National Holdings Corporation Reports Fiscal Second Quarter 2013 Financial Results
National Holdings Corporation Reports Fiscal Second Quarter 2013 Financial Results
NEW YORK--(BUSINESS WIRE)-- National Holdings Corporation (OTC BB: NHLD) ("National Holdings" or the "Company"), a leading hybrid broker dealer, today announced financial results for the Company's fiscal second quarter and six months ended March 31, 2013.
Fiscal Second Quarter and Year-to-Date Highlights
Generated fiscal second quarter 2013 net income of $0.5 million, or $0.01 per basic and diluted share, compared with a loss of $1.8 million, or $0.07 per basic and diluted share in the year-ago period
Reported Adjusted EBITDA, a non-GAAP measure, of $1.2 million and $1.6 million for the fiscal second quarter and six months ended March 31, 2013, compared with $0.1 million and a loss of $0.2 million, respectively
Strengthened capital structure with $8.8 million private offering and converted all preferred share classes into common shares
Satisfied all remaining $2.8 million of outstanding debt
Mark D. Klein, National Holdings' Chief Executive Officer and Co-Executive Chairman, commented, "Over the past nine months, we have implemented a series of initiatives designed to focus our revenue mix on higher margin offerings, reduce costs, return to profitability and strengthen our capital and reporting structures. We are now seeing significant improvements in all of these key areas, with additional benefits to be realized in the coming quarters. Our improving results are a testament to the Company's success managing costs and streamlining operations. We expect to actively evaluate opportunities to expand into new products, broaden our business platform and increase our established brokerage force."
Fiscal Second Quarter 2013 Financial Review
National Holdings reported fiscal second quarter 2013 total revenue of $32.9 million, a decrease of 1% from revenue of $33.2 million reported in the fiscal second quarter of 2012.
Operating expenses were $32.2 million in the second fiscal quarter of 2013. The $32.2 million represents a $1.7 million, or 5% decrease in expenses, compared with $33.9 million in the fiscal second quarter of 2012. The decrease in expenses was due primarily to improvements in reduced occupancy costs and overall lower payroll. These expense reductions enabled the company to return to profitability.
The Company uses Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA to provide greater clarity regarding the cash earnings of the business by removing income taxes, non-cash reorganization-related share-based compensation charges and non-cash interest expenses, as defined in the Non-GAAP Financial Measures section below. On this basis, National Holdings reported fiscal second quarter 2013 Adjusted EBITDA of $1.2 million, compared with $0.1 million in the fiscal second quarter of 2012.
On a GAAP basis, net income for the fiscal second quarter was $0.5 million, or $0.01 per basic and diluted share, compared with a net loss of $1.8 million, or $0.07 per basic and diluted share, in the fiscal second quarter of 2012.
Six Months Ended March 31, 2013 Financial Review
National Holdings reported 2013 year-to-date revenue of $59.4 million, an increase of 1% over year-to-date revenue of $58.6 million reported in 2012.
Operating expenses were $58.7 million for the six months ended March 31, 2013. The $58.7 million represents a 3% decrease from $60.3 million in the prior year period of 2012. The decrease was primarily a result of the Company's focus on managing expenses and increasing efficiencies within its brokerage operations, as well as other cost reduction efforts as described in the fiscal second quarter review.
Adjusted EBITDA increased to $1.6 million in the six months ended March 31, 2013, compared with a loss of $0.2 million in the six months ended March 31, 2012.
On a GAAP basis, net income for the six months ended March 31, 2013 was $0.5 million, or $0.01 per basic and diluted share, compared with a net loss of $2.8 million, or $0.12 per basic and diluted share in 2012.
Balance Sheet
As of March 31, 2013, National Holdings had $13.5 million in cash and cash equivalents. On January 25, 2013, the Company completed an offering of 29.45 million shares of its common stock that raised gross proceeds of $8.8 million. The proceeds were used to repay $2.8 million in debt. Proceeds will also be utilized for general working capital purposes, as well as investments in organic and M&A opportunities to expand, strengthen and diversify National Holdings' business units. As part of this transaction, the Company converted its outstanding preferred Series C, D and E into common stock. No preferred shares of National Holdings remain outstanding as of March 31, 2013.
