Highlights:
- First quarter 2015 revenues of $278.8
million, up 32% year-over-year
- First quarter 2015 EBITDA, as adjusted,
of $10.5 million
- Record client assets of approximately
$127 billion, up 42% year-over-year
- Trailing twelve month recurring revenue
of 71% in independent brokerage and advisory services segment
- Shareholders’ equity of $399 million at
March 31, 2015
- Completed acquisition of Securities
Service Network, Inc. on January 2, 2015, adding approximately 450
financial advisors and approximately $13 billion in client
assets
Ladenburg Thalmann Financial Services Inc. (NYSE MKT:LTS, LTS
PrA) today announced financial results for the three months ended
March 31, 2015.
Dr. Phillip Frost, Chairman of Ladenburg, said, “Ladenburg’s
first quarter revenues benefited from a substantial increase in our
independent brokerage and advisory services business, partially
offset by a decrease in investment banking business, resulting in
adjusted EBITDA of $10.5 million. We now have record client assets
of approximately $127 billion, up 42% year-over-year, and we feel
positive about the outlook for our capital markets business for the
coming quarters.”
Richard Lampen, President and Chief Executive Officer of
Ladenburg, said, “We have significant momentum in our independent
broker-dealer business as a result of organic growth, recruiting
and acquisitions, and we’ve seen growth in recurring revenues and
asset management fees. Ladenburg has a strong team in our
investment banking/capital markets business and, despite a decline
in equity capital raises for small and mid-cap public companies in
the first quarter, we are encouraged by our pipeline of potential
deals. We remain focused on building on the success of these two
complementary and profitable business lines to continue driving
value for shareholders.”
First Quarter 2015First quarter
2015 revenues were $278.8 million, a 32% increase from revenues of
$211.8 million in the first quarter of 2014, in part due to the
acquisitions of Highland Capital Brokerage, Inc. (“Highland”), KMS
Financial Services, Inc. (“KMS”) and Securities Service Network,
Inc. (“SSN”). For the trailing twelve months ended March 31, 2015,
revenues were $988.3 million. Advisory fee revenue for the three
months ended March 31, 2015 increased by 44% to $110.5 million from
$76.9 million for the comparable period in 2014, resulting from the
KMS and SSN acquisitions, strong new business development and
favorable market conditions.
Net loss attributable to the Company for the first quarter of
2015 was $3.6 million, as compared to net income attributable to
the Company of $4.3 million in the first quarter of 2014. Net loss
available to common shareholders, after payment of preferred
dividends, was $9.9 million or ($0.05) per basic and diluted common
share for the first quarter of 2015, as compared to net income
available to common shareholders of $1.1 million or $0.01 per basic
and diluted common share in the comparable 2014 period. The first
quarter 2015 results included approximately $9.9 million of
non-cash charges for depreciation, amortization and compensation,
$2.7 million of amortization of retention and forgivable loans,
$1.4 million of interest expense, $1.7 million of income tax
benefit and $0.3 million of loss on extinguishment of debt, while
the first quarter 2014 results included approximately $5.8 million
of non-cash charges for depreciation, amortization and
compensation, $2.8 million of amortization of retention and
forgivable loans, $1.9 million of interest expense, $0.6 million of
income tax expense and $0.3 million of loss on extinguishment of
debt.
Recurring RevenuesFor the three
months ended March 31, 2015, recurring revenues, which consist of
advisory fees, trailing commissions, cash sweep fees and certain
other fees, represented approximately 73% of revenues from the
Company’s independent brokerage and advisory services business.
Recurring revenues for this business were 71% for the trailing
twelve months ended March 31, 2015.
EBITDA, as adjustedEBITDA, as
adjusted, for the first quarter of 2015 was $10.5 million, a 33%
decrease from $15.7 million in the 2014 period. For the trailing
twelve months ended March 31, 2015, EBITDA, as adjusted, was $55.9
million. Attached hereto as Table 2 is a reconciliation of EBITDA,
as adjusted, to net (loss) income attributable to the Company as
reported (see “Non-GAAP Financial Measures” below).
