TIDMTAM
RNS Number : 6063L
Titanium Asset Management Corp
13 August 2013
Titanium Asset Management Corp.
Reports 2013 Second Quarter Results
Milwaukee, WI, August 13, 2013 - Titanium Asset Management Corp.
(AIM - TAM) today reported results for the second quarter ended
June 30, 2013.
Highlights are as follows:
-- Assets under management (AUM) decreased 1.0% during the
second quarter of 2013 to $8,876.3 million reflecting negative
market returns, offset in part by net inflows. Market returns for
our fixed income assets were down 1.8% as interest rates increased
sharply during May and June.
-- Average AUM of $8,921.6 million for the second quarter of
2013 was 4.0% higher relative to the average AUM of $8,581.7
million for the same period last year. Investment management fee
revenues were $5,984,000 for the second quarter of 2013, an 8.9%
increase from investment management fee revenues of $5,493,000 for
the same period last year, primarily due to the higher average AUM
levels and a higher average fee rate. For the year to date, average
AUM of $8,899.2 million was 4.8% higher relative to the average AUM
of $8,493.4 million for the same period last year. Investment
management fee revenues were $11,867,000 for the 2013 year to date
period, a 10.4% increase from investment management fee revenues of
$10,752,000 for the same period last year, primarily due to the
higher average AUM levels and a higher average fee rate.
-- Adjusted EBITDA(1) for the second quarter of 2013 was
$346,000 and included a net charge of $266,000 related to a
settlement arrangement for one of the contingency matters.
Excluding the settlement provision, Adjusted EBITDA for the second
quarter of 2013 was $612,000, compared to Adjusted EBITDA of
$591,000 for the comparable period last year. For the 2013 year to
date period, Adjusted EBITDA was $998,000. Excluding the settlement
provision, Adjusted EBITDA for the 2013 year to date period was
$1,264,000, compared to Adjusted EBITDA of $856,000 for the same
period last year. The improvements primarily reflect the increased
investment management fee revenues.
-- Net investment income was $23,000 for the second quarter of
2013, compared to net investment income of $70,000 for the same
period last year. Net investment income was $142,000 for the 2013
year to date period, compared to $305,000 for the same period last
year.
-- Net income of $90,000, or $0.00 per diluted common share, for
the second quarter of 2013 compared to a net loss of $1,772,000, or
$0.09 per diluted common share, for the second quarter of 2012. Net
income of $581,000, or $0.03 per diluted common share, for the
first six months of 2013 compared to a net loss of $3,074,000, or
$0.18 per diluted common share, for the first six months 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.
Recent Developments
On December 18, 2012, TAMCO, an entity principally owned and
controlled by the senior management of the Company, acquired all
10,585,400 shares of Common Stock held by Clal for $18,500,000
pursuant to a securities purchase agreement. As of June 30, 2013,
TAMCO and its affiliates hold total beneficial interests in
11,920,569 shares of Common Stock, representing approximately 60.4%
of the currently outstanding Common Stock.
On April 22, 2013, the Company received a proposal from TAMCO
that it wished to acquire, through a tender offer, the remaining
outstanding equity interests of the Company that it did not already
own at $1.00 per share. The Company's board of directors has
appointed a special committee, consisting solely of its independent
directors, to consider the terms of the proposed transaction. The
special committee has engaged independent advisors and is
considering the proposal and its implications, in accordance with
applicable state and federal laws. The special committee will
inform shareholders of its activities in due course. There can be
no assurance that the proposed transaction will be approved or
completed.
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 June 30,
2013, is expected to be filed with the Securities and Exchange
Commission on or about August 15, 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 $8.9 billion at June 30, 2013 were
consistent with the $8.9 billion reported at December 31, 2012 as
net inflows were largely offset by negative investment returns. The
following table presents summary activity for 2013 and 2012
periods.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
(in millions) 2013 2012 2013 2012
------------ ------------ ------------ ------------
Annual Activity:
Beginning balance $ 8,966.8 $ 8,587.8 $ 8,854.6 $ 8,316.8
Inflows 395.5 587.1 827.6 1,083.1
Outflows (367.5) (701.5) (764.9) (1,084.1)
------------ ------------ ------------ ------------
Net flows 28.0 (114.4) 62.7 (1.0)
------------ ------------ ------------ ------------
Market value change (118.5) 102.2 (41.0) 259.8
------------ ------------ ------------ ------------
Ending balance $ 8,876.3 $ 8,575.6 $ 8,876.3 $ 8,575.6
============ ============ ============ ============
Average Assets Under Management
(1) $ 8,921.6 $ 8,581.7 $ 8,899.2 $ 8,493.4
Average Fee Rate (basis points) 26.8 25.6 26.7 25.3
(1) Average assets under management are calculated based on the quarter end balances.
The principle factors affecting our net flows during the periods
ended June 30, 2013 and 2012 include the following:
-- Outflows for the three and six month periods ended June 30, 2012 include the liquidation of approximately $280 million of investments related to an investment strategy that invested in securities participating in the TALF program of the Federal Reserve Bank of New York. These assets carried annualized fees of approximately $280,000.
