Friday, May 01, 2009 7:02:39 PM
Terra Nova Financial Group, Inc. Announces Preliminary Earnings
May 1, 2009 4:04:00 PM
Email Story Discuss on ZenoBank
View Additional ProfilesCHICAGO, IL -- (MARKET WIRE) -- 05/01/09 -- Terra Nova Financial Group, Inc. (OTCBB: TNFG), a specialized financial services firm that through its subsidiaries provides brokerage services and trading technologies for professional traders, hedge funds and money managers, today announced preliminary unaudited financial performance metrics for the three months ended March 31, 2009.
Selected Results and Discussion
-- Consolidated revenue was $7.4 million for the three months ended March
31, 2009 versus $9.9 million for the same period in 2008. The $2.5
million decrease in revenue was largely due to the following factors:
-- Lower commissions and fees by $1.5 million to $6.7 million for the
three months ended March 31, 2009, compared to the same period in
2008. Trade activity sharply dropped off in the first part of the
quarter ended March 31, 2009. Although volume rebounded somewhat
in March of 2009, it was lower overall by 49% for the three month
period in 2009 compared to 2008. The Company's focus on improving
margins at the customer level contributed to some of the decline in
trading volume, as did the impact of market drivers. An improvement
in commissions per trade offset some of the reduction in volume by
$1.1 million. Commissions per trade have improved due to an
increased focus on enhancing gross margin.
-- Lower net interest income by $1.0 million to $420,000 for the three
months ended March 31, 2009, compared to same period in 2008. The
decline was primarily attributable to a drop in the federal funds
rate -- the base rate from which the Company earns interest on its
bank deposits and margin loans. Additionally, client margin
balances are down over 70% as of March 31, 2009 compared to the
same period in 2008.
-- Higher net software fees of $100,000 from Tradient platform
subscriptions for the three months ended March 31, 2009 compared to the
same period last year. The number of Tradient platform users increased
from 2,327 as of March 31, 2008 to 2,535 as of March 31, 2009.
-- Overall trade activity declined during the three months ended March 31,
2009 compared to the same period in 2008. DARTs (daily average revenue
trades) were 17,129 for the three months ended March 31, 2009 compared
to 25,046 for the same period in 2008. The level of trading activity
in March 2009 improved over February 2009 but remains below the level
of activity seen in the same period last year.
-- Commission revenue margin (commissions and fees less cost of sales)
increased 2.7% to 51.8% for the three months ended March 31, 2009. The
margin improvement was driven by a shift in the mix of trades through
the Company's proprietary platform and lower cost third party platforms
from 20% for the three months ended March 31, 2008 to 56% for the same
period in 2009.
-- Adjusted EBITDA was $54,000 for the three months ended March 31, 2009
compared to $1 million for the same period in 2008.
-- Net loss per share of $0.01 for the three months ended March 31, 2009
compared to net income per share of $0.01 for the same period in 2008.
-- The Company increased its reserve as of March 31, 2009 for a potential
fine related to a pending regulatory matter with FINRA involving
allegations relating to the Company's past practices for soft dollar
accounts. The Company has previously made a written response to the
FINRA allegations which are primarily based on events that occurred in
prior years 2004 and 2005. The Company continues to seek a reasonable
negotiated settlement.
"Our strategy to improve margins continues into the new fiscal year," said Michael Nolan, President and CEO. "Despite a 26% decline in revenues, segment adjusted EBITDA margins declined 20 basis points -- evidence of the leverage opportunity in our business model. As the market environment improves and as we continue to enhance our product offering, we feel well positioned to drive earnings in the future."
Stock Repurchase Authorization
The Company's Board of Directors has authorized the Company's management to pursue repurchases of the Company's stock at the discretion of the management. This authorization allows management to purchase up to $3,000,000 of stock under the safe harbor guidelines of SEC Rule 10b-18. This authorization grants discretion to the Company's management and there is no requirement for them to purchase a minimum number of shares. The repurchase program is intended to continue until April 30, 2010, but may be modified or terminated prior to that date. This repurchase program is similar to a prior repurchase program that ended in September 2008. No purchases have yet been made under this program.
