GMP Capital Inc. Reports Third Quarter 2014 Results

For further information about GMP Capital Inc., our results for third quarter 2014 and the meaning of certain references, this earnings release should be read in conjunction with our unaudited interim condensed consolidated financial statements as at and for the three and nine months ended September 30, 2014 (Third Quarter 2014 Financial Statements), and our management's discussion and analysis for the three and nine months ended September 30, 2014 (Third Quarter 2014 MD&A), which can be accessed on our website at gmpcapital.com and on SEDAR at sedar.com. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars and have been taken from our Third Quarter 2014 Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS).

TORONTO, Nov. 7, 2014 /CNW/ - GMP Capital Inc. (GMP) (TSX: GMP) today reported revenue of $67.5 million in third quarter 2014, up 58% compared with the same period a year ago.  GMP recorded net income of $6.1 million and diluted earnings per share (EPS) of $0.05 in third quarter 2014 compared with a net loss of $0.5 million and a diluted loss per share of $0.01 in third quarter 2013. Return on common equity (ROE)¹ was  5.6% in third quarter 2014 compared with negative 1.2% in third quarter 2013.

"Early momentum this quarter gave way to intensifying geo-political and macroeconomic uncertainty late in the quarter and into October 2014. Amid the volatility, our businesses performed reasonably well, powered by a 159% increase in investment banking fees and higher contributions from our U.S. and international operations. Our partners at Richardson GMP have completed integration efforts and delivered a solid quarterly performance," said Harris Fricker, Chief Executive Officer, GMP.

 FINANCIAL HIGHLIGHTS

Third quarter 2014 vs. Third quarter 2013

• Revenue of $67.5 million compared with $42.6 million.
• Net income of $6.1 million compared with a net loss of $0.5 million.
• On an adjusted basis¹, net income of $4.4 million and net income attributable to common shareholders of $2.2 million compared with a net loss of $1.1 million and net loss attributable to common shareholders of $1.3 million.
• Diluted EPS of $0.05 compared with a diluted loss per share of $0.01.
• On an adjusted basis¹, diluted EPS was $0.03 compared with a diluted loss per share of $0.02.
• ROE¹ was 5.6% compared with negative 1.2%; adjusted ROE¹ was 3.1% compared with negative 2.2%.

First nine months 2014 vs. First nine months 2013

• Revenue of $211.8 million compared with $151.8 million.
• Net income of $21.2 million compared with $3.8 million.
• Diluted EPS of $0.23 compared with a diluted loss per share of $0.09.
• ROE¹ was 8.2% compared with negative 3.1%.
• On an adjusted basis¹, net income of $23.5 million, diluted EPS of $0.26 and ROE¹ of 9.3% compared with net loss of $0.3 million, diluted loss per share of $0.04 and ROE¹ of negative 1.5%.

Commenting further, Mr. Fricker said, "Our conservative capitalization, strong liquidity and highly variable cost structure allow us to endure periods of shifting conditions and to capitalize on opportunities as they arise."

1.

Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) under IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers.  This data should be read in conjunction with the "Non-GAAP Measures" section at the end of this press release, which sets out the composition of the measures for the periods presented, and the "Presentation of Financial Information and Non-GAAP Measures" section in the Third Quarter 2014 MD&A.

THIRD QUARTER 2014 BUSINESS SEGMENT HIGHLIGHTS

Capital Markets

Revenue

• Revenue increased 61% to $61.8 million compared with third quarter 2013, bolstered by a 159% increase in investment banking fees. Performance of our M&A advisory franchise was particularly strong compared with third quarter 2013.
• Non-resources investment banking revenue increased 36%, U.S. and international operations contributed nearly half of total revenues.
• Principal transactions reflect lower returns on principal inventories and higher losses on client facilitation trading.
• Commissions increased 10% compared with third quarter 2013 on higher client trading volumes.
• Canadian dollar weakening contributed to the increase in reported revenues.

Expenses

• Expenses of $53.6 million increased 42% compared with third quarter 2013 primarily reflecting higher variable compensation commensurate with the increased revenue generation as well as incremental costs associated with the expansion of our energy business into Houston.
• The prior year quarter included a $1.5 million pre-tax recovery of previously accrued restructuring charges.
• Canadian dollar weakening contributed to the increase in reported expenses.

Income (loss) before income taxes

• Income before income taxes of $8.2 million compared with $0.6 million in third quarter 2013.
• On an adjusted basis¹, income before income taxes of $8.8 million compared with a near break-even result in third quarter 2013.

Capital Markets highlights:

• GMP Securities L.P. maintained first place ranking among independent dealers in the dollar value of common equity underwriting transactions completed in Canada during first nine months 2014 for which we were lead or co-lead. (Source: FPinfomart)
• Led or co-led 17 underwriting transactions in third quarter 2014, raising approximately $0.8 billion on behalf of clients.
• GMP USA reported robust investment banking activity that included notable M&A advisory and debt underwriting mandates in the energy sector.

