(Source: Business Wire)
GLG Partners, Inc. ("GLG") (NYSE: GLG), the U.S.-listed asset manager,
today reported a GAAP net loss attributable to common stockholders of
$99.0 million for the quarter ended September 30, 2009 and a net loss of
$243.7 million for the first nine months of fiscal 2009. GAAP diluted
EPS was a loss of $0.45 for the quarter ended September 30, 2009 and a
loss of $1.12 for the first nine months of 2009. These GAAP metrics
compare to a GAAP net loss attributable to common stockholders of $167.1
million and diluted EPS loss of $0.79 for the quarter ended September
30, 2008 and a net loss of $487.0 million and diluted EPS loss of $2.30
for the first nine months of fiscal 2008.
Under GAAP, GLG expects to continue to recognize significant and largely
non-cash expenses associated with GLG's reverse acquisition transaction
with Freedom Acquisition Holdings in November 2007. Accordingly, GAAP
net losses for the third quarter and first nine months of 2009 resulted
directly from the recognition of $110.1 million and $365.7 million,
respectively, of Acquisition-related compensation expenses as compared
to $188.0 million and $588.5 million for the third quarter and first
nine months of 2008, respectively. Acquisition-related GAAP compensation
expenses will be recognized quarterly through to the fourth quarter of
2013. For further discussion of these largely non-cash
Acquisition-related charges see below under "Non-GAAP Financial
Measures".
Table 1: Financial Highlights
(US$ in millions except per share amounts)
YTD to YTD to
Q3 2009 Q3 2008 YoY ? 9/30/09 9/30/08 YoY ?
Closing net assets under management (AUM) 21,628 17,280 25 % 21,628 17,280 25 %
Net revenues 48.2 102.1 (53 %) 186.1 422.3 (56 %)
GAAP net loss attributable to common stockholders (99.0 ) (167.1 ) (41 %) (243.7 ) (487.0 ) (50 %)
GAAP fully diluted EPS (0.45 ) (0.79 ) 43 % (1.12 ) (2.30 ) 51 %
Non-GAAP adjusted net (loss) / income (5.1 ) 21.8 (123 %) 85.5 99.9 (14 %)
Non-GAAP adjusted net (loss) / income divided by non-GAAP weighted average fully diluted shares (0.02 ) 0.07 (123 %) 0.27 0.31 (14 %)
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Non-GAAP adjusted net loss was $5.1 million for the quarter ended
September 30, 2009 as compared to non-GAAP adjusted net income of $21.8
million for the same period in 2008. Non-GAAP adjusted net income was
$85.5 million for the first nine months of fiscal 2009 as compared to
$99.9 million for the year ago period. The ratio of non-GAAP adjusted
net (loss) / income to non-GAAP weighted average fully diluted shares
was (0.02) for the quarter ended September 30, 2009, as compared to 0.07
for the same period in 2008, and 0.27 for the first nine months of
fiscal 2009, as compared to 0.31 for the same period in 2008. Non-GAAP
results for the first nine months of 2009 reflected the following
significant items: an $84.8 million gain on the extinguishment of debt
(or $75.0 million on an after-tax basis), $4.1 million of related
acquisition and restructuring costs associated with the acquisition of
Société Générale Asset Management UK ("SGAM UK") ($3.2 million on an
after-tax basis) and a $2.0 million operating loss on a pre- and
after-tax basis from SGAM UK. Non-GAAP adjusted net income and non-GAAP
weighted average fully diluted shares are financial measures not
prepared under GAAP. A reconciliation of GAAP net income to non-GAAP
adjusted net income and average fully diluted shares under GAAP to
non-GAAP weighted average fully diluted shares is presented below under
"Non-GAAP Financial Measures".
