Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.7.0.1
Segment Information
 3 Months Ended
Mar. 31, 2017
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, 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 months ended March 31, 2017 and 2016 was as follows:

Three Months Ended March 31, 2017
 
Independent
Brokerage and
Advisory Services
 
Ladenburg
 
Insurance Brokerage
 
Corporate
 
Total
Revenues
 
$
265,841

 
$
11,865

 
$
12,301

 
$
284

 
$
290,291

Income (loss) before income taxes
 
3,594

 
(520
)
 
(2,515
)
 
(5,077
)
(1) 
(4,518
)
EBITDA, as adjusted (3)
 
11,735

 
113

 
(443
)
 
(3,915
)
 
7,490

Identifiable assets (2)
 
417,972

 
35,770

 
50,611

 
19,695

 
524,048

Depreciation and amortization
 
5,450

 
163

 
1,804

 
15

 
7,432

Interest
 
236

 
—

 
168

 
73

 
477

Capital expenditures
 
2,188

 
133

 
33

 
39

 
2,393

Non-cash compensation
 
268

 
158

 
62

 
941

 
1,429

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 

 
 
 
 
 
 
 

Revenues
 
$
243,744

 
$
10,522

 
$
11,324

 
$
206

 
$
265,796

Income (loss) before income taxes
 
3,253

 
(3,142
)
 
(2,734
)
 
(3,762
)
(1) 
(6,385
)
EBITDA, as adjusted (3)
 
11,044

 
(2,798
)
 
(656
)
 
(2,517
)
 
5,073

Identifiable assets (2)
 
409,824

 
36,516

 
56,383

 
38,983

 
541,706

Depreciation and amortization
 
4,926

 
175

 
1,757

 
17

 
6,875

Interest
 
843

 
—

 
170

 
194

 
1,207

Capital expenditures
 
1,746

 
—

 
93

 
—

 
1,839

Non-cash compensation
 
251

 
136

 
61

 
907

 
1,355

 
 
 
 
 
 
 
 
 
 
 

(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) 
The following table reconciles loss before income taxes for the three months ended March 31, 2017 and 2016 to EBITDA, as adjusted.
 
 
Three Months Ended March 31,
 
 
2017
 
2016
 
Loss before income taxes
 
$
(4,518
)
 
$
(6,385
)
 
Adjustments:
 
  

 
  

 
Interest income
 
(102
)
 
(133
)
 
Change in fair value of contingent consideration
 
(152
)
 
57

 
Interest expense
 
477

 
1,207

 
Depreciation and amortization
 
7,432

 
6,875

 
Non-cash compensation expense
 
1,429

 
1,355

 
Amortization of retention and forgivable loans
 
1,591

 
1,434

 
Financial advisor recruiting expense
 
868

 
321

 
Acquisition-related expense
 
176

 
36

 
Loss attributable to noncontrolling interest
 
5

 
18

 
Other (1)
 
284

 
288

 
EBITDA, as adjusted
 
$
7,490

 
$
5,073

 
 
 
 
 
 
 
EBITDA, as adjusted
 
 
 
 
 
Independent Brokerage and Advisory Services
 
$
11,735

 
$
11,044

 
Ladenburg
 
113

 
(2,798
)
 
Insurance Brokerage
 
(443
)
 
(656
)
 
Corporate
 
(3,915
)
 
(2,517
)
 
Total segments
 
$
7,490

 
$
5,073

 


(1) 
Includes excise and franchise tax expense of $141 for the three months ended March 31, 2017 and compensation expense that may be paid in stock of $143 for the three months ended March 31, 2017. Includes excise and franchise tax expense of $134 for the three months ended March 31, 2016 and compensation expense that may be paid in stock of $154 for the three months ended March 31 , 2016.