NEW YORK, Dec. 29, 2011 (GLOBE NEWSWIRE) -- W.P. Stewart & Co., Ltd. Announces June 30 Financial Results and Gives Corporate Update, Including:
- AUM of $1.4 Billion as of November 30, 2011
- Outperformance of Benchmark Year-to-Date and Three Years Ending November 30, 2011
Six Month 2011 Financial Highlights
W.P. Stewart & Co., Ltd. ("W.P. Stewart" or the "Company") today reported its financial results for the first half of 2011. Net results on a cash basis for the six months ended June 30, 2011 were approximately -$508,000 (net loss of $3 million adjusted for $2.5 million, representing non-cash expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization, and other non-cash charges, on a tax-effected basis), or -$0.10 per share (diluted). In the same period of the prior year, net results on a cash basis were approximately -$614,000 (net loss of $4.9 million adjusted to include $4.3 million, representing non-cash expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization and other non-cash charges, on a tax-effected basis), or -$0.12 per share (diluted).
On a U.S. GAAP basis, the Company reported a net loss of $3.0 million, or $0.60 per share (diluted) and $0.60 per share (basic), for the six months ended June 30, 2011. These results compare with a net loss in the first half of 2010 of $4.9 million, or $0.92 per share (diluted) and $0.92 per share (basic). These prior year results included cash charges of approximately $775,000, or $0.14 per share (diluted), on a tax-effected basis, primarily related to (a) professional fees incurred in connection with (1) the exploration of a strategic transaction that was not completed and (2) the corporate restructuring of the Company and certain of its formerly Bermuda-based subsidiaries that was completed in May 2010 and (b) severance payments made to employees terminated in connection with the corporate restructuring.
For the six months ended June 30, 2011 there were 4,939,242 common shares outstanding on a weighted average diluted basis (4,939,242 – weighted average basic) compared to 5,315,064 common shares outstanding for the six months ended June 30, 2010 on the same weighted average diluted basis (5,315,064 – weighted average basic).
Included in this release are tables containing revenue and expense detail for the six months ended June 30, 2011 with comparisons to the same period of the prior year.
Investment Performance and Assets Under Management Update
The year-to-date performance for the W.P. Stewart U.S. Equity Composite (the "Composite") for the six months ended June 30, 2011, was 2.3%, pre-fee, and 1.8%, post-fee, compared with 6.0% for the S&P 500. As of November 30, 2011, year-to-date performance for the Composite was 3.8%, pre-fee, and 2.9%, post-fee, compared with 1.1% for the S&P 500. For the three years ending November 30, 2011, annualized performance for the Composite was 16.4%, pre-fee, and 15.3% post-fee, which was 1.2% ahead of the S&P 500 at 14.1% for the same period. Interim monthly and quarterly performance for the Composite for 2011 are posted on the Company's website at www.wpstewart.com.
In relation to the firm's recent investment performance, Mark Phelps, CEO of the Company, commented: "Relative performance over the last one and three years has been good as investors have focused on higher quality businesses in difficult times. Looking forward we believe those companies will continue to outperform as investors look for businesses that have their own engines of growth over and above the modest economic recovery we see in the U.S."
Assets under management ("AUM") at November 30, 2011 were approximately $1.4 billion (preliminary), compared with approximately $1.5 billion at June 30, 2011 and $1.6 billion at December 31, 2010. In the attached tables, a complete breakdown of AUM flows for the periods ended June 30, 2011 with comparisons to earlier periods is provided.
The Company releases composite portfolio investment returns on a monthly basis and intends to release AUM data at least on a quarterly basis. The performance returns are posted on the Company's website at www.wpstewart.com, usually within one week of month-end and AUM quarterly updates will be posted usually within one month of the quarter-end. A complete history of the performance of the Composite is available on the Company's website. Performance results and AUM data are subject to change on final reconciliation of all relevant data.
Revenues and Other Financial Data
Fee revenue was $8.1 million for the six months ended June 30, 2011, down 3.2% from $8.4 million for the same period of 2010.
Total revenue was $8.3 million for the six months ended June 30, 2011, down 21.7% from $10.6 million for the same period of 2010. However, the June 30, 2010 results included one time gains on an investment portfolio along with commission revenue earned through W.P. Stewart Securities LLC, the firm's broker dealer subsidiary. W.P. Stewart Securities LLC ceased operations on December 1, 2010.
The average gross management fee, annualized, was 1.02% for the six months ended June 30, 2011, compared to 1.06% for the six months ended June 30, 2010 on an annualized basis. Excluding performance fee based accounts, which pay a lower quarterly base fee plus an annual performance fee at year-end if earned, the average gross management fee was 1.26%, annualized, for the six months ended June 30, 2011, compared to 1.27% in the comparable period of the prior year on an annualized basis.
Total operating expenses for the six months ended June 30, 2011 were $11.2 million. For the same period of the prior year, total operating expenses were $14.5 million, including $775,000 in cash charges, on a tax-effected basis, primarily related to (a) professional fees incurred in connection with (1) the exploration of a strategic transaction that was not completed and (2) the corporate restructuring of the Company and certain of its formerly Bermuda-based subsidiaries that was completed in May 2010 and (b) severance payments made to employees terminated in connection with the corporate restructuring.
For the six months ended June 30, 2011, non-cash compensation expense related to the Company's restricted share issuances to employees was approximately $2.1 million. For the same period of the prior year, these non-cash compensation charges were approximately $2.6 million. These non-cash compensation expenses are included in "employee compensation and benefits".
The Company's provision/(benefit) for taxes for the six months ended June 30, 2011 was approximately $49,000 versus $1.0 million in the comparable period of the prior year.
Please see the tables included in this release for further detail on revenue and expenses for the six months ended June 30, 2011 with comparisons to the same period of the prior year.
The Company had cash and marketable securities at June 30, 2011 of $24.9 million. The Company has no debt. As of December 12, 2011, the Company had cash and marketable securities balances of approximately $22.7 million. In addition, the joint venture company that owned the Company's headquarter building in Bermuda completed its sale of the building in May 2010 and will subsequently distribute its assets, including the proceeds of the sale, to its joint venture partners, The Bank of Bermuda and the Company.
Shareholders' equity at June 30, 2011 was approximately $22.7 million.
Other Items
From January through June 30, 2011, the Company repurchased 450,000 shares of its common stock from an employee and funds managed by Arrow Capital Management for an aggregate amount of $2,389,500. From July 1, 2011 through December 22, 2011, the Company purchased an additional 25,317 shares of its common stock from employees for an aggregate amount of $165,320. The Company funded these repurchases with cash on hand.
Earlier in December, the Company held its annual meeting of stockholders at the Company's headquarters in New York. At the meeting, all of the members of the Board of Directors were re-elected. Additionally, the re-appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the 2010 fiscal year was ratified and the appointment of Grant Thornton LLP as the Company's independent auditors for the 2011 fiscal year was approved.
W.P. Stewart & Co., Ltd. is an asset management company that has provided research-intensive equity management services to clients throughout the world since 1975. The Company is headquartered in New York, New York and has additional operations or affiliates in Europe.
The Company's shares are currently traded on the Pink Sheets under the symbol "WPSL".
For more information, please visit the Company's website at http://www.wpstewart.com, or call W.P. Stewart Investor Relations at 1-888-695-4092 (toll-free within the United States) or 1-212-750-8585 (outside the United States) or e-mail to IRINFO@wpstewart.com. Statements made in this release concerning our assumptions, expectations, beliefs, intentions, plans or strategies are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ from those expressed or implied in these statements. Such risks and uncertainties include, without limitation, the effects of the Company's corporate reorganization, the adverse effect from a decline or volatility in the securities markets, the general downturn in the economy, the effects of economic, financial or political events, a loss of client accounts, inability of the Company to attract or retain qualified personnel, a challenge to our former U.S. tax status, competition from other companies, changes in government policy or regulation, a decline in the Company's products' performance, inability of the Company to implement its operating strategy, the effects of the Company's delisting and deregistration under the U.S. Securities Act of 1934, inability of the Company to manage unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations, industry capacity and trends, changes in demand for the Company's services, changes in the Company's business strategy or development plans and contingent liabilities. The information in this release is as of the date of this release, and will not be updated as a result of new information or future events or developments.