"GLG delivered solid investment returns across the franchise and built
momentum in the business throughout the quarter," said Noam Gottesman,
Chairman and Co-CEO of GLG. "We won mandates from a large sovereign
wealth fund and a Fortune 100 corporate pension fund, received buy'
rankings from two prominent institutional consulting firms for our
global and international equity products, and successfully launched a UK
retail-oriented offering leveraging the platform we acquired with the
second quarter 2009 purchase of SGAM UK. Additionally, we continued to
build out our UCITS III offerings, a growing segment for investors that
is well suited for many of our strategies. Our net AUM flows turned
positive in the third quarter and we generated strong investment returns
across the franchise. Going forward, our primary focus remains the
delivery of superior investment performance for our investors. We are
excited about the broad range of investment and strategic opportunities
that we see on the horizon."
"With the markets righting themselves and inflows returning to the
industry, GLG is well-positioned for growth: we continue to invest in
our talented pool of professionals, rewarding strong performance and
making selective hires," said Emmanuel Roman, Co-CEO of GLG. "We have
streamlined our operations over the past year, our net inflows have
turned positive with redemption trends normalizing and we continue to
believe that our broad, internationally-focused, multi-strategy platform
will benefit significantly as industry flows continue to gather
momentum."
Assets Under Management Summary
GLG's total net assets under management ("AUM") as of September 30, 2009
were approximately $21.6 billion (net of assets invested from other GLG
managed funds), up 13% from June 30, 2009 and up 25% from September 30,
2008.
Investment performance across the GLG franchise was strong, increasing
net AUM by $1.9 billion in the third quarter of 2009 and $2.9 billion
for the first nine months of 2009. Specifically, investment returns1
for the quarter ended September 30, 2009 for GLG's alternative,
long only and 130/30 strategies were 10.2%, 12.8% and 12.3%,
respectively. The year-to-date returns1 through September 30,
2009 were 24.6% for the alternative strategies, 31.0% for the long only
strategies and 25.8% for the 130/30 strategies. The returns through
October 20092 were 25.2% for alternative, 28.0% for long only
and 24.5% for 130/30 strategies. For the third quarter of 2009, first
nine months of 2009 and the month of October, the MSCI World Index was
up 14.8%, up 20.3% and down 2.2%, respectively, and the S&P 500 Index
was up 15.4%, up 18.6% and down 1.9%, respectively.
Net inflows for the quarter ended September 30, 2009 were $216 million,
largely reflecting interest in GLG's managed account capabilities, its
Japan and convertible debt offerings and the new UK retail distribution
platform which launched in August, offset by anticipated outflows from
the lifting of suspensions on redemptions from the GLG Market Neutral
Fund. For the first nine months of 2009, net inflows were $2.5 billion
primarily from approximately $2.6 billion of incremental net AUM
acquired from SGAM UK during the second quarter of 2009.
The effect of currency translation increased net AUM by $435 million in
the quarter ended September 30, 2009 and $1.2 billion in the first nine
months of 2009.
GLG's total gross AUM (including assets invested from other GLG managed
funds) was $24.0 billion as of September 30, 2009, up 11% from June 30,
2009 and up 13% from September 30, 2008.
Table 2: Assets Under Management
(US$ in millions)
As of September 30,
2009 2008
Alternative strategies(3) $ 10,924 $ 16,740
Long only strategies(4) 13,069 4,412
Gross AUM $ 23,993 $ 21,152
YoY % Change 13.4 % (10.3 %)
Less: alternative strategy investments in GLG Funds $ (1,266 ) $ (3,867 )
Less: long only strategy investments in GLG Funds (1,099 ) (5 )
Net AUM $ 21,628 $ 17,280
YoY % Change 25.2 % (15.6 %)
Quarterly average net AUM5 $ 20,361 $ 20,474
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Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Opening Net AUM $ 19,094 $ 23,668 $ 15,039 $ 24,612
Inflows (net of redemptions)(6) 216 (2,182 ) 2,492 (2,044 )
Performance (gains net of losses and fees) 1,883 (3,139 ) 2,873 (4,956 )
Currency translation impact (non-US$ AUM expressed in US$) 435 (1,068 ) 1,224 (332 )
Closing Net AUM $ 21,628 $ 17,280 $ 21,628 $ 17,280
% of Opening Net AUM
Net inflows (net of redemptions) 1.1 % (9.2 %) 16.6 % (8.3 %)
Net performance (gains net of losses and fees)(7) 9.9 % (13.3 %) 19.1 % (20.1 %)
Net currency translation impact (non-US$ expressed in US$) 2.3 % (4.5 %) 8.1 % (1.3 %)
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Note: Managed accounts amounted to $10.4 billion in net AUM at September
30, 2009 and $1.8 billion in net AUM at September 30, 2008.
