NEW YORK, April 12, 2012 (GLOBE NEWSWIRE) -- W.P. Stewart & Co., Ltd. Reports Second Half and Full Year 2011 Financial Results & Provides Corporate Update, Including:
- AUM of $1.6 Billion at March 31, 2012
- Cash/Marketable Securities of $22.4 Million at April 12, 2012
Financial Results
Second Half Highlights
W.P. Stewart & Co., Ltd. ("W.P. Stewart" or the "Company") today reported a net loss on a GAAP basis of -$5.0 million, or -$1.05 per share (diluted) and -$1.05 per share (basic), for the six months ended December 31, 2011 compared to a loss on a GAAP basis of -$6.6 million in the second half of 2010, or -$1.28 per share (diluted) and -$1.28 per share (basic).
On a cash basis the Company reported a net loss of -$2.8 million, or -$0.59 per share (diluted) and -$0.59 per share (basic), for the six months ended December 31, 2011 compared to a loss on a cash basis of -$2.0 million in the second half of 2010 or -$0.40 per share (diluted) and -$0.40 per share (basic). The cash basis results reflect adjustments to net income of $2.2 million and $4.6 million in the second half of 2011 and 2010, respectively, representing non-cash income and expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization, and other non-cash charges, on a tax-effected basis.
The GAAP results above include the following charges (the "Excluded Charges"):
- In the second half of 2011, charges of $652,000 or $0.13 share (diluted), on a tax-effected basis, primarily related to:
- Professional fees incurred in connection with (1) the acquisition of Bowen Asia Limited, as more fully described below, (2) ongoing NY State and Federal tax audits, (3) tax services associated with the redomestication, (4) placement fees and (5) other charges, and
- An adjustment to tax assets and liabilities.
- In the second half of 2010, charges of $2.6 million or $0.50 per share (diluted), on a tax-effected basis, primarily related to:
- Professional fees incurred in connection with (1) the reorganization of our U.S. mutual fund, (2) the exploration of a strategic transaction that was not completed and (3) the corporate restructuring of the Company and certain of its formerly Bermuda-based subsidiaries that was concluded in May 2010 as previously reported,
- Severance payments and non-cash compensation charges related to employees whose employment terminated during the period,
- Other costs relating to corporate consolidation and cost rationalization efforts, and
- An adjustment to tax assets and liabilities.
Excluding these Excluded Charges, the net loss on a GAAP basis for the six months ended December 31, 2011 was -$4.3 million, or -$0.92 per share (diluted) compared to the net loss on a GAAP basis for the six months ended December 31, 2010 of -$4.0 million, or -$0.78 per share (diluted).
Full Year 2011 Highlights
For the year ended December 31, 2011 the net loss on a GAAP basis was -$8.0 million, or -$1.64 per share (diluted) and -$1.64 per share (basic), compared to a loss on a GAAP basis of -$11.5 million in for the year ended December 31, 2010, or -$2.20 per share (diluted) and -$2.20 per share (basic).
On a cash basis the Company reported a net loss of -$3.3 million, or -$0.68 per share (diluted) and -$0.68 per share (basic), for the year ended December 31, 2011 compared to a loss on a cash basis of -$2.7 million for the year ended December 31, 2010, or -$0.51 per share (diluted) and -$0.51 per share (basic). The cash basis results reflect adjustments to net income of $4.6 million and $8.8 million in 2011 and 2010, respectively, representing non-cash income and expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization, and other non-cash charges, on a tax-effected basis.
The GAAP results above include the following Excluded Charges:
- In 2011, charges of $652,000 or $0.13 per share (diluted), on a tax-effected basis, primarily related to:
- Professional fees incurred in connection with (1) the acquisition of Bowen Asia Limited, as more fully described below, (2) ongoing NY State and Federal tax audits, (3) tax services associated with the redomestication, (4) placement fees and (5) other charges, and
- An adjustment to tax assets and liabilities.
