JMP Group LLC (NYSE: JMP), an investment banking and alternative
asset management firm, reported financial results today for the
quarter ended June 30, 2021.
A summary of JMP Group’s operating results for the quarter and
six months ended June 30, 2021, and for comparable prior periods,
is set forth below.
Quarter Ended Six Months Ended (in thousands, except per share
amounts) June 30, 2021 Mar. 31, 2021 June 30, 2020 June 30, 2021
June 30, 2020 Total net revenues
$48,492
$38,493
$29,993
$86,985
$35,260
Net income/(loss) attributable to JMP Group
$3,628
$1,089
$1,124
$4,717
($10,624
)
Net income/(loss) attributable to JMP Group per share
$0.17
$0.05
$0.06
$0.23
($0.54
)
Operating net income/(loss)
$6,129
$3,784
$2,591
$9,913
$2,054
Operating net income/(loss) per share
$0.29
$0.18
$0.13
$0.47
$0.10
Book value per share
$3.54
$3.38
$2.87
$3.54
$2.87
Adjusted book value per share
$4.42
$4.24
$3.69
$4.42
$3.69
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.”
“JMP Group’s operating
earnings of $0.29 per share for the June quarter mark the
second-best quarter in our company’s history, driven by strong
advisory revenues at JMP Securities, record results in our asset
management business, and investment income that well exceeded our
corporate costs,” said Joe Jolson, chairman and CEO of JMP Group.
“On a trailing-four-quarters basis, our operating earnings were a
record $1.00 per share, representing a 32.9% return on average
equity.
“During the quarter, we
successfully monetized certain principal investments, enabling us
to call $25.0 million of our fixed-rate debt and reducing our
long-term borrowings to less than $50.0 million as of
July.”
“For the six months ended in
June, JMP Securities’ investment banking revenues were up 80% year
over year,“ said Mark Lehmann, president of JMP Group and CEO of
JMP Securities. “Through June of this year, we underwrote 19 IPOs,
compared to 20 last year on the whole, and bookran nine
transactions, versus nine throughout 2020.
“In our advisory business, we
reached the $50 million mark for total fee revenues over the latest
12 months and are thrilled that our investment in people continues
to pay off. We built on our momentum in July and feel confident
about the third quarter, given a strong backlog and active dialogs
with an ever-growing number of corporate clients.”
Segment Results of Operations
A summary of JMP Group’s operating net income per share by
segment for the quarter and six months ended June 30, 2021, and for
comparable prior periods, is set forth below.
Quarter Ended Six Months Ended ($ as shown) June 30, 2021 Mar. 31,
2021 June 30, 2020 June 30, 2021 June 30, 2020 Broker-dealer
$0.15
$0.21
$0.14
$0.36
$0.13
Asset management: Asset management fee income
0.09
0.00
(0.01
)
0.09
(0.02
)
Investment income
0.13
0.06
0.08
0.19
0.14
Total asset management
0.23
0.06
0.07
0.29
0.12
Corporate costs
(0.09
)
(0.08
)
(0.08
)
(0.17
)
(0.15
)
Operating EPS (diluted)
$0.29
$0.18
$0.13
$0.47
$0.10
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 were $32.7 million for the quarter,
an increase of 51.5% from $21.6 million for the quarter ended June
30, 2020. For the six months ended June 30, 2021, investment
banking revenues were $65.3 million, an increase of 80.2% from
$36.2 million for six months ended June 30, 2020.
A summary of the company’s investment banking revenues and
transaction counts for the quarter and six months ended June 30,
2021, and for comparable prior periods, is set forth below.