Financial and Operational Summary
REVENUES
Net revenues and other income were $48.2 million, down 53%
year-over-year, for the quarter ended September 30, 2009. The decline
largely reflects the greater representation in net AUM from long only
funds and managed accounts which have lower management and
administrative fees than GLG's alternative strategy funds. Net revenues
and other income for the first nine months of 2009 decreased 56% from
the first nine months of 2008 to $186.1 million.
Third quarter 2009 performance fees were $1.9 million, down $4.9 million
from the year ago period. It is GLG's policy to recognize performance
fees when they crystallize, generally on June 30 and December 31 of each
year. Sustained performance from the third quarter on AUM in a position
to generate performance fees will generally be recognized in the fourth
quarter when the fees crystallize on December 31. Accordingly, the
fourth quarter's performance fees will largely reflect second half
performance. Performance fees for the first nine months of 2009 were
$50.7 million versus $89.8 million in the year ago period due to
generally stronger investment performance offset by lower levels of AUM
in position to generate performance fees.
Management fees and administration, service and distribution fees
totalled $46.0 million for the quarter ended September 30, 2009, down
53% from the same period last year due to a greater representation in
net AUM from long only funds and managed accounts which have lower
management and administration fees than GLG's alternative strategies.
The annualized yield on management, administration, service and
distribution fees was 0.90% of average net AUM, a decline of 102 basis
points ("bps") compared to the yield in the third quarter of 2008 but
steady relative to the second quarter of 2009. For the first nine months
of 2009, management fees and administration, service and distribution
fees totaled $127.8 million, down 61% from the same period last year.
The annualized yield on management, administration, service and
distribution fees was 0.96% of average net AUM8, a decline of
99 bps compared to the yield in the first nine months of 2008.
Other income, which largely reflects the currency translation impact on
non-dollar denominated cash held on GLG's balance sheet and currency
hedging, increased by $3.1 million from the third quarter of 2008 to
$0.3 million for the three months ended September 30, 2009 due to the
weakening of the U.S. dollar during the period. For the first nine
months of 2009, other income rose by $5.1 million from the same period a
year ago to $7.6 million.
EXPENSES
GAAP compensation, benefits and profit share for the quarter ended
September 30, 2009 decreased to $136.6 million compared to $227.4
million in the same quarter last year. For the first nine months of
2009, GAAP compensation, benefits and profit share decreased to $455.2
million compared to $777.1 million in the first nine months of 2008.
Non-GAAP compensation, benefits and profit share ("non-GAAP CBP")
decreased in the quarter ended September 30, 2009 by 33% from the year
ago period to $26.5 million. For the first nine months of 2009, CBP
decreased by 53% from the year ago period to $89.5 million. Non-GAAP CBP
is a financial measure not prepared under GAAP, and includes
compensation, benefits and profit share but excludes Acquisition-related
compensation expense described below under "Non-GAAP Financial Measures".
The total level of non-GAAP CBP when expressed as a percentage of
revenues and other income rose 16 percentage points to 55% in the
quarter ended September 30, 2009 from the same period last year, and
rose 3 percentage points to 48% in the first nine months of 2009 when
compared to the first nine months of 2008. Restructuring costs tied to
the acquisition of SGAM UK added $3.3 million to GAAP compensation,
benefits and profit share and non-GAAP CBP for the first nine months of
2009. These restructuring compensation costs, when expressed as a
percentage of revenues and other income, were 1.8% in the first nine
months of 2009. The higher non-GAAP CBP to revenue ratios in 2009 when
compared to 2008 reflect stronger investment performance broadly, a
lower percentage of total net AUM in a position to generate performance
fees and lower management and administration fee yields. Please note
that GLG's compensation, benefits and profit share has large
discretionary components and is finalized based primarily on full year
performance as at December 31 of each year.
