Oppenheimer(OPY) - 2025 Q1 - Quarterly Results

Financial Performance Overview The firm reported strong Q1 2025 results with increased net income and revenue, driven by advisory fees and trading, despite macroeconomic uncertainties and rising expenses First Quarter 2025 Earnings Summary Oppenheimer Holdings Inc. reported a solid first quarter for 2025, with net income rising to $30.7 million ($2.93 per share) from $26.1 million ($2.50 per share) in Q1 2024 Earnings Summary (Millions USD, except EPS) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $30.7 million | $26.1 million | | Basic EPS | $2.93 | $2.50 | | Revenue | $367.8 million | $353.1 million | - The CEO highlighted significant macroeconomic challenges, including swift policy changes on trade and immigration, concerns of a potential trade war, and increased market volatility, raising the likelihood of a recession and dampening hopes for active capital market activity[2] - Despite market challenges, the firm achieved record equity levels and is positioned for its CEO-elect, Robert Lowenthal, to lead the company into its next phase[4] Summary Operating Results The firm's overall revenue grew to $367.8 million, with pre-tax income rising to $41.4 million, while Wealth Management saw a slight revenue increase but a decrease in pre-tax income Summary Operating Results (Millions USD) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Firm Revenue | $367.8 million | $353.1 million | | Firm Pre-Tax Income | $41.4 million | $37.5 million | | Wealth Management Revenue | $242.0 million | $238.0 million | | Wealth Management Pre-Tax Income | $67.9 million | $75.8 million | | Capital Markets Revenue | $123.3 million | $112.1 million | | Capital Markets Pre-Tax Loss | $(5.1) million | $(6.7) million | Key Highlights Revenue growth in Q1 2025 was primarily fueled by higher advisory fees and trading revenue, while expenses increased due to wage inflation and higher non-compensation costs - Revenue was primarily driven by higher advisory fees, transaction-based commissions, and sales and trading revenue[9] - Expenses increased due to: - Compensation: Inflationary wage pressures and higher production-related expenses - Non-compensation: Higher interest, technology, and clearing/execution costs[9] - The company achieved record highs in total stockholders' equity, book value, and tangible book value per share due to positive earnings[9] Segment Performance Wealth Management revenue increased but pre-tax income declined due to higher expenses, while Capital Markets saw revenue growth and a narrowed pre-tax loss driven by sales and trading Wealth Management The Wealth Management segment reported a 1.7% revenue increase to $242.0 million, driven by advisory fees and retail commissions, despite a 10.5% fall in pre-tax income due to rising expenses Wealth Management Performance (Millions USD, except %) | Wealth Management | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $242.0 million | $238.0 million | | Pre-Tax Income | $67.9 million | $75.8 million | | Pre-Tax Margin | 28.0% | 31.8% | | AUM (billions) | $48.9 | $46.6 | - Key revenue drivers: - Advisory fees: Increased 12.2% due to higher AUM - Retail commissions: Increased 7.8% from higher trading activity - Bank deposit sweep income: Decreased by $6.6 million due to lower balances and rates[16] - Total expenses rose, driven by a 3.5% increase in compensation costs and a 16.9% increase in non-compensation expenses, primarily from higher legal and external portfolio management costs[16] Capital Markets The Capital Markets segment's revenue grew 10.0% year-over-year to $123.3 million, while its pre-tax loss narrowed to $5.1 million, driven by strong sales and trading performance Capital Markets Performance (Millions USD) | Capital Markets | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $123.3 million | $112.1 million | | Investment Banking Revenue | $45.0 million | $47.9 million | | Sales and Trading Revenue | $76.9 million | $63.7 million | | Pre-Tax Loss | $(5.1) million | $(6.7) million | - Investment Banking revenue changes: - Advisory fees: Decreased 18.5% due to fewer private placement transactions - Fixed income underwriting: Increased 116.6% due to higher public finance activity[22] - Sales and Trading revenue grew, with equities up 37.9% on higher volumes and options activity, and fixed income up 5.2% from higher interest income on trading inventory[22] Financial Statements and Other Matters The consolidated income statement shows revenue and net income growth, supported by a lower effective tax rate and increased stockholders' equity Consolidated Income Statement The consolidated income statement details a 4.2% rise in total revenue to $367.8 million, leading to a 10.5% rise in pre-tax income and a 17.7% increase in net income attributable to the company Consolidated Income Statement (Millions USD) | | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | 367.8 million | 353.1 million | 4.2% | | Commissions | 110.9 million | 95.9 million | 15.7% | | Advisory fees | 128.8 million | 114.8 million | 12.2% | | Investment banking | 47.6 million | 50.5 million | (5.8)% | | Total expenses | 326.4 million | 315.7 million | 3.4% | | Pre-Tax Income | 41.4 million | 37.5 million | 10.5% | | Net income attributable to OPY | 30.7 million | 26.1 million | 17.7% | Other Matters The company announced a quarterly dividend of $0.18 per share, with stockholders' equity increasing to $872.3 million and a lower effective tax rate of 25.9% - The Board of Directors declared a quarterly dividend of $0.18 per share, payable on May 23, 2025[22] Other Financial Metrics (Millions USD, except %) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Stockholders' Equity | $872.3 million | $801.5 million | | Common Stock Repurchases | $0.1 million | $8.4 million | | Effective Tax Rate | 25.9% | 31.3% | - The effective tax rate decreased to 25.9% from 31.3% in the prior year, benefiting from fewer non-deductible expenses and a higher tax benefit on the vesting of share awards[22] Company Information and Disclosures Oppenheimer Holdings Inc. provides diverse financial services and includes standard forward-looking statement disclosures Company Information Oppenheimer Holdings Inc. is a prominent middle-market investment bank and full-service broker-dealer with a history dating back to 1881, providing a comprehensive suite of financial services - Oppenheimer is a leading middle-market investment bank and full-service broker-dealer engaged in retail securities brokerage, institutional sales and trading, investment banking, research, and asset management services[23] Forward-Looking Statements This press release contains forward-looking statements, and readers are advised to consult the company's Annual Report on Form 10-K for a comprehensive discussion of related risks and factors - The report includes forward-looking statements, and for a discussion of related risks, reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 2024[24]