EX-99.1 2 c55637_ex99-1.htm c55637_ex99-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
Exibit 99.1

NEWS RELEASE

Contacts:
Michael Lacovara, Chief Executive Officer
(212) 356-0513

Financial Dynamics
Julie Prozeller / Hannah Sloane
212-850-5600

Rodman & Renshaw Capital Group, Inc. Announces Financial Results for the Third Quarter 2008

New York, NY, November 13, 2008 – Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) today announced its results for the third quarter ended September 30, 2008.

Total revenue for the quarter was $8.6 million, representing a decrease of 11.2% from $9.6 million in the third quarter of 2007. Excluding principal transactions revenue, which registered a loss of $4.9 million for the quarter primarily due to severe market volatility in the last two weeks of September that adversely impacted the value of its warrant positions, the Company reported revenue of $13.5 million. The Company reported a net loss of $2.9 million, or $(0.08) per share, for the quarter, compared to net loss of $3.7 million, or $(0.15) per share, for the third quarter of 2007. The Company reported a net loss on a non-U.S. GAAP basis of $2.5 million, or $(0.07) per share, compared to a net income of $0.03 million, or less than $0.01 per share, for the third quarter of 2007.1

“On an operating basis, Rodman performed reasonably well during the quarter, increasing banking revenue compared to the third quarter of 2007, and we were on track to record a profit until the sudden and severe market reversals late into September. We, like everyone else, were affected by the adverse market developments in the final weeks of the quarter, which both delayed transactions that were scheduled to close in the quarter and led to significant erosion in the value of our warrant positions,” commented Michael Lacovara, Chief Executive Officer of Rodman & Renshaw. “Despite the late-quarter reversals, we remain confident in the resiliency of our long-term business model and the future of Rodman.”

“Fundamentally, we continue to realign our assets to drive revenue, to keep our expenses under control, to build a robust pipeline, and to maintain adequate cash to support our business. We have enhanced our position in the healthcare sector with the recent transition of Michael King from Director of Research to Head of Healthcare, which will allow Mike to interact with clients in revenue generating ways. Although we cannot predict the future direction of the markets, we are well positioned to weather the storm and emerge a stronger player once the markets normalize.”

“Finally, let me say a word about the price of our stock. I believe our stock price decline reflects indiscriminate selling across the financial services sector and that our stock price has become largely divorced from the fundamentals of our business today, much less our prospects as we continue to grow. For that reason, I intend to purchase Rodman stock as soon as our policies will permit, and I expect that other members of management and our board may do the same. ”

OPERATING RESULTS

Investment Banking

Investment banking revenue was $11.9 million for the quarter, compared to $8.8 million in investment banking revenue in the third quarter of 2007.

  • Private placement and underwriting revenue for the quarter was $8.4 million, compared to $6.4 million in the third quarter of 2007. During the quarter, the Company completed 13 financing transactions with an average transaction size of $11.4 million, compared to 9 financing transactions with an average transaction size of $16.2 million in the third quarter of 2007.

  • Strategic advisory fees for the quarter were $3.5 million, compared to $2.3 million in the third quarter of 2007.

__________________________

1 Reconciliation between GAAP and non-GAAP results can be found in the accompanying tables.

Sales & Trading

  • Commissions for the quarter were $1.4 million, compared to $1.3 million in the third quarter of 2007.

  • Principal transaction losses for the quarter were $4.9 million, compared to losses of $0.5 million in the third quarter of 2007 due to market volatility in the second half of September.

Conference Fees

There was no conference fee revenue for the third quarter of 2008, or during the prior-year period. Revenue from conference fees is booked in the quarter in which the conference occurs.

Operating Expenses

Total operating expenses were $12.8 million for the quarter, compared to $9.4 million in the third quarter of 2007. The expenses for the third quarter of 2008 include employee compensation and benefits, professional and consulting fees and occupancy and equipment rentals. For the quarter, expenses, net of pre-offering stock compensation expense, were $12.2 million, compared to $9.0 million in the third quarter of 2007.

  • Compensation Expense

Employee compensation and benefits expense for the quarter, including pre-offering stock compensation expense, was $5.9 million, compared to $4.9 million in the third quarter of 2007.

Excluding pre-offering stock compensation expense of $0.6 million, employee compensation and benefits expense for the quarter was $5.3 million, compared to $4.5 million in the third quarter of 2007.

Employee compensation and benefits expense for the third quarter, excluding pre-offering stock compensation expense, represented 40% of Transaction Related Revenue (revenue excluding principal transactions), compared to 45% in the third quarter of 2007.

  • Non-Compensation Expense

Non-compensation expense for the quarter was $6.9 million, compared to $4.5 million in the third quarter of 2007.

Capital

At September 30, 2008 stockholders’ equity was $70.0 million. Cash and cash equivalents was $23.5 million. Liquid assets were $31.9 million, consisting of cash and cash equivalents, “Level I” assets and current receivables. Book value per common share was $1.73. Book value per common share is based on common shares outstanding including unvested and vested restricted stock and restricted stock units.

