HOUSTON, May 10, 2011 /PRNewswire/ -- Sanders Morris
Harris Group Inc. (NASDAQ: SMHG) today reported first quarter
earnings from continuing operations of $3.0
million, or $0.10 per share.
Client assets rose to $18.2 billion,
up from $11.9 billion a year earlier.
Revenue excluding Concept Capital, the prime brokerage division
which is being spun off, rose 27.5% to $43.4
million in the quarter.
In the year earlier quarter, the Company had earnings per share
of $0.09, or $2.6 million, including $2.6 million of after-tax investment gains.
Investment gains declined to $1.0
million this year, while net income from continuing
operations before investment gains rose to $1.9 million.
The expansion of the Edelman Financial Services division
continued to track plan. Of the six New
York area offices opened in the fourth quarter of 2009,
three had a location profit in the latest three months and the
remaining three should do so in this quarter. An additional 12
Edelman Financial Services branches have commenced operation since
the beginning of 2010 and are adding client assets as expected.
Seven more branch offices are scheduled to open before the end of
the year. The net cost of the expansion in the quarter was
$0.03 a share, in line with prior
periods.
George Ball, Chairman and Chief
Executive Officer, said, "The quarter was a good one. It reflects
the near-completion of our transition to a wealth management
company. The amount of 'noise' was minor and the continuing growth
in earnings from our core operations was pleasing. It was a sound
prelude to the change in our name to The Edelman Financial Group,
the approval of which we anticipate at our annual meeting in
May."
Ric Edelman, President, who will
become Co-Chief Executive Officer at that annual meeting, noted,
"Growth in client assets and the fees that accompany them will
drive our earnings going forward. We added $293 million of net new client monies – beyond
market appreciation – in the latest quarter. A good part of that
was from the new Edelman offices, and the other divisions and
offices also did well. We expect that our plans to enhance the
Company's marketing efforts will help us even more over time."
Mr. Edelman's new weekly television program, The Truth About
Money with Ric Edelman, has
begun to air on public television stations across the nation. As it
debuts on more stations in the coming months, the show is expected
to reach 90% of the U.S. television households nationwide and be
seen by 20 million viewers in the upcoming year.
Mr. Ball added, "The growth of our Edelman division, the
Company's largest, is on a sound and rapid trajectory. With
$31 million of cash, we are able to
fund that expansion and also acquire additional investment advisory
practices."
Conference Call
The Company will host a conference call on Tuesday, May 10, 2011 to discuss first quarter
2011 financial and operational results. The call will begin at
9:00 a.m. Central Time, and is open
to the public. To listen to the conference call, use U.S. dial-in
number (800) 447-0521 or International dial-in number (847)
413-3238 and enter pass code 29707123. It is recommended that
listeners phone in at least 10 minutes before the call is scheduled
to begin to avoid delay. For those unable to listen to the live
call, a replay of the conference call in its entirety will be
available approximately two hours after its completion for 10 days
by dialing (888) 843-8996 (U.S.), (630) 652-3044 (International)
and entering the pass code 29707123#.
About Sanders Morris Harris Group
Sanders Morris Harris Group is a wealth management company that
manages approximately $18.2 billion
in client assets. Client assets include the gross value of assets
under management directly or via outside managers and assets held
in brokerage accounts for clients by outside clearing firms. Its
corporate philosophy of investment in common aligns its interests
with those of its clients. Sanders Morris
Harris has approximately 530 employees in 25 states.
Additional information is available at www.smhgroup.com.
In addition to the historical information, this press release
contains certain forward-looking and non-GAAP statements under
federal securities laws. These statements concern Sanders Morris
Harris Group's expected future business prospects, revenue and
income. These forward-looking statements are based upon current
expectations and involve certain risks and uncertainties that could
cause actual results to differ materially from any such statement.
Non-GAAP information includes operating earnings, defined as
earnings from continuing operations, adjusted for investment
portfolio gains and losses. These risks and uncertainties, many of
which are beyond the Company's control, include but are not limited
to (1) trading volume in the securities markets; (2) volatility of
the securities markets and interest rates; (3) changes in
regulatory requirements that could affect the demand for the
Company's services or the cost of doing business; (4) general
economic conditions, both domestic and foreign, especially in the
regions where the Company does business; (5) changes in the rate of
inflation and related impact on securities markets; (6) competition
from existing financial institutions and other new participants in
the securities markets; (7) legal developments affecting the
litigation experience of the securities industry; (8) successful
implementation of technology solutions; (9) changes in valuations
of the Company's trading and warrant portfolios resulting from
mark-to-market adjustments; (10) dependence on key personnel; (11)
demand for the Company's services; and (12) litigation and
securities law liabilities. The Company does not undertake any
obligation to publicly update or revise any forward-looking
statements.
