Last checked at 14 May 2010 07:00
Titanium Asset Management Corp.
Reports 2010 First Quarter Results
Milwaukee, WI, May 14, 2010 - Titanium Asset Management Corp. (AIM - TAM) today reported results for the first quarter ended March 31, 2010.
Highlights are as follows:
·; Managed and fee paying assets increased by 4.0% from $9,126.3 million to $9,490.2 million during first quarter of 2010.
·; Revenues of $5,550,000 for the first quarter of 2010, a 7.5% increase over revenues of $5,163,000 for the same period last year.
·; Adjusted EBITDA deficit of $690,000 for the first quarter of 2010 compared to an Adjusted EBITDA deficit of $994,000 for the same period last year. Excluding severance costs, the Adjusted EBITDA deficit was $270,000 for the first quarter of 2010.
·; Net loss of $1,270,000, or $0.06 per diluted common share, for the first quarter of 2010 compared to a net loss of $1,541,000, or $0.08 per diluted common share, for the first quarter of 2009.
Commenting on these results, Robert Brooks, CEO of Titanium Asset Management Corporation said:
"In the first quarter we continued to see growth in managed and distributed assets. Our managed assets at the end of the first quarter of 2010 were $923 million higher than the first quarter of 2009. Additionally, distributed assets were $166 million higher than they were at the end of the first quarter of 2009. This represents a 12% increase in managed assets and a 20% increase in distributed assets. As a result, revenue in the first quarter grew by $387,000, or approximately 7.5% over the same period in 2009."
"We are optimistic that the momentum we are experiencing will continue to drive additional growth in fee paying assets. Performance in our primary products has been consistently above benchmarks and bodes well for future sales. Client withdrawals have eased, particularly at our Charlotte subsidiary, Sovereign Holdings LLC. Our entry into real estate asset management has begun to gain traction in the marketplace. We have won several investment mandates and frequently are seeing new opportunities to manage assets."
"We continue to focus on integrating and scaling the overall business to profitably meet the opportunities ahead. While numerous transitional expenses have impacted current profitability, they should recede throughout the year. We are fortunate to have many talented people within all aspects of our business, and our number one challenge remains to empower them to generate excellent performance for our clients, and grow revenue and profits for our shareholders."
For further information please contact:
Titanium Asset Management Corp.
Robert Brooks, CEO 312-335-8300
Seymour Pierce Ltd
Jonathan Wright +44 20 7107 8000
Penrose FinancialGay Collins/Laura Jakob +44 20 7786 4882 or +44 7798 626282
titanium@penrose.co.uk
Assets Under Management
Our managed and fee paying assets increased by 4.0% three months ended March 31, 2010, totaling $9,490.2 million at March 31, 2010:
|
| Managed Assets | Distributed Assets |
|
| (in millions) | |
|
|
|
|
| Balance at December 31, 2009 | $ 8,151.4 | $ 974.9 |
| Net inflows (outflows) | 183.4 | 5.2 |
| Market movement | 163.6 | 12.0 |
| Balance at March 31, 2010 | $ 8,498.1 | $ 992.1 |
Distributed assets are those managed by a hedge fund advisor on which we earn referral fees. Net contributions are a combination of new and lost accounts plus contributions and withdrawals from existing accounts. Market movement is a combination of the change in financial market plus the effect (positive or negative) of active management.
The increase in managed assets was driven by three factors: the stabilization of assets under management at our Sovereign Holdings subsidiary; new business mandates won; and positive returns in the fixed income and equity markets. While we experienced withdrawals due to the cash needs of our clients, they moderated in the first quarter of 2010 compared to previous periods. Additionally, with the final Term Asset-Backed Securities Loan Facility (TALF) auctions taking place in the first quarter, we were able to add assets at Boyd Watterson.
For the three months ended March 31, 2009, 75% of our managed and fee paying assets with defined performance benchmarks outperformed their respective benchmarks.
