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10 Aug 2009 12:06
Titanium Asset Management Corp.
Reports Second Quarter 2009 Results
Milwaukee, WI, August 10, 2009 - Titanium Asset Management Corp. (AIM - TAM) today reported results for the second quarter of 2009.
Highlights are as follows:
Revenues of $4,944,000 for the second quarter of 2009, a 10% increase over the same period last year.
Performance fees generated in the quarter but not yet recognized of $580,000 (Q2 2008 - nil).
Managed and fee paying assets up from $8,379.4 million to $8,475.3 million in the year to date.
Net loss of $1,195,000, or $0.06 per diluted common share, compared to a loss of $1,492,000, or $0.07 per diluted common share, for the second quarter of 2008.
Commenting on these results, Nigel Wightman, Chairman and CEO of Titanium Asset Management Corporation said:
"During the quarter we continued the integration of our four operating businesses. This allowed us to reduce headcount and achieve other savings, the benefits of which will be felt in the coming quarters.
Our sales effort is now operating across all businesses and products. Investors seem to have made few strategic changes to their portfolios in the first half of the year but as markets stabilize we expect activity to pick up in the second half. Our institutional pipeline remains strong and we expect this to translate into significant amounts of new business over the balance of the year. In particular we expect to be major participants in the US Government's TALF programme on behalf of our clients.
Better market conditions have allowed us to generate $580,000 in performance fees in the quarter on our two absolute return funds. Because these fees are earned on a calendar year basis they are not included in fee income and are subject to change, up or down, over the balance of the year."
For further information please contact:
Titanium Asset Management Corp.
Nigel Wightman, Chairman and CEO
+44 20 7822 1881 or + 44 7789 277849
Seymour Pierce Ltd
Jonathan Wright
+44 20 7107 8000
Penrose FinancialGay Collins/Elisha Vincent
+44 20 7786 4882 or +44 7798 626282
titanium@penrose.co.uk
Titanium Asset Management Corp. Second Quarter 2009 Operating Results
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
Fee income |
$ 4,944,000 |
$ 4,486,000 |
$ 9,840,000 |
$ 6,706,000 |
|
EBITDA(1) |
(1,033,000) |
391,000 |
(2,027,000) |
718,000 |
|
Net loss |
(1,195,000) |
(1,492,000) |
(2,736,000) |
(1,488,000) |
|
Earnings per share: |
||||
|
Basic |
$ (0.06) |
$ (0.07) |
$ (0.13) |
$ (0.07) |
|
Diluted |
$ (0.06) |
$ (0.07) |
$ (0.13) |
$ (0.07) |
See accompanying table for definition of EBITDA.
Assets Under Management
Our managed and fee paying assets increased over the six months ended June 30, 2009, totaling $8,475.3mn at the end of the second quarter 2009:
|
Managed Assets |
Distributed Assets |
|
|
(in millions) |
||
|
Balance at December 31, 2008 |
$ 7,573.2 |
$ 806.2 |
|
Net assets won/lost |
(138.0) |
4.5 |
|
Market effect |
179.7 |
49.7 |
|
Balance at June 30, 2009 |
$ 7,614.9 |
$ 860.4 |
Distributed assets are those managed by a hedge fund advisor on which we earn referral fees. Net assets won/lost are a combination of new and lost accounts plus additions and withdrawals from existing accounts. Market effect is a combination of the change in financial market plus the effect (positive or negative) of active management.
While we had a positive net inflow of assets from new accounts, existing client accounts saw a net withdrawal, principally at NIS. This reflected cash flow issues at a number of our institutional clients.
The positive market effect reflected the strong recovery in fixed income markets and positive returns from absolute return (hedge fund) strategies. In the second quarter, equity markets recovered the losses seen in the first quarter.
During the six months to June 30, 2009, 84% 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:
|
June 30, 2009 |
December 31, 2008 |
|||
|
(in millions) |
% of total |
(in millions) |
% of total |
|
|
U.S. fixed income |
$ 6,907.4 |
90.7% |
$ 6,674.8 |
88.2% |
|
U.S. equity |
685.4 |
9.0% |
874.6 |
11.5% |
|
International equity |
22.1 |
0.3% |
23.8 |
0.3% |
|
Balance at end of period |
$ 7,614.9 |
100.0% |
$ 7,573.2 |
100.0% |
Our assets under management by broad client type were as follows:
|
June 30, 2009 |
December 31, 2008 |
|||
|
(in millions) |
% of total |
(in millions) |
% of total |
|
|
Institutional - Retirement plans |
$ 3,350.1 |
44.0% |
$ 3,633.3 |
48.0% |
|
Institutional - Other |
2,563.6 |
33.7% |
2,197.3 |
29.0% |
|
Retail - Broker/dealer accounts |
939.6 |
12.3% |
948.6 |
12.5% |
|
Retail - Other |
761.6 |
10.0% |
794.0 |
10.5% |
|
Balance at end of period |
$ 7,614.9 |
100.0% |
$ 7,573.2 |
100.0% |
Operating Results
Our revenues increased relative to the second quarter of 2008 as a result of the acquisition of Boyd Watterson Asset Management, offset in part by decreased revenues at our other three subsidiaries as a result of weaker markets and net business losses over the past twelve months. Our institutional new business pipeline is strong and significant assets are expected to be won in the coming quarters. In particular we expect to be major participants in the US Government's TALF programme under which investors can borrow from the New York Federal Reserve to invest in AAA rated asset-backed and related securities. We are also developing a real estate investment capability.
