Investors Capital Holdings Reports Revenue and Net Income Growth in Year-End Results

Investors Capital Holdings Reports Revenue and Net Income Growth in Year-End Results

Focus on retention, recruiting, recurring revenues, practice management, and 5-Star Service every day results in revenue growth and increased profits.

LYNNFIELD, Mass.--(BUSINESS WIRE)-- Investors Capital Holdings, Ltd. (NYSE MKT: ICH, the "Company"), a financial services holding company, posted net income of $0.37 million on total revenue of $84.89 million for the fiscal year ended March 31, 2013 (the "year end"). Investors Capital Holdings, Ltd. operates primarily through its wholly-owned subsidiary, Investors Capital Corporation ("ICC"), a dually registered broker-dealer and investment advisory firm.

Timothy B. Murphy, President & CEO, Investors Capital Corporation and Investors Capital Holdings, Lt ...
Timothy B. Murphy, President & CEO, Investors Capital Corporation and Investors Capital Holdings, Lt ...

Timothy B. Murphy, President & CEO, Investors Capital Corporation and Investors Capital Holdings, Ltd. (Photo: Business Wire)


Total revenue increased 4.7% to $84.89 million compared to total revenue of $81.04 million for the fiscal year ended March 31, 2012 (the "prior period"). The recruitment of higher-producing registered representatives, improved financial markets, rising recurring revenues, and an increase in other fee income all combined to create a profitable year.

Commission revenue rose 3.4% to $65.58 million, compared to $63.44 million in the prior period. Increased sales of mutual funds, variable annuities, and other investment products pushed commission revenue higher. Advisory fees also rose, increasing 2.8% to $16.41 million, compared to $15.96 million in the prior period. Asset value growth, increases in investment contributions as well as more advisors conducting advisory business led to the increase in advisory fee revenue.

Total expenses increased slightly: increases in commissions and advisory fees paid to registered representatives and regulatory, legal, and professional fees were offset by decreases in compensation and benefits, brokerage and commissions, and occupancy and equipment. Expenses rose 0.7% to $84.30 million compared to $83.70 million for the prior period.

The company reported operating income of $0.59 million compared to an operating loss of $2.66 million for the prior period. Net income was $0.37 million for the fiscal year compared to a net loss of $2.33 million for the prior period. The firm's profitability was due to an increase in other fee income as well as rebounding financial markets.

Investors Capital continues to benefit from enhancing the overall quality of its representatives by providing broad practice management, marketing, and technology solutions to assist its advisors in growing their practices as well as 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 fiscal year to $190,201, an increase of 8.1% over $175,877 for the prior rolling 12-month period.

The firm made several strategic moves and introduced numerous corporate initiatives designed to enhance organic revenue growth by helping its registered representatives increase their individual production:

  • Investors Capital awarded advisors who achieved year-over-year growth from 2011 to 2012 a growth rebate of some or all of their monthly CapitalCONNECT Core bundle technology fees. CapitalCONNECT, the firm's suite of technology tools designed to help advisors increase their efficiency, productivity and, ultimately, revenue, growth, and profitability. The suite includes data aggregation and performance reporting software, marketing tools, industry research and product analysis tools, ICC's proprietary workflow software, Transparency, CRM, and more.

  • The Brand It Symposium is a 2-day marketing and branding symposium held three times per year to assist representatives with properly marketing and branding their businesses.

  • Investors Capital added staff to its Practice Management department to provide representatives with one-on-one coaching and consulting, robust online self-serve tools, high-end marketing collateral, and other business growth resources.

Adjusted EBITDA was $1.11 million compared to negative $0.78 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.

"By continually focusing on the retention of and respect for our existing representatives, implementing new practice management and technology initiatives, providing 5-Star Service every day, and recruiting quality, high-producing, successful representatives, we can attain the organic and new growth necessary to achieve our goal of doubling the size of the firm in four years," said Tim Murphy, President and CEO of Investors Capital Holdings, Ltd.

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 broker/dealer and investment advisor subsidiary, Investors Capital Corporation (ICC). 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, exceed their clients' expectations, and achieve success. Business units include Investors Capital Corporation, ICC Insurance Agency, Inc., and Investors Capital Holdings Securities Corporation. For more information, please call (800) 949-1422 x4814 or visit www.investorscapital.com.

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., Six Kimball Lane, Lynnfield, Massachusetts 01940, Distributor.

