JMP Group LLC (NYSE: JMP), an investment banking and alternative
asset management firm, reported financial results today for the
quarter ended March 31, 2021.
A summary of JMP Group’s operating results for the quarter ended
March 31, 2021, and for comparable prior periods, is set forth
below.
Quarter Ended (in thousands, except per share amounts) Mar. 31,
2021 Dec. 31, 2020 Mar. 31, 2020 Total net revenues
$38,493
$53,615
$5,267
Net income/(loss) attributable to JMP Group
$1,089
$9,009
($11,748
)
Net income/(loss) attributable to JMP Group per share
$0.05
$0.45
($0.60
)
Operating net income/(loss)
$3,784
$8,427
($537
)
Operating net income/(loss) per share
$0.18
$0.42
($0.03
)
Book value per share
$3.38
$3.18
$2.64
Adjusted book value per share
$4.24
$4.03
$3.45
For more information about operating net income, including a
reconciliation to net income, and adjusted book value per share,
including a reconciliation to book value per share, see the section
below titled “Non-GAAP Financial Measures.”
“Driven by strong results at
JMP Securities, JMP Group posted operating EPS of $0.18 for the
first quarter and a record $0.84 for the latest 12 months,” said
Joe Jolson, chairman and CEO of JMP Group. “We continue to make
good progress at refocusing our company on its core operations,
while looking to opportunistically monetize corporate investments
and retire long-term debt. We redeemed $10 million of senior notes
in February and expect to reduce the remaining balance later this
year, if the sale of Harvest Capital Credit Corporation closes in
June as planned. Our adjusted book value per share has increased
from $3.45 to $4.24 over the past year, and improving this metric
continues to be a key objective for us.”
“We’re very proud of our first-quarter results, as they
represent a continuation of the terrific momentum we built during
such a successful 2020,“ said Mark Lehmann, president of JMP Group
and CEO of JMP Securities. “JMP Securities produced capital markets
revenues of $31.6 million, a new record not just for the first
quarter but for any quarter of the year. We underwrote nine IPOs
and 18 follow-on offerings during the period, bookrunning five of
those transactions. In addition, our ECM backlog is as strong as
it’s ever been, across multiple verticals, making us optimistic
about our prospects for the balance of the year. On the advisory
front, we remain active, and our M&A fee revenues should build
as many of the deals in a very full pipeline close in coming
quarters.“
Segment Results of Operations
A summary of JMP Group’s operating net income per share by
segment for the quarter ended March 31, 2021, and for comparable
prior periods, is set forth below.
Quarter Ended ($ as shown) Mar. 31, 2021 Dec. 31, 2020 Mar. 31,
2020 Broker-dealer
$0.21
$0.42
($0.01
)
Asset management: Asset management fee income
0.00
0.03
(0.02
)
Investment income
0.06
0.10
0.07
Total asset management
0.06
0.13
0.05
Corporate costs
(0.08
)
(0.13
)
(0.07
)
Operating EPS (diluted)
$0.18
$0.42
($0.03
)
Note: Due to
rounding, numbers in columns above may not sum to totals
presented.
For more information about operating net
income, including a reconciliation to net income, see the section
below titled “Non-GAAP Financial Measures.”
Composition of
Revenues
Investment
Banking
Investment banking revenues for the quarter
were $32.6 million, an increase of 122.7% from $14.6 million for
the quarter ended March 31, 2020. The $32.6 million for the quarter
ended March 31, 2021, represents a record first-quarter total and
the second-largest total for any quarter in the company’s history,
trailing only the $43.3 million recorded for the quarter ended
December 31, 2020.
A summary of the company’s investment banking
revenues and transaction counts for the quarter ended March 31,
2021, and for comparable prior periods, is set forth below.
Quarter Ended Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020 ($ in
thousands) Count Revenues Count Revenues Count Revenues
Equity and debt origination
41
$25,670
33
$20,658
17
$8,556
Strategic advisory and private placements
6
6,899
12
22,632
4
6,069
Total
47
$32,569
45
$43,290
21
$14,625
Brokerage
Net brokerage revenues for the quarter were $5.9 million, an
increase of 41.0% from $4.2 million for the quarter ended March 31,
2020.
Total capital markets revenues, which consist of net brokerage
revenues produced by the institutional equities division in
addition to equity and debt origination revenues generated by the
investment banking division, were $31.6 million for the quarter, an
increase of 147.8% from $12.7 million for the quarter ended March
31, 2020.
Asset Management
Asset management fees for the quarter were $2.2 million, an
increase of 26.4% from $1.7 million for the quarter ended March 31,
2020.
