Oppenheimer Holdings Inc. Reports Second Quarter 2024 Earnings
The elevated interest rate environment resulted in improved interest revenue though the high interest rates also contributed to a significant decline in our
While we are somewhat disappointed in our earnings for the quarter, they were particularly impacted by the lack of follow through in underwriting revenue after a strong first quarter. We continue to believe that our investment in senior personnel will pay off in future quarters as those markets strongly re-open. Results from the Wealth Management business continue to be strong amidst the background of a very strong equity market.
The Company ended the quarter with a strong balance sheet and record book value per share levels. We remain focused on both attracting new financial advisors and retaining existing advisors while concurrently attracting qualified professionals to our investment banking platform and building our Equity and Fixed Income groups in order to position us well for growth as we move into the second half of 2024."
Summary Operating Results (Unaudited) |
||
('000s, except per share amounts or otherwise indicated) |
||
Firm |
2Q-24 |
2Q-23 |
Revenue |
$ 330,589 |
$ 306,189 |
Compensation Expenses |
$ 220,727 |
$ 187,224 |
Non-compensation Expenses |
$ 93,997 |
$ 130,664 |
Pre-Tax Income (Loss) |
$ 15,865 |
$ (11,699) |
Income Tax Provision (Benefit) |
$ 5,599 |
$ (2,131) |
Net Income (Loss) (1) |
$ 10,266 |
$ (9,400) |
Earnings Per Share (Basic) (1) |
$ 0.99 |
$ (0.85) |
Earnings Per Share (Diluted) (1) |
$ 0.92 |
$ (0.85) |
Book Value Per Share |
$ 78.63 |
$ 71.77 |
Tangible Book Value Per Share (2) |
$ 61.56 |
$ 56.29 |
Private Client |
|
|
Revenue |
$ 208,701 |
$ 201,245 |
Pre-Tax Income |
$ 55,537 |
$ 20,794 |
|
$ 126.0 |
$ 113.2 |
Asset Management |
|
|
Revenue |
$ 25,826 |
$ 22,198 |
Pre-Tax Income |
$ 8,694 |
$ 6,534 |
Assets Under Management (billions) |
$ 47.5 |
$ 41.2 |
Capital Markets |
|
|
Revenue |
$ 92,141 |
$ 79,582 |
Pre-Tax Loss |
$ (21,775) |
$ (14,051) |
|
|
|
(1) Attributable to |
||
(2) Represents book value less goodwill and intangible assets divided by number of shares outstanding. |
Highlights
- Increased revenue for the second quarter of 2024 was primarily driven by significantly higher advisory fees attributable to a rise in billable assets under management ("AUM") as well as improved investment banking and interest revenues
- Assets under administration and under management were both at record levels at
June 30, 2024 , benefiting from market appreciation and positive net asset flows - Compensation expenses increased from the prior year quarter largely as a result of higher incentive compensation expenses, share-based compensation costs and production-related expenses
- Non-compensation expenses decreased from the prior year quarter primarily due to lower legal costs partially offset by higher interest expense
- Book value and tangible book value per share reached new record highs as a result of positive earnings
Private Client
Private Client reported revenue for the current quarter of
('000s, except otherwise indicated) |
||
|
2Q-24 |
2Q-23 |
|
|
|
Revenue |
|
|
Commissions |
|
|
Advisory Fees |
|
|
Bank Deposit Sweep Income |
|
|
Interest |
|
|
Other |
$ 8,410 |
|
|
|
|
Total Expenses |
|
|
Compensation |
|
|
Non-compensation |
|
|
|
|
|
Pre-Tax Income |
|
|
|
|
|
Compensation Ratio |
56.3 % |
49.5 % |
Non-compensation Ratio |
17.1 % |
40.2 % |
|
26.6 % |
10.3 % |
|
|
|
|
$ 126.0 |
$ 113.2 |
Cash Sweep Balances (billions) |
$ 2.9 |
$ 3.9 |
Revenue:
- Retail commissions increased 16.5% from a year ago primarily due to higher retail trading activity
- Advisory fees increased 15.4% due to higher AUM during the billing period for the current quarter when compared to the second quarter of last year
- Bank deposit sweep income decreased
$9.2 million from a year ago due to lower cash sweep balances - Interest revenue decreased modestly from the prior year period due to lower stock borrow income
- Other revenue decreased from a year ago primarily due to smaller movements in the cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in the fair value of the policies' underlying investments
Total Expenses:
- Compensation expenses increased 18.0% from a year ago primarily due to higher production related and share-based compensation expenses
- Non-compensation expenses decreased 55.8% from a year ago primarily due to lower legal costs
Asset Management
Asset Management reported revenue for the current quarter of
('000s, except otherwise indicated) |
||
|
2Q-24 |
2Q-23 |
|
|
|
Revenue |
$ 25,826 |
$ 22,198 |
Advisory Fees |
$ 26,241 |
$ 22,196 |
Other |
$ (415) |
$ 2 |
|
|
|
Total Expenses |
$ 17,132 |
$ 15,664 |
Compensation |
$ 6,120 |
$ 6,283 |
Non-compensation |
$ 11,012 |
$ 9,381 |
|
|
|
Pre-Tax Income |
$ 8,694 |
$ 6,534 |
|
|
|
Compensation Ratio |
23.7 % |
28.3 % |
Non-compensation Ratio |
42.6 % |
42.3 % |
|
33.7 % |
29.4 % |
|
|
|
AUM (billions) |
$ 47.5 |
$ 41.2 |
Revenue:
- Advisory fee revenue increased 18.2% from a year ago due to increased management fees resulting from the higher net value of billable AUM during the current quarter
Assets under Management (AUM):
- AUM increased to
$47.5 billion atJune 30, 2024 , a new record high, which is the basis for advisory fee billings forJuly 2024 - The increase in AUM was comprised of higher asset values of
$6.1 billion on existing client holdings and a net contribution of$0.2 billion in new client assets
Total Expenses:
- Compensation expenses were down 2.6% from a year ago primarily resulting from decreases in incentive compensation
- Non-compensation expenses were up 17.4% when compared to the prior year period mostly due to higher external portfolio management costs which are directly related to the increase in AUM
Capital Markets
Capital Markets reported revenue for the current quarter of
('000s) |
|
|
|
2Q-24 |
2Q-23 |
|
|
|
Revenue |
|
|
|
|
|
Investment Banking |
|
|
Advisory Fees |
|
|
Equities Underwriting |
|
$ 5,478 |
Fixed Income Underwriting |
$ 2,815 |
$ 1,867 |
Other |
$ 386 |
$ 459 |
|
|
|
|
|
|
Equities |
|
|
Fixed Income |
|
|
|
|
|
Other |
$ 676 |
$ 617 |
|
|
|
Total Expenses |
|
|
Compensation |
|
|
Non-compensation |
|
|
|
|
|
Pre-Tax Loss |
|
|
|
|
|
Compensation Ratio |
79.5 % |
77.0 % |
Non-compensation Ratio |
44.1 % |
40.7 % |
|
(23.6) % |
(17.7) % |
Revenue:
Investment Banking
- Advisory fees earned from investment banking activities increased 12.3% compared with a year ago due to higher M&A volumes
- Equity underwriting fees increased 104.6% when compared with a year ago due to higher new issuance volumes
- Fixed income underwriting fees were modestly higher than the prior year period
- Equities sales and trading revenue was relatively flat when compared with the prior year period
- Fixed income sales and trading revenue increased 22.3% compared with a year ago primarily due to an increase in trading income attributable to higher interest rates and volumes
Total Expenses:
- Compensation expenses increased 19.6% compared with a year ago primarily due to costs associated with opportunistic new hires and higher incentive compensation
- Non-compensation expenses were 25.5% higher than a year ago primarily due to an increase in interest expense in financing trading inventories
Other Matters
(In millions, except number of shares and per share amounts) |
||
|
2Q-24 |
2Q-23 |
Capital |
|
|
Stockholders' Equity (1) |
$ 812.1 |
$ 788.3 |
|
$ 460.7 |
$ 417.5 |
|
$ 439.7 |
$ 394.7 |
|
|
|
Common Stock Repurchases |
|
|
Repurchases |
$ 0.9 |
$ 3.6 |
Number of Shares |
23,102 |
96,135 |
Average Price |
$ 40.01 |
$ 37.43 |
|
|
|
Period End Shares |
10,327,510 |
10,984,240 |
Effective Tax Rate |
35.3 % |
18.2 % |
|
|
|
(1) Attributable to Oppenheimer Holdings Inc. |
||
(2) Attributable to |
- The Board of Directors announced a
$0.03 , or 20% increase in the quarterly dividend to$0.18 per share effective for the second quarter of 2024 payable onAugust 23, 2024 to holders of Class A non-voting and Class B voting common stock of record onAugust 9, 2024 - Compensation expense as a percentage of revenue was higher at 66.8% during the current period versus 61.1% during the same period last year due to opportunistic new hires and increased share based compensation costs
- The effective tax rate for the current period was 35.3% compared with 18.2% for the prior year period. The effective tax rate for the second quarter of 2024 was negatively impacted by permanent items and non-deductible losses in non-
U.S. businesses.