"The stock buyback program, authorized by the Board of Directors, is an initiative consistent with another of our strategies rooted in financial discipline," said Nolan. "It involves deploying capital in ways that we believe are most advantageous to the long term strength of the firm."
Brokerage Services Segment
First quarter 2009 highlights
-- Brokerage revenue of $7.1 million for the three months ended March 31,
2009 -- a decline of 27% compared to the same period in 2008 --
predominately attributable to a decline in net interest income of $1
million due to decreasing federal funds rates. Commissions and fees
declined $1.5 million due to lower trading volume, offset by an increase in
average price per trade.
-- Net income of $327,000 for the three months ended March 31, 2009 -- a
decline of 70% compared to the same period in 2008, due primarily to lower
commission revenue and net interest income.
-- Adjusted EBITDA of $717,000 for the three months ended March 31,
2009 -- a decline of 52% compared to the same period in 2008.
Software Services Segment
First quarter 2009 highlights
-- Revenue of $257,000 for the three months ended March 31, 2009 -- an
increase of 62% compared to the same period in 2008.
-- Net loss of $77,000 for the three months ended March 31, 2009,
compared to net loss of $303,000 in the same period in 2008.
-- Adjusted EBITDA of ($2,000) for the three months ended March 31, 2009
compared to ($230,000) for the same period in 2008.
-- An increase in the number of Tradient platform users from 2,327 as of
March 31, 2008 to 2,535 as of March 31, 2009.
Unallocated Expenses
-- Unallocated expenses increased from $401,000 in the quarter ending
March 31, 2008 to $790,000 in the quarter ending March 31, 2009. The
increase relates to $350,000 of legacy payables that were written off in
the first quarter of 2008.
Consolidated Company Totals
GAAP and Non-GAAP preliminary unaudited financial results on a consolidated basis include:
-- Consolidated revenue of $7.4 million for the three months ended March
31, 2009 compared to $9.9 million for the same period in 2008.
-- Net loss for three months ended March 31, 2009 of approximately
$330,000 compared to $172,000 net income for the same period in 2008.
-- Adjusted EBITDA of $54,000 for the three months ended March 31, 2009
compared to $1 million for the same period in 2008.
Consolidated financial statements - Preliminary Unaudited
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
REVENUES (Unaudited) (Unaudited)
Commissions and fees $ 6,720,234 $ 8,237,980
Interest income 420,276 2,070,884
Interest expense on brokerage accounts 284 608,743
----------- -----------
Net interest income 419,992 1,462,141
Software fees, net 257,518 159,003
Other revenue 461 84,781
----------- -----------
Net revenues 7,398,205 9,943,905
EXPENSES
Commissions and clearing 2,534,779 2,608,227
Compensation and benefits 2,365,888 3,022,051
Software and market data 903,770 1,654,011
Advertising and promotional 137,230 181,989
Professional fees 686,921 796,851
Communications and information technology 239,190 256,571
Depreciation and amortization 563,267 557,563
Other general and administrative expenses 506,969 466,515
----------- -----------
Total expenses 7,938,014 9,543,778
----------- -----------
Income (loss) before income taxes (539,809) 400,127
Income tax benefit (provision) 210,000 (228,000)
----------- -----------
Net income (loss) (329,809) 172,127
----------- -----------
Dividends on preferred stock - (17,574)
----------- -----------
Net income (loss) attributable to common
shareholders $ (329,809) $ 154,553
=========== ===========
Net income (loss) per common share:
Basic $ (0.01) $ 0.01
=========== ===========
Diluted $ (0.01) $ 0.01
=========== ===========
Weighted average common shares outstanding:
Basic 25,482,942 26,421,079
=========== ===========
Diluted 25,482,942 26,421,079
=========== ===========
Consolidated financial statements - Preliminary Unaudited, continued
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2009 2008
------------- -------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 6,244,079 $ 7,889,553
Cash segregated in compliance with federal
regulations 136,391,934 141,159,364
Receivables from brokers, dealers and
clearing organizations 14,613,008 13,568,459
Receivables from customers and non-customers,
net 5,623,845 4,858,360
Property and equipment, net 1,218,325 1,221,066
Capitalized software development costs, net 1,929,728 2,060,015
Intangible assets, net 3,768,976 4,111,514
Income tax receivables 716,264 1,446,264
Goodwill 7,501,408 7,501,408
Deferred income taxes, net 1,994,761 1,784,761
Other assets 1,162,681 1,346,764
------------- -------------
Total assets $ 181,165,009 $ 186,947,528
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Payables to brokers, dealers and clearing
organizations 670,152 913,621
