| 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 the fair value of contingent consideration related to acquisitions, loss on extinguishment of debt, interest income and non-cash compensation expense, is a key metric 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 and other acquisition-related 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, pre-tax income, net income and cash flows from operating activities.
Segment information for the three months ended June 30, 2014 and 2013 was as follows:
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Independent
Brokerage and
Advisory Services
|
|
Ladenburg |
|
Corporate |
|
Total |
2014 |
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|
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Revenues |
$ |
202,855 |
|
|
$ |
17,818 |
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|
$ |
80 |
|
|
$ |
220,753 |
|
Pre-tax income (loss) |
3,676 |
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|
3,412 |
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|
(3,398 |
) |
(2) |
3,690 |
|
EBITDA, as adjusted(6)
|
11,487 |
|
|
3,735 |
|
|
(1,885 |
) |
|
13,337 |
|
Identifiable assets |
313,085 |
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|
43,692 |
|
|
42,135 |
|
|
398,912 |
|
Depreciation and amortization |
3,611 |
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|
173 |
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|
3 |
|
|
3,787 |
|
Interest |
1,281 |
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|
3 |
|
|
315 |
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|
1,599 |
|
Capital expenditures |
2,243 |
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|
483 |
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|
(38 |
) |
|
2,688 |
|
Non-cash compensation |
1,194 |
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|
153 |
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|
736 |
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|
2,083 |
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2013 |
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Revenues |
$ |
181,780 |
|
(4) |
$ |
17,165 |
|
(4) |
$ |
(5,076 |
) |
(5) |
$ |
193,869 |
|
Pre-tax (loss) income(3)
|
(1,478 |
) |
|
2,839 |
|
|
(6,281 |
) |
(1)(2) |
(4,920 |
) |
EBITDA, as adjusted(3)(6)
|
12,210 |
|
|
3,277 |
|
(1) |
(4,580 |
) |
(1) |
10,907 |
|
Identifiable assets |
312,075 |
|
|
37,405 |
|
|
7,133 |
|
|
356,613 |
|
Depreciation and amortization |
3,646 |
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|
206 |
|
|
18 |
|
|
3,870 |
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Interest |
3,969 |
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|
65 |
|
|
842 |
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|
4,876 |
|
Capital expenditures |
1,655 |
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|
470 |
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|
— |
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|
2,125 |
|
Non-cash compensation |
590 |
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|
167 |
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|
622 |
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|
1,379 |
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|
Segment information for the six months ended June 30, 2014 and 2013 was as follows:
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Independent
Brokerage and
Advisory Services
|
|
Ladenburg |
|
Corporate |
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Total |
2014 |
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Revenues |
$ |
391,257 |
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|
$ |
41,155 |
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|
$ |
159 |
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|
$ |
432,571 |
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Pre-tax income (loss) |
5,741 |
|
|
9,776 |
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|
(6,970 |
) |
(2) |
8,547 |
|
EBITDA, as adjusted(6)
|
21,949 |
|
|
10,390 |
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|
(4,429 |
) |
|
27,910 |
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Identifiable assets |
313,085 |
|
|
43,692 |
|
|
42,135 |
|
|
398,912 |
|
Depreciation and amortization |
7,311 |
|
|
311 |
|
|
3 |
|
|
7,625 |
|
Interest |
2,854 |
|
|
7 |
|
|
631 |
|
|
3,492 |
|
Capital expenditures |
3,691 |
|
|
926 |
|
|
108 |
|
|
4,725 |
|
Non-cash compensation |
2,273 |
|
|
305 |
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|
1,432 |
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|
4,010 |
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|
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2013 |
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Revenues |
$ |
351,617 |
|
(4) |
$ |
34,565 |
|
(4) |
$ |
(5,008 |
) |
(5) |
$ |
381,174 |
|
Pre-tax (loss) income(3)
|
(473 |
) |
|
6,678 |
|
|
(10,479 |
) |
(1)(2) |
(4,274 |
) |
EBITDA, as adjusted(3)(6)
|
24,282 |
|
|
7,481 |
|
(1) |
(6,896 |
) |
(1) |
24,867 |
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Identifiable assets |
312,075 |
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|
37,405 |
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|
7,133 |
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|
356,613 |
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Depreciation and amortization |
7,330 |
|
|
412 |
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|
35 |
|
|
7,777 |
|
Interest |
8,925 |
|
|
68 |
|
|
2,119 |
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|
11,112 |
|
Capital expenditures |
2,485 |
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|
552 |
|
|
— |
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|
3,037 |
|
Non-cash compensation |
1,258 |
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|
323 |
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|
1,211 |
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|
2,792 |
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(1) |
Includes the elimination of $2,545, consisting of $5,148 of revenue net of employee brokerage commission expenses of $2,603 related to sale of the Company's Series A Preferred Stock.
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(2) |
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses. |
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(3) |
Management fees paid by the Company's operating segments to the Company have been reclassified within segments to conform to the current period’s presentation. |
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(4) |
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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(5) |
Includes the elimination of $5,148 of revenue referred to in (1).
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(6) |
The following table reconciles EBITDA, as adjusted, to pre-tax income (loss) for the three and six months ended June 30, 2014 and 2013: |
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Three months ended June 30, |
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Six months ended June 30, |
EBITDA, as adjusted |
2014 |
|
2013 |
|
2014 |
|
2013 |
Independent Brokerage and Advisory Services |
$ |
11,487 |
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|
$ |
12,210 |
|
|
21,949 |
|
|
$ |
24,282 |
|
Ladenburg |
3,735 |
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|
3,277 |
|
|
10,390 |
|
|
7,481 |
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Corporate |
(1,885 |
) |
|
(4,580 |
) |
|
(4,429 |
) |
|
(6,896 |
) |
Total Segments |
13,337 |
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|
10,907 |
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|
27,910 |
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|
24,867 |
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Adjustments: |
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Interest Income |
83 |
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|
50 |
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|
136 |
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|
90 |
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Change in fair value of contingent consideration |
— |
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|
(144 |
) |
|
12 |
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|
(121 |
) |
Loss on extinguishment of debt |
— |
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|
(3,754 |
) |
|
(314 |
) |
|
(3,754 |
) |
Interest expense |
(1,599 |
) |
|
(4,876 |
) |
|
(3,492 |
) |
|
(11,112 |
) |
Depreciation and amortization |
(3,787 |
) |
|
(3,870 |
) |
|
(7,625 |
) |
|
(7,777 |
) |
Non-cash compensation expense |
(2,083 |
) |
|
(1,379 |
) |
|
(4,010 |
) |
|
(2,792 |
) |
Amortization of retention loans |
(1,782 |
) |
|
(1,841 |
) |
|
(3,570 |
) |
|
(3,649 |
) |
Acquisition-related expenses |
(458 |
) |
|
— |
|
|
(458 |
) |
|
— |
|
Net loss attributable to noncontrolling interest |
(21 |
) |
|
(13 |
) |
|
(42 |
) |
|
(26 |
) |
Pre-tax income (loss) |
$ |
3,690 |
|
|
$ |
(4,920 |
) |
|
$ |
8,547 |
|
|
$ |
(4,274 |
) |
|