Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.10.0.1
Segment Information
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information

The Company has three operating segments. The independent advisory and brokerage services segment includes the investment advisory and broker-dealer services provided by the Company's independent advisory and brokerage 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, and LTAIS, which provides marketing strategies, product expertise, and back-office processing for fixed and equity-indexed annuities.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted for acquisition-related expense, amortization of retention and forgivable loans, amortization of contract acquisition costs, change in fair value of contingent consideration related to acquisitions, 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, amortization of contract acquisition costs 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 months and six months ended June 30, 2018 and 2017 was as follows:

Three Months Ended June 30, 2018
 
Independent
Advisory and Brokerage Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
299,471

 
$
18,120

 
$
37,925

 
$
2,240

 
$
357,756

Income (loss) before income taxes
 
16,708

 
1,979

 
832

 
(5,635
)
(1) 
13,884

EBITDA, as adjusted (3)
 
25,221

 
2,268

 
1,413

 
(3,063
)
 
25,839

Identifiable assets (2)
 
496,331

 
56,592

 
87,056

 
107,911

 
747,890

Depreciation and amortization
 
5,423

 
111

 
223

 
5

 
5,762

Interest
 
263

 
13

 
171

 
1,707

 
2,154

Capital expenditures
 
4,160

 
166

 
15

 
24

 
4,365

Non-cash compensation
 
309

 
177

 
56

 
1,026

 
1,568

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 

 
 
 
 
 
 
 

Revenues
 
$
280,855

 
$
18,011

 
$
12,339

 
$
331

 
$
311,536

Income (loss) before income taxes
 
5,404

 
1,829

 
(1,604
)
 
(4,442
)
(1) 
1,187

EBITDA, as adjusted (3)
 
13,722

 
2,219

 
517

 
(3,301
)
 
13,157

Identifiable assets (2)
 
421,277

 
43,733

 
46,077

 
27,201

 
538,288

Depreciation and amortization
 
5,350

 
124

 
1,806

 
14

 
7,294

Interest
 
277

 

 
171

 
73

 
521

Capital expenditures
 
2,064

 
143

 
101

 
5

 
2,313

Non-cash compensation
 
241

 
157

 
60

 
920

 
1,378

Six Months Ended June 30, 2018
 
Independent
Advisory and Brokerage and
Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
575,000

 
$
40,434

 
$
68,985

 
$
2,721

 
$
687,140

Income (loss) before income taxes
 
27,388

 
6,292

 
701

 
(12,861
)
(1) 
21,520

EBITDA, as adjusted (3)
 
45,232

 
6,919

 
1,854

 
(8,002
)
 
46,003

Identifiable assets(2)
 
496,331

 
56,592

 
87,056

 
107,911

 
747,890

Depreciation and amortization
 
10,875

 
223

 
465

 
8

 
11,571

Interest
 
550

 
48

 
339

 
3,083

 
4,020

Capital expenditures
 
6,257

 
256

 
68

 
24

 
6,605

Non-cash compensation
 
619

 
353

 
113

 
1,977

 
3,062


 


 


 


 


 


Six Months Ended June 30, 2017
 

 

 

 

 

Revenues
 
$
546,696

 
$
29,876

 
$
24,640

 
$
615

 
$
601,827

Income (loss) before income taxes
 
8,998

 
1,309

 
(4,119
)
 
(9,519
)
(1) 
(3,331
)
EBITDA, as adjusted (3)
 
25,457

 
2,332

 
74

 
(7,216
)
 
20,647

Identifiable assets(2)
 
421,277

 
43,733

 
46,077

 
27,201

 
538,288

Depreciation and amortization
 
10,800

 
287

 
3,610

 
29

 
14,726

Interest
 
513

 

 
339

 
146

 
998

Capital expenditures
 
4,252

 
276

 
134

 
44

 
4,706

Non-cash compensation
 
509

 
315

 
122

 
1,861

 
2,807



(1) Includes interest expense, compensation, professional fees, and other general and administrative expenses related to the Corporate segment.

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

(3) 
The following table reconciles income (loss) before income taxes for the three and six months ended June 30, 2018 and 2017 to EBITDA, as adjusted.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Income (loss) before income taxes
 
$
13,884

 
$
1,187

 
$
21,520

 
$
(3,331
)
Adjustments:
 
  

 
  

 
  

 
  

Interest income
 
(508
)
 
(98
)
 
(878
)
 
(200
)
Change in fair value of contingent consideration
 
50

 
63

 
111

 
(89
)
Interest expense
 
2,154

 
521

 
4,020

 
998

Depreciation and amortization
 
5,762

 
7,294

 
11,571

 
14,726

Non-cash compensation expense
 
1,568

 
1,378

 
3,062

 
2,807

Amortization of retention and forgivable loans
 
107

 
1,671

 
183

 
3,262

Amortization of contract acquisition costs
 
2,361

 

 
4,571

 

Financial advisor recruiting expense
 
89

 
564

 
176

 
1,432

Acquisition-related expense
 

 
89

 
913

 
265

(Income) loss attributable to noncontrolling interest
 
(8
)
 
3

 
(9
)
 
8

Other (1) (2)
 
380

 
485

 
763

 
769

EBITDA, as adjusted
 
$
25,839

 
$
13,157

 
$
46,003

 
$
20,647

 
 
 
 
 
 
 
 
 
EBITDA, as adjusted
 
 
 
 
 
 
 
 
Independent Advisory and Brokerage Services
 
$
25,221

 
$
13,722

 
$
45,232

 
$
25,457

Ladenburg
 
2,268

 
2,219

 
6,919

 
2,332

Insurance Brokerage
 
1,413

 
517

 
1,854

 
74

Corporate
 
(3,063
)
 
(3,301
)
 
(8,002
)
 
(7,216
)
Total segments
 
$
25,839

 
$
13,157

 
$
46,003

 
$
20,647


(1) 
Includes severance costs of $86 and $174, excise and franchise tax expense of $169 and $322 and compensation expense that may be paid in stock of $125 and $267 for the three and six months ended June 30, 2018, respectively.
(2)
Includes severance costs of $194, excise and franchise tax expense of $145 and $286 and compensation expense that may be paid in stock of $160 and $303 for the three and six months ended June 30, 2017, respectively.