KBW, Inc. (KBW) Misses Q3 EPS Views; Appoints New CEO; To Cut 80 Positions
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KBW, Inc. (NYSE: KBW) reported Q3 EPS of ($0.47), $0.52 worse than the analyst estimate of $0.05. Revenue for the quarter came in at $50.4 million versus the consensus estimate of $82.52 million.
Thomas B. Michaud has been appointed Chief Executive Officer and President and Andrew M. Senchak has been appointed Chairman of the Board. Previously Mr. Michaud had been Chief Operating Officer and Mr. Senchak had been a Vice Chairman and President of the Company. John G. Duffy will stay with the Company, serving as Vice Chairman of the Board. Each of Messrs. Michaud, Senchak and Duffy will continue to be members of the Company’s Board of Directors. These appointments have been approved by the Board and became effective on October 27, 2011.
The Company also announced the implementation of a workforce reduction program, in light of sustained uncertainty in global market and economic conditions and the continued low level of capital markets and merger and acquisitions activity in the financial services sector.
The employee reduction plan is expected to result in a decrease in the Company’s workforce of approximately 80 full time employees. A portion of these employee reductions occurred in the third quarter and have continued into the fourth quarter, through a combination of terminations and selective decisions to not replace certain departing employees. It is estimated that the Company will incur severance costs of approximately $5 million. Severance costs of $1.8 million were included in the results for the third quarter and the remainder is expected to be included in the fourth quarter results. The annualized salary and benefits expense associated with the employees included in this plan is approximately $13 million in the aggregate. In addition to the headcount reduction, other cost reduction initiatives are underway, including significantly reducing the use of consultants and temporary employees, as well as efforts to reduce other non-compensation expenses.
Thomas B. Michaud has been appointed Chief Executive Officer and President and Andrew M. Senchak has been appointed Chairman of the Board. Previously Mr. Michaud had been Chief Operating Officer and Mr. Senchak had been a Vice Chairman and President of the Company. John G. Duffy will stay with the Company, serving as Vice Chairman of the Board. Each of Messrs. Michaud, Senchak and Duffy will continue to be members of the Company’s Board of Directors. These appointments have been approved by the Board and became effective on October 27, 2011.
The Company also announced the implementation of a workforce reduction program, in light of sustained uncertainty in global market and economic conditions and the continued low level of capital markets and merger and acquisitions activity in the financial services sector.
The employee reduction plan is expected to result in a decrease in the Company’s workforce of approximately 80 full time employees. A portion of these employee reductions occurred in the third quarter and have continued into the fourth quarter, through a combination of terminations and selective decisions to not replace certain departing employees. It is estimated that the Company will incur severance costs of approximately $5 million. Severance costs of $1.8 million were included in the results for the third quarter and the remainder is expected to be included in the fourth quarter results. The annualized salary and benefits expense associated with the employees included in this plan is approximately $13 million in the aggregate. In addition to the headcount reduction, other cost reduction initiatives are underway, including significantly reducing the use of consultants and temporary employees, as well as efforts to reduce other non-compensation expenses.
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