Conference Call
National Holdings will host a conference call to discuss its fiscal second quarter 2013 earnings results on Monday, May 13, 2013, at 5:00 p.m. ET. To access the teleconference, please dial (706) 902-2067 (domestic and international) approximately ten minutes before the teleconference's scheduled start time and reference ID # 64698546. A live webcast will also be available on the investor relations portion of National Holdings' website at http://www.nhldcorp.com/investors.aspx.
If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion and available through May 20, 2013. The teleconference replay can be accessed by dialing (404) 537-3406 (domestic and international) and entering the ID# 64698546. A webcast replay will also be available on the investor relations portion of National Holdings' website at http://www.nhldcorp.com/investors.aspx.
About National Holdings Corporation
National Holdings Corporation is a full-service investment banking and asset management firm that provides a range of services, including independent retail brokerage and advisory services, investment banking, institutional sales and trading and equity research, to corporations, institutional investors and high-net-worth clients. With over 1,000 Independent advisors, brokers, traders and sales associates, the Company is a leading Independent Advisor and Broker services company. National Holdings operates through four subsidiaries: National Securities Corporation, vFinance Investments, Inc., National Insurance Corporation and National Asset Management, Inc. The Company was founded in 1947 and is headquartered in New York and Florida. For more information, visit www.nhldcorp.com.
Safe Harbor Statements
This release contains forward-looking statements within the meaning of the federal securities laws. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Information on significant potential risks and uncertainties that may also cause differences includes, but is not limited to, those mentioned by National Holdings from time to time in their filings with the SEC. The words "may," "will," "believe," "estimate," "expect," "plan," "intend," "project," "anticipate," "could," "would," "should," "seek," "continue," "pursue" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. National Holdings undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may be disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K and in or periodic reports on Form 10-Q, and, therefore, readers should not place undue reliance on these forward-looking statements.
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||
ASSETS | |||||||||
March 31, | September 30, | ||||||||
2013 | 2012 | ||||||||
Current Assets | (Unaudited) | (Audited) | |||||||
Cash and cash equivalents | $ | 13,496,000 | $ | 7,934,000 | |||||
Deposit with clearing organizations | 1,107,000 | 1,107,000 | |||||||
Receivables from broker-dealers and clearing organizations | 3,572,000 | 3,650,000 | |||||||
Other receivables, net of allowance for uncollectible accounts | 747,000 | 147,000 | |||||||
Advances to registered representatives - Current portion | 215,000 | 249,000 | |||||||
Securities owned: marketable - at market value | 2,072,000 | 696,000 | |||||||
Securities owned: non-marketable - at fair value | 423,000 | 56,000 | |||||||
Other assets | 907,000 | 520,000 | |||||||
Total Current Assets | 22,539,000 | 14,359,000 | |||||||
Advances to registered representatives - Long term portion | 531,000 | 641,000 | |||||||
Fixed assets, net | 474,000 | 662,000 | |||||||
Intangible assets, net | 155,000 | 466,000 | |||||||
Other assets | 155,000 | 461,000 | |||||||
Total Assets | $ | 23,854,000 | $ | 16,589,000 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||
Current Liabilities | |||||||||
Accounts payable, accrued expenses and other liabilities | $ | 12,421,000 | $ | 11,297,000 | |||||
Payable to broker-dealers and clearing organizations | 13,000 | 119,000 | |||||||
Securities sold, but not yet purchased, at market | 213,000 | 1,000 | |||||||
Convertible notes payable | - | 6,800,000 | |||||||
Subordinated borrowings - Related party | - | 1,000,000 | |||||||
Total Current Liabilities | 12,647,000 | 19,217,000 | |||||||