Our assets under management by major investment strategy were as follows:
|
| March 31, 2010 | March 31, 2009 | ||
|
| (in millions) | % of total | (in millions) | % of total |
|
|
|
|
|
|
| Fixed income | $ 7,485.4 | 88.1% | $ 6,795.0 | 89.7% |
| Equity | 916.5 | 10.8% | 777.2 | 10.3% |
| Real estate | 96.2 | 1.1% | - | 0.0% |
| Balance at end of period | $ 8,498.1 | 100.0% | $ 7,572.2 | 100.0% |
Our assets under management by broad client type were as follows:
|
| March 31, 2010 | March 31, 2009 | ||
|
| (in millions) | % of total | (in millions) | % of total |
|
|
|
|
|
|
| Institutional | $ 6,910.4 | 81.3% | $ 5,858.0 | 77.4% |
| Retail | 1,587.7 | 19.7% | 1,714.2 | 22.6% |
| Balance at end of period | $ 8,498.1 | 100.0% | $ 7,572.2 | 100.0% |
Operating Results
|
| Three Months Ended March 31, | |
|
| 2010 | 2009 |
|
|
|
|
| Average assets under management (in millions) | 8,324.8 | 7,572.7 |
| Average fee rate (basis points) | 24 | 24 |
|
|
|
|
| Revenue | $ 5,550,000 | $ 5,163,000 |
| Adjusted EBITDA(1) | (690,000) | (994,000) |
| Operating loss | (1,585,000) | (2,064,000) |
| Net loss | (1,270,000) | (1,541,000) |
|
|
|
|
| Earnings per share: |
|
|
| Basic | $ (0.06) | $ (0.08) |
| Diluted | $ (0.06) | $ (0.08) |
(1) See the accompanying table on page 9 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 first quarter revenues increased $387,000, or 7.5%, relative to the first quarter of 2009 due to the increase in average assets under management. The increase in average assets under management reflects asset gains from our participation in the TALF program and from our new real estate investment advisory business, as well as strong market returns.
Our Adjusted EBITDA deficit of $690,000 for the first quarter of 2010 includes $420,000 of severance costs. Excluding severance costs, our Adjusted EBITDA deficit improved by $724,000 over the prior year amount. The improvement reflects the 7.5% increase in revenues and a 6.2% decrease in administrative expenses, excluding severance costs. Our administrative expenses declined $398,000, as a result of the ongoing integration activities and reduced operating staff as well as lower professional fees. Since March 31, 2009, we have reduced our headcount from 97 to 84.
Forward-looking Statements
This press release contains certain statements that are "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 the control of Titanium.
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 the Company undertakes no obligation to update any such statements. Results may differ significantly due to market fluctuations that alter our assets under management; 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 three months ended March 31, 2010, is expected to be filed with the Securities and Exchange Commission on or before May 16, 2010. 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, 2010 | December 31, 2009 |
|
| (unaudited) |
|
| Assets |
|
|
| Current assets |
|
|
| Cash and cash equivalents | $ 947,000 | $ 4,773,000 |
| Investments | 12,009,000 | 12,549,000 |
| Accounts receivable | 3,789,000 | 5,030,000 |
| Other current assets | 1,121,000 | 1,162,000 |
| Total current assets | 17,866,000 | 23,514,000 |
|
|
|
|
| Investments in affiliates | 6,318,000 | 2,179,000 |
| Property and equipment, net | 402,000 | 427,000 |
| Goodwill | 28,147,000 | 28,147,000 |
| Intangible assets, net | 24,091,000 | 24,920,000 |
| Total assets | $ 76,824,000 | $ 79,187,000 |
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
| Current liabilities |
|
|
| Accounts payable | $ 198,000 | $ 237,000 |
| Acquisition payments due | 1,744,000 | 1,746,000 |
| Other current liabilities | 2,541,000 | 3,504,000 |
| Total current liabilities | 4,483,000 | 5,487,000 |
|
|
|
|
| Acquisition payments due | 960,000 | 960,000 |
| Total liabilities | 5,443,000 | 6,447,000 |
| Commitments and contingencies |
|
|
| Stockholders' equity |
|
|
| Common stock, $0.0001 par value; 54,000,000 shares authorized; 20,564,816 shares issued and outstanding at March 31, 2010 and December 31, 2009 | 2,000 | 2,000 |
