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| 8-K - 8-K - TIPTREE INC. | a8k-9302015er.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
TIPTREE FINANCIAL INC. REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS
• | Tiptree Financial Inc. GAAP net loss of $4.6 million for the third quarter and GAAP net income of $9.4 million for the first nine months of 2015, representing its 81% ownership of Tiptree Operating Company, LLC, which had GAAP net loss of $6.4 million for the third quarter and GAAP net income of $11.4 million for the first nine months of 2015. |
• | Tiptree Operating Company, LLC total Adjusted EBITDA of $4.9 million for the third quarter and $50.0 million for the first nine months of 2015. |
• | Tiptree Operating Company, LLC Adjusted EBITDA for continuing operations of $4.9 million for the third quarter and $16.8 million for the first nine months of 2015. |
• | Declared dividend of $0.025 per share to Class A stockholders of record on November 23, 2015 with a payment date of November 30, 2015. |
• | GAAP book value of $9.12 per Class A common share and $9.24 per share of Tiptree Operating Company, LLC as of September 30, 2015. |
New York, New York - November 13, 2015 - Tiptree Financial Inc. (NASDAQ:TIPT) (“Tiptree Financial”), a diversified holding company which operates in the insurance and insurance services, specialty finance, asset management and real estate industries, today announced its financial results for the quarter and nine months ended September 30, 2015. Tiptree Financial operates its business through Tiptree Operating Company, LLC (“Tiptree” or the “Company”), which is currently owned 81% by Tiptree Financial and 19% by Tiptree Financial Partners, L.P. (“TFP”). This release reports both the results of Tiptree and the results available to Tiptree Financial’s Class A stockholders.
Third Quarter 2015 Highlights
• | Fortegra Financial Corporation contributed $10.1 million in pre-tax earnings to consolidated results for the third quarter and $20.4 million for the first nine months of 2015. |
• | Completed the acquisition of Reliance First Capital, LLC (“Reliance”), a retail mortgage originator operating in 32 states with fulfillment operations conducted through several call centers and Reliance’s corporate headquarters. |
• | Invested $40 million to Telos 2015-7, Ltd. (“Telos 7”) which entered into a warehouse credit facility in anticipation of launching a new CLO. |
• | Grew its principal investments in pools of non-performing residential mortgage loans securing single family properties (“NPLs”) with an additional investment of $20.9 million, bringing the Company’s total investment in NPLs at the end of the third quarter to $30.6 million. |
• | Commenced a stock purchase program for the purchase of up to an aggregate of $5 million of Class A common stock by Tiptree Financial and Michael Barnes. |
• | Issued an aggregate of 1,711,173 shares of Class A common stock to limited partners of TFP in exchange for an aggregate of 611,570 TFP partnership units and the cancellation of 1,711,173 shares of Class B common stock, bringing Tiptree Financial’s direct and indirect ownership of the Company to 81%. |
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Third Quarter and First Nine Months 2015 Financial Overview
Consolidated Results
For the three months ended September 30, 2015, the Company reported after-tax net loss of $6.4 million compared with after tax net income of $8.0 million in the comparable period of 2014. For the nine months ended September 30, 2015, the Company reported after tax net income of $11.4 million compared with after tax net income of $15.7 million in the comparable period in 2014. The drivers of the year over year difference in the net loss were higher depreciation and amortization from new investment in real estate at Care, realized and unrealized losses on CLO subordinated note investments, lower distributions received on CLO subordinated notes due to sales of CLO subordinated notes in the second quarter of 2015, higher corporate expenses associated with our effort to improve our controls and financial reporting infrastructure, an increase in the provision for income taxes, the impact of the loss of income from discontinued operations due to our sale of PFG at the end of the second quarter, offset by improved profitability from the addition of Fortegra, growth in specialty finance volumes and margins and increased rental income in our real estate operations. In addition, in the three months ended September 30, 2014, there was a one-time gain of $7.9 million from the repayment of a loan to Care, which impacted the year over year comparison.
The Company’s total adjusted EBITDA was $4.9 million and $50.0 million in the three and nine months ended September 30, 2015, respectively, compared with total adjusted EBITDA of $15.0 million and $37.0 million in the three and nine months ended September 30, 2014, respectively. The key drivers of the change in Adjusted EBITDA were the same as those which impacted our loss from continuing operations. The smaller decline versus that reported for loss from continuing operations was primarily driven by the elimination of the period over period changes attributable to increased depreciation and amortization at our real estate segment and the purchase accounting impacts of Fortegra.
