Chairman, Presidentand CEO Richard Hendrix is hopeful his company's investment banking business canexecute some significant capital markets deals before year-end, despite a challengingoperating environment.
Speakingduring an earnings conference call, Hendrix noted that the U.S. IPO market is onpace to have its worst year since the financial crisis. He added that the lack ofnew issuance activity negatively impacted FBR's results in the second quarter, aperiod in which the company reporteda net loss of $8.2 million, or $1.08 per share, on revenue of $20.9 million, comparedto net income of $2.9 million, or 36 cents per share, on revenue of $44.3 millionfor the year-ago quarter.
Hendrixsaid the execution of sole-managed capital markets transactions will drive improvementin FBR's results. FBR has a reputationfor working on large transactions, such as 144A equity private placements, and theexecution of one can drasticallyboost the company's earningsresults.
So farin 2016, a lack of the large deals has hampered FBR's investment banking revenue,Hendrix said. Through the second quarter, FBR reported capital raising revenue of$9.3 million, down from $37.1 million in the first half of 2015.
Hendrixsaid the company is currently running a road show for a significant health caretransaction, and is also actively working on deals in the energy and industrialssectors. Forecasting a substantial increase in activity is difficult because ofthe high level of uncertainty in the market, but Hendrix is cautiously optimisticthat FBR can execute the deals in the near term.
"DoI think those are necessarily going to push into '17?" he said. "Not necessarily."