ZAIS Group Holdings, Inc. Reports Third Quarter 2015 Results
RED BANK, N.J., Nov. 6, 2015 /PRNewswire/ -- ZAIS Group Holdings, Inc. (NASDAQ: ZAIS) ("ZAIS"), today reported financial results for the three and nine months ended September 30, 2015. ZAIS conducts substantially all of its operations through ZAIS Group, LLC ("ZAIS Group"). References to the "Company" herein refer to ZAIS, together with its consolidated subsidiaries and affiliates.
Michael F. Szymanski, Chief Executive Officer, said, "We are focused on positioning the Company for the future. The United States and European risk retention rules require investment managers to provide capital solutions and we have committed up to $51 million of capital to a majority owned subsidiary, in which we will co-invest with one of our long-standing clients, enabling the subsidiary to invest in ZAIS Group managed CLO vehicles. We have also committed to a $5 million equity position in a $50 million corporate credit fund that ZAIS Group will sub-advise. Our equity capital provides us the ability to offer opportunities to ZAIS Group's clients and investors we could not otherwise offer."
CONSOLIDATED GAAP RESULTS
The Company recorded GAAP net loss for the three months ended September 30, 2015 of $(4.8) million compared with GAAP net income of $17.2 million for the three months ended September 30, 2014. GAAP net income (loss) includes results of certain investment vehicles managed by ZAIS Group that are required to be consolidated under GAAP (the "Consolidated Funds of ZAIS Group"). The Company recorded pre-tax GAAP net loss for the three months ended September 30, 2015 of $(6.3) million compared with pre-tax GAAP net income for the three months ended September 30, 2014 of $17.2 million.
As of September 30, 2015, a portion of the proceeds of the business combination ZAIS completed in March 2015 (the "Business Combination") had been committed to expand existing business lines and consequently, the Company's results for this quarterly period may not be representative of future financial results once the proceeds from the Business Combination are fully deployed.
ZAIS Group Parent, LLC ("ZGP"), a majority-owned consolidated subsidiary of ZAIS, is the sole member, and owns all of the equity, of ZAIS Group. The consolidated financial statements include non-controlling interests of the members of ZGP other than ZAIS (the "ZGP Founder Members") which represent Class B Units of ZGP held by the ZGP Founder Members.
CONSOLIDATED NON-GAAP RESULTS
The Company recorded a net loss (excluding Consolidated Funds of ZAIS Group) for the three months ended September 30, 2015 of $(1.6) million, or $(0.06) per diluted weighted average Class A common share outstanding compared with a net loss (excluding Consolidated Funds of ZAIS Group) of $(3.5) million, or $(0.51) per diluted weighted average Class A common share outstanding for the three months ended September 30, 2014. The number of shares of common stock that was used to calculate ZGP's earnings per share for all periods prior to the Business Combination was 7,000,000, representing the interests of the ZGP Founder Members. The year-over-year decrease of loss was driven primarily by a decrease in management fee income and incentive income of $(1.4) million and $(2.1) million, respectively, more than offset by a decrease in expenses of $3.8 million and a tax benefit of $1.5 million in the current year, for which there was no comparable benefit in the prior year. The decrease in revenues is related to the decline in assets under management.
For the three months ended September 30, 2015, the Company reported negative Adjusted EBITDA of $(1.1) million, compared with negative Adjusted EBITDA of $(2.2) million for the three months ended September 30, 2014.
Additionally, the Company had $6.2 million in gross undistributed, unrecognized incentive income across investment vehicles managed by ZAIS Group as of September 30, 2015. This income has not been recognized in net income (loss) under GAAP or other Non-GAAP measures of income (loss) and remains at risk and subject to reduction or elimination based on the investment performance of the related ZAIS Group managed investment vehicle until the contractual measurement period for incentive fees is reached.
Please see the discussion of "Non-GAAP Financial Measures", including the definitions of net income (loss) (excluding Consolidating Funds of ZAIS Group), Adjusted EBITDA, and reconciliations of such Non-GAAP financial measures to the respective GAAP net income (loss) and pre-tax GAAP net income (loss) measures for the periods discussed above at the end of this press release.
The Company's GAAP net income (loss) and other Non-GAAP measures of income (loss) may fluctuate materially depending upon the performance of investment vehicles managed by ZAIS Group as well as other factors. Accordingly, the GAAP net income (loss) and other Non-GAAP measures of income (loss) in any particular period should not be expected to be indicative of future results.
LIQUIDITY & CAPITAL RESOURCES
As of September 30, 2015, the Company had cash and cash equivalents of $75.7 million and debt obligations of $1.3 million.
INVESTOR CONFERENCE CALL
Management will host a conference call today, November 6, 2015, at 10:00 a.m. Eastern time to review the Company's financial results. The number to call for this interactive teleconference is (785) 424-1676.
A replay of the conference call will be available through Friday November 13, 2015, by dialing (719) 457-0820 and entering the confirmation number, 557534.