General, administrative, and other expenses for the quarter ended
September 30, 2009 decreased 22% from the year ago period to $23.7
million, and decreased 21% year-over-year for the first nine months of
2009 to $71.5 million. The decrease is mainly the result of targeted
cost cutting initiatives established in the fourth quarter of 2008
partially offset by the addition of expenses from the operations
acquired from SGAM UK. Non-compensation related acquisition and
restructuring costs tied to SGAM UK added $0.1 million and $0.9 million
to general, administrative, and other expenses for the third quarter and
first nine months of 2009, respectively.
Net interest expense was $2.9 million during the quarter ended September
30, 2009 and $8.8 million during the first nine months of 2009. Net
interest expense largely reflects the cost of borrowings under GLG's
term loan, revolving credit facilities and convertible notes, offset by
the amortization of the deferred portion of the gain on debt
restructuring and interest income on cash balances.
Realized gains on available-for-sale investments were $1.0 million in
the third quarter of 2009 and a loss of $20.2 million during the first
nine months of 2009. The realized gain or loss on available-for-sale
investments relates to investments made in GLG funds on behalf of
participants in GLG's equity participation plan. These investments are
consolidated on GLG's balance sheet under GAAP but are excluded from the
calculation of non-GAAP adjusted net income, as the gains or losses on
these investments flow to the participants in the plan. A net gain of
approximately $75 million was recognized on the extinguishment of debt
for the nine months ended September 30, 2009 resulting from $284.5
million principal amount of debt repurchased in the second quarter of
2009 for $170.7 million (the difference between the $113.8 million
discount paid to face value on the repurchase and the recorded gain in
the statement of operations of $84.8 million is being amortized as a
reduction of interest expense). There was also a gain in the quarter
ended June 30, 2009 of $21.1 million reflecting negative goodwill from
the acquisition of SGAM UK (intangible assets of $33.3 million
associated with the acquisition are being amortized over the next ten
years). The negative goodwill gain, related amortization and associated
tax benefit are excluded from the calculation of non-GAAP adjusted net
income for the first nine months of 2009 as these items are not factored
into management's assessment of the underlying performance of GLG's
business.
Capital
As of September 30, 2009, there were 249.6 million common shares, 58.9
million FA Sub 2 Limited Exchangeable Shares and 54.5 million warrants
outstanding (250.3 million, 58.9 million and 54.5 million, respectively,
at June 30, 2009 and 245.8 million, 58.9 million and 54.5 million,
respectively, at March 31, 2009). Approximately 0.6 million shares were
repurchased and no warrants were repurchased or exercised during the
third quarter of 2009. During the first nine months of 2009, no warrants
were repurchased or exercised and 29.0 million shares were repurchased
for $67.0 million.
Investor/Analyst Conference Call and Webcast
GLG will hold a conference call for investors and analysts on Thursday,
November 5, 2009 at 8:30 a.m. EST / 1:30 p.m. GMT hosted by Chairman of
the Board and Co-Chief Executive Officer, Noam Gottesman, and Chief
Financial Officer, Jeffrey Rojek. To participate by telephone, the
domestic dial-in number is +1 888 713 4211 and the international dial-in
number is +1 617 213 4864. The access code is 12622431.
Participants may pre-register for the call at: https://www.theconferencingservice.com/prereg/key.process?key=PXX9RJNW7
Pre-registrants will be issued a pin number to use when dialing into the
live call which will provide quick access to the conference by bypassing
the operator upon connection.
For the audio replay, which will be available until December 5, 2009,
the domestic dial-in number is +1 888 286 8010 and the international
dial-in number is +1 617 801 6888. The replay access code is 72696678.
A live audio webcast of the teleconference will be accessible via the
Investor Relations section of GLG's website at www.glgpartners.com.
The audio webcast will be available for replay in the Calendar of Events
section of the website until December 5, 2009. A copy of this earnings
release and the third quarter update investor presentation will also be
available online.
About GLG
GLG is a U.S.-listed asset management company offering its base of
long-standing prestigious clients a diverse range of alternative and
traditional investment products and account management services.
