2007'02.11.Sun
W.P. Stewart & Co., Ltd. Reports Net Income for Third Quarter and First Nine Months of 2006 of $3.5 Million and $25.8 Million
PR
October 26, 2006
Diluted Earnings per Share of $0.08 and $0.56 for the Third Quarter and First Nine Months, Respectively
HAMILTON, Bermuda, Oct. 26 /Xinhua-PRNewswire/ --
Third Quarter 2006 Summary
W.P. Stewart & Co., Ltd. today reported net income
of $3.5 million, or $0.08 per share (diluted) and $0.08 per
share (basic), for the third quarter ended 30 September
2006. This compares with net income in the third quarter of
2005 of $12.2 million, or $0.27 per share (diluted) and
$0.27 per share (basic).
Cash earnings for the quarter ended 30 September 2006
were $7.5 million (net income of $3.5 million adjusted to
include $4.0 million representing non-cash expenses of
depreciation, amortization and other non-cash charges on a
tax effected basis), or $0.16 per share (diluted). In the
same quarter of the prior year, cash earnings were $14.9
million (net income of $12.2 million adjusted for the
inclusion of $2.7 million representing non-cash expenses of
depreciation, amortization and other non-cash charges on a
tax-effected basis), or $0.32 per share (diluted).
Portfolio trading activity for the quarter was equal to
only approximately 53% of the average quarterly transaction
levels dating back to the first quarter of 2001. This
abnormally low level of transactions represented a
reduction of $0.15 per share in the third quarter of 2006
as compared with the second quarter of 2006 when portfolio
transactions were abnormally high.
The Company bills clients quarterly, in advance, based
on assets under management ("AUM") at the end of
the prior quarter. AUM billings in the third quarter were
down approximately 10.6% from AUM billings in the second
quarter of 2006 which resulted in a $2.8 million decrease
in fee revenue for the quarter and represents $0.05 per
share.
Assets under management at 30 September 2006 were
approximately $8.3 billion, compared to $8.4 billion at the
end of the prior quarter, a decrease of 1.2% and a decrease
of 13.5% from the $9.6 billion reported at 30 September
2005.
For the third quarter of 2006 there were 45,794,313
common shares outstanding on a weighted average diluted
basis compared to 45,991,471 common shares outstanding for
the third quarter of 2005 on the same weighted average
diluted basis.
Current Perspective
There has been a substantial improvement in portfolio
performance since late July with the W.P. Stewart U.S.
Equity Composite (the "Composite") up
approximately 6.1%, pre-fee, year-to-date, as of 23 October
2006 and approximately 630 basis points behind the S&P
500. In contrast, at the end of July, when the Company
reported second quarter results, the Composite was down
approximately 7.3%, pre-fee, on a year-to-date basis and
approximately 940 basis points behind the S&P 500.
Based on performance through the end of the third
quarter of 2006, the Company may be entitled to a
performance fee this year on a limited number of its
accounts, including on W.P. Stewart Holdings, our mutual
fund listed on Euronext Amsterdam. Regardless of
performance at any other point during the year, the
Company's right to receive a performance fee on those
accounts will depend entirely upon the account's
performance for the period ended 31 December, the date that
the performance fee is measured and earned. Accordingly, no
performance fee had been recorded at 30 September 2006.
Portfolio trading activity during October has returned
to levels more closely approximating our quarterly average
levels of the past five years.
As previously announced, the Board of Directors agreed
to invest an aggregate of $30 million in three new pooled
fund products. Two of these new funds are U.S. equity
products targeted at investors with large asset bases and
utilize performance fee structures. The third, an EAFE fund
(world ex US), is expected to be launched in the fourth
quarter and will be available to the company's worldwide
client base. These investments reflect the Board's strong
confidence in the W.P. Stewart investment style and a
commitment to capitalize on new opportunities identified by
the Company.
Using what we believe to be reasonable assumptions, the
implementation of targeted expense reductions and continued
development of a meaningful expense discipline, we expect
the fourth quarter of 2006 and calendar year 2007 to
produce forward twelve month cash earnings sufficient to
sustain our current annual dividend level of $0.92 per
share.
