GMP Capital Inc. reports first quarter 2015 results

For further information about GMP Capital Inc., our results for first quarter 2015 and the meaning of certain references, this earnings release should be read in conjunction with our unaudited interim condensed consolidated financial statements as at and for the three months ended March 31, 2015 (First Quarter 2015 Financial Statements), and our management's discussion and analysis for the three months ended March 31, 2015 (First Quarter 2015 MD&A), which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our First Quarter 2015 Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS).

TORONTO, April 30, 2015 /CNW/ - GMP Capital Inc. (GMP) (TSX: GMP) today reported revenue of $53.3 million in first quarter 2015, down 17% compared with the same period a year ago.  GMP recorded a net loss of $8.9 million and a diluted loss per share of $0.14 in first quarter 2015 compared with net income of $2.7 million and diluted earnings per share (EPS) of $0.03 in first quarter 2014.  On an adjusted basis1, the first quarter 2015 net loss was $6.4 million and diluted loss per share was $0.10.

"Challenging market conditions persisted throughout first quarter 2015 as low commodity valuations produced subdued capital markets activity within our key mid-market sectors," said Harris Fricker, Chief Executive Officer, GMP.  "The build-out of our global energy business into Houston, Texas is now largely complete. Our new Houston office is home to an impressive team of energy professionals already collaborating with their international colleagues to ensure clients gain access to GMP's extensive capabilities."

Commenting further, "As major shareholders ourselves, senior management is fully cognizant of the near-term impact of the ongoing risk retrenchment and, as we continue to diversify our business, we are keenly focused on safeguarding capital and maintaining liquidity."

FINANCIAL HIGHLIGHTS

First Quarter 2015 versus First Quarter 2014

  • Revenue of $53.3 million compared with $63.9 million.
  • Net loss of $8.9 million compared with net income of $2.7 million.
  • Net loss attributable to common shareholders of $9.6 million compared with net income attributable to common shareholders of $2.2 million.
  • Diluted loss per share of $0.14 compared with EPS of $0.03.
  • Return on common equity (ROE)1 of negative 15.2% compared with 3.2%.
  • Adjusted net loss of $6.4 million compared with adjusted net income of $5.4 million.
  • Adjusted diluted loss per share of $0.10 compared with EPS of $0.07 and adjusted ROE of negative 11.1% compared with 7.1%.
  • Adjusted net loss attributable to common shareholders of $7.1 million compared with adjusted net income attributable to common shareholders of $4.9 million.

1.

Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) under IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. This data should be read in conjunction with the "Non-GAAP Measures" section at the end of this press release and the "Presentation of Financial Information and Non-GAAP Measures" section in the First Quarter 2015 MD&A.

FIRST QUARTER 2015 BUSINESS SEGMENT HIGHLIGHTS

Capital Markets
First Quarter 2015 versus First Quarter 2014

Revenue
Revenue of $52.7 million decreased 11% primarily due to lower investment banking fees.

  • Investment banking revenue of $18.8 million decreased 37% primarily driven by lower equity underwriting fees. M&A fees increased 7% to $8.5 million.
  • Commission revenue of $14.0 million decreased 7% on lower client trading activity.
  • Principal transactions increased 34%, generating net gains of $15.5 million, bolstered by improved returns on principal inventories and higher client-related fixed income activity. Canadian dollar weakening also contributed to the increase.

Expenses
Expenses of $55.7 million increased 8% primarily due to higher costs incurred in connection with the expansion of our energy business into Houston, Texas.

  • Employee compensation and benefits included $5.2 million associated with the Houston initiative compared with $1.1 million in first quarter 2014.
  • Variable compensation decreased 5% due to lower revenue compared with first quarter 2014.
  • Canadian dollar weakening contributed to the increase in reported expenses.

Loss before income taxes

  • Loss before income taxes of $3.0 million compared with income before income taxes of $8.0 million.
  • On an adjusted basis, loss before income taxes of $2.8 million compared with income before income taxes $8.4 million.

Capital Markets highlights:

  • Led or co-led six underwriting transactions completed in Canada in first quarter 2015, raising approximately $0.4 billion on behalf of clients.

Wealth Management

First Quarter 2015 versus First Quarter 2014

  • Wealth Management reported a loss before income taxes of $0.7 million compared with a loss before income taxes of $1.6 million.
  • First quarter 2014 was adversely impacted by integration costs related to Richardson GMP's acquisition of Macquarie Private Wealth Inc., our share of which was $2.5 million (nil in first quarter 2015).
  • CQI ended first quarter 2015 with $49 million in assets under management2, down 13%.

