Investors Capital Holdings Posts Solid Quarterly Revenue Growth

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Investors Capital Holdings Posts Solid Quarterly Revenue Growth

Firm records historic first quarter revenue results. Average revenue per representative reaches another new high.

LYNNFIELD, Mass.--(BUSINESS WIRE)-- Investors Capital Holdings, Ltd. (NYSE MKT: ICH, the "Company"), a financial services holding company, posted first quarter total revenue of $23.08 million for the period ended June 30, 2013 (the "quarter"). The firm posted a net loss of $0.36 million for the quarter. Investors Capital Holdings, Ltd. operates primarily through its wholly-owned subsidiary, Investors Capital Corporation ("ICC"), a dually registered independent broker-dealer and investment advisory firm.

Total revenue increased 11.0% to $23.08 million compared to total revenue of $20.80 million for the quarter ended June 30, 2012 (the "prior period"). This was the first quarter since September 2009 that total revenues exceeded $23.0 Million, and represents the highest first quarter total revenue results in firm history. The increase was due primarily to top-line growth of both commissions and advisory fees organically through the firm's practice management initiatives, attracting and recruiting new financial advisors, and improved financial market conditions.

Commission revenue climbed 12.8% to $18.14 million, compared to $16.09 million in the prior period, due to an increase in direct business from improved market conditions as well as new business from new advisors. Improving financial markets also benefited advisory fee revenue, which increased 8.1% to $4.44 million, compared to $4.11 million in the prior period.

Total expenses increased $3.40 million or 16.7% to $23.75 million, principally as a result of increases in commissions and advisory fees compensated to our independent representatives and in regulatory, legal, and professional costs. Regulatory, legal and professional expenses more than doubled, driven principally by related legal costs incurred to litigate and resolve claims concerning investment products sold by our representatives prior to the recent recession, coupled with an increase in the Company's professional liability insurance.

The firm posted an operating loss of $0.67 million compared to operating income of $0.45 million for the prior period and a net loss of $0.36 million for the quarter compared to net income of $0.26 million for the prior period.

Investors Capital continues to benefit from enhancing the overall quality of its representatives by providing broad practice management solutions, 5-Star Service, and business-building technology to its advisors to assist them in growing their practices, as well as attracting and recruiting established, high-performing representatives. The firm's average revenue per representative, based on a rolling 12-month period, rose at the end of the first quarter to new all-time high of $193,153, an increase of 13.7% over $169,934 for the prior rolling 12-month period.

Adjusted EBITDA was negative $0.46 million compared to income of $0.58 million for the prior period. Adjusted EBITDA, a non-GAAP financial measure described below, is a key metric utilized by the firm in evaluating its financial performance.

"I'm very excited about our record first quarter revenue results," said Timothy B. Murphy, President and CEO of Investors Capital Holdings, Ltd. "We're seeing the fruits of recruiting and retaining high-quality advisors as well as the benefits that come from implementing strategic, organic growth initiatives. Our 2X Workshop, Capital Cup competition, branding symposiums, practice management initiatives, technology platform, and 5-Star Service every day, in addition to improved market conditions combined to provide our advisors with the tools, resources, and mindset to achieve solid, and, in some cases, exceptional growth so far this year. I look forward to this first quarter revenue momentum continuing throughout the year."

"While pleased with our top-line growth, we are still challenged by the continued costs of product litigation and settlements, which have significantly impacted our operating and net income results for several reporting periods," Mr. Murphy continued. "Management's strategy for resolving these cases and stemming related costs are essential to improving our operating and net income results going forward."

About Investors Capital Holdings, Ltd.:

Investors Capital Holdings, Ltd. (NYSE MKT: ICH) of Lynnfield, Massachusetts is a financial services holding company that operates primarily through its independent broker/dealer and investment advisor subsidiary, Investors Capital Corporation. Our mission is to provide 5-Star Service and support to our valued registered representatives, including top-notch advisory programs, strategic practice management and marketing services, and transformational technology, to help them grow their businesses and exceed their clients' expectations. Business units include Investors Capital Corporation, ICC Insurance Agency, Inc., Investors Capital Holdings Securities Corporation, and Advisor Direct, Inc. For more information, please call (800) 949-1422 x4814 or visit

Certain statements contained in this press release that are not historical fact may be deemed to be forward-looking statements under federal securities laws. There are many factors that could cause our future actual results to differ materially from those suggested by or forecast in the forward-looking statements. Such factors include, but are not limited to, general economic conditions, interest rate fluctuations, regulatory changes affecting the financial services industry, competitive factors effecting demand for our services, availability of funding, and other risks including those identified in the Company's Securities and Exchange Commission filings.

