EX-99.1 2 c62402_ex99-1.htm c62402_ex99-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 99.1

NEWS RELEASE   Contact:   Dave Horin
        Chief Financial Officer
        (212) 356-0545

Rodman Reports Second Quarter 2010 Financial Results

New York, NY August 3, 2010 – Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) today announced financial results for the first half and second quarter of 2010.

First Half 2010 Highlights:

  • Investment banking revenue of $50.1 million, compared to $33.9 million in the first half of 2009.

  • Revenue, excluding principal transactions, of $54.3 million, compared to $35.6 million in the first half of 2009.

  • Net loss of $2.5 million, or $0.07 per diluted share. Operating net income of $3.2 million, or $0.08 per diluted share and an 11% pre-tax operating margin. A reconciliation between GAAP results and non-U.S. GAAP measures is contained in the tables that accompany this release, under “Non-U.S. GAAP Financial Measures”.

  • 66 financing transactions were completed raising $1.4 billion in the first half of 2010, compared to 32 financing transactions raising $519 million in the first half of 2009.

Second Quarter 2010 Highlights:

  • Investment banking revenue of $20.8 million, compared to $27.0 million and $29.3 million in the second quarter of 2009 and the first quarter of 2010, respectively.

  • Revenue, excluding principal transactions, of $23.7 million, compared to $27.8 million and $30.5 million in the second quarter of 2009 and the first quarter of 2010, respectively.

  • Net loss of $4.6 million, or $0.12 per diluted share. Operating net income of $0.2 million, or $0.01 per diluted share and a 1% pre-tax operating margin. For the first quarter of 2010, the Company reported operating net income of $3.0 million, or $0.08 per diluted share and a 19% pre-tax operating margin. A reconciliation between GAAP results and non-U.S. GAAP measures is contained in the tables that accompany this release, under “Non-U.S. GAAP Financial Measures”.

  • 29 financing transactions were completed raising $439 million in the second quarter of 2010, compared to 25 financing transactions raising $410 million in the second quarter of 2009 and 37 financing transactions raising $938 million in the first quarter of 2010.

  • The Company was once again ranked the number one investment bank in PIPE transactions by deal volume for the quarter and the first six months of 2010.1

The Company will hold a conference call this morning, August 3, 2010, at 10:00 AM Eastern Time to discuss these results (see “Conference Call Information” below).

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

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Edward Rubin, Rodman & Renshaw’s CEO and President said, “Although our second quarter results were impacted by the lack of capital markets activity during the months of May and June, we generated $20.8 million in investment banking revenue and completed 29 financing transactions raising $439 million. Unlike some of our competitors, we have been successful in raising capital for our clients in these challenging times.

“Since the beginning of the third quarter, which continues to be a difficult market period, we generated approximately $8 million of investment banking revenue. This included a significant contribution from our Metals & Mining Group – one of our targeted verticals - which acted as an advisor to Zaporizhstal Group on one of the largest steel transactions of 2010, the sale of a 50% interest in the 5th largest steel mill in Ukraine to an investment group. This is a direct dividend on the Miller Mathis acquisition that we consummated in 2008 and demonstrates both our growing presence in this vertical as well as the success of our global outreach. Our deal pipeline remains solid, including 14 prospective public offerings that our Capital Markets Group currently has in registration. Subject to market conditions, we believe that this should result in deal related revenues in the latter half of the year assuming that the capital markets improve, advancing Rodman & Renshaw as the go-to investment bank for growth companies,” concluded Mr. Rubin.

BUSINESS HIGHLIGHTS

Investment Banking

Investment banking revenue was $20.8 million for the second quarter of 2010, which included $2.7 million related to warrants received as compensation for activities as underwriter or placement agent valued using Black-Scholes, compared to $27.0 million in investment banking revenue, which included $9.6 million related to warrants received, for the second quarter of 2009 and $29.3 million in investment banking revenue, which included $6.1 million related to warrants received, for the first quarter of 2010. Private placement and underwriting revenue for the second quarter of 2010 was $19.8 million, compared to $27.6 million for the first quarter of 2010. Strategic advisory fees for the second quarter of 2010 were $1.0 million, compared to $1.7 million for the first quarter of 2010.

Merchant Banking

Merchant banking revenue, consisting of gains (or losses) on investments by the Company’s Aceras BioMedical joint venture and other principal investments activity, was $1.1 million. The value of Aceras BioMedical’s assets was determined based on a valuation performed as of June 30, 2010, taking into consideration market prices, cash received, cost of the investment, market participant inputs, estimated cash flows based on entity specific criteria, purchase multiples paid in other comparable third-party transactions, market conditions, liquidity, operating results and other qualitative and quantitative factors. The values at which the Company’s investments are carried on its books are adjusted to estimated fair value at the end of each quarter taking into account general economic and stock market conditions. The gain recognized in the second quarter of 2010 mostly relates to gains from the other principal investments activity.