Richardson GMP Highlights:

The following information sets forth an overview of the consolidated financial results of Richardson GMP, on a 100% basis; noting, however, that GMP owns an approximate 30% non-controlling interest of Richardson GMP as at March 31, 2015.

  • Revenue of $68.5 million representing a 14% decrease primarily driven by lower commissions.
  • Adjusted EBITDA2 of $8.2 million decreased 38%.
  • Assets under administration2 of $27.7 billion relatively unchanged as at March 31, 2015, compared with March 31, 2014.
  • 194 advisory teams at the end of the quarter compared with 207 at the end of the prior year quarter.

2.

Considered to be a non-GAAP financial measure. This data should be read in conjunction with the "Supplemental Information" section at the end of this press release and in the First Quarter 2015 MD&A.

DIVIDENDS

On April 29, 2015, the board of directors of GMP (Board of Directors) declared a quarterly cash dividend of $0.05 per common share, and a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B, each payable on June 30, 2015, to the respective shareholders of record on June 15, 2015.

NORMAL COURSE ISSUER BID RENEWAL

On April 29, 2015, the Board of Directors approved the renewal of GMP's normal course issuer bid, which has been accepted by the TSX (2015 NCIB). The 2015 NCIB commenced on April 30, 2015, and will terminate on April 29, 2016, or until such earlier date on which purchases under the 2015 NCIB have been completed. Under the 2015 NCIB, GMP is authorized to purchase for cancellation up to 5,133,735 Common Shares, representing 10% of the public float on April 20, 2015, by way of normal course purchases effected by GMP Securities L.P. through the facilities of the TSX and any other protected marketplace or alternative trading system in Canada. As of April 20, 2015, GMP had 72,573,310 common shares outstanding. Purchases will be made by GMP in accordance with the requirements of the TSX and the price which GMP will pay for any such Common Shares will be the market price of any such Common Shares at the time of acquisition, or such other price as may be permitted by the TSX. For purposes of the TSX rules, a maximum of 18,342 Common Shares may be purchased by GMP on any one day under the bid, except where purchases are made in accordance with the "block purchase exception" of the TSX rules. The daily repurchase limit represents 25% of the average daily trading volume of 73,370 Common Shares for the six-month period ended March 31, 2015, excluding purchases made under the previously approved normal course issuer bid program during that period. Under its previously approved NCIB program that expired on April 29, 2015, GMP purchased for cancellation 1,648,180 of its common shares at an average weighted purchase cost per share of $5.9791. GMP has renewed the 2015 NCIB program because it believes the purchase of common shares may at certain times enhance value to shareholders and is an appropriate use of funds. Shareholders may obtain copy of the filed notice without charge by contacting GMP's Chief Financial Officer by telephone at (416) 367-8600 or toll free at 1-888-301-3244 or by email at investorrelations@gmpcapital.com.

CONFERENCE CALL

A conference call and live audio webcast to discuss GMP's first quarter 2015 results will be held this morning at 9:00 a.m. (ET).  GMP executives will host the call followed by a question-and-answer session for analysts and institutional investors.  Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-340-2218 or 1-866-223-7781 (toll free) or via live audio webcast at http://gmpcapital.com/Investor-Relations/Quarterly-Information. A recording of the conference call will be available until Thursday, May 7, 2015, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 2565141#. The webcast will be archived at http://gmpcapital.com/Investor-Relations/Quarterly-Information.

NON-GAAP MEASURES

We use certain measures to assess our financial performance that are not GAAP measures under IFRS. These measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GMP's performance, liquidity, cash flows and profitability. For further information, refer to  the "Presentation of Financial Information and Non-GAAP Measures" section in the First Quarter 2015 MD&A

The following table provides a reconciliation of GMP's reported results to its adjusted measures including the composition of the adjusted measures for the periods presented.


($000, except as otherwise noted)

Three months ended March 31


2015

2014

Reported Results



(Loss) Income before income taxes

(9,101)

4,961

Income tax (recovery) expense

(223)

2,234

Net (loss) income

(8,878)

2,727

Net (loss) income attributable to common shareholders

(9,576)

2,173

Reported Measures



Net (loss) income per common share (dollars):




Basic

(0.14)

0.03


Diluted ¹

(0.14)

0.03

ROE ²

(15.2)%

3.2%

Pre-Tax Impact of Adjusting Items




Bond forward unrealized losses

3,300


Share of associate's MPW Canada and integration costs

2,469


Retention shares

136

451

Impact of adjusting items on (loss) income before income taxes

3,436

2,920

After-Tax Impact of Adjusting Items




Bond forward unrealized losses

2,432


Share of associate's MPW Canada and integration costs

2,469


Retention shares

76

252

Impact of adjusting items on net (loss) income

2,508

2,721

Adjusted Results ²



(Loss) income before income taxes

(5,665)

7,881

Net (loss) income

(6,370)

5,448

Net (loss) income attributable to common shareholders

(7,068)

4,894

Adjusted Measures ²



Net (loss) income per common share (dollars):




Basic

(0.10)

0.07


Diluted ¹

(0.10)

0.07

ROE

(11.1)%

7.1%





1.

