LaBranche & Co. Inc.
LaBranche & Co Inc. Reports Second Quarter 2010 Results
Tuesday 20 July 2010
On a pro-forma basis, the Company reported a net loss from continuing operations for the second quarter of 2010 of $14.0 million, or $0.33 per share, compared to pro-forma net income from continuing operations of $7.4 million, or $0.13 per share, for the second quarter of 2009, which excludes income from the early of extinguishment of the Company’s public debt in the second quarter of 2009 at prices below par. Included in the 2010 second quarter results are non-cash charges of approximately $0.8 million for depreciation and share based compensation expense and one-time severance costs of $0.5 million.
The Company reported an after-tax net loss of $12.7 million, or $0.28 per share, for the six months ended June 30, 2010, which includes an after-tax charge of $4.3 million related to the redemption of all its remaining outstanding 11% Senior Notes due 2012. This compares to an after-tax net loss of $16.4 million, or $0.29 per share, for the six months ended June 30, 2009, which includes after-tax income of $0.6 million related to the redemption of a portion of the Company’s outstanding 11% Senior Notes due 2012.
On a pro-forma basis, the Company reported an after-tax net loss for the six months ended June 30, 2010 of $12.0 million, or $0.26 per share, compared to an after-tax pro-forma net loss of $25.0 million, or $0.45 per share, for the six months ended June 30, 2009. These pro-forma results exclude the expense and income, respectively, on early extinguishment of debt in the related periods as well as discontinued operations relating to the disposition of the Designated Market Maker business.
The negative results reported for the second quarter of 2010 are primarily attributable to losses in the Company’s equity options market-making division. These losses more than offset the income generated in the other divisions of the Company. The Company believes that market structure changes are having an increasingly greater impact on its business model and is making adjustments to its market-making business as a result of these changes.
Commencing in the first quarter of 2010, the Company is no longer adjusting its GAAP revenues to give pro forma effect to gains/losses in its NYX shares, because the Company has sold approximately 2.0 million of its 3.1 million previously-owned NYX shares, leaving the Company with approximately 1.1 million NYX shares. Adjustments that had been made in prior periods to reflect the gains/losses in our NYX shares have been removed from the attached Regulation G reconciliation to enable the reader to compare similar measures to the comparable prior-year period.
The Company is the parent of LaBranche Structured Holdings, Inc., whose subsidiaries are market-makers in options, exchange-traded funds and futures on various exchanges domestically and internationally and
Certain statements contained in this release, including without limitation, statements containing the words "believes", "intends", "expects", "anticipates", and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such forward-looking statements are not guarantees of future performance, and since such statements involve risks and uncertainties, the actual results and performance of the Company and the industry may turn out to be materially different from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company also disclaims any obligation to update its view of any such risks or uncertainties or to publicly announce the result of any revisions to the forward-looking statements made in this release.
TABLES TO FOLLOW
LaBranche & Co Inc.
Condensed Consolidated Statements of Operations
(all data in thousands, except per share data)
(unaudited)
LaBranche & Co Inc.
Condensed Consolidated Statements of Financial Condition
(all data in thousands)
Regulation G Requirement: Reconciliation of Non-GAAP Financial Measures
(all data in thousands, except per share data)
(unaudited)
In evaluating the Company’s financial performance, management reviews results from continuing operations excluding non-operating items. Pro-forma earnings per share is a non-GAAP (generally accepted accounting principles) performance measure, but the Company believes that it is useful to assist investors in gaining an understanding of the trends and operating results for our continuing business. Pro-forma earnings per share should be viewed in addition to, and not in lieu of, the Company’s reported results under U.S. GAAP.
Commencing in the first quarter of 2010, the Company is no longer adjusting its GAAP revenues to give pro forma effect to gains/losses in its NYX shares due to the fact that the Company sold approximately 2.0 million of its 3.1 million previously-owned NYX shares, leaving the Company with approximately 1.1 million NYX shares. Therefore, the adjustments that reflected the loss in the Company’s NYX shares that were made in the Company’s earnings release for the second quarter of 2009 have been removed from this Regulation G reconciliation of non-GAAP financial measures. In the earnings release for the second quarter of 2009, the Company had adjusted reported revenues by a gain of $29.3 million and a loss of $33.2 million for the three and six months ended June 30, 2009, respectively, to reflect the fair value of the Company’s NYX shares in those periods. These adjustment amounts are removed in this earnings release to enable the reader to compare similar measures in each period.
The following is a reconciliation of U.S. GAAP results from continuing operations to our pro-forma results from continuing operations for the periods presented: