| 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 income (loss) and cash flows (used in) provided by operating activities.
Segment information for the three months ended March 31, 2016 and 2015 was as follows:
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Three Months Ended March 31, 2016 |
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Independent
Brokerage and
Advisory Services
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Ladenburg |
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Insurance Brokerage |
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Corporate |
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Total |
Revenues |
|
$ |
243,744 |
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$ |
10,522 |
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|
$ |
11,324 |
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$ |
206 |
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$ |
265,796 |
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Income (loss) before income taxes |
|
3,253 |
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|
(3,142 |
) |
|
(2,734 |
) |
|
(3,762 |
) |
(1) |
(6,385 |
) |
EBITDA, as adjusted (4)
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|
11,008 |
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|
(2,798 |
) |
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(656 |
) |
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(2,517 |
) |
|
5,037 |
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Identifiable assets (2)
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409,824 |
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36,516 |
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56,383 |
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|
38,983 |
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(3) |
541,706 |
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Depreciation and amortization |
|
4,926 |
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|
175 |
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|
1,757 |
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17 |
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|
6,875 |
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Interest |
|
843 |
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|
— |
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|
170 |
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|
194 |
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|
1,207 |
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Capital expenditures |
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1,746 |
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— |
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|
93 |
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— |
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1,839 |
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Non-cash compensation |
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251 |
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136 |
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61 |
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|
907 |
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1,355 |
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Three Months Ended March 31, 2015 |
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Revenues |
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$ |
254,869 |
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$ |
13,578 |
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$ |
10,273 |
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$ |
103 |
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$ |
278,823 |
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Income (loss) before income taxes |
|
716 |
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|
174 |
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(2,284 |
) |
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(3,898 |
) |
(1) |
(5,292 |
) |
EBITDA, as adjusted (4)
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11,786 |
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|
1,392 |
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(378 |
) |
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(2,310 |
) |
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10,490 |
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Identifiable assets (2)
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400,023 |
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39,956 |
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62,004 |
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70,770 |
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(3) |
572,753 |
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Depreciation and amortization |
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4,729 |
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|
175 |
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1,678 |
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8 |
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6,590 |
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Interest |
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1,047 |
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3 |
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|
168 |
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|
222 |
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1,440 |
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Capital expenditures |
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2,118 |
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9 |
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263 |
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— |
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2,390 |
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Non-cash compensation |
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1,908 |
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184 |
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59 |
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1,109 |
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3,260 |
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(1) |
Includes interest expense, compensation, professional fees and other general and administrative expenses. |
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(2) |
Identifiable assets are presented as of the end of the period. |
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(3) |
Includes cash and cash equivalents of $34,441 and $67,595 as of March 31, 2016 and 2015, respectively.
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(4) |
The following table reconciles EBITDA, as adjusted, to loss before income taxes for the three months ended March 31, 2016 and 2015. |
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Three Months Ended
March 31, |
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EBITDA, as adjusted |
2016 |
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2015 |
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Independent Brokerage and Advisory Services |
$ |
11,008 |
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$ |
11,786 |
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Ladenburg |
(2,798 |
) |
|
1,392 |
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Insurance Brokerage |
(656 |
) |
|
(378 |
) |
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Corporate |
(2,517 |
) |
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(2,310 |
) |
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Total Segments |
5,037 |
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10,490 |
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Adjustments: |
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Interest income |
133 |
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60 |
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Change in fair value of contingent consideration |
(57 |
) |
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31 |
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Loss on extinguishment of debt |
— |
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(252 |
) |
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Interest expense |
(1,207 |
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(1,440 |
) |
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Depreciation and amortization |
(6,875 |
) |
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(6,590 |
) |
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Non-cash compensation expense |
(1,355 |
) |
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(3,260 |
) |
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Financial advisor recruiting expense |
(321 |
) |
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(520 |
) |
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Amortization of retention and forgivable loans |
(1,434 |
) |
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(2,698 |
) |
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Acquisition-related expenses |
— |
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(108 |
) |
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Other |
(288 |
) |
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(985 |
) |
(1) |
Net loss attributable to noncontrolling interest |
(18 |
) |
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(20 |
) |
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Loss before income taxes |
$ |
(6,385 |
) |
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$ |
(5,292 |
) |
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(1) |
Includes loss on write-off of receivable from subtenant of $855 for the three months ended March 31, 2015.
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