LYNNFIELD, Mass., Aug. 12, 2011 (GLOBE NEWSWIRE) -- Investors Capital Holdings, Ltd. (NYSE Amex:ICH) (the "Company"), a financial services holding company, posted first quarter revenue of $21.44 million for the period ended June 30, 2011 (the "quarter"). This represents a 2.4% increase over revenue of $20.94 million for the quarter ended June 30, 2010 ("prior period"). 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 increased primarily due to a rise in advisory fees. Commission revenue, which accounts for 78.9% of total revenue, increased 1.4% to $16.92 million. Advisory fees, which make up 19.5% of total revenue, grew 12.1% to $4.18 million. The rise in advisory fee revenue reflects increases in the value of underlying advisory program assets augmented by new investment contributions.
Investors Capital continues to benefit from enhancing the overall quality of its representatives by helping them expand their skills and practices, recruiting established, high-quality representatives, and terminating lower-quality advisors. The firm's average revenue per representative, based on a rolling 12-month period, rose at quarter-end to $160,943, an increase of 15.3% over $139,587 for the prior rolling 12-month period.
Operations were largely impacted by litigation and regulatory actions accompanying a more demanding industry regulatory environment. Total expenses rose 6.1%, led by regulatory, legal, and professional services expenses, which increased 58.5%. Non-recurring professional and legal expenses related to the firm's secondary offering also contributed to the rise in total expenses for the current period. The result was a net loss of $1.26 million for the quarter compared to a net loss of $0.01 million for the prior period.
Quarterly adjusted EBITDA was negative $0.35 million as opposed to $0.12 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.
"While we realized revenue growth, the effects of the recession, regulatory assessments, and non-recurring expenses continue to impact our bottom line and slow the pace of our growth," said Timothy B. Murphy, President and CEO of Investors Capital Holdings, Ltd. "However, our net capital is strong, and our recruiting pipeline is substantial. I firmly believe that by reducing our non-recurring expenses, paired with increased revenues, we can look forward to a return to profitability."
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 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, 2011 | March 31, 2011 | |
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | $4,737,602 | $ 4,587,195 |
| Deposit with clearing organization, restricted | 175,000 | 175,000 |
| Accounts receivable | 5,511,646 | 6,798,638 |
| Note receivable -- (current) | 32,988 | 108,169 |
| Loans receivable from registered representatives (current), net of allowance | 730,360 | 721,664 |
| Prepaid income taxes | 0 | 157,880 |
| Securities owned at fair value | 227,841 | 17,384 |
| Investments | 50,000 | 50,000 |
| Prepaid expenses | 1,204,114 | 1,073,969 |
| 12,669,551 | 13,689,899 | |
| Property and equipment, net | 547,472 | 597,735 |
| Long Term Investments | ||
| Loans receivable from registered representatives | 733,735 | 616,583 |
| Note receivable | 495,000 | 495,000 |
| Investments | 216,499 | 214,555 |
| Non-qualified deferred compensation investment | 1,123,606 | 1,089,572 |
| Cash surrender value life insurance policies | 698,294 | 680,429 |
| 3,267,134 | 3,096,139 | |
| Other Assets | ||
| Deferred tax asset, net | 1,247,784 | 1,218,773 |
| Capitalized software, net | 141,798 | 132,131 |
| Other assets | 15,308 | 15,808 |
| 1,404,890 | 1,366,712 | |
| TOTAL ASSETS | $17,889,047 | $ 18,750,485 |
| Liabilities and Stockholders' Equity | ||
| Current Liabilities | ||
| Accounts payable | $1,114,707 | $ 1,109,400 |
| Accrued expenses | 2,526,630 | 2,078,705 |
| Income taxes payable | 307,345 | 0 |
| Commissions payable | 3,302,110 | 3,246,898 |
| Notes payable | 996,273 | 1,527,969 |
| Unearned revenues | 128,011 | 113,486 |
| Securities sold, not yet purchased, at fair value | 16 | 0 |
| 8,375,092 | 8,076,458 | |
| Long-Term Liabilities | ||
| Non-qualified deferred compensation plan | 1,221,721 | 1,176,096 |
| 1,221,721 | 1,176,096 | |
| Total liabilities | 9,596,813 | 9,252,554 |
| Stockholders' Equity: | ||
| Common stock, $.01 par value, 10,000,000 shares authorized; 6,617,614 issued and 6,613,729 outstanding at June 30, 2011; 6,618,259 issued and 6,614,374 outstanding at March 31, 2011 | 66,176 | 66,183 |
| Additional paid-in capital | 12,327,455 | 12,279,380 |
| Accumulated deficit | (4,129,923) | (2,874,214) |
| Less: Treasury stock, 3,885 shares at cost | (30,135) | (30,135) |
| Accumulated other comprehensive income | 58,661 | 56,717 |
| Total stockholders' equity | 8,292,234 | 9,497,931 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $17,889,047 | $ 18,750,485 |
| INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| THREE MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED) | ||
| 2011 | 2010 | |
| Revenue: | ||
| Commissions | $16,916,508 | $16,677,517 |
| Advisory fees | 4,183,052 | 3,732,153 |
| Other fee income | 103,393 | 190,183 |
| Other revenue | 239,773 | 342,120 |
| Total revenue | 21,442,726 | 20,941,973 |
| Expenses: | ||
| Commissions and advisory fees | 17,094,637 | 16,524,228 |
| Compensation and benefits | 2,103,025 | 2,009,067 |
| Regulatory, legal and professional services | 1,275,790 | 804,873 |
| Brokerage, clearing and exchange fees | 505,460 | 591,187 |
| Technology and communications | 368,832 | 295,374 |
| Marketing and promotion | 307,018 | 334,227 |
| Occupancy and equipment | 235,411 | 228,293 |
| Other administrative | 360,771 | 184,851 |
| Interest | 7,944 | 6,874 |
| Total operating expenses | 22,258,888 | 20,978,974 |
| Operating loss | $ (816,162) | $ (37,001) |
| Provision (Benefit) for income taxes | $439,547 | $ (26,211) |
| Net loss | $ (1,255,709) | $ (10,790) |
| Basic and diluted net loss per share | $ (0.19) | $0.00 |
| Basic dividends per common share | $0.00 | $0.00 |
| Shares used in basic and diluted per share calculations | 6,585,174 | 6,541,129 |
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 may be reconciled with net income as follows:
| Quarter Ended June 30, | ||
| 2011 | 2010 | |
| Adjusted EBITDA: | $ (352,390) | $ 120,987 |
| Adjustments to conform Adjusted EBITDA to GAAP Net income (loss): | ||
| Income tax benefit | -- | 87,133 |
| Interest expense | (7,944) | (6,874) |
| Income tax expense | (439,547) | (60,922) |
| Depreciation and amortization | (108,468) | (104,727) |
| Non-recurring professional fees | (299,291) | -- |
| Non-cash compensation | (48,069) | (46,387) |
| Net income (loss) | $ (1,255,709) | $ (10,790) |