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| 8-K - FORM 8-K - NATIONAL HOLDINGS CORP | nhld20140513_8k.htm |
Exhibit 99.1
NATIONAL HOLDINGS CORPORATION REPORTS RECORD REVENUE AND NET INCOME IN THE FISCAL SECOND QUARTER 2014
Revenues Increased 60% to Approximately $53 Million and Net Income Increased to $3.2 Million
Ninth Consecutive Quarter of Positive Adjusted EBITDA and Fifth Straight Quarter of Net Income
NEW YORK, May 13, 2014 – National Holdings Corporation (OTC BB: NHLD) (”National Holdings” or the “Company”), a full-service investment banking and asset management firm, today announced financial results for the Company’s fiscal second quarter and six months ended March 31, 2014.
Fiscal Second Quarter 2014 Highlights
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Increased revenues by approximately 60% to $52.7 million, compared with revenues of $32.9 million in the prior year period |
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Generated net income of $3.2 million, or $0.03 per basic and diluted share for the three months ended March 31, 2014, compared with net income of $0.5 million, or $0.01 per basic and diluted share for the same period last year |
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Reported Adjusted EBITDA, a non-GAAP measure, of $4.3 million for the three months ended March 31, 2014, compared with $1.2 million for the same period last year |
First Half of Fiscal 2014 Highlights
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Increased revenues by 59% to $94.5 million, compared with revenues of $59.4 million in the prior year period |
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Generated net income of $3.9 million, or $0.03 per basic and diluted share for the six months ended March 31, 2014, compared with net income of $0.5 million, or $0.01 per basic and diluted share for the same period last year |
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Reported Adjusted EBITDA, a non-GAAP measure, of $5.9 million for the six months ended March 31, 2014, compared with $1.6 million for the same period last year |
Mark D. Klein, National Holdings’ Chief Executive Officer and Co-Executive Chairman, commented, “Our strong financial results reflect significant growth in revenues and earnings in the quarter and year-to-date. For the quarter, we achieved net income and adjusted EBITDA that exceeded our totals recorded in the entire previous fiscal year. This growth demonstrates continued momentum across all business units, including investment banking, retail brokerage and contributions from tax and financial planning. These results are a testament to management’s focused operating philosophy and ability to manage costs in a volatile macro environment. With a debt-free balance sheet and simplified capital structure, we remain well positioned to continue our growth initiatives by strengthening our existing platforms while identifying potential new opportunities that complement our business model.”
Mark Goldwasser, President and Chief Executive Officer of the Company’s broker-dealer subsidiary, National Securities, added, “Our investment banking business continues to serve as a significant contributor to total company revenue, with revenue growth of 141% to $5.6 million in the quarter. During the quarter, our investment banking group participated in 16 transactions with emerging growth companies across our target sectors. In line with expectations, we benefitted from the Gilman Ciocia tax and accounting business, and of additional significance, the legacy National Holdings business increased 27%.”
Fiscal Second Quarter Ended March 31, 2014 Financial Review
National Holdings reported fiscal second quarter 2014 revenue of $52.7 million, an increase of approximately 60% over revenue of $32.9 million reported in the fiscal second quarter of 2013. The increase in revenues reflects growth across all major business lines and the merger with Gilman Ciocia, which diversified the Company’s business to include financial planning and tax preparation services and expanded the team of registered representatives and investment advisors, insurance sales representatives, and accountants.
In comparison with the approximately 60% increase in total revenues, total expenses increased 53%, or $17.1 million, to $49.3 for the fiscal second quarter 2014 compared to $32.2 in the fiscal second quarter 2013. The increase in total expenses is primarily a result of higher levels of commissions – where National Holdings is experiencing revenue increases versus the industry trend of revenue compression – compensation and fees. These expenses were partially offset by a reduction in interest expense. Interest expense decreased significantly due to the recapitalization, which allowed the Company to repay all of its debt in 2013. While total expenses increased, which included the assumption of real estate leases as part of the Gilman Ciocia transaction, the Company recorded a quarter over quarter improvement in net profit margin of approximately 430 basis points.