Sales & Trading

  • Commissions for the second quarter were $1.0 million, compared to $0.7 million for the second quarter of 2009 and $1.0 million for the first quarter of 2010.

  • Principal transactions revenue for the second quarter was a $7.4 million loss, compared to a $5.6 million gain for the second quarter of 2009 and a $2.8 million loss for the first quarter of 2010. The decline in the Company’s portfolio was consistent with the overall market decline in “micro-cap” China and Biotech securities. Since the fluctuation in value is outside of the Company’s control, it excludes such revenue or loss when recording income on a non-GAAP basis.

Operating Expenses

Compensation Expense

  • Employee compensation and benefits expense for the second quarter of 2010 was $13.5 million, compared to $11.8 million for the second quarter of 2009 and $13.5 million for the first quarter of 2010.

  • Employee compensation and benefits expense for the second quarter of 2010 and the first quarter of 2010 represented 82% and 49% of revenue, respectively. Employee compensation and benefits expense for the second quarter, excluding the $7.4 million principal transactions loss, represented 57% of transaction related revenue (revenue excluding principal transactions), compared to 43% in the second quarter of 2009.

  • The Company had 130 full-time employees at June 30, 2010, compared to 127 full-time employees at March 31, 2010. Approximately 80% of the Company’s employees at June 30, 2010 were client facing employees.

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Non-Compensation Expense

Non-compensation expense for the second quarter was $10.8 million, compared to $5.6 million for the second quarter of 2009 and $9.9 million for the first quarter of 2010. The increase in non-compensation in the second quarter was primarily due to expenses related to the Company’s London Investment Conference which was held during the second quarter and a write-off of customer relationship related intangible assets.

Income Taxes

Income tax benefit for the second quarter was $3.4 million which represents a 42.6% effective tax rate.

Capital

Cash and cash equivalents were $20.3 million at June 30, 2010, compared to $24.1 million at March 31, 2010. Liquid assets were $33.2 million at June 30, 2010, consisting of cash and cash equivalents, “Level I” assets less “Level I” liabilities and current receivables, compared to $37.6 million at March 31, 2010. The decrease in liquid assets primarily relates to tax payments of approximately $3.1 million and treasury stock repurchases of approximately $1.1 million. Book value per common share at June 30, 2010 was $1.52. Book value per common share is based on common shares outstanding including unvested and vested restricted stock and restricted stock units.

On May 25, 2010, the Board of Directors authorized a stock repurchase plan in which the Company may buy back up to $5 million of its shares. As of June 30, 2010, 348,700 shares have been repurchased at an aggregate cost of $1.1 million.

Conference Call Information

In conjunction with this earnings release, Rodman & Renshaw senior management will host a conference call at 10:00 AM Eastern Time, hosted by Mr. Edward Rubin, Chief Executive Officer and Mr. David Horin, Chief Financial Officer. Investors and analysts can participate in the conference call by dialing 1-877-407-8033 (United States) or 1-201-689-8033 (International).

The conference will be replayed in its entirety beginning at approximately 2:00 PM Eastern Time on August 3, 2010, through to 11:59 PM Eastern Time on August 10, 2010. If you wish to listen to the replay of this conference call, please dial 1-877-660-6853 (United States) or 1-201-612-7415 (International) and use Account #286, Conference # 353840.

The conference call will also be simultaneously broadcast live over the Internet, as well as for replay, and can be accessed through the webcasts and presentations tab of the investor relations section of the Rodman & Renshaw Capital Group, Inc. website located at www.rodm.com. Please allow for some time following the completion of the conference call to access the archive of the Webcast. Allow for time prior to the conference call Webcast to visit the web site and download the streaming media software required to listen to the Internet broadcast.

About Rodman & Renshaw Capital Group, Inc.

Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) 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 corporate finance, strategic advisory and related services to public and private companies across multiple sectors and regions. The company also provides research and sales and trading services to institutional investors. Rodman is the leader in the PIPE (private investment in public equity) and RD (registered direct offering) transaction markets. According to Sagient Research Systems, Rodman has been ranked the #1 Placement Agent by deal volume of PIPE and RD financing transactions completed every year since 2005.

For more information visit Rodman & Renshaw on the Internet at www.rodm.com.