The live broadcast of the ZAIS quarterly conference call will also be available online at ZAIS's website, www.zaisgroupholdings.com on Friday November 6, 2015, beginning at 10:00 a.m. Eastern time. The online replay will follow shortly after the call and will be available for approximately one year.
THIRD QUARTER 2015 SUPPLEMENTAL INFORMATION
The Company's Third Quarter 2015 Supplemental Information – September 30, 2015, is available on ZAIS's website at www.zaisgroupholdings.com. To access the presentation, go to the "ZAIS Shareholders" section of the website.
USE OF NON-GAAP FINANCIAL INFORMATION
In addition to the results presented in accordance with generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial information, including net income (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA (and per share measures). Net income (loss) (excluding Consolidated Funds of ZAIS Group) is a non-GAAP financial measure that the Company defines as GAAP net income (loss) excluding the consolidating effects of the Consolidated Funds of ZAIS Group. Adjusted EBITDA is a non-GAAP financial measure that the Company defines as GAAP net income (loss), excluding consolidating effects of Consolidated Funds of ZAIS Group, net unrealized gain (loss) on investments, compensation expense related to a portion of net operating income of ZAIS Group payable to certain employees of ZAIS Group, compensation expense related to incentive income in the form of percentage interests being recorded before related incentive income is recognized, equity-based compensation, severance, taxes, interest expense, depreciation and amortization expenses, foreign currency and certain other non-cash and non-operating items.
The Company believes that providing investors with this non-GAAP financial information, in addition to the related GAAP measures, gives investors greater transparency to the information used by management in its financial and operational decision-making. However, because net income (loss) (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA are incomplete measures of the Company's financial performance and involve differences from net income (loss) computed in accordance with GAAP, they should be considered along with, but not as alternatives to, the Company's net income (loss) computed in accordance with GAAP as a measure of the Company's financial performance. In addition, because not all companies use identical calculations, the Company's presentation of net income (loss) (excluding Consolidated Funds of ZAIS Group) and Adjusted EBITDA may not be comparable to other similarly-titled measures of other companies.
The following table presents the reconciliation of the Company's GAAP net income (loss) to its non-GAAP financial measure of net income (loss) (excluding Consolidated Funds of ZAIS Group) for the periods presented in this Earnings Release.
| Three Months Ended |
Nine Months Ended |
|||||||||||||||||
| 2015 |
2014 |
2015 |
2014 |
|||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||
| Consolidated net income (loss), net of tax (GAAP Net Income (Loss)) |
$ |
(4,770) |
$ |
17,229 |
$ |
(11,769) |
$ |
66,419 |
||||||||||
| Addback: Elimination of Management fee income |
64 |
1,164 |
183 |
8,682 |
||||||||||||||
| Addback: Elimination of Incentive income |
— |
1,055 |
— |
10,800 |
||||||||||||||
| Addback: Elimination of Other revenues |
— |
10 |
— |
48 |
||||||||||||||
| Addback: Elimination of net gain (loss) on investments |
(11) |
(174) |
34 |
1,465 |
||||||||||||||
| Less: Income of Consolidated Funds |
(1,105) |
(30,377) |
(4,314) |
(88,110) |
||||||||||||||
| Addback: Expenses of Consolidated Funds |
(742) |
11,938 |
772 |
99,864 |
||||||||||||||
| Net (gain) loss on Consolidated Funds' investments |
4,987 |
(4,384) |
3,003 |
(72,177) |
||||||||||||||
| Net income (excluding Consolidated Funds of |
$ |
(1,577) |
$ |
(3,539) |
$ |
(12,091) |
$ |
26,991 |
||||||||||
The following tables present the reconciliations of the Company's GAAP pre-tax consolidated net income (loss) to its non-GAAP financial measures of Distributable Earnings and Adjusted EBITDA for the periods presented in this Earnings Release.
