Investors Capital Holdings, Ltd. (NYSE MKT: ICH, the “Company”), a financial services holding Company, today announced financial results for its third quarter ended December 31, 2012. Continued expense reductions coupled with revenue growth translated into successive operating and net income for the first three quarters of the fiscal year ending March 31, 2013. Third Quarter Highlights:
- Revenue for the third quarter of fiscal year ending March 31, 2013 increased 9.10% to $20.77 million, as compared to $19.0 million in the third quarter of the prior period.
- Commissions revenue rose 7.7% to %15.5 million, compared to $14.40 million in the prior period.
- Advisory fees increased by 9.6% to $4.2 million, compared to $3.8 million in the prior period, as asset values grew.
- Operating income was $0.28 million compared to an operating loss of $0.01 million for the prior period. Specifically, total compensation and benefit expenses decreased by $0.55 million or 26.9% as the Company realigned expenses with top-line revenues and profit margins.
- Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) increased 67% to $0.40 million compared to $0.24 million the third quarter of the prior period. Adjusted EBITDA, a non-GAAP financial measure described below, is a key metric utilized by the Company in evaluating its financial performance.
- Net income was $0.13 million for the quarter compared to a net income of $0.43 million for the prior period attributed to an income tax benefit of $0.44 million.
- The Company’s average revenue per representative, based on a rolling 12-month period, rose at the end of the third quarter to approximately $180,000, an increase of 5.1% compared to approximately $170,000 for the prior rolling 12-month period.
- In March 2012, ICC launched its proprietary technology platform, CapitalCONNECT. Since then, we see a greater adoption rate for new offerings as our advisors are more efficiently leveraging technology to increase productivity. The Company followed that launch with an internal campaign providing customized advisor trainings on how to utilize the ever-expanding suite of technological tools available on CapitalCONNECT.
- Investors Capital practice management solutions expanded, and now includes Cannon Financial Institute’s Certified Wealth Strategist® (CWS) designation, one of the fastest growing certifications in our industry. Topics covered include effective wealth advising and retaining and expanding client relationships. This and other marketing services are designed to increase advisor productivity.
- ICC welcomed new advisors in many locations, including New England, Nevada and Texas, further strengthening and expanding our geographic footprint of advisors across the country.
- ICC’s Insurance Agency continues to expand its insurance contracting resources for Fixed and Indexed Annuity Sales, welcoming new IMO partners: Creative Marketing, DMI Marketing and Saybrus Partners.
- In December 2012, the Company relocated its Home Office, to new office space, continuing to reside in the town of Lynnfield, Massachusetts. This new office space will further enhance the Company’s business relationships and employee engagement.
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 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., and Investors Capital Holdings Securities Corporation. For more information, please call (800) 949-1422 x4814 or visit www.investorscapital.com. Investors Capital Holdings, Ltd., 6 Kimball Lane, Suite 150, Lynnfield, Massachusetts 01940 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions, including, but not limited to, the impact of the weakness in the U.S. and international economies on our business, our inability to manage our future growth effectively or profitably, fluctuations in our revenue and quarterly results, our license renewal rate, the impact of competition and our ability to maintain margins or market share, the limited market for our common stock, the volatility of the market price of our common stock, the performance of our products, our ability to respond to rapidly evolving technology and customer requirements, our ability to protect our proprietary technology, the security of our software, our dependence on our management team and key personnel, our ability to hire and retain future key personnel, or our ability to maintain an effective system of internal controls as well as other risks described in our filings with the Securities and Exchange Commission. Any of such risks could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. We expressly disclaim any obligation to update any forward-looking statement.
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)|
|December 31, 2012||March 31, 2012|
|Cash and cash equivalents||$||4,551,387||$||4,537,713|
|Deposit with clearing organization, restricted||175,000||175,000|
|Loans receivable from registered representatives (current), net of allowance||753,451||654,560|
|Prepaid income taxes||156,596||137,658|
|Securities owned at fair value||237,068||235,454|
|Property and equipment, net||226,703||340,007|
|Long Term Assets|
|Loans receivable from registered representatives||945,539||1,002,621|
|Non-qualified deferred compensation investment||1,630,676||1,327,806|
|Cash surrender value life insurance policies||162,213||157,991|
|Deferred tax asset, net||899,095||1,550,010|
|Capitalized software, net||107,425||172,240|
|Liabilities and Stockholders' Equity|
|Securities sold, not yet purchased, at fair value||-||8,186|
|Non-qualified deferred compensation plan||1,762,177||1,458,169|
|Common stock, $.01 par value, 10,000,000 shares authorized;6,681,748 issued and 6,677,863 outstanding at December 31, 20126,689,009 issued and 6,685,124 outstanding at March 31, 2012||66,816||66,890|
|Additional paid-in capital||12,579,379||12,425,713|
|Less: Treasury stock, 3,885 shares at cost||(30,135||)||(30,135||)|
|Total stockholders' equity||8,085,634||7,256,425|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||16,070,895||$||15,490,997|
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(UNAUDITED)||THREE MONTHS ENDED|
|Other fee income||935,375||567,444|
|Commissions and advisory fees||16,125,987||14,751,775|
|Compensation and benefits||1,484,416||2,031,820|
|Regulatory, legal and professional services||1,378,066||721,595|
|Brokerage, clearing and exchange fees||385,100||471,905|
|Technology and communications||337,495||330,989|
|Marketing and promotion||188,808||170,547|
|Occupancy and equipment||170,539||203,488|
|Total operating expenses||20,483,091||19,047,371|
|Operating income (loss)||283,271||(11,674||)|
|Provision (benefit) for income taxes||149,555||(440,160||)|
|Basic net income (loss) per share||$||0.02||$||0.07|
|Diluted net income (loss) per share||$||0.02||$||0.06|
|Weighted average shares used in basic per share calculations||6,547,623||6,553,824|
|Weighted average shares used in diluted per share calculations||6,547,623||6,692,520|
Adjusted EBITDAAdjusted 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 December 31,|
|Adjustments to conform Adjusted EBITDA to|
|GAAP Net income:|
|Income tax provision||(149,555||)||440,160|
|Depreciation and amortization||(82,039||)||(86,464||)|
|Non-recurring professional fees||-||(133,818||)|