Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.1.9
Segment Information
 3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Segment Information
Segment Information

The Company has three operating segments. The independent brokerage and advisory services segment includes the broker-dealer and investment advisory services provided by the Company's independent broker-dealer subsidiaries to their independent contractor financial advisors and the 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. The insurance brokerage segment includes the wholesale insurance brokerage activities provided by Highland, which delivers life insurance, fixed and equity indexed annuities and long-term care solutions to investment and insurance providers.

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 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 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.

Segment information for the three months ended March 31, 2015 and 2014 was as follows:


 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
2015
 
 
 
 
 
 
 
 
 
Revenues
$
254,869

 
$
13,578

 
$
10,273

 
$
103

 
$
278,823

(Loss) income before income taxes
716

 
174

 
(2,284
)
 
(3,898
)
(1) 
(5,292
)
EBITDA, as adjusted(3)
11,786

 
1,392

 
(378
)
 
(2,310
)
 
10,490

Identifiable assets
400,023

 
39,956

 
62,004

 
70,770

(2) 
572,753

Depreciation and amortization
4,729

 
175

 
1,678

 
8

 
6,590

Interest
1,047

 
3

 
168

 
222

 
1,440

Capital expenditures
2,118

 
9

 
263

 
—

 
2,390

Non-cash compensation
1,908

 
184

 
59

 
1,109

 
3,260

 
 
 
 
 
 
 
 
 
 
2014

 
 
 
 
 
 
 

Revenues
$
188,402

 
$
23,337

 
$
—

 
$
79

 
$
211,818

Income (loss) before income taxes
2,066

 
6,364

 
—

 
(3,573
)
(1) 
4,857

EBITDA, as adjusted(3)
11,617

 
6,655

 
—

 
(2,543
)
 
15,729

Identifiable assets
311,182

 
49,612

 
—

 
7,633

(2) 
368,427

Depreciation and amortization
3,700

 
138

 
—

 
—

 
3,838

Interest
1,573

 
3

 
—

 
317

 
1,893

Capital expenditures
1,448

 
442

 
—

 
147

 
2,037

Non-cash compensation
1,079

 
153

 
—

 
695

 
1,927

 
 
 
 
 
 
 
 
 
 



(1) 
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses.

(2) 
Includes cash and cash equivalents of $67,595 and $5,281 for the three months ended March 31, 2015 and 2014, respectively.

(3)  
The following table reconciles EBITDA, as adjusted, to (loss) income before income taxes for the three months ended March 31, 2015 and 2014:

 
Three months ended March 31,
EBITDA, as adjusted
2015
 
2014
 
Independent Brokerage and Advisory Services
$
11,786

 
$
11,617

 
Ladenburg
1,392

 
6,655

 
Insurance Brokerage
(378
)
 
—

 
Corporate
(2,310
)
 
(2,543
)
 
Total Segments
10,490

 
15,729

(1) 
 
 
 
 
 
Adjustments:
 
 
 
 
Interest income
60

 
53

 
Change in fair value of contingent consideration
31

 
12

 
Loss on extinguishment of debt
(252
)
 
(314
)
 
Interest expense
(1,440
)
 
(1,893
)
 
Depreciation and amortization
(6,590
)
 
(3,838
)
 
Non-cash compensation expense
(3,260
)
 
(1,927
)
 
Financial advisor acquisition expense
(520
)
 
(164
)
 
Amortization of retention and forgivable loans
(2,698
)
 
(2,780
)
 
Other
(985
)
(2) 
—

 
Acquisition-related expenses
(108
)
 
—

 
Net loss attributable to noncontrolling interest
(20
)
 
(21
)
 
(Loss) income before income taxes
$
(5,292
)
 
$
4,857

 

(1) Includes increase of $1,156 in 2014 related to amortization of forgivable loans and financial advisor acquisition expenses to conform to the 2015 presentation.
(2) Consists primarily of loss on write-off of receivable from subtenant of $855.