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 | ||||||||
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:
The article Investors Capital Holdings Posts Solid Quarterly Revenue Growth originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
