Investors Capital Holdings, Ltd. (NYSE Amex: ICH), a financial services holding company, posted first quarter total revenues of $20.94 million for the period ended June 30, 2010 (“the quarter”) compared to total revenues of $18.61 million for the prior period (quarter ended June 30, 2009). The firm posted a net loss for the quarter of $0.01 million compared to net income of $0.05 million for the prior period.

Adjusted EBITDA was $0.11 million for the quarter compared to $0.54 million for the prior period. Adjusted EBITDA, described below, is a key metric utilized by the firm in evaluating its financial performance.

Total revenue increased $2.3 million, or 12.5%, to $20.94 million, reflecting a rebound in investor confidence since the low point of the recent recession. Commission revenue, which accounts for 81.2% of total revenue, increased 8.2% to $16.99 million. Advisory fees, which account for 16.3% of total revenue jumped 40.4% to $3.41 million.

The rise in the Company’s advisory revenue reflects an increase in assets under management due to rising markets and additional investor contributions. Advisory services are delivered through Investors Capital Advisory Services (ICA), the investment advisory division of Investors Capital Corporation (ICC), ICH’s wholly-owned broker-dealer and registered investment advisor subsidiary.

Investors Capital continues to benefit from improving the overall quality of its registered representatives, a key component of its strategy for achieving growth in revenues and net income. The firm seeks to improve the quality of its representatives by helping them grow their practices, terminating representatives with low-production or quality of services, and recruiting more established, higher-quality representatives. The firm’s average revenue per representative, based on a rolling 12-month period, rose in the first quarter to $139,587, an increase of 17% over $119,270 for the prior period.

Investors Capital’s net capital position remained stable at $3.27 million for the quarter (an excess of $2.87 million) with a net capital ratio of 1.82 to 1. The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that ICC maintain net capital of $100,000 and a ratio of specified aggregate indebtedness to net capital (a “net capital ratio”) not to exceed 15 to 1.

“Investors Capital’s recruiting higher-quality advisors, our existing representatives are increasing their production, and we’re hiring more home office staff in expectation of future growth,” said Timothy B. Murphy, President and CEO of Investors Capital Holdings, Ltd. “In an environment where many of our competitors are struggling and some have even succumbed, Investors Capital continues to execute on its plan for achieving long-term prosperity.”

Adjusted EBITDA

Earnings before interest, taxes, depreciation and amortization (“EBITDA”), as adjusted by eliminating other non-cash expense, gains or losses on sales of assets, and various non-recurring items (“adjusted EBITDA”), is a key metric we use in evaluating our financial performance. Adjusted EBITDA eliminates 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 may be reconciled with net (loss) income as follows:
  Quarters Ended June 30,
2010   2009
 
Adjusted EBITDA: $ 107,530 $ 541,128
 
Adjustments to GAAP Net income (loss):
Income tax benefit 87,133 231,671
Interest expense (6,874 ) (10,580 )
Income tax expense (60,922 ) (470,273 )
Depreciation and amortization (91,270 ) (88,142 )
Non-cash compensation (46,387 ) (68,783 )
Non-recurring professional fees to evaluate strategic business opportunities 0 (83,485 )
   
Net income (loss) $ (10,790 )   $ 51,536  
 

About Investors Capital Holdings, Ltd.:

Investors Capital Holdings, Ltd. (NYSE Amex: 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 premier, concierge-level service and support to our valued registered representatives, including advisory programs, strategic practice management and marketing services, and technology, to help them grow their businesses and exceed their clients’ expectations. 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., 230 Broadway, Lynnfield, Massachusetts 01940, Distributor.
INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
   
June 30, 2010 March 31, 2010
Assets
Current Assets
Cash and cash equivalents $ 5,729,854 $ 5,812,865
Deposit with clearing organization, restricted 175,000 175,000
Accounts receivable 4,831,567 6,042,188
Note receivable - (current) 109,859 140,598
Loans receivable from registered representatives (current), net of allowance 716,924 769,263
Prepaid income taxes 592,548 559,007
Securities owned at fair value 2,862 57,933
Investments 50,000 50,000
Prepaid expenses   1,179,781     957,674  
13,388,395 14,564,528
 
Property and equipment, net 688,909 774,182
Long Term Investments
Loans receivable from registered representatives 314,922 292,884
Note receivable 595,000 595,000
Investments 171,972 184,319
Non-qualified deferred compensation investment 858,816 929,897
Cash surrender value life insurance policies   558,664     551,398  
2,499,374 2,553,498
Other Assets
Other assets 23,121 25,069
Deferred tax asset, net 838,400 838,773
Capitalized software, net   126,988     138,497  
988,509 1,002,339
 
TOTAL ASSETS $ 17,565,187   $ 18,894,547  
 
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 815,687 $ 817,761
Accrued expenses 2,048,286 2,358,656
Commissions payable 2,748,740 3,488,415
Notes payable 737,651 1,130,922
Unearned revenues 110,221 101,931
Securities sold, not yet purchased, at fair value   74,770     5,693  
6,535,355 7,903,378

Long-Term Liabilities
Non-qualified deferred compensation plan   809,148     793,735  
809,148 793,735

Total liabilities
  7,344,503     8,697,113  
Stockholders' Equity:

Common stock, $.01 par value, 10,000,000 shares authorized; 6,595,016 issued and 6,591,131 outstanding at June 30, 2010; 6,595,804 issued and 6,591,919 outstanding at March 31, 2010
65,950 65,958
Additional paid-in capital 12,142,257 12,095,862
Accumulated deficit (1,974,874 ) (1,964,084 )
Less: Treasury stock, 3,885 shares at cost (30,135 ) (30,135 )
Accumulated other comprehensive income   17,486     29,833  
Total stockholders' equity   10,220,684     10,197,434  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,565,187   $ 18,894,547  
 
INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED)
   
 
 
2010 2009
Revenue:
Commissions $ 16,994,941 $ 15,712,809
Advisory fees 3,414,729 2,432,188
Other fee income 190,183 141,677
Other revenue   342,120     328,161
Total revenue 20,941,973 18,614,835
 
Expenses:
Commissions and advisory fees 16,524,227 14,377,819
Compensation and benefits 2,009,067 1,671,936
Regulatory, legal and professional services 804,873 615,624
Brokerage, clearing and exchange fees 591,187 678,665
Technology and communications 308,831 247,490
Marketing and promotion 334,227 197,908
Occupancy and equipment 214,837 229,116
Other administrative 184,851 295,559
Interest   6,874     10,580
Total operating expenses   20,978,974     18,324,697
 
Operating income (loss) (37,001 ) 290,138
 
(Benefit) provision for income taxes   (26,211 )   238,602
 
Net (loss) income $ (10,790 ) $ 51,536
 
 
Basic and diluted net (loss) income per share $ (0.00 ) $ 0.01
 
 

Shares used in basic and diluted per share calculations
  6,541,129     6,483,690
 

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