Conference Call details

A conference call with management to discuss the financial results for the third quarter of 2008 will be held today at 10:00 AM Eastern time. Investors can participate in the conference call by dialing (888)-713-4214 (domestic) or (617)-213-4866 (international). The passcode for the call is 17334564. The call is being webcast by Thomson/CCBN and can be accessed through the Rodman & Renshaw Capital Group, Inc. website at www.rodm.com as well as the Thomson/CCBN link: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=122722&eventID=1999984

The conference will be replayed in its entirety beginning at 12:00 PM on November 13, 2008, through to 11:59 PM on November 20, 2008. If you wish to listen to the replay of this conference call, please dial (888)-286-8010 (domestic) or (617)-801-6888 (international) and enter passcode 98566943.

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About Rodman & Renshaw Capital Group, Inc.

Rodman & Renshaw Capital Group, Inc. is a holding company with a number of direct and indirect subsidiaries, including Rodman & Renshaw, LLC, Rodman Principal Investments, LLC, and Miller Mathis & Co., LLC.

Rodman & Renshaw, LLC is a full service investment bank dedicated to providing investment banking services to companies that have significant recurring capital needs due to their growth and development strategies, along with research and sales and trading services to investor clients that focus on such companies. Rodman is a leading investment banking firm with particular emphasis on “essential” industries with significant capital needs, including health care (especially life science), energy (especially upstream oil and gas), ferrous and non-ferrous metals, shipping, and natural resources, as well as a leader in the PIPE (private investment in public equity) and RD (registered direct placements) transaction markets.

MEMBER FINRA, SIPC

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements regarding future events and financial performance. In some cases, you can identify these statements by words such as “may,” “might,” “will,” “should,” “except,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms and other comparable terminology. These statements involve a number of risks and uncertainties and are based on numerous assumptions involving judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. There are or may be important factors that could cause our actual results to materially differ from our historical results or from any future results expressed or implied by such forward looking statements.

These factors include, but are not limited to, those discussed under the section entitled “Risk Factors” in our Annual Report on Form 10-K, filed March 14, 2008, which is available at the Securities and Exchange Commission website at www.sec.gov. The forward-looking statements in this press release are based upon management's reasonable belief as of the date hereof. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

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RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH AND
NICE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)

  For the Three Months Ended          For the Nine Months Ended
   September 30   September 30
    2008       2007       2008       2007  
Revenues:                              
   Investment banking $ 11,924,042     $ 8,755,133     $ 43,109,263     $ 47,247,785  
   Principal transactions   (4,923,590 )     (529,713 )     3,857,846       2,207,345  
   Commissions   1,396,131       1,326,007       4,694,586       4,932,244  
   Conference fees   -       -       842,865       719,009  
   Interest and other income   166,053       94,008       771,148       472,755  
          Total revenues $ 8,562,636     $ 9,645,435     $ 53,275,708     $ 55,579,138  
 
Operating expenses:                              
   Employee compensation and benefits   5,945,111       4,922,660       26,700,793       31,344,369  
   Other employee benefits   172,614       121,419       422,647       322,512  
   Conference fees   130,197       208,374       2,732,099       2,352,867  
   Broker dealer commissions   50,479       46,915       210,679       143,539  
   Professional and consulting fees   2,401,144       1,563,500       4,391,487       3,395,024  
   Business development   723,242       656,734       2,364,418       2,090,278  
   Advertising   356,417       -       590,245       -  
   Communication and market research   718,883       575,186       1,882,461       1,464,593  
   Office   150,635       139,681       391,590       541,560  
   Occupancy and equipment rentals   999,249       348,226       1,904,538       953,625  
   Clearance and execution charges   118,805       109,017       342,392       206,867  
   Depreciation and amortization   762,447       141,355       1,216,303       466,168  
   Impairment of goodwill   -       375,717       1,065,000       375,717  
   Other   298,464       206,032       1,075,729       662,179  
          Total operating expenses   12,827,687       9,414,816       45,290,381       44,319,298  
 
 Operating (loss) income   (4,265,051 )     230,619       7,985,327       11,259,840  
 
   Interest expenses   -       (2,978,709 )     -       (3,771,570 )
 
 (Loss) Income from continuing operations before                              
income taxes   (4,265,051 )     (2,748,090 )     7,985,327       7,488,270  
   Income tax benefit (expense)   1,414,710       (849,579 )     (3,734,119 )     (1,201,443 )
   (Loss) Income from continuing operations   (2,850,341 )     (3,597,669 )     4,251,208       6,286,827  
 (Loss) Income from discontinued operations   -       (97,522 )     -       45,088  
 Net (loss) income $ (2,850,341 )   $ (3,695,191 )   $ 4,251,208     $ 6,331,915  
 
Weighted average common shares outstanding:                              
   Basic   33,732,827       24,330,826       33,224,150       20,239,245  
   Diluted   33,732,827       24,330,826       34,861,772       21,328,663  
 
