EX-99.1 2 c58385_ex99-1.htm c58385_ex99-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

NEWS RELEASE

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

Rodman & Renshaw Capital Group, Inc. Announces Financial Results for the Second Quarter of 2009

New York, NY July 30, 2009 – Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) today announced its results for the second quarter of 2009.

The Company reported record revenues of $33.4 million for the second quarter compared to $5.8 million in the first quarter of 2009. Total revenues excluding principal transactions for the second quarter were $27.8 million, compared to $7.8 million in the first quarter. The Company also reported record net income of $15.9 million, or $0.42 per diluted share, for the quarter, compared to a net loss of $12.3 million, or $(0.35) per share, for the first quarter of 2009. During the second quarter, the Company completed 25 financing transactions raising $399.4 million, compared to 5 financing transactions raising $58.4 million, in the first quarter. Rodman was once again ranked the number one investment bank in PIPE transactions by volume for the second quarter and the first half of 2009.1

Adjusting for certain non-cash events related to principal transactions and acceleration of stock-based compensation associated with terminated employees, and the impairment of goodwill, the Company reported a net income on a non-U.S. GAAP basis of $10.9 million, or $0.29 per diluted share, for the quarter, compared to a net loss of $6.4 million, or $(0.18) per share, for the first quarter of 2009. A reconciliation between GAAP results and non-GAAP measures is contained in the tables that accompany this release, under “Non-GAAP Financial Measures.”

BUSINESS HIGHLIGHTS

Investment Banking

Investment banking revenue was $27.0 million for the second quarter, which included $9.6 million related to warrants received as compensation for activities as underwriter or placement agent valued using Black-Scholes, compared to $6.9 million in investment banking revenue, which included $1.4 million related to warrants received, for the first quarter of 2009. Private placement and underwriting revenue for the second quarter was $25.4 million, compared to $4.0 million for the first quarter of 2009. Strategic advisory fees for the second quarter were $1.6 million, compared to $2.9 million for the first quarter of 2009.

Sales & Trading

  • Commissions for the second quarter were $0.7 million, compared to $0.8 million for the first quarter of 2009.
  • Principal transaction revenue for the second quarter was $5.6 million, compared to principal transaction losses of $2.0 million for the first quarter of 2009.

Operating Expenses

Compensation Expense

  • Employee compensation and benefits expense for the second quarter was $11.8 million, compared to $12.1 million for the first quarter of 2009.
  • Employee compensation and benefits expense for the second quarter represented 35% of revenue, compared to 207% for the first quarter of 2009. For the first half of 2009, employee compensation and benefits expense represented 61% of total revenue.
  • The Company employed 105 employees as of June 30, 2009, compared to 106 employees as of March 31, 2009.

1

Non-Compensation Expense

Non-compensation expense for the second quarter, excluding impairment of goodwill, was $5.0 million, compared to $5.4 million for the first quarter of 2009.

Cost Savings and Restructuring Initiatives

As a result of our cost savings initiatives as detailed in our first quarter earnings release, the Company has reduced its budgeted quarterly fixed cash costs to approximately $6.0 million. Actual quarterly fixed costs, excluding non-recurring costs, were approximately $6.0 million for the second quarter of 2009.

Income Taxes

Due to the prior period operating losses, we did not record a material amount of income tax expense for the second quarter of 2009. We will continue to review the value of our net deferred tax assets and may reverse a portion of our valuation allowance associated with these net deferred tax assets if the Company continues to generate sufficient operating income in the future.

Capital

Cash and cash equivalents were $14.3 million as of June 30, 2009, compared to $8.8 million as of March 31, 2009. Liquid assets were $19.5 million, consisting of cash and cash equivalents, “Level I” assets 2 and current receivables, compared to $12.1 million as of March 31, 2009. Book value per common share was $0.96 as of June 30, 2009. Book value per common share is based on common shares outstanding including unvested and vested restricted stock and restricted stock units.

Cash Flows

The increase in cash and cash equivalents of $5.5 million since March 31, 2009 is a result of cash inflows from operations of $5.0 million including a second quarter cash bonus of $3.4 million that was paid in July 2009; offset by $1.2 million of deferred acquisition payments to Miller Mathis, $0.6 million to Aceras for investing purposes, and $1.1 million related to leasehold improvements, severance, and legal fees related to an ongoing arbitration.

1Source: Sagient Research Systems, a leading publisher of independent research for the financial services and institutional investment communities.

2Level I assets as of June 30, 2009 exclude Skystar Bio-Pharmaceutical Co., Ltd. (NASDAQ:SKBI) shares purchased pursuant to an underwriting agreement entered into on June 30, 2009. The shares were fully allocated to investors before the market opened on July 1, 2009.

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 & Renshaw, LLC is a full service investment bank dedicated to providing investment banking services to companies that have significant capital needs, 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 industries with significant capital needs, including health care, energy, and metals/mining, 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

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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 12, 2009, 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 Financial Condition as of June 30, 2009 (Unaudited)
and December 31, 2008

    June 30,     December 31,  
    2009     2008  
    (Unaudited)          
Assets                 
     Cash and cash equivalents 
               
          Unrestricted 
  $  10,857,337     $  18,383,224  
          Restricted 
    3,484,696       3,371,108  
     Total cash and cash equivalents 
    14,342,033       21,754,332  
Financial instruments owned, at fair value      38,610,192       13,872,184  
Private placement and other fees receivable      4,022,308       1,974,571  
Receivable from brokers, dealers & clearing agencies      3,145,204       2,713,594  
Prepaid expenses      1,018,654       439,377  
Property and equipment, net      2,003,674       1,389,705  
Other assets      3,553,132       2,632,256  
Due from affiliate      131,331       -  
Other intangible assets, net      2,327,075       2,906,436  
Total Assets    $  69,153,603     $  47,682,455  
 
