NEW YORK, July 27, 2018 /CNW/ - Oppenheimer Holdings Inc.
(NYSE: OPY) today reported net income of $8.9 million or $0.67 basic
net income per share for the second quarter of 2018 compared with a net loss of $1.3 million or
$0.10 basic net loss per share for the second quarter of 2017. Income before income taxes
from continuing operations was $12.5 million for the second quarter of 2018 compared with a loss
before income taxes from continuing operations of $1.6 million for the second quarter of
2017. Revenue from continuing operations for the second quarter of 2018 was $242.6 million
compared with revenue from continuing operations of $215.9 million for the second quarter of 2017,
an increase of 12.4%.
|
|
Summary Operating Results (Unaudited)
|
|
('000s, except Per Share Amounts)
|
|
|
For the 3-Months Ended
|
|
For the 6-Months Ended
|
|
|
6/30/2018
|
|
6/30/2017
|
|
% Change
|
|
6/30/2018
|
|
6/30/2017
|
|
%Change
|
|
Revenue
|
|
$
|
242,556
|
|
$
|
215,884
|
|
12.4
|
|
$
|
477,086
|
|
$
|
429,145
|
|
11.2
|
|
Expenses
|
|
230,055
|
|
217,521
|
|
5.8
|
|
454,960
|
|
437,807
|
|
3.9
|
|
Income (Loss) Before Income Taxes from
Continuing Operations
|
|
12,501
|
|
(1,637)
|
|
*
|
|
22,126
|
|
(8,662)
|
|
*
|
|
Income Taxes
|
|
3,662
|
|
(274)
|
|
*
|
|
6,578
|
|
(1,961)
|
|
*
|
|
Net Income (Loss) from Continuing Operations
|
|
8,839
|
|
(1,363)
|
|
*
|
|
15,548
|
|
(6,701)
|
|
*
|
|
Net Income from Discontinued Operations
|
|
—
|
|
53
|
|
(100.0)
|
|
—
|
|
640
|
|
(100.0)
|
|
Net Income (Loss)
|
|
8,839
|
|
(1,310)
|
|
*
|
|
15,548
|
|
(6,061)
|
|
*
|
|
Less Net Income (Loss) Attributable to Non-
Controlling Interest, Net of Tax
|
|
(16)
|
|
9
|
|
*
|
|
(12)
|
|
105
|
|
*
|
|
Net Income (Loss) Attributable to Oppenheimer
Holdings Inc.
|
|
$
|
8,855
|
|
$
|
(1,319)
|
|
*
|
|
$
|
15,560
|
|
$
|
(6,166)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Net Income (Loss) Per Share (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.67
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.17
|
|
$
|
(0.50)
|
|
*
|
|
Discontinued Operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net Income (Loss) Per Share
|
|
$
|
0.67
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.17
|
|
$
|
(0.46)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Net Income (Loss) Per Share (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
$
|
0.63
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.11
|
|
$
|
(0.50)
|
|
*
|
|
Discontinued Operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net Income (Loss) Per Share
|
|
$
|
0.63
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.11
|
|
$
|
(0.46)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
13,249
|
|
13,261
|
|
(0.1)
|
|
13,244
|
|
13,330
|
|
(0.6)
|
|
Diluted
|
|
14,051
|
|
13,261
|
|
6.0
|
|
14,006
|
|
13,330
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
6/30/2018
|
|
6/30/2017
|
|
% Change
|
|
6/30/2018
|
|
12/31/2017
|
|
% Change
|
|
Book Value Per Share (1)
|
|
$
|
40.61
|
|
$
|
37.73
|
|
7.6
|
|
$
|
40.61
|
|
$
|
39.55
|
|
2.7
|
|
Tangible Book Value Per Share (1)(2)
|
|
$
|
27.78
|
|
$
|
24.91
|
|
11.5
|
|
$
|
27.78
|
|
$
|
26.74
|
|
3.9
|
|
|
|
(1)
|
Attributable to Oppenheimer Holdings Inc.
|
|
(2)
|
Represents book value less goodwill and intangible assets divided by number
of shares outstanding.
|
|
*
|
Percentage not meaningful.
|
The S&P 500 index increased 2.9% during the second quarter of 2018 propelled by a strong U.S. economy, low unemployment,
and solid corporate earnings while inflation was quite moderate for an economic expansion now entering its ninth year.