MEMBER FINRA, SIPC

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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 16, 2010, which is available at the U.S. 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

Consolidated Statements of Financial Condition as of June 30, 2010 (Unaudited) and December 31, 2009
Dollars in Thousands, Except Per Share Amounts

      June 30, 2010       December 31, 2009  
 
Assets                
Cash and cash equivalents                
Unrestricted   $ 18,587     $ 12,603  
Restricted     1,695       2,943  
Total cash and cash equivalents     20,282       15,546  
Financial instruments owned, at fair value     41,166       56,156  
Private placement and other fees receivable     1,796       4,798  
Receivable from brokers, dealers & clearing agencies     1,694       5,735  
Prepaid expenses     1,126       781  
Property and equipment, net     3,097       2,773  
Other assets     10,956       7,136  
Goodwill and other intangible assets, net     773       1,961  
Total Assets   $ 80,890     $ 94,886  
 
Liabilities and Stockholders’ Equity                
Accrued compensation payable   $ 14,650     $ 10,098  
Accounts payable and accrued expenses     4,857       6,217  
Acquisitions related payables     1,787       2,826  
Financial instruments sold, not yet purchased, at fair value     755       304  
Total Liabilities     22,049       19,445  
 
Stockholders’ Equity                
Common stock, $0.001, par value; 100,000,000 shares authorized; 35,006,469 and 35,918,222 issued as of June 30, 2010 and December 31, 2009, respectively
 		    35       36  
Preferred stock, $0.001 par value; 1,000,000 authorized; none issued     -       -  
Additional paid-in capital     73,015       75,989  
Treasury stock, 40,000 shares in 2010, 534,500 shares in 2009     (123 )     (1,034 )
Accumulated deficit     (14,086 )     (11,609 )
Total common stockholders’ equity     58,841       63,382  
Non-controlling interest     -       12,059  
Total Stockholders’ Equity     58,841       75,441  
Total Liabilities and Stockholders’ Equity   $ 80,890     $ 94,886  

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RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 2010 and 2009 (Unaudited)
Amounts in Thousands, Except Per Share Amounts

      Three Months Ended     Six Months Ended  
      June 30,     June 30,  
      2010       2009     2010       2009  
Revenues:                              
Investment banking
 		  $ 20,783     $ 26,993   $ 50,051     $ 33,876  
Merchant banking
 		    1,063       -     1,240       -  
Commissions
 		    972       705     1,986       1,513  
Conference fees
 		    879       -     879       -  
Principal transactions
 		    (7,350 )     5,637     (10,160 )     3,674  
Interest and other income
 		    42       60     120       171  
Total revenues
 		  $ 16,389     $ 33,395   $ 44,116     $ 39,234  
 
Operating expenses:                              
Compensation and benefits
 		    13,520       11,846     27,016       23,912  
Conference expense
 		    2,899       -     6,016       -  
Professional and consulting
 		    2,140       1,303     3,701       2,840  
Occupancy and equipment rentals
 		    786       784     1,554       1,577  
Advertising and marketing
 		    424       96     1,077       400  
Communication and market research
 		    870       649     1,631       1,302  
Depreciation and amortization
 		    334       741     854       1,375  
Business development
 		    1,540       486     2,535       1,024  
Office supplies
 		    90       167     298       259  
Impairment of goodwill / other intangibles
 		    933       644     933       1,327  
Bad debt expense
 		    -       272     485       449  
Other
 		    812       456     1,648       1,115  
Total operating expenses
 		    24,348       17,444     47,748       35,580  
Operating income (loss)
 		    (7,959 )     15,951     (3,632 )     3,654  
Income tax expense (benefit)
 		    (3,388 )     23     (1,155 )     9  
Net income (loss) to common stockholders
 		  $ (4,571 )   $ 15,928   $ (2,477 )   $ 3,645  
 
Net income (loss) per common share:                              
Basic
 		  $ (0.12 )   $ 0.45   $ (0.07 )   $ 0.10  
Diluted
 		  $ (0.12 )   $ 0.42   $ (0.07 )   $ 0.10  
 
Weighted average common shares outstanding:                              
Basic
 		    36,763       35,669     36,456       35,233  
Diluted
 		    36,763       37,883     36,456       37,156  

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The table below reconciles weighted average number of common shares outstanding, basic and diluted, for the three months and six months ended June 30, 2010 and 2009 (weighted average shares in thousands):

      Three Months Ended     Six Months Ended  
      June 30,     June 30,  
      2010     2009     2010     2009  
 
Shares outstanding (A)   35,255     34,854     35,311     34,710  
Unearned restricted stock (B)   (94 )   (183 )   (119 )   (271 )
Earned restricted stock units (C)   1,602     998     1,264     794  
Shares outstanding, basic     36,763     35,669     36,456     35,233  
Stock options (D)   -     35     -     65  
Non-vested restricted stocks and RSUs (D)   -     2,179     -     1,858  
Shares outstanding, diluted     36,763     37,883     36,456     37,156  

Due to the fact the Company had a net loss for the quarter and half ended June 30, 2010, the outstanding shares for the calculation of basic EPS and diluted EPS for that period are the same.