| Restricted common stock, $0.0001 par value; 720,000 shares authorized; 612,716 issued and outstanding at March 31, 2010 and December 31, 2009 | - | - |
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | - | - |
| Additional paid-in capital | 100,373,000 | 100,332,000 |
| Accumulated deficit | (29,036,000) | (27,766,000) |
| Other comprehensive income | 42,000 | 172,000 |
| Total stockholders' equity | 71,381,000 | 72,740,000 |
| Total liabilities and stockholders' equity | $ 76,824,000 | $ 79,187,000 |
| Titanium Asset Management Corp. Condensed Consolidated Statement of Operations (unaudited) |
|
| Three Months Ended March 31, | |
|
| 2010 | 2009 |
|
|
|
|
| Operating revenues | $ 5,550,000 | $ 5,163,000 |
|
|
|
|
| Operating expenses: |
|
|
| Administrative | 6,306,000 | 6,284,000 |
| Amortization of intangible assets | 829,000 | 943,000 |
| Total operating expenses | 7,135,000 | 7,227,000 |
|
|
|
|
| Operating loss | (1,585,000) | (2,064,000) |
|
|
|
|
| Other income |
|
|
| Interest income | 88,000 | 120,000 |
| Gain (loss) on investments | 104,000 | (381,000) |
| Income from equity investees | 139,000 | - |
| Interest expense | (16,000) | (14,000) |
|
|
|
|
| Loss before taxes | (1,270,000) | (2,339,000) |
|
|
|
|
| Income tax benefit | - | (798,000) |
|
|
|
|
| Net loss | $ (1,270,000) | $ (1,541,000) |
|
|
|
|
| Earnings (loss) per share |
|
|
| Basic | $ (0.06) | $ (0.08) |
| Diluted | $ (0.06) | $ (0.08) |
|
|
|
|
| Weighted average number of common shares outstanding: |
|
|
| Basic | 20,701,493 | 20,546,491 |
| Diluted | 20,701,493 | 20,546,491 |
|
|
|
|
|
|
|
|
| Titanium Asset Management Corp. Condensed Consolidated Statement of Cash Flows (unaudited) |
|
| Three Months Ended March 31, | |
|
| 2010 | 2009 |
|
|
|
|
| Cash flows from operating activities |
|
|
| Net loss | $ (1,270,000) | $ (1,541,000) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
| Depreciation and amortization | 854,000 | 972,000 |
| Share compensation expense | 41,000 | 98,000 |
| Loss (gain) on investments | (104,000) | 381,000 |
| Income from equity investees | (139,000) | - |
| Accretion of acquisition payments | 16,000 | 10,000 |
| Deferred income taxes | - | (798,000) |
| Changes in assets and liabilities: |
|
|
| Decrease (increase) in accounts receivable | 1,241,000 | 403,000 |
| Decrease (increase) in other current assets | 41,000 | (24,000) |
| Increase (decrease) in accounts payable | (39,000) | (221,000) |
| Increase (decrease) in other current liabilities | (981,000) | (63,000) |
| Net cash used in operating activities | (340,000) | (783,000) |
|
|
|
|
| Cash flows from investing activities |
|
|
| Purchases of property and equipment | - | (93,000) |
| Purchases of investments | (6,675,000) | (1,514,000) |
| Sales and redemptions of investments | 7,189,000 | - |
| Investments in equity investees | 4,000,000 | - |
| Cash paid for acquisition of subsidiaries, net of cash acquired | - | (6,000) |
| Net cash used in investing activities | (3,486,000) | (1,613,000) |
|
|
|
|
| Cash flows from financing activities |
|
|
| Payment of deferred acquisition obligations | - | (8,145,000) |
| Net cash used in financing activities | - | (8,145,000) |
|
|
|
|
| Net decrease in cash and cash equivalents | (3,826,000) | (10,541,000) |
|
|
|
|
| Cash and cash equivalents: |
|
|
| Beginning | 4,773,000 | 18,753,000 |
| Ending | $ 947,000 | $ 8,212,000 |
|
|
|
|
| Titanium Asset Management Corp. Reconciliation of Adjusted EBITDA (unaudited) |
|
| Three Months Ended March 31, | |
|
| 2010 | 2009 |
|
|
|
|
| Operating loss | $ (1,585,000) | $ (2,064,000) |
|
|
|
|
| Amortization of intangible assets | 829,000 | 943,000 |
| Depreciation expense | 25,000 | 29,000 |
| Share compensation expense | 41,000 | 98,000 |
|
|
|
|
| Adjusted EBITDA(1) | $ (690,000) | $ (994,000) |
Notes:
(1) Adjusted EBITDA is defined as operating loss before non-cash charges for amortization and impairment of intangible assets and goodwill, depreciation, and share 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.