Accrued expenses and other liabilities - Long term portion | 236,000 | 263,000 | |||||||
Total Liabilities | 12,883,000 | 19,480,000 | |||||||
National Holdings Corporation Stockholders' Equity (Deficit) | |||||||||
Series C and D, convertible preferred stock, $0.01 par value, 10,000,000 shares | |||||||||
authorized, 0 issued and outstanding at March 31, 2013 and 94,169 at September 30, 2012 | - | 6,156,000 | |||||||
Common stock, $.02 par value, 150,000,000 shares authorized; | |||||||||
89,016,988 and 26,567,193 shares issued and outstanding at March 31, 2013 and | |||||||||
September 30, 2012 | 1,780,000 | 531,000 | |||||||
Additional paid-in capital | 64,496,000 | 46,184,000 | |||||||
Accumulated deficit | (55,326,000 | ) | (55,780,000 | ) | |||||
Total National Holdings Corporation Stockholders' Equity (Deficit) | 10,950,000 | (2,909,000 | ) | ||||||
Non Controlling Interest | 21,000 | 18,000 | |||||||
Total Stockholders' Equity (Deficit) | 10,971,000 | (2,891,000 | ) | ||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 23,854,000 | $ | 16,589,000 | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements. | |||||||||
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three-month Period Ended | Six-month Period Ended | |||||||||||||||||
March 31, | March 31, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
Revenues | ||||||||||||||||||
Commissions | $ | 20,769,000 | $ | 20,484,000 | $ | 36,809,000 | $ | 33,687,000 | ||||||||||
Net dealer inventory gains | 4,310,000 | 3,686,000 | 6,912,000 | 6,762,000 | ||||||||||||||
Investment banking | 2,334,000 | 4,232,000 | 4,389,000 | 8,987,000 | ||||||||||||||
Interest and dividends | 1,004,000 | 663,000 | 2,050,000 | 1,366,000 | ||||||||||||||
Transfer fees and clearing services | 2,033,000 | 2,141,000 | 4,040,000 | 3,971,000 | ||||||||||||||
Investment advisory fees and other income | 2,499,000 | 2,003,000 | 5,193,000 | 3,835,000 | ||||||||||||||
Total Revenues | 32,949,000 | 33,209,000 | 59,393,000 | 58,608,000 | ||||||||||||||
Operating Expenses | ||||||||||||||||||
Commissions, compensation and fees | 28,329,000 | 29,682,000 | 51,164,000 | 52,412,000 | ||||||||||||||
Clearing fees | 575,000 | 374,000 | 997,000 | 834,000 | ||||||||||||||
Communications | 1,149,000 | 1,162,000 | 2,267,000 | 2,362,000 | ||||||||||||||
Occupancy, equipment and other administrative costs | 981,000 | 1,345,000 | 1,754,000 | 2,206,000 | ||||||||||||||
Professional fees | 764,000 | 643,000 | 1,535,000 | 1,174,000 | ||||||||||||||
Interest | 66,000 | 276,000 | 230,000 | 552,000 | ||||||||||||||
Taxes, licenses, registration | 369,000 | 440,000 | 777,000 | 803,000 | ||||||||||||||
Total Operating Expenses | 32,233,000 | 33,922,000 | 58,724,000 | 60,343,000 | ||||||||||||||
Net Income (Loss) from Operations | 716,000 | (713,000 | ) | 669,000 | (1,735,000 | ) | ||||||||||||
Other Expenses | ||||||||||||||||||
Loss on disposition of unconsolidated joint venture | - | (1,051,000 | ) | - | (1,051,000 | ) | ||||||||||||
Loss on investment in unaffiliated entity | (162,000 | ) | - | (162,000 | ) | - | ||||||||||||
Income tax expense - Current | (60,000 | ) | - | (60,000 | ) | - | ||||||||||||
Total Other Expenses | (222,000 | ) | (1,051,000 | ) | (222,000 | ) | (1,051,000 | ) | ||||||||||
Net income (loss) before non-controlling interest | 494,000 | (1,764,000 | ) | 447,000 | (2,786,000 | ) | ||||||||||||
Non-controlling interest | - | 4,000 | 7,000 | 17,000 | ||||||||||||||
Net income (loss) | 494,000 | (1,760,000 | ) | 454,000 | (2,769,000 | ) | ||||||||||||
Preferred stock dividends | - | - | - | (93,000 | ) | |||||||||||||
Net income (loss) attributable to common stockholders | $ | 494,000 | $ | (1,760,000 | ) | $ | 454,000 | $ | (2,862,000 | ) | ||||||||
Diluted: | ||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 0.01 | $ | (0.07 | ) | $ | 0.01 | $ | (0.12 | ) | ||||||||
Net income (loss) attributable to common stockholders: Diluted | $ | 0.01 | $ | (0.07 | ) | $ | 0.01 | $ | (0.12 | ) | ||||||||
Weighted average number of shares outstanding: Basic | 72,232,218 | 26,088,530 | 49,289,601 | 23,855,581 | ||||||||||||||
Weighted average number of shares outstanding: Diluted | 74,743,336 | 26,088,530 | 55,324,608 | 23,855,581 | ||||||||||||||