| Three Months Ended |
Nine Months Ended |
||||||||||||||||||
| 2015 |
2014 |
2015 |
2014 |
||||||||||||||||
| (Dollars in thousands) |
|||||||||||||||||||
| Adjusted EBITDA - Non GAAP |
|||||||||||||||||||
| Pre-tax Consolidated Net Income (loss) (GAAP pre-tax |
$ |
(6,298) |
$ |
17,234 |
$ |
(15,880) |
$ |
66,438 |
|||||||||||
| Addback: Elimination of Management fee income |
64 |
1,164 |
183 |
8,682 |
|||||||||||||||
| Addback: Elimination of Incentive income |
— |
1,055 |
— |
10,800 |
|||||||||||||||
| Addback: Elimination of Other revenues |
— |
10 |
— |
48 |
|||||||||||||||
| Addback: Elimination of Net gain (loss) on investments |
(11) |
(174) |
34 |
1,465 |
|||||||||||||||
| Less: Income of Consolidated Funds |
(1,105) |
(30,377) |
(4,314) |
(88,110) |
|||||||||||||||
| Addback: Expenses of Consolidated Funds |
(742) |
11,938 |
772 |
99,864 |
|||||||||||||||
| Net (gain) loss on Consolidated Funds' investments |
4,987 |
(4,384) |
3,003 |
(72,177) |
|||||||||||||||
| Addback: Compensation attributable to Income Unit |
— |
2,085 |
198 |
6,225 |
|||||||||||||||
| Addback: Compensation attributable to equity |
1,410 |
— |
3,288 |
— |
|||||||||||||||
| Addback: Severance costs |
113 |
— |
1,087 |
430 |
|||||||||||||||
| Reclassification of incentive compensation |
— |
(905) |
— |
(7,664) |
|||||||||||||||
| Addback: Depreciation and amortization |
445 |
122 |
654 |
358 |
|||||||||||||||
| Adjusted EBITDA – Non-GAAP |
$ |
(1,137) |
$ |
(2,232) |
$ |
(10,975) |
$ |
26,359 |
|||||||||||
| ZAIS GROUP HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
| Consolidated Statements of Financial Condition |
||||||||
| (Dollars in thousands) |
||||||||
| September |
December |
|||||||
| (Unaudited) |
||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ |
75,707 |
$ |
7,664 |
||||
| Income and fees receivable |
2,077 |
4,283 |
||||||
| Investments in affiliates, at fair value |
— |
104 |
||||||
| Due from related parties |
809 |
648 |
||||||
| Fixed assets, net |
612 |
1,091 |
||||||
| Prepaid expenses |
1,602 |
1,543 |
||||||
| Deferred tax asset |
4,320 |
— |
||||||
| Other assets |
2,974 |
3,310 |
||||||
| Assets of Consolidated Funds |
||||||||
| Cash and cash equivalents |
20,098 |
94,212 |
||||||
| Restricted cash |
2,265 |
30,265 |
||||||
| Investments, at fair value |
46,230 |
1,126,737 |
||||||
| Investments in affiliated securities, at fair value |
26,466 |
31,457 |
||||||
| Derivative assets, at fair value |
1,805 |
6,648 |
||||||
| Other assets |
3,264 |
11,577 |
||||||
| Total Assets |
$ |
188,229 |
$ |
1,319,539 |
||||
| Liabilities, Redeemable Non-controlling Interests and Equity |
||||||||
| Liabilities |
||||||||
| Notes payable |
$ |
1,253 |
$ |
— |
||||
| Compensation payable |
2,461 |
6,094 |
||||||
| Due to related parties |
174 |
32 |
||||||
| Other liabilities |
3,044 |
3,050 |
||||||
| Liabilities of Consolidated Funds |
||||||||
| Notes payable of consolidated CDOs, at fair value |
— |
749,719 |
||||||
| Securities sold, not yet purchased |
12,621 |
19,308 |
||||||
| Derivative liabilities, at fair value |
1,994 |
5,785 |
||||||
| Due to broker |
15,588 |
21,047 |
||||||
| Other liabilities |
205 |
32,863 |
||||||
| Total Liabilities |
37,340 |
837,898 |
||||||
| Commitments and Contingencies |
||||||||
| Redeemable Non-controlling Interests |
59,551 |
452,925 |
||||||
| Equity |
||||||||
| Class A Common Stock, $0.0001 par value; 180,000,000 shares authorized; |
1 |
1 |
||||||
| Class B Common Stock, $0.000001 par value; 20,000,000 shares authorized; |
— |
— |
||||||
| Additional paid-in capital |
59,771 |
— |
||||||
| Retained earnings (Accumulated deficit) |
(4,337) |
18,189 |
||||||
| Accumulated other comprehensive income (loss) |
215 |
186 |
||||||
| Total stockholders' equity, ZAIS Group Holdings, Inc. |
55,650 |
18,376 |
||||||
| Non-controlling interests in ZAIS Group Parent, LLC |
25,811 |
— |
||||||
| Non-controlling interests in Consolidated Funds |
9,877 |
10,340 |
||||||
| Total Equity |
91,338 |
28,716 |
||||||
| Total Liabilities, Redeemable Non-controlling Interests and Equity |
$ |
188,229 |
$ |
1,319,539 |
||||
