EX-99.1 2 c54560_ex99-1.htm c54560_ex99-1.htm

Exhibit 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 Second Quarter 2008
Reports Record Second Quarter Revenue, up 95% Sequentially

New York, NY, August 12, 2008 – Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) today announced its results for the second quarter ended June 30, 2008.

Total revenue for the quarter was $29.5 million, representing an increase of 95% from $15.2 million in the first quarter of 2008. The Company reported net income of $6.0 million, or $0.18 per share, for the quarter, compared to net income of $1.1 million, or $0.03 per share, for the first quarter of 2008. The Company reported net income on a non-U.S. GAAP basis of $6.6 million, or $0.20, per share compared to net income of $1.7 million, or $0.05 per share, for the first quarter of 2008.1

“We are pleased with our performance during the second quarter,” commented Michael Lacovara, Chief Executive Officer of Rodman & Renshaw. “Despite the challenging environment, we achieved record revenue driven by particular strength within our core healthcare sector. We also were once again ranked the number one firm in PIPE transactions by volume for the second quarter and the first half of 20082. We achieved these results well below our target compensation ratio and showed record improvement in operating margin, which stood at 34% for the quarter. We believe that these results begin to validate our strategy of building a solidly profitable and increasingly diverse franchise in a structure that emphasizes relatively low fixed costs and compensation expense that varies highly with revenue. The businesses we have acquired since the beginning of the year, and the new professionals we have brought on board, are performing well and helping to propel our business forward. We are mindful that conditions are still unfavorable for all investment banks, but we believe that we are well-positioned to continue to successfully execute on our strategy.”

OPERATING RESULTS

Investment Banking

Investment banking revenue was $22.3 million for the quarter, which included $8.0 million in warrants received as compensation for activities as underwriter or placement agent valued using the Black-Scholes Option Pricing Model, as compared to $8.9 million in investment banking revenue in the first quarter of 2008, comprised of $7.4 million of cash fees and $1.5 million attributed to warrants received, valued using the Black-Scholes Option Pricing Model.

  • Private placement and underwriting revenue for the quarter was $20.8 million, compared to $8.2 million in the first quarter of 2008. During the quarter, the Company completed 14 financing transactions with an average transaction size of $22.6 million, compared to 13 financing transactions with an average transaction size of $10.8 million in the first quarter of 2008.

  • Strategic advisory fees for the quarter were $1.5 million, compared to $0.7 million in the first quarter of 2008.

 

 
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Reconciliation between GAAP and non-GAAP results can be found in the accompanying tables.
2

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


Sales & Trading

  • Commissions for the quarter were $1.7 million, compared to $1.6 million in the first quarter of 2008.

  • Principal transactions revenue for the quarter was $4.4 million, compared to $4.3 million in the first quarter of 2008, which included $9.2 million in additional principal transaction revenue as a result of a change in valuation method related to our warrant portfolio.

Conference Fees

Conference fees revenue was $0.8 million for the quarter, compared to $0 in the first quarter of 2008.

Operating Expenses

Total operating expenses were $19.4 million for the quarter, compared to $13.1 million in the first quarter of 2008. The expenses for the second quarter of 2008 include employee compensation and benefits, conference fees associated with our European Conference held in May, and professional and consulting fees. For the quarter, expenses, net of pre-offering stock compensation expense and goodwill impairment, were $18.3 million, compared to $11.0 million in the first quarter of 2008.

  • Compensation Expense

Employee compensation and benefits expense for the quarter, including pre-offering stock compensation expense, was $12.5 million, compared to $8.3 million in the first quarter of 2008.

Excluding pre-offering stock compensation expense of $1.0 million, employee compensation and benefits expense for the quarter was $11.5 million, compared to $7.2 million in the first quarter of 2008.

Employee compensation and benefits expense for the second quarter, excluding pre-offering stock compensation expense, represented 38.9% of revenue, compared to 47.6% in the first quarter of 2008.

  • Non-Compensation Expense

Non-compensation expense for the quarter was $6.9 million, compared to $4.8 million in the first quarter of 2008, with most of the difference attributable to conference expenses.

Capital

At June 30, 2008 stockholders’ equity was $71.2 million. Cash and cash equivalents and cash held by us but segregated and on deposit for regulatory purposes, or deposited with clearing and depository organizations was $30.3 million. Book value per common share was $1.80. Book value per common share is based on common shares outstanding including unvested and vested restricted stock and restricted stock units.

Termination of Stock Repurchase Program

The Company further announced that it has terminated the Stock Repurchase Program that it announced on February 20, 2008. 529,000 shares were purchased by the Company under the Program at an average price per share of $1.85.

