periods the returns were (11.4%) and (6.7%), respectively).
Our equity assets generally underperformed their respective
benchmarks for the six months ended June 30, 2011.
The following table presents summary breakdowns for our assets
under management at June 30, 2011 and December 31, 2010.
June 30, % of December % of
(in millions) 2011 total 31, 2010 total
---------- ------- ---------- -------
By investment strategy:
Fixed income $ 7,476.5 89% $ 7,137.4 88%
Equity 719.3 9% 781.3 10%
Real estate 206.7 2% 206.3 2%
---------- ------- ---------- -------
Total $ 8,402.5 100% $ 8,125.0 100%
========== ======= ========== =======
By client type:
Institutional $ 7,175.8 85% $ 6,902.8 85%
Retail 1,226.7 15% 1,222.2 15%
---------- ------- ---------- -------
Total $ 8,402.5 100% $ 8,125.0 100%
========== ======= ========== =======
By investment vehicle:
Separate accounts $ 7,537.7 90% $ 7,246.9 89%
Private funds 864.8 10% 878.1 11%
---------- ------- ---------- -------
Total $ 8,402.5 100% $ 8,125.0 100%
========== ======= ========== =======
Our mix of assets under management by investment strategy was
relatively unchanged as fixed income assets comprised 89% of total
assets under management at June 30, 2011, compared to 88% at
December 31, 2010.
Our mix of assets under management by client type was relatively
unchanged as institutional accounts comprised 85% of total assets
under management at both June 30, 2011 and December 31, 2010.
Our mix of assets under management by investment vehicle was
relatively unchanged as separate accounts comprised 90% of total
assets under management as of June 30, 2011 compared to 89% at
December 31, 2010.
We earn referral fees on clients referred to Attalus Capital LLC
("Attalus"), a hedge fund manager with whom we have a referral
arrangement. The distributed assets managed by Attalus under this
arrangement decreased from $894.4 million at December 31, 2010 to
$814.7 million at June 30, 2011. The activity related to these
distributed assets was as follows:
For the Three For the Six Months
Months Ended Ended
June 30, June 30,
------------------ ----- -------------------- -----
(in millions) 2011 2010 2011 2010
-------- -------- ----- --------- --------- -----
Annual Activity:
Beginning
balance $ 908.5 $ 992.1 $ 894.4 $ 974.9
Inflows 8.2 18.4 8.2 23.6
Outflows (83.5) - (83.5) -
Market
value
change (18.5) (54.9) (4.4) (42.9)
-------- -------- --------- ---------
Ending
balance $ 814.7 $ 955.6 $ 814.7 $ 955.6
======== ======== ========= =========
Average Assets
Under
Management $ 861.6 $ 973.8 -12% $ 872.5 $ 978.7 -11%
Average
Referral Fee
Rate (basis
points) 16.1 25.3 -36% 17.0 25.0 -32%
The assets managed by Attalus came under significant pressure in
the fourth quarter of 2010 as a result of several factors,
including Attalus' overall fee rates, the investment performance of
the hedge funds managed by Attalus relative to the performance of
other hedge funds, and certain changes in Attalus' management.
Starting January 1, 2011, Attalus has reduced its average fee
rates. The reduction in their fees reduced our average referral
rate from approximately 24.6 basis points to 17.5 points and will
reduce our annualized referral fees by approximately $650,000.
Since the fourth quarter of 2010, the outflows from redemptions
have totaled approximately $200 million (representing approximately
$350,000 of annualized referral fees). Based on the most recent
information from Attalus, current pending redemption requests total
approximately $400 million (representing approximately $580,000 of
annualized referral fees) that may occur in the third and fourth
quarters. If all these pending redemptions occur as scheduled, they
would further reduce referral fees over the second half of 2011 by
approximately $170,000.
Attalus and our client service personnel have been actively
communicating with our mutual clients regarding Attalus' investment
strategies, the changes in Attalus' management, and the reduction
in Attalus' fees in efforts to limit the redemptions. During the
first half of 2011, Attalus' relative investment performance has
improved.