Performance fees of $580,000 were generated during the quarter; these fees are not recognized as revenues because they are based on a calendar year performance period. As such this figure is subject to change, up or down, over the balance of the year.
Our operating loss of $1,195,000, while an improvement on the loss of $1,492,000 in the same quarter in 2008, reflects in part continuing high professional fees. These are expected to fall in the second half of the year. The benefits of greater operational integration that is taking place and the consequent reduction in headcount should also be felt over the balance of the year. During the second quarter we reduced our headcount from 97 to 92.
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. 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 June 30, 2009, is expected to be filed with the Securities and Exchange Commission on or before August 14, 2009. 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 |
|
June 30, 2009 |
December 31, 2008 |
|
|
(unaudited) |
||
|
Assets |
||
|
Current assets |
||
|
Cash and cash equivalents |
$ 11,296,000 |
$ 18,753,000 |
|
Securities available for sale |
8,574,000 |
10,683,000 |
|
Accounts receivable |
3,568,000 |
4,041,000 |
|
Other current assets |
1,798,000 |
1,420,000 |
|
Total current assets |
25,236,000 |
34,897,000 |
|
Securities available for sale |
- |
672,000 |
|
Property and equipment, net |
504,000 |
456,000 |
|
Goodwill |
34,410,000 |
32,757,000 |
|
Intangible assets, net |
28,488,000 |
32,206,000 |
|
Deferred income taxes |
5,680,000 |
4,202,000 |
|
Total assets |
$ 94,318,000 |
$ 105,190,000 |
|
Liabilities and Stockholders' Equity |
||
|
Current liabilities |
||
|
Accounts payable |
$ 321,000 |
$ 663,000 |
|
Acquisition payments due |
954,000 |
8,145,000 |
|
Other current liabilities |
1,757,000 |
1,789,000 |
|
Total current liabilities |
3,032,000 |
10,597,000 |
|
Acquisition payments due |
960,000 |
1,889,000 |
|
Total liabilities |
3,992,000 |
12,486,000 |
|
Commitments and contingencies |
||
|
Stockholders' equity |
||
|
Common stock, $0.0001 par value; 54,000,000 shares authorized; 20,509,502 and 20,464,002 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively |
2,000 |
2,000 |
|
Restricted common stock, $0.0001 par value; 720,000 shares authorized; 612,716 issued and outstanding at June 30, 2009 and December 31, 2008 |
- |
- |
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued |
- |
- |
|
Additional paid-in capital |
99,667,000 |
99,462,000 |
|
Accumulated deficit |
(9,333,000) |
(6,597,000) |
|
Other comprehensive income loss |
(10,000) |
(163,000) |
|
Total stockholders' equity |
90,326,000 |
92,704,000 |
|
Total liabilities and stockholders' equity |
$ 94,318,000 |
$ 105,190,000 |
|
Titanium Asset Management Corp. Condensed Consolidated Statement of Operations (unaudited) |
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
Fee income |
$ 4,944,000 |
$ 4,486,000 |
$ 9,840,000 |
$ 6,706,000 |
|
Operating expenses: |
||||
|
Administrative |
6,109,000 |
4,095,000 |
12,126,000 |
5,988,000 |
|
Amortization of intangible assets |
1,096,000 |
1,193,000 |
2,039,000 |
2,002,000 |
|
Impairment of intangible assets |
- |
1,792,000 |
- |
1,792,000 |
|
Total operating expenses |
7,205,000 |
7,080,000 |
14,165,000 |
9,782,000 |
|
Operating loss |
(2,261,000) |
(2,594,000) |
(4,325,000) |
(3,076,000) |
|
Other income |
||||
|
Interest income |
114,000 |
372,000 |
234,000 |
868,000 |
|
Interest expense |
(15,000) |
- |
(29,000) |
- |
|
Gain (loss) on investments |
193,000 |
- |
(188,000) |
- |
|
Loss before taxes |
(1,969,000) |
(2,222,000) |
(4,308,000) |
(2,208,000) |
|
Income tax benefit |
(774,000) |
(730,000) |
(1,572,000) |
(720,000) |
|
Net loss |
$ (1,195,000) |
$ (1,492,000) |
$ (2,736,000) |
$ (1,488,000) |
|
Earnings (loss) per share |
||||
|
Basic |
$ (0.06) |
$ (0.07) |
$ (0.13) |
$ (0.07) |
|
Diluted |
$ (0.06) |
$ (0.07) |
$ (0.13) |
$ (0.07) |
|
Weighted average number of common shares outstanding: |