A summary of the company’s client assets under management for
the quarter ended March 31, 2021, and for comparable prior periods,
is set forth below.
(in millions) Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Client assets under management (1)
$694
$660
$549
Assets under management by sponsored funds (2)
4,825
4,934
5,136
Client assets under management including sponsored funds
$5,519
$5,594
$5,685
(1)
Includes assets managed by Harvest Capital
Strategies, JMP Asset Management, and HCAP Advisors on behalf of
third parties.
(2)
Sponsored funds are asset management
strategies in which JMP Group owns an economic interest. Includes
assets managed by Medalist Partners Corporate Finance, the former
JMP Credit Advisors.
Principal Transactions
Principal transactions generated a net realized and unrealized
loss of $3.2 million for the quarter, compared to a net realized
and unrealized loss of $17.6 million for the quarter ended March
31, 2020. The year-over-year difference is in part due to the
impairment of CLO equity owned by JMP Group. A reduction in the net
present value of forecasted cash flows through the end of the
expected life of the collateralized loan obligations required an
impairment charge of $4.6 million for the quarter ended March 31,
2021. For the quarter ended March 31, 2020, the impairment charge
was $13.5 million.
Net Interest Income
Net interest income for the quarter was $0.5 million, an
increase of 23.4% from $0.4 million for the quarter ended March 31,
2020.
Expenses
Compensation and Benefits
Compensation and benefits expense for the quarter was $29.9
million, compared to $16.2 million for the quarter ended March 31,
2020. As a percentage of net revenues, compensation and benefits
expense was 77.8%, compared to 307.8% for the quarter ended March
31, 2020.
Non-Compensation Expense
Non-compensation expense for the quarter was $7.0 million,
compared to $8.1 million for the quarter ended March 31, 2020.
Share Repurchase Activity
JMP Group did not repurchase any outstanding common shares
during the quarter ended March 31, 2021.
Personnel
At March 31, 2021, the company had 179 full-time employees,
compared to 180 at December 31, 2020, and 192 at March 31,
2020.
Non-GAAP Financial Measures
In addition to the GAAP financial results presented in this
press release, JMP Group presents the non-GAAP financial measures
discussed below. These non-GAAP measures are provided to enhance
investors’ overall understanding of the company’s current financial
performance. Furthermore, company management believes that this
presentation enables a more meaningful comparison of JMP Group’s
financial performance across various periods. However, the non-GAAP
financial results presented should not be considered a substitute
for results that are presented in a manner consistent with GAAP. A
limitation of the non-GAAP financial measures presented is that the
adjustments concern gains, losses or expenses that JMP Group
generally expects to continue to recognize. The adjustment of these
non-GAAP items should not be construed as an inference that these
gains or expenses are unusual, infrequent or non-recurring.
Therefore, both GAAP measures of JMP Group’s financial performance
and the respective non-GAAP measures should be considered together.
The non-GAAP measures presented herein may not be comparable to
similarly titled measures presented by other companies.
Operating Net Income
Operating net income is a non-GAAP financial measure that (i)
excludes compensation expense related to share-based awards and
deferred compensation, (ii) reverses impairment charges related to
CLO equity, (iii) excludes costs resulting from the early
retirement of debt, (iv) reverses unrealized gains or losses on
real estate investments, (v) reverses net unrealized gains and
losses on strategic equity investments and warrants, and (vi)
assumes an effective tax rate. In particular, operating net income
adjusts for:
- the grant of restricted stock units and options;
- net deferred compensation, which consists of (a) deferred
compensation awarded in a given period but recognized as a GAAP
expense over the subsequent three years, less (b) GAAP expense
recognized in a given period but already reflected in the operating
income of a prior period; the purpose of this adjustment is to
fully reflect compensation awarded in a given year, notwithstanding
the timing of GAAP expense;
- the impairment of CLO equity recorded among principal
transactions, as the company believes that the forecasted reduction
in future cash flows will be mitigated by a change in the interest
rate environment and that distributions will be larger than
currently projected;
- expenses associated with the redemption of outstanding senior
notes and the resulting acceleration of the amortization of
remaining capitalized issuance costs;
- unrealized gains or losses related to commercial real estate
investments, adjusted for non-cash expenditures, including
depreciation and amortization;
- unrealized mark-to-market gains or losses on the company’s
strategic equity investments as well as certain warrant positions;
and
- a combined federal, state and local income tax rate of 26% at
the consolidated taxable parent company, JMP Group.
A reconciliation of JMP Group’s net income to its operating net
income for the quarter ended March 31, 2021, and for comparable
prior periods is set forth below.