- In 2010, charges of $3.2 million or $0.61 per share (diluted), on a tax-effected basis, primarily related to:
- Professional fees incurred in connection with (1) the reorganization of our U.S. mutual fund, (2) the exploration of a strategic transaction that was not completed and (3) the corporate restructuring of the Company and certain of its formerly Bermuda-based subsidiaries that was concluded in May 2010 as previously reported,
- Severance payments and non-cash compensation charges related to employees whose employment terminated during the period,
- Other costs relating to corporate consolidation and cost rationalization efforts, and
- An adjustment to tax assets and liabilities.
Excluding these Excluded Charges, the net loss on a GAAP basis for the year ended December 31, 2011 was -$7.3 million, or -$1.51 per share (diluted) compared to the net loss for the year ended December 31, 2010 of -$8.3 million, or -$1.59 per share (diluted).
Included in this release are tables containing revenue and expense detail for the six months and year ended December 31, 2011 with comparisons to prior periods.
Second-Half & Full Year Business Commentary
- The second-half of 2011 saw the Company impacted by the general aversion to equities due to macroeconomic concerns regarding the sovereign debt crisis in Europe and growth in the U.S. and China. A decrease in AUM related to both the decrease in the S&P and client outflows.
As a result of that decrease and given the Company's practice of billing in advance, revenues were $7.7 million for the six months ended December 31, 2011, down 15% from $9.1 million for the same period in the prior year. Revenues were $16.0 million for the full year ended December 31, 2011, compared to $19.7 million for 2010.
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As the markets recovered in the fourth quarter of 2011, the general attitude toward equities began to reverse with an increase in AUM through market appreciation and new flows. However, this recovery began from a lower AUM base.
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At year end, the Company earned a performance fee for W.P. Stewart Holdings Fund when that Luxembourg registered SICAV exceeded its high-water mark.
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During 2011, the Company completed the ancillary work related to redomestication and restructuring begun in 2009 and concluded in May 2010. Total operating expenses for the six months ended December 31, 2011 were $12.6 million, including $652,000 in Excluded Charges, on a tax-effected basis, compared to $14.6 million, including $2.6 million in Excluded Charges, on a tax-effected basis for the second half of 2010.
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Cost control continues to be a primary focus. Total operating expenses for the year ended December 31, 2011 were $23.8 million, including $652,000 in Excluded Charges, on a tax-effected basis, this compares to total operating expenses for the year ended December 31, 2010 of $29.1 million, including $2.0 million in non-recurring charges on a tax-effected basis. The nature of the Excluded Charges related to both years is described above.
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A UCITS IV fund available to non-U.S. investors, with potential for multiple classes was launched in Luxemburg in late 2011 for the Company's Global and US products. The introduction of this structure represents a significant investment in our continued growth.
- In 2011, the Company added another year of relative outperformance to our longer-term track records of 37 years for our US product and 8 years for our Global product. Building upon the strong absolute and relative performance of recent years, both strategies ranked in the top quartiles of their respective PSN peer groups for the three-year period ending December 31, 2011.
Investment Performance and Assets Under Management Update
The performance for the W.P. Stewart U.S. Equity Composite (the "Composite") for the year ended December 31, 2011, was 3.2%, gross, and 2.2%, net, compared with 2.1% for the S&P 500. For the three years ending December 31, 2011, annualized performance for the Composite was 16.4%, gross, and 15.4%, net, which was 1.3% ahead of the S&P 500 at 14.1% for the same period.
As of March 31, 2012, year-to-date performance for the Composite was 17.7%, gross, and 17.5%, net, compared with 12.6% for the S&P 500. For the one year period ending March 31, 2012, performance for the Composite was 20.2%, gross, and 19.1%, net, compared with 8.5% for the S&P 500. For the three years ending March 31, 2012, annualized performance for the Composite was 24.5%, gross, and 23.4%, net, compared with 23.4% for the S&P 500 for the same period.
Interim monthly and quarterly performance for the Composite for 2012 is posted on the Company's website at www.wpstewart.com.
Assets under management ("AUM") at March 31, 2012 were approximately $1.6 billion (preliminary), compared with approximately $1.4 billion at December 31, 2011 and $1.6 billion at December 31, 2010. In the attached tables a complete breakdown of AUM flows for the year ended December 31, 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.
The Company had cash and marketable securities at December 31, 2011 of $21.5 million. The Company has no debt. As of April 12, 2012, the Company had cash and marketable securities balances of approximately $22.4 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 is expected to shortly distribute its assets, including the proceeds of the sale, to its joint venture partners, The Bank of Bermuda and the Company.
