Highlights:
- First quarter 2016 revenues of $265.8
million
- First quarter net income of $2.4
million
- Client assets of approximately $126
billion at March 31, 2016
- First quarter 2016 recurring revenue
was 77% in independent brokerage and advisory services
business
- First quarter 2016 EBITDA, as adjusted,
of $5.0 million
- Shareholders’ equity of $370 million at
March 31, 2016
Ladenburg Thalmann Financial Services Inc. (NYSE MKT:LTS, LTS
PrA) today announced financial results for the three months ended
March 31, 2016.
Dr. Phillip Frost, Chairman of Ladenburg, said, “Coming off a
year of growth and expansion in our Independent Brokerage and
Advisory Services Business (IBD), our network model performed
solidly in the first quarter, with continued growth in advisory
assets and fees. Commissions remained strong, but were down in the
single digits as a result of an industry-wide slowdown in
alternative investments. Additionally, we continued to see strong
recurring revenues in our IBD business, which grew to 77% in the
quarter.”
Richard Lampen, President and Chief Executive Officer of
Ladenburg, said, “Our investment banking business declined in the
period amidst a downturn in equity capital raising activity driven
by volatile market conditions. We remain focused on building
valuable client relationships and will continue to explore cost
effective ways to enhance our offering to better meet client needs.
We believe that our network of 4,000 independent financial
advisors, in excess of $125 billion in client assets, and a
talented banking team well position Ladenburg in an evolving
financial services landscape.”
First Quarter 2016
First quarter 2016 revenues were $265.8 million, a 5% decrease
from revenues of $278.8 million in the first quarter of 2015.
Commissions revenue for the three months ended March 31, 2016
decreased by 8% to $127.9 million from $139.4 million for the
comparable 2015 period, mainly a result of an industry-wide
slowdown in alternative investments.
Net income attributable to the Company for the first quarter of
2016 was $2.4 million, as compared to net loss attributable to the
Company of $3.6 million in the first quarter of 2015. Net loss
available to common shareholders, after payment of preferred
dividends, was $4.9 million or ($0.03) per basic and diluted common
share for the first quarter of 2016, as compared to net loss
available to common shareholders of $9.9 million or ($0.05) per
basic and diluted common share in the comparable 2015 period. The
first quarter 2016 results included approximately $8.2 million of
non-cash charges for depreciation, amortization and compensation,
$1.4 million of amortization of retention and forgivable loans,
$1.2 million of interest expense and $8.8 million of income tax
benefit. 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, $0.3 million of
loss on extinguishment of debt and $1.7 million of income tax
benefit.
Recurring Revenues
For the three months ended March 31, 2016, recurring revenues,
which consist of advisory fees, trailing commissions, cash sweep
fees and certain other fees, represented approximately 77% of
revenues from the Company’s independent brokerage and advisory
services business.
EBITDA, as adjusted
EBITDA, as adjusted, for the first quarter of 2016 was $5.0
million, a 52% decrease from $10.5 million in the comparable 2015
period. Attached hereto as Table 2 is a reconciliation of EBITDA,
as adjusted, to net income (loss) attributable to the Company as
reported (see “Non-GAAP Financial Measures” below). The decline in
EBITDA, as adjusted, for the first quarter of 2016 was primarily
attributable to a $4.2 million decrease in EBITDA, as adjusted, in
our Ladenburg segment as a result of lower investment banking
revenues.
Client Assets
At March 31, 2016, total client assets under administration were
approximately $126 billion, a decrease of 1% from approximately
$127 billion at March 31, 2015. At March 31, 2016, client assets
included cash balances of approximately $4.5 billion.
Stock Repurchases
During the quarter ended March 31, 2016, Ladenburg repurchased
1,523,392 shares of its common stock at a cost of approximately
$3.7 million, representing an average price per share of $2.41.
