Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NATIONAL FINANCIAL PARTNERS CORP | d8k.htm |
 SECOND QUARTER 2011 EARNINGS CALL PRESENTATION
AUGUST 2, 2011
Exhibit 99.1 |
 2
Related to Forward-Looking Statements
Certain
items
in
this
presentation
and
in
today’s
discussion,
including
matters
relating
to
revenue,
net
income,
Adjusted
EBITDA,
cash
earnings,
cash
earnings
per
diluted
share
and
percentages
or
calculations
using
these
measures,
acquisitions,
capital
structure
or
growth
rates
and
other
financial
measurements
and
non-financial
statements
in
future
periods,
constitute
forward-looking
statements
as
that
term
is
defined
in
the
Private
Securities
Litigation
Reform
Act
of
1995.
These
forward-
looking
statements
are
based
on
management's
current
views
with
respect
to
future
results
and
are
subject
to
risks
and
uncertainties.
These
statements
are
not
guarantees
of
future
performance.
Actual
results
may
differ
materially
from
those
contemplated
by
forward-looking
statements.
National
Financial
Partners
Corp.
(“NFP”
or
the
“Company”)
refers
you
to
its
filings
with
the
SEC,
including
its
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2010,
filed
on
February
10,
2011,
for
additional
discussion
of
these
risks
and
uncertainties
as
well
as
a
cautionary
statement
regarding
forward-looking
statements.
Forward-looking
statements
made
during
this
presentation
speak
only
as
of
today's
date.
NFP
expressly
disclaims
any
obligation
to
update
or
revise
any
forward-looking
statements,
whether
as
a
result
of
new
information,
future
events or otherwise. |
 3
Related to Non-GAAP Financial Information
The
Company
analyzes
its
performance
using
historical
and
forward-looking
non-GAAP
financial
measures
called
cash
earnings,
cash
earnings
per
diluted
share,
Adjusted
EBITDA,
adjusted
income
before
management
fees,
management
fees
(excluding
the
accelerated
vesting
of
certain
RSUs),
and
percentages
or
calculations
using
these
measures.
The
Company
believes
these
non-
GAAP
financial
measures
provide
additional
meaningful
methods
of
evaluating
certain
aspects
of
the
Company’s
operating
performance
from
period
to
period
on
a
basis
that
may
not
be
otherwise
apparent
under
GAAP.
Cash
earnings
is
defined
as
net
income
excluding
amortization
of
intangibles,
depreciation,
the
after-tax
impact
of
the
impairment
of
goodwill
and
intangible
assets,
the
after-tax
impact
of
non-cash
interest
expense
and
the
after-tax
impact
of
certain
non-recurring
items.
Cash
earnings
per
diluted
share
is
calculated
by
dividing
cash
earnings
by
the
number
of
weighted
average
diluted
shares
outstanding
for
the
period
indicated.
Cash
earnings
and
cash
earnings
per
diluted
share
should
not
be
viewed
as
substitutes
for
net
income
and
net
income
per
diluted
share,
respectively.
Adjusted
EBITDA
is
defined
as
net
income
excluding
income
tax
expense,
interest
income,
interest
expense,
gain
on
early
extinguishment
of
debt,
other,
net,
amortization
of
intangibles,
depreciation,
impairment
of
goodwill
and
intangible
assets,
(gain)
loss
on
sale
of
businesses,
the
pre-tax
impact
of
the
accelerated
vesting
of
certain
RSUs
and
any
change
in
estimated
contingent
consideration
amounts
recorded
in
accordance
with
purchase
accounting
that
have
been
subsequently
adjusted
and
recorded
in
the
consolidated
statement
of
operations.
Adjusted
EBITDA
should
not
be
viewed
as
a
substitute
for
net
income.
Adjusted
income
before
management
fees
is
defined
as
income
before
management
fees
excluding
corporate
income.
Adjusted
income
before
management
fees
should
not
be
viewed
as
a
substitute
for
income
from
operations.
Management
fees
(excluding
accelerated
vesting
of
certain
RSUs)
shows
management
fees
without
the
one-time
impact
of
the
accelerated
vesting
of
certain
RSUs
on
September
17,
2010.
Management
fees
(excluding
the
accelerated
vesting
of
certain
RSUs)
should
not
be
viewed
as
a
substitute
for
management
fees.
A
reconciliation
of
these
non-GAAP
financial
measures
to
their
GAAP
counterparts
for
the
periods
presented
herein
is
provided
in
the
Company’s
quarterly
financial
supplement
for
the
period
ended
June
30,
2011,
which
is
available
on
the
Investor
Relations
section
of
the
Company’s
Web
site
at
www.nfp.com. |
 4
Reconciliation: Net Income to Cash Earnings
($ in thousands, except per share data)
Q2 2011
Q2 2010
1H 2011
1H 2010
GAAP net income
$ 9,490
$ 12,069
$ 16,368
$ 19,059
Amortization of intangibles
7,897
8,206
15,859
16,544
Depreciation
3,037
3,005
6,114
6,011
Impairment of goodwill and intangible assets
920
-
920
2,901
Tax benefit of impairment of goodwill and intangible assets
(364)
88
(364)
(1,030)
Non-cash interest, net of tax
637
1,838
1,268
3,704
Cash earnings (1)
$ 21,617
$ 25,206
$ 40,165
$ 47,189
GAAP
net
income
per
share
-
diluted
$ 0.21
$ 0.27
$ 0.36
$ 0.43
Amortization of intangibles
0.17
0.19
0.35
0.38
Depreciation
0.07
0.07
0.14
0.14
Impairment of goodwill and intangible assets
0.02
-
0.02
0.07
Tax benefit of impairment of goodwill and intangible assets
(0.01)
-
(0.01)
(0.02)
Non-cash interest, net of tax (1)
0.01
0.04
0.03
0.08
Cash
earnings
per
share
-
diluted
(2)
$ 0.48
$ 0.57
$ 0.89
$ 1.08
Cash earnings is a non-GAAP financial measure, which the Company defines as net income excluding
amortization of intangibles, depreciation, the after-tax impact of the impairment of
goodwill and intangible assets, the after-tax impact of non-cash interest expense and the
after-tax impact of certain non-recurring items.
The sum of the per-share components of cash earnings per share - diluted may not agree to cash
earnings per share - diluted due to rounding.
(1)
(2) |
 5
Reconciliation: Net Income to
Adjusted EBITDA
(1)
Adjusted
EBITDA
is
a
non-GAAP
financial
measure,
which
the
Company
defines
as
net
income
excluding
income
tax
expense,
interest
income,
interest
expense,
gain
on early extinguishment of debt, other, net, amortization of intangibles,
depreciation, impairment of goodwill and intangible assets, (gain) loss on sale of businesses,
the
pre-tax
impact
of
the
accelerated
vesting
of
certain
RSUs
and
any
change
in
estimated
contingent
consideration
amounts
recorded
in
accordance
with
purchase
accounting that have been subsequently adjusted and recorded in the consolidated
statement of operations. The reconciliation of Adjusted EBITDA per
reportable segment does not include the following items, which are not allocated to any of the Company’s reportable
segments:
income
tax
expense,
interest
income,
interest
expense,
gain
on
early
extinguishment
of
debt
and
other,
net.
These
items
are
included
in
the
reconciliation
of Adjusted EBITDA to net income on a consolidated basis.
For a reconciliation of Adjusted EBITDA per reportable segment for the three
months ended June 30, 2010, September 30, 2010, December 31, 2010 and June 30, 2011,
please see the Company’s quarterly financial supplement for the period ended
June 30, 2011 which is available on the Investor Relations section of the
Company’s
Web
site
at
www.nfp.com.