Other Items
For the six months and year ended December 31, 2011 non-cash compensation expense related to the Company's restricted share issuances to employees was approximately $2.1 million and $4.2 million, respectively. For the same periods of the prior year, these non-cash compensation charges were approximately $3.0 million and $5.5 million, respectively. These non-cash compensation expenses are included in "employee compensation and benefits".
The Company's provision/(benefit) for taxes for the six months ended December 31, 2011 was $65,796 versus $1.0 million in the comparable period of the previous year, and was $114,507 versus $2.1 million for the years ended December 31, 2011 and 2010, respectively. The Company is currently engaged in audits with two taxing authorities.
Shareholders' equity at December 31, 2011 was approximately $19.5 million.
The Company has entered into an agreement to purchase all the outstanding shares of Bowen Asia Limited, a Hong Kong private limited company, for a nominal amount. The purchase is subject to certain closing conditions, including approval of the Hong Kong Securities and Futures Commission. The Company has agreed to provide Bowen with sufficient cash (whether by loan or otherwise) in order that Bowen is able to make certain payments at the closing of the transaction in an amount not to exceed $275,000. The Company had previously indirectly held a minority interest in Bowen until December 2009 when it sold its interest for a nominal amount plus an option to purchase a certain amount of shares for $1 under certain circumstances. At December 31, 2011, Bowen had approximately $35 million in assets under management. The Company has been working closely with Bowen since 2004 on the Asian investments in the Global portfolio.
Please see the tables included in this release for further detail on revenue and expenses for the six months and full years ended December 31, 2011 and 2010.
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.
| SUMMARY of KEY COMPARATIVE STATISTICS | ||||||
|
For the Six Months Ending December 31 |
For the Year Ending December 31 |
|||||
| 2011 | 2010 | 2011 | 2010 | |||
| Revenue (in millions) | $ 7.7 | $ 9.1 | -15.8% | $ 16.0 | $ 19.7 | -18.9% |
| Total Operating Expenses (in millions) | $ 12.6 | $ 14.6 | -14.1% | $ 23.8 | $ 29.1 | -18.4% |
| AUM (in billions) | $ 1.38 | $ 1.63 | -15.3% | $ 1.38 | $ 1.63 | -15.3% |
| Average Gross Management Fee - Annualized | ||||||
| Including Performance Fee accounts2 | 0.98% | 1.07% | 1.00% | 1.06% | ||
| Excluding Performance Fee accounts2 | 1.21% | 1.27% | 1.24% | 1.27% | ||
| Common shares outstanding | 4,752,763 | 5,155,550 | 4,845,922 | 5,234,651 | ||
| (weighted adv. diluted & basic basis) | ||||||
| GAAP BASIS | ||||||
| Net Income (in millions) | ||||||
| Before Excluded Charges1 | $ (5.0) | $ (6.6) | 24.4% | $ (8.0) | $ (11.5) | 30.9% |
| Excluded Charges1&3 | $ (0.7) | $ (2.6) | 75.0% | $ (0.7) | $ (3.2) | 79.6% |
| Net of Excluded Charges1 | $ (4.3) | $ (4.0) | -8.4% | $ (7.3) | $ (8.3) | 12.3% |
| Earnings per Share (Basic & Diluted) | ||||||
| Before Excluded Charges1 | $ (1.05) | $ (1.28) | 18.0% | $ (1.64) | $ (2.20) | 25.5% |
| Excluded Charges1&3 | $ (0.13) | $ (0.50) | 74.0% | $ (0.13) | $ (0.61) | 78.7% |
| Net of Excluded Charges1 | $ (0.92) | $ (0.78) | -17.9% | $ (1.51) | $ (1.59) | 5.0% |
| CASH BASIS | ||||||
