TIDMTAM
RNS Number : 8617C
Titanium Asset Management Corp
08 May 2012
Titanium Asset Management Corp.
Reports 2012 First Quarter Results
Milwaukee, WI, May 8, 2012 - Titanium Asset Management Corp.
(AIM - TAM) today reported results for the first quarter ended
March 31, 2012.
Highlights are as follows:
-- Managed assets increased by 3.3% from $8,316.8 million to
$8,587.8 million during the first quarter of 2012 reflecting net
inflows and positive market returns.
-- Average managed assets of $8,452.3 million for the first
quarter of 2012 were 1.9% higher relative to the $8,291.2 million
for the same period last year. Investment management fee revenues
were $5,259,000 for the first quarter of 2012, a 4.2% increase from
investment management fee revenues of $5,047,000 for the same
period last year primarily due to the higher average managed asset
levels and higher average fee rates.
-- Distributed assets increased modestly from $374.0 million to
$382.8 million during the first quarter of 2012. The combination of
the erosion in the distributed asset client base and the reduction
in our average referral fee rates due to the decrease in the hedge
fund adviser's fees have led to significant decreases in our
referral fee revenues. Referral fee revenues were $125,000 for the
first quarter of 2012, a 68.4% decrease from referral fee revenues
of $395,000 for the first quarter of 2011.
-- Adjusted EBITDA(1) continued to improve during the first
quarter of 2012. Adjusted EBITDA of $264,000 for the first quarter
of 2012 compared to Adjusted EBITDA deficit of $69,000 for the same
period last year. The ongoing improvements in Adjusted EBITDA
primarily reflect the structural cost reductions achieved since the
beginning of 2010, offset in part by the decrease in referral fee
revenue.
-- Net investment income of $236,000 for the first quarter of
2012 compared to net investment income of $375,000 for the same
period last year.
-- Net loss of $1,932,000, or $0.09 per diluted common share,
for the first quarter of 2012 compared to a net loss of $4,437,000,
or $0.22 per diluted common share, for the first quarter of
2011.
(1) See the table below for a definition of Adjusted EBITDA
(deficit), 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.
Commenting on these results, Robert Brooks, CEO of Titanium
Asset Management Corp. said:
"We are pleased to report continued year-over-year improvement
to EBITDA for the first quarter of 2012. The improvement largely
reflects the ongoing benefits of the significant reductions to our
cost structure that were implemented over the last two years and
higher investment management fees from both increased managed
assets and higher average fee rates."
"During the first quarter of 2012, we achieved significant
growth in managed assets from both net inflows and positive market
returns. The net inflows achieved in the first quarter represent a
turnaround from recent quarterly activity."
"Our investment management teams continue to achieve solid
investment performance and several of our fixed income strategies
are performing in the upper deciles of our peer group rankings for
their three year investment performance. We believe these strong
performance rankings position us for strong asset growth over the
next year."
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 $8.6 billion at March 31, 2012 were
higher than the $8.3 billion reported at December 31, 2011 due to
positive net flows and investment returns. The following table
presents summary activity for 2012 and 2011 periods.
Three months ended 2012
March 31, vs.
--------------------------
(in millions) 2012 2011 2011
------------ ------------ -------
Periodic Activity:
Beginning balance $ 8,316.8 $ 8,125.0
Inflows 496.0 496.6
Outflows (382.6) (267.0)
------------ ------------
Net flows 113.4 229.6
------------ ------------
Market value change 157.6 102.9
------------ ------------
Ending balance $ 8,587.8 $ 8,457.4 2%
============ ============
Average Assets Under
Management $ 8,452.3 $ 8,291.2 2%
Average Fee Rate
(basis points) 24.9 24.3 2%
The principle factors affecting our net flows during the periods
ended March 31, 2012 and 2011 include the following:
-- Multiemployer pension and welfare plans represent
approximately 34% 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 and
resulted in modest growth or net outflows. Net inflows from
multiemployer pension and welfare plans were approximately $112
million for the three months ended March 31, 2012 compared to net
inflows of approximately $25 million for the prior year period. The
net inflows for 2012 include approximately $49 million in new real
estate investments.
-- Inflows and outflows are also significantly affected by the
timing of tax receipts and disbursements for several public entity
accounts that we manage. Net inflows related to these accounts were
$62 million for the three months ended March 31, 2012 compared to
net inflows of $192 million for the prior year period. 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.
-- Inflows and net flows for 2011 were positively impacted by
the addition of approximately $20 million of equity assets of a
mutual fund for which Clal Finance serves as investment adviser,
and for which we serve as sub-adviser pursuant to a sub-advisory
agreement with Clal Finance.
Market value changes reflect our investment performance. Fixed
income assets comprised approximately 89% of our total assets under
management at March 31, 2012. Fixed income returns as measured by
the Barclay's Aggregate Index were 0.3% for the three months ended
March 31, 2012 (for the comparable 2011 period the returns were
0.4%). Approximately 91% of our fixed income assets with defined
performance benchmarks outperformed their respective benchmarks for
the three months ended March 31, 2012.
Equity assets comprised approximately 8% of our total assets
under management at March 31, 2012. Equity returns as measured by
the S&P 500 Index were 12.6% for the three months ended March
31, 2012 (for the comparable 2011 period the returns were 5.9%).
Approximately 69% of our equity assets outperformed their
respective benchmarks for the three months ended March 31,
2012.
The following table presents summary breakdowns for our assets
under management at March 31, 2012 and December 31, 2011.
March 31, % of December % of
31,
(in millions) 2012 total 2011 Total
------------ ------- ------------ -------
By investment strategy:
Fixed income $ 7,636.9 89% $ 7,483.4 90%
Equity 690.5 8% 621.4 7%
Real estate 260.4 3% 212.0 3%
------------ ------- ------------ -------
Total $ 8,587.8 100% $ 8,316.8 100%
============ ======= ============ =======
By client type:
Institutional $ 7,490.2 87% $ 7,178.9 86%
Retail 1,097.6 13% 1,137.9 14%
------------ ------- ------------ -------
Total $ 8,587.8 100% $ 8,316.8 100%
============ ======= ============ =======
By investment vehicle:
Separate accounts $ 7,833.3 91% $ 7,540.2 91%
Private funds 754.4 9% 776.6 9%
------------ ------- ------------ -------
Total $ 8,587.8 100% $ 8,316.8 100%
============ ======= ============ =======
Our mix of assets under management by investment strategy was
relatively unchanged as fixed income assets comprised 89% of total
assets under management at March 31, 2012, compared to 90% at
December 31, 2011.
Our mix of assets under management by client type was relatively
unchanged as institutional accounts comprised 87% of total assets
under management as of March 31, 2012, compared to 86% at December
31, 2011.
Our mix of assets under management by investment vehicle was
relatively unchanged as separate accounts comprised 91% of total
assets under management as of March 31, 2012 compared to 91% at
December 31, 2011.
Distributed Assets
We earn referral fees on clients referred to Attalus Capital LLC
("Attalus"), a hedge fund manager with whom we have a referral
arrangement. The assets managed by Attalus under this arrangement
increased from $374.0 million at December 31, 2011 to $382.8
million at March 31, 2012, due to market returns. The activity
related to these assets was as follows:
For the three months
ended
March 31,
----------------------- -----
(in millions) 2012 2011
----------- ---------- -----
Periodic Activity:
Beginning balance $ 374.0 $ 894.4
Inflows - -
Outflows - -
Market value change 8.8 14.1
----------- ----------
Ending balance $ 382.8 $ 908.5 -58%
=========== ==========
Average Assets Under
Management $ 378.4 $ 901.5 -58%
Average Referral
Fee Rate (basis points) 13.2 17.5 -25%
During 2011, we experienced significant decreases in the assets
managed by Attalus 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 reduced its average fee rates, which reduced our
referral fee rate and revenue. The combination of these factors
resulted in outflows totaling $500 million during 2011 and a
reduction of $1,400,000 in annualized referral fees.
Attalus has also informed us that they have received further
redemption requests that are expected to be effective at the
beginning of the second and third quarters of 2012. These
additional redemption requests total approximately $240 million
(representing approximately $300,000 of annualized referral fees).
These redemptions would reduce the referred assets under management
to approximately $140 million, with an annualized referral fee rate
of approximately $250,000.
Operating Results
Three Months Ended
March 31,
----------------------------
2012 2011
------------- -------------
Average assets under management
(in millions) $ 8,452.3 $ 8,291.2
Average fee rate (basis
points) 24.9 24.3
Average distributed assets
under management (in millions) $ 378.4 $ 901.5
Average referral fee rate
(basis points) 13.2 17.5
Investment management
fees $ 5,259,000 $ 5,047,000
Referral fees 125,000 395,000
------------- -------------
Total operating revenue 5,384,000 5,442,000
Adjusted EBITDA (deficit)(1) 264,000 (69,000)
Amortization of intangible
assets 2,401,000 1,217,000
Impairment of goodwill - 3,500,000
Operating loss (2,168,000) (4,812,000)
Net investment income
(loss) 236,000 375,000
Net loss (1,932,000) (4,437,000)
Earnings per share:
Basic and diluted $ (0.09) $ (0.22)
(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 2012 first quarter investment management fees increased
$212,000, or 4.2%, relative to the first quarter of 2011 due to a
2% increase in the average assets under management and a 2%
increase in our average fee rate.
Our 2012 first quarter referral fee revenue decreased $270,000,
or 68.4%, compared to the referral fee revenue for the first
quarter of 2011. The decrease reflects a combination of asset
redemptions incurred by Attalus throughout 2011 and a reduction in
our average referral fee rate due to Attalus' reduction in its
fees.
Our Adjusted EBITDA for the first quarter of 2012 was $264,000,
an increase of $333,000, over the comparable amount for the 2011
period. The improvement to EBITDA in the 2012 periods primarily
reflects the increase in investment management fees and the ongoing
impact of the cost reductions achieved over 2011, offset in part by
the decrease in referral fee revenue.
