Highlights:
- Second quarter 2015 revenues of $296.7
million, up 34% year-over-year
- Second quarter 2015 EBITDA, as
adjusted, of $11.8 million
- Record client assets of approximately
$128 billion at June 30, 2015, up 38% year-over-year
- Trailing twelve month recurring revenue
of 73% in independent brokerage and advisory services business
- Shareholders’ equity of $397 million at
June 30, 2015
Seventh paragraph, third sentence of the release should read:
Net loss available to common shareholders, after payment of
preferred dividends, was $19.5 million... (instead of Net loss
available to common shareholders, after payment of preferred
dividends, was $9.5 million...).
The corrected release reads:
LADENBURG THALMANN REPORTS SECOND QUARTER
2015 FINANCIAL RESULTS
Highlights:
- Second quarter 2015 revenues of $296.7
million, up 34% year-over-year
- Second quarter 2015 EBITDA, as
adjusted, of $11.8 million
- Record client assets of approximately
$128 billion at June 30, 2015, up 38% year-over-year
- Trailing twelve month recurring revenue
of 73% in independent brokerage and advisory services business
- Shareholders’ equity of $397 million at
June 30, 2015
Ladenburg Thalmann Financial Services Inc. (NYSE MKT:LTS, LTS
PrA) today announced financial results for the three and six months
ended June 30, 2015.
Dr. Phillip Frost, Chairman of Ladenburg, said, “Ladenburg
continued to advance our strategy in the second quarter, balancing
growth in our independent brokerage and advisory business,
including a steady increase in recurring revenue and asset
management fees, with our complementary investment banking firm.
Ladenburg is a leader in the attractive independent market with a
growing asset base, and continues to make progress with our capital
markets and investment banking business.”
Richard Lampen, President and Chief Executive Officer of
Ladenburg, said, “We have seen significant growth over the past
twelve months in revenues and produced meaningful adjusted EBITDA
as we have broadened our independent platform and focused on our
best investment banking opportunities. During the first half of
2015, however, adjusted EBITDA was impacted by lower capital
markets activity, a reduction in interest and dividends revenue and
an increase in expense related to business expansion, among other
factors.”
Mr. Lampen continued, “Within our independent broker-dealer
business, we have momentum as a result of new business development,
acquisitions and recruiting. We believe that our talented teams in
both the independent and investment banking businesses well
position Ladenburg to generate long-term value for our
shareholders.”
For the Three and Six Months Ended June
30, 2015
Second quarter 2015 revenues were $296.7 million, a 34% increase
from revenues of $220.8 million in the second 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
June 30, 2015, revenues were $1.1 billion. Advisory fee revenue for
the three months ended June 30, 2015 increased by 46% to $119.4
million from $82.1 million for the comparable period in 2014, as a
result of the KMS and SSN acquisitions, strong new business
development and favorable market conditions.
Net loss attributable to the Company for the second quarter of
2015 was $2.5 million, as compared to net income attributable to
the Company of $2.9 million in the second quarter of 2014. Net loss
available to common shareholders, after payment of preferred
dividends, was $9.6 million or ($0.05) per basic and diluted common
share for the second quarter of 2015, as compared to net loss
available to common shareholders of $0.8 million or ($0.00) per
basic and diluted common share in the comparable 2014 period. The
second quarter 2015 results included approximately $9.1 million of
non-cash charges for depreciation, amortization and compensation,
$2.9 million of amortization of retention and forgivable loans,
$1.3 million of interest expense and $0.4 million of income tax
benefit. The second quarter 2014 results included approximately
$5.9 million of non-cash charges for depreciation, amortization and
compensation, $2.9 million of amortization of retention and
forgivable loans, $1.6 million of interest expense and $0.8 million
of income tax expense.
For the six months ended June 30, 2015, the Company had revenues
of $ 575.6 million, a 33% increase over revenues of $432.6 million
for the comparable 2014 period. Net loss attributable to the
Company for the six months ended June 30, 2015 was $6.0 million, as
compared to net income attributable to the Company of $7.2 million
in the comparable 2014 period. Net loss available to common
shareholders, after payment of preferred dividends, was $19.5
million or ($0.11) per basic and diluted common share for the six
months ended June 30, 2015, as compared to net income available to
common shareholders, after payment of preferred dividends, of $0.3
million or $0.00 per basic and diluted common share in the
comparable 2014 period. The results for the six months ended June
30, 2015 included approximately $19.0 million of non-cash charges
for depreciation, amortization and compensation, $5.6 million of
amortization of retention and forgivable loans, $2.7 million of
interest expense, $0.3 million of loss on extinguishment of debt
and $2.1 million of income tax benefit. The comparable 2014 results
included approximately $11.6 million of non-cash charges for
depreciation, amortization and compensation, $5.7 million of
amortization of retention and forgivable loans, $3.5 million of
interest expense, $0.3 million of loss on early extinguishment of
debt and $1.4 million of income tax expense.
