The Blackstone Group Reports Third Quarter Earnings
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The Blackstone Group Reports Third Quarter Earnings
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2007-11-14
Third Quarter 2007 Business Highlights
Overall revenues increased to $526.7 million vs. $461.5 million in the prior year
Corporate Private Equity revenues increased to $227.3 million vs. $159.6 million in the prior year
Real Estate revenues decreased to $109.1 million vs. $196.1 million in the prior year
Marketable Alternative Asset Management revenues increased to $124.9 million vs. $66.5 million in the prior year Financial Advisory revenues increased to $84.3 million vs. $52.6 million in the prior year
Nine Months Ended September 30, 2007 Business Highlights
Overall revenues increased to $2.71 billion vs. $1.34 billion in the prior year
Corporate Private Equity revenues increased to $880.7 million from $547.0 million in the prior year
Real Estate revenues increased to $1.22 billion from $471.8 million in the prior year
Marketable Alternative Asset Management revenues increased to $449.8 million from $188.1 million
in the prior year
Financial Advisory revenues increased to $277.0 million from $175.3 million in the prior year
NEW YORK, November 12, 2007: The Blackstone Group L.P. (NYSE: BX) today reported its third quarter 2007 results.
For the three months ended September 30, 2007, revenues and net loss (due to non-cash charges) totaled $526.7 million and $113.2 million, respectively, compared with revenues of $461.5 million and net income of $372.5 million a year ago. The net loss of $113.2 million includes the impact of $802.6 million of non-cash charges associated with the vesting of transaction related equity-based compensation arising
from IPO unit awards and the amortization of intangibles. Strong growth in three business segments - Corporate Private Equity, Marketable Alternative Asset Management and Financial Advisory - drove the increase in revenues.
For the nine months ended September 30, 2007, revenues and net income totaled $2.71 billion and $1.79 billion, respectively, compared with revenues of $1.34 billion and net income of $1.08 billion a year ago. The $1.79 billion of net income reflects the impact of $1.05 billion of non-cash charges associated with the vesting of transaction related equity-based compensation arising from IPO unit awards
and the amortization of intangibles. Strong growth in all four business segments - Corporate Private Equity, Real Estate, Marketable Alternative Asset Management and Financial Advisory - drove this nine month increase.
In connection with the initial public offering of the common units of The Blackstone Group L.P. (the publicly traded partnership), Blackstone effected a reorganization as of the close of business on June 18, 2007, which affects the comparison of the current year's periods with those of the prior year's.
Blackstone's business was historically conducted through a large number of entities as to which there was no single holding entity. Accordingly, operating results for the three and nine months ended September 30, 2007 and 2006 are for the consolidated and combined entities.
Throughout much of the third quarter, global equity markets were strong, with many approaching nearrecord levels and the global economy remaining healthy. Concerns over weakness in the U.S. housing market and sub-prime mortgage market, coupled with a large volume of debt financing backlog related to leveraged equity transactions, served to create more challenging financing conditions starting in the last
week of June, which continue to date. The lack of liquidity in the financing markets has had a dampening effect on initiating new, large-sized corporate private equity transactions.
Stephen A. Schwarzman, Chairman and Chief Executive Officer of Blackstone, said: "Blackstone posted year-over-year increases in revenues, cash flow and assets under management despite the very significant credit market dislocations. This environment provides us with both challenges and opportunities. While it will be difficult to structure very large leveraged transactions in corporate private equity and real estate until the credit markets improve, pricing of assets is more favorable. Additionally, Blackstone's
marketable alternatives and advisory businesses continue to grow and are not dependent on access to the lending markets."
SEGMENT REVIEW(1)
For the three months ended September 30, 2007, three of Blackstone’s four business segments delivered strong revenue growth. Economic Net Income for the three months ended September 30, 2007 totaled $299.2 million as compared to Pro Forma Adjusted Economic Net Income of $291.0 million for the three months ended September 30, 2006. Economic Net Income After Taxes for the three months ended September 30, 2007 totaled $234.0 million as compared to Pro Forma Adjusted Economic Net Income After Taxes of $239.1 million for the comparable prior year period.
For the nine months ended September 30, 2007, all of Blackstone’s business segments delivered very strong results. Pro Forma Adjusted Economic Net Income for the nine months ended September 30, 2007 totaled $1.99 billion as compared to $780.2 million for the nine months ended September 30, 2006. Pro Forma Adjusted Economic Net Income After Taxes for the nine months ended September 30, 2007
totaled $1.73 billion as compared to $619.4 million for the comparable prior year period.
Net Cash Flow Used In Operating Activities was $1.09 billion for the nine months ended September 30, 2007 as compared to $1.29 billion for the comparable prior period. Pro Forma Adjusted Cash Flow from Operations for the nine months ended September 30, 2007 was $1.27 billion as compared to $814.1 million for the comparable prior period.
The table below details Blackstone's Economic Net Income for the three months ended September 30, 2007 as compared to Pro Forma Adjusted Economic Net Income for the three months ended September 30, 2006 as well as Blackstone’s Pro Forma Adjusted Economic Net Income for the nine months ended September 30, 2007 and 2006. Management considers Economic Net Income Before Taxes, which includes unrealized gains and compensation related to those gains but excludes the non-cash charges associated with the vesting of transaction related equity-based compensation arising from IPO
unit awards and the amortization of intangibles, an important measurement of value creation and benchmarks its performance against Economic Net Income.
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