UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | |||||||||
FORM 8-K | |||||||||
CURRENT REPORT | |||||||||
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||
Date of Report (Date of Earliest Event Reported): April 21, 2015 |
PZENA INVESTMENT MANAGEMENT, INC. | ||
(Exact Name of Registrant as Specified in its Charter) |
Delaware | 001-33761 | 20-8999751 | ||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
120 West 45th Street, New York, New York | 10036 |
(Address of Principal Executive Offices) | Zip Code |
Registrant’s Telephone Number, Including Area Code: (212) 355-1600 |
(Former Name or Former Address, If Changed Since Last Report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act. o Soliciting material pursuant to Rule 14a-12 under the Exchange Act. o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
ITEM 2.02 | RESULTS OF OPERATION AND FINANCIAL CONDITION. |
ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits | |
99.1 Press release, dated April 21, 2015, of Pzena Investment Management, Inc. |
PZENA INVESTMENT MANAGEMENT, INC. | ||
Dated: April 21, 2015 | By: | /s/ Gary J. Bachman |
Name: Gary J. Bachman | ||
Title: Chief Financial Officer | ||
Exhibit No. | Document |
99.1 | Press release, dated April 21, 2015, of Pzena Investment Management, Inc. |
• | 2015 revenue was $28.7 million for the first quarter. |
• | 2015 GAAP operating income was $13.0 million for the first quarter. For the same period, non-GAAP operating income was $13.3 million. |
• | 2015 GAAP diluted earnings per share was $0.12 for the first quarter. For the same period, non-GAAP diluted earnings per share was $0.12. |
• | Declared a quarterly dividend of $0.03 per share. |
GAAP Basis | Non-GAAP Basis | ||||||||||||||
For the Three Months Ended | For the Three Months Ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(unaudited) | |||||||||||||||
Basic Net Income | $ | 1,622 | $ | 1,448 | $ | 1,606 | $ | 1,386 | |||||||
Basic Earnings Per Share | $ | 0.12 | $ | 0.12 | $ | 0.12 | $ | 0.11 | |||||||
Diluted Net Income | $ | 7,927 | $ | 7,576 | $ | 8,085 | $ | 7,514 | |||||||
Diluted Earnings Per Share | $ | 0.12 | $ | 0.11 | $ | 0.12 | $ | 0.11 | |||||||
Assets Under Management (unaudited) | ||||||||||||||||||||
($ billions) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
March 31, | December 31, | March 31, | March 31, | March 31, | ||||||||||||||||
2015 | 2014 | 2014 | 2015 | 2014 | ||||||||||||||||
Institutional Accounts | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Beginning of Period | $ | 15.6 | $ | 14.3 | $ | 15.4 | $ | 15.2 | $ | 12.2 | ||||||||||
Inflows | 1.1 | 1.5 | 0.5 | 3.4 | 2.1 | |||||||||||||||
Outflows | (0.9 | ) | (0.3 | ) | (0.9 | ) | (3.0 | ) | (2.5 | ) | ||||||||||
Net Flows | 0.2 | 1.2 | (0.4 | ) | 0.4 | (0.4 | ) | |||||||||||||
Market Appreciation/(Depreciation) | 0.1 | 0.1 | 0.2 | 0.3 | 3.4 | |||||||||||||||
End of Period | $ | 15.9 | $ | 15.6 | $ | 15.2 | $ | 15.9 | $ | 15.2 | ||||||||||
Retail Accounts | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Beginning of Period Assets | $ | 12.1 | $ | 12.1 | $ | 9.6 | $ | 10.2 | $ | 7.3 | ||||||||||
Inflows | 0.4 | 0.3 | 0.8 | 2.9 | 2.2 | |||||||||||||||
Outflows | (0.4 | ) | (0.7 | ) | (0.4 | ) | (1.7 | ) | (1.3 | ) | ||||||||||
Net Flows | — | (0.4 | ) | 0.4 | 1.2 | 0.9 | ||||||||||||||
Market Appreciation/(Depreciation) | (0.1 | ) | 0.4 | 0.2 | 0.6 | 2.0 | ||||||||||||||
End of Period | $ | 12.0 | $ | 12.1 | $ | 10.2 | $ | 12.0 | $ | 10.2 | ||||||||||
Total | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Beginning of Period | $ | 27.7 | $ | 26.4 | $ | 25.0 | $ | 25.4 | $ | 19.5 | ||||||||||
Inflows | 1.5 | 1.8 | 1.3 | 6.3 | 4.3 | |||||||||||||||
Outflows | (1.3 | ) | (1.0 | ) | (1.3 | ) | (4.7 | ) | (3.8 | ) | ||||||||||
Net Flows | 0.2 | 0.8 | — | 1.6 | 0.5 | |||||||||||||||
Market Appreciation/(Depreciation) | — | 0.5 | 0.4 | 0.9 | 5.4 | |||||||||||||||
End of Period | $ | 27.9 | $ | 27.7 | $ | 25.4 | $ | 27.9 | $ | 25.4 |
Revenue (unaudited) | |||||||||||
($ thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2015 | 2014 | 2014 | |||||||||
Institutional Accounts | $ | 20,969 | $ | 20,572 | $ | 20,296 | |||||
Retail Accounts | 7,684 | 7,988 | 6,105 | ||||||||
Total | $ | 28,653 | $ | 28,560 | $ | 26,401 | |||||
Operating Expenses (unaudited) | ||||||||||||
($ thousands) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Compensation and Benefits Expense | $ | 12,070 | $ | 10,702 | $ | 10,050 | ||||||
General and Administrative Expense | 3,603 | 3,109 | 2,320 | |||||||||
GAAP Operating Expenses | 15,673 | 13,811 | 12,370 | |||||||||
Non-Recurring Lease Expenses | (346 | ) | (392 | ) | — | |||||||
Non-GAAP Operating Expenses | $ | 15,327 | $ | 13,419 | $ | 12,370 | ||||||
Other (Expense)/ Income (unaudited) | ||||||||||||
($ thousands) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Net Interest and Dividend Income | $ | 120 | $ | 119 | $ | 65 | ||||||
Gains/ (Losses) and Other Investment Income | 15 | (129 | ) | 104 | ||||||||
Change in Liability to Selling and Converting Shareholders¹ | (245 | ) | (221 | ) | (127 | ) | ||||||
Other (Expense)/ Income | (179 | ) | (1 | ) | (89 | ) | ||||||
GAAP Other (Expense)/ Income | (289 | ) | (232 | ) | (47 | ) | ||||||
Change in Liability to Selling and Converting Shareholders¹ | 245 | 221 | 127 | |||||||||
Outside Interests of Investment Partnerships² | 60 | 73 | (73 | ) | ||||||||
Non-GAAP Other Income, Net of Outside Interests | $ | 16 | $ | 62 | $ | 7 | ||||||
1 Reflects the change in the liability to the Company’s selling and converting shareholders associated with | ||||||||||||
the deferred tax asset generated by the Company’s initial public offering and subsequent unit conversions. | ||||||||||||
2 Represents the non-controlling interest allocation of the loss/(income) of the Company's consolidated | ||||||||||||
investment partnerships to its external investors. |
Income Tax Expense (unaudited) | ||||||||||||
($ thousands) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Non-GAAP Corporate Income Tax Expense | $ | 886 | $ | 962 | $ | 1,090 | ||||||
Non-GAAP Unincorporated Business Tax Expense | 531 | 648 | 782 | |||||||||
Non-GAAP Income Tax Expense | 1,417 | 1,610 | 1,872 | |||||||||
Change in Valuation Allowance1 | (297 | ) | (422 | ) | (791 | ) | ||||||
Less: Effects of Non-Recurring Lease Expenses2 | (32 | ) | (44 | ) | — | |||||||
Net Adjustment to Deferred Tax Asset3 | — | (450 | ) | 602 | ||||||||
GAAP Income Tax Expense | $ | 1,088 | $ | 694 | $ | 1,683 | ||||||
1 Reflects the change in the valuation allowance assessed against the deferred tax asset established | ||||||||||||
as part of the Company's initial public offering and subsequent unit conversions. | ||||||||||||
2 Reflects the tax effect of non-recurring lease expenses on Corporate Income Tax Expense and Unincorporated | ||||||||||||
Business Tax Expense for the first quarter of 2015 of $25 thousand and $7 thousand, respectively, and $31 thousand and | ||||||||||||
$13 thousand for the fourth quarter of 2014, respectively, which are excluded from Non-GAAP results. | ||||||||||||
3 Reflects the net impact of the changes in the Company's deferred tax asset and valuation allowance | ||||||||||||
assessed against the deferred tax asset associated with the changes in expected future tax benefits. | ||||||||||||
Non-Controlling Interests (unaudited) | ||||||||||||
($ thousands) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Operating Company Allocation | $ | 10,041 | $ | 11,427 | $ | 10,780 | ||||||
Add Back: Effects of Non-Recurring Lease Expenses1 | 278 | 313 | — | |||||||||
Non-GAAP Operating Company Allocation | 10,319 | 11,740 | 10,780 | |||||||||
Outside Interests of Investment Partnerships2 | (60 | ) | (73 | ) | 73 | |||||||
Less: Effects of Non-Recurring Lease Expenses1 | (278 | ) | (313 | ) | — | |||||||
GAAP Net Income Attributable to Non-Controlling Interests | $ | 9,981 | $ | 11,354 | $ | 10,853 | ||||||
1 Reflects the effects of non-recurring lease expenses on non-controlling interests. | ||||||||||||
2 Represents the non-controlling interest allocation of the (loss)/ income of the Company's consolidated | ||||||||||||
investment partnerships to its external investors. |
PZENA INVESTMENT MANAGEMENT, INC. | |||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||
(in thousands) | |||||||||
As of | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
ASSETS | |||||||||
Cash and Cash Equivalents | $ | 21,105 | $ | 39,109 | |||||
Restricted Cash | 3,485 | 2,810 | |||||||
Due from Broker | 705 | 94 | |||||||
Advisory Fees Receivable | 23,014 | 22,939 | |||||||
Investments | 32,239 | 27,945 | |||||||
Prepaid Expenses and Other Assets | 2,059 | 1,599 | |||||||
Deferred Tax Asset, Net of Valuation Allowance | |||||||||
of $43,872 and $44,239, respectively | 13,981 | 14,618 | |||||||
Property and Equipment, Net of Accumulated | |||||||||
Depreciation of $3,137 and $3,072, respectively | 5,997 | 2,772 | |||||||
TOTAL ASSETS | $ | 102,585 | $ | 111,886 | |||||
LIABILITIES AND EQUITY | |||||||||
Liabilities: | |||||||||
Accounts Payable and Accrued Expenses | $ | 9,061 | $ | 5,974 | |||||
Due to Broker | 752 | 698 | |||||||
Securities Sold Short, at Fair Value | 2,404 | 1,572 | |||||||
Liability to Selling and Converting Shareholders | 15,603 | 15,358 | |||||||
Lease Liability | 248 | 354 | |||||||
Deferred Compensation Liability | 744 | 2,211 | |||||||
Other Liabilities | 648 | 686 | |||||||
TOTAL LIABILITIES | 29,460 | 26,853 | |||||||
Equity: | |||||||||
Total Pzena Investment Management, Inc.'s Equity | 15,343 | 18,401 | |||||||
Non-Controlling Interests | 57,782 | 66,632 | |||||||
TOTAL EQUITY | 73,125 | 85,033 | |||||||
TOTAL LIABILITIES AND EQUITY | $ | 102,585 | $ | 111,886 |
