Date of Report (Date of earliest event reported): February 15, 2011
Registrant's telephone number, including area code: (800) 949-1422
Item 2.02 Results of Operations and Financial Condition.
On February 15, 2011 the Registrant issued a news release, a copy of which is set forth in Exhibit 2.02 hereto, announcing financial results for the Registrant for the fiscal quarter ended December 31, 2010.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Investors Capital Holdings Posts Third-Quarter Profit
Total revenue, Average Revenue per Rep increase; net capital position strengthens
Lynnfield, Mass. (February 15, 2011) – Investors Capital Holdings, Ltd. (NYSE Amex: ICH, “the Company”), a financial services holding company, posted third quarter net income of $0.35 million on total revenue of $21.43 million for the period ended December 31, 2010 (“the quarter”) compared to net income of $0.43 million on total revenue of $21.05 million for the quarter ended December 31, 2009 (“prior period”). The Company operates primarily through its wholly-owned subsidiary, Investors Capital Corporation (“ICC”), a dually registered broker-dealer and investment advisory firm.
Total revenue for the quarter grew by $0.38 million, or 1.8%, compared to the prior period. The increase is due primarily to a rise in commissionable revenues as markets continue to rebound from the recent recession. Commission revenue, which accounts for 81.5% of total revenue, increased 1.7% to $17.47 million. Advisory fees, which account for 15.2% of total revenue, grew 3.4% to $3.27 million. The rise in advisory revenue reflects growth in market asset values, as well as new investment contributions.
“Our focus continues to be on quality advisors, assets, and profits,” said Timothy B. Murphy, the Company’s President and CEO. “Our net capital position remains strong; the markets and economy are improving; trading volume is increasing. We know where we want to go and how we want to get there. All we have to do is execute.”
At quarter end, the firm’s net capital position strengthened to $2.99 million (an excess of $2.51 million) with a net capital ratio of 2.38:1. The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that Investors Capital maintain net capital of $100,000 and a ratio of specified aggregate indebtedness to net capital (a “net capital ratio”) not to exceed 15 to 1.
Investors Capital continues to benefit from improving the overall quality of its representatives, a key component of the Company’s strategy for achieving growth in revenues and net income. The firm seeks to continually
improve the quality of its representatives by helping them expand their skills and practices, recruiting established, high-quality representatives, and terminating low-quality advisors. The firm’s average revenue per representative, based on a rolling 12-month period, rose again in the third quarter to $145,153, an increase of 12.5% over $129,006 for the prior rolling 12-month period.
“To use a baseball analogy, we’re not trying to swing for the fences,” said Murphy. “Single, single, double is how smart teams produce runs in baseball and profits in business. We are focusing on organic growth, retention, and recruitment of quality advisors to achieve our growth targets for revenues, assets, and profits.”
Adjusted EBITDA was $0.47 million for the quarter compared to $0.86 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.
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 premier 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.
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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: