TIDMTAM
RNS Number : 7739D
Titanium Asset Management Corp
01 May 2013
Titanium Asset Management Corp.
Reports 2013 First Quarter Results
Milwaukee, WI, May 1, 2013 - Titanium Asset Management Corp.
(AIM - TAM) today reported results for the first quarter ended
March 31, 2013.
Highlights are as follows:
-- Assets under management (AUM) increased 1.3% during the first
quarter of 2013 to $8,966.8 million reflecting both net inflows and
positive market returns.
-- Average AUM of $8,910.7 million for the first quarter of 2013
were 5.4% higher relative to the average AUM of $8,452.3 million
for the same period last year. Investment management fee revenues
were $5,883,000 for the first quarter of 2013, an 11.9% increase
from investment management fee revenues of $5,259,000 for the same
period last year, primarily due to the higher average AUM levels
and a higher average fee rate.
-- Adjusted EBITDA(1) continued to improve during the first
quarter of 2013. Adjusted EBITDA was $652,000 for the first quarter
of 2013, compared to Adjusted EBITDA of $264,000 for the same
period last year. The improvement primarily reflects the increased
investment management fee revenues.
-- Net investment income of $119,000 for the first quarter of
2013 compared to net investment income of $236,000 for the same
period last year.
-- Net income of $491,000, or $0.02 per diluted common share,
for the first quarter of 2013 compared to a net loss of $1,932,000,
or $0.09 per diluted common share, for the first quarter of
2012.
(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, Chairman 312-335-8300
Titanium Asset Management Corp.
Brian Gevry, Chief Executive Officer 216-771-3450
Cantor Fitzgerald Europe
David Foreman / Rishi Zaveri +44 20 7894 7000
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 TAMCO
Holdings, LLC, as our significant stockholder. Additional factors
that could influence our financial results are included in our
Securities and Exchange Commission filings, including our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2013, is expected to be filed with the Securities and Exchange
Commission on or about May 3, 2013. The report will be available on
the SEC's website at www.sec.gov and on our website at
www.ti-am.com.
Assets Under Management
Assets under management of $9.0 billion at March 31, 2013 were
1% higher than the $8.9 billion reported at December 31, 2012 due
to net inflows and positive investment returns. The following table
presents summary activity for 2013 and 2012 periods.
Three Months Ended
March 31,
--------------------------
(in millions) 2013 2012
------------ ------------
Annual Activity:
Beginning balance $ 8,854.6 $ 8,316.8
Inflows 432.1 496.0
Outflows (397.3) (382.6)
------------ ------------
Net flows 34.8 113.4
------------ ------------
Market value change 77.4 157.6
------------ ------------
Ending balance $ 8,966.8 $ 8,587.8
============ ============
Average Assets Under Management (1) $ 8,910.7 $ 8,452.3
Average Fee Rate (basis points) 26.4 24.9
(1) Average assets under management are calculated based on the quarter end balances.
The principle factors affecting our net flows during the periods
ended March 31, 2013 and 2012 include the following:
-- Multiemployer pension and welfare plans represent
approximately 38% of our client base, and these plans have been
faced with a challenging economic environment over the last several
years. The current economic environment has generally led to
reduced employer contributions and increased withdrawals. For the
three months ended March 31, 2013, net inflows from multiemployer
pension and welfare plans were approximately $13 million compared
to net inflows of approximately $112 million for the prior year
period.
-- 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
$41 million for the three months ended March 31, 2013 compared to
net inflows of $62 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.
Market value changes reflect our investment performance. Fixed
income assets comprised approximately 89% of our total assets under
management at March 31, 2013. The overall market value change
related to fixed income assets was approximately $20.5 million, or
0.3%, for the three months ended March 31, 2013 ($93.5 million, or
1.3% for the comparable 2012 period). Fixed income returns as
measured by the Barclay's Aggregate Index were -0.1% for the three
months ended March 31, 2013 (0.3% for the comparable 2012 period).
For the twelve months ended March 31, 2013, approximately 93% of
our fixed income assets with defined performance benchmarks
outperformed their respective benchmarks.
Equity assets comprised approximately 7% of our total assets
under management at March 31, 2013. The overall market value change
related to equity assets was approximately $59.5 million, or 9.8%,
for the three months ended March 31, 2013 ($64.0 million, or 10.3%
for the comparable 2012 period). Equity returns as measured by the
S&P 500 Index were up 10.6% for the three months ended March
31, 2013 (compared to an increase of 12.6% for the comparable 2012
period). Approximately 15% of our equity assets outperformed their
respective benchmarks for the twelve months ended March 31,
2013.
The following table presents summary breakdowns for our assets
under management at March 31, 2013 and December 31, 2012.
(in millions) March 31, % of December % of
total 31, 2012 total
2013
------------ ------- ------------ -------
By investment strategy:
Fixed income $ 7,983.0 89% $ 7,914.9 89%
Equity 647.6 7% 595.6 7%
Real estate 336.2 4% 344.1 4%
------------ ------- ------------ -------
Total $ 8,966.8 100% $ 8,854.6 100%
============ ======= ============ =======
By client type:
Institutional $ 7,938.0 89% $ 7,748.7 88%
Retail 1,028.8 11% 1,105.9 12%
------------ ------- ------------ -------
Total $ 8,966.8 100% $ 8,854.6 100%
============ ======= ============ =======
By investment vehicle:
Separate accounts $ 8,103.4 90% $ 8,009.1 90%
Private funds 863.4 10% 845.5 10%
------------ ------- ------------ -------
Total $ 8,966.8 100% $ 8,854.6 100%
============ ======= ============ =======
Our mix of assets under management by investment strategy was
unchanged as fixed income assets comprised 89% of total assets
under management at March 31, 2013 and December 31, 2012.
Our mix of assets under management by client type was relatively
unchanged as institutional accounts comprised 89% of total assets
under management at March 31, 2013 compared to 88% at December 31,
2012.
Our mix of assets under management by investment vehicle was
unchanged as separate accounts comprised 90% of total assets under
management at March 31, 2013 and December 31, 2012.
Operating Results
Three Months Ended
March 31,
----------------------------
2013 2012
------------- -------------
Average assets under management (in millions) $ 8,910.7 $ 8,452.3
Average fee rate (basis points) 26.4 24.9
Investment management fees $ 5,883,000 $ 5,259,000
Incentive fees 32,000 -
Referral fees - 125,000
------------- -------------
Total operating revenue 5,915,000 5,384,000
Adjusted EBITDA(1) 652,000 264,000
Amortization of intangible assets 243,000 2,401,000
Operating income (loss) 372,000 (2,168,000)
Net investment income 119,000 236,000
Net income (loss) 491,000 (1,932,000)
Earnings (loss) per share:
Basic and diluted $ 0.02 $ (0.09)
(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 the three month period, our investment management fees
increased by $624,000, or 12%, due to a 5% increase in our average
assets under management and a 6% increase in our average fee
rate.
We also receive incentive fees on an annual basis from the
management of certain of our private funds, including one that
invests in preferred stocks. Because investment returns on
preferred stocks can be volatile, the level of incentive fees
earned can vary significantly from year to year. These fees
generally are based on a calendar year performance period and we
recognize the fees at the conclusion of the performance period. In
2012, we earned incentive fees of $1,165,000, which were recognized
in December 2012. Based on performance through March 31, 2013, we
would have earned incentive fees of approximately $350,000 (of
which $32,000 was recognized due to withdrawals). Because these
fees are primarily earned on a calendar year performance, the
results for the first three months are not necessarily indicative
of the fees to be expected for the full year.
Our Adjusted EBITDA for the three months ended March 31, 2013
was $652,000, an increase of $388,000, over the comparable amount
for the 2012 period. The improvement to Adjusted EBITDA primarily
reflects the increases in investment management fees.
Amortization of intangible assets
Amortization of intangible assets decreased by $2,158,000 for
the three months ended March 31, 2013. The reduction reflects the
elimination of amortization expense related to the NIS referral
relationship intangible asset in 2013 as the asset was fully
amortized as of December 31, 2012.
Titanium Asset Management Corp.
Condensed Consolidated Balance Sheets
March 31, December
31, 2012
2013
-------------- --------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 5,222,000 $ 3,092,000
Investments 4,298,000 5,644,000
Accounts receivable 3,982,000 5,015,000
Other current assets 678,000 854,000
-------------- --------------
Total current assets 14,180,000 14,605,000
Investment in equity investee 4,067,000 3,970,000
Property and equipment, net 466,000 483,000
Goodwill 13,264,000 13,264,000
Intangible assets, net 5,066,000 5,309,000
Total assets $ 37,043,000 $ 37,631,000
============== ==============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 107,000 $ 166,000
Other current liabilities 1,982,000 2,246,000
-------------- --------------
Total current liabilities and total liabilities 2,089,000 2,412,000
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value; 54,000,000
shares authorized; 19,744,824 shares issued
and outstanding at March 31, 2013 and 20,634,232
issued and outstanding at December 31, 2012 2,000 2,000
Restricted common stock, $0.0001 par value;
720,000 shares authorized; none issued - -
Preferred stock, $0.0001 par value; 1,000,000
shares authorized; none issued - -
Additional paid-in capital 100,227,000 100,971,000
Accumulated deficit (65,220,000) (65,711,000)
Other comprehensive loss (55,000) (43,000)
Total stockholders' equity 34,954,000 35,219,000
-------------- --------------
Total liabilities and stockholders' equity $ 37,043,000 $ 37,631,000
============== ==============
Titanium Asset Management Corp.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended
March 31,
-------------------------------
2013 2012
------------- ----------------
Operating revenues $ 5,915,000 $ 5,384,000
Operating expenses:
Administrative 5,300,000 5,151,000
Amortization of intangible assets 243,000 2,401,000
Total operating expenses 5,543,000 7,552,000
Operating income (loss) 372,000 (2,168,000)
Other income
Interest income 1,000 17,000
Net realized gains (losses) on investments 21,000 (1,000)
Income (loss) from equity investees 97,000 220,000
Income (loss) before income taxes 491,000 (1,932,000)
Income tax benefit - -
Net income (loss) $ 491,000 $ (1,932,000)
============= ================
Earnings (loss) per share
Basic $ 0.02 $ (0.09)
Diluted $ 0.02 $ (0.09)
Weighted average number of common shares outstanding:
Basic 20,114,578 20,634,232
Diluted 20,114,578 20,634,232
Titanium Asset Management Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
------------------------------
2013 2012
------------- ---------------
Cash flows from operating activities
Net income (loss) $ 491,000 $ (1,932,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of intangible assets 243,000 2,401,000
Depreciation 37,000 31,000
Net realized losses (gains) on investments (21,000) 1,000
Income from equity investees (97,000) (220,000)
Income distributions from equity investees - 92,000
Changes in assets and liabilities:
Decrease in accounts receivable 1,033,000 141,000
Decrease in other current assets 176,000 316,000
Increase (decrease) in accounts payable (59,000) 123,000
Decrease in other current liabilities (264,000) (204,000)
------------- ---------------
Net cash provided by operating activities 1,539,000 749,000
Cash flows from investing activities
Purchases of investments (1,100,000) (1,374,000)
Sales and redemptions of investments 2,455,000 661,000
Purchases of property and equipment (20,000) (34,000)
------------- ---------------
Net cash provided by (used in) investing activities 1,335,000 (747,000)
Cash flows from financing activities
Repurchase of common stock (744,000) -
------------- ---------------
Net cash used for financing activities (744,000) -
Net increase in cash and cash equivalents 2,130,000 2,000
Cash and cash equivalents:
Beginning 3,092,000 2,787,000
------------- ---------------
Ending $ 5,222,000 $ 2,789,000
============= ===============
Titanium Asset Management Corp.
Reconciliation of Adjusted EBITDA
(unaudited)
Three months ended
March 31,
------------------------------
2013 2012
------------ ----------------
Operating income (loss) $ 372,000 $ (2,168,000)
Amortization of intangible assets 243,000 2,401,000
Depreciation expense 37,000 31,000
Adjusted EBITDA $ 652,000 $ 264,000
============ ================
Notes:
(1) Adjusted EBITDA is defined as operating income or loss
before non-cash charges for amortization and impairment of
intangible assets and goodwill, depreciation, and share-based
compensation expense. We believe Adjusted EBITDA 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 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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