Quarter Ended (in thousands, except per share amounts) Mar. 31,
2021 Dec. 31, 2020 Mar. 31, 2020 Net income/(loss)
attributable to JMP Group
$1,089
$9,009
($11,748
)
Add back/(subtract): Income tax expense/(benefit)
379
3,907
(7,239
)
Income/(loss) before taxes
1,468
12,916
(18,987
)
Add back/(subtract): Share-based awards and deferred
compensation
(521
)
(2,440
)
546
Impairment of CLO equity
4,587
4,420
13,523
Early retirement of debt
288
-
89
Unrealized (gain)/loss – real estate-related depreciation and
amortization
371
564
338
Unrealized mark-to-market (gain)/loss – strategic equity
investments and warrants
(1,080
)
(4,072
)
3,766
Operating income/(loss) before taxes
5,113
11,388
(725
)
Income tax expense/(benefit)
1,329
2,961
(189
)
Operating net income/(loss)
$3,784
$8,427
($537
)
Operating net income/(loss) per share: Basic
$0.19
$0.43
($0.03
)
Diluted (1)
$0.18
$0.42
($0.03
)
Weighted average shares outstanding: Basic
19,824
19,709
19,532
Diluted (1)
20,678
19,943
19,654
(1)
On a GAAP basis, the weighted average
number of diluted shares outstanding for the quarter ended March
31, 2020, was 19,531,824. Due to the company’s net loss for the
period, all share counts are equivalent to the weighted average
number of basic shares outstanding. Under GAAP, in a period of net
loss, dilutive securities are disregarded in the calculation of
earnings per share.
Book Value per Share
At March 31, 2021, JMP Group’s book value per share was $3.38.
Adding back accumulated depreciation and amortization expense
related to commercial real estate investments that is recognized by
JMP Group as a result of equity method accounting reflects the
reversal of that expense in the calculation of operating net
income. The add-back includes a tax provision related to the
expense reversed in a given period, due to the company’s election
to be taxed as a C corporation as of January 1, 2019. As a result,
adjusted book value per share was $4.24 for the quarter ended March
31, 2021, as set forth below.
(in thousands, except per share amounts) Mar. 31, 2021 Dec. 31,
2020 Mar. 31, 2020 Shareholders' equity
$66,933
$62,940
$51,629
Accumulated unrealized loss – real estate-related
depreciation and amortization
17,148
16,873
15,750
Adjusted shareholders' equity
$84,081
$79,813
$67,379
Book value per share
$3.38
$3.18
$2.64
Adjusted book value per share
$4.24
$4.03
$3.45
Basic shares outstanding
19,825
19,790
19,547
Quarterly operating ROE (1)
23.3
%
57.7
%
(3.8
%)
LTM operating ROE (1)
28.9
%
21.9
%
(4.4
%)
Quarterly adjusted operating ROE (1)
18.5
%
44.9
%
(3.0
%)
LTM adjusted operating ROE (1)
22.6
%
17.1
%
(3.6
%)
(1)
Operating return on equity (ROE) equals
operating net income divided by average shareholders’ equity.
Adjusted operating ROE equals operating net income divided by
average adjusted shareholders’ equity. For more information about
operating net income, including a reconciliation to net income
attributable to JMP Group, see the section above titled “Operating
Net Income.”
Conference Call
JMP Group will not hold a conference call in connection with the
release of the company’s financial results.
Cautionary Note Regarding Quarterly Financial Results
Due to the nature of its business, JMP Group’s quarterly
revenues and net income may fluctuate materially depending on many
factors, including: the size and number of investment banking
transactions on which it advises; the timing of the completion of
those transactions; the size and number of securities trades which
it executes for brokerage customers; the performance of its asset
management funds and inflows and outflows of assets under
management; gains or losses stemming from sales of or prepayments
on, or losses stemming from defaults on, loans underlying
collateralized loan obligations in which the company has financial
interests; and the effect of the overall condition of the
securities markets and economy as a whole. Accordingly, revenues
and net income in any particular quarter may not be indicative of
future results. Furthermore, JMP Group’s compensation expense is
generally based upon revenues and can fluctuate materially in any
quarter, depending upon the amount and sorts of revenue recognized
as well as other factors. The amount of compensation and benefits
expense recognized in a particular quarter may not be indicative of
such expense in any future period. As a result, the company
suggests that its annual results may be the most meaningful gauge
for investors in evaluating the performance of its business.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements reflect JMP Group’s current
expectations or forecasts about future events, including beliefs,
plans, objectives, intentions, assumptions and other statements
that are not historical facts. The words “may,” “could,” “should,”
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“predict” and similar expressions and their variants, as they
relate to JMP Group, may identify forward-looking statements.