-- 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 June 30, 2013, net inflows from multiemployer
pension and welfare plans were approximately $53 million compared
to net inflows of approximately $100 million for the prior year
period. For the six months ended June 30, 2013, net inflows from
multiemployer pension and welfare plans were $66 million compared
to net inflows of $212 million for the prior year.
-- Inflows and outflows are also significantly affected by the
timing of tax receipts and disbursements for several public entity
accounts that we manage. Net outflows related to these accounts
were $66 million for the three months ended June 30, 2013 compared
to net outflows of $48 million for the prior year period. For the
six months ended June 30, 2013, net outflows were $24 million
compared to net inflows of $14 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 June 30, 2013. For the three months ended June 30,
2013, the overall market value change related to fixed income
assets was a decrease of approximately $145.2 million, or -1.8%
(compared to an increase of $121.3 million, or 1.6%, for the
comparable 2012 period). For the three months ended June 30, 2013,
fixed income returns as measured by the Barclay's Aggregate Index
were -2.3% (compared to 2.1% for the comparable 2012 period). For
the six months ended June 30, 2013, the overall market value change
related to fixed income assets was a decrease of approximately
$106.1, or -1.3% (compared to an increase of $215.9 million, or
2.9% for the comparable 2012 period). For the six months ended June
30, 2013, fixed income returns as measured by the Barclay's
Aggregate Index were -2.4% (compared to a gain of 2.4% for the
comparable 2012 period). For the twelve months ended June 30, 2013,
approximately 82% 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 June 30, 2013. For the three months ended June
30, 2013, the overall market value change related to equity assets
was an increase of approximately $26.8 million, or 4.1% (compared
to a decrease of $19.1 million, or -2.9%, for the comparable 2012
period). For the three months ended June 30, 2013, equity returns
as measured by the S&P 500 Index were 2.9% (compared to -2.8%
for the comparable 2012 period). For the six months ended June 30,
2013, the overall market value change related to equity assets was
an increase of approximately $67.7, or 11.2% (compared to an
increase of $44.0 million, or 7.1% for the comparable 2012 period).
For the six months ended June 30, 2013, equity returns as measured
by the S&P 500 Index were 13.8% (compared to 9.5% for the
comparable 2012 period). Approximately 18% of our equity assets
outperformed their respective benchmarks for the twelve months
ended June 30, 2013.
The following table presents summary breakdowns for our assets
under management at June 30, 2013 and December 31, 2012.
(in millions) June 30, % of December % of
total 31, 2012 total
2013
------------ ------- ------------ -------
By investment strategy:
Fixed income $ 7,900.7 89% $ 7,914.9 89%
Equity 623.0 7% 595.6 7%
Real estate 352.6 4% 344.1 4%
------------ ------- ------------ -------
Total $ 8,876.3 100% $ 8,854.6 100%
============ ======= ============ =======
By client type:
Institutional $ 7,870.1 89% $ 7,748.7 88%
Retail 1,006.2 11% 1,105.9 12%
------------ ------- ------------ -------
Total $ 8,876.3 100% $ 8,854.6 100%
============ ======= ============ =======
By investment vehicle:
Separate accounts $ 8,021.9 90% $ 8,009.1 90%
Private funds 854.4 10% 845.5 10%
------------ ------- ------------ -------
Total $ 8,876.3 100% $ 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 June 30, 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 June 30, 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 June 30, 2013 and December 31, 2012.
Operating Results
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ------------------------------
2013 2012 2013 2012
------------- ------------- -------------- --------------
Average assets under management
(in millions) $ 8,921.6 $ 8,581.7 $ 8,899.2 $ 8,493.4
Average fee rate (basis
points) 26.8 25.6 26.7 25.3
Investment management
fees $ 5,984,000 $ 5,493,000 $ 11,867,000 $ 10,752,000
Incentive fees - - 32,000 -
Referral fees - 74,000 - 199,000
------------- ------------- -------------- --------------
Total operating revenue 5,984,000 5,567,000 11,899,000 10,951,000
Adjusted EBITDA(1) 346,000 591,000 998,000 856,000
Amortization of intangible
assets 242,000 2,401,000 485,000 4,802,000
Operating income (loss) 67,000 (1,842,000) 439,000 (4,009,000)
Net investment income 23,000 70,000 142,000 305,000
Net income (loss) 90,000 (1,772,000) 581,000 (3,704,000)
Earnings (loss) per share:
Basic and diluted $ 0.00 $ (0.09) $ 0.03 $ (0.18)
(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 periods, our investment management fees
increased by $491,000, or 9%, due to a 4% increase in our average
assets under management and a 5% increase in our average fee rate.
For the six month periods, our investment management fees increased
by $1,115,000, or 10%, 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 June 30, 2013, we
would have earned incentive fees of approximately $275,000 (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 six months are not necessarily indicative of
the fees to be expected for the full year.
