Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.3.0.814
Segment Information
 9 Months Ended
Sep. 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 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 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 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 (loss) income and cash flows provided by (used in) operating activities.

Segment information for the three and nine months ended September 30, 2015 and 2014 was as follows:

Three Months Ended September 30, 2015
 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
256,671

 
$
13,248

 
$
12,210

 
$
85

 
$
282,214

Income (loss) before income taxes
 
3,141

 
(144
)
 
(1,585
)
 
(4,561
)
(1) 
(3,149
)
EBITDA, as adjusted(4)
 
10,925

 
98

 
417

 
(3,080
)
 
8,360

Identifiable assets(2)
 
400,290

 
44,053

 
63,522

 
55,425

(3) 
563,290

Depreciation and amortization
 
4,834

 
178

 
1,769

 
17

 
6,798

Interest
 
834

 
—

 
172

 
249

 
1,255

Capital expenditures
 
1,646

 
51

 
188

 
—

 
1,885

Non-cash compensation
 
(914
)
 
151

 
60

 
945

 
242

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2014
 

 
 
 
 
 
 
 

Revenues
 
$
197,730

 
$
16,675

 
$
9,242

 
$
85

 
$
223,732

Income (loss) before income taxes
 
1,186

 
3,400

 
(742
)
 
(4,415
)
(1) 
(571
)
EBITDA, as adjusted(4)
 
11,656

 
3,734

 
386

 
(2,429
)
 
13,347

Identifiable assets(2)
 
314,083

 
72,190

 
62,812

 
44,247

(3) 
493,332

Depreciation and amortization
 
3,771

 
176

 
952

 
3

 
4,902

Interest
 
1,267

 
11

 
118

 
305

 
1,701

Capital expenditures
 
1,114

 
—

 
48

 
—

 
1,162

Non-cash compensation
 
2,640

 
153

 
58

 
828

 
3,679

 
 
 
 
 
 
 
 
 
 
 


Nine Months Ended September 30, 2015
 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
(5) 
Corporate
 
Total
Revenues
 
$
777,009

 
$
44,806

 
$
35,680

 
$
290

 
$
857,785

Income (loss) before income taxes
 
4,562

 
2,420

 
(5,628
)
 
(12,628
)
(1) 
(11,274
)
EBITDA, as adjusted(4)
 
33,677

 
4,765

 
203

 
(7,967
)
 
30,678

Identifiable assets(2)
 
400,290

 
44,053

 
63,522

 
55,425

(3) 
563,290

Depreciation and amortization
 
14,377

 
528

 
5,141

 
34

 
20,080

Interest
 
2,713

 
7

 
511

 
739

 
3,970

Capital expenditures
 
5,849

 
87

 
652

 
86

 
6,674

Non-cash compensation
 
2,191

 
486

 
179

 
3,070

 
5,926

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2014
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
588,987

 
$
57,830

 
$
9,242

 
$
244

 
$
656,303

Income (loss) before income taxes
 
6,927

 
13,176

 
(742
)
 
(11,385
)
(1) 
7,976

EBITDA, as adjusted(4)
 
36,243

 
14,123

 
386

 
(6,857
)
 
43,895

Identifiable assets(2)
 
314,083

 
72,190

 
62,812

 
44,247

(3) 
493,332

Depreciation and amortization
 
11,082

 
486

 
952

 
7

 
12,527

Interest
 
4,121

 
18

 
118

 
936

 
5,193

Capital expenditures
 
4,805

 
926

 
48

 
108

 
5,887

Non-cash compensation
 
4,913

 
458

 
58

 
2,260

 
7,689

 
 
 
 
 
 
 
 
 
 
 

(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 $53,399 and $42,421 as of September 30, 2015 and 2014, respectively.

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

(5) 
Represents operations of Highland, which was acquired in July 2014.

 
Three Months Ended 
 September 30,
 
Nine Months Ended September 30,
 
EBITDA, as adjusted
2015
 
2014
 
2015
 
2014
 
Independent Brokerage and Advisory Services
$
10,925

 
$
11,656

 
$
33,677

 
$
36,243

 
Ladenburg
98

 
3,734

 
4,765

 
14,123

 
Insurance Brokerage
417

 
386

 
203

 
386

 
Corporate
(3,080
)
 
(2,429
)
 
(7,967
)
 
(6,857
)
 
Total Segments
8,360

 
13,347

(1) 
30,678

 
43,895

(1) 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Interest income
69

 
59

 
178

 
195

 
Change in fair value of contingent consideration
—

 
—

 
31

 
12

 
Loss on extinguishment of debt
—

 
—

 
(252
)
 
(314
)
 
Interest expense
(1,255
)
 
(1,701
)
 
(3,970
)
 
(5,193
)
 
Depreciation and amortization
(6,798
)
 
(4,902
)
 
(20,080
)
 
(12,527
)
 
Non-cash compensation expense
(242
)
 
(3,679
)
 
(5,926
)
 
(7,689
)
 
Financial advisor recruiting expense
(764
)
 
(354
)
 
(1,670
)
 
(889
)
 
Amortization of retention and forgivable loans
(2,223
)
 
(2,471
)
 
(7,831
)
 
(8,144
)
 
Acquisition-related expense
(139
)
 
(850
)
 
(257
)
 
(1,308
)
 
Other
(146
)
 
—

 
(2,136
)
(2) 
—

 
Net loss attributable to noncontrolling interest
(11
)
 
(20
)
 
(39
)
 
(62
)
 
(Loss) income before income taxes
$
(3,149
)
 
$
(571
)
 
$
(11,274
)
 
$
7,976

 


(1) Includes increases of $1,287 and $3,925 for the three and nine months ended September 30, 2014, respectively, related to amortization of forgivable loans and financial advisor recruiting expenses to conform to the 2015 presentation.
(2) Includes loss on write-off of receivable from subtenant of $855 for the nine months ended September 30, 2015, rent expense due to default by subtenant of $468 for the nine months ended September 30, 2015, and excise and franchise tax expense of $263 for the nine months ended September 30, 2015.