Siebert Financial Corp. (NASDAQ:SIEB) (“Siebert”), a provider of financial services, today announced results for the first quarter of 2019, reporting net income of $1.0 million, basic and diluted earnings per share (EPS) of $0.04, and revenue of $6.4 million.
“We entered 2019 on the heels of a record setting 2018 that saw strong results across nearly every financial metric. The first quarter of 2019 was weaker on a year over year basis due mostly to market volatility, lower trading volume, and investment in infrastructure and technology. Despite revenues being down year over year, in comparison to the fourth quarter of 2018, operating income was up 8% and revenue stayed relatively flat,” said Gloria E. Gebbia, controlling shareholder and board member of Siebert.
“Additionally, we saw good results from Park Wilshire in the first quarter of 2019. We are also exploring ways to invigorate our customer channels, including the implementation of a program to contact a targeted number of our clients – nearly $3 billion in AUM – to proactively market new Siebert products and offerings. We see this as an opportunity to generate new business from existing clients.
“As we continue to expand our corporate footprint, we increased our office space in Jersey City to nearly 11,000 square feet and are in the process of establishing a large Miami office. Investing in our office infrastructure, technology and internal processes is key towards the long-term success of our business. Going forward, we are excited to further energize our customer networks, delivering value for our clients, partners and shareholders,” added Mrs. Gebbia.
Selected Financial Highlights
The following table summarizes the results for the below periods (unaudited):
| Three Months Ended March 31, | ||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||
| Revenue | $ | 6,429,000 | $ | 8,177,000 | $ | 2,379,000 | ||||||||
Operating income | $ | 1,336,000 | $ | 2,106,000 | $ | 61,000 | ||||||||
| Net income | $ | 1,006,000 | $ | 1,693,000 | $ | 58,000 | ||||||||
| Basic and diluted EPS | $ | 0.04 | $ | 0.06 | $ | 0.00 | ||||||||
SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2019 | 2018 | |||||
| Revenue: | ||||||
| Margin interest, marketing and distribution fees | $ | 2,772,000 | $ | 2,535,000 | ||
| Commissions and fees | 1,864,000 | 2,674,000 | ||||
| Principal transactions | 1,610,000 | 2,941,000 | ||||
| Advisory fees | 168,000 | 16,000 | ||||
| Interest | 15,000 | 11,000 | ||||
| Total Revenue | 6,429,000 | 8,177,000 | ||||
| Expenses: | ||||||
| Employee compensation and benefits | 2,835,000 | 3,662,000 | ||||
| Clearing fees, including execution costs | 654,000 | 902,000 | ||||
| Professional fees | 502,000 | 608,000 | ||||
| Other general and administrative | 385,000 | 386,000 | ||||
| Technology and communications | 247,000 | 234,000 | ||||
| Rent and occupancy | 295,000 | 242,000 | ||||
| Depreciation and amortization | 175,000 | 24,000 | ||||
| Advertising and promotion | — | 13,000 | ||||
| Total Expenses | 5,093,000 | 6,071,000 | ||||
Income before provision for income tax and before earnings of equity method investment | 1,336,000 | 2,106,000 | ||||
Provision for income tax | 369,000 | 413,000 | ||||
Income before earnings of equity method investment | 967,000 | 1,693,000 | ||||
Earnings of equity method investment | 39,000 | — | ||||
| Net income | $ | 1,006,000 | $ | 1,693,000 | ||
| Net income per share of common stock | ||||||
| Basic and diluted | $ | 0.04 | $ | 0.06 | ||
| Weighted average shares outstanding | ||||||
| Basic and diluted | 27,157,188 | 27,157,188 | ||||
SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||
| March 31, 2019 | December 31, 2018 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 3,767,000 | $ | 7,229,000 | ||
| Receivables from clearing and other brokers | 2,275,000 | 2,030,000 | ||||
| Receivable from related party | 1,000,000 | 1,000,000 | ||||
| Receivable from lessors | — | 171,000 | ||||
| Other receivables | 96,000 | 96,000 | ||||
| Prepaid expenses and other assets | 568,000 | 470,000 | ||||
| Furniture, equipment and leasehold improvements, net | 992,000 | 468,000 | ||||
| Software, net | 1,404,000 | 1,137,000 | ||||
| Lease right-of-use assets | 2,257,000 | — | ||||
| Investment in related party | 3,704,000 | — | ||||
| Deferred tax assets | 5,486,000 | 5,576,000 | ||||