Volatility continued to be driven by economic news and discussions around trade-related matters including the imposition of
tariffs between the U.S. and its trading partners. The equity markets continued to be propelled by the expectation for
strong corporate earnings amid increasing growth trends in the U.S. somewhat offset by a slowdown in growth in the rest of the
world. The Federal Reserve raised short-term interest rates by 25 basis points in June, the seventh increase since the Fed
began raising rates in December 2015. The 10-Year Treasury Yield increased 11 basis points during the quarter to yield
2.85% at June 30, 2018. There are expectations that the Fed will increase rates two more
times this year for a total of four rate hikes in 2018. Continuing concerns around the flattening of the yield curve (the
spread between the 2-Year and the 10-Year Treasury Yields) moderated expectations about future economic growth.
Albert G. Lowenthal, Chairman and CEO commented, "We are pleased with our results for the
quarter and for the first six months of the year with marked improvement in both revenue and earnings compared with the prior
year. Results were driven by robust investment banking activity, higher asset management fee-based revenue, as well as
higher bank deposit sweep income. Retail and institutional equities commission revenue declined for the period reflecting
the continued downward trend in transaction-based business. Investment banking results were positively impacted by
increases in equity underwritings and advisory fees from M&A transactions. Our Asset Management business continued to
perform well, driven by higher levels of managed assets as clients continue to embrace a managed solution. Increases in
short-term interest rates continued to benefit our bank deposit fee income."
Financial Highlights
- Commission revenue was $82.9 million for the second quarter of 2018, a decrease of 1.2%
compared with $83.9 million for the second quarter of 2017 due to lower transaction-based revenue
in both the retail and institutional equities businesses during the second quarter of 2018.
- Advisory fees were $77.3 million for the second quarter of 2018, an increase of 6.2% compared
with $72.8 million for the second quarter of 2017 due to a higher level of client assets under
management ("AUM").
- Investment banking revenue increased 81.4% to $27.9 million for the second quarter of 2018
compared with $15.4 million for the second quarter of 2017 due to higher equity underwriting fees
as well as higher merger and acquisition advisory fees during the second quarter of 2018.
- Bank deposit sweep income was $28.9 million for the second quarter of 2018, an increase of
62.8% compared with $17.7 million for the second quarter of 2017 due to higher short-term
interest rates during the second quarter of 2018.
- Interest revenue was $13.1 million for the second quarter of 2018, an increase of 1.8%
compared with $12.8 million for the second quarter of 2017 due primarily to an increase in
interest revenue on margin extended to customers offset by a decrease in interest earned on U.S. Government and Agency
securities during the second quarter of 2018.
- Principal transactions revenue increased 20.7% to $6.4 million for the second quarter of 2018
compared with $5.3 million for the second quarter of 2017 due to higher levels of volatility in
fixed income markets driving somewhat higher trading income. The Company continues to maintain a low level of risk-based
assets moderating the impact of period-to-period price volatility.
|
|
Business Segment Results (Unaudited)
|
|
('000s)
|
|
For the 3-Months Ended
|
|
|
For the 6-Months Ended
|
|
6/30/2018
|
|
6/30/2017
|
|
% Change
|
|
6/30/2018
|
|
6/30/2017
|
|
% Change
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Client
|
$
|
156,553
|
|
$
|
140,252
|
|
11.6
|
|
$
|
310,647
|
|
$
|
277,641
|
|
11.9
|
|
Asset Management
|
17,706
|
|
|
19,304
|
|
(8.3)
|
|
|
35,350
|
|
|
37,970
|
|
(6.9)
|
|
Capital Markets
|
68,206
|
|
53,707
|
|
27.0
|
|
129,735
|
|
109,610
|
|
18.4
|
|
Corporate/Other
|
91
|
|
2,621
|
|
(96.5)
|
|
1,354
|
|
3,924
|
|
(65.5)
|
|
|
$
|
242,556
|
|
$
|
215,884
|
|
12.4
|
|
$
|
477,086
|
|
429,145
|
|
11.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes from Continuing Operations
|
|
|
|
|
|
|
Private Client
|
$
|
33,513
|
|
$
|
28,051
|
|
19.5
|
|
$
|
73,675
|
|
$
|
56,813
|
|
29.7
|
|
Asset Management
|
3,958
|
|
4,081
|
|
(3.0)
|
|
7,676
|
|
7,792
|
|
(1.5)
|
|
Capital Markets
|
(199)
|
|
(10,982)
|
|
(98.2)
|
|
(6,256)
|
|
(23,596)
|
|
(73.5)
|
|
Corporate/Other
|
(24,771)
|
|
(22,787)
|
|
8.7
|
|
(52,969)
|
|
|
(49,671)
|
|
6.6
|
|
|
$
|
12,501
|
|
$
|
(1,637)
|
|
*
|
|
$
|
22,126
|
|
$
|
(8,662)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Percentage not meaningful.