| ZAIS GROUP HOLDINGS, INC. AND SUBSIDIARIES |
||||||||||||||||
| Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||
| Three |
Three |
Nine |
Nine |
|||||||||||||
| Revenues |
||||||||||||||||
| Management fee income |
$ |
4,111 |
$ |
4,373 |
$ |
11,826 |
$ |
14,739 |
||||||||
| Incentive income |
3,870 |
4,953 |
5,991 |
41,743 |
||||||||||||
| Other revenues |
81 |
85 |
218 |
454 |
||||||||||||
| Income of Consolidated Funds |
1,105 |
30,377 |
4,314 |
88,110 |
||||||||||||
| Total Revenues |
9,167 |
39,788 |
22,349 |
145,046 |
||||||||||||
| Expenses |
||||||||||||||||
| Compensation and benefits |
6,488 |
9,490 |
20,418 |
37,600 |
||||||||||||
| General, administrative and other |
4,370 |
5,472 |
13,470 |
13,086 |
||||||||||||
| Depreciation and amortization |
445 |
122 |
654 |
358 |
||||||||||||
| Expenses of Consolidated Funds |
(742) |
11,938 |
772 |
99,864 |
||||||||||||
| Total Expenses |
10,561 |
27,022 |
35,314 |
150,908 |
||||||||||||
| Other income (loss) |
||||||||||||||||
| Net gain (loss) on investments |
— |
(20) |
— |
(41) |
||||||||||||
| Other income (expense) |
83 |
104 |
88 |
164 |
||||||||||||
| Net gains (losses) of Consolidated |
(4,987) |
4,384 |
(3,003) |
72,177 |
||||||||||||
| Total Other Income (Loss) |
(4,904) |
4,468 |
(2,915) |
72,300 |
||||||||||||
| Income (loss) before income taxes |
(6,298) |
17,234 |
(15,880) |
66,438 |
||||||||||||
| Income tax (benefit) expense |
(1,528) |
5 |
(4,111) |
19 |
||||||||||||
| Consolidated net income (loss), net of tax |
(4,770) |
17,229 |
(11,769) |
66,419 |
||||||||||||
| Other comprehensive income (loss), net of tax: |
||||||||||||||||
| Foreign currency translation adjustment |
(160) |
831 |
323 |
630 |
||||||||||||
| Total Comprehensive Income (Loss) |
$ |
(4,930) |
$ |
18,060 |
$ |
(11,446) |
$ |
67,049 |
||||||||
| Allocation of Consolidated Net Income |
||||||||||||||||
| Redeemable non-controlling interests |
$ |
(2,282) |
$ |
21,183 |
$ |
(43) |
$ |
41,434 |
||||||||
| Non-controlling interests in Consolidated |
(911) |
(415) |
365 |
1,726 |
||||||||||||
| Stockholders' equity, ZAIS Group |
(568) |
— |
(4,337) |
— |
||||||||||||
| Non-controlling interests in ZAIS Group |
(1,009) |
(3,539) |
(7,754) |
23,259 |
||||||||||||
| $ |
(4,770) |
$ |
17,229 |
$ |
(11,769) |
$ |
66,419 |
|||||||||
| Allocation of Total Comprehensive Income (Loss) |
||||||||||||||||
| Redeemable non-controlling interests |
$ |
(2,282) |
$ |
21,182 |
$ |
(43) |
$ |
41,408 |
||||||||
| Non-controlling interests in Consolidated Funds |
(911) |
(415) |
365 |
1,726 |
||||||||||||
| Stockholders' equity, ZAIS Group Holdings, Inc. |
(674) |
— |
(4,122) |
— |
||||||||||||
| Non-controlling interests in ZAIS Group Parent, LLC |
(1,063) |
(2,707) |
(7,646) |
23,915 |
||||||||||||
| $ |
(4,930) |
$ |
18,060 |
$ |
(11,446) |
$ |
67,049 |
|||||||||
| Consolidated Net Income (Loss), net of |
$ |
(0.04) |
$ |
(0.51) |
$ |
(0.43) |
$ |
3.32 |
||||||||
| Consolidated Net Income (Loss), net of |
$ |
(0.06) |
$ |
(0.51) |
$ |
(0.54) |
$ |
3.32 |
||||||||
| Weighted average shares of Class A |
||||||||||||||||
| Basic |
13,870,917 |
7,000,000 |
(2) |
10,009,416 |
(3) |
7,000,000 |
(2) |
|||||||||
| Diluted |
20,870,917 |
(1) |
7,000,000 |
17,009,416 |
(1) (3) |
7,000,000 |
||||||||||
| (1) |
Number of diluted shares outstanding for periods after Business Combination takes into account non-controlling interests in ZAIS Group Parent, LLC that may be exchanged for Class A common stock under certain circumstances. |
|
| (2) |
Represents 100% ownership of ZAIS Group prior to the Business Combination. |
|
| (3) |
Pro-rated based on the portion of the nine-month period preceding and following the Business Combination. |
The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds of ZAIS Group on the Company's financial position at September 30, 2015 and December 31, 2014, and results of operations for the three and nine months ended September 30, 2015 and September 30, 2014:
| September 30, 2015 |
|||||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
||||||||||||||||
| ( Dollars in thousands ) |
|||||||||||||||||||