PZENA INVESTMENT MANAGEMENT, INC. | |||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(in thousands, except share and per-share amounts) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2015 | 2014 | ||||||||||
REVENUE | $ | 28,653 | $ | 26,401 | |||||||
EXPENSES | |||||||||||
Compensation and Benefits Expense | 12,070 | 10,050 | |||||||||
General and Administrative Expense | 3,603 | 2,320 | |||||||||
TOTAL OPERATING EXPENSES | 15,673 | 12,370 | |||||||||
Operating Income | 12,980 | 14,031 | |||||||||
Other (Expense)/ Income | (289 | ) | (47 | ) | |||||||
Income Before Taxes | 12,691 | 13,984 | |||||||||
Income Tax Expense | 1,088 | 1,683 | |||||||||
Consolidated Net Income | 11,603 | 12,301 | |||||||||
Less: Net Income Attributable to Non-Controlling Interests | 9,981 | 10,853 | |||||||||
Net Income Attributable to Pzena Investment Management, Inc. | $ | 1,622 | $ | 1,448 | |||||||
Earnings per Share - Basic and Diluted Attributable to | |||||||||||
Pzena Investment Management, Inc. Common Stockholders: | |||||||||||
Net Income for Basic Earnings per Share | $ | 1,622 | $ | 1,448 | |||||||
Basic Earnings per Share | $ | 0.12 | $ | 0.12 | |||||||
Basic Weighted Average Shares Outstanding | 13,057,714 | 12,176,592 | |||||||||
Net Income for Diluted Earnings per Share | $ | 7,927 | $ | 7,576 | |||||||
Diluted Earnings per Share | $ | 0.12 | $ | 0.11 | |||||||
Diluted Weighted Average Shares Outstanding | 67,982,245 | 67,929,783 |
PZENA INVESTMENT MANAGEMENT, INC. | |||||||||||
UNAUDITED NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(in thousands, except share and per-share amounts) | |||||||||||
Non-GAAP Basis | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2015 | 2014 | ||||||||||
REVENUE | $ | 28,653 | $ | 26,401 | |||||||
EXPENSES | |||||||||||
Compensation and Benefits Expense | 12,070 | 10,050 | |||||||||
General and Administrative Expense | 3,257 | 2,320 | |||||||||
TOTAL OPERATING EXPENSES | 15,327 | 12,370 | |||||||||
Operating Income | 13,326 | 14,031 | |||||||||
Other Income, Net of Outside Interests | 16 | 7 | |||||||||
Income Before Taxes and Operating Company Allocation | 13,342 | 14,038 | |||||||||
Unincorporated Business Tax Expense | 531 | 782 | |||||||||
Allocable Income | 12,811 | 13,256 | |||||||||
Operating Company Allocation | 10,319 | 10,780 | |||||||||
Income Before Corporate Income Taxes | 2,492 | 2,476 | |||||||||
Corporate Income Tax Expense | 886 | 1,090 | |||||||||
Non-GAAP Net Income | $ | 1,606 | $ | 1,386 | |||||||
Effect of Non-Recurring Lease Expenses | (36 | ) | — | ||||||||
Tax Receivable Agreement Income, Net of Taxes | 52 | 62 | |||||||||
GAAP Net Income | $ | 1,622 | $ | 1,448 | |||||||
Earnings Per Share - Basic and Diluted Attributable to | |||||||||||
Pzena Investment Management, Inc. Common Stockholders: | |||||||||||
Net Income for Basic Earnings per Share | $ | 1,606 | $ | 1,386 | |||||||
Basic Earnings per Share | $ | 0.12 | $ | 0.11 | |||||||
Basic Weighted Average Shares Outstanding | 13,057,714 | 12,176,592 | |||||||||
Net Income for Diluted Earnings per Share | $ | 8,085 | $ | 7,514 | |||||||
Diluted Earnings per Share | $ | 0.12 | $ | 0.11 | |||||||
Diluted Weighted Average Shares Outstanding | 67,982,245 | 67,929,783 |