(A)

Shares outstanding represents shares issued less shares repurchased in treasury stock.
 
(B)

As restricted stock is contingent upon a future service condition, unearned shares are removed from shares outstanding in the calculation of basic EPS as the Company’s obligation to issue these shares remains contingent.
 
(C)

As earned restricted stock units are no longer contingent upon a future service condition and are issuable upon a certain date in the future, earned restricted stock units are added to shares outstanding in the calculation of basic EPS.
 
(D)

Calculated under the treasury stock method. The treasury stock method assumes the issuance of only a net incremental number of shares as proceeds from issuance are assumed to be used to repurchase shares at the average stock price for the period.
 

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Non-U.S. 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, 2010, March 31, 2010 and June 30, 2009, respectively. 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 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 GAAP net income (loss) for the second quarter of 2010, the first quarter of 2010 and the second quarter of 2009 to its non-GAAP net income for the second quarter of 2010, the first quarter of 2010 and the second quarter of 2009 is set forth below (in millions of dollars):

Net loss for the three months ended June 30, 2010 $ (4.6 )
Exclusion of principal transaction loss, net of related compensation and taxes   4.3  
Exclusion of other intangible asset impairment charge, net of taxes   0.5  
Non-GAAP net income for the three months ended June 30, 2010 $ 0.2  
 
Net income for the three months ended March 31, 2010 $ 2.1  
Exclusion of principal transaction loss, net of related compensation and taxes   0.9  
Non-GAAP net income for the three months ended March 31, 2010 $ 3.0  
 
Net loss for the six months ended June 30, 2010 $ (2.5 )
Exclusion of principal transaction loss, net of related compensation and taxes   5.2  
Exclusion of other intangible asset impairment charge, net of taxes   0.5  
Non-GAAP net income for the six months ended June 30, 2010 $ 3.2  
 
Net income for the three months ended June 30, 2009 $ 15.9  
Exclusion of principal transaction gain   (5.6 )
Exclusion of goodwill impairment charge   0.6  
Non-GAAP net income for the three months ended June 30, 2009 $ 10.9  

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Basic and diluted income (loss) per share is calculated by dividing net income 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 quarter of 2010, the first quarter of 2010 and the second quarter of 2009, after applying the adjustments described above:

Amounts in Thousands,
Except Per Share Amounts 		Three Months Ended   Six Months Ended  
    **                 **  
  June 30, 2010   March 31, 2010   June 30, 2009   June 30, 2010  
Weighted average shares:                        
Basic   36,763     36,149     35,669     36,456  
Diluted   36,763     37,818     37,883     36,456  
 
Income (loss) per share:                        
Basic $ (0.12 ) $ 0.06   $ 0.45   $ (0.07 )
Diluted $ (0.12 ) $ 0.06   $ 0.42   $ (0.07 )
 
Non-GAAP income per share:                        
Basic $ 0.01   $ 0.08   $ 0.31   $ 0.09  
Diluted $ 0.01   $ 0.08   $ 0.29   $ 0.08  

** Diluted EPS weighted average shares for the quarter and the half year ended June 30, 2010 is not the same as the diluted EPS weighted average shares on a non-GAAP basis. The amount of non-GAAP diluted EPS weighted average shares for the quarter and the half year ended June 30, 2010 is 37,800,000 and 38,619,000, respectively.

Pre-tax operating margin is calculated by dividing (a) operating income, with non-GAAP adjustments, less non-cash principal transaction revenue, net of compensation and non-controlling interest, by (b) total revenues, less non-cash principal transaction revenue and non-controlling interest.

Amounts in Millions, Except Percentages Three Months   Three Months   Six Months  
  Ended   Ended   Ended  
  June 30, 2010   March 31, 2010   June 30, 2010  
 
Operating income (loss) $ (8.0 ) $ 4.3   $ (3.6 )
Principal transaction revenue, less related compensation   7.4     1.4     8.8  
Other intangible asset impairment charge   0.9     -     0.9  
Adjusted operating income $ 0.3   $ 5.7   $ 6.1  
 
Total revenues $ 16.4   $ 27.7   $ 44.1  
Principal transaction revenue   7.4     2.8     10.2  
Adjusted total revenues $ 23.8   $ 30.5   $ 54.3  
 
Pre-tax operating margin   1 %   19 %   11 %

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