JB Oxford Holdings Bullish on Outlook for Industry, Company
Wednesday April 7, 5:28 pm Eastern Time
LOS ANGELES, April 7 /PRNewswire/ -- In a conference call with analysts and investors today, the management of JB Oxford Holdings, Inc. (Nasdaq: JBOH - news), a provider of discount and on-line brokerage services to clients nationwide, reiterated their upbeat outlook for the discount brokerage industry as a whole and in particular the company's growth prospects for 1999.
''We are very bullish on the industry,'' said JB Oxford Chairman and Chief Executive Officer C.L. Jarratt. ''The experts are saying that [the discount and on-line brokerage industries] are going to have tremendous growth and we intend to get our fair share of that growth. It's not a question of 'if,' it's 'when' the electronic delivery of information and trades will be the dominant player in the future.
''In June of last year this was a turnaround situation, a situation where this company was losing as much as $1 million a month,'' Mr. Jarratt said. ''And we have taken the company to the point that [in the fourth quarter we generated a pre-tax profit of] approximately $1 million a month... We expect to meet or exceed that in the first quarter.''
Contributing to the increase in the company's return to profitability in the fourth quarter was a concerted focus on cost containment. Total expenses for the quarter were 85% of total revenues, versus 98% for the year. Excluding a $2.5 million noncash interest charge, total expenses were 94% of total revenues for 1998, down from 96% in 1997.
''From the cost containment standpoint, we feel like we've made some headway,'' said President and Chief Operating Officer Jamie Lewis. ''Margins that you saw in the fourth quarter we feel were in line with what we were expecting to do, and we hope to continue that in 1999. Some of that difference as far as percentages in the total expenses going down as a percentage of revenue was a function of high fixed-costs in this business. Once your volumes get up above covering certain levels of [fixed] expenses, then you really start to have additional marginal income off of additional dollars of revenue.''
For 1998, the company generated 40% of total revenues from retail commissions, 35% from interest, 17% from clearing and execution services, and 8% from trading and market-making activities. Management anticipates that the revenue breakdown for 1999 will be consistent with 1998.
In addition, as of year-end JB Oxford had approximately 115,000 retail accounts with over $2 billion in customer assets, for an average of more than $17,000 in assets per account.
In terms of growth, ''the industry is looking for around 20% plus, 25% just organically -- we hope to get at least that,'' Mr. Jarratt said.
''As we look forward into '99, what we're primarily looking at is trying to grow the business, focus less on the cost containment and more on growing the revenues,'' Mr. Lewis said. ''We're planning to do that through an increased advertising budget and a refocused marketing plan, also through using strategic partnerships with other on-line providers and some strategic acquisitions.''
''There are roughly 100 -- 140 at last count -- discount brokers that have on-line trading capabilities,'' Mr. Jarratt said. ''What's different about us is that we actually can clear trades. And we'll be looking at the smaller ones, most likely that's what you would see us buying, a smaller one, and consolidating those accounts up into our infrastructure as it is now. You'll see a high percentage of those revenues go straight to the bottom line to the extent that we're able to do that.
''Our first goal when taking over this company was to assess the risks as well as the revenue side of the business,'' Mr. Jarratt said. ''Expenses were out of hand, revenues were declining, and changes in top management needed to be made. We've done that. Now we're looking forward to the future of this company, where the growth is coming from and where that can lead. Right now, about 75% to 85% is on retail trading through personal brokers. About 25% of our retail business is done on-line. We see the growth -- as well as our competitors see the growth -- or a substantial amount of the growth from the on-line business. We're also going to see growth, not to as big an extent, but on the personal side through personal brokers.''
''We do have what we consider to be excellent customer service, and we continue to be committed to providing that type of customer service in the future,'' Mr. Lewis said. ''We're going to aggressively grow the business and still remain committed to keeping the personal touch that we think has served our customers well in the past.''
In response to a question, management indicated that the company currently has approximately 15.0 million shares outstanding following the conversion of $502,615 in face value of 9% senior secured convertible notes by Hareton Sales & Marketing, Inc. In full satisfaction of this debt, the company issued 718,021 shares of common stock in February 1999. The company estimates its currently float at approximately 14.0 million shares and its diluted shares at approximately 23.5 million shares.
JB Oxford Holdings, Inc., through its wholly owned subsidiary JB Oxford & Company, provides discount and on-line brokerage services, as well as correspondent clearing services, to clients throughout the United States. The company has branches in New York, Miami and Los Angeles. More information can be obtained from the company's web site at www.jboxford.com.
This press release contains statements that are forward-looking and comments on market conditions, revenue growth, expense management, and outlook. Any number of conditions may occur which would affect important factors in this analysis and materially change expectations. These factors include, but are not limited to, known and unknown risks, customer trading activity, changes in technology, shifts in competitive patterns, decisions with regard to products and services, changes in revenues and profits, and significant changes in the market environment. |