Wealth Management

• The Wealth Management segment consists of GMP's non-controlling ownership interest in Richardson GMP and the financial results of CQI.
• Wealth Management reported income before income taxes of $2.1 million in third quarter 2014 compared with $1.1 million in third quarter 2013. Third quarter 2014 results included a dilution gain of $2.0 million in connection with the dilution of GMP's equity ownership interest in Richardson GMP following the issuance of convertible debentures by Richardson GMP to its employees.
• CQI's investment management and fee income increased in line with higher AUM.
• GMP's share of Richardson GMP's net income attributable to common shareholders was $0.9 million in third quarter 2014.
• On an adjusted basis¹, third quarter 2014 income before income taxes was $0.2 million compared with $1.1 million in third quarter 2013 which included $1.4 million in dividends on GMP's preferred share investment in Richardson GMP.

Richardson GMP highlights:

The following information sets forth an overview of the consolidated financial results of Richardson GMP, on a 100% basis; noting, however, that GMP owns an approximately 31% non-controlling interest of Richardson GMP as at September 30, 2014.

• Revenue of $75.8 million increased 98% compared with third quarter 2013 primarily due to higher commissions and investment management and fee income commensurate with higher average assets under administration (AUA)¹.
• Adjusted EBITDA¹ of $13.0 million in third quarter 2014 compared with $4.2 million in third quarter 2013.
• AUA of $28.5 billion at September 30, 2014, up 87% relative to September 30, 2013, bolstered by the MPW Canada acquisition.
• 199 investment advisory teams at September 30, 2014, up from 114 teams at September 30, 2013.

DIVIDENDS

On November 6, 2014, the board of directors of GMP (Board of Directors) declared a quarterly cash dividend of $0.05 per common share, and a quarterly cash dividend of $0.3438 per Cumulative 5-Year Rate Reset Preferred Share, Series B, each payable on December 31, 2014, to the respective shareholders of record on December 10, 2014.

CONFERENCE CALL

A conference call and live audio webcast to discuss GMP's third quarter 2014 results will be held on Friday, November 7, 2014 at 10:00 a.m. (ET).  GMP executives will host the call followed by a question-and-answer session for analysts and institutional investors.  Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-340-2218 or 1-866-223-7781 (toll free) or via live audio webcast at http://www.gmpcapital.com/investor. A recording of the conference call will be available until Friday, November 14, 2014, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 8332444. The webcast will be archived at http://www.gmpcapital.com/investor.

NON-GAAP MEASURES
Consistent with our management framework, we use certain measures to assess our financial performance that are not generally accepted accounting principles (GAAP) measures under IFRS. These measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of GMP's performance, liquidity, cash flows and profitability. For further information, refer to the "Presentation of Financial Information and Non-GAAP Measures" section in the Third Quarter 2014 MD&A.

The following table provides a reconciliation of GMP's reported results to its adjusted measures including the composition of the adjusted measures for the periods presented.

($000, except as otherwise noted)		Three months ended September 30		Nine months ended September 30
		2014	2013	2014	2013
Reported Results
Income (loss) before income taxes		8,827	(440)	30,316	2,748
Income tax expense (benefit)		2,772	71	9,138	(1,099)
Net income (loss)		6,055	(511)	21,178	3,847
Net income (loss) attributable to common shareholders		3,818	(695)	16,909	(5,663)
Reported Measures
Net income (loss) per common share (dollars):
	Basic	0.06	(0.01)	0.24	(0.09)
	Diluted ¹	0.05	(0.01)	0.23	(0.09)
ROE ²		5.6%	(1.2)%	8.2%	(3.1)%
Pre-Tax Impact of Adjusting Items
	Share of associate's MPW Canada integration costs	—	—	3,489	—
	Retention shares	585	839	1,491	2,716
	Dilution gain	(1,978)	—	(1,978)	—
	Restructuring costs	—	(1,500)	—	7,645
	AUM sale transaction	—	—	—	(11,843)
Impact of adjusting items on income (loss) before income taxes		(1,393)	(661)	3,002	(1,482)
After-Tax Impact of Adjusting Items
	Share of associate's MPW Canada integration costs	—	—	3,489	—
	Retention shares	326	468	832	1,516
	Dilution gain	(1,978)	—	(1,978)	—
	Restructuring costs	—	(1,105)	—	5,613
	AUM sale transaction	—	—	—	(11,310)
Impact of adjusting items on net income (loss)		(1,652)	(637)	2,343	(4,181)
Adjusted Results ²
Income (loss) before income taxes		7,434	(1,101)	33,318	1,266
Net income (loss)		4,403	(1,148)	23,521	(334)
Net income (loss) attributable to common shareholders		2,166	(1,332)	19,252	(2,762)
Adjusted Measures ²
Net income (loss) per common share (dollars):
	Basic	0.03	(0.02)	0.28	(0.04)
	Diluted ¹	0.03	(0.02)	0.26	(0.04)
ROE		3.1%	(2.2)%	9.3%	(1.5)%

1.	In the case of a net loss, the effect of Common Share options and warrants on diluted net loss per common share will be anti-dilutive; therefore, basic and diluted net loss per common share will be the same.
2.	Return on common equity, adjusted results and adjusted measures are considered to be non-GAAP financial measures. These measures do not have any standardized meaning prescribed by GAAP under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. The table above outlines our adjusted results and adjusted measures with their closest GAAP counterparts.

