GMP Capital Inc. reported a net loss of $3.8 million from continuing operations for the second quarter of 2019, the firm’s Q2 2019 results show. The net loss of $3.8 million was a decrease from net income of $1.5 million for the same period in 2018. On an adjusted basis, the company reported a net loss of $0.6 million, down from net income of $5.0 million in Q2 2018.
“The results for this quarter were impacted by the 35% industry-wide decline in common equity underwriting transactions compared to the prior period, largely in the cannabis, blockchain and mining sectors, an uncertain market environment as well as costs incurred in connection with the sale of the Capital Markets business to Stifel [Financial Corp.],” Harris Fricker, CEO of the Capital Markets business at GMP Securities, said in press release issued on Friday.
The release notes that this past Tuesday, GMP’s shareholders “overwhelmingly” approved the sale of virtually all of GMP’s capital markets business to Stifel, a U.S.-based global wealth-management and investment-banking company, and the curtailment of stated capital to allow a one-time return of capital distribution of $0.275 per common share.
“Upon closing of the sale transaction, GMP intends to redeploy considerable capital toward accelerating the growth of its wealth-management business,” the release stated.
GMP Capital’s continuing operations revenue decreased by $11 million (to $26.5 million from $37.5 million ) from Q2 2018 to Q2 2019, the release noted. GMP’s capital markets revenue of $23.1 million was down 32% from the same period last year, mainly as a result of lower investment banking revenue, commission revenue and lower returns on principal inventories, the firm said in the release.
GMP’s capital markets expenses decreased by 18% in Q2 2019 compared with Q2 2018, primarily due to lower employee compensation and benefits expense, as well as lower selling, general and administrative expense.