Stock RepurchasesDuring the quarter
ended March 31, 2015, Ladenburg repurchased 403,841 shares of its
common stock at a cost of approximately $1.6 million, representing
an average price per share of $3.93. Since the inception of its
stock repurchase program in March 2007, Ladenburg has repurchased
14,499,993 shares at a total cost of approximately $24.9 million,
including purchases of 7,500,000 shares outside its stock
repurchase program. Ladenburg has the authority to repurchase an
additional 10,500,007 shares under its current repurchase plan.
Non-GAAP Financial MeasuresEarnings
before interest, taxes, depreciation and amortization, or EBITDA,
adjusted for acquisition-related expense, amortization of retention
and forgivable loans, change in fair value of contingent
consideration related to acquisitions, loss on extinguishment of
debt, non-cash compensation expense, financial advisor acquisition
expense and other expense, which includes loss on write-off of
receivable from subtenant and compensation expense that may be paid
in stock, is a key metric the Company uses in evaluating its
financial performance. EBITDA, as adjusted, is considered a
non-GAAP financial measure as defined by Regulation G promulgated
by the SEC under the Securities Act of 1933, as amended. The
Company considers EBITDA, as adjusted, important in evaluating its
financial performance on a consistent basis across various periods.
Due to the significance of non-cash and non-recurring items,
EBITDA, as adjusted, enables the Company’s Board of Directors and
management to monitor and evaluate the business on a consistent
basis. The Company uses EBITDA, as adjusted, as a primary measure,
among others, to analyze and evaluate financial and strategic
planning decisions regarding future operating investments and
potential acquisitions. The Company believes that EBITDA, as
adjusted, eliminates items that are not indicative of its core
operating performance, such as amortization of retention and
forgivable loans and financial advisor acquisition expenses, or do
not involve a cash outlay, such as stock-related compensation,
which is expected to remain a key element in our long-term
incentive compensation program. EBITDA, as adjusted, should be
considered in addition to, rather than as a substitute for, income
before income taxes, net income and cash flows from operating
activities.
About LadenburgLadenburg
Thalmann Financial Services Inc. (NYSE MKT: LTS, LTS PrA) is a
publicly-traded diversified financial services company based in
Miami, Florida. Ladenburg’s subsidiaries include industry-leading
independent broker-dealer firms Securities America, Inc., Triad
Advisors, Inc., Securities Service Network, Inc., Investacorp, Inc.
and KMS Financial Services, Inc., as well as Premier Trust, Inc.,
Ladenburg Thalmann Asset Management Inc., Highland Capital
Brokerage, Inc., a leading independent life insurance brokerage
company, and Ladenburg Thalmann & Co. Inc., an investment bank
which has been a member of the New York Stock Exchange for 135
years. The company is committed to investing in the growth of its
subsidiaries while respecting and maintaining their individual
business identities, cultures, and leadership. For more
information, please visit www.ladenburg.com.
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding future financial
performance, future growth, growth of our independent brokerage and
advisory business, growth of our investment banking business and
future levels of recurring revenue. These statements are based on
management’s current expectations or beliefs and are subject to
uncertainty and changes in circumstances. Actual results may vary
materially from those expressed or implied by the statements herein
due to changes in economic, business, competitive and/or regulatory
factors, including the Department of Labor’s proposed rule and
exemptions pertaining to the fiduciary status of investment advice
providers to 401(k) plan, plan sponsors, plan participants and the
holders of individual retirement or health savings accounts, and
other risks and uncertainties affecting the operation of the
Company’s business. These risks, uncertainties and contingencies
include those set forth in the Company’s annual report on Form 10-K
for the fiscal year ended December 31, 2014 and other factors
detailed from time to time in its other filings with the Securities
and Exchange Commission. The information set forth herein should be
read in light of such risks. Further, investors should keep in mind
that the Company’s quarterly revenue and profits can fluctuate
materially depending on many factors, including the number, size
and timing of completed offerings and other transactions.
Accordingly, the Company’s revenue and profits in any particular
quarter may not be indicative of future results. The Company is
under no obligation to, and expressly disclaims any obligation to,
update or alter its forward-looking statements, whether as a result
of new information, future events, changes in assumptions or
otherwise.