Management believes that adjusted EBITDA provides a supplementary metric to enhance investors’ understanding of the on-going earnings potential of the Company’s businesses and an indication of the Company’s ability to generate additional funds for re-investment in the combined businesses. As adjusted EBITDA is a Non-GAAP measure, it should be reviewed in conjunction with the Company’s GAAP results. See “Non-GAAP Financial Measures-EBIDTA and Adjusted EBITDA” below for further information relating to the Company’s adjusted EBITDA measure, including a reconciliation to GAAP net income.
Segment Results
Insurance and Insurance Services segment
The Company’s insurance and insurance services segment is comprised of its wholly-owned Fortegra subsidiary, which was acquired in December 2014. The financial information for the three and nine months ended September 30, 2014 previously reported in Fortegra’s filings with the SEC may not be comparable to financial information reported in this report due to purchase price accounting adjustments giving effect to the push-down accounting treatment of the acquisition. Prior year results in this segment have been reclassified to discontinued operations due to the sale of PFG.
Insurance and insurance services segment pre-tax income was $20.4 million in the nine months ended September 30, 2015, and $10.1 million for the three months ended September 30, 2015, an increase over the prior year operating result. Pre-tax income increased $3.8 million from the second quarter primarily due to improved volume in credit and warranty products.
Net revenues were $103.4 million for the nine months ended September 30, 2015. For the third quarter 2015, net revenues were $34.2 million. Adjusted for the impact of purchase accounting, net revenues were $84.0 million for the nine months ended September 30, 2015, essentially flat to prior year operating results, and $29.8 million for the third quarter 2015, flat to the previous year operating results.
Credit protection net revenues for the quarter ended September 30, 2015, were $17.4 million, a meaningful increase over the prior year operating results. Credit protection net revenues for the nine month period were $47.1 million or slightly higher than the previous year operating results. Cellphone warranty services net revenues for the third quarter were $9.0 million, a slight increase over the prior year operating results. Cell phone warranty products for the nine months ended September 30, 2015 were $25.4 million, down meaningfully from the prior year operating results. Improvement in specialty products helped close the gap in net revenues in the third quarter due to the competitive pressures in the cellphone warranty business. Specialty products net revenue for the third quarter were $1.3 million, up significantly from the prior year operating results, while specialty products net revenues year to date in 2015 were $4.1 million, nearly twice as much as the prior year operating results. Credit protection products and specialty products continue to provide opportunities for growth through a combination of expanded product offerings, new clients and geographic expansion in the latter case.
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Operating expenses in the insurance and insurance services segment are composed of payroll and employee commissions and amortization expenses and other expenses. Segment operating expenses in the nine months ended September 30, 2015 were $83.0 million, a meaningful increase from the previous year costs. Operating expenses were $24.1 million in the third quarter, generally flat relative to prior year costs. The primary driver of the year over year increase in costs was attributable to higher depreciation and amortization expense attributable to amortization of the fair value attributed to the insurance policies and contracts acquired of $17.2 million for the nine months and $3.1 million for the quarter, partially offset by cost reduction efforts in the third quarter.
Insurance and insurance services segment adjusted EBITDA was $13.2 million for the three months ended September 30, 2015 and $30.5 million for the nine months ended September 30, 2015. See “—Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA” below for a reconciliation to GAAP net income.
Specialty Finance segment
Specialty Finance segment pre-tax income was $1.3 million for the third quarter of 2015, compared with a pre-tax net loss of $703.0 thousand for the third quarter of 2014. For the nine months ended September 30, 2015, the specialty finance segment pre-tax net income was $2.3 million, compared with a pre-tax net loss of $2.2 million for the prior year comparable period. The Luxury and Siena businesses benefited from an improving US economy. The key drivers of the increase were due both to higher volume in our mortgage origination business, including the impact from the acquisition of Reliance, which resulted in both higher funding volume and improved margins as a result of Reliance’s focus on higher margin FHA/VA and agency production and improved volume at Luxury. The improvement in Siena’s results were primarily the result of increased loan originations and higher utilization rates.
Specialty finance segment adjusted EBITDA was $1.6 million for the three months ended September 30, 2015 compared to a loss of $0.6 million in the prior year period. Specialty finance segment adjusted EBITDA was $2.9 million for the nine months ended September 30, 2015 compared to a loss of $1.8 million for the prior year period.