Corporate
Individual
Advisor
(in thousands)
Client Group
Client Group
Services Group
Consolidated
For the six months ended June 30, 2011
GAAP net income
16,368
$
Income tax expense
13,505
Interest income
(1,900)
Interest expense
7,745
Other, net
(4,516)
Income (loss) from operations
21,235
$
4,756
$
5,211
$
31,202
$
Amortization of intangibles
10,280
5,579
-
15,859
Depreciation
3,238
2,282
594
6,114
Impairment of goodwill and intangible assets
-
920
-
920
(Gain) loss on sale of businesses, net
(47)
60
-
13
Adjusted EBITDA
(1)
34,706
$
13,597
$
5,805
$
54,108
$
For the six months ended June 30, 2010
GAAP net income
19,059
$
Income tax expense
14,293
Interest income
(1,776)
Interest expense
9,459
Other, net
(2,671)
Income from operations
27,065
$
7,638
$
3,661
$
38,364
$
Amortization of intangibles
10,601
5,943
-
16,544
Depreciation
3,075
2,280
656
6,011
Impairment of goodwill and intangible assets
1,931
970
-
2,901
(Gain) loss on sale of businesses, net
(8,162)
(1,759)
-
(9,921)
Adjusted EBITDA
(1)
34,510
$
15,072
$
4,317
$
53,899
$
|
 JESSICA BIBLIOWICZ
Chairman, President & Chief Executive Officer |
 7
2Q11 Highlights
Organic revenue growth +2.0%
Positive contributions from
–
Corporate Client Group +5.6%
–
Advisor Services Group +17.1%
Adjusted EBITDA grew 14%; margin expansion
Strategy to continue to further diversify product & service offerings
throughout NFP Focus on P&C and other recurring revenue businesses
Balanced capital allocation strategy
Strategic acquisitions
–
Lapre
Scali
acquisition (P&C brokerage) closed July 1, 2011
Reinvestment in existing businesses
$50 million stock repurchase plan
–
As of July 29, 2011, repurchased $15.6 million of NFP stock
#8
Top Insurance Broker Globally (Best’s Review), up from
#9 last year |
 8
Business Segments
Advisor Services Group
Organic revenue growth +17.1%
Individual Client Group
Organic revenue decline -10.3%
Corporate Client Group
Organic revenue growth +5.6%
2Q11
Revenue
$239.4
million
$81.9
34.2%
$94.3
39.4%
$63.2
26.4% |
 9
Business Segment
2Q11 Overview & Components of Revenue
Solid performance
Ongoing expectations for CCG
3% -
4% organic growth
Adjusted EBITDA margins
generally consistent with last
year
Corporate Client Group
Individual Client Group
Advisor Services Group
Strong performance in wealth
management
Expectations for life insurance
Pipeline activity continues; longer
sales cycle
Volatility and uncertainty remains
in the market
34.2%
Retail Life
Marketing Organization & Wholesale Life
Brokerage
Wealth Management
26.4%
Asset Based Fees & Trails
Commissions & Non-Recurring Fees
Continued strong growth
AUM $10.0 billion, up 22.2% YOY
Strong variable annuity sales
Near-term expectations for ASG
(depending on performance of
financial markets)
13% –
15% organic growth
Investments in recruiting and
marketing
Adjusted EBITDA margin about
4.5% in 2011
% of ICG
Revenue
% of ASG
Revenue
39.4%
Corporate Benefits
Executive Benefits
% of CCG
Revenue
89.6%
10.4%
60.9%
39.1%
19.4%
30.7%
49.9% |
 10
$66.0
27.6%
$25.1
10.5%
$15.9
6.6%
$38.1
15.9%
$94.3
39.4
%
Recurring Revenue
1
by Business Segment
2Q11 Revenue $239.4 million
2Q11
Recurring
revenue
61.9%
2Q10
Recurring
revenue
57.7%
1
Recurring revenue refers to revenue that is generally recurring in nature and
includes revenue from corporate and executive benefits, investment advisory and asset based fees
and trails.