Adjusted EBITDA increased to $4.3 million in the fiscal second quarter ended March 31, 2014, compared to adjusted EBITDA of $1.2 million in the fiscal second quarter ended March 31, 2013.
On a GAAP basis, net income for the fiscal second quarter ended March 31, 2014 was $3.2 million, or $0.03 per basic and diluted share, compared to net income of $0.5 million, or $0.01 per basic and diluted share in the second quarter of fiscal 2013.
Six Months Ended March 31, 2014 Financial Review
National Holdings reported fiscal 2014 year-to-date revenue of $94.5 million, an increase of 59% over revenue of $59.4 million reported in fiscal 2013. The increase in revenues reflects growth across all major business lines and the merger with Gilman Ciocia.
Total expenses increased 54%, or $31.6 million, to $90.3 for the six months ended March 31, 2014, compared to $58.7 in the six months ended March 31, 2013. The increase in total expenses is consistent with the factors outlined above. For the six month period, the Company recorded an improvement in net profit margin of approximately 330 basis points.
Adjusted EBITDA increased to $5.9 million in the six months ended March 31, 2014, compared with $1.6 million in the six months ended March 31, 2013.
On a GAAP basis, net income for the six months ended March 31, 2014 was $3.9 million, or $0.03 per basic and diluted share, compared with net income of $0.5 million, or $0.01 per basic and diluted share in 2013.
Balance Sheet
As of March 31, 2014, National Holdings had $26.4 million in cash and cash equivalents.
Conference Call
National Holdings will host a conference call to discuss its fiscal second quarter 2014 earnings results on Tuesday, May 13, 2014, at 5:00 p.m. ET. To access the teleconference, please dial (706) 902-2067 (domestic and international) approximately ten minutes before the teleconference’s scheduled start time and reference ID # 40300645.
If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call’s completion and available through May 23, 2014. The teleconference replay can be accessed by dialing (404) 537-3406 (domestic and international) and entering the ID# 40300645. An audio file replay will also be available on the investor relations portion of National Holding’s website at http://www.nhldcorp.com/investors.aspx.
About National Holdings Corporation
National Holdings Corporation is a full-service investment banking and asset management firm that provides a range of services, including independent retail brokerage and advisory services, investment banking, institutional sales and trading and equity research, financial planning, market making, tax preparation, insurance and annuities, to corporations, institutional investors and high-net-worth clients. With over 1,100 Independent advisors, brokers, traders and sales associates, the Company is a leading Independent Advisor and Broker services company. National Holdings operates through five subsidiaries: National Securities Corporation, vFinance Investments, Inc., National Insurance Corporation, National Asset Management, Inc. and Gilman Ciocia, Inc. The Company was founded in 1947 and is headquartered in New York and Florida. For more information, visit www.nhldcorp.com.
Safe Harbor Statements
This release contains forward-looking statements within the meaning of the federal securities laws. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Information on significant potential risks and uncertainties that may also cause differences includes, but is not limited to, those mentioned by National Holdings from time to time in their filings with the SEC. The words “may,” “will,” “believe,” “estimate,” “expect,” “plan,” “intend,” “project,” “anticipate,” “could,” “would,” “should,” “seek,” “continue,” “pursue” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. National Holdings undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may be disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K and in or periodic reports on Form 10-Q, and, therefore, readers should not place undue reliance on these forward-looking statements.