Payables to customers and non-customers 146,588,408 151,970,566
Accounts payable and accrued expenses 2,668,444 2,525,692
------------- -------------
Total liabilities 149,927,004 155,409,879
Commitments and contingencies
Shareholders' equity
Common stock; $0.01 par value; 150,000,000
shares authorized; 25,482,942 shares issued
and outstanding at March 31, 2009 and
December 31, 2008 254,829 254,829
Additional paid-in capital 52,035,583 52,005,418
Accumulated deficit (21,052,407) (20,722,598)
------------- -------------
Total shareholders' equity 31,238,005 31,537,649
------------- -------------
Total liabilities and shareholders' equity $ 181,165,009 $ 186,947,528
============= =============
SEGMENT REPORTING and CONSOLIDATED FINANCIAL STATEMENTS - Preliminary Unaudited
In addition to reporting financial results in accordance with generally accepted accounting principles in the United States, or GAAP, Terra Nova uses the measure of Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and other non-cash items). This measure is not in accordance with or an alternative for GAAP and may be different from measures used by other companies. Adjusted EBITDA eliminates certain items of expenses and losses. The Company's management believes that this statistic is indicative of the relative strength of the Company's operating performance and allows investors to evaluate the current operating and financial performance of the Company's core business. The Company's management uses these measures for reviewing its financial results and for business planning. Terra Nova's management discloses this information externally along with a reconciliation of their most directly comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results.
Below is Terra Nova's preliminary unaudited segment reporting & Adjusted EBITDA reconciliations for the three months ended March 31, 2009 and 2008.
Segment reporting & Adjusted EBITDA reconciliations - Preliminary Unaudited
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Adjustments - Unaudited
Three Months Ended March 31,
----------------------------
2009 2008
------------- -------------
REVENUES
Commissions and fees $ 6,720,234 $ 8,237,980
Net interest income 419,992 1,462,141
Software fees, net 257,518 159,003
Other revenue 461 84,781
------------- -------------
Net revenues 7,398,205 9,943,905
Cost of sales 3,237,856 4,193,438
Gross profit 4,160,349 5,750,466
------------- -------------
Operating expenses 4,700,158 5,350,340
------------- -------------
Income (loss) before income taxes (539,809) 400,127
Income tax benefit (provision) 210,000 (228,000)
------------- -------------
Net income (loss) (329,809) 172,127
Adjustments:
Depreciation and amortization 563,267 557,563
Stock-based compensation 30,165 42,484
Income tax benefit (provision) (210,000) 228,000
------------- -------------
Total Adjusted EBITDA $ 53,623 $ 1,000,174
============= =============
Commissions revenue margin $ 3,482,378 $ 4,044,542
Commissions revenue margin % 51.8% 49.1%
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Segment reconciliation of Non-GAAP Adjustments - Unaudited
Three Months Ended March 31,
----------------------------
2009 2008
------------- -------------
Brokerage Services
Total revenues $ 7,140,225 $ 9,775,888
Total expenses (6,813,183) (8,680,739)
------------- -------------
Income before income taxes 327,042 1,095,149
Net income 327,042 1,095,149
ADJUSTMENTS:
Depreciation and amortization 390,006 384,837
------------- -------------
Total Adjusted EBITDA $ 717,048 $ 1,479,986
Three Months Ended March 31,
----------------------------
Software Services 2009 2008
------------- -------------
Total revenues $ 568,356 $ 555,722
Elimination of intercompany charges (310,838) (396,718)
Total expenses (334,572) (462,445)
------------- -------------
Loss before income taxes (77,054) (303,441)
Net loss (77,054) (303,441)
ADJUSTMENTS:
Depreciation and amortization 75,067 73,355
------------- -------------
Total Adjusted EBITDA $ (1,987) $ (230,086)
============= =============
Total Adjusted EBITDA for Segments: $ 715,061 $ 1,249,900
Three Months Ended March 31,
----------------------------
Unallocated expenses 2009 2008
------------- -------------
Total revenues $ 461 $ 9,013
Total expenses (790,258) (400,594)
------------- -------------
Loss before income taxes (789,797) (391,581)
Income tax benefit (provision) 210,000 (228,000)
------------- -------------
Net loss (579,797) (619,581)
ADJUSTMENTS:
Depreciation and amortization 98,194 99,371
Stock-based compensation 30,165 42,484
Income tax benefit (provision) (210,000) 228,000
------------- -------------
Total Adjusted EBITDA for Unallocated
expenses: $ (661,438) $ (249,726)
============= =============
Total Adjusted EBITDA $ 53,623 $ 1,000,174
============= =============
About Terra Nova Financial Group, Inc.
