Toronto, April 27, 2017 - GMP Capital Inc. (GMP) (TSX: GMP) today reported revenue of $48.9 million in first quarter 2017, up 7% compared with the same period a year ago. Revenues were bolstered by $7.7 million in dividends received in connection with GMP's preferred share investments in Richardson GMP. First quarter 2017 net income was $3.5 million and diluted earnings per share (EPS) was $0.03, compared with a net loss of $3.6 million and diluted loss per share of $0.08 in first quarter 2016. On an adjusted basis1, first quarter 2017 net income was $7.1 million and EPS was $0.07.
For further information about GMP Capital Inc., our results for first quarter 2017 and the meaning of certain references, this earnings release should be read in conjunction with our unaudited interim condensed consolidated financial statements as at and for the three months ended March 31, 2017 (First Quarter 2017 Financial Statements) and our management's discussion and analysis for the three months ended March 31, 2017 (First Quarter 2017 MD&A), which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our First Quarter 2017 Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS).
“This quarter was another characterized by daunting conditions for generating revenue. That said, the cost cutting and efficiency measures undertaken over the past two years allow us to be profitable in what can clearly be characterized as an anemic quarter for Capital Markets,” said Harris Fricker, President and Chief Executive Officer, GMP. “There were a few bright spots for the quarter including the performance of our equity commission business post the acquisition of GMP FirstEnergy and the strong results at Richardson GMP.”
Commenting further, Mr. Fricker said, “And, as always, we remain focused on maintaining our capital strength and liquidity through this and all cycles.”
First quarter 2017 vs. First quarter 2016
- Revenue of $48.9 million compared with $45.9 million.
- Net income of $3.5 million compared with net loss of $3.6 million.
- On an adjusted basis1, net income of $7.1 million compared with net loss of $2.9 million.
- EPS of $0.03 compared with diluted loss per share of $0.08.
- On an adjusted basis1, EPS of $0.07 compared with diluted loss per share of $0.07.
- Annualized return on common equity (ROE)1 of 4.4% compared with negative 9.3%.
- On an adjusted basis1, ROE of 10.6% compared with negative 8.0%.
1. Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) under IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. This data should be read in conjunction with the “Non-GAAP Measures” section at the end of this press release and the “Presentation of Financial Information and Non-GAAP Measures” section in the First Quarter 2017 MD&A.
FIRST QUARTER 2017 BUSINESS SEGMENT HIGHLIGHTS
First quarter 2017 vs. First quarter 2016
Revenue of $38.1 million decreased 13% primarily due to a decline in investment banking fees.
- Investment banking revenue of $15.9 million decreased 29% primarily driven by lower M&A advisory fees which declined 78% to $3.0 million.
- Underwriting revenue increased 40% to $12.9 million on solid client activity in the energy and real estate sectors.
- Commission revenue of $12.1 million increased 29% as we continue to benefit from the acquisition of GMP FirstEnergy.
- Principal transactions generated net gains of $8.2 million representing a decrease of 22% primarily due to lower U.S. client-related fixed income activity.
Expenses of $36.6 million decreased 19% primarily due to lower employee compensation and benefits expenses.
- Fixed salaries and benefits declined 29% primarily due to a lower cost base following prior period restructuring initiatives.
- Variable compensation decreased 25% primarily due to the decrease in investment banking revenue.
Income (loss) before income taxes
- Income before income taxes of $1.5 million compared with loss before income taxes of $1.5 million.
First quarter 2017 vs. First quarter 2016
- Wealth Management reported income before income taxes of $8.4 million compared with $0.1 million.
- First quarter 2017 revenues include $7.7 million in dividends received in connection with GMP's preferred share investments in Richardson GMP.
- Share of Richardson GMP net income of $0.7 million compared with $0.1 million.
Richardson GMP Highlights:
The following information sets forth an overview of the consolidated financial results of Richardson GMP, on a 100% basis; noting, however, that GMP owns an approximate 31% non-controlling interest of Richardson GMP as at March 31, 2017.
- Revenue of $77.4 million representing an 18% increase on higher commissions and investment management fees.
- Adjusted EBITDA2 of $11.3 million increased 43%.
- Assets under administration of $29.8 billion as at March 31, 2017, a 12% increase compared with $26.6 billion as at March 31, 2016.
2. Considered to be a non-GAAP financial measure. This data should be read in conjunction with the “Supplemental Information” section at the end of this press release and in the First Quarter 2017 MD&A.
On April 26, 2017, the board of directors of GMP (Board of Directors) approved a quarterly cash dividend of $0.2257 per Cumulative 5-Year Rate Reset Preferred Share, Series B, and $0.2100 per Cumulative Floating Rate Preferred Shares, Series C, payable on June 30, 2017 to preferred shareholders of record on June 15, 2017.