| Assets |
|||||||||||||||||||
| Cash and cash equivalents |
$ |
75,707 |
$ |
— |
$ |
— |
$ |
75,707 |
|||||||||||
| Income and fees receivable |
2,077 |
— |
— |
2,077 |
|||||||||||||||
| Investments in affiliates, at fair value |
253 |
— |
(253) |
— |
|||||||||||||||
| Due from related parties |
848 |
— |
(39) |
809 |
|||||||||||||||
| Fixed assets, net |
612 |
— |
— |
612 |
|||||||||||||||
| Prepaid expenses |
1,602 |
— |
— |
1,602 |
|||||||||||||||
| Deferred tax assets |
4,320 |
— |
— |
4,320 |
|||||||||||||||
| Other assets |
2,974 |
— |
— |
2,974 |
|||||||||||||||
| Assets of Consolidated Funds |
|||||||||||||||||||
| Cash and cash equivalents |
— |
20,098 |
— |
20,098 |
|||||||||||||||
| Restricted cash |
— |
2,265 |
— |
2,265 |
|||||||||||||||
| Investments, at fair value |
— |
46,230 |
— |
46,230 |
|||||||||||||||
| Investments in affiliated securities, at fair value |
— |
26,466 |
— |
26,466 |
|||||||||||||||
| Derivative assets, at fair value |
— |
1,805 |
— |
1,805 |
|||||||||||||||
| Other assets |
— |
3,264 |
— |
3,264 |
|||||||||||||||
| Total Assets |
$ |
88,393 |
$ |
100,128 |
$ |
(292) |
$ |
188,229 |
|||||||||||
| Liabilities, Redeemable Non-controlling |
|||||||||||||||||||
| Liabilities |
|||||||||||||||||||
| Notes payable |
$ |
1,253 |
$ |
— |
$ |
— |
$ |
1,253 |
|||||||||||
| Compensation payable |
2,461 |
— |
— |
2,461 |
|||||||||||||||
| Due to related parties |
174 |
— |
— |
174 |
|||||||||||||||
| Other liabilities |
3,044 |
— |
— |
3,044 |
|||||||||||||||
| Liabilities of Consolidated Funds |
|||||||||||||||||||
| Notes payable of consolidated CDOs, at fair |
— |
— |
— |
— |
|||||||||||||||
| Securities sold, not yet purchased |
— |
12,621 |
— |
12,621 |
|||||||||||||||
| Derivative liabilities, at fair value |
— |
1,994 |
— |
1,994 |
|||||||||||||||
| Due to broker |
— |
15,588 |
— |
15,588 |
|||||||||||||||
| Other liabilities |
— |
244 |
(39) |
205 |
|||||||||||||||
| Total Liabilities |
6,932 |
30,447 |
(39) |
37,340 |
|||||||||||||||
| Commitments and Contingencies |
|||||||||||||||||||
| Redeemable Non-controlling Interests |
— |
59,792 |
(241) |
59,551 |
|||||||||||||||
| Equity |
|||||||||||||||||||
| Class A Common Stock |
1 |
— |
— |
1 |
|||||||||||||||
| Class B Common Stock |
— |
— |
— |
— |
|||||||||||||||
| Additional paid-in-capital |
59,771 |
— |
— |
59,771 |
|||||||||||||||
| Retained earnings (Accumulated deficit) |
(4,337) |
— |
— |
(4,337) |
|||||||||||||||
| Accumulated other comprehensive income (loss) |
215 |
— |
— |
215 |
|||||||||||||||
| Total stockholders' equity, ZAIS Group Holdings, Inc. |
55,650 |
— |
— |
55,650 |
|||||||||||||||
| Non-controlling interests in ZAIS Group Parent, LLC |
25,811 |
— |
— |
25,811 |
|||||||||||||||
| Non-controlling interests in Consolidated Funds |
— |
9,889 |
(12) |
9,877 |
|||||||||||||||
| Total Equity |
81,461 |
9,889 |
(12) |
91,338 |
|||||||||||||||
| Total Liabilities, Redeemable Non-controlling Interests and Equity |
$ |
88,393 |
$ |
100,128 |
$ |
(292) |
$ |
188,229 |
|||||||||||
| December 31, 2014 |
||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
|||||||||||||
| ( Dollars in thousands ) |
||||||||||||||||
| Assets |
||||||||||||||||
| Cash and cash equivalents |
$ |
7,664 |
$ |
— |
$ |
— |
$ |
7,664 |
||||||||
| Income and fees receivable |
11,223 |
— |
(6,940) |
4,283 |
||||||||||||
| Investments in affiliates, at fair value |
1,752 |
— |
(1,648) |
104 |
||||||||||||
| Due from related parties |
968 |
— |
(320) |
648 |
||||||||||||
| Fixed assets, net |
1,091 |
— |
— |
1,091 |
||||||||||||
| Prepaid expenses |
1,543 |
— |
— |
1,543 |
||||||||||||
| Other assets |
3,310 |
— |
— |
3,310 |
||||||||||||
| Assets of Consolidated Funds |
||||||||||||||||
| Cash and cash equivalents |
— |
94,212 |
— |
94,212 |
||||||||||||
| Restricted cash |
— |
30,265 |
— |
30,265 |
||||||||||||
| Investments, at fair value |
— |
1,126,737 |
— |
1,126,737 |
||||||||||||
| Investments in affiliated securities, at fair value |
— |
66,219 |
(34,762) |
31,457 |
||||||||||||
| Derivative assets, at fair value |
— |
6,648 |
— |
6,648 |
||||||||||||
| Other assets |
— |