Conference Call details

A conference call with management to discuss the financial results for the second 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 45608124. The call is being webcast by Thomson/CCBN and can be accessed through the Rodman & Renshaw Capital Group, Inc. website at www.rodmanandrenshaw.com as well as the Thomson/CCBN link: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=122722&eventID=1905305


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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 PERIOD ENDED JUNE 30,
2008, MARCH 31, 2008 AND JUNE 30, 2007 (UNAUDITED)

      For the Three Months       For the Three Months       For the Three  
      Ended       Ended       Months Ended  
      June 30, 2008                 March 31, 2008                 June 30, 2007  
Revenues:                        
   Investment banking   $ 22,283,045     $ 8,902,176     $ 24,142,483  
   Principal transactions     4,439,738       4,341,699       (442,109 )
   Commissions     1,735,089       1,563,365       1,606,368  
   Conference fees     842,865       -       719,009  
   Interest and other income     231,323       373,772       285,226  
       Total revenues   $ 29,532,060     $ 15,181,012     $ 26,310,977  
 
Operating expenses:                        
   Employee compensation and benefits     12,504,456       8,251,226       16,385,545  
   Other employee benefits     139,311       110,722       107,453  
   Conference fees     2,293,056       308,845       1,968,861  
   Broker dealer commissions     67,255       92,945       52,736  
   Professional and consulting fees     1,275,633       948,539       1,316,549  
   Business development     829,589       811,586       848,935  
   Communication and market research     603,451       560,127       491,246  
   Office     115,538       125,417       207,928  
   Occupancy and equipment rentals     587,293       317,996       307,718  
   Clearance and execution charges     146,733       76,854       47,027  
   Depreciation and amortization     316,617       137,239       162,318  
   Impairment of goodwill     -       1,065,000       -  
   Other     487,478       289,788       203,258  
       Total operating expenses     19,366,410       13,096,284       22,099,574  
 
   Operating income     10,165,650       2,084,728       4,211,403  
 
   Interest expenses     -       -       594,646  
 
   Income from continuing operations before income taxes     10,165,650       2,084,728       3,616,757  
   Income tax expense     (4,161,544 )     (987,285 )     391,184 )
   Income from continuing operations     6,004,106       1,097,443       3,225,573  
   (Loss) income from discontinued operations     -       -       (19,330 )
   Net income   $ 6,004,106     $ 1,097,443     $ 3,206,243  
 
Weighted average common shares outstanding:                        
   Basic     32,989,283       32,927,297       18,159,147  
   Diluted     34,109,190       33,244,200       24,218,617  
 
Net income per share – basic                        
   Income from continuing operations   $ 0.18     $ 0.03     $ 0.18  
   Income from discontinued operations     -       -       -  
   Net income   $ 0.18     $ 0.03     $ 0.18  
 
Net income per share – diluted                        
   Income from continuing operations   $ 0.18     $ 0.03     $ 0.16  
   Income from discontinued operations     -       -       -  
   Net income   $ 0.18     $ 0.03     $ 0.16  


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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, 2008 AND 2007 (UNAUDITED)

     
For the Three Months Ended
      For the Six Months Ended  
      June 30          June 30  
      2008                   2007                   2008                   2007  
Revenues:                                
   Investment banking   $ 22,283,045     $ 24,142,483     $ 31,185,221     $ 38,492,653  
   Principal transactions     4,439,738       (442,109 )     8,781,438       2,737,057  
   Commissions     1,735,089       1,606,368       3,298,454       3,606,237  
   Conference fees     842,865       719,009       842,865       719,009  
   Interest and other income     231,323       285,226       605,094       378,747  
       Total revenues   $ 29,532,060     $ 26,310,977     $    44,713,072     $    45,933,703  
 
Operating expenses:                                
   Employee compensation and benefits     12,504,456       16,385,545       20,755,682       26,421,709  
   Other employee benefits     139,311       107,453       250,032       201,093  
   Conference fees     2,293,056       1,968,861       2,601,902       2,144,492  
   Broker dealer commissions     67,255       52,736       160,201       96,624  
   Professional and consulting fees     1,275,633       1,316,549       2,224,172       1,831,524  
   Business development     829,589       848,935       1,641,176       1,433,545  
   Communication and market research     603,451       491,246       1,163,578       889,407  
   Office     115,538       207,928       240,955       401,879  
   Occupancy and equipment rentals     587,293       307,718       905,288       605,398  
   Clearance and execution charges     146,733       47,027       223,587       97,850  
   Depreciation and amortization     316,617       162,318       453,855       324,813  
   Impairment of goodwill     -       -       1,065,000       -  
   Other     487,478       203,258       777,266       456,148  
       Total operating expenses     19,366,410       22,099,574       32,462,694       34,904,482  
 