Contacts:
National Holdings Corporation
Mark Klein, 212-417-8210
Chief Executive Officer and Co-Chairman
Or
Prosek Partners
Nick Rust, 212-279-3115
nrust@prosek.com
Source: National Holdings Corporation
(Financial Tables Follow)
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
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ASSETS |
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March 31, |
September 30, |
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2014 |
2013 |
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(Unaudited) |
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| Current Assets | ||||||||
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Cash and cash equivalents |
$ | 21,404,000 | $ | 19,985,000 | ||||
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Restricted cash |
92,000 | 92,000 | ||||||
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Deposits with clearing organizations |
1,137,000 | 1,107,000 | ||||||
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Receivables from broker-dealers and clearing organizations |
4,332,000 | 4,296,000 | ||||||
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Other receivables, net of allowance for doubtful accounts |
2,572,000 | 1,049,000 | ||||||
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Advances to registered representatives - Current portion, net of allowance for uncollectible accounts |
727,000 | 384,000 | ||||||
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Securities owned: marketable – at market value |
638,000 | 428,000 | ||||||
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Securities owned: nonmarketable – at fair value |
53,000 | 39,000 | ||||||
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Prepaid expenses |
1,647,000 | 764,000 | ||||||
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Total Current Assets |
32,602,000 | 28,144,000 | ||||||
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Advances to registered representatives - Long term portion |
491,000 | 427,000 | ||||||
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Fixed assets, net of accumulated depreciation |
799,000 | 447,000 | ||||||
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Intangible assets, net |
9,462,000 | - | ||||||
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Goodwill |
4,464,000 | - | ||||||
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Other assets |
668,000 | 493,000 | ||||||
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Total Assets |
$ | 48,486,000 | $ | 29,511,000 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Accounts payable, accrued expenses and other liabilities |
$ | 19,300,000 | $ | 13,494,000 | ||||
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Payable to broker-dealers and clearing organizations |
13,000 | 13,000 | ||||||
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Securities sold, but not yet purchased, at market value |
82,000 | 15,000 | ||||||
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Total Current Liabilities |
19,395,000 | 13,522,000 | ||||||
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Accrued expenses and other liabilities - Long term portion |
223,000 | 192,000 | ||||||
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Total Liabilities |
19,618,000 | 13,714,000 | ||||||
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National Holdings Corporation Stockholders' Equity |
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Common stock, $.02 par value, 150,000,000 shares authorized; 123,246,888 shares issued and outstanding at March 31, 2014 and 100,580,203 shares issued and outstanding at September 30, 2013 |
2,465,000 | 2,012,000 | ||||||
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Additional paid-in capital |
76,674,000 | 67,982,000 | ||||||
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Accumulated deficit |
(50,286,000 |
) |
(54,212,000 |
) | ||||
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Total National Holdings Corporation Stockholders' Equity |
28,853,000 | 15,782,000 | ||||||
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Non Controlling Interest |
15,000 | 15,000 | ||||||
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Total Stockholders' Equity |
28,868,000 | 15,797,000 | ||||||
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Total Liabilities and Stockholders' Equity |
$ | 48,486,000 | $ | 29,511,000 | ||||
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Month Period Ended March 31, |
Six Month Period Ended March 31, |
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2014 |
2013 |
2014 |
2013 |
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Revenues |
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Commissions |
$ | 30,306,000 | $ | 20,769,000 | $ | 57,913,000 | $ | 36,809,000 | ||||||||
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Principal transactions |
5,983,000 | 4,310,000 | 9,142,000 | 6,912,000 | ||||||||||||
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Investment banking fees |
5,619,000 | 2,334,000 | 9,201,000 | 4,389,000 | ||||||||||||
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Interest and dividends |
884,000 | 1,004,000 | 1,817,000 | 2,050,000 | ||||||||||||
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Transfer fees and clearing services |
2,452,000 | 2,033,000 | 4,767,000 | 4,040,000 | ||||||||||||
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Investment advisory fees |
3,547,000 | 2,426,000 | 6,727,000 | 4,846,000 | ||||||||||||
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Tax preparation and accounting fees |
3,737,000 | - | 4,275,000 | - | ||||||||||||
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Other |
156,000 | 73,000 | 636,000 | 347,000 | ||||||||||||
