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WisdomTree Announces First Quarter 2016 Results

$0.09 diluted EPS for the quarter

Declares $0.08 quarterly dividend

Buyback authorization increased by $60 million to $100 million

NEW YORK, April 29, 2016 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. WETF, -8.93% an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager today reported net income of $12.1 million or $0.09 diluted EPS in the first quarter. This compares to $12.1 million in the first quarter of last year and $20.5 million in the fourth quarter of 2015.

WisdomTree CEO and President Jonathan Steinberg said, "Against a backdrop of equity and currency market headwinds, our largest Japan and European based exposures experienced outflows in the first quarter, in line with market sentiment. However, despite this difficult operating environment we achieved solid financial results underscoring the efficiency and durability of our business model. As a reflection of our financial strength, WisdomTree's Board approved a $60 million increase to our share repurchase program to a total amount of $100 million."

Mr. Steinberg added, "We are continuing to build on our market leadership position and invest in initiatives for future growth, including expanding our product footprint with 29 new U.S. ETF listings across equities, fixed income, commodities and alternatives since the start of 2015. Not only are we competing in new categories like Liquid Alts and U.S. Fixed Income, we are deepening our distribution capabilities while expanding and diversifying the client channels and markets in which we compete."

Summary Operating and Financial Highlights

Three Months Ended Change From
Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
Operating Highlights 2016 2015 2015 2015 2015
U.S. listed ETFs ($, in billions):
AUM $ 44.3 $ 51.6 $ 55.8 (14.3 %) (20.6 %)
Net inflows/(outflows) $ (5.4 ) $ (2.6 ) $ 13.5 n/a n/a
Average AUM $ 45.5 $ 56.6 $ 46.4 (19.7 %) (2.0 %)
Average advisory fee 0.52 % 0.52 % 0.52 % - -
Market share of industry inflows n/a n/a 24.4 % n/a n/a
European listed ETPs ($, in millions):
AUM $ 885.0 $ 773.9 $ 334.6 14.4 % 164.4 %
Net inflows $ 193.3 $ 205.3 $ 174.2 (5.8 %) 11.0 %
Average advisory fee 0.68 % 0.70 % 0.75 % -0.02 -0.07
Financial Highlights($, in millions, except per share amounts):
Consolidated Results
Total revenues $ 60.9 $ 76.5 $ 60.1 (20.4 %) 1.2 %
Pre-tax income $ 21.7 $ 35.7 $ 21.0 (39.3 %) 3.1 %
Net income $ 12.1 $ 20.5 $ 12.1 (41.2 %) 0.1 %
Diluted earnings per share $ 0.09 $ 0.15 $ 0.09 $ -0.06 -
Pre-tax margin 35.6 % 46.7 % 35.0 % -11.1 +0.6
U.S. listed ETFs
Gross margin [1] (non-GAAP) 82.9 % 85.6 % 83.2 % -2.7 -0.03
Pre-tax margin 40.7 % 52.1 % 38.3 % -11.4 +2.4

[_________________________________________]

[1] Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.

Recent Business Developments

  • On February 15, 2016, the Company announced it commenced operations in Japan
  • On February 24, 2016, the Company announced the launch of the WisdomTree CBOE S&P 500 PutWrite Strategy Fund (PUTW)
  • On March 1, 2016, the Company announced it won six Fund Action ETF Performance Awards
  • On March 24, 2016, the Company announced CEO Jonathan Steinberg received the ETF.com Lifetime Achievement Award
  • On March 29, 2016, the Company named Joseph Grogan Head of U.S. Institutional Distribution
  • On April 7, 2016, the Company announced the launch of the WisdomTree Emerging Markets Dividend Fund (DVEM) and the WisdomTree International Quality Dividend Growth Fund (IQDG)
  • On April 22, 2016, the Company announced plans to launch ETFs in Canada
  • On April 27, 2016, the Company announced the launch of its Fundamental U.S. Corporate Bond ETF Suite: the WisdomTree Fundamental U.S. Corporate Bond Fund (WFIG), the WisdomTree Fundamental U.S. Short-Term Corporate Bond Fund (SFIG), the WisdomTree Fundamental U.S. High Yield Corporate Bond Fund (WFHY) and the WisdomTree Fundamental U.S. Short-Term High Yield Corporate Bond Fund (SFHY)
  • WisdomTree Europe:
    • Launched the WisdomTree Emerging Asia Equity Income UCITS ETF (DEMA) and multiple currency hedged share classes of flagship global funds: DXJ, HEDJ and DXGP, in Switzerland on the SIX Swiss Exchange on February 4, 2016
    • Announced it was named Best Smart Beta Provider and Most Innovative European ETN Provider by etfexpress on February 29, 2016
    • Announced the Boost short & leveraged ETP range hits new trading volume record in February of $1.5 billion on March 7, 2016
    • Celebrated 1 [st] anniversary of European UCITS ETF platform launch in Germany on February 25, 2016 and in Switzerland on March 10, 2016
    • Launched one volatility and two emerging markets Boost ETPs in Italy on the Borsa Italiana on March 17, 2016