Real Estate segment
Care had a pre-tax net loss of $2.6 million for the third quarter of 2015, compared with pre-tax net income of $7.0 million in the third quarter of 2014. Care had a pre-tax loss of $8.8 million in the nine months ended September 30, 2015, compared with pre-tax income of $5.5 million in the nine months ended September 30, 2014. In the third quarter of 2014, Care recorded a gain of approximately $7.9 million on the repayment in full to Care of a loan that was secured by real property. Care did not have a similar gain in the third quarter of 2015. Additionally, Care made significant investments in senior housing properties and joint ventures during the latter part of 2014 and the first quarter of 2015. The increase in the number of properties generated higher rental and other income in 2015 compared with 2014, however the Company also incurred additional depreciation, amortization and interest expenses as a consequence of the growth in Care’s property portfolio.
Care had Adjusted EBITDA of $1.3 million for the third quarter of 2015 compared to $8.6 million in the comparable period of 2014 and $3.9 million of Adjusted EBITDA for the nine months ended September 30, 2015 compared to $10.2 million in the comparable period in 2014 primarily due to the repayment to Care of the Westside Loan. See “—Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA” below for a reconciliation to GAAP net income.
Asset Management
Pre-tax net income for the asset management segment was $2.1 million for the third quarter of 2015, compared with pre-tax net income of $2.3 million for the third quarter of 2014, a decrease of $201 thousand. Pre-tax net income for the nine months ended September 30, 2015 was $6.7 million, compared to $7.2 million in the prior year period. The principal reason for the decline was the reduction in CLO management fees, driven by a combination of amortized AUM and lower fees as described below.
Asset management segment adjusted EBITDA was $2.1 million for the three months ended September 30, 2015 compared to $2.3 million in the prior year period. Asset management segment adjusted EBITDA was $6.7 million for the nine months ended September 30, 2015 compared to $7.2 million for the prior year period. See “—Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA” below for a reconciliation to GAAP net income.
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Net Income attributable to CLOs managed by the Company
Pre-tax net loss from the Company’s CLO business was $1.4 million for the third quarter of 2015, compared with pre-tax net income of $2.7 million in the third quarter of 2014. Pre-tax net income attributable to consolidated CLOs was $1.2 million in the nine months ended September 30, 2015 versus $14.5 million in the prior year period. The primary drivers of the decline in 2015 was attributable to realized and unrealized losses incurred on the Company’s holdings of CLO subordinated notes. The Company realized losses with the sale of its subordinated notes issued by Telos 2 and Telos 4 during the second quarter of 2015, which generated net cash proceeds of $39.7 million and tax losses of approximately $12.5 million. The unrealized loss in the third quarter of 2015 was due to the mark-to-market write-down in our CLO subordinated note holdings. The lower distributions from the subordinated notes in the third quarter of 2015 compared to the prior year is primarily due to our sales of CLO subordinated notes in the second quarter of 2015.
Corporate and Other
The Company’s corporate and other segment incorporates revenues from the Company’s investments in CLOs and tax exempt securities, income from the Company’s credit investment portfolio and net gains or losses from the Company’s corporate finance activity, including the interest rate and credit derivative risk mitigation transactions. Segment expenses include interest expense on the Fortress credit facility and head office payroll and other expenses.
Pre-tax loss from the corporate and other segment for the third quarter 2015 was $14.5 million compared to $3.8 million in the comparable period in 2014. Pre-tax loss from the corporate and other segment for the nine months ended September 30, 2015 was $31.6 million compared to $3.3 million for the comparable period in 2014. The primary driver of the loss in the third quarter and first nine months of 2015 was realized and unrealized net losses on CLO subordinated notes and increased corporate payroll and other expenses as the Company expanded its staff and other professional support as a result of its efforts to improve reporting and controls infrastructure.
Earnings Conference Call
Tiptree Financial will host a conference call on Tuesday, November 17, 2015 at 10:00 a.m. Eastern Time to discuss its third quarter 2015 financial results. A copy of our investor presentation for the third quarter 2015, to be used during the conference call, as well as this press release, will be available in the Investor Relations section of the Company’s website, located at www.tiptreefinancial.com.
The conference call will be available via live or archived webcast at http://www.investors.tiptreefinancial.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To participate in the telephone conference call, please dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). Please dial in at least five minutes prior to the start time.
A replay of the call will be available from Tuesday, November 17, 2015 at 2:00 p.m. Eastern Time, until midnight Eastern on Tuesday, November 24, 2015. To listen to the replay, please dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international), Passcode: 13624588.