TABLE 1 LADENBURG
THALMANN FINANCIAL SERVICES INC. CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in thousands, except share and
per share amounts)
(Unaudited) Three Months Ended
March
31,
2015
2014
% Change Revenues:
Commissions $139,419 $100,599 38.6% Advisory fees 110,531 76,879
43.8% Investment banking 6,607 15,999 (58.7%) Principal
transactions 424 782 (45.8%) Interest and dividends 547 1,703
(67.9%) Service fees and other income
21,295
15,856
34.3% Total revenues
278,823
211,818
31.6%
Expenses: Commissions and fees 210,962
151,739 39.0% Compensation and benefits 34,406 27,890 23.4%
Non-cash compensation 3,260 1,927 69.2% Brokerage, communication
and clearance fees 5,425 4,407 23.1% Rent and occupancy, net of
sublease revenue 2,140 1,533 39.6% Professional services 3,109
2,148 44.7% Interest 1,440 1,893 (23.9%) Depreciation and
amortization 6,590 3,838 71.7% Acquisition-related expense 108 - *
Amortization of retention and forgivable loans 2,698 2,780 (2.9%)
Loss on extinguishment of debt 252 314 (19.7%) Other
13,756
8,504 61.8% Total expenses
284,146
206,973
37.3% (Loss) income before item shown below (5,323)
4,845
(209.9%) Change in fair value of contingent consideration
31 12 158.3% (Loss) income before income
taxes (5,292) 4,857 (209.0%) Income tax (benefit) expense
(1,720) 593 (390.1) Net (loss) income
(3,572) 4,264 (183.8%) Net loss attributable to noncontrolling
interest
(20) (21) (4.8%) Net (loss)
income attributable to the Company $(3,552) $4,285 (182.9%)
Dividends declared on preferred stock
(6,332)
(3,225) 96.3% Net (loss) income available to common
shareholders
$(9,884) $1,060 (1032.5%)
Net (loss) income per share available to common shareholders
(basic)
$( 0.05) $ 0.01 (1119.8%)
Net (loss) income per share available to common shareholders
(diluted)
$ (0.05) $ 0.01 (1119.8%)
Weighted average common shares used in
computation of per share data:
Basic
184,998,551 181,502,068 1.9% Diluted
184,998,551 202,332,855 (8.6%)
TABLE 2
LADENBURG THALMANN FINANCIAL SERVICES INC.
The following table presents a reconciliation
of EBITDA, as adjusted, to net (loss) income attributable to the
Company as reported.
Three Months Ended
Trailing
Twelve
March
31,
Months
Ended
March
31,
(Unaudited) (dollars in thousands)
2015
2014
%
Change
2015
Total revenues $278,823 $211,818 31.6% $988,258 Total expenses
284,146 206,973 37.3% 988,432 (Loss) income before income taxes
(5,292) 4,857 209.0% (143) Net (loss) income attributable to the
Company (3,552) 4,285 (182.9%) 25,596 Reconciliation of
EBITDA, as adjusted, to net (loss) income attributable to the
Company: EBITDA, as adjusted (1) $10,490 $15,729 (33.3%)
$55,939 Add: Interest income 60 53 13.2% 252 Change in fair value
of contingent consideration 31 12 158.3% 31 Less: Loss on
extinguishment of debt (252) (314) (19.7%) (486) Interest expense
(1,440) (1,893) (23.9%) (6,537) Income tax benefit (expense) 1,720
(593) (390.1) 25,659 Depreciation and amortization (6,590) (3,838)
71.7% (21,149) Non-cash compensation expense (3,260) (1,927) 69.2%
(11,874) Acquisition-related expense (108) - * (2,450) Amortization
of retention and forgivable loans (2,698) (2,780) (2.9%) (10,959)
Financial advisor acquisition expense (520) (164) 217.1% (1,845)
Other (2) (985) - * (985) Net
(loss) income attributable to the Company
$ (3,552)
$4,285
(182.9%)
$ 25,596
* Not Meaningful
(1) Results for the three months ended March 31, 2014 have
been restated to include adjustments for financial advisor
acquisition expense of $164 and amortization of forgivable loans of
$992 to conform to the 2015 presentation. (2) Consists primarily of
loss on write-off of receivable from subtenant of $855.
Sard Verbinnen & CoPaul Caminiti/Emily
Deissler212-687-8080
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