9.1% revenue growth paired with 26.9% decrease in compensation
expenses results in three successive quarters of operating income and
profits
LYNNFIELD, Mass. -- (Business Wire)
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.
2012 Business Highlights:
-
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.
“We continue to invest in the revenue-generating areas of our business,
supplementing the success of our recruiting efforts with organic growth
initiatives such as practice management, leveraging technology and
value-added events and services,” said Tim Murphy, President and CEO of
Investors Capital Holdings, Ltd. “I believe that the strategic steps
that we have taken thus far, along with our plans for the remainder of
this fiscal year, make Investors Capital well-appointed to support
productive growth from our current and new advisors.” He added, “By
continually focusing on the basics of our business and providing 5-Star
Service to our advisors each day, I believe that we have paved the way
for continued growth.”
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 |
Assets | | | | | | | | |
Current Assets | | | | | | | | |
Cash and cash equivalents
| | |
$
|
4,551,387
| | | |
$
|
4,537,713
| |
Deposit with clearing organization, restricted
| | | |
175,000
| | | | |
175,000
| |
Accounts receivable
| | | |
5,513,220
| | | | |
4,525,157
| |
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
| |
Prepaid expenses
| | | |
690,130
|
| | | |
674,780
|
|
| | | |
12,076,852
| | | | |
10,940,322
| |
| | | | | | | |
|
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
|
|
| | | |
2,738,428
| | | | |
2,488,418
| |
Other Assets | | | | | | | | |
Deferred tax asset, net
| | | |
899,095
| | | | |
1,550,010
| |
Other asset
| | | |
22,392
| | | | |
-
| |
Capitalized software, net
| | | |
107,425
|
| | | |
172,240
|
|
| | | |
1,028,912
| | | | |
1,722,250
| |
| | | | | | | |
|
TOTAL ASSETS | | | $ | 16,070,895 |
| | | $ | 15,490,997 |
|
| | | | | | | |
|
Liabilities and Stockholders' Equity | | | | | | | | |
Current Liabilities | | | | | | | | |
Accounts payable
| | |
$
|
601,088
| | | |
$
|
820,540
| |
Accrued expenses
| | | |
1,426,013
| | | | |
1,408,324
| |
Commissions payable
| | | |
2,911,712
| | | | |
2,787,467
| |
Notes payable
| | | |
51,437
| | | | |
1,605,688
| |
Unearned revenues
| | | |
1,232,834
| | | | |
146,198
| |
Securities sold, not yet purchased, at fair value
| | | |
-
|
| | | |
8,186
|
|
| | | |
6,223,084
| | | | |
6,776,403
| |
Long-Term Liabilities | | | | | | | | |
Non-qualified deferred compensation plan
| | | |
1,762,177
|
| | | |
1,458,169
|
|
| | | |
1,762,177
| | | | |
1,458,169
| |
| | | | | | | |
|
Total liabilities | | | |
7,985,261
|
| | | |
8,234,572
|
|
| | | | | | | |
|
Stockholders' Equity: | | | | | | | | |
Common stock, $.01 par value, 10,000,000 shares authorized; 6,681,748
issued and 6,677,863 outstanding at December 31, 2012 6,689,009
issued and 6,685,124 outstanding at March 31, 2012
| | | |
66,816
| | | | |
66,890
| |
Additional paid-in capital
| | | |
12,579,379
| | | | |
12,425,713
| |
Accumulated deficit
| | | |
(4,530,426
|
)
| | | |
(5,206,043
|
)
|
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 |
| | | | December 31, |
| | | | 2012 |
|
| | 2011 |
Revenue: | | | | | | | | |
Commissions
| | |
$
|
15,510,183
| | |
$
|
14,404,727
| |
Advisory fees
| | | |
4,162,082
| | | |
3,797,760
| |
Other fee income
| | | |
935,375
| | | |
567,444
| |
Other revenue
| | | |
158,722
| | | |
265,766
|
|
Total revenue
| | | |
20,766,362
| | | |
19,035,697
|
|
| | | | | | | |
|
Expenses: | | | | | | | | |
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
| |
Other administrative
| | | |
409,092
| | | |
354,725
| |
Interest
| | | |
3,588
| | | |
10,527
| |
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
|
)
|
| | | | | | | |
|
Net income | | |
$
|
133,716
| | |
$
|
428,486
|
|
| | | | | | | |
|
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 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 December 31, |
| | | 2012 | | | 2011 |
| | | | | |
|
Adjusted EBITDA:
| | |
$
|
399,251
| | | |
$
|
238,993
| |
| | | | | |
|
Adjustments to conform Adjusted EBITDA to
| | | | | | |
GAAP Net income:
| | | | | | |
Income tax provision
| | | |
(149,555
|
)
| | | |
440,160
| |
Interest expense
| | | |
(3,588
|
)
| | | |
(10,527
|
)
|
Depreciation and amortization
| | | |
(82,039
|
)
| | | |
(86,464
|
)
|
Non-cash compensation
| | | |
(30,353
|
)
| | | |
(19,858
|
)
|
Non-recurring professional fees
| | |
|
-
|
| | |
|
(133,818
|
)
|
| | | | | |
|
Net income
| | |
$
|
133,716
|
| | |
$
|
428,486
|
|
| | | | | | | | | |
|
Contacts:
Investors Capital Holdings, Ltd.
Robert Foney, 781-477-4814
Chief
Marketing Officer
rfoney@investorscapital.com
www.investorscapital.com
Source: Investors Capital Holdings, Ltd.
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