SUPPLEMENTAL INFORMATION

The following supplemental information reflects how management of Richardson GMP assesses the financial performance of

Richardson GMP.

Supplemental Financial Information - Richardson GMP

Richardson GMP's management assesses performance on both a reported and an adjusted basis and considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also permits readers to assess the impact of specified items on financial results. Richardson GMP's management use certain measures to assess the financial performance of Richardson GMP that are not GAAP measures under IFRS.  EBITDA and adjusted EBITDA do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of Richardson GMP's performance, liquidity, cash flows and profitability.  Richardson GMP's management believes adjusting results by excluding the impact of the specified items is more reflective of ongoing financial performance and cash generating capabilities and provides readers with an enhanced understanding of how management views Richardson GMP's core performance. For further information, refer to the "Supplemental Information" section in the Third Quarter 2014 MD&A.

The following table sets forth an overview of the consolidated financial results of Richardson GMP for the periods indicated, on a 100% basis; noting, however, that GMP owns an approximately 31% non-controlling interest of Richardson GMP as at September 30, 2014.

($000, except as otherwise noted)		Three months ended September 30				% increase/ (decrease)		Nine months ended September 30				% increase/ (decrease)
		2014		2013				2014		2013
Revenue		75,810		38,375		98		238,808		116,018		106
Expenses		70,867		37,910		87		232,390		112,371		107
Employee compensation and benefits		50,692		24,901		104		160,421		74,854		114
Non-compensation expenses		20,175		13,009		55		71,969		37,517		92
Net income - reported		4,943		465		963		6,418		3,647		76
Pre-tax impact of adjusting items
	Interest	2,068		405		411		5,769		1,203		380
	Depreciation and amortization	1,338		837		60		4,032		2,526		60
	Transition assistance loan amortization	3,455		1,053		228		10,038		3,302		204
EBITDA^1		11,804		2,760		328		26,257		10,678		146
	MPW Canada integration costs	—		1,080		(100)		10,973		1,080		(100)
	Share-based compensation	1,191		377		216		5,311		838		534
Adjusted EBITDA^1		12,995		4,217		208		42,541		12,596		238
Number of advisory teams		199		114		75
AUA at period-end ($ millions)^1		28,493		15,224		87

FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" as defined under applicable Canadian securities laws.   This information includes, but is not limited to, statements concerning our 2014 objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.

Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. GMP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions (M&A), dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect GMP's actual results and could cause its actual results to differ materially from those expressed or implied in any forward-looking information disclosed by management or on its behalf.  For a description of additional risks that could cause our actual results to materially differ from our current expectations, see "Risk Management" in the Third Quarter 2014 MD&A and "Risk Factors" in GMP's annual information form. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (GMP Group).  Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also impair the operations of the GMP Group.  Material assumptions or factors underlying the forward-looking information contained in this press release are set out in the "Business Environment and Market Outlook" section of the Third Quarter 2014 MD&A and include, without limitation: generally expectations for an increase in U.S. interest rates in 2015, strength of corporate balance sheets, continued accommodative interest rate environment in Canada, strong global geo-political headwinds and weakness in energy markets.  Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking information contained in this press release is made as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release. Except as required by applicable law, management and GMP's Board of Directors undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.          

ABOUT GMP CAPITAL INC.
GMP is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global client base that includes corporate clients and institutional and individual investors in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices located in Toronto, Montreal, Calgary, New York, Houston, Stamford, Miami, Dallas, London, Perth and Sydney.  The Capital Markets segment conducts its business through the following operating entities: GMP Securities L.P., GMP Securities, LLC, Griffiths McBurney Corp., GMP Securities Europe LLP and GMP Securities Australia Pty Limited. Wealth Management consists of GMP's non-controlling ownership interest in Richardson GMP Limited and the investment management and alternative investment products offered by CQI Capital Management L.P.  Richardson GMP Limited is a full-service independent firm focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol "GMP". For further information, please visit our corporate website at gmpcapital.com.

SOURCE: GMP Capital Inc.

GMP Capital Inc., Rocco Colella, Director, Investor Relations, 145 King Street West, Suite 300, Toronto, Ontario M5H 1J8, Tel: [phone]; Fax: [phone], [email protected] or [email protected]