National Holdings Corporation Reports Fiscal Third Quarter 2013 Results
National Holdings Corporation Reports Fiscal Third Quarter 2013 Results
Business continues to gain momentum with two consecutive quarters of net income and six consecutive quarters of EBITDA
Year to date net income of $1.3 million compared with a net loss of $2.2 million in the same period last year
Announced definitive agreement to acquire Gilman Ciocia in June 2013
NEW YORK--(BUSINESS WIRE)-- National Holdings Corporation (OTC BB: NHLD) ("National Holdings" or the "Company"), a full-service investment banking and asset management firm, today announced financial results for the Company's fiscal third quarter and nine months ended June 30, 2013.
Fiscal Third Quarter and Year-to-Date Highlights
Increased revenues by approximately 5% to $32.7 million, compared with revenues of $31.1 million in the prior year quarter
Generated net income of $0.8 million, or $0.01 per diluted share and $1.3 million, or $0.02 per diluted share for the fiscal third quarter and nine months ended June 30, 2013, compared with $0.7 million, or $0.02 per diluted share and a loss of $2.2 million, or $0.09 per diluted share for the same periods last year
Reported Adjusted EBITDA, a non-GAAP measure, of $1.2 million and $2.9 million for the fiscal third quarter and nine months ended June 30, 2013, compared with $1.2 million and $1.3 million for the same periods last year
Signed a definitive agreement to acquire Gilman Ciocia in a stock transaction, which will further strengthen National Holdings' retail brokerage and enhances the Company's platform in the area of financial planning services and tax preparation
Mark D. Klein, National Holdings' Chief Executive Officer and Co-Executive Chairman, commented, "We achieved revenue growth of approximately 5%, net income of $0.8 million and our sixth consecutive quarter of EBITDA. The Company's strong performance supports our ongoing business strategy focused on enhancing revenues and improving profitability through shifting to higher margin products and reducing costs. We also signed a definitive agreement to acquire Gilman Ciocia, which we expect to increase our retail brokerage operations to more than 825 registered representatives and expand our products and service offerings. Looking back on a pro forma trailing twelve-month basis, our combined revenues would have been approximately 31% higher with a significantly enhanced adjusted EBITDA. With ample cash and no debt, we remain well positioned financially as we execute our strategy to further expand our business across the retail brokerage, investment banking and institutional sales and market making platforms."
Fiscal Third Quarter 2013 Financial Review
National Holdings reported fiscal third quarter 2013 total revenue of $32.7 million, an increase of 5% from revenue of $31.1 million reported in the fiscal third quarter of 2012.
Operating expenses were $31.9 million in the third fiscal quarter of 2013. This represents a $1.4 million, or 4% increase in expenses, compared with $30.4 million in the fiscal third quarter of 2012. The increase in expenses was consistent with higher revenues, due primarily to higher commissions, offset by reductions in other expenses and an improvement of approximately 50 basis points in contribution margin.
The Company uses Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA to provide greater clarity regarding the operating performance of the business by removing non operating expenses such as Interest, taxes, depreciation and amortization as well as, amortization of forgivable loans and other one- time expenses as it deems appropriate to evaluate the operating performance of the Company, as defined in the Non-GAAP Financial Measures section below. On this basis, National Holdings reported fiscal third quarter 2013 Adjusted EBITDA of $1.2 million, compared with $1.2 million also reported in the fiscal third quarter of 2012.
On a GAAP basis, net income for the fiscal third quarter was $0.8 million, or $0.01 per basic and diluted share, compared with net income of $0.7 million, or $0.03 per basic and $0.02 per share diluted, in the fiscal third quarter of 2012.
Nine Months Ended June 30, 2013 Financial Review
National Holdings reported 2013 year-to-date revenue of $92.1 million, an increase of 3% over year-to-date revenue of $89.7 million reported in 2012.
Operating expenses were $90.6 million for the nine months ended June 30, 2013. This represents a decrease of $183,000, compared with $90.8 million for the same nine months in 2012, despite the 3% increase in revenues. The decrease was primarily a result of an improvement of approximately 300 basis points in contribution margin combined with the Company's continued concentration on managing expenses and increasing efficiencies within its brokerage operations, as well as other cost reductions in occupancy and equipment rental costs.
Adjusted EBITDA increased to $2.9 million in the nine months ended June 30, 2013, compared with EBITDA of $1.3 million in the nine months ended June 30, 2012.
On a GAAP basis, net income for the nine months ended June 30, 2013 was $1.3 million, or $0.02 per basic and diluted share, compared with a net loss of $2.2 million, or $0.09 per basic and diluted share in 2012.
Balance Sheet
As of June 30, 2013, National Holdings had $14.7 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.
Conference Call
National Holdings will host a conference call to discuss its fiscal third quarter 2013 earnings results on Tuesday, August 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 # 28973372.