Terra Nova Financial, LLC ("Terra Nova Financial") and Tradient Technologies, Inc. ("Tradient") are wholly-owned subsidiaries of Terra Nova Financial Group, Inc. ("Terra Nova") a public company trading on the OTC Bulletin Board under the symbol TNFG. Terra Nova, through its subsidiaries, primarily operates as a registered broker-dealer and service bureau, offering a broad array of trading products including equities, options, futures and commodity options, ETFs, fixed income and mutual funds.
Terra Nova Financial is a specialized financial services firm focused on supporting trading professionals. Professional traders, hedge funds and money managers come to Terra Nova Financial for unmatched value in execution, clearing and prime brokerage services. This recognition originated with the firm's role as the sponsoring broker-dealer for the innovative Archipelago ECN (now part of the NYSE Euronext) and has been further earned through its proven mastery of the client experience. Through a portfolio of advanced technology tools, Terra Nova Financial empowers self-directed clients to trade, analyze, strategize and report with the precision professionals require. Its team is built to enhance the impact of these tools by providing swift, flexible care and insight, with one goal in mind: clients success. The firm was founded in 1994 and is headquartered in Chicago, IL with a sales presence in New York, NY.
Tradient operates Terra Nova's technology development activities, building applications for electronic trade execution, order routing and clearing. Tradient platforms are designed around the need for efficiency, consistency and value using a swift, targeted innovation and development process. Tradient is located in Chicago, IL.
Terra Nova Financial is regulated by the SEC, FINRA and NFA and is a member of Depository Trust Company, National Securities Clearing Corporation, Securities Investor Protection Corporation, and the Options Clearing Corporation. The firm holds trading memberships with the NASDAQ OMX Group, Inc., NASDAQ OMX PHLX, Chicago Stock Exchange, National Stock Exchange, CBOE Stock Exchange, NYSE Arca Options, NYSE Arca Equities, NYSE Amex Securities, NYSE Euronext, Boston Options Exchange and International Securities Exchange.
Forward-looking statements
Certain statements in this release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and other laws and regulations. Such forward-looking statements involve known and unknown risks and other important factors that could cause the actual results or performance of the company to differ materially from any future results expressed or implied by such forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words "plan," "believe," "expect," "anticipate," "intend," "project," or other similar words, or the negative of these terms or comparable language, or by discussion of strategy or intentions. This cautionary statement is being made pursuant to applicable securities laws with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. The Company cautions investors that any forward-looking statements made by the Company are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to the Company, include, but are not limited to, risks and uncertainties that are described in the Annual Report on Form 10-K for the year ended December 31, 2008 and in other securities filings by the Company with the SEC. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise.
Contact Information
For more information about Terra Nova's brokerage and clearing services,
please visit www.TNFG.com.
For more information about Terra Nova's technology offering, please visit
www.TradientTech.com.