| Net Income (in millions) | ||||||
| As Reported | $ (5.0) | $ (6.6) | 24.4% | $ (8.0) | $ (11.5) | 30.9% |
| Excluded Non-cash Income & Expenses4 | $ 2.2 | $ 4.6 | 52.1% | $ 4.6 | $ 8.8 | 47.5% |
| Net of Non-cash Income & Expenses4 | $ (2.8) | $ (2.0) | -37.2% | $ (3.3) | $ (2.7) | -23.4% |
| Earnings per Share (Basic & Diluted) | ||||||
| As Reported | $ (1.05) | $ (1.28) | 18.0% | $ (1.64) | $ (2.20) | 25.5% |
| Excluded Non-cash Income & Expenses4 | $ (0.46) | $ (0.88) | 47.7% | $ (0.96) | $ (1.69) | 43.2% |
| Net of Non-cash Income & Expenses4 | $ (0.59) | $ (0.40) | -47.5% | $ (0.68) | $ (0.51) | -33.3% |
| 1 Excluded Charges: See prior descriptions and details in the Press Release text | ||||||
| 2 Performance fee based accounts, pay a lower quarterly base fee plus an annual performance fee at year-end if earned | ||||||
| 3 On a tax effected basis | ||||||
| 4 Non-cash Income & Expenses: Consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization, and other non-cash charges on a tax-effected basis | ||||||
| W.P. Stewart & Co., Ltd. | ||
| Condensed Consolidated Statements of Financial Condition | ||
| December 31, 2011 | December 31, 2010 | |
| Assets: | ||
| Cash and cash equivalents | $ 18,076,603 | $ 23,676,690 |
| Fees receivable | 119,443 | 204,718 |
| Investments in unconsolidated affiliates | 2,017,832 | 2,017,832 |
| Receivables from affiliates, net | 1,423,414 | 536,784 |
| Investments, trading (cost $2,220,237 and $1,719,847 for 2011 and 2010, respectively) | 2,624,718 | 2,058,284 |
| Investments, available for sale (cost $762,400 and $12,400 for 2011 and 2010 respectively) | 770,610 | 23,730 |
| Furniture, equipment, software and leasehold improvements (net of accumulated depreciation and amortization of $1,525,021 and $3,570,177 for 2011 and 2010, respectively) | 463,866 | 418,081 |
| Income taxes receivable | 1,338,184 | 4,795,996 |
| Deferred income taxes receivable | 413,176 | 437,392 |
| Other assets | 1,775,705 | 2,582,134 |
| $ 29,023,551 | $ 36,751,641 | |
| Liabilities and Shareholders' Equity: | ||
| Liabilities: | ||
| Employee compensation and benefits payable | $ 1,935,628 | $ 2,633,827 |
| Fees payable | 356,613 | 163,898 |
| Vendor payables | 1,766,166 | 2,719,774 |
| Accrued expenses and other liabilities | 5,424,914 | 5,334,677 |
| 9,483,321 | 10,852,176 | |
| Shareholders' Equity: | ||
| Common shares, $0.01 par value (12,500,000 shares authorized; 5,019,219 and 5,379,036 shares issued, 5,016,719 and 5,376,536 shares outstanding at December 31, 2011 and December 31, 2010 respectively) | 50,192 | 53,790 |
| Additional paid-in-capital | 139,711,936 | 138,134,599 |
| Accumulated other comprehensive income | 584,196 | 566,310 |
| Retained earnings/(deficit) | (120,800,769) | (112,849,909) |
| Common shares held in treasury, at cost, $0.01 par value (2,500 shares at December 31, 2011 and December 31, 2010) | (5,325) | (5,325) |
| 19,540,230 | 25,899,465 | |
| $ 29,023,551 | $ 36,751,641 | |
| W.P. Stewart & Co., Ltd. | ||||
| Unaudited Condensed Consolidated Statements of Operations | ||||
| For the Year Ended December 31, | ||||
| 2011 | 2010 | % | ||
| Revenue: | ||||
| Fees | $ 15,846,034 | $ 16,077,616 | -1.44% | |
| Commissions | -- | 781,623 | -100.00% | |
| Realized and unrealized gains/(losses) on investments | (65,975) | 1,279,339 | -105.16% | |
| Interest and other | 179,049 | 1,548,042 | -88.43% | |