NORMAL COURSE ISSUER BID RENEWAL
On April 26, 2017, the Board of Directors approved the renewal of GMP's normal course issuer bid, which has been accepted by the TSX (2017 NCIB). The 2017 NCIB will commence on April 29, 2017, and will terminate on April 28, 2018, or until such earlier date on which purchases under the 2017 NCIB have been completed. Under the 2017 NCIB, GMP is authorized to purchase for cancellation up to 5,306,499 Common Shares, representing 10% of the public float on April 15, 2017, by way of normal course purchases effected by GMP Securities L.P. through the facilities of the TSX and any other protected marketplace or alternative trading system in Canada. As of April 15, 2017, GMP had 81,491,653 Common Shares outstanding. Purchases will be made by GMP in accordance with the requirements of the TSX and the price which GMP will pay for any such Common Shares will be the market price of any such Common Shares at the time of acquisition, or such other price as may be permitted by the TSX. For purposes of the TSX rules, a maximum of 11,799 Common Shares may be purchased by GMP on any one day under the bid, except where purchases are made in accordance with the “block purchase exception” of the TSX rules. The daily repurchase limit represents 25% of the average daily trading volume of 47,194 Common Shares for the six-month period ended March 31, 2017, excluding purchases made under the previously approved normal course issuer bid program during that period. Under its 2016 NCIB program that will expire on April 28, 2017, GMP purchased for cancellation a total of 1,082,646 Common Shares at an average weighted purchase cost per share of $4.1644. GMP has renewed the 2017 NCIB program because it believes the purchase of Common Shares may at certain times enhance value to shareholders and is an appropriate use of funds. Shareholders may obtain a copy of the filed notice without charge by contacting GMP's Chief Financial Officer by telephone at (416) 367-8600 or toll-free at 1-888-301-3244 or by email at email@example.com.
A conference call and live audio webcast to discuss GMP’s first quarter 2017 results will be held this morning at 8:00 a.m. (MST) / 10:00 a.m. (EST). Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-340-2216 or 1-800-273-9672 (toll free) or via live audio webcast at http://gmpcapital.com/Investor-Relations/Quarterly-Information. A recording of the conference call will be available until Thursday, May 4, 2017, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 5328158#. The webcast will be archived at http://gmpcapital.com/Investor-Relations/Quarterly-Information.
We use certain measures to assess our financial performance that are not GAAP measures under IFRS. These measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GMP's performance, liquidity, cash flows and profitability. For further information, refer to the “Presentation of Financial Information and Non-GAAP Measures” section in the First Quarter 2017 MD&A.
The following table provides a reconciliation of GMP’s reported results to its adjusted measures including the composition of the adjusted measures for the periods presented.
The following supplemental information reflects how management of Richardson GMP assesses the financial performance of Richardson GMP.
Supplemental Financial Information - Richardson GMP
Richardson GMP's management assesses performance on both a reported and an adjusted basis and considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also permits readers to assess the impact of specified items on financial results. Richardson GMP's management uses certain measures to assess the financial performance of Richardson GMP that are not GAAP measures under IFRS. EBITDA and adjusted EBITDA do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of Richardson GMP's performance, liquidity, cash flows and profitability. Richardson GMP's management believes adjusting results by excluding the impact of the specified items is more reflective of ongoing financial performance and cash generating capabilities and provides readers with an enhanced understanding of how management views Richardson GMP's core performance. For further information, refer to the "Supplemental Information" section in the First Quarter 2017 MD&A.
The following table sets forth an overview of the consolidated financial results of Richardson GMP for the periods indicated, on a 100% basis; noting, however, that GMP owns an approximate 31% non-controlling interest of Richardson GMP as at March 31, 2017.
This press release contains “forward-looking information” as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. GMP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions, dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect GMP's actual results and could cause its actual results to materially differ from those expressed or implied in any forward-looking information disclosed by management or on its behalf. For a description of additional risks that could cause our actual results to materially differ from our current expectations, see “Risk Management” and "Risk Factors" in the First Quarter 2017 MD&A and “Risk Factors” in GMP's annual information form. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (GMP Group). Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the GMP Group. Material assumptions or factors underlying the forward-looking information contained in this press release include, but are not limited to, “First Quarter 2017 Financial Highlights”, “Segment Results ”, “Liquidity and Capital Resources” sections of the First Quarter 2017 MD&A. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking information contained in this press release is made as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release. Except as required by applicable law, management and GMP's Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
ABOUT GMP CAPITAL INC.
GMP is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global client base that includes corporate clients, institutional investors and high-net-worth individuals in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices in Canada, the United States, the United Kingdom, Bahamas and Asia. Wealth Management consists of GMP’s non-controlling ownership interest in Richardson GMP Limited. Richardson GMP Limited, Canada’s largest independent wealth management firm, is focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol “GMP”. For further information, please visit our corporate website at gmpcapital.com.
For further information please contact:
GMP Capital Inc.
Rocco Colella, Director, Investor Relations
145 King Street West, Suite 300, Toronto, Ontario M5H 1J8
Tel: (416) 941-0894; Fax: (416) 943-6175
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