Forward-looking statements are subject to known and unknown risks
and uncertainties that could cause actual results to differ
materially from those expected or implied by the forward-looking
statements. The company’s actual results could differ materially
from those anticipated in forward-looking statements for many
reasons, including the factors described in the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the company’s
Form 10-K for the year ended December 31, 2020, as filed with the
U.S. Securities and Exchange Commission on March 29, 2021, as well
as in the similarly captioned sections of other periodic reports
filed by the company under the Exchange Act. The Form 10-K for the
year ended December 31, 2020, and all other periodic reports are
available on JMP Group’s website at www.jmpg.com and on the SEC’s
website at www.sec.gov. Any forward-looking statements contained in
this press release speak only as of the date hereof. Unless
required by law, JMP Group undertakes no obligation to publicly
update or revise any forward-looking statement to reflect
circumstances or events after the date of this press release.
Disclosure Information
JMP Group uses the investor relations section of its website as
a means of complying with its disclosure obligations under
Regulation FD. Accordingly, investors should monitor the company’s
website in addition to its press releases, SEC filings, and
webcasts.
About JMP Group
JMP Group LLC is a diversified capital markets firm that
provides investment banking, equity research, and sales and trading
services to corporate and institutional clients as well as
alternative asset management products and services to institutional
and high-net-worth investors. JMP Group conducts its investment
banking and research, sales and trading activities through JMP
Securities; its venture capital and private capital activities
through Harvest Capital Strategies and JMP Asset Management; and
the management of Harvest Capital Credit Corporation (NASDAQ:
HCAP), a business development company, through HCAP Advisors. For
more information, visit www.jmpg.com.
JMP GROUP LLC
Consolidated Statements of
Financial Condition
(Unaudited)
(in thousands) Mar. 31, 2021 Dec. 31, 2020 Assets
Cash and cash equivalents
$61,204
$91,444
Restricted cash and deposits
1,293
1,287
Marketable securities owned
57,653
55,494
Loans held for investment, net of allowance for loan losses
901
994
Other investments
25,093
26,821
Other assets
69,120
65,291
Total assets
$215,264
$241,331
Liabilities and Shareholders' Equity Liabilities:
Marketable securities sold, but not yet purchased
$446
$ -
Accrued compensation
18,264
46,353
Bond payable, net of issuance costs
71,289
80,912
Note payable
10,610
10,610
Other liabilities
48,174
41,048
Total liabilities
148,783
178,923
Shareholders' Equity: Total JMP Group LLC shareholders'
equity
66,933
62,940
Non-redeemable non-controlling interest
(452
)
(532
)
Total equity
66,481
62,408
Total liabilities and shareholders' equity
$215,264
$241,331
JMP GROUP LLC
Consolidated Statements of
Operations
(Unaudited)
Quarter Ended (in thousands, except per share amounts) Mar.
31, 2021 Mar. 31, 2020 Revenues: Investment banking
$32,569
$14,625
Brokerage
5,905
4,187
Asset management fees
2,169
1,716
Principal transactions
(3,211
)
(17,552
)
Net dividend income
-
227
Other income
816
935
Non-interest revenues
38,248
4,138
Interest income
2,101
2,214
Interest expense
(1,568
)
(1,782
)
Net interest income
533
432
Gain/(loss) on repurchase or early retirement of debt
(288
)
697
Total net revenues
38,493
5,267
Non-interest expenses: Compensation and benefits
29,945
16,213
Administration
1,491
2,222
Brokerage, clearing and exchange fees
680
634
Travel and business development
67
922
Managed deal expenses
1,398
588
Communications and technology
1,107
1,129
Occupancy
1,198
1,199
Professional fees
827
890
Depreciation
275
548
Other
(42
)
-
Total non-interest expense
36,946
24,345
Net income/(loss) before income tax
1,547
(19,078
)
Income tax expense/(benefit)
379
(7,239
)
Net income/(loss)
1,168
(11,839
)
Less: Net income/(loss) attributable to non-redeemable
non-controlling interest
79
(91
)
Net income/(loss) attributable to JMP Group
$1,089
($11,748
)
Net income/(loss) attributable to JMP Group per share: Basic
$0.05
($0.60
)
Diluted
$0.05
($0.60
)
Weighted average common shares outstanding: Basic
19,824
19,532
Diluted
20,678
19,532
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429005829/en/
Investor Relations Contact JMP Group LLC Andrew Palmer
(415) 835-8978 apalmer@jmpg.com Media Relations Contacts
Dukas Linden Public Relations, Inc. Zach Leibowitz (646) 722-6528
zach@dlpr.com Michael Falco (646) 808-3611 michael@dlpr.com
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