11,599 |
(22) |
11,577 |
||||||||||||
| Total Assets |
$ |
27,551 |
$ |
1,335,680 |
$ |
(43,692) |
$ |
1,319,539 |
||||||||
| Liabilities, Redeemable Non-controlling Interests and Equity |
||||||||||||||||
| Liabilities |
||||||||||||||||
| Compensation payable |
$ |
6,094 |
$ |
— |
$ |
— |
$ |
6,094 |
||||||||
| Due to related parties |
32 |
— |
— |
32 |
||||||||||||
| Other liabilities |
3,050 |
— |
— |
3,050 |
||||||||||||
| Liabilities of Consolidated Funds |
||||||||||||||||
| Notes payable of consolidated CDOs, at fair value |
— |
784,481 |
(34,762) |
749,719 |
||||||||||||
| Securities sold, not yet purchased |
— |
19,308 |
— |
19,308 |
||||||||||||
| Derivative liabilities, at fair value |
— |
5,785 |
— |
5,785 |
||||||||||||
| Due to broker |
— |
21,047 |
— |
21,047 |
||||||||||||
| Other liabilities |
— |
40,144 |
(7,281) |
32,863 |
||||||||||||
| Total Liabilities |
9,176 |
870,765 |
(42,043) |
837,898 |
||||||||||||
| Commitments and Contingencies |
||||||||||||||||
| Redeemable Non-controlling Interests |
— |
452,925 |
— |
452,925 |
||||||||||||
| Equity |
||||||||||||||||
| Class A Common Stock |
1 |
— |
— |
1 |
||||||||||||
| Class B Common Stock |
— |
— |
— |
— |
||||||||||||
| Additional paid-in-capital |
— |
— |
— |
— |
||||||||||||
| Retained earnings (Accumulated deficit) |
18,188 |
1,650 |
(1,649) |
18,189 |
||||||||||||
| Accumulated other comprehensive income (loss) |
186 |
— |
— |
186 |
||||||||||||
| Total stockholders' equity, ZAIS Group |
18,375 |
1,650 |
(1,649) |
18,376 |
||||||||||||
| Non-controlling interests in ZAIS Group Parent, LLC |
— |
— |
— |
— |
||||||||||||
| Non-controlling interests in Consolidated Funds |
— |
10,340 |
— |
10,340 |
||||||||||||
| Total Equity |
18,375 |
11,990 |
(1,649) |
28,716 |
||||||||||||
| Total Liabilities, Redeemable Non-controlling |
$ |
27,551 |
$ |
1,335,680 |
$ |
(43,692) |
$ |
1,319,539 |
||||||||
| Three months Ended September 30, 2015 |
||||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
|||||||||||||||
| ( Dollars in Thousands ) |
||||||||||||||||||
| Revenues |
||||||||||||||||||
| Management fee income |
$ |
4,175 |
$ |
— |
$ |
(64) |
$ |
4,111 |
||||||||||
| Incentive income |
3,870 |
— |
— |
3,870 |
||||||||||||||
| Other revenues |
81 |
— |
— |
81 |
||||||||||||||
| Income of Consolidated Funds |
— |
1,105 |
— |
1,105 |
||||||||||||||
| Total Revenues |
8,126 |
1,105 |
(64) |
9,167 |
||||||||||||||
| Expenses |
||||||||||||||||||
| Compensation and benefits |
6,488 |
— |
— |
6,488 |
||||||||||||||
| General, administrative and other |
4,370 |
— |
— |
4,370 |
||||||||||||||
| Depreciation and amortization |
445 |
— |
— |
445 |
||||||||||||||
| Expenses of Consolidated Funds |
— |
(677) |
(65) |
(742) |
||||||||||||||
| Total Expenses |
11,303 |
(677) |
(65) |
10,561 |
||||||||||||||
| Other Income (loss) |
||||||||||||||||||
| Net gain (loss) on investments |
(11) |
— |
11 |
— |
||||||||||||||
| Other income (expense) |
83 |
— |
— |
83 |
||||||||||||||
| Net gains (losses) of Consolidated Funds' |
— |
(4,987) |
— |
(4,987) |
||||||||||||||
| Total Other Income (Loss) |
72 |
(4,987) |
11 |
(4,904) |
||||||||||||||
| Income (loss) before income taxes |
(3,105) |
(3,205) |
12 |
(6,298) |
||||||||||||||
| Income tax (benefit) expense |
(1,528) |
— |
— |
(1,528) |
||||||||||||||
| Consolidated net income (loss) , net of tax |
(1,577) |
(3,205) |
12 |
(4,770) |
||||||||||||||
| Other Comprehensive Income (Loss), net of |
||||||||||||||||||
| Foreign currency translation adjustment |
(160) |
— |
— |
(160) |
||||||||||||||
| Total Comprehensive Income (Loss) |
$ |
(1,737) |
$ |
(3,205) |
$ |
12 |
$ |
(4,930) |
||||||||||
| Three months Ended September 30, 2014 |
|||||||||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
||||||||||||||||||||
| ( Dollars in Thousands ) |
|||||||||||||||||||||||
| Revenues |
|||||||||||||||||||||||
| Management fee income |
$ |
5,537 |
$ |
— |
$ |
(1,164) |
$ |
4,373 |
|||||||||||||||
| Incentive income |
6,008 |
— |
(1,055) |
4,953 |
|||||||||||||||||||
| Other revenues |
95 |
— |
(10) |
85 |
|||||||||||||||||||
| Income of Consolidated Funds |
