GMP Capital ups dividend, plans share buy back; yearly revenue up 28%

By Lisa Kerner

Charlotte, N.C., March 2 - GMP Capital Inc. is committed to returning capital to shareholders, chief executive officer Harris Fricker said during GMP's fourth-quarter and fiscal 2010 earnings call on Wednesday.

The company's board of directors approved a 33% increase in the quarterly cash dividend - to C$0.80 from C$0.60 - beginning with the fourth-quarter dividend payable later this month.

GMP subsidiary Griffiths McBurney LP announced last month that it will redeem C$60 million principal amount of senior notes on or about March 24.

The redemption will remove covenants that Fricker said have severely limited the company's ability to buy back its stock.

"Make no mistake - we intend to deploy significant capital to the repurchase [of] our stock in 2011," Fricker said.

Fricker said on Tuesday GMP closed the over-allotment option on its cumulative five-year rate reset preferred shares, series B, which originally closed on Feb. 22, for total proceeds of C$115 million.

The proceeds will be used for general corporate purposes, including the redemption of the Griffiths McBurney notes.

According to Fricker, the issuance provides GMP with low-cost capital.

Looking ahead, Fricker said he is "cautiously optimistic that capital market activity will continue to improve in 2011" and that the company expects to expand into the Australian market.

Financial results

For the fourth quarter of 2010, GMP reported revenue of C$148.4 million, a 39% increase from the prior-year period. The increase was attributed in large part to record quarterly revenues in the capital markets segment.

Net income for the quarter was C$38 million, or C$0.54 per basic share, compared with net income of C$19.5 million in the fourth quarter of 2009, or C$0.28 per basic share.

Fiscal 2010 revenue was up 28% from fiscal 2009 at C$443.5 million.

Net income for the year was C$20.5 million, or C$0.29 per basic share, compared with net income of C$43.1 million in fiscal 2009.

Excluding a C$80.9 million non-cash impairment charge relating to EdgeStone Capital Partners LP, the adjusted net income for fiscal 2010 was C$97 million and adjusted earnings per basic share were C$1.38.

GMP's capital markets business had fourth-quarter revenue of C$41.3 million, compared with C$126.8 million for the prior-year period, or a 48% increase.

The alternative investments business saw its fourth-quarter revenue rise 41% to C$5.2 million from the fourth quarter of 2009.

GMP's wealth management segment reported operating earnings of C$0.9 million in the fourth quarter of 2010, compared with an operating loss of C$1.3 million for the fourth quarter of 2009.

Because wealth management's fourth-quarter 2010 results reflect GMP's share of Richardson GMP's results, while fourth-quarter 2009 results include the consolidated results of former subsidiary GMP Private Client LP, the company's comparison of revenues and expenses for the period is limited.

Toronto-based GMP Capital is an independent Canadian investment dealer.

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