Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.5.0.2
Segment Information
 6 Months Ended
Jun. 30, 2016
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, severance costs 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, income (loss) before income taxes, net income (loss) and cash flows provided by (used in) operating activities.

Segment information for the three and six months ended June 30, 2016 and 2015 was as follows:

Three Months Ended June 30, 2016
 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
243,640

 
$
12,511

 
$
13,418

 
$
206

 
$
269,775

Income (loss) before income taxes
 
3,431

 
(970
)
 
(618
)
 
(3,419
)
(1) 
(1,576
)
EBITDA, as adjusted (4)
 
11,652

 
(460
)
 
1,488

 
(2,193
)
 
10,487

Identifiable assets (2)
 
407,989

 
34,721

 
55,976

 
33,385

(3) 
532,071

Depreciation and amortization
 
5,239

 
186

 
1,799

 
17

 
7,241

Interest
 
808

 
—

 
170

 
194

 
1,172

Capital expenditures
 
1,648

 
120

 
93

 
—

 
1,861

Non-cash compensation
 
252

 
135

 
61

 
893

 
1,341

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 

 
 
 
 
 
 
 

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

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
487,384

 
$
23,033

 
$
24,742

 
$
412

 
$
535,571

Income (loss) before income taxes
 
6,684

 
(4,112
)
 
(3,352
)
 
(7,181
)
(1) 
(7,961
)
EBITDA, as adjusted (4)
 
22,660

 
(3,258
)
 
832

 
(4,710
)
 
15,524

Identifiable assets (2)
 
407,989

 
34,721

 
55,976

 
33,385

(3) 
532,071

Depreciation and amortization
 
10,165

 
361

 
3,556

 
34

 
14,116

Interest
 
1,651

 
—

 
340

 
388

 
2,379

Capital expenditures
 
3,394

 
120

 
186

 
—

 
3,700

Non-cash compensation
 
503

 
271

 
122

 
1,800

 
2,696

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
 
 
 

(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 $29,500 and $58,836 as of June 30, 2016 and 2015, respectively.

(4) 
The following table reconciles EBITDA, as adjusted, to loss before income taxes for the three and six months ended June 30, 2016 and 2015.
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
EBITDA, as adjusted
 
2016
 
2015
 
2016
 
2015
 
Independent Brokerage and Advisory Services
 
$
11,652

 
$
10,966

 
$
22,660

 
$
22,752

 
Ladenburg
 
(460
)
 
3,275

 
(3,258
)
 
4,667

 
Insurance Brokerage
 
1,488

 
164

 
832

 
(214
)
 
Corporate
 
(2,193
)
 
(2,577
)
 
(4,710
)
 
(4,887
)
 
Total Segments
 
10,487

 
11,828

 
15,524

 
22,318

 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
Interest income
 
161

 
49

 
295

 
109

 
Change in fair value of contingent consideration
 
(49
)
 
—

 
(106
)
 
31

 
Loss on extinguishment of debt
 
—

 
—

 
—

 
(252
)
 
Interest expense
 
(1,172
)
 
(1,275
)
 
(2,379
)
 
(2,715
)
 
Depreciation and amortization
 
(7,241
)
 
(6,692
)
 
(14,116
)
 
(13,282
)
 
Non-cash compensation expense
 
(1,341
)
 
(2,424
)
 
(2,696
)
 
(5,684
)
 
Financial advisor recruiting expense
 
(363
)
 
(386
)
 
(684
)
 
(906
)
 
Amortization of retention and forgivable loans
 
(1,544
)
 
(2,910
)
 
(2,978
)
 
(5,608
)
 
Acquisition-related expenses
 
—

 
(10
)
 
—

 
(118
)
 
Other (1)
 
(500
)
 
(1,005
)
 
(789
)
 
(1,990
)
 
Net loss attributable to noncontrolling interest
 
(14
)
 
(8
)
 
(32
)
 
(28
)
 
Loss before income taxes
 
$
(1,576
)
 
$
(2,833
)
 
$
(7,961
)
 
$
(8,125
)
 

(1) 
Includes loss on severance costs of $233 for the three and six months ended June 30, 2016 and excise and franchise tax expense of $99 and $234 for the three and six months ended June 30, 2016, respectively. Includes loss on write-off of receivable from subtenant of $855 for the six months ended June 30, 2015, rent expense due to default of 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, respectively.