Since the inception of its stock repurchase program in March 2007,
Ladenburg has repurchased 21,292,959 shares at a total cost of
approximately $43.4 million, including purchases of 7,500,000
shares outside its stock repurchase program. Ladenburg has the
authority to repurchase an additional 3,707,041 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 recruiting expense and other expense, which includes loss
on write-off of receivable from subtenant, excise and franchise tax
expense 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 recruiting 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, (loss) income before income taxes,
net income (loss) and cash flows (used in) provided by 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 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, 2015 and quarterly report on Form
10-Q for the quarter ended March 31, 2016 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.
[Financial Tables Follow]
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, %
2016 2015 Change Revenues:
Commissions $ 127,910 $ 139,419 (8.3)% Advisory fees 110,925
110,531 0.4% Investment banking 4,502 6,607 (31.9)% Principal
transactions 133 424 (68.6)% Interest and dividends 1,729 547
216.1% Service fees and other income 20,597 21,295 (3.3)% Total
revenues 265,796 278,823 (4.7)%
Expenses: Commissions and
fees 199,741 210,962 (5.3)% Compensation and benefits 36,827 34,406
7.0% Non-cash compensation 1,355 3,260 (58.4)% Brokerage,
communication and clearance fees 5,030 5,425 (7.3)% Rent and
occupancy, net of sublease revenue 2,450 2,140 14.5% Professional
services 3,426 3,109 10.2% Interest 1,207 1,440 (16.2)%
Depreciation and amortization 6,875 6,590 4.3% Acquisition-related
expense — 108 (100.0)% Loss on extinguishment of debt — 252 N/A
Amortization of retention and forgivable loans 1,434 2,698 (46.8)%
Other 13,779 13,756 0.2% Total expenses 272,124 284,146 (4.2)% Loss
before item shown below (6,328) (5,323) 18.9% Change in fair value
of contingent consideration (57) 31 (283.9)% Loss before income
taxes (6,385) (5,292) 20.7% Income tax benefit (8,769) (1,720)
409.8% Net income (loss) 2,384 (3,572) 166.7% Less: Net loss
attributable to noncontrolling interest (18) (20) (10.0)% Net
income (loss) attributable to the Company 2,402 (3,552) 167.6%
Dividend declared on preferred stock (7,345) (6,332) 16.0% Net loss
available to common shareholders $ (4,943) $ (9,884) (50.0)%
Net loss per common share available to common shareholders (basic)
$ (0.03) $ (0.05) (40.0)% Net loss per common share available to
common shareholders (diluted) $ (0.03) $ (0.05) (40.0)%
Weighted average common shares used in computation of per share
data: Basic 181,363,446 184,998,551 (2.0)% Diluted 181,363,446
184,998,551 (2.0)%
TABLE 2 LADENBURG THALMANN FINANCIAL
SERVICES INC.
The following table presents a reconciliation
of EBITDA, as adjusted, to net income (loss) attributable to the
Company as reported.
Three months ended March 31,
(Unaudited; dollars in thousands) 2016
2015
% Change
Total revenues $ 265,796 $ 278,823 (5)% Total expenses 272,124
284,146 (4)% Loss before income taxes (6,385) (5,292) 21% Net
income (loss) attributable to the Company 2,402 (3,552) 168%
Reconciliation of EBITDA, as adjusted, to net income (loss)
attributable to the Company: EBITDA, as adjusted $ 5,037 $
10,490 (52)% Add: Interest income 133 60 122% Change in fair value
of contingent consideration (57) 31 (284)% Less: Loss on
extinguishment of debt — (252) (100)% Interest expense (1,207)
(1,440) (16)% Income tax benefit 8,769 1,720 410% Depreciation and
amortization (6,875) (6,590) 4% Non-cash compensation expense
(1,355) (3,260) (58)% Acquisition-related expense — (108) (100)%
Amortization of retention and forgivable loans (1,434) (2,698)
(47)% Financial advisor recruiting expense (321) (520) (38)% Other
(1) (288) (985) (71)% Net income (loss) attributable to the Company
$ 2,402 $ (3,552) 168%
(1) Includes loss on write-off of receivable
from subtenant of $855 for the three months ended March 31,
2015.
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version on businesswire.com: http://www.businesswire.com/news/home/20160506005830/en/
Sard Verbinnen & CoPaul Caminiti / Emily Deissler,
212-687-8080
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