Net (loss) per share – basic                              
   Income (loss) from continuing operations $ (0.08 )   $ (0.15 )   $ 0.13     $ 0.31  
   Income (loss) from discontinued operations   -       -       -       -  
   Net income (loss) $ (0.08 )   $ (0.15 )   $ 0.13     $ 0.31  
 
Net income per share – diluted                              
   Income (loss) from continuing operations $ (0.08 )     (0.15 )   $ 0.12     $ 0.30  
   Income (loss) from discontinued operations   -       -       -       -  
   Net (loss) income $ (0.08 )     (0.15 )   $ 0.12     $ 0.30  

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RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF SEPTEMBER 30,
2008 (UNAUDITED) AND DECEMBER 31, 2007

    September 30       December 31,  
    2008       2007  
    (Unaudited)          
Assets              
Cash and cash equivalents              
          Unrestricted   17,482,954     $ 54,834,189  
          Restricted   5,978,360       -  
Total cash and cash equivalents   23,460,954       54,834,189  
Financial instruments owned, at fair value   26,553,949       9,011,405  
Private placement and other fees receivable   2,681,048       967,473  
Due from clearing broker   5,574,985       1,888,854  
Prepaid expenses   2,000,621       688,550  
Deferred tax assets   -       2,258,301  
Property and equipment, net   1,372,771       913,645  
Other assets   2,988,461       244,790  
Goodwill and other intangible assets   22,593,316       1,065,000  
Total Assets $ 87,226,105     $ 71,872,207  
 
Liabilities and Stockholders’ Equity              
Accrued compensation payable $ 4,032,777     $ 6,140,839  
Accounts payable and accrued expenses   8,021,064       2,929,072  
Conference deposits   1,346,315       15,443  
Financial instruments sold, not yet purchased, at fair value   2,143,160       147,663  
Distributions payable   -       1,440,000  
Due to affiliate   467,616       382,963  
Income tax payable   -       48,067  
Deferred tax liabilities   1,189,724       -  
Total Liabilities   17,200,654       11,104,047  
 
 
 
Stockholders’ Equity              
Common stock, $0.001, par value; 100,000,000 shares authorized;              
36,414,539 and 33,750,000 issued as of              
September 30, 2008 and December 31, 2007, respectively   36,414       33,750  
Preferred stock, $0.001 par value; 1,000,000 authorized; none issued   -       -  
Additional paid-in capital   68,219,775       62,345,072  
Treasury Stock, 534,500 shares   (1,012,041 )     -  
Accumulated other comprehensive loss   -       (140,757 )
Retained Earnings (Deficit)   2,781,303       (1,469,905 )
Total Stockholders’ Equity   70,025,451       60,768,160  
 
   Total Liabilities and stockholders’ equity $ 87,226,105     $ 71,872,207  

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Non-GAAP Financial Measures

The Company has utilized the non-GAAP information set forth below as an additional device to aid in understanding and analyzing its financial results for the three months ended September 30, 2008. Management believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the Company’s business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods. Reference to these non-GAAP measures should not be considered a substitute for results that are presented in a manner consistent with GAAP.

A limitation of utilizing these non-GAAP measures is that GAAP accounting does in fact reflect the underlying financial results of the Company’s business. Therefore, management believes that the GAAP measures as well as the corresponding non-GAAP measures of the Company’s financial performance should be considered together.

            Reconciliation            
Three Months ended September 30, 2008:   GAAP       Amount         Non-GAAP  
Compensation and benefits expense $ 5,945,111     $ (588,037 ) (a)   $ 5,357,074  
Income before income tax expense $ (4,265,051 )   $ 588,037   (a)   $ (3,677,014 )
Income tax benefit (expense) $ 1,414,710     $ (195,051 ) (b)   $ 1,219,659  
Net (loss) / income $ (2,850,341 )   $ 392,986   (c)   $ (2,457,355 )
Compensation ratio (d)   69.4 %               62.6 %
                         
Earnings per share (e):                        
Basic $ (0.08 )   $ 0.01       $ (0.07 )
Diluted $ (0.08 )   $ 0.01       $ (0.07 )
                         
Weighted average number of                        
common shares outstanding (e):                        
Basic   33,732,827       -   (f)     33,732,827  
Diluted   33,732,827       -   (f)     33,732,827  

(a) The non-GAAP adjustment represents the pre-tax expense with respect to the amortization of the restricted stock and option awards granted to employees prior to the Company’s October 2007 public offering (the “Offering”)

(b) The non-GAAP adjustment with respect to income tax expense represents the elimination of the tax benefit resulting from the amortization of the pre-Offering restricted stock and option awards in the period.

(c) The non-GAAP adjustment with respect to net income was the after-tax amortization of the pre-Offering restricted stock and option awards in the period.

(d) The third quarter 2008 compensation ratio was calculated by dividing compensation and benefits expense by total revenues of $8.6 million.

(e) In accordance with Statement of Financial Accounting Standards No. 128, basic and diluted common shares outstanding are equal for the quarter ended September 30, 2008.

(f) Unadjusted.

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