Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.2.0.727
Segment Information
 6 Months Ended
Jun. 30, 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 and six months ended June 30, 2015 and 2014 was as follows:

Three Months Ended June 30, 2015
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
$
265,469

 
$
17,980

 
$
13,197

 
$
102

 
$
296,748

Income (loss) before income taxes
705

 
2,390

 
(1,759
)
 
(4,169
)
(1) 
(2,833
)
EBITDA, as adjusted(4)
10,966

 
3,275

 
164

 
(2,577
)
 
11,828

Identifiable assets(2)
406,385

 
48,432

 
61,958

 
61,725

(3) 
578,500

Depreciation and amortization
4,814

 
175

 
1,694

 
9

 
6,692

Interest
832

 
4

 
171

 
268

 
1,275

Capital expenditures
2,084

 
27

 
201

 
87

 
2,399

Non-cash compensation
1,197

 
151

 
60

 
1,016

 
2,424

 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2014

 
 
 
 
 
 
 

Revenues
$
202,855

 
$
17,818

 
$
—

 
$
80

 
$
220,753

Income (loss) before income taxes
3,676

 
3,412

 
—

 
(3,398
)
(1) 
3,690

EBITDA, as adjusted(4)
12,970

 
3,735

 
—

 
(1,886
)
 
14,819

Identifiable assets(2)
313,085

 
43,692

 
—

 
42,135

(3) 
398,912

Depreciation and amortization
3,611

 
173

 
—

 
3

 
3,787

Interest
1,281

 
3

 
—

 
315

 
1,599

Capital expenditures
2,243

 
483

 
—

 
(38
)
 
2,688

Non-cash compensation
1,194

 
153

 
—

 
736

 
2,083

 
 
 
 
 
 
 
 
 
 




Six Months Ended June 30, 2015
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
$
520,338

 
$
31,558

 
$
23,470

 
$
205

 
$
575,571

Income (loss) before income taxes
1,421

 
2,564

 
(4,043
)
 
(8,067
)
(1) 
(8,125
)
EBITDA, as adjusted(4)
22,752

 
4,667

 
(214
)
 
(4,887
)
 
22,318

Identifiable assets(2)
406,385

 
48,432

 
61,958

 
61,725

(3) 
578,500

Depreciation and amortization
9,543

 
350

 
3,372

 
17

 
13,282

Interest
1,879

 
7

 
339

 
490

 
2,715

Capital expenditures
4,202

 
36

 
464

 
87

 
4,789

Non-cash compensation
3,105

 
335

 
119

 
2,125

 
5,684

 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2014
 
 
 
 
 
 
 
 
 
Revenues
$
391,257

 
$
41,155

 
$
—

 
$
159

 
$
432,571

Income (loss) before income taxes
5,741

 
9,776

 
—

 
(6,970
)
(1) 
8,547

EBITDA, as adjusted(4)
24,587

 
10,390

 
—

 
(4,429
)
 
30,548

Identifiable assets(2)
313,085

 
43,692

 
—

 
42,135

(3) 
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

 
—

 
1,432

 
4,010

 
 
 
 
 
 
 
 
 
 

(1) 
Includes interest expense, compensation, professional fees and other general and administrative expenses.

(2) 
Identifiable assets are presented as of the end of the period.

(3) 
Includes cash and cash equivalents of $58,836 and $38,777 as of June 30, 2015 and 2014, respectively.

(4)  
The following table reconciles EBITDA, as adjusted, to (loss) income before income taxes for the three and six months ended June 30, 2015 and 2014:

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
EBITDA, as adjusted
2015
 
2014
 
2015
 
2014
 
Independent Brokerage and Advisory Services
$
10,966

 
$
12,970

 
$
22,752

 
$
24,587

 
Ladenburg
3,275

 
3,735

 
4,667

 
10,390

 
Insurance Brokerage
164

 
—

 
(214
)
 
—

 
Corporate
(2,577
)
 
(1,886
)
 
(4,887
)
 
(4,429
)
 
Total Segments
11,828

 
14,819

(1) 
22,318

 
30,548

(1) 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Interest income
49

 
83

 
109

 
136

 
Change in fair value of contingent consideration
—

 
—

 
31

 
12

 
Loss on extinguishment of debt
—

 
—

 
(252
)
 
(314
)
 
Interest expense
(1,275
)
 
(1,599
)
 
(2,715
)
 
(3,492
)
 
Depreciation and amortization
(6,692
)
 
(3,787
)
 
(13,282
)
 
(7,625
)
 
Non-cash compensation expense
(2,424
)
 
(2,083
)
 
(5,684
)
 
(4,010
)
 
Financial advisor acquisition expense
(386
)
 
(371
)
 
(906
)
 
(535
)
 
Amortization of retention and forgivable loans
(2,910
)
 
(2,893
)
 
(5,608
)
 
(5,673
)
 
Other
(1,005
)
(2) 
—

 
(1,990
)
(2) 
—

 
Acquisition-related expenses
(10
)
 
(458
)
 
(118
)
 
(458
)
 
Net loss attributable to noncontrolling interest
(8
)
 
(21
)
 
(28
)
 
(42
)
 
(Loss) income before income taxes
$
(2,833
)
 
$
3,690

 
$
(8,125
)
 
$
8,547

 


(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.