Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RF Capital Group Inc (GMPXF, Financial) reported a record high of $38.2 billion in Assets Under Administration (AUA), up $3 billion since the beginning of the year.
- The company has been recognized by Great Place to Work for 6 consecutive years and named one of the best workplaces in financial services and insurance for 5 consecutive years.
- Fee-based revenue increased by 5{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to $133.7 million for the first 6 months of 2024 compared to the same period last year.
- Net income rose significantly to $6.4 million for the 6-month period, up from $1.38 million in 2023.
- The company successfully recruited 5 new advisory teams in Q2, including top-producing teams with a combined $800 million in AUA.
Negative Points
- Interest income declined by 16{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} due to lower client cash and margin balances.
- Free cash flow decreased by $5.2 million to $2 million, primarily due to higher advisor recruiting and associated payments.
- Operating expenses increased, driven by a $1.6 million swing in mark-to-market expenses on RSUs and DSUs.
- The stock price does not yet reflect the growing intrinsic value of the company, which is disappointing to the management.
- The search for a new Chief Financial Officer is still underway, following the announcement that Tim Wilson will be leaving the company.
Q & A Highlights
Q: Congratulations on the executive transitions. How do you view the current executive team, and are there plans to build it out further?
A: David Kelly, Chief Operating Officer: The focus is on operational excellence and supporting advisors. We have great leaders and teams, but we will add talent where needed to enhance these areas.
Q: What are your priorities for product and solution build-out for advisors over the next 12 months?
A: David Kelly, Chief Operating Officer: We will focus on supporting advisors with products and solutions that are accretive to their practices and beneficial for clients. More details will be provided in the future.
Q: Can you explain the timing and process of onboarding new advisor teams and their assets?
A: Kishore Kapoor, President and CEO: The onboarding process varies, typically taking 60 to 120 days. Growth comes from net new assets, market performance, and new recruits. Over the last 10 months, we recruited 10 teams with $2.3 billion in assets.
Q: What has been the impact of recent advisor team recruitment on client assets?
A: Kishore Kapoor, President and CEO: Recent recruits will continue to grow their practices. Our growth this year is a combination of new assets from existing advisors, market performance, and new recruits. The process of transferring assets can take time due to various factors.
Q: How do you plan to address the current stock price performance and unlock intrinsic value?
A: Kishore Kapoor, President and CEO: Despite the disappointing stock price, the intrinsic value of our business is substantial. We believe that the efforts of Dave Kelly and the team will eventually translate into realized value for shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