Nine Month Results
For the nine months ended 30 September 2006, net income
was down 30.7%, compared to the first nine months of 2005,
to $25.8 million, or $0.56 per share (diluted) and $0.56
per share (basic), on revenues of $102.4 million. Net
income for the nine months ended 30 September 2005 was
$37.3 million, or $0.81 per share (diluted) and $0.82 per
share (basic), on revenues of $102.4 million.
Cash earnings for the nine months ended 30 September
2006 were $35.1 million (net income of $25.8 million
adjusted to include $9.3 million, representing non-cash
expenses of depreciation, amortization and other non-cash
charges on a tax-effected basis), or $0.77 per share
(diluted). In the same period of the prior year, cash
earnings were $45.4 million (net income of $37.3 million
adjusted for the inclusion of $8.1 million representing
non-cash expenses of depreciation, amortization and other
non-cash charges on a tax-effected basis), or $0.99 per
share (diluted).
For the nine months ended 30 September 2006, there were
45,883,021 common shares outstanding on a weighted average
diluted basis compared to 45,895,724 common shares
outstanding for the same period in 2005 on the same
weighted average diluted basis.
Performance
Performance in the W.P. Stewart & Co., Ltd. U.S.
Equity Composite (the "Composite") for the third
quarter of 2006 was 4.6% pre-fee and 4.3% post-fee,
compared to 5.7% for the S&P 500. For the nine months
ended 30 September 2006, performance in the Composite was
2.0% pre-fee and 1.1% post-fee, compared to 8.5% for the
S&P 500. For the twelve month period ending 30
September 2006, performance in the Composite was 3.5 %
pre-fee and 2.3 % post-fee, compared to 10.8 % for the
S&P 500.
W.P. Stewart's five-year performance record for the
period ended 30 September 2006 averaged 9.0% pre-fee (7.8%
post-fee), compounded annually, compared to an average of
7.0% for the S&P 500 in the five-year period.
In the five and ten-year periods, ended 30 September
2006, performance of the Composite has exceeded the
performance of the S&P 500 on a pre-fee and on a
post-fee basis. For the three-year period ending 30
September 2006, performance exceeded the S&P 500 on a
pre-fee basis but not on a post-fee basis.
Assets Under Management
Assets under management (AUM) at quarter-end were
approximately $8.3 billion, compared with $8.4 billion at
the quarter ended 30 June 2006, and $9.6 billion reported
at the quarter ended 30 September 2005.
Total net flows of AUM for the quarter ended 30
September 2006 were -$476 million, compared with +$28
million in the comparable quarter of 2005 and -$510 million
in the second quarter of 2006.
Total net flows of AUM for the nine months ended 30
September 2006 and 2005 were -$1,223 million and -$130
million, respectively.
In the third quarter of 2006, net cash flows of
existing accounts were -$142 million compared with net cash
flows of +$23 million in the third quarter of 2005. Net
cash flows of existing accounts for the nine months ended
30 September 2006 were -$380 million compared to -$65
million for the nine months ended 30 September 2005.
Net new flows (net contributions to our publicly
available funds and flows from new accounts minus closed
accounts) were -$334 million for the quarter compared to
+$5 million for the same quarter of the prior year. Net new
flows were -$843 million for the nine-months ending 30
September 2006 compared to -$65 million for the nine months
ended 30 September 2005.
A confluence of factors has pressured flows over the
past few quarters including a significant realignment of
account relationship responsibilities over the past 18
months, prior dispersion, competitive pressures, large-cap
growth asset class fatigue and weak short-term performance.
The Company continues to profitably manage a
substantial and diverse pool of client assets and
relationships, has maintained a superior long-term
investment track record and has a stable and experienced
investment team which is committed to serving the firm's
clients over the coming years.
As noted above, there has been a significant turn in
the direction of our performance.
