Oppenheimer Holdings Inc. Reports Strong Second Quarter 2024 Earnings

Oppenheimer Holdings Inc. Reports Second Quarter 2024 Earnings

NEW YORK, July 26, 2024 /PRNewswire/ - Oppenheimer Holdings Inc. (NYSE: OPY) (the "Company" or "Firm") today reported net income of $10.3 million or $0.99 basic earnings per share for the second quarter of 2024, compared with a net loss of $(9.4) million or $(0.85) basic earnings per share for the second quarter of 2023. Revenue for the second quarter of 2024 was $330.6 million, an increase of 8.0%, compared to revenue of $306.2 million for the second quarter of 2023. Albert G. Lowenthal, Chairman and CEO commented, "The Firm was profitable for the second quarter during a mostly favorable business environment. During the quarter, continued investor interest in artificial intelligence ("AI") stocks allowed all major indices to reach fresh records, despite continuing concerns about high interest rates and weakening employment data. Strong equity markets provided a backdrop for greater retail trading activity and drove our AUM to yet another new record, benefiting both our transaction driven revenues and AUM-based advisory fees. The elevated interest rate environment resulted in improved interest revenue though the high interest rates also contributed to a significant decline in our FDIC sweep balances and related fees as clients sought higher returns elsewhere. The environment was also less favorable for our investment banking business, which saw less capital market activity when compared to the first quarter. While we are somewhat disappointed in our earnings for the quarter, they were particularly impacted by the lack of follow through in underwriting revenue after a strong first quarter. We continue to believe that our investment in senior personnel will pay off in future quarters as those markets strongly re-open. Results from the Wealth Management business continue to be strong amidst the background of a very strong equity market. The Company ended the quarter with a strong balance sheet and record book value per share levels. We remain focused on both attracting new financial advisors and retaining existing advisors while concurrently attracting qualified professionals to our investment banking platform and building our Equity and Fixed Income groups in order to position us well for growth as we move into the second half of 2024." Private Client reported revenue for the current quarter of $208.7 million, 3.7% higher compared with a year ago mostly due to higher advisory fees driven by appreciation in AUM and an increase in commission revenue. Pre-tax income of $55.5 million in the current quarter resulted in a pre-tax margin of 26.6%. Financial advisor headcount at the end of the current quarter was 934 compared to 964 at the end of the second quarter of 2023. Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that is engaged in a broad range of activities in the financial services industry, including retail securities brokerage, institutional sales and trading, investment banking (corporate and public finance), equity and fixed income research, market-making, trust services, and investment advisory and asset management services. With roots tracing back to 1881, the Company is headquartered in New York and has 88 retail branch offices in the United States and institutional businesses located in London, Tel Aviv, and Hong Kong. Forward-Looking Statements This press release includes certain "forward-looking statements" relating to anticipated future performance. For a discussion of the factors that could cause future performance to be different than anticipated, reference is made to Factors Affecting "Forward-Looking Statements" and Part 1A - Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. View original content:https://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2024-earnings-302207103.html

Oppenheimer Holdings Inc. Reports Second Quarter 2024 Earnings - Oppenheimer Hldgs (NYSE:OPY)

NEW YORK, July 26, 2024 /PRNewswire/ - Oppenheimer Holdings Inc. OPY (the "Company" or "Firm") today reported net income of $10.3 million or $0.99 basic earnings per share for the second quarter of 2024, compared with a net loss of $(9.4) million or $(0.85) basic earnings per share for the second quarter of 2023. Revenue for the second quarter of 2024 was $330.6 million, an increase of 8.0%, compared to revenue of $306.2 million for the second quarter of 2023. Albert G. Lowenthal, Chairman and CEO commented, "The Firm was profitable for the second quarter during a mostly favorable business environment. During the quarter, continued investor interest in artificial intelligence ("AI") stocks allowed all major indices to reach fresh records, despite continuing concerns about high interest rates and weakening employment data. Strong equity markets provided a backdrop for greater retail trading activity and drove our AUM to yet another new record, benefiting both our transaction driven revenues and AUM-based advisory fees. The elevated interest rate environment resulted in improved interest revenue though the high interest rates also contributed to a significant decline in our FDIC sweep balances and related fees as clients sought higher returns elsewhere. The environment was also less favorable for our investment banking business, which saw less capital market activity when compared to the first quarter. While we are somewhat disappointed in our earnings for the quarter, they were particularly impacted by the lack of follow through in underwriting revenue after a strong first quarter. We continue to believe that our investment in senior personnel will pay off in future quarters as those markets strongly re-open. Results from the Wealth Management business continue to be strong amidst the background of a very strong equity market. The Company ended the quarter with a strong balance sheet and record book value per share levels. We remain focused on both attracting new financial advisors and retaining existing advisors while concurrently attracting qualified professionals to our investment banking platform and building our Equity and Fixed Income groups in order to position us well for growth as we move into the second half of 2024." Summary Operating Results (Unaudited) ('000s, except per share amounts or otherwise indicated) Firm 2Q-24 2Q-23 Revenue $ 330,589 $ 306,189 Compensation Expenses $ 220,727 $ 187,224 Non-compensation Expenses $ 93,997 $ 130,664 Pre-Tax Income (Loss) $ 15,865 $ (11,699) Income Tax Provision (Benefit) $ 5,599 $ (2,131) Net Income (Loss) (1) $ 10,266 $ (9,400) Earnings Per Share (Basic) (1) $ 0.99 $ (0.85) Earnings Per Share (Diluted) (1) $ 0.92 $ (0.85) Book Value Per Share $ 78.63 $ 71.77 Tangible Book Value Per Share (2) $ 61.56 $ 56.29 Private Client Revenue $ 208,701 $ 201,245 Pre-Tax Income $ 55,537 $ 20,794 Assets Under Administration (billions) $ 126.0 $ 113.2 Asset Management Revenue $ 25,826 $ 22,198 Pre-Tax Income $ 8,694 $ 6,534 Assets Under Management (billions) $ 47.5 $ 41.2 Capital Markets Revenue $ 92,141 $ 79,582 Pre-Tax Loss $ (21,775) $ (14,051) (1) Attributable to Oppenheimer Holdings Inc. (2) Represents book value less goodwill and intangible assets divided by number of shares outstanding. Highlights Increased revenue for the second quarter of 2024 was primarily driven by significantly higher advisory fees attributable to a rise in billable assets under management ("AUM") as well as improved investment banking and interest revenuesAssets under administration and under management were both at record levels at June 30, 2024, benefiting from market appreciation and positive net asset flowsCompensation expenses increased from the prior year quarter largely as a result of higher incentive compensation expenses, share-based compensation costs and production-related expensesNon-compensation expenses decreased from the prior year quarter primarily due to lower legal costs partially offset by higher interest expenseBook value and tangible book value per share reached new record highs as a result of positive earnings Private Client Private Client reported revenue for the current quarter of $208.7 million, 3.7% higher compared with a year ago mostly due to higher advisory fees driven by appreciation in AUM and an increase in commission revenue. Pre-tax income of $55.5 million in the current quarter resulted in a pre-tax margin of 26.6%. Financial advisor headcount at the end of the current quarter was 934 compared to 964 at the end of the second quarter of 2023. ('000s, except otherwise indicated) 2Q-24 2Q-23 Revenue $208,701 $201,245 Commissions $ 52,872 $ 45,377 Advisory Fees $ 90,946 $ 78,811 Bank Deposit Sweep Income $ 34,847 $ 44,060 Interest $ 21,626 $ 22,403 Other $ 8,410 $ 10,594 Total Expenses $153,164 $180,451 Compensation $117,419 $ 99,528 Non-compensation $ 35,745 $ 80,923 Pre-Tax Income $ 55,537 $ 20,794 Compensation Ratio 56.3 % 49.5 % Non-compensation Ratio 17.1 % 40.2 % Pre-Tax Margin 26.6 % 10.3 % Assets Under Administration (billions) $ 126.0 $ 113.2 Cash Sweep Balances (billions) $ 2.9 $ 3.9 Revenue: Retail commissions increased 16.5% from a year ago primarily due to higher retail trading activityAdvisory fees increased 15.4% due to higher AUM during the billing period for the current quarter when compared to the second quarter of last yearBank deposit sweep income decreased $9.2 million from a year ago due to lower cash sweep balancesInterest revenue decreased modestly from the prior year period due to lower stock borrow incomeOther revenue decreased from a year ago primarily due to smaller movements in the cash surrender value of Company-owned life insurance policies, which fluctuates based on changes in the fair value of the policies' underlying investments Total Expenses: Compensation expenses increased 18.0% from a year ago primarily due to higher production related and share-based compensation expensesNon-compensation expenses decreased 55.8% from a year ago primarily due to lower legal costs Asset Management Asset Management reported revenue for the current quarter of $25.8 million, 16.3% higher compared with a year ago. Pre-tax income was $8.7 million, an increase of 33.1% compared with the prior year period. ('000s, except otherwise indicated) 2Q-24 2Q-23 Revenue $ 25,826 $ 22,198 Advisory Fees $ 26,241 $ 22,196 Other $ (415) $ 2 Total Expenses $ 17,132 $ 15,664 Compensation $ 6,120 $ 6,283 Non-compensation $ 11,012 $ 9,381 Pre-Tax Income $ 8,694 $ 6,534 Compensation Ratio 23.7 % 28.3 % Non-compensation Ratio 42.6 % 42.3 % Pre-Tax Margin 33.7 % 29.4 % AUM (billions) $ 47.5 $ 41.2 Revenue: Advisory fee revenue increased 18.2% from a year ago due to increased management fees resulting from the higher net value of billable AUM during the current quarter Assets under Management (AUM): AUM increased to $47.5 billion at June 30, 2024, a new record high, which is the basis for advisory fee billings for July 2024The increase in AUM was comprised of higher asset values of $6.1 billion on existing client holdings and a net contribution of $0.2 billion in new client assets Total Expenses: Compensation expenses were down 2.6% from a year ago primarily resulting from decreases in incentive compensationNon-compensation expenses were up 17.4% when compared to the prior year period mostly due to higher external portfolio management costs which are directly related to the increase in AUM Capital Markets Capital Markets reported revenue for the current quarter of $92.1 million, 15.8% higher when compared with the prior year period. Pre-tax loss was $21.8 million compared with a pre-tax loss of $14.1 million a year ago. ('000s) 2Q-24 2Q-23 Revenue $ 92,141 $ 79,582 Investment Banking $ 26,699 $ 18,749 Advisory Fees $ 12,290 $ 10,945 Equities Underwriting $ 11,208 $ 5,478 Fixed Income Underwriting $ 2,815 $ 1,867 Other $ 386 $ 459 Sales and Trading $ 64,766 $ 60,216 Equities $ 33,250 $ 34,453 Fixed Income $ 31,516 $ 25,763 Other $ 676 $ 617 Total Expenses $113,916 $ 93,633 Compensation $ 73,290 $ 61,255 Non-compensation $ 40,626 $ 32,378 Pre-Tax Loss $(21,775) $ (14,051) Compensation Ratio 79.5 % 77.0 % Non-compensation Ratio 44.1 % 40.7 % Pre-Tax Margin (23.6) % (17.7) % Revenue: Investment Banking Advisory fees earned from investment banking activities increased 12.3% compared with a year ago due to higher M&A volumesEquity underwriting fees increased 104.6% when compared with a year ago due to higher new issuance volumesFixed income underwriting fees were modestly higher than the prior year period Sales and Trading Equities sales and trading revenue was relatively flat when compared with the prior year periodFixed income sales and trading revenue increased 22.3% compared with a year ago primarily due to an increase in trading income attributable to higher interest rates and volumes Total Expenses: Compensation expenses increased 19.6% compared with a year ago primarily due to costs associated with opportunistic new hires and higher incentive compensationNon-compensation expenses were 25.5% higher than a year ago primarily due to an increase in interest expense in financing trading inventories Other Matters (In millions, except number of shares and