Greenhill & Co. Reports Fourth Quarter Earnings Per Share Of $0.51 And Annual Earnings Per Share Of $1.43
- Quarterly advisory revenues of
$76.3 million , up 1% from same period in prior year; annual advisory revenues of$280.5 million , down 2% from prior year - Compensation ratio of 49% for the fourth quarter; for the full year at 54%, consistent with the prior year
- Pre-tax profit margin of 31% for the fourth quarter; for the full year at 25%, consistent with the prior year
- Net income and earnings per share for the full year 2014 lower due to modest revenue decline and slightly higher tax rate
- For the full year 2014, repurchased 739,546 shares of our common stock and common stock equivalents, resulting in a share count essentially unchanged from the prior year-end and from our 2004 IPO
- Board authorized up to
$75.0 million of share repurchases in 2015 - Recruited Vice Chairman for our
Houston office who will focus primarily on the energy sector
The Firm's 2014 total revenues compare to total revenues of
The Firm's 2014 net income allocated to common stockholders compared to net income allocated to common stockholders of
The Firm's fourth quarter total revenues were
The Firm's fourth quarter income before tax was
The Firm's revenues, income before tax and net income can fluctuate materially depending on the number and size of completed transactions on which it advised, the size of investment gains (or losses), the level of expenses, the tax rate and other factors. Accordingly, the revenues and net income in any particular period may not be indicative of future results.
"We are pleased that in 2014 we again achieved our long stated corporate objectives in relation to our pre-tax profit margin, our dividend and our share count. After several consecutive years of achieving our fourth such objective, an increase in our share of the global advisory fee pool, we fell short in 2014 with essentially a flat revenue outcome. There were several factors that led to this revenue outcome, including a relatively modest increase in completed transaction activity for the market as a whole, the fact that our important foreign markets saw less improvement than the U.S. market, a strong dollar that diminished the value of overseas fees and some personnel changes that we believe will enhance the long term potential of the Firm. We are encouraged that our second half advisory revenue was nearly 50% higher than the first half's, and that we expect a stronger start to 2015. Despite the inevitable year to year variations that reflect the unpredictable nature of the deal business, we believe that our shareholders will be well served for the long term by our continued dedication to the principles that have made us unique: being solely focused on advising clients, having one unified global team of bankers operating under our brand, emphasizing productivity and profitability as well as growth, and returning significant capital to shareholders via a strong dividend as well as significant share repurchases,"
"2014 was a year in which we advised many prominent new clients for the first time on transactions as well as many longtime clients on repeat transactions. The breadth of our advisory activities beyond M&A was impressive, with a variety of important financing advisory roles and a very strong performance by our capital advisory team in real estate fund raising assignments. And from a regional perspective, our revenue contribution from
For the full year 2014, the number of completed transactions globally increased by 7% as compared to 2013, while the volume of completed transactions (reflecting the sum of all transaction sizes) increased 16%. The number of announced transactions globally increased by 14% in 2014 as compared to 2013, while the volume of announced transactions rose by 40%. 1
1 Source: Thomson Financial as of
Revenues
Revenues by Source
The following provides a breakdown of total revenues by source for the three month periods and years ended
For the Three Months Ended |
|||||||||||||
December 31, 2014 |
|
||||||||||||
Amount |
% of Total |
Amount |
% of Total |
||||||||||
(in millions, unaudited) |
|||||||||||||
Advisory revenues |
$ |
76.3 |
100 |
% |
$ |
75.4 |
99 |
% |
|||||
Investment revenues |
0.3 |
— |
% |
0.9 |
1 |
% |
|||||||
Total revenues |
$ |
76.6 |
100 |
% |
$ |
76.3 |
100 |
% |
For the Year Ended |
|||||||||||||
|
|
||||||||||||
Amount |
% of Total |
Amount |
% of Total |
||||||||||
(in millions, unaudited) |
|||||||||||||
Advisory revenues |
$ |
280.5 |
102 |
% |
$ |
287.0 |
100 |
% |
|||||
Investment revenues |
(5.2) |
(2) |
% |
0.2 |
— |
% |
|||||||
Total revenues |
$ |
275.3 |
