| Segment Information |
Segment Information
The Company has two operating segments. The independent brokerage and advisory services segment includes the broker-dealer and investment advisory services provided by Securities America, Triad and Investacorp to their independent contractor financial advisors and wealth management services provided by Premier Trust. The Ladenburg segment includes the investment banking, sales and trading and asset management services and investment activities conducted by Ladenburg and LTAM.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for acquisition-related expense, amortization of retention loans and change in fair value of contingent consideration related to acquisitions, loss on extinguishment of debt, gains or losses on sales of assets and non-cash compensation expense, is the primary profit measure the Company's management uses in evaluating financial performance for its reportable segments. 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 loans for the Securities America acquisition, or do not involve a cash outlay, such as stock-related compensation. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.
Segment information for the three months ended September 30, 2013 and 2012 was as follows:
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Independent
Brokerage and
Advisory Services
|
|
Ladenburg |
|
Corporate |
|
Total |
2013 |
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|
|
|
|
|
Revenues |
$ |
184,085 |
|
|
$ |
16,325 |
|
|
$ |
79 |
|
|
$ |
200,489 |
|
Pre-tax income (loss) |
4,428 |
|
|
2,329 |
|
|
(3,799 |
) |
(3) |
2,958 |
|
EBITDA, as adjusted(5)
|
12,819 |
|
|
2,697 |
|
|
(2,748 |
) |
|
12,768 |
|
Identifiable assets |
315,401 |
|
|
34,526 |
|
|
4,908 |
|
|
354,835 |
|
Depreciation and amortization |
3,550 |
|
|
214 |
|
|
12 |
|
|
3,776 |
|
Interest |
1,906 |
|
|
3 |
|
|
374 |
|
|
2,283 |
|
Capital expenditures |
823 |
|
|
478 |
|
|
— |
|
|
1,301 |
|
Non-cash compensation |
851 |
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|
163 |
|
|
633 |
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|
1,647 |
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2012 |
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Revenues |
$ |
149,201 |
|
|
$ |
10,560 |
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|
$ |
73 |
|
|
$ |
159,834 |
|
Pre-tax loss |
(2,003 |
) |
|
(317 |
) |
|
(3,309 |
) |
(3) |
(5,629 |
) |
EBITDA, as adjusted(5)
|
7,701 |
|
|
83 |
|
|
(1,476 |
) |
|
6,308 |
|
Identifiable assets |
310,724 |
|
|
21,208 |
|
|
1,904 |
|
|
333,836 |
|
Depreciation and amortization |
3,759 |
|
|
203 |
|
|
17 |
|
|
3,979 |
|
Interest |
4,942 |
|
|
3 |
|
|
1,203 |
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|
6,148 |
|
Capital expenditures |
853 |
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|
4 |
|
|
— |
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|
857 |
|
Non-cash compensation |
244 |
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|
195 |
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|
615 |
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|
1,054 |
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|
Segment information for the nine months ended September 30, 2013 and 2012 was as follows:
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|
Independent
Brokerage and
Advisory Services
|
|
Ladenburg |
|
Corporate |
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Total |
2013 |
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Revenues |
$ |
535,702 |
|
(1) |
$ |
50,890 |
|
(1) |
$ |
(4,929 |
) |
(2) |
$ |
581,663 |
|
Pre-tax income (loss) |
4,414 |
|
|
9,095 |
|
|
(14,825 |
) |
(3)(4) |
(1,316 |
) |
EBITDA, as adjusted(5)
|
37,562 |
|
|
10,268 |
|
(4) |
(10,195 |
) |