 
 Operating income     10,165,650       4,211,403       12,250,378       11,029,221  
 
   Interest expenses     -       594,646       -       792,861  
 
 
   Income from continuing operations before income taxes     10,165,650       3,616,757       12,250,378       10,236,360  
   Income tax expense     (4,161,544 )     (391,184 )     (5,148,829 )     (351,865 )
 
   Income from continuing operations     6,004,106       3,225,573       7,101,549       9,884,495  
                      -       142,610  
 (Loss) income from discontinued operations     -       (19,330 )                
 Net income   $ 6,004,106     $ 3,206,243     $ 7,101,549     $ 10,027,105  
 
Weighted average common shares outstanding:                                
   Basic     32,989,283       18,159,147       33,000,108       18,159,147  
   Diluted     34,109,190       24,218,617       34,327,527       24,203,713  
 
Net income per share – basic                                
   Income from continuing operations   $ 0.18     $ 0.18       0.22     $ 0.54  
   Income from discontinued operations     -       -       -       0.01  
   Net income   $ 0.18     $ 0.18       0.22     $ 0.55  
 
Net income per share – diluted                                
   Income from continuing operations   $ 0.18     $ 0.16       0.21     $ 0.44  
   Income from discontinued operations     -       -       -       0.01  
   Net income   $ 0.18     $ 0.16       0.21     $ 0.45  


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

    June 30,       December 31,  
    2008                      2007  
    (Unaudited)          
Assets              
Cash and cash equivalents $      27,866,572     $ 54,834,189  
Cash and cash equivalent segregated and on deposit for regulatory purposes or deposited with clearing and depository              
organizations   2,446,695       -  
Financial instruments owned, at fair value   28,945,814       9,011,405  
Private placement and other fees receivable   2,304,786       967,473  
Due from clearing broker   3,186,739       1,888,854  
Prepaid expenses   770,172       688,550  
Deferred tax assets   -       2,258,301  
Property and equipment, net   887,768       913,645  
Other assets   3,479,195       244,790  
Goodwill and other intangible assets   22,738,040       1,065,000  
Total Assets $ 92,625,781     $ 71,872,207  
 
Liabilities and Stockholders’ Equity              
Accrued compensation payable $ 9,167,357     $ 6,140,839  
Accounts payable and accrued expenses   7,535,001       2,929,072  
Conference deposits   418,805       15,443  
Financial instruments sold, not yet purchased, at fair value   1,262,073       147,663  
Distributions payable   -       1,440,000  
Due to affiliate   329,907       382,963  
Income tax payable   -       48,067  
Deferred tax liabilities   2,620,715       -  
Total Liabilities   21,333,858       11,104,047  
 
 
 
Stockholders’ Equity              
Common stock, $0.001, par value; 100,000,000 shares authorized;              
36,341,376 and 33,750,000 issued as of              
June 30, 2008 and December 31, 2007, respectively   36,341       33,750  
Preferred stock, $0.001 par value; 1,000,000 authorized; none issued   -       -  
Additional paid-in capital   66,612,769       62,345,072  
Treasury Stock, 522,675 shares   (988,831 )     -  
Accumulated other comprehensive loss   -       (140,757 )
Retained Earnings (Deficit)   5,631,644       (1,469,905 )
Total Stockholders’ Equity   71,291,923       60,768,160  
 
   Total Liabilities and stockholders’ equity $ 92,625,781     $ 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 June 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 June 30, 2008:     GAAP                 Amount                      Non-GAAP  
Compensation and benefits expense   $12,504,456     $(1,023,218 )   (a) $11,481,236  
Income before income tax expense   $10,165,650     $1,023,218   (a) $11,188,868  
Income tax expense   $4,161,544     $433,844   (b) $4,595,388  
Net (loss) / income   $6,004,106     $589,374   (c) $6,593,480  
Compensation ratio (d)     42.3%               38.9%
Earnings per share (e):                        
Basic   $0.18     $0.02     $0.20  
Diluted   $0.18     $0.02     $0.20  
Weighted average number of                        
common shares outstanding (e):                        
Basic     32,989,283       -   (f)   32,989,283  
Diluted     34,109,190       -   (f)   34,109,190  

(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 second quarter 2008 compensation ratio was calculated by dividing compensation and benefits expense by total revenues of $29,532,060.

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

(f) Unadjusted.

 

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