Look Through Earning Power
W.P. Stewart & Co., Ltd. concentrates its
investments in large, generally less cyclical, growing
businesses. Throughout most of the Company's history, the
growth in earning power behind clients' portfolios has
ranged from approximately 10% to 20%, annually.
Currently the "look-through" earning power
behind our clients' portfolios remains solidly positive
with portfolio earnings per share growth on a trailing four
quarter basis as at 30 September 2006 expected to have
advanced at the high end of the historical range. The
Company's research analysts expect "look-through"
portfolio earnings growth to be within the 12-15% range over
the next few years.
Revenues and Profitability
Revenues were $27.6 million for the quarter ended 30
September 2006, down 18.1% from $33.7 million for the same
quarter of 2005. Revenues for the nine months ended 30
September 2006 and 2005 were $102.4 million and $102.4
million, respectively.
The average gross management fee was 1.09%, annualized,
for the quarter ended 30 September 2006 and 1.12% for the
nine months ended 30 September 2006, compared to 1.17% and
1.17%, respectively, in each of the comparable periods of
the prior year.
Excluding performance fee based accounts, the average
gross management fee was 1.23%, annualized, for the quarter
ended 30 September 2006, and 1.25% for the nine months ended
30 September 2006, compared to 1.28% in each of the
comparable periods of the prior year.
Total operating expenses increased 17.3% to $23.6
million, for the third quarter 2006, from $20.1 million in
the same quarter of the prior year. Total operating
expenses were $72.6 million and $60.9 million for the nine
months ended 30 September 2006 and 2005, respectively.
The increase in operating expenses in the third quarter
of 2006 compared to the third quarter of 2005 resulted
primarily from an increase in compensation expenses, both
cash, including accruals, and non-cash expenses related to
the issuance of restricted shares to various employees.
Operating expenses declined sequentially from the second
quarter of 2006 by $4.2 million.
The increase in operating expenses for the nine months
ended 30 September 2006 compared to the same period in 2005
relates to an increase in these same compensation expenses,
noted above, plus the one-time $2.6 million charge in
connection with the completion of the transfer of W.P.
Stewart Holdings NV from Curacao to Luxembourg.
As previously reported, the Company expects cash
compensation to be in the range of $26 - $28 million for
2006 as compared with $26.8 million in 2005.
The non-cash compensation expense related to the
restricted share grants was approximately $2.6 million for
the third quarter of 2006 (approximately $820,000 in third
quarter 2005) and approximately $5.2 million for the nine
months ended 30 September 2006 (approximately $2.3 million
for nine months 2005). This non-cash compensation expense
is included in "employee compensation and
benefits". We expect non-cash compensation expense
related to these restricted share grants to be at least
$7.7 million for 2006.
Pre-tax income, at $4.0 million, was 14.6% of gross
revenues for the quarter ended 30 September 2006 compared
to $13.6 million or 40.4% of gross revenues in the
comparable quarter of the prior year. Pre-tax income was
$29.7 million (29.1% of gross revenues) for the nine months
ended 30 September 2006, and $41.5 million (40.5% of gross
revenues) for the nine months ended 30 September 2005.
The Company's provision for taxes for the quarter ended
30 September 2006 was $0.5 million versus $1.4 million in
the comparable quarter of the prior year, and was $3.9
million versus $4.2 million for the nine months ended 30
September 2006 and 2005, respectively. The effective tax
rate was approximately 12.2% of income before taxes in the
third quarter of 2006 compared to approximately 10.2% in
the third quarter of 2005. The effective tax rate was
approximately 13.1% and 10.1% of income before taxes for
the nine month periods ended 30 September 2006 and 2005,
respectively.
The increase in the tax rate for the nine month period
in 2006 relates to changes in the allocation of portfolio
management activities among various jurisdictions
reflecting recent portfolio manager departures and other
management changes. The proportion of various activities
based in high-tax jurisdictions has increased somewhat
relative to the activity based in lower-tax jurisdictions.
Whereas the Company had previously indicated that the
anticipated tax rate for 2006 would be between 17% and 20%,
it now expects that the tax rate will be approximately 14%
for 2006.