— |
25,065 |
5,312 |
30,377 |
|||||||||||||||||||
| Total Revenues |
11,640 |
25,065 |
3,083 |
39,788 |
|||||||||||||||||||
| Expenses |
|||||||||||||||||||||||
| Compensation and benefits |
9,490 |
— |
— |
9,490 |
|||||||||||||||||||
| General, administrative and other |
5,472 |
— |
— |
5,472 |
|||||||||||||||||||
| Depreciation and amortization |
122 |
— |
— |
122 |
|||||||||||||||||||
| Expenses of Consolidated Funds |
— |
17,449 |
(5,511) |
11,938 |
|||||||||||||||||||
| Total Expenses |
15,084 |
17,449 |
(5,511) |
27,022 |
|||||||||||||||||||
| Other Income (loss) |
|||||||||||||||||||||||
| Net gain (loss) on investments |
(194) |
— |
174 |
(20) |
|||||||||||||||||||
| Other income (expense) |
104 |
— |
— |
104 |
|||||||||||||||||||
| Net gains (losses) of Consolidated Funds' |
— |
151,354 |
(146,970) |
4,384 |
|||||||||||||||||||
| Total Other Income (Loss) |
(90) |
151,354 |
(146,796) |
4,468 |
|||||||||||||||||||
| Income (loss) before income taxes |
(3,534) |
158,970 |
(138,202) |
17,234 |
|||||||||||||||||||
| Income tax (benefit) expense |
5 |
— |
— |
5 |
|||||||||||||||||||
| Consolidated net income (loss), net of tax |
(3,539) |
158,970 |
(138,202) |
17,229 |
|||||||||||||||||||
| Other Comprehensive Income (Loss), net of tax |
|||||||||||||||||||||||
| Foreign currency translation adjustment |
831 |
— |
— |
831 |
|||||||||||||||||||
| Total Comprehensive Income (Loss) |
$ |
(2,708) |
$ |
158,970 |
$ |
(138,202) |
$ |
18,060 |
|||||||||||||||
| Nine months Ended September 30, 2015 |
|||||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
||||||||||||||||
| ( Dollars in Thousands ) |
|||||||||||||||||||
| Revenues |
|||||||||||||||||||
| Management fee income |
$ |
12,009 |
$ |
— |
$ |
(183) |
$ |
11,826 |
|||||||||||
| Incentive income |
5,991 |
— |
— |
5,991 |
|||||||||||||||
| Other revenues |
218 |
— |
— |
218 |
|||||||||||||||
| Income of Consolidated Funds |
— |
4,314 |
— |
4,314 |
|||||||||||||||
| Total Revenues |
18,218 |
4,314 |
(183) |
22,349 |
|||||||||||||||
| Expenses |
|||||||||||||||||||
| Compensation and benefits |
20,418 |
— |
— |
20,418 |
|||||||||||||||
| General, administrative and other |
13,470 |
— |
— |
13,470 |
|||||||||||||||
| Depreciation and amortization |
654 |
— |
— |
654 |
|||||||||||||||
| Expenses of Consolidated Funds |
— |
956 |
(184) |
772 |
|||||||||||||||
| Total Expenses |
34,542 |
956 |
(184) |
35,314 |
|||||||||||||||
| Other Income (loss) |
|||||||||||||||||||
| Net gain (loss) on investments |
34 |
— |
(34) |
— |
|||||||||||||||
| Other income (expense) |
88 |
— |
— |
88 |
|||||||||||||||
| Net gains (losses) of Consolidated Funds' |
— |
(3,003) |
— |
(3,003) |
|||||||||||||||
| Total Other Income (Loss) |
122 |
(3,003) |
(34) |
(2,915) |
|||||||||||||||
| Income (loss) before income taxes |
(16,202) |
355 |
(33) |
(15,880) |
|||||||||||||||
| Income tax (benefit) expense |
(4,111) |
— |
— |
(4,111) |
|||||||||||||||
| Consolidated net income (loss), net of tax |
(12,091) |
355 |
(33) |
(11,769) |
|||||||||||||||
| Other Comprehensive Income (Loss), net of |
|||||||||||||||||||
| Foreign currency translation adjustment |
323 |
— |
— |
323 |
|||||||||||||||
| Total Comprehensive Income (Loss) |
$ |
(11,768) |
$ |
355 |
$ |
(33) |
$ |
(11,446) |
|||||||||||
| Nine months Ended September 30, 2014 |
||||||||||||||||||||
| ZAIS |
Consolidated |
Eliminations |
Consolidated |
|||||||||||||||||
| ( Dollars in Thousands ) |
||||||||||||||||||||
| Revenues |
||||||||||||||||||||
| Management fee income |
$ |
23,421 |
$ |
— |
$ |
(8,682) |
$ |
14,739 |
||||||||||||
| Incentive income |
52,543 |
— |
(10,800) |
41,743 |
||||||||||||||||
| Other revenues |
502 |
— |
(48) |
454 |
||||||||||||||||
| Income of Consolidated Funds |
— |
77,355 |
10,755 |
88,110 |
||||||||||||||||
| Total Revenues |
76,466 |
77,355 |
(8,775) |
145,046 |
||||||||||||||||
| Expenses |
||||||||||||||||||||
| Compensation and benefits |
37,600 |
— |
— |
37,600 |
||||||||||||||||
| General, administrative and other |
13,086 |
— |
— |
13,086 |
||||||||||||||||
| Depreciation and amortization |
358 |
— |
— |
358 |
||||||||||||||||