| W.P. Stewart & Co., Ltd. | ||
| Condensed Consolidated Statements of Financial Condition | ||
|
June 30, 2011 |
December 31, 2010 |
|
| (unaudited) | ||
| Assets: | ||
| Cash and cash equivalents | $ 22,056,639 | $ 23,676,690 |
| Fees receivable | 142,958 | 204,718 |
| Investments in unconsolidated affiliates | 2,017,832 | 2,017,832 |
| Receivables from affiliates, net | 286,731 | 536,784 |
| Investments, trading (cost $1,190,401 at June 30, 2011 and $1,719,847 at December 31, 2010, respectively) | 2,855,289 | 2,058,284 |
| Investments, available for sale (cost $12,400 at June 30, 2011 and December 31, 2010 respectively) | 29,090 | 23,730 |
| Furniture, equipment, software and leasehold improvements (net of accumulated depreciation and amortization of $1,765,722 and $3,570,177 at June 30, 2011 and December 31, 2010, respectively) | 481,978 | 418,081 |
| Income taxes receivable | 1,349,506 | 4,795,996 |
| Deferred income taxes receivable | 513,484 | 437,392 |
| Other assets | 1,497,794 | 2,582,134 |
| $ 31,231,301 | $ 36,751,641 | |
| Liabilities and Shareholders' Equity: | ||
| Liabilities: | ||
| Employee compensation and benefits payable | $ 709,308 | $ 2,633,827 |
| Fees payable | 80,850 | 163,898 |
| Vendor payables | 2,313,339 | 2,719,774 |
| Accrued expenses and other liabilities | 5,459,426 | 5,334,677 |
| 8,562,923 | 10,852,176 | |
| Shareholders' Equity: | ||
| Common shares, $0.01 par value (12,500,000 shares authorized; 5,024,036 and 5,379,036 shares issued, 5,021,536 and 5,376,536 shares outstanding at June 30, 2011 and December 31, 2010 respectively) | 50,240 | 53,790 |
| Additional paid-in-capital | 137,861,279 | 138,134,599 |
| Accumulated other comprehensive income | 571,602 | 566,310 |
| Retained earnings/(deficit) | (115,809,418) | (112,849,909) |
|
Common shares held in treasury, at cost, $0.01 par value (2,500 shares at December 31, 2010 and June 30, 2011) |
(5,325) | (5,325) |
| 22,668,378 | 25,899,465 | |
| $ 31,231,301 | $ 36,751,641 | |
| W.P. Stewart & Co., Ltd. | |||
| Unaudited Condensed Consolidated Statements of Operations | |||
| For the Six Months Ended June 30, | |||
| 2011 | 2010 | % | |
| Revenue: | |||
|
Fees (includes fees from affiliates of $499,666 and $461,776 for 2010 and 2009, respectively) |
$ 8,092,121 | $ 8,363,030 | -3.24% |
| Commissions | 0 | 369,599 | -100.00% |
| Realized and unrealized gains/(losses) on investments | 76,226 | 544,975 | -86.01% |
| Interest and other | 133,796 | 1,318,393 | -89.85% |
| 8,302,143 | 10,595,997 | -21.65% | |
| Expenses: | |||
| Employee compensation and benefits | 5,843,534 | 8,070,014 | -27.59% |
| Fees paid out | 810,922 | 915,017 | -11.38% |
| Commissions, clearance and trading | (770) | 264,104 | -100.29% |
| Research and administration | 2,253,758 | 2,624,692 | -14.13% |
| Marketing | 741,555 | 598,000 | 24.01% |
| Depreciation and amortization | 73,455 | 43,068 | 70.56% |
| Other operating | 1,490,490 | 1,980,328 | -24.74% |
| 11,212,944 | 14,495,223 | -22.64% | |
| Income/(loss) before taxes | (2,910,801) | (3,899,226) | -25.35% |
| Provision/(benefit) for taxes | 48,711 | 1,009,529 | -95.17% |
| Net income/(loss) | $ (2,959,512) | $ (4,908,755) | -39.71% |
| Earnings/(loss) per share: | |||
| Basic earnings/(loss) per share | $ (0.60) | $ (0.92) | -34.78% |
| Diluted earnings/(loss) per share | $ (0.60) | $ (0.92) | -34.78% |
| W.P. Stewart & Co., Ltd. | |||||
| Net Flows of Assets Under Management* | |||||
| (in millions) | |||||
| For the Three Months Ended | For the Six Months Ended | ||||
| Jun. 30, 2011 | Mar. 31, 2011 | Jun. 30, 2010 | Jun. 30, 2011 | Jun. 30, 2010 | |
| Existing Accounts: | |||||
| Contributions | $ 22 | $ 38 | $ 42 | $ 60 | $ 56 |
| Withdrawals | (29) | (57) | (29) | (86) | (49) |
| Net Flows of Existing Accounts | (7) | (19) | 13 | (26) | 7 |
| Publicly Available Funds: | |||||
| Contributions | 5 | 14 | 24 | 19 | 70 |
| Withdrawals | (15) | (6) | (40) | (21) | (49) |
| Direct Accounts Opened | 2 | 6 | 12 | 8 | 36 |
| Direct Accounts Closed | (43) | (59) | (15) | (102) | (44) |
| Net New Flows | (51) | (45) | (19) | (96) | 13 |
| Net Flows of Assets Under Management | $ (58) | $ (64) | $ (6) | $ (122) | $ 20 |
| * The table above sets forth the total net flows of assets under management for the three months ended June 30, 2011, March 31, 2011 and June 30, 2010, respectively, and for the six months ended June 30, 2011 and 2010, respectively, which include changes in net flows of existing accounts and net new flows (net contributions to our publicly available funds and flows from new accounts minus closed accounts). The table excludes total capital appreciation or depreciation in assets under management with the exception of the amount attributable to withdrawals and closed accounts. | |||||