Other Events
The Company paid a dividend of $0.30 per common share
on 28 July 2006 to shareholders of record as of 14 July
2006 and will pay a dividend of $0.23 per share on 27
October 2006 to shareholders of record as of 13 October
2006.
Conference Call
In conjunction with this third quarter 2006 earnings
release, W.P. Stewart & Co., Ltd. will host a
conference call on Thursday, 26 October 2006. The
conference call will commence promptly at 9:15am (EDT) and
will conclude at 10:00am (EDT). Those who are interested in
participating in the teleconference should dial
1-800-370-0898 (within the United States) or +973-409-9260
(outside the United States). The conference ID is
"W.P. Stewart 7990805".
To listen to the live broadcast of the conference over
the Internet, simply visit our website at
http://www.wpstewart.com and click on the Investor
Relations tab for a link to the web-cast.
The teleconference will be available for replay from
Thursday 26 October, 2006 at 12:00 noon (EDT) through
Friday, 27 October, 2006 at 5:00 p.m. (EDT). To access the
replay, please dial 1-877-519-4471 (within the United
States) or + 973-341-3080 (outside the United States). The
PIN number for accessing this replay is 7990805.
You will be able to access a replay of the Internet
broadcast through Thursday, 2 November, 2006, on the
Company's website at http://www.wpstewart.com . The Company
will respond to questions submitted by e-mail, following the
conference.
W.P. Stewart & Co., Ltd. is an asset management
company that has provided research-intensive equity
management services to clients throughout the world since
1975. The Company is headquartered in Hamilton, Bermuda and
has additional operations or affiliates in the United
States, Europe and Asia.
The Company's shares are listed for trading on the New
York Stock Exchange (NYSE: WPL) and on the Bermuda Stock
Exchange (BSX: WPS).
For more information, please visit the Company's
website at http://www.wpstewart.com , or call W.P. Stewart
Investor Relations (Fred M. Ryan) at 1-888-695-4092
(toll-free within the United States) or + 441-295-8585
(outside the United States) or e-mail to
IRINFO@wpstewart.com.
Statements made in this release concerning our
assumptions, expectations, beliefs, intentions, plans or
strategies are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. Such statements involve risks and uncertainties that
may cause actual results to differ from those expressed or
implied in these statements. Such risks and uncertainties
include, without limitation, the adverse effect from a
decline or volatility in the securities markets, a general
downturn in the economy, the effects of economic, financial
or political events, a loss of client accounts, inability of
the Company to attract or retain qualified personnel, a
challenge to our U.S. tax status, competition from other
companies, changes in government policy or regulation, a
decline in the Company's products' performance, inability
of the Company to implement its operating strategy,
inability of the Company to manage unforeseen costs and
other effects related to legal proceedings or
investigations of governmental and self-regulatory
organizations, industry capacity and trends, changes in
demand for the Company's services, changes in the Company's
business strategy or development plans and contingent
liabilities. The information in this release is as of the
date of this release, and will not be updated as a result
of new information or future events or developments.