(4) |
37,635 |
|
Identifiable assets |
315,401 |
|
|
34,526 |
|
|
4,908 |
|
|
354,835 |
|
Depreciation and amortization |
10,880 |
|
|
626 |
|
|
47 |
|
|
11,553 |
|
Interest |
10,830 |
|
|
71 |
|
|
2,494 |
|
|
13,395 |
|
Capital expenditures |
3,575 |
|
|
1,031 |
|
|
— |
|
|
4,606 |
|
Non-cash compensation |
2,109 |
|
|
486 |
|
|
1,844 |
|
|
4,439 |
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|
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|
2012 |
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Revenues |
$ |
442,993 |
|
|
$ |
34,758 |
|
|
$ |
183 |
|
|
$ |
477,934 |
|
Pre-tax loss |
(3,000 |
) |
|
(160 |
) |
|
(9,779 |
) |
(3) |
(12,939 |
) |
EBITDA, as adjusted(5)
|
22,534 |
|
|
1,233 |
|
|
(4,505 |
) |
|
19,262 |
|
Identifiable assets |
310,724 |
|
|
21,208 |
|
|
1,904 |
|
|
333,836 |
|
Depreciation and amortization |
11,430 |
|
|
631 |
|
|
51 |
|
|
12,112 |
|
Interest |
14,850 |
|
|
75 |
|
|
3,475 |
|
|
18,400 |
|
Capital expenditures |
3,631 |
|
|
15 |
|
|
6 |
|
|
3,652 |
|
Non-cash compensation |
1,210 |
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|
687 |
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|
1,748 |
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|
3,645 |
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(1) |
Includes brokerage commissions of $4,240 and $908 in the Ladenburg and Independent brokerage and advisory services segments, respectively, related to the sale of the Company's Series A Preferred Stock (eliminated in consolidation).
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(2) |
Includes the elimination of $5,148 of revenue referred to in footnote (1).
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(3) |
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses. |
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(4) |
Includes the elimination of $2,545, consisting of $5,148 of revenue net of employee brokerage commission expenses of $2,603 charged to additional paid-in capital related to sale of the Company's Series A Preferred Stock.
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(5) |
The following table reconciles EBITDA, as adjusted, to pre-tax income (loss) for the three and nine months ended September 30, 2013 and 2012: |
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Three months ended September 30 |
|
Nine months ended September 30, |
EBITDA, as adjusted |
2013 |
|
2012 |
|
2013 |
|
2012 |
Independent Brokerage and Advisory Services |
$ |
12,819 |
|
|
$ |
7,701 |
|
|
$ |
37,562 |
|
|
$ |
22,534 |
|
Ladenburg |
2,697 |
|
|
83 |
|
|
10,268 |
|
|
1,233 |
|
Corporate |
(2,748 |
) |
|
(1,476 |
) |
|
(10,195 |
) |
|
(4,505 |
) |
Total segments |
12,768 |
|
|
6,308 |
|
|
37,635 |
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|
19,262 |
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Adjustments: |
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Interest income |
55 |
|
|
47 |
|
|
145 |
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|
140 |
|
Change in fair value of contingent consideration |
— |
|
|
909 |
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|
(121 |
) |
|
7,111 |
|
Loss on extinguishment of debt |
(446 |
) |
|
— |
|
|
(4,200 |
) |
|
— |
|
Interest expense |
(2,283 |
) |
|
(6,148 |
) |
|
(13,395 |
) |
|
(18,400 |
) |
Depreciation and amortization |
(3,776 |
) |
|
(3,979 |
) |
|
(11,553 |
) |
|
(12,112 |
) |
Non-cash compensation expense |
(1,647 |
) |
|
(1,054 |
) |
|
(4,439 |
) |
|
(3,645 |
) |
Amortization of retention loans |
(1,690 |
) |
|
(1,712 |
) |
|
(5,339 |
) |
|
(5,295 |
) |
Loss attributable to noncontrolling interest |
(23 |
) |
|
— |
|
|
(49 |
) |
|
— |
|
Pre-tax income (loss) |
$ |
2,958 |
|
|
$ |
(5,629 |
) |
|
$ |
(1,316 |
) |
|
$ |
(12,939 |
) |
|