| $ | 21,549,000 | $ | 18,177,000 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Liabilities: | ||||||
| Accounts payable and accrued liabilities | $ | 579,000 | $ | 699,000 | ||
| Due to clearing brokers and related parties | 64,000 | 133,000 | ||||
Income tax payable | 196,000 | — | ||||
| Lease incentive obligation | — | 171,000 | ||||
| Lease liabilities | 2,530,000 | — | ||||
| 3,369,000 | 1,003,000 | |||||
| Commitments and Contingencies | ||||||
| Stockholders’ equity: | ||||||
Common stock, $.01 par value; 49,000,000 shares authorized, 27,157,188 shares issued and outstanding as of March 31, 2019 and December 31, 2018 | 271,000 | 271,000 | ||||
| Additional paid-in capital | 7,641,000 | 7,641,000 | ||||
| Retained earnings | 10,268,000 | 9,262,000 | ||||
| 18,180,000 | 17,174,000 | |||||
| $ | 21,549,000 | $ | 18,177,000 | |||
Notice to Investors
This communication is provided for informational purposes only and is neither an offer to sell nor a solicitation of an offer to buy any securities in the United States or elsewhere.
About Siebert Financial Corp.
Siebert Financial Corp. is a holding company that conducts its retail discount brokerage business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc. (“MSCO”), which became a member of the New York Stock Exchange (“NYSE”) in 1967 when Ms. Siebert became the first woman to own a seat on the NYSE and the first to head one of its member firms. The company conducts its investment advisory business through its wholly-owned subsidiary, Siebert AdvisorNXT, Inc. (“AdvisorNXT”), a registered investment advisor, and its insurance business through its wholly-owned subsidiary, Park Wilshire Companies Inc. (“PWC”), a licensed insurance agency. Siebert’s fourth wholly-owned subsidiary, KCA Technologies, LLC (“KCAT”), is a developer of robo-advisory technology. Siebert is headquartered in New York City with 13 retail branches throughout the continental United States. Siebert is under common control with StockCross Financial Services, Inc. (“StockCross”). More information is available at www.siebertnet.com.
Cautionary Note Regarding Forward-Looking Statements
Statements in this press release that are not statements of historical or current fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” involve risks and uncertainties and known and unknown factors that could cause the actual results of Siebert Financial Corp. (the “Company”) to be materially different from historical results or from any future results expressed or implied by such “forward-looking statements”, including without limitation: changes in general economic and market conditions; changes and prospects for change in interest rates; fluctuations in volume and price of securities; changes in demand for brokerage services; competition within and without the brokerage business, including the offer of broader services; competition from electronic discount brokerage firms offering greater discounts on commissions than the Company; the prevalence of a flat fee environment; limited trading opportunities; the method of placing trades by the Company’s customers; computer and telephone system failures; the level of spending by the Company on advertising and promotion; trading errors and the possibility of losses from customer non-payment amounts due; other increases in expenses and changes in net capital or other regulatory requirements. As a result of these and other factors, the Company may experience material fluctuations in its operating results on a quarterly or annual basis, which could materially and adversely affect its business, financial condition, operating results, and stock price, as well as other risks detailed in the Company’s filings with the Securities and Exchange Commission (“SEC”). Accordingly, investors are cautioned not to place undue reliance on any such “forward-looking statements.” The Company undertakes no obligation to update the information contained herein or to publicly announce the result of any revisions to such “forward-looking statements” to reflect future events or developments. An investment in the Company involves various risks, including those mentioned above and those which are detailed from time to time in the Company’s SEC filings, copies of which may be obtained from the Company or through the SEC’s website.
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