Investor Relations:
Gregg J. Fuesel
1-312-827-3654
Media Contact:
Christopher Hartman
1-312-827-3695
May 1, 2009 4:04:00 PM
Email Story Discuss on ZenoBank
View Additional ProfilesCHICAGO, IL -- (MARKET WIRE) -- 05/01/09 -- Terra Nova Financial Group, Inc. (OTCBB: TNFG), a specialized financial services firm that through its subsidiaries provides brokerage services and trading technologies for professional traders, hedge funds and money managers, today announced preliminary unaudited financial performance metrics for the three months ended March 31, 2009.
Selected Results and Discussion
-- Consolidated revenue was $7.4 million for the three months ended March
31, 2009 versus $9.9 million for the same period in 2008. The $2.5
million decrease in revenue was largely due to the following factors:
-- Lower commissions and fees by $1.5 million to $6.7 million for the
three months ended March 31, 2009, compared to the same period in
2008. Trade activity sharply dropped off in the first part of the
quarter ended March 31, 2009. Although volume rebounded somewhat
in March of 2009, it was lower overall by 49% for the three month
period in 2009 compared to 2008. The Company's focus on improving
margins at the customer level contributed to some of the decline in
trading volume, as did the impact of market drivers. An improvement
in commissions per trade offset some of the reduction in volume by
$1.1 million. Commissions per trade have improved due to an
increased focus on enhancing gross margin.
-- Lower net interest income by $1.0 million to $420,000 for the three
months ended March 31, 2009, compared to same period in 2008. The
decline was primarily attributable to a drop in the federal funds
rate -- the base rate from which the Company earns interest on its
bank deposits and margin loans. Additionally, client margin
balances are down over 70% as of March 31, 2009 compared to the
same period in 2008.
-- Higher net software fees of $100,000 from Tradient platform
subscriptions for the three months ended March 31, 2009 compared to the
same period last year. The number of Tradient platform users increased
from 2,327 as of March 31, 2008 to 2,535 as of March 31, 2009.
-- Overall trade activity declined during the three months ended March 31,
2009 compared to the same period in 2008. DARTs (daily average revenue
trades) were 17,129 for the three months ended March 31, 2009 compared
to 25,046 for the same period in 2008. The level of trading activity
in March 2009 improved over February 2009 but remains below the level
of activity seen in the same period last year.
-- Commission revenue margin (commissions and fees less cost of sales)
increased 2.7% to 51.8% for the three months ended March 31, 2009. The
margin improvement was driven by a shift in the mix of trades through
the Company's proprietary platform and lower cost third party platforms
from 20% for the three months ended March 31, 2008 to 56% for the same
period in 2009.
-- Adjusted EBITDA was $54,000 for the three months ended March 31, 2009
compared to $1 million for the same period in 2008.
-- Net loss per share of $0.01 for the three months ended March 31, 2009
compared to net income per share of $0.01 for the same period in 2008.
-- The Company increased its reserve as of March 31, 2009 for a potential
fine related to a pending regulatory matter with FINRA involving
allegations relating to the Company's past practices for soft dollar
accounts. The Company has previously made a written response to the
FINRA allegations which are primarily based on events that occurred in
prior years 2004 and 2005. The Company continues to seek a reasonable
negotiated settlement.
"Our strategy to improve margins continues into the new fiscal year," said Michael Nolan, President and CEO. "Despite a 26% decline in revenues, segment adjusted EBITDA margins declined 20 basis points -- evidence of the leverage opportunity in our business model. As the market environment improves and as we continue to enhance our product offering, we feel well positioned to drive earnings in the future."
Stock Repurchase Authorization
The Company's Board of Directors has authorized the Company's management to pursue repurchases of the Company's stock at the discretion of the management. This authorization allows management to purchase up to $3,000,000 of stock under the safe harbor guidelines of SEC Rule 10b-18. This authorization grants discretion to the Company's management and there is no requirement for them to purchase a minimum number of shares. The repurchase program is intended to continue until April 30, 2010, but may be modified or terminated prior to that date. This repurchase program is similar to a prior repurchase program that ended in September 2008. No purchases have yet been made under this program.