Sanders
Morris Harris
Selected Condensed
Operating Information
(in thousands, except per
share amounts)
(unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
Revenue
|
$
|
43,414
|
|
$
|
43,572
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
38,480
|
|
|
41,285
|
|
|
|
|
|
|
|
|
|
Net
|
|
4,934
|
|
|
2,287
|
|
|
|
|
|
|
|
|
|
Equity in income of limited
partnerships
|
|
3,175
|
|
|
3,226
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
|
8,109
|
|
|
5,513
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
(2,092)
|
|
|
(1,675)
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations, net of income taxes
|
|
6,017
|
|
|
3,838
|
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations, net of income taxes of $74 and $507
respectively
|
|
(115)
|
|
|
(792)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
5,902
|
|
|
3,046
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to
the noncontrolling interest
|
|
(3,063)
|
|
|
(1,211)
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Sanders Morris Harris Group Inc.
|
$
|
2,839
|
|
$
|
1,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.10
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
-
|
|
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
0.10
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
common share:
|
$
|
0.10
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
-
|
|
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
$
|
0.10
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
29,168
|
|
|
29,915
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
29,930
|
|
|
29,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Sanders
Morris Harris Group Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations, net of tax
|
$
|
2,954
|
|
$
|
2,627
|
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations, net of tax
|
|
(115)
|
|
|
(792)
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
2,839
|
|
$
|
1,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP to non-GAAP
Reconciliation
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
March 31,
2011
|
|
March 31,
2010
|
|
Operating
Earnings:
|
Amount
|
Diluted
EPS
|
|
Amount
|
Diluted
EPS
|
|
Income from continuing
operations, net of tax, attributable to Sanders Morris Harris Group
Inc.
|
$
|
2,954
|
|
$
|
0.10
|
|
|
$
|
2,627
|
|
$
|
0.09
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment portfolio gains, net
of tax
|
|
(1,049)
|
|
|
(0.04)
|
|
|
|
(2,603)
|
|
|
(0.09)
|
|
|
Net operating income
|
$
|
1,905
|
|
$
|
0.06
|
|
|
$
|
24
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
29,930
|
|
|
|
|
|
|
29,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mass
Affluent
|
$
|
21,206
|
|
|
|
|
|
$
|
16,869
|
|
|
|
|
|
Other Wealth
Management
|
|
22,155
|
|
|
|
|
|
|
14,959
|
|
|
|
|
|
Wealth Management Total
|
|
43,361
|
|
|
|
|
|
|
31,828
|
|
|
|
|
|
Corporate Support
and Other
|
|
53
|
|
|
|
|
|
|
2,223
|
|
|
|
|
|
Total revenue (excluding Concept Capital)
|
$
|
43,414
|
|
|
|
|
|
$
|
34,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
31,073
|
|
|
|
|
|
|
|
|
|
|
|
|
Other tangible net
assets
|
|
83,829
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible net
assets
|
|
114,902
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
$
|
262,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanders
Morris Harris
Selected Condensed
Operating Information
(in thousands)
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2011
|
2010
|
|
Revenue:
|
|
|
|
Mass Affluent
|
$ 21,206
|
$16,869
|
|
Other Wealth
Management
|
22,155
|
14,959
|
|
Wealth Management
Total
|
43,361
|
31,828
|
|
Prime Brokerage
Services
|
-
|
9,521
|
|
Corporate Support and
Other
|
53
|
2,223
|
|
Total
|
$ 43,414
|
$43,572
|
|
|
|
|
|
Income (loss) from continuing
operations before equity in
income of limited partnerships
and income taxes:
|
|
|
|
Mass Affluent
|
$
4,780
|
$ 3,885
|
|
Other Wealth
Management
|
6,322
|
4,520
|
|
Wealth Management
Total
|
11,102
|
8,405
|
|
Prime Brokerage
Services
|
-
|
486
|
|
Corporate Support and
Other
|
(6,168)
|
(6,604)
|
|
Total
|
4,934
|
$ 2,287
|
|
|
|
|
|
Equity in income of limited
partnerships:
|
|
|
|
Mass Affluent
|
$-
|
$-
|
|
Other Wealth
Management
|
2,617
|
720
|
|
Wealth Management
Total
|
2,617
|
720
|
|
Prime Brokerage
Services
|
-
|
-
|
|
Corporate Support and
Other
|
558
|
2,506
|
|
Total
|
$
3,175
|
$ 3,226
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes:
|
|
|
|
Mass Affluent
|
$
4,780
|
$ 3,885
|
|
Other Wealth
Management
|
8,939
|
5,240
|
|
Wealth Management
Total
|
13,719
|
9,125
|
|
Prime Brokerage
Services
|
-
|
486
|
|
Corporate Support and
Other
|
(5,610)
|
(4,098)
|
|
Total
|
$
8,109
|
$ 5,513
|
|
|
|
|
|
Net income (loss) attributable
to the noncontrolling interest:
|
|
|
|
Mass Affluent
|
$
(1,147)
|
$ (933)
|
|
Other Wealth
Management
|
(2,464)
|
(505)
|
|
Wealth Management
Total
|
(3,611)
|
(1,438)
|
|
Prime Brokerage
Services
|
-
|
-
|
|
Corporate Support and
Other
|
548
|
227
|
|
Total
|
$
(3,063)
|
$ (1,211)
|
|
|
|
|
|
|
SOURCE Sanders Morris Harris Group Inc.