LaBranche & Co Inc. Reports Third Quarter 2009 Results
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NEW YORK--(BUSINESS WIRE)-- LaBranche & Co Inc. (NYSE: LAB) (the "Company") today reported financial results for the third quarter and nine months ended September 30, 2009. The Company reported an after-tax net loss of $8.9 million, or $0.17 per share, for the 2009 third quarter, which includes a pre-tax unrealized gain on the Company's shares of NYSE Euronext, Inc. common stock (the "NYX shares") of $5.1 million. This compares to a net loss of $5.6 million, or $0.09 per share, for the 2008 third quarter, which included a $31.9 million pre-tax unrealized loss on the Company's NYX shares.
On a pro-forma basis, the Company reported a net loss for the third quarter of 2009 of $12.0 million, or $0.22 per share, compared to pro-forma net income of $13.6 million, or $0.22 per share, for the third quarter of 2008. These pro-forma results exclude the unrealized gain on the NYX shares in the third quarter of 2009 and the unrealized loss on the NYX shares in the third quarter of 2008.
The Company reported an after-tax net loss of $25.3 million, or $0.45 per share, for the nine months ended September 30, 2009, which compares to a net loss of $67.2 million, or $1.08 per share, for the nine months ended September 30, 2008.
On a pro-forma basis, the Company reported a net loss for the nine months ended September 30, 2009 of $28.6 million, or $0.51 per share, compared to pro-forma net income of $23.1 million, or $0.37 per share, for the nine months ended September 30, 2008. These pro-forma results exclude both the unrealized (gain) loss on the NYX shares and the income (loss) on early extinguishment of debt as reported in the attached reconciliation of Non-GAAP Financial Measures in each period.
The Company is the parent of LaBranche & Co. LLC, one of the largest market-makers in exchange-listed securities. The Company is also the parent of LaBranche Structured Holdings, Inc., whose subsidiaries are market-makers in options, exchange-traded funds and futures on various exchanges domestically and internationally. Another subsidiary of the Company, LaBranche Financial Services, LLC, provides mainly securities execution and brokerage services to institutional investors.
Certain statements contained in this release, including without limitation, statements containing the words "believes", "intends", "expects", "anticipates", and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such forward-looking statements are not guarantees of future performance, and since such statements involve risks and uncertainties, the actual results and performance of the Company and the industry may turn out to be materially different from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company also disclaims any obligation to update its view of any such risks or uncertainties or to publicly announce the result of any revisions to the forward-looking statements made in this release.
LaBranche & Co Inc.
Condensed Consolidated Statements of Operations
(all data in thousands, except per share data)
(unaudited)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
REVENUES:
Net gain on
principal $ 5,017 $ 84,634 $ 16,039 $ 189,731
transactions
Commissions 17,290 10,890 54,342 30,849
and other fees
Net gain
(loss) on 6,183 (35,343 ) 3,222 (153,112 )
investments
Interest 46 16,129 1,956 63,523
income
Other 719 1,000 3,238 2,403
Total revenues 29,255 77,310 78,797 133,394
Interest
Expense:
Debt 5,388 6,455 16,445 25,822
Inventory 5,270 23,841 16,360 75,461
financing
Total interest 10,658 30,296 32,805 101,283
expense
Revenues, net
of interest 18,597 47,014 45,992 32,111
expense
EXPENSES:
Employee
compensation 14,296 34,955 36,022 83,079
and related
benefits
Exchange,
clearing and 10,491 12,357 28,123 32,758
brokerage fees
Lease of
exchange
memberships 361 429 1,171 1,272
and trading
license fees
Depreciation
and 1,033 925 2,980 2,722
amortization
of intangibles
Early
extinguishment -- -- (762 ) 6,005
of debt
Other 7,439 7,215 22,665 21,483
Total expenses 33,620 55,851 90,199 147,319
Loss before
benefit for (15,023 ) (8,867 ) (44,207 ) (115,208 )
income taxes
Benefit for (6,123 ) (3,280 ) (18,873 ) (48,046 )
income taxes
Loss
applicable to $ (8,900 ) $ (5,587 ) $ (25,334 ) $ (67,162 )
common
stockholders
Weighted
average common
shares
outstanding:
Basic 53,638 61,946 55,790 61,931
Diluted 53,638 61,946 55,790 61,931
Loss per
common share:
Basic $ (0.17 ) $ (0.09 ) $ (0.45 ) $ (1.08 )
Diluted $ (0.17 ) $ (0.09 ) $ (0.45 ) $ (1.08 )
LaBranche & Co Inc.