| 15,959,108 | 19,686,620 | -18.93% | ||
| Expenses: | ||||
| Employee compensation and benefits | 12,566,305 | 16,569,791 | -24.16% | |
| Fees paid out | 2,023,905 | 1,666,712 | 21.43% | |
| Commissions, clearance and trading | -- | 486,392 | -100.00% | |
| Research and administration | 4,595,484 | 5,047,545 | -8.96% | |
| Marketing | 1,557,360 | 1,360,920 | 14.43% | |
| Depreciation and amortization | 115,997 | 90,791 | 27.76% | |
| Other operating | 2,936,413 | 3,922,337 | -25.14% | |
| 23,795,464 | 29,144,488 | -18.35% | ||
| Income/(loss) before taxes | (7,836,356) | (9,457,868) | 17.14% | |
| Provision/(benefit) for taxes | 114,507 | 2,054,783 | -94.43% | |
| Net income/(loss) | $ (7,950,863) | $ (11,512,651) | 30.94% | |
| Earnings/(loss) per share: | ||||
| Basic earnings/(loss) per share | $ (1.64) | $ (2.20) | 25.45% | |
| Diluted earnings/(loss) per share | $ (1.64) | $ (2.20) | 25.45% | |
| W.P. Stewart & Co., Ltd. | |||
| Unaudited Condensed Consolidated Statements of Operations | |||
| For the Six Months Ended December 31, | |||
| 2011 | 2010 | % | |
| Revenue: | |||
| Fees | $ 7,753,913 | $ 7,714,586 | 0.51% |
| Commissions | -- | 412,024 | -100.00% |
| Realized and unrealized gains/(losses) on investments | (142,201) | 734,364 | -119.36% |
| Interest and other | 45,253 | 229,649 | -80.29% |
| 7,656,965 | 9,090,623 | -15.77% | |
| Expenses: | |||
| Employee compensation and benefits | 6,722,771 | 8,499,777 | -20.91% |
| Fees paid out | 1,212,983 | 751,695 | 61.37% |
| Commissions, clearance and trading | 770 | 222,288 | -99.65% |
| Research and administration | 2,341,726 | 2,422,853 | -3.35% |
| Marketing | 815,805 | 762,920 | 6.93% |
| Depreciation and amortization | 42,542 | 47,723 | -10.86% |
| Other operating | 1,445,923 | 1,942,009 | -25.54% |
| 12,582,520 | 14,649,265 | -14.11% | |
| Income/(loss) before taxes | (4,925,555) | (5,558,642) | 11.39% |
| Provision/(benefit) for taxes | 65,796 | 1,045,254 | -93.71% |
| Net income/(loss) | $ (4,991,351) | $ (6,603,896) | 24.42% |
| Earnings/(loss) per share: | |||
| Basic earnings/(loss) per share | $ (1.05) | $ (1.28) | 17.97% |
| Diluted earnings/(loss) per share | $ (1.05) | $ (1.28) | 17.97% |
| W.P. Stewart & Co., Ltd. | ||||||||||
| Net Flows of Assets Under Management* | ||||||||||
| (in millions) | ||||||||||
| For the Six Months Ended | For the Year Ended | |||||||||
| Dec. 31, 2011 | Jun. 30, 2011 | Dec. 31, 2010 | Dec. 31, 2011 | Dec. 31, 2010 | ||||||
| Existing Accounts: | ||||||||||
| Contributions | $ 30 | $ 60 | $ 46 | $ 90 | $ 102 | |||||
| Withdrawals | (97) | (86) | (47) | (183) | (96) | |||||
| Net Flows of Existing Accounts | (67) | (26) | (1) | (93) | 6 | |||||
| Publicly Available Funds: | ||||||||||
| Contributions | 12 | 19 | 78 | 31 | 148 | |||||
| Withdrawals | (49) | (21) | (60) | (70) | (109) | |||||
| Direct Accounts Opened | 11 | 8 | 4 | 19 | 40 | |||||
| Direct Accounts Closed | (30) | (102) | (47) | (132) | (91) | |||||
| Net New Flows | (56) | (96) | (25) | (152) | (12) | |||||
| Net Flows of Assets Under Management | $ (123) | $ (122) | $ (26) | $ (245) | $ (6) | |||||
| * The table above sets forth the total net flows of assets under management for the six months ended December 31, 2011, June 30, 2011 and December 31, 2010, respectively, and for the years ended December 31, 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. | ||||||||||