Amortization of intangible assets
Throughout 2011, the Company considered the impact of recurring
redemptions of the Attalus assets and their impact on the remaining
useful life of its NIS referral relationship intangible asset. The
most recent assessment at year end resulted in reducing the
estimated remaining useful life to approximately 15 months as of
October 1, 2011. The $1,184,000 increase in amortization expense in
2012 reflects these revisions to the estimated remaining useful
life of the intangible asset related to the referral relationship.
As a result of the most recent revision to the estimated remaining
useful life, we expect that the total annual amortization expense
will increase to $9,604,000 for 2012.
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 quarter
ended March 31, 2012, is expected to be filed with the Securities
and Exchange Commission on or about May 11, 2012. 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
March 31, December
31, 2011
2012
-------------- --------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 2,789,000 $ 2,787,000
Investments 3,703,000 2,990,000
Accounts receivable 3,577,000 3,718,000
Other current assets 512,000 828,000
-------------- --------------
Total current assets 10,581,000 10,323,000
Investments in equity investees 4,835,000 4,707,000
Property and equipment, net 481,000 478,000
Goodwill 13,264,000 13,264,000
Intangible assets, net 12,512,000 14,913,000
Total assets $ 41,673,000 $ 43,685,000
============== ==============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 214,000 $ 91,000
Other current liabilities 2,130,000 2,334,000
-------------- --------------
Total current liabilities and total liabilities 2,344,000 2,425,000
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value; 54,000,000
shares authorized; 20,634,232 shares issued
and outstanding at March 31, 2012 and December
31, 2011 2,000 2,000
Restricted common stock, $0.0001 par value;
720,000 shares authorized; none issued at
March 31, 2012 and 612,716 issued and outstanding
at December 31, 2011 - -
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 (61,550,000) (59,618,000)
Other comprehensive loss (94,000) (95,000)
Total stockholders' equity 39,329,000 41,260,000
-------------- --------------
Total liabilities and stockholders' equity $ 41,673,000 $ 43,685,000
============== ==============
Titanium Asset Management Corp.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended
March 31,
----------------------------------
2012 2011
---------------- ----------------
Operating revenues $ 5,384,000 $ 5,442,000
Operating expenses:
Administrative 5,151,000 5,537,000
Amortization of intangible assets 2,401,000 1,217,000
Impairment of goodwill - 3,500,000
---------------- ----------------
Total operating expenses 7,552,000 10,254,000
Operating loss (2,168,000) (4,812,000)
Other income
Interest income 17,000 22,000
Net realized losses on investments (1,000) (6,000)
Income from equity investees 220,000 359,000
Loss before income taxes (1,932,000) (4,437,000)
Income tax benefit - -
Net loss $ (1,932,000) $ (4,437,000)
================ ================
Earnings (loss) per share
Basic $ (0.09) $ (0.22)
Diluted $ (0.09) $ (0.22)
Weighted average number of common shares outstanding:
Basic 20,634,232 20,634,232
Diluted 20,634,232 20,634,232
Titanium Asset Management Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
--------------------------------
2012 2011
--------------- ---------------
Cash flows from operating activities
Net loss $ (1,932,000) $ (4,437,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of intangible assets 2,401,000 1,217,000
Impairment of goodwill - 3,500,000
Depreciation 31,000 26,000
Net realized losses on investments 1,000 6,000
Income from equity investees (220,000) (359,000)
Income distributions from equity investees 92,000 131,000
Changes in assets and liabilities:
Decrease in accounts receivable 141,000 1,028,000
Decrease in other current assets 316,000 374,000
Increase in accounts payable 123,000 59,000
Decrease in other current liabilities (204,000) (1,284,000)
--------------- ---------------
Net cash provided by operating activities 749,000 261,000
--------------- ---------------
Cash flows from investing activities
Purchases of investments (1,374,000) (1,717,000)
Sales and redemptions of investments 661,000 983,000
Purchases of property and equipment (34,000) (38,000)
Acquisitions of subsidiaries, net of cash
acquired - (4,000,000)
Net cash used in investing activities (747,000) (4,772,000)
--------------- ---------------
Net increase (decrease) in cash and cash
equivalents 2,000 (4,511,000)
Cash and cash equivalents:
Beginning 2,787,000 4,698,000
--------------- ---------------
Ending $ 2,789,000 $ 187,000
=============== ===============
Titanium Asset Management Corp.
Reconciliation of Adjusted EBITDA
(unaudited)
Three Months Ended
March 31,
----------------------------------
2011 2010
---------------- ----------------
Operating loss $ (2,168,000) $ (4,812,000)
Amortization of intangible
assets 2,401,000 1,217,000
Impairment of goodwill - 3,500,000
Depreciation expense 31,000 26,000
Adjusted EBITDA (deficit) $ 264,000 $ (69,000)
================ ================
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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