Condensed Consolidated Statements of Financial Condition
(all data in thousands)
September 30, 2009 December 31, 2008
ASSETS (unaudited) (audited)
Cash and cash equivalents $ 155,612 $ 304,179
Cash and securities segregated under 1,727 1,876
federal regulations
Receivable from brokers, dealers and 60,783 91,354
clearing organizations
Receivable from customers 16,664 --
Financial instruments owned, at fair 3,607,081 3,175,968
value
Exchange memberships owned, at adjusted
cost
(market value of $5,371 and $3,910, 1,202 1,202
respectively)
Office equipment and leasehold
improvements, at cost, less accumulated
depreciation and amortization of $14,177 15,232 16,522
and $14,362, respectively
Goodwill and other intangible assets, net 109,229 109,229
Deferred tax assets 7,151 --
Income tax receivable 10,318 --
Other assets 18,543 31,285
Total assets $ 4,003,542 $ 3,731,615
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to brokers, dealers and clearing $ 396,250 $ 105,037
organizations
Payable to customers 4,859 36
Financial instruments sold, but not yet 2,965,290 2,855,420
purchased, at fair value
Accrued compensation 6,371 75,747
Accounts payable and other accrued 27,266 29,179
expenses
Other liabilities 12,730 12,840
Income tax payable 3,005 5,834
Deferred tax liabilities -- 5,349
Long term debt 189,323 199,323
Total liabilities 3,605,094 3,288,765
Total stockholders' equity 398,448 442,850
Total liabilities and stockholders' $ 4,003,542 $ 3,731,615
equity
LaBranche & Co Inc. Regulation G Requirement: Reconciliation of Non-GAAP Financial Measures (all data in thousands, except per share data) (unaudited) In evaluating the Company's financial performance, management reviews results from operations, which excludes non-operating charges. Pro-forma earnings per share is a non-GAAP (generally accepted accounting principles) performance measure, but the Company believes that it is useful to assist investors in gaining an understanding of the trends and operating results for the Company's core business. Pro-forma earnings per share should be viewed in addition to, and not in lieu of, the Company's reported results under U.S. GAAP. The following is a reconciliation of U.S. GAAP results to pro-forma results for the periods presented:
Three Months Ended September 30,
2009 2008
Amounts (1) (2) Pro Amounts (1) (2) Pro
as forma as forma
reported Adjustments amounts reported Adjustments amounts
Revenues,
net of $18,597 $(5,141) (1) $13,456 $47,014 $31,937 (1) $78,951
interest
expense
Total 33,620 -- 33,620 55,881 -- 55,881
expenses
(Loss)
income
before
(benefit) (15,023) (5,141) (20,164) (8,867) 31,937 23,070
provision
for income
taxes
(Benefit)
provision (6,123) (2,056) (8,179) (3,280) 12,775 9,495
for income
taxes
(Loss)
income $
applicable $(8,900) $(3,085) (11,985) $(5,587) $19,162 $13,575
to common
stockholders
Basic per $(0.17) $(0.05) $(0.22) $(0.09) $0.31 $0.22
share
Diluted per $(0.17) $(0.05) $(0.22) $(0.09) $0.31 $0.22
share
Nine Months Ended September 30,
2009 2008
Amounts (1) (2) Pro forma Amounts (1) (2) Pro
as amounts as forma
reported Adjustments reported Adjustments amounts
Revenues,
net of $45,992 $(4,734) $41,258 $32,111 $144,389 $176,500
interest (1) (1)
expense
Total 90,199 762 (2) 90,961 147,319 (6,005) (2) 141,314
expenses
(Loss)
income
before
(benefit) (44,207) (5,496) (49,703) (115,208) 150,394 35,186
provision
for income
taxes
(Benefit)
provision (18,873) (2,198) (21,071) (48,046) 60,158 12,112
for income
taxes (3)
(Loss)
income $
applicable (25,334) $(3,298) $(28,632) $(67,162) $90,236 $23,074
to common
stockholders
Basic per $(0.45) $(0.06) $(0.51) $(1.08) $1.45 $0.37
share
Diluted per $(0.45) $(0.06) $(0.51) $(1.08) $1.45 $0.37
share
__________________
Revenue adjustment reflects (gain) loss in each accounting period, based on
(1) the change in fair market value of the Company's NYX shares at the end of
each such period versus the beginning of such period.
(2) Expense adjustment reflects the (income) expense associated with early
extinguishment of the Company's debt in accounting period.
In the first quarter of 2008, the Company recognized a tax benefit due to
(3) the release of a tax reserve for an expired tax year, which resulted in a
reduced provision for income taxes.
Source: LaBranche & Co Inc.
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