100 |
% |
$ |
287.2 |
100 |
% |
Summarized below is historical advisory revenues by client location and industry for each of the prior five year periods ended
Historical Financial Advisory Revenues by Client Location
For the Year Ended |
||||||||||||||
2014 |
2013 |
2012 |
2011 |
2010 |
||||||||||
|
59 |
% |
52 |
% |
60 |
% |
48 |
% |
57 |
% |
||||
|
30 |
% |
33 |
% |
22 |
% |
22 |
% |
20 |
% |
||||
|
9 |
% |
12 |
% |
14 |
% |
22 |
% |
15 |
% |
||||
|
2 |
% |
3 |
% |
4 |
% |
8 |
% |
8 |
% |
Historical Financial Advisory Revenues by Industry
For the Year Ended |
||||||||||||||
2014 |
2013 |
2012 |
2011 |
2010 |
||||||||||
Communications & Media |
12 |
% |
9 |
% |
7 |
% |
7 |
% |
7 |
% |
||||
Consumer Goods & Retail |
16 |
% |
14 |
% |
8 |
% |
13 |
% |
6 |
% |
||||
Energy & Utilities |
% |
7 |
% |
11 |
% |
8 |
% |
14 |
% |
|||||
Financial Services |
11 |
% |
13 |
% |
7 |
% |
22 |
% |
17 |
% |
||||
Healthcare |
15 |
% |
16 |
% |
9 |
% |
12 |
% |
7 |
% |
||||
Real Estate, Lodging & Leisure |
2 |
% |
4 |
% |
5 |
% |
6 |
% |
6 |
% |
||||
Technology |
1 |
% |
6 |
% |
13 |
% |
2 |
% |
4 |
% |
||||
|
25 |
% |
20 |
% |
31 |
% |
21 |
% |
38 |
|||||
Capital Advisory (Fund Placement) |
11 |
% |
11 |
% |
9 |
% |
9 |
% |
1 |
% |
Advisory Revenues
Full Year
For the year ended
In 2014, we advised on transactions for the first time for such leading companies around the world as AA Limited, Anixter International Inc., Boart Longyear Ltd., Cerner Corporation, Dillard's Inc., London Stock Exchange Group plc, MannKind Corporation, Nippon Television Holdings, Reckitt Benckiser and Voya Financial, Inc. We also advised on new transactions for historic clients such as Actavis plc, Alcoa Inc., AT&T Inc., Gannett Co., Inc., Tesco plc, TUI AG and Validus Holdings, Ltd.
By geographic region in 2014, our advisory revenues were relatively well dispersed throughout the regional markets in which we operate with an increased contribution from
By industry sector in 2014, improved performance in the communications & media, consumer & retail and general industrials sectors generally offset a decline in activity in the technology, real estate and financial sectors.
While merger and acquisition assignments continued to be our largest revenue source, we benefited from a significant increase in revenue from financing and restructuring advisory assignments.
During 2014, our capital advisory group served as global placement agent on behalf of private equity and real estate funds for eight final closings of the sale of limited partnership interests in such funds. For 2014, we generated 11% of our advisory revenues from our capital advisory business, which was consistent with the prior year, despite narrowing our focus primarily to real estate funds.
We earned advisory revenues from 135 different clients in 2014 compared to 143 in 2013. Of this group of clients, 39% were new to the Firm in 2014. We earned
Fourth Quarter
Advisory revenues were
Completed assignments in the fourth quarter of 2014 included:
- the acquisition by Alcoa Inc. of
Firth Rixson Limited ; - the sale of AT&T's wireline operations in the
State of Connecticut to Frontier Communications; - the representation of the Board of Directors of Boart Longyear Ltd. in connection with its recapitalization transactions with certain affiliates of
Centerbridge Partners, L.P. ; - the acquisition by
The Boler Company ofFrauenthal Automative Sales GmbH ; - the sale by
The Boler Company of its 50% equity stake in Muelles yBallestas Hispano-Alemanas, S.A. to its co-shareholderInvest Ziur, S.L .; - the representation of the Detroit Retirement Systems in connection with the
City of Detroit's Chapter 9 bankruptcy proceedings; - the representation of Dillard's, Inc. on a strategic alliance relating to its credit card business with Wells Fargo & Company;
- the acquisition by Dometic Group AB of Atwood Mobile Products;
- the acquisition by Gannett Co., Inc. of
Cars.com ; - the acquisition by London Stock Exchange Group plc of Frank Russell Company;
- the merger of
QR Energy, LP with Breitburn Energy Partners LP; - the sale by
Modern Star Pty Ltd of its shares toNavis Capital ; - the acquisition by Nippon Television Holdings of
Tipness Limited fromSuntory Holdings and Marubeni Corporation; - the sale by Nuplex Industries of its specialty chemicals and masterbatch businesses to CHAMP Private Equity;
- the merger by TUI AG with TUI Travel Plc;
- the acquisition by Validus Holdings, Ltd. of
Western World Insurance Group, Inc. ; and - the representation of the Independent Committee of the Board of Directors of Voya Financial, Inc. in connection with the repurchase of shares from ING Groep N.V.