In the case of a net loss, the effect of common share options potentially exercisable and the impact of shares pledged on share purchase loans and other common shares subject to vesting conditions under share-based compensation programs on diluted net loss per common share will be anti-dilutive; therefore, basic and diluted net loss per common share will be the same.


2.

These are considered to be non-GAAP financial measures. These measures do not have any standardized meaning prescribed by GAAP under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. The table above outlines our adjusted results and adjusted measures with their closest GAAP counterparts.

SUPPLEMENTAL INFORMATION

The following supplemental information reflects how management of Richardson GMP assesses the financial performance of Richardson GMP.

Supplemental Financial Information - Richardson GMP

Richardson GMP's management assesses performance on both a reported and an adjusted basis and considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also permits readers to assess the impact of specified items on financial results. Richardson GMP's management uses certain measures to assess the financial performance of Richardson GMP that are not GAAP measures under IFRS. Earnings before interest, tax, depreciation and amortization (EBITDA) and adjusted EBITDA do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of Richardson GMP's performance, liquidity, cash flows and profitability.  Richardson GMP's management believes adjusting results by excluding the impact of the specified items is more reflective of ongoing financial performance and cash generating capabilities and provides readers with an enhanced understanding of how management views Richardson GMP's core performance. For further information, refer to the "Supplemental Information" section in the First Quarter 2015 MD&A.

The following table sets forth an overview of the consolidated financial results of Richardson GMP for the periods indicated, on a 100% basis; noting, however, that GMP owns approximately 30% non-controlling interest of Richardson GMP as at March 31, 2015.


($000, except as otherwise noted)

Three months ended

March 31

%

increase/

(decrease)

2015

2014

Revenue

68,534


79,545


(14)

Expenses

68,078


82,138


(17)

Employee compensation and benefits

47,735


54,392


(12)

Non-compensation expenses

20,343


27,746


(27)

Net income (loss) - reported

456


(2,593)


118

Pre-tax impact of adjusting items





Interest

1,647


1,740


(5)


Depreciation and amortization

1,426


1,348


6


Transition assistance loan amortization

3,530


3,506


1

EBITDA¹

7,059


4,001


76


MPW Canada integration costs


7,740


(100)


Share-based compensation

1,171


1,544


(24)

Adjusted EBITDA¹

8,230


13,285


(38)

Number of advisory teams

194


209


(7)

AUA at period-end ($ millions)¹

27,656


27,693














FORWARD-LOOKING INFORMATION

This press release contains "forward-looking information" as defined under applicable Canadian securities laws.   This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.

Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. GMP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions,  dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect GMP's actual results and could cause its actual results to differ materially from those expressed or implied in any forward-looking information disclosed by management or on its behalf.  For a description of additional risks that could cause our actual results to materially differ from our current expectations, see "Risk Management"  and "Risk Factors" in the First Quarter 2015 MD&A and "Risk Factors" in GMP's annual information form. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (GMP Group).  Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the GMP Group.  Material assumptions or factors underlying the forward-looking information contained in this press release include, but are not limited to, "Business Environment and Outlook", "First Quarter 2015 Financial Highlights", "Segment Results ", "Liquidity and Capital Resources" sections of the First Quarter 2015 MD&A. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking information contained in this press release is made as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release. Except as required by applicable law, management and GMP's Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

ABOUT GMP CAPITAL INC.

GMP is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global client base that includes corporate clients, institutional investors and high-net-worth individuals in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices located in Toronto, Montreal, Calgary, New York, Houston, Stamford, Miami, Dallas, London, Perth, Sydney, Hong Kong and Beijing. Wealth Management consists of GMP's non-controlling ownership interest in Richardson GMP Limited and CQI Capital Management L.P., an asset management firm. Richardson GMP Limited, Canada's largest independent wealth management firm, is focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol "GMP". For further information, please visit our corporate website at gmpcapital.com.

SOURCE GMP Capital Inc.

For further information: GMP Capital Inc., Rocco Colella, Director, Investor Relations, 145 King Street West, Suite 300, Toronto, Ontario M5H 1J8, Tel: (416) 941-0894; Fax: (416) 943-6175, rcolella@gmpcapital.com or investorrelations@gmpcapital.com

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