|
Private Client
Private Client reported revenue of $156.6 million for the second quarter of 2018, 11.6% higher
than the second quarter of 2017 due to increased advisory fee revenue from higher AUM, higher fees earned on client deposits in
the FDIC-insured bank deposit program, and higher margin interest revenue during the second quarter of 2018. Income before
income taxes was $33.5 million for the second quarter of 2018, an increase of 19.5% compared with
the second quarter of 2017 due to the increases in revenue referred to above during the second quarter of 2018.
- Client assets under administration were $85.8 billion at June 30,
2018 compared with $86.9 billion at December 31, 2017, a
decrease of 1.3%.
- Financial adviser headcount was 1,083 at the end of the second quarter of 2018 (1,082 at the end of the first quarter of
2018), down from 1,132 at the end of the second quarter of 2017. The decline in financial adviser headcount since the
second quarter of 2017 has resulted from the Company's attention to adviser productivity. The decline in headcount also
has been impacted by retirements and normal attrition.
- Retail commissions were $49.5 million for the second quarter of 2018, a decrease of 2.4% from
the second quarter of 2017 due to reduced transaction volumes from retail investors during the second quarter of 2018.
- Advisory fee revenue on traditional and alternative managed products was $59.8 million for
the second quarter of 2018, an increase of 11.2% from the second quarter of 2017 (see Asset Management below for further
information). The increase in advisory fees was due to the increase in the value of AUM.
- Bank deposit sweep income was $28.9 million for the second quarter of 2018, an increase of
62.8% compared with $17.7 million for the second quarter of 2017 due to higher short-term
interest rates during the second quarter of 2018.
Asset Management
Asset Management reported revenue of $17.7 million for the second quarter of 2018, 8.3% lower
than the second quarter of 2017 due to a change in the method of reporting management fees earned through an investment adviser
of alternative investments during the first quarter of 2018. Income before income taxes was $4.0
million for the second quarter of 2018, a decrease of 3.0% compared with the second quarter of 2017.
- Advisory fee revenue on traditional and alternative managed products was $17.5 million for
the second quarter of 2018, a decrease of 7.4% from the second quarter of 2017. Advisory fees are calculated based on the
value of AUM at the end of the prior quarter which totaled $28.2 billion at March 31, 2018 ($25.8 billion at March 31, 2017)
and are allocated to the Private Client and Asset Management business segments.
- AUM increased 10.0% to $28.7 billion at June 30, 2018 compared
with $26.1 billion at June 30, 2017. AUM at June 30, 2018 is the basis for advisory fee billings for the third quarter of 2018. The increase in AUM
was comprised of asset appreciation of $1.7 billion and net contributions of assets of
$0.9 billion.
Capital Markets
Capital Markets reported revenue of $68.2 million for the second quarter of 2018, 27.0% higher
than the second quarter of 2017 primarily due to higher equities underwriting and merger and acquisition advisory fees partially
offset by lower institutional equities commissions during the second quarter of 2018. Loss before income taxes was
$199,000 for the second quarter of 2018, compared with a loss before income taxes of $11.0 million for the second quarter of 2017 primarily due to the increases in revenue referred to above during
the second quarter of 2018.
- Institutional equities commissions decreased 2.9% to $23.2 million for the second quarter of
2018 compared with the second quarter of 2017 reflecting lower client trading activity in the second quarter of 2018.
- Advisory fees from investment banking activities increased 40.4% to $8.0 million in the
second quarter of 2018 compared with the second quarter of 2017 due to higher fees earned on completed merger and acquisition
transactions during the second quarter of 2018.
- Equity underwriting fees increased 176.4% to $15.2 million for the second quarter of 2018
compared with the second quarter of 2017 due to the Company's increased focus on equity issuances as well as a robust market
for equity underwritings during the second quarter of 2018.