Quarter Ended Six Months Ended June 30, 2021 Mar. 31, 2021 June 30,
2020 June 30, 2021 June 30, 2020 ($ in thousands) Count Revenues
Count Revenues Count Revenues Count Revenues Count Revenues Equity
and debt origination
34
$16,946
41
$25,670
22
$14,569
75
$42,616
39
$23,125
Strategic advisory and private placements
11
15,767
6
6,899
5
7,026
17
22,666
9
13,095
Total
45
$32,713
47
$32,569
27
$21,595
92
$65,282
48
$36,220
Brokerage
Net brokerage revenues were $3.4 million for the quarter, a
decrease of 39.9% from $5.6 million for the quarter ended June 30,
2020. For the six months ended June 30, 2021, net brokerage
revenues were $9.3 million, a decrease of 5.5% from $9.8 million
for the six months ended June 30, 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 $20.3 million and $51.9 million
for the quarter and six months ended June 30, 2021, respectively,
compared to $20.2 million and $33.0 million for the quarter and six
months ended June 30, 2020, respectively.
Asset Management
Asset management fees were $11.1 million for the quarter,
compared to $1.7 million for the quarter ended June 30, 2020. For
the six months ended June 30, 2021, asset management fees were
$13.3 million, compared to $3.4 million for the six months ended
June 30, 2020. The year-over-year differences are primarily due to
aggregate incentive fees of $9.8 million recorded in connection
certain fund strategies for the quarter ended June 30, 2021.
On June 9, 2021, Portman Ridge Finance Corporation closed its
acquisition of Harvest Capital Credit Corporation, which had been
externally managed by JMP Group subsidiary HCAP Advisors, and the
investments transferred in the transaction are no longer considered
among JMP Group’s client assets under management. Additionally, on
June 30, 2021, JMP Group sold its minority interest in Medalist
Partners Corporate Finance, a manager of collateralized loan
obligations, to Medalist Partners. Consequently, CLO assets managed
by Medalist are no longer considered among assets under management
by sponsored funds.
A summary of the company’s client assets under management for
the quarter ended June 30, 2021, and for comparable prior periods,
is set forth below.
(in millions) June 30, 2021 Mar. 31, 2021 June 30, 2020 Client
assets under management (1)
$630
$694
$590
Assets under management by sponsored funds (2)
3,403
4,825
5,102
Client assets under management, including sponsored funds
$4,033
$5,519
$5,692
(1)
Includes assets managed by Harvest Capital
Strategies and JMP Asset Management on behalf of third parties.
Through March 31, 2021, includes assets managed by HCAP
Advisors.
(2)
Sponsored funds are asset management
strategies in which JMP Group owns an economic interest. Through
March 31, 2021, includes assets managed by Medalist Partners
Corporate Finance.
Principal Transactions
Principal transactions generated a net realized and unrealized
loss of $49,000 for the quarter, compared to a net realized and
unrealized loss of $48,000 for the quarter ended June 30, 2020. For
the six months ended June 30, 2021, principal transactions
generated a net realized and unrealized loss of $3.3 million,
compared to a net realized and unrealized loss of $17.6 million for
the six months ended June 30, 2020. The year-over-year difference
for the six-month periods 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
$8.3 million for the six months ended June 30, 2021, and $14.5
million for the six months ended June 30, 2020. For the six months
ended June 30, 2021, the impairment charge of $8.3 million was
partially offset by net realized and unrealized gains on the
aforementioned sales of Harvest Capital Credit Corporation and a
minority interest in Medalist Partners Corporate Finance and on
venture capital and real estate investments.
Net Interest Income
Net interest income was $0.3 million for the quarter, compared
to $0.2 million for the quarter ended June 30, 2020. For the six
months ended June 30, 2021, net interest income was $0.8 million,
compared to $0.6 million for the six months ended June 30,
2020.
Early Retirement of Debt
On June 25, 2021, JMP Group redeemed $10.0 million of
outstanding 7.25% senior notes due 2027. The early redemption of
the notes accelerated the amortization of remaining capitalized
issuance costs, resulting in an expense of $0.3 million for the
quarter ended June 30, 2021. For the quarter ended June 30, 2020,
there was no such expense. For the six months ended June 30, 2021,
redemption of senior notes resulted in an expense of $0.6 million,
while there was no such expense for the six months ended June 30,
2020.