Adjusted EBITDA for the three months ended June 30, 2013
included a net charge of $266,000 related to a settlement
arrangement for one of the contingency matters. Excluding the
settlement provision, Adjusted EBITDA for the three months ended
June 30, 2013 was $612,000, compared to Adjusted EBITDA of $591,000
for the comparable period last year. Excluding the settlement
provision, Adjusted EBITDA was for the six months ended June 30,
2013 was $1,264,000, compared to Adjusted EBITDA of $856,000 for
the same period last year. The improvements primarily reflect the
increased investment management fee revenues.
Amortization of intangible assets
Amortization of intangible assets decreased by $2,159,000 for
the three months ended June 30, 2013 and $4,317,000 for the six
months ended June 30, 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
June 30, December
31, 2012
2013
-------------- --------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 6,119,000 $ 3,092,000
Investments 4,438,000 5,644,000
Accounts receivable 4,148,000 5,015,000
Other current assets 1,058,000 854,000
-------------- --------------
Total current assets 15,763,000 14,605,000
Investments in equity investee 3,081,000 3,970,000
Property and equipment, net 437,000 483,000
Goodwill 13,264,000 13,264,000
Intangible assets, net 4,824,000 5,309,000
Total assets $ 37,369,000 $ 37,631,000
============== ==============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 131,000 $ 166,000
Other current liabilities 2,207,000 2,246,000
-------------- --------------
Total current liabilities and total liabilities 2,338,000 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 June 30, 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 (65,130,000) (65,711,000)
Other comprehensive loss (68,000) (43,000)
Total stockholders' equity 35,031,000 35,219,000
-------------- --------------
Total liabilities and stockholders' equity $ 37,369,000 $ 37,631,000
============== ==============
Titanium Asset Management Corp.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- --------------------------------
2013 2012 2013 2012
------------- ---------------- -------------- ----------------
Operating revenues $ 5,984,000 $ 5,567,000 $ 11,899,000 $ 10,951,000
Operating expenses:
Administrative 5,675,000 5,008,000 10,975,000 10,158,000
Amortization of intangible
assets 242,000 2,401,000 485,000 4,802,000
------------- ----------------
Total operating expenses 5,917,000 7,409,000 11,460,000 14,960,000
Operating income (loss) 67,000 (1,842,000) 439,000 (4,009,000)
Other income
Interest income 9,000 20,000 10,000 37,000
Net realized gains (losses)
on investments - (5,000) 21,000 (7,000)
Income from equity investees 14,000 55,000 111,000 275,000
Income (loss) before income
taxes 90,000 (1,772,000) 581,000 (3,704,000)
Income tax expense - - - -
Net income (loss) $ 90,000 $ (1,772,000) $ 581,000 $ (3,704,000)
============= ================ ============== ================
Earnings (loss) per share
Basic $ 0.00 $ (0.09) $ 0.03 $ (0.18)
Diluted $ 0.00 $ (0.09) $ 0.03 $ (0.18)
Weighted average number of
common shares outstanding:
Basic 19,744,824 20,634,232 19,927,647 20,634,232
Diluted 19,744,824 20,634,232 19,927,647 20,634,232
Titanium Asset Management Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
------------------------------
2013 2012
------------- ---------------
Cash flows from operating activities
Net income (loss) $ 581,000 $ (3,704,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of intangible assets 485,000 4,802,000
Depreciation 74,000 63,000
Net realized losses (gains) on investments (21,000) 7,000
Income from equity investees (111,000) (275,000)
Income distributions from equity investees - 131,000
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 867,000 (75,000)
Decrease (increase) in other current assets (204,000) 228,000
Increase (decrease) in accounts payable (35,000) 53,000
Decrease in other current liabilities (39,000) (320,000)
------------- ---------------
Net cash provided by operating activities 1,597,000 910,000
Cash flows from investing activities
Purchases of investments (2,101,000) (3,111,000)
Sales and redemptions of investments 3,303,000 2,314,000
Redemption of equity investee 1,000,000 -
Purchases of property and equipment (28,000) (36,000)
------------- ---------------
Net cash provided by (used in) investing activities 2,174,000 (833,000)
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 3,027,000 77,000
Cash and cash equivalents:
Beginning 3,092,000 2,787,000
------------- ---------------
Ending $ 6,119,000 $ 2,864,000
============= ===============
Titanium Asset Management Corp.
Reconciliation of Adjusted EBITDA
(unaudited)
Three months ended Six months ended
June 30, June 30,
------------------------------ ------------------------------
2013 2012 2013 2012
------------ ---------------- ------------ ----------------
Operating income (loss) $ 67,000 $ (1,842,000) $ 439,000 $ (4,009,000)
Amortization of intangible
assets 242,000 2,401,000 485,000 4,802,000
Depreciation expense 37,000 32,000 74,000 63,000
------------ ----------------
Adjusted EBITDA $ 346,000 $ 591,000 $ 998,000 $ 856,000
============ ================ ============ ================
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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