| 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 Securities America, Triad, Investacorp, KMS and SSN to their independent contractor financial advisors and 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 conducted by Highland, which delivers life insurance, fixed and equity indexed annuities, as well as 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. 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 years ended December 31, 2015, 2014 and 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Brokerage and Advisory Services |
|
Ladenburg |
|
Insurance Brokerage |
|
Corporate |
|
Total |
2015 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,035,365 |
|
|
$ |
61,841 |
|
|
$ |
49,573 |
|
|
$ |
5,339 |
|
|
$ |
1,152,118 |
|
Income (loss) before income taxes |
|
7,735 |
|
|
3,095 |
|
|
(6,701 |
) |
|
(15,824 |
) |
(1) |
(11,695 |
) |
EBITDA, as adjusted (5)
|
|
46,053 |
|
|
6,052 |
|
|
1,170 |
|
|
(9,639 |
) |
|
43,636 |
|
Identifiable assets |
|
417,378 |
|
|
44,050 |
|
|
61,689 |
|
|
51,241 |
|
|
574,358 |
|
Depreciation and amortization |
|
19,373 |
|
|
703 |
|
|
6,949 |
|
|
52 |
|
|
27,077 |
|
Interest |
|
3,532 |
|
|
7 |
|
|
683 |
|
|
947 |
|
|
5,169 |
|
Capital expenditures |
|
7,341 |
|
|
87 |
|
|
783 |
|
|
87 |
|
|
8,298 |
|
Non-cash compensation |
|
3,836 |
|
|
638 |
|
|
239 |
|
|
4,046 |
|
|
8,759 |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
816,581 |
|
|
$ |
73,298 |
|
|
$ |
26,164 |
|
|
$ |
5,210 |
|
|
$ |
921,253 |
|
Income (loss) before income taxes |
|
10,520 |
|
|
14,846 |
|
|
(841 |
) |
|
(14,519 |
) |
(1) |
10,006 |
|
EBITDA, as adjusted (5)
|
|
50,596 |
|
|
16,174 |
|
|
2,315 |
|
|
(7,907 |
) |
|
61,178 |
|
Identifiable assets |
|
350,225 |
|
|
39,845 |
|
|
67,941 |
|
|
52,747 |
|
|
510,758 |
|
Depreciation and amortization |
|
14,978 |
|
|
665 |
|
|
2,743 |
|
|
11 |
|
|
18,397 |
|
Interest |
|
5,460 |
|
|
67 |
|
|
297 |
|
|
1,166 |
|
|
6,990 |
|
Capital expenditures |
|
6,058 |
|
|
1,002 |
|
|
253 |
|
|
134 |
|
|
7,447 |
|
Non-cash compensation |
|
6,751 |
|
|
612 |
|
|
116 |
|
|
3,062 |
|
|
10,541 |
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
723,246 |
|
(2) |
$ |
69,603 |
|
(2) |
$ |
— |
|
|
$ |
267 |
|
(3) |
$ |
793,116 |
|
Income (loss) before income taxes |
|
4,850 |
|
|
11,689 |
|
|
— |
|
|
(14,135 |
) |
(1)(4) |
2,404 |
|
EBITDA, as adjusted (5)
|
|
52,549 |
|
|
13,188 |
|
|
— |
|
|
(8,534 |
) |
(4) |
57,203 |
|
Identifiable assets |
|
320,239 |
|
|
33,950 |
|
|
— |
|
|
6,631 |
|
|
360,820 |
|
Depreciation and amortization |
|
14,475 |
|
|
791 |
|
|
— |
|
|
49 |
|
|
15,315 |
|
Interest |
|
12,527 |
|
|
75 |
|
|
— |
|
|
2,836 |
|
|
15,438 |
|
Capital expenditures |
|
4,898 |
|
|
1,963 |
|
|
— |
|
|
— |
|
|
6,861 |
|
Non-cash compensation |
|
3,667 |
|
|
646 |
|
|
— |
|
|
2,453 |
|
|
6,766 |
|
|
|
(1) |
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses. |
|
|
(2) |
Includes brokerage commissions of $4,240 and $908 in the Ladenburg and Independent brokerage and advisory services segments, respectively, related to the sale of the Company's Series A Preferred Stock (eliminated in consolidation).
|
|
|
(3) |
Includes the elimination of $5,148 of revenue referred to in footnote (2).
|
|
|
(4) |
Includes the elimination of $2,545, consisting of $5,148 of revenue, net of employee brokerage commission expenses of $2,603 charged to additional paid-in capital related to sale of the Company's Series A Preferred Stock.
|
|
|
(5) |
The following table reconciles EBITDA, as adjusted, to (loss) income before income taxes for the years ended December 31, 2015, 2014 and 2013: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
EBITDA, as adjusted |
|
2015 |
|
2014 |
|
2013 |
|
Independent Brokerage and Advisory Services |
|
$ |
46,053 |
|
|
$ |
50,596 |
|
|
$ |
52,549 |
|
|
Ladenburg |
|
6,052 |
|
|
16,174 |
|
|
13,188 |
|
|
Insurance Brokerage |
|
1,170 |
|
|
2,315 |
|
|
— |
|
|
Corporate |
|
(9,639 |
) |
|
(7,907 |
) |
|
(8,534 |
) |
|
Total segments |
|
43,636 |
|
|
61,178 |
|
|
57,203 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
254 |
|
|
245 |
|
|
194 |
|
|
Change in fair value of contingent consideration |
|
55 |
|
|
12 |
|
|
(121 |
) |
|
Loss on extinguishment of debt |
|
(252 |
) |
|
(548 |
) |
|
(4,547 |
) |
|
Interest expense |
|
(5,169 |
) |
|
(6,990 |
) |
|
(15,438 |
) |
|
Depreciation and amortization |
|
(27,077 |
) |
|
(18,397 |
) |
|
(15,315 |
) |
|
Non-cash compensation expense |
|
(8,759 |
) |
|
(10,541 |
) |
|
(6,766 |
) |
|
Amortization of retention and forgivable loans |
|
(9,238 |
) |
|
(11,041 |
) |
|
(11,544 |
) |
|
Financial advisor recruiting expense |
|
(2,387 |
) |
|
(1,489 |
) |
|
(1,194 |
) |
|
Acquisition-related expense |
|
(528 |
) |
|
(2,342 |
) |
|
— |
|
|
Loss attributable to noncontrolling interest |
|
(62 |
) |
|
(81 |
) |
|
(68 |
) |
|
Other |
|
(2,168 |
) |
(6) |
— |
|
|
— |
|
|
(Loss) income before income taxes |
|
$ |
(11,695 |
) |
|
$ |
10,006 |
|
|
$ |
2,404 |
|
|
(6) Includes loss on write-off of receivable from subtenant of $855, deferred compensation obligation of $532, rent expense due to default by subtenant of $468 and excise and franchise tax expense of $313.
|