Expenses
Compensation and Benefits
Compensation and benefits expense was $35.1 million for the
quarter, compared to $22.4 million for the quarter ended June 30,
2020. As a percentage of net revenues, compensation and benefits
expense was 72.5% for the quarter, compared to 74.6% for the
quarter ended June 30, 2020. For the six months ended June 30,
2021, compensation and benefits expense was $65.1 million, compared
to $38.6 million for the six months ended June 30, 2020. As a
percentage of net revenues, compensation and benefits expense was
74.8% for the six months ended June 30, 2021, compared to 109.5%
for the six months ended June 30, 2020.
Non-Compensation Expense
Non-compensation expense was $8.4 million for the quarter,
compared to $6.3 million for the quarter ended June 30, 2020. As a
percentage of net revenues, non-compensation expense was 17.3% for
the quarter, compared to 21.1% for the quarter ended June 30, 2020.
For the six months ended June 30, 2021, non-compensation expense
was $15.4 million, compared to $14.5 million for the six months
ended June 30, 2020. As a percentage of net revenues,
non-compensation expense was 17.7% for the six months ended June
30, 2021, compared to 41.0% for the six months ended June 30,
2020.
Share Repurchase Activity
JMP Group did not repurchase any outstanding common shares
during the quarter ended June 30, 2021.
Personnel
At June 30, 2021, the company had 174 full-time employees,
compared to 179 at March 31, 2021, and 191 at June 30, 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 and six months ended June 30, 2021, and for
comparable prior periods is set forth below.
Quarter Ended Six Months Ended (in thousands, except per share
amounts) June 30, 2021 Mar. 31, 2021 June 30, 2020 June 30, 2021
June 30, 2020 Net income/(loss) attributable to JMP Group
$3,628
$1,089
$1,124
$4,717
($10,624
)
Add back/(subtract): Income tax expense/(benefit)
1,307
379
176
1,686
(7,063
)
Income/(loss) before taxes
4,935
1,468
1,300
6,403
(17,687
)
Add back/(subtract): Share-based awards and deferred
compensation
(225
)
(521
)
(130
)
(746
)
416
Impairment of CLO equity
3,711
4,587
1,013
8,298
14,536
Early retirement of debt
271
288
-
559
89
Unrealized (gain)/loss – real estate-related depreciation and
amortization
492
371
516
863
854
Unrealized mark-to-market (gain)/loss – strategic equity
investments and warrants
(901
)
(1,080
)
802
(1,981
)
4,568
Operating income/(loss) before taxes
8,283
5,113
3,501
13,396
2,776
Income tax expense/(benefit)
2,154
1,329
910
3,483
722
Operating net income/(loss)
$6,129
$3,784
$2,591
$9,913
$2,054
Operating net income/(loss) per share: Basic
$0.31
$0.19
$0.13
$0.50
$0.11
Diluted (1)
$0.29
$0.18
$0.13
$0.47
$0.10
Weighted average shares outstanding: Basic
19,861
19,824
19,582
19,842
19,557
Diluted (1)
21,043
20,678
19,744
20,870
19,676
(1)
On a GAAP basis, the weighted average
number of diluted shares outstanding for the six months ended June
30, 2020, was 19,556,972, equivalent to the weighted average number
of basic shares outstanding, due to the company’s net loss for the
period. Under GAAP, in a period of net loss, dilutive securities
are disregarded in the calculation of earnings per share.
Book Value per Share
At June 30, 2021, JMP Group’s book value per share was $3.54.
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 $4.42 for the quarter ended June
30, 2021, as set forth below.
(in thousands, except per share amounts) June 30, 2021 Mar. 31,
2021 June 30, 2020 Shareholders' equity
$70,412
$66,933
$56,188
Accumulated unrealized loss – real estate-related
depreciation and amortization
17,512
17,148
16,132
Adjusted shareholders' equity
$87,924
$84,081
$72,320
Book value per share
$3.54
$3.38
$2.87
Adjusted book value per share
$4.42
$4.24
$3.69
Basic shares outstanding
19,877
19,825
19,594
Quarterly operating ROE (1)
35.7%
23.3%
19.2%
LTM operating ROE (1)
32.9%
28.9%
0.4%
Quarterly adjusted operating ROE (1)
28.5%
18.5%
14.8%
LTM adjusted operating ROE (1)
25.9%
22.6%
0.3%
(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 for the quarter ended
June 30, 2021. For supplemental information, see the investor
presentation available online at
investor.jmpg.com/events-and-presentations.