| Expenses of Consolidated Funds |
— |
134,466 |
(34,602) |
99,864 |
||||||||||||||||
| Total Expenses |
51,044 |
134,466 |
(34,602) |
150,908 |
||||||||||||||||
| Other Income (loss) |
||||||||||||||||||||
| Net gain (loss) on investments |
1,424 |
— |
(1,465) |
(41) |
||||||||||||||||
| Other income (expense) |
164 |
— |
— |
164 |
||||||||||||||||
| Net gains (losses) of Consolidated Funds' |
— |
92,504 |
(20,327) |
72,177 |
||||||||||||||||
| Total Other Income (Loss) |
1,588 |
92,504 |
(21,792) |
72,300 |
||||||||||||||||
| Income (loss) before income taxes |
27,010 |
35,393 |
4,035 |
66,438 |
||||||||||||||||
| Income tax (benefit) expense |
19 |
— |
— |
19 |
||||||||||||||||
| Consolidated net income (loss), net of tax |
26,991 |
35,393 |
4,035 |
66,419 |
||||||||||||||||
| Other Comprehensive Income (Loss), net of tax |
||||||||||||||||||||
| Foreign currency translation adjustment |
630 |
— |
— |
630 |
||||||||||||||||
| Total Comprehensive Income (Loss) |
$ |
27,621 |
$ |
35,393 |
$ |
4,035 |
$ |
67,049 |
||||||||||||
ABOUT ZAIS GROUP HOLDINGS, INC.
ZAIS (NASDAQ: ZAIS) owns a majority interest in, and is the managing member of ZGP. ZGP is the sole member of ZAIS Group, an investment advisory and asset management firm focused on specialized credit strategies with approximately $4.2 billion of assets under management as of September 30, 2015. Based in Red Bank, New Jersey with operations in London, ZAIS Group employs professionals across investment management, client relations, information technology, analytics, finance, law, compliance, risk management and operations. To learn more, visit www.zaisgroupholdings.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute "forward-looking statements," as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are generally identified by the use of words such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "would," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "pipeline," "comfortable," "assume," "remain," "maintain," "sustain," "achieve" or the negative version of those words or other comparable words. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to: the inability of the Company to realize the benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and retain its management and key employees; the outcome of any legal proceedings that may be instituted against the Company or others following completion of the Business Combination; the inability to continue to be listed on the NASDAQ Stock Market; the risk that the Business Combination disrupts current plans and operations of the Company; costs related to the Business Combination; changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; the relative and absolute investment performance of advised or sponsored investment products; the availability of suitable investment opportunities; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability and terms of financing; conditions in the market for mortgage-related investments; the impact of capital improvement projects; the impact of future acquisitions or divestitures; the impact, extent and timing of technological changes and the adequacy of intellectual property protection; the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to the Company; terrorist activities and international hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and the Company; the ability to attract and retain highly talented professionals; the impact of changes to tax legislation and, generally, the tax position of the Company; legislative and regulatory changes that could adversely affect the business of the Company; and other factors, including those set forth in the Risk Factors section of the Company's Annual Report on Form 10-K filed on February 12, 2015, Form 8-K filed on March 23, 2015, Form 10-Q filed on November 6, 2015 and other reports filed by the Company with the Securities and Exchange Commission (the "SEC"), copies of which are available on the SEC's website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
SOURCE ZAIS Group Holdings, Inc.
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