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 August 20, 2013. The teleconference replay can be accessed by dialing (404) 537-3406 (domestic and international) and entering the ID# 28973372. An audio file replay will also be available on the investor relations portion of National Holding's 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 | ||||||||||
June 30, | September 30, | |||||||||
2013 | 2012 | |||||||||
Current Assets | (Unaudited) | (Audited) | ||||||||
Cash and cash equivalents | $ | 14,696,000 | $ | 7,934,000 | ||||||
Deposit with clearing organizations | 1,107,000 | 1,107,000 | ||||||||
Receivables from broker-dealers and clearing organizations | 3,617,000 | 3,650,000 | ||||||||
Other receivables, net of allowance for uncollectible accounts | 842,000 | 147,000 | ||||||||
Advances to registered representatives - Current portion | 490,000 | 249,000 | ||||||||
Securities owned: marketable - at market value | 618,000 | 696,000 | ||||||||
Securities owned: non-marketable - at fair value | 297,000 | 56,000 | ||||||||
Other assets | 787,000 | 520,000 | ||||||||
Total Current Assets | 22,454,000 | 14,359,000 | ||||||||
Advances to registered representatives - Long term portion | 366,000 | 641,000 | ||||||||
Fixed assets, net | 431,000 | 662,000 | ||||||||
Intangible assets, net | 0 | 466,000 | ||||||||
Other assets - Long term portion | 180,000 | 461,000 | ||||||||
Total Assets | $ | 23,431,000 | $ | 16,589,000 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||
Current Liabilities | ||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 11,608,000 | $ | 11,297,000 | ||||||
Payable to broker-dealers and clearing organizations | 13,000 | 119,000 | ||||||||
Securities sold, but not yet purchased, at market | 11,000 | 1,000 | ||||||||
Convertible notes payable | - | 6,800,000 | ||||||||
Subordinated borrowings - Related party | - | 1,000,000 | ||||||||
Total Current Liabilities | 11,632,000 | 19,217,000 | ||||||||
Accrued expenses and other liabilities - Long term portion | 179,000 | 263,000 | ||||||||
Total Liabilities | 11,811,000 | 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 June 30, 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 June 30, 2013 and September 30, 2012 | 1,780,000 | 531,000 | ||||||||
Additional paid-in capital | 64,466,000 | 46,184,000 | ||||||||
Accumulated deficit | (54,647,000 | ) | (55,780,000 | ) | ||||||
Total National Holdings Corporation Stockholders' Equity (Deficit) | 11,599,000 | (2,909,000 | ) | |||||||
Non Controlling Interest | 21,000 | 18,000 | ||||||||
Total Stockholders' Equity (Deficit) | 11,620,000 | (2,891,000 | ) | |||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 23,431,000 | $ | 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 | Nine-Month Period Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
Revenues | ||||||||||||||||||
Commissions | $ | 19,799,000 | $ | 18,328,000 | $ | 56,608,000 | $ | 51,927,000 | ||||||||||
Net dealer inventory gains | 3,649,000 | 4,280,000 | 10,561,000 | 11,129,000 | ||||||||||||||
Investment banking | 4,105,000 | 3,897,000 | 8,494,000 | 12,884,000 | ||||||||||||||
Interest and dividends | 880,000 | 772,000 | 2,930,000 | 2,138,000 | ||||||||||||||
Transfer fees and clearing services | 1,810,000 | 1,658,000 | 5,850,000 | 5,629,000 | ||||||||||||||
Investment advisory fees and other income | 2,421,000 | 2,155,000 | 7,614,000 | 5,990,000 | ||||||||||||||
Total Revenues | 32,664,000 | 31,090,000 | 92,057,000 | 89,697,000 | ||||||||||||||
Operating Expenses | ||||||||||||||||||
Commissions, compensation and fees | 28,242,000 | 26,473,000 | 79,407,000 | 78,885,000 | ||||||||||||||
Clearing fees | 552,000 | 421,000 | 1,549,000 | 1,256,000 | ||||||||||||||
Communications | 1,174,000 | 1,157,000 | 3,437,000 | 3,519,000 | ||||||||||||||
Occupancy, equipment and other administrative costs | 663,000 | 972,000 | 2,417,000 | 3,178,000 | ||||||||||||||
Professional fees | 781,000 | 803,000 | 2,316,000 | 1,979,000 | ||||||||||||||
Interest | 10,000 | 213,000 | 240,000 | 764,000 | ||||||||||||||
Taxes, licenses, registration | 437,000 | 381,000 | 1,214,000 | 1,182,000 | ||||||||||||||
Total Operating Expenses | 31,859,000 | 30,420,000 | 90,580,000 | 90,763,000 | ||||||||||||||
Net Income (Loss) from Operations | 805,000 | 670,000 | 1,477,000 | (1,066,000 | ) | |||||||||||||
Other Expenses | ||||||||||||||||||
Loss on disposition of unconsolidated joint venture | - | - | - | (1,051,000 | ) | |||||||||||||
Loss on investment in unaffiliated entity | - | - | (162,000 | ) | - | |||||||||||||
Income tax expense - Current | - | - | (60,000 | ) | - | |||||||||||||
Total Other Expenses | - | - | (222,000 | ) | (1,051,000 | ) | ||||||||||||
Net income (loss) before non-controlling interest | 805,000 | 670,000 | 1,255,000 | (2,117,000 | ) | |||||||||||||
Non-controlling interest | - | 9,000 | (3,000 | ) | (8,000 | ) | ||||||||||||
Net income (loss) | 805,000 | 661,000 | 1,258,000 | (2,109,000 | ) | |||||||||||||
Preferred stock dividends | - | - | - | (93,000 | ) | |||||||||||||
Net income (loss) attributable to common stockholders | $ | 805,000 | $ | 661,000 | $ | 1,258,000 | $ | (2,202,000 | ) | |||||||||
Income (Loss) Per Common Share | ||||||||||||||||||
Net income (loss) attributable to common stockholders: Basic | $ | 0.01 | $ | 0.03 | $ | 0.02 | $ | (0.09 | ) | |||||||||
Net income (loss) attributable to common stockholders: Diluted | $ | 0.01 | $ | 0.02 | $ | 0.02 | $ | (0.09 | ) | |||||||||
Weighted average number of shares outstanding: Basic | 89,016,988 | 26,088,530 | ||||||||||||||||