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 and its venture capital and private capital activities
through Harvest Capital Strategies and JMP Asset Management. For
more information, visit www.jmpg.com.
JMP GROUP LLC
Consolidated Statements of
Financial Condition
(Unaudited)
(in thousands) June 30, 2021 Dec. 31, 2020 Assets
Cash and cash equivalents
$86,981
$91,444
Restricted cash and deposits
1,293
1,287
Marketable securities owned
40,000
55,494
Loans held for investment, net of allowance for loan losses
520
994
Other investments
19,033
26,821
Other assets
78,237
65,291
Total assets
$226,064
$241,331
Liabilities and Shareholders' Equity Liabilities:
Accrued compensation
$40,459
$46,353
Bond payable, net of issuance costs
61,834
80,912
Note payable
10,610
10,610
Other liabilities
42,232
41,048
Total liabilities
155,135
178,923
Shareholders' Equity: Total JMP Group LLC shareholders'
equity
70,412
62,940
Non-redeemable non-controlling interest
517
(532
)
Total equity
70,929
62,408
Total liabilities and shareholders' equity
$226,064
$241,331
JMP GROUP LLC
Consolidated Statements of
Operations
(Unaudited)
Quarter Ended Six Months Ended (in thousands, except per
share amounts) June 30, 2021 June 30, 2020 June 30, 2021 June 30,
2020 Revenues: Investment banking
$32,713
$21,595
$65,282
$36,220
Brokerage
3,391
5,645
9,296
9,832
Asset management fees
11,101
1,712
13,270
3,428
Principal transactions
(49
)
(48
)
(3,260
)
(17,600
)
Net dividend income
215
10
215
237
Other income
1,127
912
1,943
1,847
Non-interest revenues
48,498
29,826
86,746
33,964
Interest income
1,754
1,890
3,855
4,104
Interest expense
(1,489
)
(1,723
)
(3,057
)
(3,505
)
Net interest income
265
167
798
599
Gain/(loss) on repurchase or early retirement of debt
(271
)
-
(559
)
697
Total net revenues
48,492
29,993
86,985
35,260
Non-interest expenses: Compensation and benefits
35,146
22,386
65,091
38,599
Administration
1,941
1,067
3,432
3,289
Brokerage, clearing and exchange fees
644
647
1,324
1,281
Travel and business development
215
54
282
976
Managed deal expenses
1,354
950
2,752
1,538
Communications and technology
1,160
1,085
2,267
2,214
Occupancy
1,173
1,194
2,371
2,393
Professional fees
1,394
731
2,221
1,621
Depreciation
265
397
540
945
Other
250
208
208
208
Total non-interest expense
43,542
28,719
80,488
53,064
Net income/(loss) before income tax
4,950
1,274
6,497
(17,804
)
Income tax expense/(benefit)
1,307
176
1,686
(7,063
)
Net income/(loss)
3,643
1,098
4,811
(10,741
)
Less: Net income/(loss) attributable to non-redeemable
non-controlling interest
15
(26
)
94
(117
)
Net income/(loss) attributable to JMP Group
$3,628
$1,124
$4,717
($10,624
)
Net income/(loss) attributable to JMP Group per share: Basic
$0.18
$0.06
$0.24
($0.54
)
Diluted
$0.17
$0.06
$0.23
($0.54
)
Weighted average common shares outstanding: Basic
19,861
19,582
19,842
19,557
Diluted
21,043
19,744
20,870
19,557
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729005118/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
Elena Muller (646) 722-6529 elena@dlpr.com
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