per share amounts) 2Q-24 2Q-23 Capital Stockholders' Equity (1) $ 812.1 $ 788.3 Regulatory Net Capital (2) $ 460.7 $ 417.5 Regulatory Excess Net Capital (2) $ 439.7 $ 394.7 Common Stock Repurchases Repurchases $ 0.9 $ 3.6 Number of Shares 23,102 96,135 Average Price $ 40.01 $ 37.43 Period End Shares 10,327,510 10,984,240 Effective Tax Rate 35.3 % 18.2 % (1) Attributable to Oppenheimer Holdings Inc. (2) Attributable to Oppenheimer & Co. Inc. broker-dealer The Board of Directors announced a $0.03, or 20% increase in the quarterly dividend to $0.18 per share effective for the second quarter of 2024 payable on August 23, 2024 to holders of Class A non-voting and Class B voting common stock of record on August 9, 2024Compensation expense as a percentage of revenue was higher at 66.8% during the current period versus 61.1% during the same period last year due to opportunistic new hires and increased share based compensation costsThe effective tax rate for the current period was 35.3% compared with 18.2% for the prior year period. The effective tax rate for the second quarter of 2024 was negatively impacted by permanent items and non-deductible losses in non-U.S. businesses. Company Information Oppenheimer Holdings Inc., through its operating subsidiaries, is a leading middle market investment bank and full service broker-dealer that is engaged in a broad range of activities in the financial services industry, including retail securities brokerage, institutional sales and trading, investment banking (corporate and public finance), equity and fixed income research, market-making, trust services, and investment advisory and asset management services. With roots tracing back to 1881, the Company is headquartered in New York and has 88 retail branch offices in the United States and institutional businesses located in London, Tel Aviv, and Hong Kong. Forward-Looking Statements This press release includes certain "forward-looking statements" relating to anticipated future performance. For a discussion of the factors that could cause future performance to be different than anticipated, reference is made to Factors Affecting "Forward-Looking Statements" and Part 1A - Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Oppenheimer Holdings Inc. Consolidated Income Statements (Unaudited) ('000s, except number of shares and per share amounts) For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 % Change 2024 2023 % Change REVENUE Commissions $ 97,055 $ 88,544 9.6 $ 192,905 $ 175,241 10.1 Advisory fees 117,197 101,015 16.0 232,044 201,559 15.1 Investment banking 29,119 19,978 45.8 79,656 57,943 37.5 Bank deposit sweep income 34,846 44,060 (20.9) 71,531 92,969 (23.1) Interest 34,805 27,320 27.4 61,571 52,261 17.8 Principal transactions, net 10,074 16,253 (38.0) 28,308 29,743 (4.8) Other 7,493 9,019 (16.9) 17,712 18,152 (2.4) Total revenue 330,589 306,189 8.0 683,727 627,868 8.9 EXPENSES Compensation and related expenses 220,727 187,224 17.9 442,440 393,516 12.4 Communications and technology 24,682 22,783 8.3 49,258 45,223 8.9 Occupancy and equipment costs 15,516 16,440 (5.6) 31,364 32,341 (3.0) Clearing and exchange fees 6,780 5,927 14.4 12,622 12,190 3.5 Interest 21,980 17,467 25.8 42,528 30,609 38.9 Other 25,039 68,047 (63.2) 52,195 106,639 (51.1) Total expenses 314,724 317,888 (1.0) 630,407 620,518 1.6 Pre-Tax Income (Loss) 15,865 (11,699) * 53,320 7,350 625.4 Income tax provision (benefit) 5,599 (2,131) * 17,310 2,454 605.4 Net Income (Loss) $ 10,266 $ (9,568) * $ 36,010 $ 4,896 635.5 Less: Net loss attributable to non-controlling interest, net of tax -- (168) * (310) (321) * Net income (loss) attributable to Oppenheimer Holdings Inc. $ 10,266 $ (9,400) * $ 36,320 $ 5,217 596.2 Earnings (loss) per share attributable to Oppenheimer Holdings Inc. Basic $ 0.99 $ (0.85) * $ 3.49 $ 0.47 642.6 Diluted $ 0.92 $ (0.85) * $ 3.29 $ 0.44 647.7 Weighted average number of common shares outstanding Basic 10,327,818 11,016,430 (6.3) 10,367,636 11,054,306 (6.2) Diluted 11,111,903 11,016,430 0.9 11,083,422 11,911,379 (7.0) Period end number of common shares outstanding 10,327,510 10,984,240 (6.0) 10,327,510 10,984,240 (6.0) * Percentage not meaningful View original content:https://www.prnewswire.com/news-releases/oppenheimer-holdings-inc-reports-second-quarter-2024-earnings-302207103.html SOURCE Oppenheimer Holdings Inc. Market News and Data brought to you by Benzinga APIs