Operating Results
Three Months
Ended Six Months Ended
June 30, June 30,
-------------------------- ----------------------------
2011 2010 2011 2010
------------ ------------ ------------- -------------
Average assets
under
management (in
millions) $ 8,430.0 $ 8,457.0 $ 8,328.3 $ 8,390.8
Average fee rate
(basis points) 24.3 24.0 24.4 23.9
Average
distributed
assets under
management (in
millions) $ 861.6 $ 973.8 $ 872.5 $ 978.7
Average referral
fee rate (basis
points) 16.1 25.3 17.0 25.0
Investment
management fees $ 5,113,000 $ 5,076,000 $ 10,160,000 $ 10,020,000
Referral fees 347,000 615,000 742,000 1,222,000
------------ ------------ ------------- -------------
Total operating
revenue 5,460,000 5,691,000 10,902,000 11,242,000
Adjusted EBITDA
(deficit)(1) 259,000 (549,000) 190,000 (1,240,000)
Impairment of
goodwill - - 3,500,000 -
Operating loss (1,162,000) (1,220,000) (5,974,000) (2,805,000)
Net investment
income 89,000 404,000 464,000 719,000
Net loss (1,073,000) (816,000) (5,510,000) (2,086,000)
Earnings per share:
Basic $ (0.05) $ (0.04) $ (0.27) $ (0.10)
Diluted $ (0.05) $ (0.04) $ (0.27) $ (0.10)
(1) See the table below for a definition of Adjusted EBITDA, a
non-GAAP financial measure. The table provides a description of
this non-GAAP financial measure and a reconciliation to the most
directly comparable GAAP measure.
Our 2011 second quarter investment management fees increased
$37,000, or 0.7%, relative to the second quarter of 2010 due to a
modest increase in the average fee rate.
Referral fee revenue decreased to $268,000 in the second quarter
of 2011, a 43.5% decrease compared to the referral fee revenue for
the second quarter of 2010, due to a combination of redemptions
incurred by Attalus in the fourth quarter of 2010 and the second
quarter of 2011 and a 36.4% reduction in our average referral fee
rate due to Attalus' reduction in its fees.
Our Adjusted EBITDA of $259,000 for the second quarter of 2011
reflects an improvement of $808,000 over the prior year amount as a
result of cost reductions achieved during 2010, the elimination of
$393,000 of severance costs incurred in the 2010 period, offset in
part by the decrease in referral fee revenue.
Forward-looking Statements
Statements in this press release which are not historical facts
may be "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
are subject to a number of assumptions, risks, and uncertainties,
many of which are beyond our control.
Any forward-looking statements made in this press release speak
as of the date made and are not guarantees of future performance.
Actual results or developments may differ materially from the
expectations expressed or implied in the forward-looking
statements, and we undertake no obligation to update any such
statements. Results may differ significantly due to market
fluctuations that alter our assets under management; a further
decline in our distributed assets; termination of investment
advisory agreements; impairment of goodwill and other intangible
assets; our inability to compete; market pressure on investment
advisory fees; ineffective management of risk; changes in interest
rates, equity prices, liquidity of global markets and international
and regional political conditions; or actions taken by Clal Finance
Ltd., as our significant stockholder. Additional factors that could
influence Titanium's financial results are included in its
Securities and Exchange Commission filings, including its Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2011, is expected to be filed with the
Securities and Exchange Commission on or about August 15, 2011. The
report will be available on the SEC's website at www.sec.gov and on
the Company's website at www.ti-am.com.
Titanium Asset Management Corp.
Condensed Consolidated Balance Sheets
June 30, December
2011 31, 2010
------------- -------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 967,000 $ 4,698,000
Investments 3,765,000 3,354,000
Accounts receivable 3,535,000 4,783,000
Other current assets 786,000 1,179,000
------------- -------------
Total current assets 9,053,000 14,014,000
Investments in affiliates 6,050,000 5,898,000
Property and equipment, net 513,000 455,000
Goodwill 21,647,000 25,147,000
Intangible assets, net 18,996,000 21,605,000
Total assets $ 56,259,000 $ 67,119,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 140,000 $ 42,000
Acquisition payments due - 4,000,000
Other current liabilities 2,108,000 3,539,000
------------- -------------
Total current liabilities and total
liabilities 2,248,000 7,581,000
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value;
54,000,000 shares authorized;
20,634,232 shares issued and
outstanding at June 30, 2011 and
20,442,232 shares issued and
outstanding at December 31, 2010 2,000 2,000
Restricted common stock, $0.0001
par value; 720,000 shares authorized;
612,716 issued and outstanding