During the fourth quarter of 2014, our capital advisory group served as global placement agent on behalf of private equity and real estate funds for three interim closings and two final closing of the sale of limited partnership interests in such funds.
In
In addition,
Investment Revenues
Since we exited the merchant banking business in 2010, we have sought to realize value from our principal investments in Iridium Communications Inc. ("Iridium") and previously sponsored merchant banking funds. We completed the liquidation of our investment in Iridium in 2013. During 2014, we substantially completed our goal of fully exiting our historic merchant banking investments.
At
The following table sets forth additional information relating to our investment revenues (losses) for the three month periods and years ended
For the Three Months Ended |
For the Years Ended |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
(in millions, unaudited) |
|||||||||||||||
Net realized and unrealized gain (loss) on investments in merchant banking funds
|
$ |
— |
$ |
1.1 |
$ |
(6.6) |
$ |
(1.9) |
|||||||
Net realized and unrealized gain (loss) in Iridium |
— |
(0.5) |
— |
0.8 |
|||||||||||
Deferred gain on sale of certain merchant banking assets |
— |
— |
0.2 |
0.2 |
|||||||||||
Interest income |
0.3 |
0.3 |
1.2 </td> |
1.1 |
|||||||||||
Total investment revenues (losses) |
$ |
0.3 |
$ |
0.9 |
$ |
(5.2) |
$ |
0.2 |
Full Year
For the year ended
Fourth Quarter
For the fourth quarter of 2014, the Firm recorded investment revenues of
Expenses
Operating Expenses
Full Year
For the year ended
Fourth Quarter
Our total operating expenses for the fourth quarter of 2014 were
The following table sets forth information relating to our operating expenses for the three month periods and years ended
For the Three Months Ended |
For the Year Ended |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
(in millions, unaudited) |
|||||||||||||||
Employee compensation and benefits expenses |
$ |
37.6 |
$ |
40.5 |
$ |
147.6 |
$ |
155.7 |
|||||||
% of revenues |
49 |
% |
53 |
% |
54 |
% |
54 |
% |
|||||||
Non-compensation expenses |
15.1 |
14.7 |
60.2 |
60.3 |
|||||||||||
% of revenues |
20 |
% |
19 |
% |
22 |
% |
21 |
% |
|||||||
Total operating expenses |
52.7 |
55.2 |
207.8 |
215.9 |
|||||||||||
% of revenues |
69 |
% |
72 |
% |
75 |
% |
75 |
% |
|||||||
Total income before tax |
24.0 |
21.2 |
67.5 |
71.2 |
|||||||||||
Pre-tax profit margin |
31 |
% |
28 |
% |
25 |
% |
25 |
% |
|||||||
Compensation and Benefits Expenses
Full Year
For the year ended
Fourth Quarter
Our employee compensation and benefits expenses in the fourth quarter of 2014 were
Our compensation expense is generally based upon revenues and can fluctuate materially in any particular period depending upon the changes in headcount, amount of revenues recognized, as well as other factors. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in a future period.
Non-Compensation Expenses
Full Year
For the year ended
Non-compensation expenses as a percentage of revenues for 2014 were 22% compared to 21% for 2013. The slight increase in non-compensation expenses as a percentage of revenues resulted from the spreading of comparable costs over lower total revenues in 2014 as compared to 2013.
Fourth Quarter
Our non-compensation expenses were
Non-compensation expenses as a percentage of revenues for the three months ended
Our non-compensation expenses as a percentage of revenues can vary as a result of a variety of factors including fluctuation in revenue amounts, changes in headcount, the amount of recruiting and business development activity, the amount of office expansion, the amount of reimbursement of engagement-related expenses by clients, the amount of short-term borrowings, interest rate and currency movements and other factors. Accordingly, the non-compensation expenses as a percentage of revenues in any particular period may not be indicative of the non-compensation expenses as a percentage of revenues in future periods.
Provision for Income Taxes
Full Year
For the year ended
The decrease in the provision for income taxes of
Fourth Quarter
For the fourth quarter of 2014, the provision for income taxes was
The increase in the provision for income taxes in the fourth quarter of 2014 of
The effective tax rate can fluctuate as a result of variations in the relative amounts of advisory and investment income earned and the tax rate imposed in the tax jurisdictions in which the Firm operates and invests. Accordingly, the effective tax rate in any particular period may not be indicative of the effective tax rate in future periods.