Assets Under Management and Net Inflows

U.S. listed ETF assets under management ("AUM") were $44.3 billion at March 31, 2016, down 14.3% from December 31, 2015 primarily due to $5.4 billion of net outflows and $2.2 billion of negative market movement. U.S. listed AUM was down 20.6% from March 31, 2015 primarily due to net outflows.

European listed AUM was $885.0 million at March 31, 2016, up 14.4% from December 31, 2015 primarily due to $193.3 million of net inflows. European listed AUM was up 164.4% from March 31, 2015 primarily due to net inflows.

Performance

In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 94% of the $43.3 billion invested in our ETFs and 67% (47 of 70) of our ETFs outperformed their comparable Morningstar average since inception as of March 31, 2016.

For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.

First Quarter Financial Discussion

Revenues

Total revenues increased 1.2% to $60.9 million as compared to the first quarter of 2015 primarily due to inflows in European listed products, partly offset by lower revenues in our U.S.-listed ETFs. Revenues decreased 20.4% compared to the fourth quarter of 2015 due to net outflows, primarily in our two largest ETFs, as well as negative market movement from the extreme volatility the markets experienced at the beginning of the year. Our average advisory fee remained at 0.52% during these periods.

Gross margin for our U.S. listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 82.9% in the first quarter of 2016 as compared to 83.2% in the first quarter of 2015 and 85.6% in the fourth quarter of 2015. The decline over these periods was due to lower average AUM as well the costs due to additional ETF launches.

Pre-tax margin was 35.6% in the first quarter of 2016 as compared to 35.0% in the first quarter of 2015 and 46.7% in the fourth quarter of 2015. Pre-tax margin for our U.S. listed ETF business was 40.7% in the first quarter of 2016 as compared to 38.3% in the first quarter of 2015 and 52.1% in the fourth quarter of 2015.

Expenses

Total expenses increased slightly from the first quarter of 2015 as lower compensation almost entirely offset increases in our other operating expenses. Total expenses declined 3.9% compared to the fourth quarter of 2015 as lower operating expenses were partly offset by higher marketing costs.

  • Compensation and benefits expense declined 22.3% from the first quarter of 2015 to $15.2 million due to lower accrued incentive compensation relating to outflows we experienced in the quarter partly offset by higher headcount related expenses to support our growth, higher stock based compensation due to equity awards we granted as part of 2015 incentive compensation and seasonally higher payroll taxes due to bonus payments. Our headcount was 146 in the U.S. and 191 globally at the end of the quarter.

    This expense declined 2.1% from the fourth quarter of 2015 as lower accrued incentive compensation was partly offset by higher seasonal taxes due to bonus payments in the quarter and higher headcount related expenses.
  • Fund management and administration expense decreased 1.2% from the first quarter of 2015 primarily due to lower fund costs for our U.S. listed ETF business partly offset by additional fund launches by our European business. This expense declined 7.7% compared to the fourth quarter of 2015 due to one-time related fund costs for our European business in the fourth quarter of last year as well as lower U.S. listed fees due to lower average AUM. We had 93 U.S. listed ETFs and 89 ETPs at the end of the quarter.
  • Marketing and advertising expense increased 24.6% from the first quarter of 2015 and 23.9% from the fourth quarter of 2015 to $3.8 million primarily due to higher levels of advertising related activities to support our growth.
  • Sales and business development expense increased 28.8% from the first quarter of 2015 to $2.4 million primarily due to higher spending for sales and product development related initiatives. This expense declined 11.8% compared to the fourth quarter of 2015 due to lower product development related expenses.
  • Professional and consulting fees increased 93.8% from the first quarter of 2015 and 16.7% compared to the fourth quarter of 2015 to $2.8 million due to higher corporate consulting related services and fees associated with our acquisition of the GreenHaven family of commodity ETFs.
  • Occupancy, communications and equipment expense increased 33.1% from the first quarter of 2015 to $1.2 million primarily due to technology equipment initiatives and higher costs for our office space in London. This expense was relatively unchanged compared to the fourth quarter of 2015.
  • Depreciation and amortization expense increased 43.6% from the first quarter of 2015 to $0.3 million...

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