MIAMI--(BUSINESS WIRE)--Ladenburg Thalmann Financial Services Inc. (NYSE MKT: LTS, LTS PrA) today announced financial results for the three and six months ended June 30, 2016.
Dr. Phillip Frost, Chairman of Ladenburg, said, “Ladenburg’s Independent Brokerage and Advisory Services Business (IBD) continued to perform well during the second quarter, growing advisory assets under management despite challenges that impacted revenues across the sector. We were also pleased to improve margins in our IBD business through continued focus on expense reduction and harvesting synergies. The firm is preparing for the implementation of the upcoming Department of Labor fiduciary rule and will continue our track record of providing industry-leading support to our network of 4,000 independent financial advisors.”
Richard Lampen, President and Chief Executive Officer of Ladenburg, said, “Ladenburg’s investment banking results were impacted by lower market activity, especially with respect to equity capital raising by small and mid-cap companies. Despite challenging market conditions, our investment banking franchise is well suited to continue helping our clients achieve their strategic and financial objectives. As we look ahead, we remain focused on managing both sides of our business efficiently to capitalize on the best opportunities to generate long-term value for our shareholders.”
For the Three and Six Months Ended June 30, 2016
Second quarter 2016 revenues were $269.8 million, a 9% decline from revenues of $296.7 million in the second quarter of 2015. Commissions revenue for the three months ended June 30, 2016 decreased by 11% to $127.4 million from $143.3 million for the comparable 2015 period, mainly a result of an industry-wide decline in sales of alternative investment, mutual fund and variable annuity products resulting from volatile markets, investor uncertainty in the low interest rate environment and the impact of the pending Department of Labor's fiduciary rule.
Net loss attributable to the Company for the second quarter of 2016 was $17.8 million, as compared to net loss attributable to the Company of $2.5 million in the second quarter of 2015. Net loss available to common shareholders, after payment of preferred dividends, was $25.2 million or ($0.14) per basic and diluted common share for the second quarter of 2016, as compared to net loss available to common shareholders of $9.6 million or ($0.05) per basic and diluted common share in the comparable 2015 period. The second quarter 2016 results included $16.2 million of non-cash income tax expense, primarily related to an increase in the valuation allowance against our deferred tax assets, $8.6 million of non-cash charges for depreciation, amortization and compensation, $1.5 million of amortization of retention and forgivable loans and $1.2 million of interest expense. The second quarter 2015 results included approximately $9.1 million of non-cash charges for depreciation, amortization and compensation, $2.9 million of amortization of retention and forgivable loans, $1.3 million of interest expense and $0.4 million of income tax benefit.
For the six months ended June 30, 2016, the Company had revenues of $535.6 million, a 7% decline from revenues of $575.6 million for the comparable 2015 period. Net loss attributable to the Company for the six months ended June 30, 2016 was $15.4 million, as compared to net loss attributable to the Company of $6.0 million in the comparable 2015 period. Net loss available to common shareholders, after payment of preferred dividends, was $30.1 million or ($0.17) per basic and diluted common share for the six months ended June 30, 2016, as compared to net loss available to common shareholders, after payment of preferred dividends, of $19.5 million or ($0.11) per basic and diluted common share in the comparable 2015 period. The results for the six months ended June 30, 2016 included approximately $16.8 million of non-cash charges for depreciation, amortization and compensation, $7.5 million of non-cash income tax expense, primarily related to the increase in the valuation allowance against our deferred tax assets, $3.0 million of amortization of retention and forgivable loans and $2.4 million of interest expense. The comparable 2015 results included approximately $19.0 million of non-cash charges for depreciation, amortization and compensation, $5.6 million of amortization of retention and forgivable loans, $2.7 million of interest expense, $0.3 million of loss on early extinguishment of debt and $2.1 million of income tax benefit.
Recurring Revenues
For the three and six months ended June 30, 2016, recurring revenues, which consist of advisory fees, trailing commissions, cash sweep fees and certain other fees, represented approximately 75% and 76%, respectively, of revenues from the Company’s independent brokerage and advisory services business.
EBITDA, as adjusted
EBITDA, as adjusted, for the second quarter of 2016 was $10.5 million, an 11% decrease from $11.8 million in the comparable 2015 period. EBITDA, as adjusted, for the six months ended June 30, 2016 was $15.5 million, a decrease of 30% from $22.3 million for the prior-year period. Attached hereto as Table 2 is a reconciliation of EBITDA, as adjusted, to net loss attributable to the Company as reported (see “Non-GAAP Financial Measures” below). The decline in EBITDA, as adjusted, for the second quarter of 2016 and the six months ended June 30, 2016 was primarily attributable to decreases of $3.7 million and $7.9 million, respectively, in EBITDA, as adjusted, in our Ladenburg segment as a result of lower investment banking revenues.
Client Assets
At June 30, 2016, total client assets under administration were approximately $128 billion, equal to the approximately $128 billion at June 30, 2015. At June 30, 2016, client assets included cash balances of approximately $4.4 billion.
Stock Repurchases
During the quarter ended June 30, 2016, Ladenburg repurchased 1,572,519 shares of its common stock at a cost of approximately $4.1 million, representing an average price per share of $2.58. During the period from January 1, 2016 through June 30, 2016, Ladenburg repurchased 3,095,911 shares of its common stock at a cost of approximately $7.7 million, representing an average price per share of $2.49. Since the inception of its stock repurchase program in March 2007, Ladenburg has repurchased 22,865,478 shares of its common stock at a total cost of approximately $47.4 million, including purchases of 7,500,000 shares outside its stock repurchase program. Ladenburg has the authority to repurchase an additional 2,134,522 shares under its current repurchase plan.
About Ladenburg
Ladenburg Thalmann Financial Services Inc. (NYSE MKT: LTS, LTS PrA) is a publicly-traded diversified financial services company based in Miami, Florida. Ladenburg’s subsidiaries include industry-leading independent broker-dealer firms Securities America, Inc., Triad Advisors, Inc., Securities Service Network, Inc., Investacorp, Inc. and KMS Financial Services, Inc., as well as Premier Trust, Inc., Ladenburg Thalmann Asset Management Inc., Highland Capital Brokerage, Inc., a leading independent life insurance brokerage company, and Ladenburg Thalmann & Co. Inc., an investment bank which has been a member of the New York Stock Exchange for 135 years. The company is committed to investing in the growth of its subsidiaries while respecting and maintaining their individual business identities, cultures, and leadership. For more information, please visit www.ladenburg.com.