Investors Capital Holdings, Ltd., 230 Broadway, Lynnfield, Massachusetts 01940, Distributor.

        June 30, 2013       March 31, 2013
Current Assets
Cash and cash equivalents $ 6,079,030 $ 6,589,698
Deposit with clearing organization, restricted 175,000 175,000
Accounts receivable 6,338,112 7,160,553
Loans receivable from registered representatives (current), net of allowance 646,786 593,730
Prepaid income taxes 1,000,385 136,972
Securities owned at fair value 272,446 258,903
Prepaid expenses 561,833   722,427  
15,073,592 15,637,283
Property and equipment, net 152,324 194,446
Long Term Assets
Loans receivable from registered representatives 859,544 893,703
Non-qualified deferred compensation investment 1,888,919 1,771,044
Cash surrender value life insurance policies 198,712   176,402  
2,947,175 2,841,149
Other Assets
Deferred tax asset, net 550,636 1,059,480
Capitalized software, net 94,760 107,590
Other asset 56,704   56,704  
702,100 1,223,774
TOTAL ASSETS $ 18,875,191   $ 19,896,652  
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,012,514 $ 1,327,691
Accrued expenses 1,727,142 1,818,379
Commissions payable 3,274,784 3,279,921
Notes payable 961,622 1,488,876
Unearned revenues 197,933 188,651
Securities sold, not yet purchased, at fair value 14,297   28,946  
7,188,292 8,132,464
Long-Term Liabilities
Non-qualified deferred compensation plan 2,120,589 1,968,691
Subordinated borrowings 2,000,000   2,000,000  
4,120,589 3,968,691
Total liabilities 11,308,881   12,101,155  
Stockholders' Equity:
Common stock, $.01 par value, 10,000,000 shares authorized;
7,100,608 issued and 7,096,723 outstanding at June 30, 2013
7,101,427 issued and 7,097,542 outstanding at March 31, 2013 70,957 71,013
Additional paid-in capital 12,724,818 12,594,370
Accumulated deficit (5,199,330 ) (4,839,751 )
Less: Treasury stock, 3,885 shares at cost (30,135 ) (30,135 )
Total stockholders' equity 7,566,310 7,795,497




June 30,
2013       2012
Commissions $ 18,140,885 $ 16,088,506
Advisory fees 4,442,783 4,110,673
Other fee income 219,222 339,103
Other revenue 280,106   264,243
Total revenue 23,082,996   20,802,525
Commissions and advisory fees 18,739,847 16,610,153
Compensation and benefits 1,738,297 1,579,260
Regulatory, legal and professional services 1,803,203 875,632
Brokerage, clearing and exchange fees 393,743 338,101
Technology and communications 342,864 296,978
Advertising, marketing and promotion 360,788 241,273
Occupancy and equipment 85,288 186,108
Other administrative 234,048 217,030
Interest 55,024   8,968
Total operating expenses 23,753,102   20,353,503
Operating (loss) income (670,106 ) 449,022
(Benefit) provision for income taxes (310,527 ) 187,340
Net (loss) income $ (359,579 ) $ 261,682
Basic net (loss) income per share $ (0.05 ) $ 0.04
Diluted net (loss) income per share $ (0.05 ) $ 0.04
Weighted average shares used in basic per share calculations 6,683,071   6,615,650
Weighted average shares used in diluted per share calculations 6,683,071   6,750,743

Adjusted EBITDA

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted by eliminating items that we believe are not part of our core operations, are non-recurring items of revenue or expense, or do not involve a cash outlay, such as stock-related compensation. We consider adjusted EBITDA important in monitoring and evaluating our financial performance on a consistent basis across various periods. We also use adjusted EBITDA as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions.

Adjusted EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, important GAAP financial measures including pre-tax income, net income and cash flows from operating activities. Items excluded from adjusted EBITDA are significant and necessary components to the operations of our business; therefore, adjusted EBITDA should only be used as a supplemental measure of our operating performance.

Adjusted EBITDA is reconciled with GAAP net income as follows:

        Quarter Ended June 30,
2013       2012
Adjusted EBITDA: $ (456,544 ) $ 583,998
Adjustments to conform Adjusted EBITDA to
GAAP Net income (loss):
Income tax provision 310,527 (187,340 )
Interest expense (55,024 ) (8,968 )
Depreciation and amortization (60,482 ) (83,021 )
Non-cash compensation   (98,056 )   (42,987 )
Net income (loss) $ (359,579 ) $ 261,682  


Investors Capital Holdings, Ltd.
Robert Foney, 781-477-4814
Chief Marketing Officer

KEYWORDS:   United States  North America  Massachusetts


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