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Ladenburg Thalmann Reports First Quarter Results

Ladenburg Thalmann Financial Services Inc. (AMEX: LTS) today announced financial results for the quarter ended March 31, 2012.

First quarter 2012 revenues were $154.7 million, a 170% increase from revenues of $57.2 million in the first quarter of 2011. Net loss for the first quarter was $3.0 million, or $(0.02) per basic and diluted share, as compared to net income of $0.4 million, or $0.00 per basic and diluted share, in the comparable 2011 period. EBITDA, as adjusted, for the three months ended March 31, 2012 was $5.3 million, an increase from EBITDA, as adjusted, of $3.4 million for the 2011 period. The first quarter 2012 results included approximately $4.6 million due to amortization of intangible assets acquired in the November 4, 2011 Securities America acquisition and retention loans and non-cash compensation for option grants to Securities America employees and financial advisors. Interest expense was approximately $6.1 million in the first quarter of 2012, including $4.2 million of interest expense for indebtedness incurred in connection with the Securities America acquisition. The foregoing amounts were offset in part by a $5.6 million gain from a change in the fair value of contingent consideration for the Securities America acquisition. The first quarter 2011 results included $1.9 million of non-cash charges for depreciation, amortization and compensation expense and interest expense of $0.8 million.

The following table presents a reconciliation of EBITDA, as adjusted, to net (loss) income as reported.

    Three months ended

March 31,

(in thousands)

2012

 

2011

(unaudited)
Total revenues $ 154,715 $ 57,202
Total expenses 162,641 56,447
Pre-tax (loss) income (2,371 ) 755
Net (loss) income (2,979 ) 409
 
Reconciliation of EBITDA, as adjusted, to net (loss) income:
 
EBITDA, as adjusted $ 5,308 $ 3,418
Add:
Interest income 44 15
Change in fair value of contingent consideration 5,555
Less:
Interest expense (6,060 ) (828 )
Income tax expense (608 ) (346 )
Depreciation and amortization (4,063 ) (893 )
Non-cash compensation (1,364 ) (957 )
Amortization of retention loans   (1,791 )      
Net (loss) income $ (2,979 ) $ 409  
 

Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for change in fair value of contingent consideration, non-cash compensation expense and interest expense is a key metric the Company uses in evaluating its financial performance. 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. The Company considers EBITDA, as adjusted, important in evaluating its financial performance on a consistent basis across various periods. Due to the significance of non-cash and non-recurring items, EBITDA, as adjusted, enables the Company’s Board of Directors and management to monitor and evaluate the business on a consistent basis. The Company uses EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions. The Company believes that EBITDA, as adjusted, eliminates items that are not indicative of its core operating performance, such as change in fair value of contingent consideration and amortization of retention loans made in connection with the Securities America acquisition, or do not involve a cash outlay, such as stock-related compensation. The presentation of EBITDA, as adjusted, should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items or by non-cash items, such as non-cash compensation, which is expected to remain a key element in its long-term incentive compensation program. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.

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