"The stock buyback program, authorized by the Board of Directors, is an initiative consistent with another of our strategies rooted in financial discipline," said Nolan. "It involves deploying capital in ways that we believe are most advantageous to the long term strength of the firm."
Brokerage Services Segment
First quarter 2009 highlights
-- Brokerage revenue of $7.1 million for the three months ended March 31,
2009 -- a decline of 27% compared to the same period in 2008 --
predominately attributable to a decline in net interest income of $1
million due to decreasing federal funds rates. Commissions and fees
declined $1.5 million due to lower trading volume, offset by an increase in
average price per trade.
-- Net income of $327,000 for the three months ended March 31, 2009 -- a
decline of 70% compared to the same period in 2008, due primarily to lower
commission revenue and net interest income.
-- Adjusted EBITDA of $717,000 for the three months ended March 31,
2009 -- a decline of 52% compared to the same period in 2008.
Software Services Segment
First quarter 2009 highlights
-- Revenue of $257,000 for the three months ended March 31, 2009 -- an
increase of 62% compared to the same period in 2008.
-- Net loss of $77,000 for the three months ended March 31, 2009,
compared to net loss of $303,000 in the same period in 2008.
-- Adjusted EBITDA of ($2,000) for the three months ended March 31, 2009
compared to ($230,000) for the same period in 2008.
-- An increase in the number of Tradient platform users from 2,327 as of
March 31, 2008 to 2,535 as of March 31, 2009.
Unallocated Expenses
-- Unallocated expenses increased from $401,000 in the quarter ending
March 31, 2008 to $790,000 in the quarter ending March 31, 2009. The
increase relates to $350,000 of legacy payables that were written off in
the first quarter of 2008.
Consolidated Company Totals
GAAP and Non-GAAP preliminary unaudited financial results on a consolidated basis include:
-- Consolidated revenue of $7.4 million for the three months ended March
31, 2009 compared to $9.9 million for the same period in 2008.
-- Net loss for three months ended March 31, 2009 of approximately
$330,000 compared to $172,000 net income for the same period in 2008.
-- Adjusted EBITDA of $54,000 for the three months ended March 31, 2009
compared to $1 million for the same period in 2008.
Consolidated financial statements - Preliminary Unaudited
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
REVENUES (Unaudited) (Unaudited)
Commissions and fees $ 6,720,234 $ 8,237,980
Interest income 420,276 2,070,884
Interest expense on brokerage accounts 284 608,743
----------- -----------
Net interest income 419,992 1,462,141
Software fees, net 257,518 159,003
Other revenue 461 84,781
----------- -----------
Net revenues 7,398,205 9,943,905
EXPENSES
Commissions and clearing 2,534,779 2,608,227
Compensation and benefits 2,365,888 3,022,051
Software and market data 903,770 1,654,011
Advertising and promotional 137,230 181,989
Professional fees 686,921 796,851
Communications and information technology 239,190 256,571
Depreciation and amortization 563,267 557,563
Other general and administrative expenses 506,969 466,515
----------- -----------
Total expenses 7,938,014 9,543,778
----------- -----------
Income (loss) before income taxes (539,809) 400,127
Income tax benefit (provision) 210,000 (228,000)
----------- -----------
Net income (loss) (329,809) 172,127
----------- -----------
Dividends on preferred stock - (17,574)
----------- -----------
Net income (loss) attributable to common
shareholders $ (329,809) $ 154,553
=========== ===========
Net income (loss) per common share:
Basic $ (0.01) $ 0.01
=========== ===========
Diluted $ (0.01) $ 0.01
=========== ===========
Weighted average common shares outstanding:
Basic 25,482,942 26,421,079
=========== ===========
Diluted 25,482,942 26,421,079
=========== ===========
Consolidated financial statements - Preliminary Unaudited, continued
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2009 2008
------------- -------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 6,244,079 $ 7,889,553
Cash segregated in compliance with federal
regulations 136,391,934 141,159,364
Receivables from brokers, dealers and
clearing organizations 14,613,008 13,568,459
Receivables from customers and non-customers,
net 5,623,845 4,858,360
Property and equipment, net 1,218,325 1,221,066
Capitalized software development costs, net 1,929,728 2,060,015
Intangible assets, net 3,768,976 4,111,514
Income tax receivables 716,264 1,446,264
Goodwill 7,501,408 7,501,408
Deferred income taxes, net 1,994,761 1,784,761
Other assets 1,162,681 1,346,764
------------- -------------
Total assets $ 181,165,009 $ 186,947,528
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Payables to brokers, dealers and clearing
organizations 670,152 913,621
Payables to customers and non-customers 146,588,408 151,970,566
Accounts payable and accrued expenses 2,668,444 2,525,692
------------- -------------
Total liabilities 149,927,004 155,409,879
Commitments and contingencies
Shareholders' equity
Common stock; $0.01 par value; 150,000,000
shares authorized; 25,482,942 shares issued
and outstanding at March 31, 2009 and
December 31, 2008 254,829 254,829
Additional paid-in capital 52,035,583 52,005,418
Accumulated deficit (21,052,407) (20,722,598)
------------- -------------
Total shareholders' equity 31,238,005 31,537,649
------------- -------------
Total liabilities and shareholders' equity $ 181,165,009 $ 186,947,528
============= =============
SEGMENT REPORTING and CONSOLIDATED FINANCIAL STATEMENTS - Preliminary Unaudited
In addition to reporting financial results in accordance with generally accepted accounting principles in the United States, or GAAP, Terra Nova uses the measure of Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and other non-cash items). This measure is not in accordance with or an alternative for GAAP and may be different from measures used by other companies. Adjusted EBITDA eliminates certain items of expenses and losses. The Company's management believes that this statistic is indicative of the relative strength of the Company's operating performance and allows investors to evaluate the current operating and financial performance of the Company's core business. The Company's management uses these measures for reviewing its financial results and for business planning. Terra Nova's management discloses this information externally along with a reconciliation of their most directly comparable GAAP amounts, to provide access to the detail and general nature of adjustments made to GAAP financial results.
Below is Terra Nova's preliminary unaudited segment reporting & Adjusted EBITDA reconciliations for the three months ended March 31, 2009 and 2008.
Segment reporting & Adjusted EBITDA reconciliations - Preliminary Unaudited
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Adjustments - Unaudited
Three Months Ended March 31,
----------------------------
2009 2008
------------- -------------
REVENUES
Commissions and fees $ 6,720,234 $ 8,237,980
Net interest income 419,992 1,462,141
Software fees, net 257,518 159,003
Other revenue 461 84,781
------------- -------------
Net revenues 7,398,205 9,943,905
Cost of sales 3,237,856 4,193,438
Gross profit 4,160,349 5,750,466
------------- -------------
Operating expenses 4,700,158 5,350,340
------------- -------------
Income (loss) before income taxes (539,809) 400,127
Income tax benefit (provision) 210,000 (228,000)
------------- -------------
Net income (loss) (329,809) 172,127
Adjustments:
Depreciation and amortization 563,267 557,563
Stock-based compensation 30,165 42,484
Income tax benefit (provision) (210,000) 228,000
------------- -------------
Total Adjusted EBITDA $ 53,623 $ 1,000,174
============= =============
Commissions revenue margin $ 3,482,378 $ 4,044,542
Commissions revenue margin % 51.8% 49.1%
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES
Segment reconciliation of Non-GAAP Adjustments - Unaudited
Three Months Ended March 31,
----------------------------
2009 2008
------------- -------------
Brokerage Services
Total revenues $ 7,140,225 $ 9,775,888
Total expenses (6,813,183) (8,680,739)
------------- -------------
Income before income taxes 327,042 1,095,149
Net income 327,042 1,095,149
ADJUSTMENTS:
Depreciation and amortization 390,006 384,837
------------- -------------
Total Adjusted EBITDA $ 717,048 $ 1,479,986
Three Months Ended March 31,
----------------------------
Software Services 2009 2008
------------- -------------
Total revenues $ 568,356 $ 555,722
Elimination of intercompany charges (310,838) (396,718)
Total expenses (334,572) (462,445)
------------- -------------
Loss before income taxes (77,054) (303,441)
Net loss (77,054) (303,441)
ADJUSTMENTS:
Depreciation and amortization 75,067 73,355
------------- -------------
Total Adjusted EBITDA $ (1,987) $ (230,086)
============= =============
Total Adjusted EBITDA for Segments: $ 715,061 $ 1,249,900
Three Months Ended March 31,
----------------------------
Unallocated expenses 2009 2008
------------- -------------
Total revenues $ 461 $ 9,013
Total expenses (790,258) (400,594)
------------- -------------
Loss before income taxes (789,797) (391,581)
Income tax benefit (provision) 210,000 (228,000)
------------- -------------
Net loss (579,797) (619,581)
ADJUSTMENTS:
Depreciation and amortization 98,194 99,371
Stock-based compensation 30,165 42,484
Income tax benefit (provision) (210,000) 228,000
------------- -------------
Total Adjusted EBITDA for Unallocated
expenses: $ (661,438) $ (249,726)
============= =============
Total Adjusted EBITDA $ 53,623 $ 1,000,174
============= =============
About Terra Nova Financial Group, Inc.