2Q10 Revenue $234.9 million
Individual Client Group
Corporate Client Group
Advisor Services Group
$89.5
38.1%
$31.9
13.6%
$14.1
6.0%
($ in millions)
$77.3
32.9%
$22.1
9.4% |
 DOUG HAMMOND
Chief Operating Officer |
 12
Steady and recurring business
Navigating challenging
economic and regulatory
environment
Diversification of products and
services
Retirement
Executive Benefits
P&C
Acquisition of Lapre Scali, P&C
brokerage
Terry Scali -
CEO, NFP P&C
Further consolidation
opportunities
Organic growth opportunities
from enhancing NFP P&C
platform
Corporate Client Group
Individual Client Group
Advisor Services Group
Life insurance
Challenges and
uncertainty remain in the
market
Pipeline activity; longer
sale cycles
Wealth management
Strong performance
continues
AUM $10.0 billion, up 22.2% YOY
Strong variable annuity sales
Growth drivers
New assets
Advisor recruitment
Asset-based fees (due to
broader financial market
performance)
Business Segment Performance |
 DONNA BLANK
Chief Financial Officer |
 14
2Q11 Consolidated Financial Highlights
Revenue growth +2%, Adjusted EBITDA growth +14% and margin expansion
$15.0
$16.7
$9.0
$10.3
$2.3
$3.0
2Q10
2Q11
$26.3
$30.1
Individual Client Group
Corporate Client Group
Advisor Services Group
$54.0
$63.2
$89.5
$94.3
$91.4
$81.9
2Q10
2Q11
$234.9
$239.4
($ in millions)
Adjusted EBITDA Margin
2Q10
2Q11
Corporate Client Group
16.8%
17.7%
Individual Client Group
9.8%
12.6%
Advisor Services Group
4.2%
4.8%
Consolidated
11.2%
12.6%
57.7%
61.9%
Recurring
Revenue
1
The sum of the components may not agree to total due to rounding.
1
Adjusted EBITDA & Margin
Revenue |
 15
50.0%
38.8%
40.2%
43.2%
36.8%
41.2%
42.7%
30%
60%
1Q
2Q
3Q
4Q
2010 QTD Mgmt Fees
2010 YTD Mgmt Fees
Management Fees (excl. accelerated vesting of
RSUs) as % of Adjusted
Income Before Management Fees Corporate Client Group*
Individual Client Group*
NFP’s priority interest in CCG was 60.8% as of 6/30/11
NFP’s priority interest in ICG was 46.9% as of 6/30/11
36.6%
43.1%
39.9%
30%
50%
1Q
2Q
3Q
4Q
2011 QTD Mgmt Fees
2011 YTD Mgmt Fees
44.9%
57.6%
65.7%
52.7%
58.0%
63.2%
59.8%
30%
60%
1Q
2Q
3Q
4Q
2010 QTD Mgmt Fees
2010 YTD Mgmt Fees
52.7%
52.9%
53.2%
50%
55%
1Q
2Q
3Q
4Q
2011 QTD Mgmt Fees
2011 YTD Mgmt Fees
2010
2010
2011
2011
*Excludes accelerated vesting of RSUs |
 16
$40
-$44
$47
$36
$32
$71
-$2
$41
$124
$5
$37
$43
$119
-$6
$34
$34
In Q1, larger payments to Principals typically occur as management
fee bonuses for prior year performance are paid
Operating Cash Flow
(1)
Q1 2008 and 12/31/08 YTD acquisitions include $14.4 mm paid in connection with an
acquisition which was treated as prepaid management fees. (2)
Sum of the quarters may not agree to the full year total due to rounding.
(1)
(1)
(2)
$50
($ in millions)
Q1’08 Q2’08 Q3’08 Q4’08
FY’08 Q1’09 Q2’09 Q3’09 Q4’09 FY’09 Q1’10 Q2’10 Q3’10 Q4’10 FY’10 Q1’11 Q2’11
Quarterly/Annual Operating Cash Flow |
 17
Balanced approach to capital allocation; maintain financial flexibility
Strategic acquisitions
Reinvestment in existing businesses
Direct capital return to shareholders –
stock buyback
$50 million NFP stock buyback authorization
Balanced Capital Allocation Strategy
1
Repurchase authorization announced May 2, 2011.
2Q11
(1)
July 2011
# of shares repurchased
731,000
573,800
Weighted average share price
$12.04
$11.79
Total $ amount outstanding (in millions)
$8.8
$6.8
$ amount remaining outstanding (in millions)
$41.2
$34.4 |