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Total Revenues |
52,684,000 | 32,949,000 | 94,478,000 | 59,393,000 | ||||||||||||
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Operating Expenses |
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Commissions, compensation and fees |
42,196,000 | 28,329,000 | 77,127,000 | 51,164,000 | ||||||||||||
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Clearing fees |
805,000 | 575,000 | 1,602,000 | 997,000 | ||||||||||||
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Communications |
1,191,000 | 1,149,000 | 2,331,000 | 2,267,000 | ||||||||||||
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Occupancy expenses |
1,073,000 | 556,000 | 2,026,000 | 1,088,000 | ||||||||||||
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Equipment rental and other administrative expenses |
1,627,000 | 160,000 | 2,731,000 | 128,000 | ||||||||||||
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Professional fees |
1,384,000 | 764,000 | 2,398,000 | 1,535,000 | ||||||||||||
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Depreciation and amortization |
622,000 | 265,000 | 1,156,000 | 538,000 | ||||||||||||
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Interest |
8,000 | 66,000 | 24,000 | 230,000 | ||||||||||||
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Taxes, licenses and registration |
408,000 | 369,000 | 916,000 | 777,000 | ||||||||||||
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Total Operating Expenses |
49,314,000 | 32,233,000 | 90,311,000 | 58,724,000 | ||||||||||||
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Net Income from operations |
3,370,000 | 716,000 | 4,167,000 | 669,000 | ||||||||||||
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Other Expenses |
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Loss on investment in unaffiliated entity |
- | (162,000 |
) |
- | (162,000 |
) | ||||||||||
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Total Other Expenses |
- | (162,000 |
) |
- | (162,000 |
) | ||||||||||
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Net Income before Income Tax |
3,370,000 | 554,000 | 4,167,000 | 507,000 | ||||||||||||
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Income tax expense - Current |
134,000 | 60,000 | 241,000 | 60,000 | ||||||||||||
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Net Income before non-controlling interest |
3,236,000 | 494,000 | 3,926,000 | 447,000 | ||||||||||||
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Net loss attributable to non-controlling interest |
- | - | - | 7,000 | ||||||||||||
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Net Income attributable to common stockholders |
$ | 3,236,000 | $ | 494,000 | $ | 3,926,000 | $ | 454,000 | ||||||||
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Net Income attributable to common stockholders - Basic |
$ | 0.03 | $ | 0.01 | $ | 0.03 | $ | 0.01 | ||||||||
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Net Income attributable to common stockholders - Diluted |
$ | 0.03 | $ | 0.01 | $ | 0.03 | $ | 0.01 | ||||||||
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Weighted number of shares outstanding - Basic |
123,246,888 | 72,232,218 | 121,503,297 | 49,289,601 | ||||||||||||
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Weighted number of shares outstanding - Diluted |
125,023,088 | 74,743,336 | 123,013,317 | 55,324,608 | ||||||||||||
Non-GAAP Financial Measures
To provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, the Company supplements its consolidated statements of income presented on a GAAP basis with non-GAAP financial measures of earnings. Please refer to the schedule in this release for a reconciliation of non-GAAP financial measures to GAAP measures.
Management uses Earnings before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA as financial measures to evaluate the profitability and efficiency of the Company’s business model. EBITDA and adjusted EBITDA are not presented in accordance with GAAP.
Investors should consider the non-GAAP measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, the Company’s non-GAAP measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures.
National Holdings Corporation
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
(unaudited)
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Three Months Ended March 31, |
Six Months Ended March 31, |
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2014 |
2013 |
2014 |
2013 |
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Net income, as reported |
$ | 3,236,000 | $ | 494,000 | $ | 3,926,000 | $ | 454,000 | ||||||||
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Interest expense |
8,000 | 66,000 | 24,000 | 230,000 | ||||||||||||
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Income taxes |
134,000 | 88,000 | 304,000 | 108,000 | ||||||||||||
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Depreciation |
101,000 | 110,000 | 201,000 | 227,000 | ||||||||||||
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Amortization |
521,000 | 155,000 | 955,000 | 311,000 | ||||||||||||
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EBITDA |
4,000,000 | 913,000 | 5,410,000 | 1,330,000 | ||||||||||||
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Non-cash compensation expense |
217,000 | - | 427,000 | - | ||||||||||||
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Forgivable loan amortization |
54,000 | 75,000 | 105,000 | 135,000 | ||||||||||||
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Loss on investment in unconsolidated entity |
- | 162,000 | - | 162,000 | ||||||||||||
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EBITDA, as adjusted |
$ | 4,271,000 | $ | 1,150,000 | $ | 5,942,000 | $ | 1,627,000 | ||||||||
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