Company Information
Forward-Looking Statements
This press release includes certain "forward-looking statements" relating to anticipated future performance. For a discussion of the factors that could cause future performance to be different than anticipated, reference is made to Factors Affecting "Forward-Looking Statements" and Part 1A – Risk Factors in the Company's Annual Report on Form 10-K for the year ended
|
||||||||||||
Consolidated Income Statements (Unaudited) |
||||||||||||
('000s, except number of shares and per share amounts) |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||||||
|
|
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
$ 97,055 |
|
$ 88,544 |
|
9.6 |
|
$ 192,905 |
|
$ 175,241 |
|
10.1 |
|
Advisory fees |
117,197 |
|
101,015 |
|
16.0 |
|
232,044 |
|
201,559 |
|
15.1 |
|
Investment banking |
29,119 |
|
19,978 |
|
45.8 |
|
79,656 |
|
57,943 |
|
37.5 |
|
Bank deposit sweep income |
34,846 |
|
44,060 |
|
(20.9) |
|
71,531 |
|
92,969 |
|
(23.1) |
|
Interest |
34,805 |
|
27,320 |
|
27.4 |
|
61,571 |
|
52,261 |
|
17.8 |
|
Principal transactions, net |
10,074 |
|
16,253 |
|
(38.0) |
|
28,308 |
|
29,743 |
|
(4.8) |
|
Other |
7,493 |
|
9,019 |
|
(16.9) |
|
17,712 |
|
18,152 |
|
(2.4) |
|
Total revenue |
330,589 |
|
306,189 |
|
8.0 |
|
683,727 |
|
627,868 |
|
8.9 |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses |
220,727 |
|
187,224 |
|
17.9 |
|
442,440 |
|
393,516 |
|
12.4 |
|
Communications and technology |
24,682 |
|
22,783 |
|
8.3 |
|
49,258 |
|
45,223 |
|
8.9 |
|
Occupancy and equipment costs |
15,516 |
|
16,440 |
|
(5.6) |
|
31,364 |
|
32,341 |
|
(3.0) |
|
Clearing and exchange fees |
6,780 |
|
5,927 |
|
14.4 |
|
12,622 |
|
12,190 |
|
3.5 |
|
Interest |
21,980 |
|
17,467 |
|
25.8 |
|
42,528 |
|
30,609 |
|
38.9 |
|
Other |
25,039 |
|
68,047 |
|
(63.2) |
|
52,195 |
|
106,639 |
|
(51.1) |
|
Total expenses |
314,724 |
|
317,888 |
|
(1.0) |
|
630,407 |
|
620,518 |
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income (Loss) |
15,865 |
|
(11,699) |
|
* |
|
53,320 |
|
7,350 |
|
625.4 |
|
Income tax provision (benefit) |
5,599 |
|
(2,131) |
|
* |
|
17,310 |
|
2,454 |
|
605.4 |
|
Net Income (Loss) |
$ 10,266 |
|
$ (9,568) |
|
* |
|
$ 36,010 |
|
$ 4,896 |
|
635.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to non-controlling interest, net of tax |
— |
|
(168) |
|
* |
|
(310) |
|
(321) |
|
* |
|
Net income (loss) attributable to |
$ 10,266 |
|
$ (9,400) |
|
* |
|
$ 36,320 |
|
$ 5,217 |
|
596.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ 0.99 |
|
$ (0.85) |
|
* |
|
$ 3.49 |
|
$ 0.47 |
|
642.6 |
|
Diluted |
$ 0.92 |
|
$ (0.85) |
|
* |
|
$ 3.29 |
|
$ 0.44 |
|
647.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
||||
|
Basic |
10,327,818 |
|
11,016,430 |
|
(6.3) |
|
10,367,636 |
|
11,054,306 |
|
(6.2) |
|
Diluted |
11,111,903 |
|
11,016,430 |
|
0.9 |
|
11,083,422 |
|
11,911,379 |
|
(7.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Period end number of common shares outstanding |
10,327,510 |
|
10,984,240 |
|
(6.0) |
|
10,327,510 |
|
10,984,240 |
|
(6.0) |
* Percentage not meaningful |
View original content:https://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2024-earnings-302207103.html
SOURCE