Oppenheimer Holdings Announces First Quarter 2007 Earnings, Dividend Declaration and $25 million Debt Pay Down
April 27 2007 - 9:15AM
PR Newswire (US)
NYSE and TSX - OPY TORONTO, April 27 /PRNewswire-FirstCall/ --
Expressed in thousands of U.S. dollars, except share and per share
amounts Quarter ended March 31, Presented in accordance with U.S.
generally accepted accounting principles (unaudited) 2007 2006
-------------------------------------------------------------------------
Revenue(x) $ 214,116 $ 201,050 Expenses $ 185,934 $ 171,639 Profit
before taxes(x) $ 28,182 $ 29,411 Net profit $ 16,790 $ 17,217
Basic earnings per share $ 1.28 $ 1.36 Diluted earnings per share $
1.26 $ 0.93 Book value per share $ 28.90 $ 25.78 Basic weighted
average number of shares outstanding 13,114,460 12,679,536 Actual
number of Class A non-voting and Class B voting shares outstanding
13,178,379 12,654,887 (x) Revenue and profit before taxes for the
quarter ended March 31, 2006 include a gain of $11.3 million
related to the exchange of the Company's three NYSE memberships for
cash and NYSE Group common shares ($0.52 per share). Excluding this
one-time gain in first quarter of 2006, profit before taxes for the
first quarter of 2007 was up 55% compared to the same period of
2006.
-------------------------------------------------------------------------
Oppenheimer Holdings Inc. reported net profit of $16,790,000 or
$1.28 per share for the first quarter of 2007, a decrease in net
profit of approximately 2.5% compared to $17,217,000 or $1.36 per
share in the first quarter of 2006. Revenue for the first quarter
of 2007 was $214,116,000, an increase of 6.5% compared to revenue
of $201,050,000 in the first quarter of 2006. The Company recorded
substantially improved investment banking activity in the first
quarter of 2007 compared to the same period of 2006, generated
primarily by the increased scope of its investment banking effort
and the general receptivity of the capital markets for securities
of mid-sized companies. Interest income improved in the first
quarter of 2007 compared to the same period of 2006, impacted by
higher rates and increased activity in the securities lending
business. Markets were strong during January and February
supporting strong commission and trading revenue but gave back most
of its gains during March, a month in which the markets experienced
increased volatility. Advisory fee revenue was strong during the
period compared to the same period in 2006 as a result of increases
in traditional fee-based assets under management. As noted in the
note to the table above, the New York Stock Exchange
("NYSE")/Archipelago merger (collectively referred to as "NYSE
Group"), which took place in March 2006, resulted in a substantial
one-time gain and had a significant impact on the Company's
financial results for the first quarter of 2006. The Company's
revenue and pre-tax results for the first quarter of 2006 reflect a
gain of $11.3 million related to the exchange of its three NYSE
memberships for cash and NYSE Group common shares ($0.52 per
share). The U.S. economy continued to exhibit modest growth during
the first quarter of 2007. Despite strong consumer spending and
increased job growth, the slowing housing market and lower capital
spending resulted in lower economic growth and higher inflation
expectations. The Federal Reserve indicated that they would lean
towards higher rates to address inflationary risks and increasing
mortgage defaults will continue to weigh on both equity and debt
markets as the year progresses. The Company's expenses in the first
quarter of 2007 were 8.3% higher compared to the same period of
2006 due primarily to higher compensation costs. Interest expense
also increased, mirroring the increase in interest revenue,
stemming from a higher interest rate environment as well as higher
interest due on long-term debt compared with the prior year and
increased securities lending activity. Communications and
technology expenses increased as the Company continued to invest in
its infrastructure. The cost of clearing and exchange fees
decreased in the first quarter of 2007 compared to the same period
of 2006 due to lower costs of execution and the Company's decision
to lower its exposure to wholesale activities. The Company
announced today its intention to repay $25 million of its senior
secured credit note by April 30, 2007, thereby reducing its
outstanding indebtedness under the senior secured credit note to
$99.1 million. Of the $25 million pay down, $10.4 million is a
required payment under the terms of the senior secured credit note
and $14.6 million represents a voluntary prepayment. Under the
terms of the senior secured credit note, the interest rate spread
over LIBOR has been reduced by 25 basis points. With strong
earnings and cash flow in the first quarter of 2007 and a positive
outlook for future quarters, the Company determined that it was
appropriate to reduce indebtedness under the senior secured credit
note at this time. As of January 1, 2007, the Company adopted FASB
Interpretation # 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement # 109, Accounting for Income
Taxes. The Company has recorded a cumulative adjustment of $823
thousand related to uncertain tax positions as a reduction to
opening retained earnings. At March 31, 2007, shareholders' equity
was approximately $381 million and book value per share was $28.90
compared to shareholders' equity of $326 million and book value per
share of $25.78 at March 31, 2006. Investment advisory assets under
management at March 31, 2007 totaled $16.2 billion compared to
$13.3 billion at March 31, 2006. The weighted average number of
Class A non-voting and Class B shares outstanding at March 31, 2007
was 13,114,460 compared to 12,679,536 outstanding at March 31,
2006, an increase of approximately 3% due to the issuance of Class
A Shares to employees pursuant to employee stock-based
arrangements. During the first quarter of 2007, the Company did not
purchase any Class A Shares pursuant to its Normal Course Issuer
Bid (which commenced on August 9, 2006, and terminates on August 8,
2007). The diluted weighted average number of Class A non-voting
and Class B shares outstanding for the three months ended March 31,
2007 was 13,331,445 compared to 19,611,536 outstanding for the
three months ended March 31, 2007, a net decrease of 32% due to the
redemption, on July 31, 2006, of $141 million of its variable rate
exchangeable debentures (the "Debentures") and the redemption, on
October 23, 2006, of the remaining $20 million of Debentures issued
on January 6, 2003 as partial payment for the acquisition of the
U.S. Private Client and Asset Management Divisions of CIBC World
Markets, Inc. The Debentures were exchangeable into 6.9 million
Class A non-voting shares of the Company. These redemptions were
funded by the issuance of a senior secured credit note in the
amount of $125 million, increased bank call loans and internally
available funds. The Company announced today a quarterly dividend
in the amount of U.S. $0.10 per share, payable on May 18, 2007 to
holders of Class A non-voting and Class B shares of record on May
4, 2007. The Company, through its principal subsidiaries,
Oppenheimer & Co. Inc. (a U.S. broker-dealer) and Oppenheimer
Asset Management Inc., offers a full range of services from 83
offices in 21 states and through local broker-dealers in 2 foreign
jurisdictions. The Company offers trust and estate services through
Oppenheimer Trust Company. Evanston Financial Corporation is
engaged in mortgage brokerage and servicing. In addition, through
its subsidiary, Freedom Investments, Inc. and the BUYandHOLD
division of Freedom, the Company offers online discount brokerage
and dollar-based investing services. This press release includes
certain "forward-looking statements" relating to anticipated future
performance. For a discussion of the factors that could cause
future performance to be different than anticipated, reference is
made to the Company's Annual Report on Form 10-K for the year ended
December 31, 2006. DATASOURCE: Oppenheimer Holdings Inc. CONTACT:
A.G. Lowenthal, (212) 668-8000; or E.K. Roberts, (416) 322-1515
Copyright