Terra Nova Financial, LLC ("Terra Nova Financial") and Tradient Technologies, Inc. ("Tradient") are wholly-owned subsidiaries of Terra Nova Financial Group, Inc. ("Terra Nova") a public company trading on the OTC Bulletin Board under the symbol TNFG. Terra Nova, through its subsidiaries, primarily operates as a registered broker-dealer and service bureau, offering a broad array of trading products including equities, options, futures and commodity options, ETFs, fixed income and mutual funds.
Terra Nova Financial is a specialized financial services firm focused on supporting trading professionals. Professional traders, hedge funds and money managers come to Terra Nova Financial for unmatched value in execution, clearing and prime brokerage services. This recognition originated with the firm's role as the sponsoring broker-dealer for the innovative Archipelago ECN (now part of the NYSE Euronext) and has been further earned through its proven mastery of the client experience. Through a portfolio of advanced technology tools, Terra Nova Financial empowers self-directed clients to trade, analyze, strategize and report with the precision professionals require. Its team is built to enhance the impact of these tools by providing swift, flexible care and insight, with one goal in mind: clients success. The firm was founded in 1994 and is headquartered in Chicago, IL with a sales presence in New York, NY.
Tradient operates Terra Nova's technology development activities, building applications for electronic trade execution, order routing and clearing. Tradient platforms are designed around the need for efficiency, consistency and value using a swift, targeted innovation and development process. Tradient is located in Chicago, IL.
Terra Nova Financial is regulated by the SEC, FINRA and NFA and is a member of Depository Trust Company, National Securities Clearing Corporation, Securities Investor Protection Corporation, and the Options Clearing Corporation. The firm holds trading memberships with the NASDAQ OMX Group, Inc., NASDAQ OMX PHLX, Chicago Stock Exchange, National Stock Exchange, CBOE Stock Exchange, NYSE Arca Options, NYSE Arca Equities, NYSE Amex Securities, NYSE Euronext, Boston Options Exchange and International Securities Exchange.
Forward-looking statements
Certain statements in this release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and other laws and regulations. Such forward-looking statements involve known and unknown risks and other important factors that could cause the actual results or performance of the company to differ materially from any future results expressed or implied by such forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words "plan," "believe," "expect," "anticipate," "intend," "project," or other similar words, or the negative of these terms or comparable language, or by discussion of strategy or intentions. This cautionary statement is being made pursuant to applicable securities laws with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. The Company cautions investors that any forward-looking statements made by the Company are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to the Company, include, but are not limited to, risks and uncertainties that are described in the Annual Report on Form 10-K for the year ended December 31, 2008 and in other securities filings by the Company with the SEC. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise.
Contact Information
For more information about Terra Nova's brokerage and clearing services,
please visit www.TNFG.com.
For more information about Terra Nova's technology offering, please visit
www.TradientTech.com.
Investor Relations:
Gregg J. Fuesel
1-312-827-3654
Media Contact:
Christopher Hartman
1-312-827-3695
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