||||
|
Basic |
20,546,490 |
20,451,502 |
20,546,490 |
20,451,502 |
|
Diluted |
20,546,490 |
20,451,502 |
20,546,490 |
20,451,502 |
|
Titanium Asset Management Corp. Condensed Consolidated Statement of Cash Flows (unaudited) |
|
Six Months Ended June 30, |
||
|
2009 |
2008 |
|
|
Cash flows from operating activities |
||
|
Net loss |
$ (2,736,000) |
$ (1,488,000) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||
|
Depreciation and amortization |
2,093,000 |
2,002,000 |
|
Impairment of intangible assets |
- |
1,792,000 |
|
Noncash share compensation |
205,000 |
- |
|
Accretion of acquisition payments |
25,000 |
- |
|
Loss on investments |
188,000 |
- |
|
Deferred income taxes |
(1,572,000) |
(751,000) |
|
Changes in assets and liabilities: |
||
|
Decrease in accounts receivable |
562,000 |
244,000 |
|
Decrease (increase) in other current assets |
170,000 |
(346,000) |
|
Decrease in accounts payable |
(348,000) |
(59,000) |
|
Decrease in other current liabilities |
(25,000) |
(916,000) |
|
Net cash provided by (used in) operating activities |
(1,438,000) |
478,000 |
|
Cash flows from investing activities |
||
|
Purchases of property and equipment |
(121,000) |
(72,000) |
|
Cash and cash equivalents released from trust |
- |
55,587,000 |
|
Purchases of securities available for sale |
(8,437,000) |
- |
|
Sales and redemptions of securities available for sale |
10,690,000 |
- |
|
Cash paid for acquisition of subsidiaries, net of cash acquired |
(6,000) |
(31,226,000) |
|
Net cash provided by investing activities |
2,126,000 |
24,289,000 |
|
Cash flows from financing activities |
||
|
Payment of deferred acquisition obligations |
(8,145,000) |
- |
|
Redemption of common stock |
- |
(12,017,000) |
|
Net cash used in financing activities |
(8,145,000) |
(12,017,000) |
|
Net increase (decrease) in cash and cash equivalents |
(7,457,000) |
12,750,000 |
|
Cash and cash equivalents: |
||
|
Beginning |
18,753,000 |
19,388,000 |
|
Ending |
$ 11,296,000 |
$ 32,138,000 |
|
Supplemental disclosure of cash flow information |
||
|
Income taxes refunded (paid) |
$ 36,000 |
$ (598,000) |
|
Supplemental disclosure of non-cash investing and financing activities |
||
|
Paid-in capital attributed to common stock repurchase rights not executed |
$ - |
$ 55,587,000 |
|
Payments due in connection with acquisitions |
$ - |
$ 1,903,000 |
|
Titanium Asset Management Corp. Reconciliation of EBITDA (unaudited) |
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
|
2009 |
2008 |
2009 |
2008 |
|
|
Net loss |
$ (1,195,000) |
$ (1,492,000) |
$ (2,736,000) |
$ (1,488,000) |
|
Amortization of intangible assets |
1,096,000 |
1,193,000 |
2,039,000 |
2,002,000 |
|
Impairment of intangible assets |
- |
1,792,000 |
- |
1,792,000 |
|
Depreciation expense |
25,000 |
- |
54,000 |
- |
|
Share compensation expense |
107,000 |
- |
205,000 |
- |
|
Interest income |
(114,000) |
(372,000) |
(234,000) |
(868,000) |
|
Interest expense |
15,000 |
- |
29,000 |
- |
|
Investment gains (losses) |
(193,000) |
- |
188,000 |
- |
|
Income tax benefit |
(774,000) |
(730,000) |
(1,572,000) |
(720,000) |
|
EBITDA(1) |
$ (1,033,000) |
$ 391,000 |
$ (2,027,000) |
$ 718,000 |
Notes:
EBITDA is defined as net loss before non-cash charges for amortization and impairment of intangible assets, depreciation, and share compensation expense, interest income and expense, investment gains and losses, and income taxes. This supplemental non-GAAP liquidity measure is provided in addition to, but not as a substitute for, cash flows from operations. As a measure of liquidity, we believe EBITDA is useful as an indicator of our ability to service debt, make new investments, and meet working capital requirements. EBITDA, as we calculate it, may not be consistent with computations of EBITDA by other companies. We believe that many investors use this information when analyzing the financial position of companies in the investment management industry.
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