Recurring Revenues
For the three and six months ended June 30, 2015, recurring
revenues, which consist of advisory fees, trailing commissions,
cash sweep fees and certain other fees, represented approximately
74% and 73%, respectively, of revenues from the Company’s
independent brokerage and advisory services business. Recurring
revenues for this business were 73% for the trailing twelve months
ended June 30, 2015.
EBITDA, as adjusted
EBITDA, as adjusted, for the second quarter of 2015 was $11.8
million, a 20% decrease from $14.8 million in the comparable 2014
period. EBITDA, as adjusted, for the six months ended June 30, 2015
was $22.3 million, a decrease of 27% from $30.5 million for the
prior-year period. For the trailing twelve months ended June 30,
2015, EBITDA, as adjusted, was $52.9 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).
Client Assets
At June 30, 2015, total client assets under administration were
approximately $128 billion, an increase of 38% from $93 billion at
June 30, 2014. At June 30, 2015, client assets included cash
balances of approximately $4.2 billion.
Stock Repurchases
During the quarter ended June 30, 2015, Ladenburg repurchased
1,076,401 shares of its common stock at a cost of approximately
$3.8 million, representing an average price per share of $3.58.
During the period from January 1, 2015 through June 30, 2015,
Ladenburg repurchased 1,480,242 shares of its common stock at a
cost of approximately $5.4 million, representing an average price
per share of $3.67. Since the inception of its stock repurchase
program in March 2007, Ladenburg has repurchased 15,576,394 shares
at a total cost of approximately $28.8 million, including purchases
of 7,500,000 shares outside its stock repurchase program. Ladenburg
has the authority to repurchase an additional 9,423,606 shares
under its current repurchase plan.
Non-GAAP Financial Measures
Earnings 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 Ladenburg
Ladenburg 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 Six Months Ended June
30, % June 30, % 2015
2014 Change 2015
2014 Change Revenues: Commissions $
143,326 $ 106,346 34.8 % $ 282,745 $ 206,945 36.6 % Advisory fees
119,403 82,053 45.5 % 229,934 158,932 44.7 % Investment banking
11,207 11,391 (1.6 )% 17,814 27,390 (35.0 )% Principal transactions
583 484 20.5 % 1,007 1,266 (20.5 )% Interest and dividends 800
1,669 (52.1 )% 1,347 3,372 (60.1 )% Service fees and other income
21,429 18,810 13.9 % 42,724 34,666 23.2 %
Total revenues 296,748 220,753 34.4 % 575,571
432,571 33.1 %
Expenses: Commissions and fees 221,413
162,001 36.7 % 432,375 313,740 37.8 % Compensation and benefits
37,393 25,091 49.0 % 71,799 52,981 35.5 % Non-cash compensation
2,424 2,083 16.4 % 5,684 4,010 41.7 % Brokerage, communication and
clearance fees 5,111 4,247 20.3 % 10,536 8,654 21.7 % Rent and
occupancy, net of sublease revenue 2,822 1,517 86.0 % 4,962 3,050
62.7 % Professional services 3,735 2,816 32.6 % 6,844 4,964 37.9 %
Interest 1,275 1,599 (20.3 )% 2,715 3,492 (22.3 )% Depreciation and
amortization 6,692 3,787 76.7 % 13,282 7,625 74.2 %
Acquisition-related expenses 10 458 (97.8 )% 118 458 (74.2 )% Loss
on extinguishment of debt — — — 252 314 (19.7 )% Amortization of
retention and forgivable loans 2,910 2,893 0.6 % 5,608 5,673 (1.1
)% Other 15,796 10,571 49.4 % 29,552 19,075
54.9 % Total expenses 299,581 217,063 38.0 % 583,727
424,036 37.7 % (Loss) income before item shown below (2,833