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2013

March 31, 2012

Assets

Current Assets

Cash and cash equivalents

$

6,589,698

$

4,537,713

Deposit with clearing organization, restricted

175,000

175,000

Accounts receivable

7,160,553

4,525,157

Loans receivable from registered representatives (current), net of allowance

593,730

654,560

Prepaid income taxes

136,972

137,658

Securities owned at fair value

258,903

235,454

Prepaid expenses

722,427

674,780

15,637,283

10,940,322

Property and equipment, net

194,446

340,007

Long Term Investments

Loans receivable from registered representatives

893,703

1,002,621

Non-qualified deferred compensation investment

1,771,044

1,327,806

Cash surrender value life insurance policies

176,402

157,991

2,841,149

2,488,418

Other Assets

Deferred tax asset, net

1,059,480

1,550,010

Capitalized software, net

107,590

172,240

Other assets

56,704

-

1,223,774

1,722,250

TOTAL ASSETS

$

19,896,652

$

15,490,997

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable

$

1,327,691

$

820,540

Accrued expenses

1,818,379

1,408,324

Commissions payable

3,279,921

2,787,467

Notes payable

1,488,876

1,605,688

Unearned revenues

188,651

146,198

Securities sold, not yet purchased, at fair value

28,946

8,186

8,132,464

6,776,403

Long-Term Liabilities

Non-qualified deferred compensation plan

1,968,691

1,458,169

Subordinated borrowings

2,000,000

-

3,968,691

1,458,169

Total liabilities

12,101,155

8,234,572

Commitments and contingencies (Note 16)

Stockholders' Equity:

Common stock, $.01 par value, 10,000,000 shares authorized;

7,101,427 issued and 7,097,542 outstanding at March 31, 2013

6,689,009 issued and 6,685,124 outstanding at March 31, 2012

71,013

66,890

Additional paid-in capital

12,594,370

12,425,713

Accumulated deficit

(4,839,751

)

(5,206,043

)

Less: Treasury stock, 3,885 shares at cost

(30,135

)

(30,135

)

Total stockholders' equity

7,795,497

7,256,425

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

19,896,652

$

15,490,997

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

YEARS ENDED

March 31,

2013

2012

Revenue:

Commissions

$

65,577,806

$

63,444,938

Advisory fees

16,409,330

15,958,497

Other fee income

1,701,482

620,595

Other revenue

1,196,772

1,016,732

Total revenue

84,885,390

81,040,762

Expenses:

Commissions and advisory fees

67,378,564

64,775,584

Compensation and benefits

6,535,007

8,744,917

Regulatory, legal and professional services

4,833,915

3,979,808

Brokerage, clearing and exchange fees

1,404,075

1,790,263

Technology and communications

1,300,652

1,335,373

Advertising, marketing and promotion

917,181

956,234

Occupancy and equipment

694,326

864,431

Other administrative

1,204,994

1,219,856

Interest

30,668

37,361

Total operating expenses

84,299,382

83,703,827

Operating income (loss)

586,008

(2,663,065

)

Provision (benefit) for income taxes

219,716

(331,236

)

Net income (loss)

$

366,292

$

(2,331,829

)

Other comprehensive income (loss):

Unrealized gains (losses) on securities

Unrealized holding loss arising during period on investment securities

-

(3,824

)

Less: Reclassification adjustment for gains included in net loss

-

(52,893

)

Other Comprehensive income (loss)

$

-

$

(56,717

)

Comprehensive income

366,292

(2,388,546

)

Basic net income (loss) per share

$

0.06

$

(0.36

)

Diluted net income (loss) per share

$

0.06

$

(0.36

)

Shares used in basic per share calculations

6,219,022

6,520,025

Shares used in diluted per share calculations

6,522,764

6,520,025

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:

Year Ended March 31,

2013

2012

Adjusted EBITDA:

$

1,110,687

$

(776,780

)

Adjustments to conform Adjusted EBITDA to

GAAP Net income (loss):

Income tax provision

(219,716

)

331,236

Interest expense

(30,668

)

(37,361

)

Depreciation and amortization

(321,231

)

(380,139

)

Non-cash compensation for transfer of

beneficial interest to former Chairman

-

(568,095

)

Non-cash compensation

(172,780

)

(147,040

)

Non-recurring professional fees

-

(753,650

)

Net income (loss)

$

366,292

$

(2,331,829

)

Photos/Multimedia Gallery Available:http://www.businesswire.com/multimedia/home/20130621005413/en/



Investors Capital Holdings, Ltd.
Robert Foney, 781-477-4814
Chief Marketing Officer
rfoney@investorscapital.com
www.investorscapital.com

KEYWORDS: United States North America Massachusetts

INDUSTRY KEYWORDS:

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