Investors Capital Holdings Posts Solid Quarterly Revenue Growth

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 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., 230 Broadway, Lynnfield, Massachusetts 01940, Distributor.

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2013

March 31, 2013

Assets

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

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

18,875,191

$

19,896,652

INVESTORS CAPITAL HOLDINGS, LTD. AND

SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS ENDED

June 30,

2013

2012

Revenue:

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

Expenses:

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

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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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