W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of
Operations
For the Three Months
Ended
Sept. 30, June 30,
Sept. 30,
2006 2006
2005
Revenue:
Fees $22,952,366 $25,788,508
$25,716,931
Commissions 3,745,090 11,916,558
7,278,100
Interest and other 899,771 832,272
690,266
27,597,227 38,537,338
33,685,297
Expenses:
Employee compensation
and benefits 11,858,821 11,228,135
7,118,277
Fees paid out 1,998,151 1,949,680
2,056,673
Performance fee charge - 2,625,642
-
Commissions, clearance
and trading 617,937 2,245,933
1,779,427
Research and
administration 3,320,368 3,330,257
3,587,671
Marketing 1,356,107 1,488,922
1,216,257
Depreciation and
amortization 1,620,681 1,648,745
2,058,776
Other operating 2,797,460 3,318,203
2,269,163
23,569,525 27,835,517
20,086,244
Income before taxes 4,027,702 10,701,821
13,599,053
Provision for taxes 490,831 1,053,940
1,384,429
Net income $3,536,871 $9,647,881
$12,214,624
Earnings per share:
Basic earnings per share $0.08 $0.21
$0.27
Diluted earnings per share $0.08 $0.21
$0.27
% Change From
June 30, 2006 Sept. 30,
2005
Revenue:
Fees -11.00%
-10.75%
Commissions -68.57%
-48.54%
Interest and other 8.11%
30.35%
-28.39%
-18.07%
Expenses:
Employee compensation and
benefits 5.62%
66.60%
Fees paid out 2.49%
-2.85%
Performance fee charge -100.00%
-
Commissions, clearance and
trading -72.49%
-65.27%
Research and
administration -0.30%
-7.45%
Marketing -8.92%
11.50%
Depreciation and
amortization -1.70%
-21.28%
Other operating -15.69%
23.28%
-15.33%
17.34%
Income before taxes -62.36%
-70.38%
Provision for taxes -53.43%
-64.55%
Net income -63.34%
-71.04%
Earnings per share:
Basic earnings per share -61.90%
-70.37%
Diluted earnings per share -61.90%
-70.37%
W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of
Operations
For the Nine Months Ended
September 30,
2006 2005
%
Revenue:
Fees $75,928,182 $78,858,375
-3.72%
Commissions 23,922,442 21,802,471
9.72%
Interest and other 2,530,120 1,731,697
46.11%
102,380,744 102,392,543
-0.01%
Expenses:
Employee compensation
and benefits 30,825,793 21,576,980
42.86%
Fees paid out 6,122,739 6,084,887
0.62%
Performance fee charge 2,625,642 -
-
Commissions, clearance
and trading 4,505,949 4,889,475
-7.84%
Research and
administration 10,280,169 10,881,524
-5.53%
Marketing 4,556,123 3,940,064
15.64%
Depreciation and
amortization 4,845,220 6,154,910
-21.28%
Other operating 8,877,800 7,413,988
19.74%
72,639,435 60,941,828
19.19%
Income before taxes 29,741,309 41,450,715
-28.25%
Provision for taxes 3,892,446 4,169,595
-6.65%
Net income $25,848,863 $37,281,120
-30.67%
Earnings per share:
Basic earnings per share $0.56 $0.82
-31.71%
Diluted earnings per share $0.56 $0.81
-30.86%
W.P. Stewart & Co., Ltd.
Net Flows of Assets Under Management*
(in millions)
For the Three Months For
the Nine
Ended
Months Ended
Sept. Jun. Sept.
Sept. Sept.
30, 30, 30, 30,
30,
2006 2006 2005 2006
2005
Existing Accounts:
Contributions $ 100 $ 168 $ 245 $ 597
$ 728
Withdrawals (242) (375) (222)
(977) (793)
Net Flows of Existing
Accounts (142) (207) 23
(380) (65)
Publicly Available Funds:
Contributions 17 78 55 129
171
Withdrawals (70) (93) (18)
(232) (111)
Direct Accounts Opened 27 27 23 111
198
Direct Accounts Closed (308) (315) (55)
(851) (323)
Net New Flows (334) (303) 5
(843) (65)
Net Flows of Assets Under
Management $(476) $ (510) $ 28 $
(1,223) $(130)
* The table above sets forth the total net flows of
assets under
management for the three months ended September 30,
2006, June 30,
2006 and September 30, 2005, respectively, and for
the six months
ended September 30, 2006 and 2005, respectively,
which include
changes in net flows of existing accounts and net new
flows
(net contributions to our publicly available funds
and flows
from new accounts minus closed accounts). The table
excludes
total capital appreciation or depreciation in assets
under
management with the exception of the amount
attributable
to withdrawals and closed accounts.
For more information, please contact:
Fred M. Ryan
Tel: +1-441-295-8585
SOURCE W.P. Stewart & Co., Ltd.
Post your Comment
広告
ブログ内検索
アーカイブ
カウンター