- Revenue from Taxable Fixed Income increased 20.5% to $15.3 million for the second quarter of
2018 compared with the second quarter of 2017 due to higher government and corporate trading income as well as higher
institutional fixed income commissions during the second quarter of 2018.
- Public Finance and Municipal Trading revenue increased 7.5% to $5.7 million for the second
quarter of 2018 compared with the second quarter of 2017 due to higher municipal capital markets fees and commissions offset by
lower municipal trading income during the second quarter of 2018.
Compensation and Related Expenses
Compensation and related expenses (including salaries, production and incentive compensation, share-based compensation,
deferred compensation, and other benefit-related items) totaled $151.9 million during the second
quarter of 2018, an increase of 6.5% compared with the second quarter of 2017. Higher salary, production-related,
incentive, and share-based compensation expenses were partially offset by lower deferred compensation and healthcare costs during
the second quarter of 2018. Compensation and related expenses as a percentage of revenue was 62.6% during the second
quarter of 2018 compared with 66.1% during the second quarter of 2017.
Non-Compensation Expenses
Non-compensation expenses were $78.2 million during the second quarter of 2018, an increase of
4.4% compared with $74.9 million during the second quarter of 2017 primarily due to higher legal
and regulatory and interest costs partially offset by lower communications and technology and occupancy and equipment costs
during the second quarter of 2018.
Income Taxes
The effective income tax rate from continuing operations for the second quarter of 2018 was 29.3% (tax expense) compared with
16.7% (tax benefit) for the second quarter of 2017 and reflects the Company's estimate of the annual effective tax rate adjusted
for certain discrete items. The estimated effective tax rate for the second quarter of 2018 is due to the Federal tax rate
of 21% (versus 35%) as a result of the passage of the Tax Cuts and Jobs Act ("TCJA") in December
2017 offset by foreign income inclusion and larger non-deductible expenses related to items such as entertainment, fringe
benefits, regulatory fines and penalties, and limitations around the deductibility of executive compensation under the TCJA.
Balance Sheet and Liquidity
- At June 30, 2018, total equity was $538.6 million compared
with $523.9 million at December 31, 2017, an increase of 2.8%.
- At June 30, 2018, book value per share was $40.61 (compared
with $39.55 at December 31, 2017) and tangible book value per share
was $27.78 (compared with $26.74 at December
31, 2017).
- The Company's level 3 assets, primarily auction rate securities, were $72.8 million at
June 30, 2018 (compared with $87.6 million at December 31, 2017).
Dividend Announcement
The Company today announced a quarterly dividend in the amount of $0.11 per share payable on
August 24, 2018 to holders of Class A non-voting and Class B voting common stock of record on
August 10, 2018.
Company Information
Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service
broker-dealer that provides a wide range of financial services including retail securities brokerage, institutional sales and
trading, investment banking (both corporate and public finance), research, market-making, trust, and investment management.
With roots tracing back to 1881, the firm is headquartered in New York and has 91 retail branch
offices in the United States and has institutional businesses located in London, Tel Aviv, and Hong Kong.
Forward-Looking Statements
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 Factors
Affecting "Forward-Looking Statements" and Part 1A – Risk Factors in the Company's Annual Report on Form 10-K for the year ended
December 31, 2017.
|
|
|
|
|
Oppenheimer Holdings Inc.
|
|
|
Consolidated Statements of Operations (Unaudited)
|
|
('000s, except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 3-Months Ended
|
|
For the 6-Months Ended
|
|
|
|
6/30/2018
|
|
6/30/2017 (1)
|
|
% Change
|
|
6/30/2018
|
|
6/30/2017 (1)
|
|
% Change
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
$
|
82,850
|
|
$
|
83,852
|
|
(1.2)
|
|
$
|
166,257
|
|
$
|
170,569
|
|
(2.5)
|
|
Advisory fees
|
|
77,270
|
|
72,783
|
|
6.2
|
|
154,818
|
|
142,192
|
|
8.9
|
|
Investment banking
|
|
27,904
|
|
15,386
|
|
81.4
|
|
56,114
|
|
33,407
|
|
68.0
|
|
Bank deposit sweep income
|
|
28,853
|
|
17,720
|
|
62.8
|
|
54,150
|
|
31,846
|
|
70.0
|
|
Interest
|
|
13,056
|
|
12,829
|
|
1.8
|
|
25,283
|
|
23,394
|
|
8.1
|
|
Principal transactions, net
|
|
6,400
|
|
5,302
|
|
20.7
|
|
9,126
|
|
10,675
|
|
(14.5)
|
|
Other
|
|
6,223
|
|
8,012
|
|
(22.3)
|
|
11,338
|
|
17,062
|
|
(33.5)
|
|
Total revenue
|
|
242,556
|
|
215,884
|
|
12.4
|
|
477,086
|
|
429,145
|
|
11.2
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses
|
|
151,871
|
|
142,657
|
|
6.5
|
|
304,975
|
|
286,535
|
|
6.4
|
|
Communications and technology
|
|
17,997
|
|
18,399
|
|
(2.2)
|
|
36,685
|
|
36,105
|
|
1.6
|
|
Occupancy and equipment costs
|
|
14,901
|
|
15,161
|
|
(1.7)
|
|
30,329
|
|
30,433
|
|
(0.3)
|
|
Clearing and exchange fees
|
|
5,780
|
|
5,916
|
|
(2.3)
|
|
11,876
|
|
11,770
|
|
0.9
|
|
Interest
|
|
10,909
|
|
6,854
|
|
59.2
|
|
19,872
|
|
12,210
|
|
62.8
|
|
Other
|
|
28,597
|
|
28,534
|
|
0.2
|
|
51,223
|
|
60,754
|
|
(15.7)
|
|
Total expenses
|
|
230,055
|
|
217,521
|
|
5.8
|
|
454,960
|
|
437,807
|
|
3.9
|
|
Income (Loss) before income taxes from continuing operations
|
|
12,501
|
|
(1,637)
|
|
*
|
|
22,126
|
|
(8,662)
|
|
*
|
|
Income taxes
|
|
3,662
|
|
(274)
|
|
*
|
|
6,578
|
|
(1,961)
|
|
*
|
|
Net income (loss) from continuing operations
|
|
8,839
|
|
(1,363)
|
|
*
|
|
15,548
|
|
(6,701)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
—
|
|
89
|
|
(100.0)
|
|
—
|
|
1,065
|
|
(100.0)
|
|
Income taxes
|
|
—
|
|
36
|
|
(100.0)
|
|
—
|
|
425
|
|
(100.0)
|
|
Net income from discontinued operations
|
|
—
|
|
53
|
|
(100.0)
|
|
—
|
|
640
|
|
(100.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
8,839
|
|
(1,310)
|
|
*
|
|
15,548
|
|
(6,061)
|
|
*
|
|
Less net income (loss) attributable to non-controlling interest, net of
tax
|
|
(16)
|
|
9
|
|
*
|
|
(12)
|
|
105
|
|
*
|
|
Net income (loss) attributable to Oppenheimer Holdings Inc.
|
|
$
|
8,855
|
|
$
|
(1,319)
|
|
*
|
|
$
|
15,560
|
|
$
|
(6,166)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.67
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.17
|
|
$
|
(0.50)
|
|
*
|
|
Discontinued
operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net income (loss) per share
|
|
$
|
0.67
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.17
|
|
$
|
(0.46)
|
|
*
|
|
Diluted net income (loss) per share attributable to Oppenheimer Holdings
Inc.
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.63
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.11
|
|
$
|
(0.50)
|
|
*
|
|
Discontinued operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.04
|
|
(100.0)
|
|
Net income (loss) per share
|
|
$
|
0.63
|
|
$
|
(0.10)
|
|
*
|
|
$
|
1.11
|
|
$
|
(0.46)
|
|
*
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
13,249
|
|
13,261
|
|
(0.1)
|
|
13,244
|
|
13,330
|
|
(0.6)
|
|
Diluted
|
|
14,051
|
|
13,261
|
|
6.0
|
|
14,006
|
|
13,330
|
|
5.1
|
|
|
|
(1)
|
Certain prior period amounts have been reclassified to conform to the
current period presentation.
|
|
*
|
Percentage not meaningful.
|
View original content:http://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2018-earnings-and-announces-quarterly-dividend-300687663.html
SOURCE Oppenheimer Holdings Inc.
View original content: http://www.newswire.ca/en/releases/archive/July2018/27/c8876.html