Business & Finance
Business and FinanceBusiness and Finance 
Mon, May 17, 2010
Sun, May 16, 2010
Sat, May 15, 2010
Fri, May 14, 2010
Terra Nova Financial Group, Inc. Announces First Quarter Earnings
CHICAGO, IL--(Marketwire - May 14, 2010) - Terra Nova Financial Group, Inc. (
Operating Initiatives
The restructuring program initiated in November 2009 has progressed as expected. The company was successful in reducing cash operating costs by 21% since November 2009, mostly from the reduction in head count and operating expenses associated with our now discontinued Tradient subsidiary.
Selected First Quarter Results and Discussion
-- Consolidated revenue was $4.1 million for the three months ended March 31, 2010 versus $7.1 million for the same period in 2009. The following factors were primary contributors to the $3 million decrease in revenue: - Commissions and fees revenues were $3.7 million for the three months ended March 31, 2010 which is $2.9 million lower than in the same period in 2009. Lower trade volumes, primarily as a result of persistently low market volatility, reduced revenues by $2.6 million. Commissions per trade for the three months ended March 31, 2010 declined 9% over the same period in 2009, to $5.57. This decline in commissions per trade contributed approximately $375,000 to the revenue decline for the three months ended March 31, 2010. - Net interest income declined by $194,000 to $226,000 for the three months ended March 31, 2010, compared to same period in 2009. The decline was primarily attributable to a drop in the interest rate the Company earns interest on its bank deposits. Additionally, client margin balances increased slightly for three months ended March 31, 2010 compared to the same period in 2009. -- DARTs (daily average revenue trades) were 10,858 for the three months ended March 31, 2010 compared to 17,868 for the same period in 2009. The results are primarily attributable to a decline in active clients offset by an increase in the number of trades per active client as compared to the same period in 2009. Shares and contracts traded during the quarter ended March 31, 2010 totaled 1.1 billion compared to 1.2 billion in the same period last year. -- Commission gross profit margin (commissions and fees less cost of sales) declined 3.4% to 50.2% for the three months ended March 31, 2010, compared to the same period in 2009. Deleveraging of software and clearing expenses as a percentage of sales accounted for 4.9% of the decline offset by an improvement in execution expense as a percentage of sales of 3.8% for the three months ended March 31, 2010 when compared to the same period in 2009. -- Adjusted EBITDA was ($1 million) for the three months ended March 31, 2010 compared to $54,000 for the same period in 2009. -- Net loss per share was ($0.06) for the three months ended March 31, 2010 compared to net loss per share of ($0.01) for the same period in 2009.
CONSOLIDATED FINANCIAL STATEMENTS - Preliminary Unaudited
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED) Three Months Ended March 31, -------------------------- 2010 2009 ------------ ------------ REVENUES Commissions and fees $ 3,748,750 $ 6,676,420 Interest income 225,902 420,276 Interest expense on brokerage accounts - 284 ------------ ------------ Net interest income 225,902 419,992 Other revenues 172,245 44,275 ------------ ------------ Net revenues 4,146,897 7,140,687 EXPENSES Commissions and clearing 1,383,127 2,693,278 Compensation and benefits 1,794,620 2,034,785 Software and market data 527,713 946,718 Advertising and promotional 20,156 87,013 Professional fees 527,957 686,579 Communications and information technology 295,979 196,622 Depreciation and amortization 529,078 489,150 Other general and administrative expenses 617,311 468,385 ------------ ------------ Total expenses 5,695,941 7,602,530 ------------ ------------ Loss from continuing operations before income taxes (1,549,044) (461,843) Income tax benefit - (180,000) ------------ ------------ Net loss from continuing operations (1,549,044) (281,843) Discontinued operations Loss from discontinued operations of Tradient (19,786) (77,966) Income tax benefit - (30,000) ------------ ------------ Loss from discontinued operations (19,786) (47,966) ------------ ------------ Net loss $ (1,568,830) $ (329,809) ============ ============ Net loss per common share: Basic and diluted Continuing operations $ (0.06) $ (0.01) Discontinued operations (0.00) (0.00) ------------ ------------ $ (0.06) $ (0.01) ============ ============ Weighted average common shares outstanding: Basic 25,054,508 25,482,942 ============ ============ Diluted 25,054,508 25,482,942 ============ ============ TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, 2010 2009 ------------ ------------ ASSETS Cash and cash equivalents $ 2,601,259 $ 1,857,671 Cash segregated in compliance with federal regulations 133,607,871 136,042,376 Receivables from brokers, dealers and clearing organizations 30,678,861 23,001,389 Receivables from brokerage customers 9,361,352 12,022,905 Property and equipment, net of accumulated depreciation and amortization 980,456 1,045,707 Capitalized software development costs, net of accumulated amortization 173,803 246,835 Intangible assets, net of accumulated amortization 2,398,826 2,741,364 Income tax receivable 738,285 738,285 Deferred income taxes, net 1,499,761 1,499,761 Other assets 749,572 657,361 ------------ ------------ Total assets $182,790,046 $179,853,654 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Payables to brokerage customers $164,393,571 $159,825,033 Payables to brokers, dealers and clearing organizations 447,962 490,911 Accounts payable and accrued expenses 1,317,918 1,355,905 ------------ ------------ Total liabilities 166,159,451 161,671,849 Commitments and contingencies Shareholders' equity Preferred stock; $10 par value; 5,000,000 shares authorized; none issued - - Common stock; $0.01 par value; 150,000,000 shares authorized; 25,482,942 shares issued and 25,054,508 shares outstanding at March 31, 2010 and December 31, 2009 254,829 254,829 Treasury stock, common, at cost; 428,434 shares at March 31, 2010 and December 31, 2009 (272,056) (272,056) Additional paid-in capital 52,150,456 52,132,836 Accumulated deficit (35,502,634) (33,933,804) ------------ ------------ Total shareholders' equity 16,630,595 18,181,805 ------------ ------------ Total liabilities and shareholders' equity $182,790,046 $179,853,654 ============ ============
In addition to reporting financial results in accordance with generally accepted accounting principles in the United States, or GAAP, the Company uses the measure of non-GAAP Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and other non-cash items) and non-GAAP loss before income taxes. These measures are not in accordance with or an alternative for GAAP, and should not be considered more meaningful than amounts determined in accordance with 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 can help in the assessment and evaluation of the relative strength of the Company's operating performance and is intended to assist investors in evaluating the current operating and financial performance of the Company's core business. The non-GAAP adjusted net loss excludes severance charges. The exclusion of this identified item from this non-GAAP financial measure should not be construed as an inference that this item is unusual or infrequent. The Company's management uses these measures internally for reviewing its financial results and for business planning. The Company 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 are Terra Nova's preliminary unaudited Total Adjusted EBITDA and Total Adjusted Net loss reconciliations for the three months ended March 31, 2010 and 2009.
TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Adjustments - Unaudited Three Months Ended March 31, -------------------------- 2010 2009 ------------ ------------ Commissions and fees $ 3,748,750 $ 6,676,420 Net interest income 225,902 419,992 Other revenue 172,245 44,275 ------------ ------------ Net revenues 4,146,897 7,140,687 Cost of sales 1,867,148 3,097,432 ------------ ------------ Gross profit 2,279,749 4,043,255 Operating expenses 3,848,579 4,583,064 ------------ ------------ Loss before income taxes (1,568,830) (539,809) Income tax benefit - (210,000) ------------ ------------ Net loss (1,568,830) (329,809) Adjustments Depreciation and amortization 529,078 563,267 Stock-based compensation 17,620 30,165 Income tax benefit - (210,000) ------------ ------------ Total Adjusted EBITDA $ (1,022,132) $ 53,623 ============ ============ Commissions gross profit $ 1,881,602 $ 3,578,988 Commissions gross profit margin 50.2% 53.6% TERRA NOVA FINANCIAL GROUP, INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Adjustments - Unaudited Three Months Ended March 31, -------------------------- 2010 2009 ------------ ------------ Total revenues $ 4,146,897 $ 7,140,687 Total expenses 5,715,727 7,680,496 ------------ ------------ Income tax benefit - (210,000) ------------ ------------ Net loss (1,568,830) (329,809) Adjustments Severance charges due to reduction in workforce 100,073 17,736 ------------ ------------ Total Adjusted Net loss $ (1,468,757) $ (312,073) ============ ============
About Terra Nova Financial Group, Inc.
Terra Nova Financial Group, Inc. is a holding company of businesses providing a range of products and services to professional traders. The Company has two primary subsidiaries. [ Terra Nova Financial, LLC ], a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of Financial Industry Regulatory Authority, Inc. provides execution, [ clearing ] and [ prime brokerage services ] to [ professional traders ], [ hedge funds ] and money managers. SC QuantNova Research SRL, based in Bucharest, Romania, provides software development, architecture and engineering for back office clearing systems. Terra Nova Financial Group, Inc. trades under the stock symbol "TNFG" and is listed on the OTC Bulletin Board.
[ Terra Nova Financial, LLC ("Terra Nova") ] is a specialized financial services firm focused on supporting trading professionals. [ Professional traders ], [ hedge funds and money managers ] come to Terra Nova for value in execution, [ clearing ] and [ prime brokerage services ]. This recognition originated with the firm's role (from 1996 to 1998) as the sponsoring broker-dealer for the innovative Archipelago ECN (now part of the NYSE Euronext). Terra Nova empowers self-directed clients to trade, analyze, strategize and report through a portfolio of advanced trading platforms. Terra Nova was founded in 1994 and is headquartered in Chicago, Illinois with a sales presence in New York, New York. Primary sources of revenue for Terra Nova include commissions, account fees and interest.
Terra Nova is a member of Financial Industry Regulatory Authority, Inc. ("FINRA"), Securities Investor Protection Corporation ("SIPC"), National Futures Association ("NFA"), The Depository Trust & Clearing Corporation ("DTCC"), National Securities Clearing Corporation ("NSCC") and The Options Clearing Corporation ("OCC") along with the following exchanges: International Securities Exchange, Boston Options Exchange, NYSE Arca Options, NYSE Amex Options, NASDAQ OMX PHLX, NYSE Arca Equities, NYSE Amex Equities, NYSE Euronext, NASDAQ OMX BX, NASDAQ Stock Market, ISE Stock Exchange, National Stock Exchange and BATS Exchange, Inc.
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," "will," "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, 2009 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.