) 3,690 (176.8 )% (8,156 ) 8,535 (195.6 )% Change in fair value of
contingent consideration — — — 31 12 158.3 %
(Loss) income before income taxes (2,833 ) 3,690 (176.8 )% (8,125 )
8,547 (195.1 )% Income tax (benefit) expense (356 ) 767
(146.4 )% (2,076 ) 1,360 (252.6 )%
Net (loss) income
(2,477
)
2,923
(184.7
)%
(6,049)
7,187
(184.2
)%
Less: Net loss attributable to noncontrolling interest (8 ) (21)
(61.9 )% (28) (42) (33.3 )%
Net (loss) income attributable to the
Company
(2,469
)
2,944
(183.9
)%
(6,021)
7,229
(183.3
)%
Dividend declared on preferred stock (7,152 ) (3,710) 92.8 %
(13,484) (6,935) 94.4 % Net (loss) income available to
common shareholders (9,621 )
(766)
(1,156.0 )% (19,505 ) 294 (6,734.4 )%
Net (loss) income per common share
available tocommon shareholders (basic)
$ (0.05 ) $ (0.00 ) * $ (0.11 ) $ 0.00
*
Net (loss) income per common share
available tocommon shareholders (diluted)
$ (0.05 ) $ (0.00 ) * $ (0.11 ) $ 0.00
* Weighted average common shares used in computation of per
share data: Basic 184,743,052 181,739,505 1.7 %
184,870,096 181,621,442 1.8 % Diluted 184,743,052
181,739,505 1.7 % 184,870,096 202,727,441 (8.8 )%
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 Six Months Ended
Trailing TwelveMonths
Ended
June 30, June 30, June 30, (Unaudited;
dollars in thousands) 2015 2014
% Change 2015 2014 %
Change 2015 Total revenues $ 296,748 $ 220,753
34.4 % $ 575,571 $ 432,571 33.1 % $ 1,064,253 Total expenses
299,581 217,063 38.0 % 583,727 424,036 37.7 % 1,070,950 (Loss)
income before income taxes (2,833 ) 3,690 (176.8 )% (8,125 ) 8,547
(195.1 )% (6,666 ) Net (loss) income attributable to the Company
(2,469 ) 2,944 (183.9 )% (6,021 ) 7,229 (183.3 )% 20,183
Reconciliation of EBITDA, asadjusted, to
net (loss) incomeattributable to the Company:
EBITDA, as adjusted (1) 11,828 14,819 (20.2 )% 22,318 30,548
(26.9 )% 52,948 Add: Interest income 49 83 (41.0 )% 109 136 (19.9
)% 218 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 (1,275 ) (1,599 ) (20.3 )% (2,715
) (3,492 ) (22.3 )% (6,213 ) Income tax benefit (expense) 356 (767
) (146.4 )% 2,076 (1,360 ) (252.6 )% 26,782 Depreciation and
amortization (6,692 ) (3,787 ) 76.7 % (13,282 ) (7,625 ) 74.2 %
(24,054 ) Non-cash compensation expense (2,424 ) (2,083 ) 16.4 %
(5,684 ) (4,010 ) 41.7 % (12,215 ) Acquisition-related expenses (10
) (458 ) (97.8 )% (118 ) (458 ) (74.2 )% (2,002 ) Amortization of
retention and forgivable loans (2,910 ) (2,893 ) 0.6 % (5,608 )
(5,673 ) (1.1 )% (10,976 ) Financial advisor acquisition expense
(386 ) (371 ) 4.0 % (906 ) (535 ) 69.3 % (1,860 ) Other (2) (1,005
) — * (1,990 ) — * (1,990 ) Net (loss) income
attributable to the Company $ (2,469 ) $ 2,944 (183.9 )% $
(6,021 ) $ 7,229 (183.3 )% $ 20,183
* Not Meaningful
(1) Includes increases of $1,482 and $2,638 for the
three and six months ended June 30, 2014, respectively, related to
amortization of forgivable loans and financial advisor acquisition
expenses to conform to the 2015 presentation. (2) Includes loss on
write-off of receivable from subtenant of $855 for the six months
ended June 30, 2015, rent expense due to default by subtenant of
$468 for the three and six months ended June 30, 2015, and excise
and franchise tax expense of $401 for the three and six months
ended June 30, 2015.
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Sard Verbinnen & CoPaul Caminiti/Emily
Deissler212-687-8080
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