Investors Capital Holdings Reports First Quarter Profit

LYNNFIELD, Mass., Aug. 14, 2012 (GLOBE NEWSWIRE) -- Investors Capital Holdings, Ltd. (NYSE Amex:ICH) (the "Company"), a financial services holding company, posted first quarter net income of $0.26 million on total revenue of $20.80 million for the period ended June 30, 2012 (the "quarter end"). Specific expense reduction initiatives implemented during the fourth quarter of the prior fiscal year translated into reduced operating costs across nearly all expense-related categories, resulting in both operating and net income in the first quarter of the new fiscal year. Investors Capital Holdings, Ltd. operates primarily through its wholly-owned subsidiary, Investors Capital Corporation ("ICC"), a dually registered broker-dealer and investment advisory firm.

Total revenue decreased 3.0% to $20.80 million compared to revenue of $21.44 million for the quarter ended June 30, 2011 (the "prior period"). The decline was due to a reduction in commission revenue, which accounts for 77.3% of total revenue. Commission revenue fell 4.9% to $16.09 million, compared to $16.92 million in the prior period, due to lower trading volume resulting from cautious investor sentiment brought on by fluctuating, uncertain market conditions. Advisory fees, which comprise 19.8% of total revenue, remained fairly consistent with the prior period, declining 1.7% to $4.11 million, compared to $4.18 million in the prior period.

Total expenses fell $1.91 million or 8.6%, declining in every expense-related category, resulting in operating income of $0.45 million compared to an operating loss of $0.82 million for the prior period and net income of $0.26 million for the quarter compared to a net loss of $1.26 million for the prior period. Net profit was the result of decreases in the Company's core expense run rate from cost-management opportunities along with completion of non-recurring expenses related to the S-3 offering filed in the prior period.

Investors Capital continues to benefit from enhancing the overall quality of its representatives by providing broad practice management solutions to assist its advisors in growing their practices 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 $169,934, an increase of 5.6% over $160,943 for the prior rolling 12-month period.

Adjusted EBITDA was $0.58 million compared to negative $0.35 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 am excited that we were able to return to profitability while sustaining our recruiting efforts, technology initiatives, practice management program, and addressing growing compliance requirements," said Timothy B. Murphy, President and CEO of Investors Capital Holdings, Ltd. "Despite the ongoing challenges in the current marketplace, our steadfast focus continues to be executing our strategy of growing top-line revenues and increasing profitability, while delivering 5-Star Service to our advisors every day."

Murphy adds: "Most importantly, I'm proud of the teamwork, solidarity, and esprit de corps displayed by our home office staff, advisors, and board of directors over the past year in getting to this point. I draw my confidence from the well of their conviction."

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 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 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., 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 SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
  June 30, 2012 March 31, 2012
Assets    
Current Assets    
Cash and cash equivalents $ 4,220,065  $ 4,537,713 
Deposit with clearing organization, restricted  175,000   175,000 
Accounts receivable  4,870,358   4,525,157 
Loans receivable from registered representatives (current), net of allowance  620,558   654,560 
Prepaid income taxes  217,173   137,658 
Securities owned at fair value  223,700   235,454 
Prepaid expenses  705,161   674,780 
   11,032,015   10,940,322 
     
Property and equipment, net  279,708   340,007 
     
Long Term Investments    
Loans receivable from registered representatives  948,312   1,002,621 
Non-qualified deferred compensation investment  1,397,450   1,327,806 
Cash surrender value life insurance policies  150,775   157,991 
   2,496,537   2,488,418 
Other Assets    
Deferred tax asset, net  1,283,155   1,550,010 
Capitalized software, net  152,221   172,240 
   1,435,376   1,722,250 
     
TOTAL ASSETS $ 15,243,637 $ 15,490,997
     
Liabilities and Stockholders' Equity    
Current Liabilities    
Accounts payable $ 835,989  $ 820,540 
Accrued expenses  1,487,257   1,408,324 
Commissions payable  2,750,427   2,787,467 
Notes payable  932,425   1,605,688 
Unearned revenues  138,276   146,198 
Securities sold, not yet purchased, at fair value  11,705   8,186 
   6,156,079   6,776,403 
Long-Term Liabilities    
Non-qualified deferred compensation plan  1,526,464   1,458,169 
   1,526,464   1,458,169 
     
Total liabilities  7,682,543   8,234,572 
     
     
Stockholders' Equity:    
Common stock, $.01 par value, 10,000,000 shares authorized; 6,684,823 issued and 6,680,938 outstanding at June 30, 2012 6,689,009 issued and 6,685,124 outstanding at March 31, 2012  66,848   66,890 
Additional paid-in capital  12,468,742   12,425,713 
Accumulated deficit  (4,944,361)  (5,206,043)
Less: Treasury stock, 3,885 shares at cost  (30,135)  (30,135)
Total stockholders' equity  7,561,094   7,256,425 
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,243,637  $ 15,490,997 
 
 
INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
  THREE MONTHS ENDED
  June 30,
  2012 2011
Revenue:    
Commissions $16,088,506 $16,916,508
Advisory fees  4,110,673  4,183,052
Other fee income  339,103  103,393
Other revenue  264,243  239,773
Total revenue  20,802,525  21,442,726
     
Expenses:    
Commissions and advisory fees  16,610,153  17,094,637
Compensation and benefits  1,579,260  2,103,025
Regulatory, legal and professional services  875,632  1,275,790
Brokerage, clearing and exchange fees  338,101  505,460
Technology and communications  296,978  368,832
Marketing and promotion  241,273  307,018
Occupancy and equipment  186,108  235,411
Other administrative  217,030  360,771
Interest  8,968  7,944
Total operating expenses  20,353,503  22,258,888
     
Operating income (loss)  449,022  (816,162)
     
Provision for income taxes 187,340 439,547
     
Net income (loss) $261,682  $ (1,255,709)
     
Basic and diluted net income (loss) per share $0.04  $ (0.19)
     
Weighted Average Shares used in basic per share calculations 6,615,650 6,585,174
     
Weighted Average Shares used in diluted per share calculations 6,750,743 6,585,174

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,
  2012 2011
     
Adjusted EBITDA:  $ 583,998  $ (352,390)
     
Adjustments to conform Adjusted EBITDA to GAAP Net income (loss):    
Income tax provision  (187,340)  (439,547)
Interest expense  (8,968) (7,944)
Depreciation and amortization  (83,021) (108,468)
Non-cash compensation  (42,987)  (48,069)
Non-recurring professional fees  --  (299,291)
     
Net income (loss)  $ 261,682  $ (1,255,709)
CONTACT: Robert Foney, Chief Marketing Officer         781.477.4814         rfoney@investorscapital.com         www.investorscapital.com

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