Liabilities and Stockholders’ Equity                 
Accrued compensation payable    $  8,704,507     $  4,882,422  
Accounts payable and accrued expenses      2,259,590       5,556,374  
Acquisitions related payables      3,514,000       4,950,000  
Financial instruments sold, not yet purchased, at fair value      2,085,410       1,360,767  
Payable to brokers, dealers & clearing agencies      12,980,000       -  
Unearned Revenue      652,625       -  
Due to affiliate      -       398,169  
Total Liabilities      30,196,132       17,147,732  
 
 
Stockholders’ Equity                 
Common stock, $0.001, par value; 100,000,000 shares authorized;                 
35,915,246 and 35,044,670 issued as of                 
June 30, 2009 and December 31, 2008, respectively      35,849       35,045  
Preferred stock, $0.001 par value; 1,000,000 authorized; none issued      -       -  
Additional paid-in capital      75,218,267       70,441,027  
Treasury Stock, 534,500 shares      (1,034,409 )      (1,034,409 ) 
Accumulated deficit      (35,262,236 )      (38,906,940 ) 
Total Stockholders’ Equity      38,957,471       30,534,723  
 
Total Liabilities and Stockholders’ Equity    $  69,153,603     $  47,682,455  

 

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RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations for the
Three Month and Six Month Periods Ended June 30, 2009 and 2008 (Unaudited)

    For the Three Months Ended      For the Six Months Ended   
    June 30,     June 30,  
    2009     2008     2009     2008  
Revenues:                                 
   Investment banking    $  26,993,263     $  22,283,045     $  33,876,359     $  31,185,221  
   Principal transactions      5,636,395       4,439,738       3,673,860       8,781,438  
   Commissions      704,641       1,735,089       1,512,816       3,298,454  
   Conference fees      -       842,865       -       842,865  
   Interest and other income      60,365       231,323       171,242       605,094  
     Total revenues    $  33,394,664     $  29,532,060     $  39,234,277     $  44,713,072  
 
Operating expenses:                                 
   Compensation and benefits      11,845,879       12,504,456       23,911,631       20,755,682  
   Other employee benefits      113,522       139,311       272,732       250,032  
   Conference fees      -       2,003,419       -       2,003,419  
   Broker dealer commissions      28,405       67,255       42,430       160,201  
   Professional and consulting fees      1,302,744       1,275,633       2,840,291       2,224,172  
   Business development      485,749       1,075,266       1,023,672       2,101,023  
   Advertising      96,451       43,960       399,879       133,792  
   Communication and market research      648,913       603,451       1,302,378       1,163,578  
   Office supplies      167,167       115,538       259,309       240,955  
   Occupancy and equipment rentals      783,666       587,293       1,577,097       905,288  
   Clearance and execution charges      57,359       146,733       190,492       223,587  
   Depreciation and amortization      740,677       316,617       1,375,203       453,855  
   Impairment of goodwill      644,068       -       1,326,740       1,065,000  
   Other      529,035       487,478       1,058,607       782,110  
       Total operating expenses      17,443,635       19,366,410       35,580,461       32,462,694  
 
     Income before income taxes      15,951,029       10,165,650       3,653,816       12,250,378  
     Income tax expense      (22,605 )      (4,161,544 )      (9,112 )      (5,148,829 ) 
Net income    $  15,928,424     $  6,004,106     $  3,644,704     $  7,101,549  
 
Weighted average common shares outstanding:                                 
   Basic      35,669,193       32,989,283       35,233,141       33,000,108  
   Diluted      37,883,263       34,109,190       37,155,835       34,327,527  
 
Earnings per common share                                 
   Net income per share – basic    $  0.45     $  0.18     $  0.10     $  0.22  
   Net income per share – diluted    $  0.42     $  0.18     $  0.10     $  0.21  

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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 June 30, 2009 and March 31, 2009. 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.

A reconciliation of the Company’s second quarter June 30, 2009 and first quarter March 31, 2009 GAAP net income (loss) to its second quarter June 30, 2009 and first quarter March 31, 2009 non-GAAP net income (loss) is set forth below (in millions):

Net income for the three months ended June 30, 2009    $ 15.9  
Exclusion of non-cash principal transaction gains      (5.6 ) 
Acceleration of stock based compensation associated with employee terminations      0.0  
Exclusion of goodwill impairment charge      0.6  
Non-GAAP net income for the three months ended June 30, 2009    $ 10.9  
 
Net loss for the three months ended March 31, 2009    $ (12.3 ) 
Exclusion of non-cash principal transaction losses      2.0  
Acceleration of stock based compensation associated with employee terminations      3.2  
Exclusion of goodwill impairment charge      0.7  
Non-GAAP net loss for the three months ended March 31, 2009    $ (6.4 ) 

The Company calculates income (loss) per share in accordance with FASB Statement No. 128, Earnings per Share. Basic and diluted income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period.

The following table sets forth the Company’s GAAP basic and diluted weighted average shares outstanding and its GAAP basic and diluted income (loss) per share for the second and first quarter of 2009, after applying the adjustments described above:

    For Three Months    For Three Months  
    Ended    Ended  
    June 30,    March 31,  
    2009    2009  
Weighted average shares used in computation of loss per share:               
Basic (in thousands)      35,669      34,795  
Diluted (in thousands)      37,883      34,795  
 
Income (loss) per share:               
Basic    $  0.45    $  (0.35 ) 
Diluted    $  0.42    $  (0.35 ) 
 
Non-GAAP income (loss) per share:               
Basic    $  0.31    $  (0.18 ) 
Diluted    $  0.29    $  (0.18 ) 

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