at June 30, 2011 and December 31,
2010 - -
Preferred stock, $0.0001 par value;
1,000,000 shares authorized; none
issued - -
Additional paid-in capital 100,971,000 100,971,000
Accumulated deficit (46,878,000) (41,368,000)
Other comprehensive income (84,000) (67,000)
Total stockholders' equity 54,011,000 59,538,000
------------- -------------
Total liabilities and stockholders' equity
$ 56,259,000 $ 67,119,000
============= =============
Titanium Asset Management Corp.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ------------------------------
2011 2010 2011 2010
-------------- ------------ -------------- --------------
Operating revenues $ 5,460,000 $ 5,691,000 $ 10,902,000 $ 11,242,000
Operating
expenses:
Administrative 5,230,000 6,082,000 10,767,000 12,389,000
Amortization of
intangible
assets 1,392,000 829,000 2,609,000 1,658,000
Impairment of
goodwill - - 3,500,000 -
-------------- ------------
Total
operating
expenses 6,622,000 6,911,000 16,876,000 14,047,000
-------------- ------------
Operating loss (1,162,000) (1,220,000) (5,974,000) (2,805,000)
Other income
Interest income 23,000 76,000 45,000 164,000
Gain (loss) on
investments 5,000 24,000 (1,000) 127,000
Income from
equity
investees 61,000 304,000 420,000 444,000
Interest
expense - - - (16,000)
-------------- ------------
Loss before taxes (1,073,000) (816,000) (5,510,000) (2,086,000)
Income tax benefit - - - -
Net loss $ (1,073,000) $ (816,000) $ (5,510,000) $ (2,086,000)
============== ============ ============== ==============
Earnings (loss)
per share
Basic $ (0.05) $ (0.04) $ (0.27) $ (0.10)
Diluted $ (0.05) $ (0.04) $ (0.27) $ (0.10)
Weighted average
number of common
shares
outstanding:
Basic 20,634,232 20,694,693 20,634,232 20,698,074
Diluted 20,634,232 20,694,693 20,634,232 20,698,074
Titanium Asset Management Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
------------------------------
2011 2010
-------------- --------------
Cash flows from operating activities
Net loss $ (5,510,000) $ (2,086,000)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Amortization of intangible assets 2,609,000 1,658,000
Impairment of goodwill 3,500,000 -
Depreciation 55,000 46,000
Share compensation credit - (139,000)
Loss (gain) on investments 1,000 (127,000)
Income from equity investees (420,000) (444,000)
Income distributions from equity
investees 268,000 246,000
Accretion of acquisition payments - 16,000
Changes in assets and liabilities:
Decrease in accounts
receivable 1,248,000 1,136,000
Decrease in other current
assets 393,000 214,000
Increase (decrease) in accounts payable
98,000 (8,000)
Decrease in other current
liabilities (1,431,000) (870,000)
-------------- --------------
Net cash provided by (used in)
operating activities 811,000 (358,000)
-------------- --------------
Cash flows from investing activities
Purchases of property and equipment (113,000) (6,000)
Purchases of investments (2,962,000) (8,874,000)
Sales and redemptions of investments 2,533,000 11,433,000
Investments in equity investees - (4,000,000)
Acquisitions of subsidiaries, net
of cash acquired (4,000,000) (1,744,000)
Net cash used in investing activities (4,542,000) (3,191,000)
-------------- --------------
Net decrease in cash and cash equivalents (3,731,000) (3,549,000)
Cash and cash equivalents:
Beginning 4,698,000 4,773,000
-------------- --------------
Ending $ 967,000 $ 1,224,000
============== ==============
Titanium Asset Management Corp.
Reconciliation of Adjusted EBITDA
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
2011 2010 2011 2010
-------------- -------------- -------------- --------------
Operating
loss $ (1,162,000) $ (1,220,000) $ (5,974,000) $ (2,805,000)
Amortization
of
intangible
assets 1,392,000 829,000 2,609,000 1,658,000
Impairment of
goodwill - - 3,500,000 -
Depreciation
expense 29,000 23,000 55,000 46,000
Share
compensation
expense - (181,000) - (139,000)
-------------- -------------- -------------- --------------
Adjusted
EBITDA
(deficit) $ 259,000 $ (549,000) $ 190,000 $ (1,240,000)
============== ============== ============== ==============
Notes:
(1) Adjusted EBITDA deficit is defined as operating income or
loss before non-cash charges for amortization and impairment of
intangible assets and goodwill, depreciation, and share
compensation expense. We believe Adjusted EBITDA deficit is useful
as an indicator of our ongoing performance and our ability to
service debt, make new investments, and meet working capital
obligations. Adjusted EBITDA deficit, as we calculate it may not be
consistent with computations made by other companies. We believe
that many investors use this information when analyzing the
operating performance, liquidity, and financial position of
companies in the investment management industry.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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