Liquidity and Capital Resources
As of
During the fourth quarter, the Firm repurchased 122,735 shares of its common stock in open market purchases and 24,481 restricted stock units from employees at the time of vesting to settle tax liabilities, in aggregate, at an average price of
For the full year 2014, the Firm repurchased 334,935 shares of its common stock in open market purchases and 404,611 restricted stock units from employees at the time of vesting to settle tax liabilities, for an aggregate of 739,546 shares of our common stock and common stock equivalents repurchased at an average price of
The Board of Directors of
Dividend
The Board of Directors of
Earnings Call
Greenhill will host a conference call beginning at
Investors and analysts may participate in the live conference call by dialing (888) 317- 6003 (toll-free domestic) or (412) 317- 6061 (international); passcode: 5676028. Please register at least 10 minutes before the conference call begins. The conference call will also be accessible as an audio webcast through the Investor Relations section of Greenhill's website at www.greenhill.com. There is no charge to access the call.
For those unable to listen to the live broadcast, a replay of the call will be available for one month via telephone starting approximately one hour after the call ends. The replay can be accessed at (877) 344 - 7529 (toll-free domestic) or (412) 317 - 0088 (international); passcode: 10059420.
Cautionary Note Regarding Forward-Looking Statements
The preceding discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear below. We have made statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "intend", "predict", "potential" or "continue", the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined under ''Risk Factors'' in our Report on Form 10-K for the fiscal year 2013. We are under no duty and we do not undertake any obligation to update or review any of these forward-looking statements after the date on which they are made, whether as a result of new information, future developments or otherwise.
|
|||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
(In thousands, except share and per share data) |
|||||||||||||||
For the Three Months |
For the Year Ended |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
Revenues |
|||||||||||||||
Advisory revenues |
$ |
76,341 |
$ |
75,412 |
$ |
280,452 |
$ |
286,908 |
|||||||
Investment revenues |
308 |
916 |
(5,218) |
244 |
|||||||||||
Total revenues |
76,649 |
76,328 |
275,234 |
287,152 |
|||||||||||
Expenses |
|||||||||||||||
Employee compensation and benefits |
37,578 |
40,464 |
147,552 |
155,666 |
|||||||||||
Occupancy and equipment rental |
4,895 |
4,772 |
18,983 |
18,094 |
|||||||||||
Depreciation and amortization |
781 |
849 |
3,228 |
4,461 |
|||||||||||
Information services |
2,007 |
2,279 |
8,625 |
8,299 |
|||||||||||
Professional fees |
1,573 |
1,377 |
5,651 |
5,427 |
|||||||||||
Travel related expenses |
2,852 |
2,425 |
11,386 |
11,785 |
|||||||||||
Interest expense |
260 |
227 |
1,238 |
996 |
|||||||||||
Other operating expenses |
2,753 |
2,765 |
11,101 |
11,218 |
|||||||||||
Total expenses |
52,699 |
55,158 |
207,764 |
215,946 |
|||||||||||
Income before taxes |
23,950 |
21,170 |
67,470 |
71,206 |
|||||||||||
Provision for taxes |
8,727 |
5,390 |
24,082 |
24,524 |
|||||||||||
Net income allocated to common stockholders |
$ |
15,223 |
$ |
15,780 |
$ |
43,388 |
$ |
46,682 |
|||||||
Average shares outstanding: |
|||||||||||||||
Basic |
30,086,601 |
29,971,743 |
30,354,227 |
30,134,430 |
|||||||||||
Diluted |
30,087,767 |
30,001,226 |
30,357,691 |
30,160,669 |
|||||||||||
Earnings per share: |
|||||||||||||||
Basic |
$ |
0.51 |
$ |
0.53 |
$ |
1.43 |
$ |
1.55 |
|||||||
Diluted |
$ |
0.51 |
$ |
0.53 |
$ |
1.43 |
$ |
1.55 |
|||||||
Dividends declared and paid per share |
$ |
0.45 |
$ |
0.45 |
$ |
1.80 |
$ |
1.80 |
Contact:
Christopher T. Grubb
Chief Financial Officer
(212) 389-1800
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/greenhill--co-reports-fourth-quarter-earnings-per-share-of-051-and-annual-earnings-per-share-of-143-300027316.html
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