About Tiptree
Tiptree is a diversified holding company engaged through its consolidated subsidiaries in a number of businesses and is an active acquirer of new businesses. Tiptree, whose operations date back to 2007, currently has subsidiaries that operate in five industries: insurance and insurance services, specialty finance, asset management and real estate. Tiptree’s principal investments are included in a corporate and others segment.
Forward-Looking Statements
This release contains “forward-looking statements” which involve risks, uncertainties and contingencies, many of which are beyond the Company’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,”
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“target,” “will,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K, and as described in the Company’s other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statements.
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Tiptree Financial Inc. | As of | ||||||
Consolidated Balance Sheets (GAAP) (in thousands except per share amounts) | September 30, 2015 | December 31, 2014 | |||||
(Unaudited) | As adjusted | ||||||
Cash and cash equivalents – unrestricted | $ | 98,737 | $ | 52,987 | |||
Cash and cash equivalents – restricted | 34,004 | 28,045 | |||||
Trading assets, at fair value | 33,817 | 30,235 | |||||
Investments in available for sale securities, at fair value | 192,387 | 171,128 | |||||
Mortgage loans held for sale, at fair value | 108,969 | 28,661 | |||||
Investments in loans, at fair value | 248,924 | 2,601 | |||||
Loans owned, at amortized cost – net of allowance | 57,395 | 36,095 | |||||
Notes receivable, net | 23,020 | 21,916 | |||||
Accounts and premiums receivable, net | 61,374 | 39,666 | |||||
Reinsurance receivables | 332,349 | 264,776 | |||||
Investments in partially-owned entities | 99 | 2,451 | |||||
Real estate | 207,393 | 131,308 | |||||
Intangible assets | 97,785 | 120,394 | |||||
Other receivables | 53,574 | 36,068 | |||||
Goodwill | 93,207 | 92,118 | |||||
Other assets | 89,717 | 36,875 | |||||
Assets of consolidated CLOs | 1,766,036 | 1,978,094 | |||||
Assets held for sale | — | 5,129,745 | |||||
Total assets | $ | 3,498,787 | $ | 8,203,163 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Trading liabilities, at fair value | $ | 24,602 | $ | 22,645 | |||
Debt | 625,491 | 363,199 | |||||
Unearned premiums | 368,827 | 299,826 | |||||
Policy liabilities | 75,170 | 63,365 | |||||
Deferred revenue | 66,153 | 45,393 | |||||
Deferred tax liabilities | 22,219 | 45,925 | |||||
Commissions payable | 8,823 | 12,983 | |||||
Other liabilities and accrued expenses | 174,742 | 63,928 | |||||
Liabilities of consolidated CLOs | 1,725,241 | 1,877,377 | |||||
Liabilities held for sale and discontinued operations | 751 | 5,006,901 | |||||
Total liabilities | $ | 3,092,019 | $ | 7,801,542 | |||
Stockholders’ Equity: | |||||||
Preferred stock | $ | — | $ | — | |||
Common stock - Class A | 35 | 32 | |||||
Common stock - Class B | 8 | 10 | |||||
Additional paid-in capital | 298,589 | 271,090 | |||||
Accumulated other comprehensive income | 594 | (49 | ) | ||||
Retained earnings | 20,367 | 13,379 | |||||
Total stockholders’ equity to Tiptree Financial Inc. | 319,593 | 284,462 | |||||
Non-controlling interests (including $71,952 and $90,144 attributable to Tiptree Financial Partners, L.P., respectively) | 87,175 | 117,159 | |||||
Total stockholders’ equity | 406,768 | 401,621 | |||||
Total liabilities and stockholders’ equity | $ | 3,498,787 | $ | 8,203,163 | |||
Book Value Per Share - Tiptree Financial Inc. | September 30, 2015 | December 31, 2014 | |||||
Total stockholders’ equity of Tiptree Financial Inc. | $ | 319,593 | $ | 284,462 | |||
Class A common stock outstanding | 35,039 | 31,830 | |||||
Class A book value per common share (1) | $ | 9.12 | $ | 8.94 | |||
Note:
(1) See “—Tiptree Financial Inc. and the Company Book Value Per Share” below for further discussion of book value per common share.
Tiptree Financial Inc.
Consolidated Statements of Operations (GAAP)
(Unaudited, in thousands, except share and per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues: | As adjusted | As adjusted | |||||||||||||
Net realized and unrealized gains (losses) on investments | $ | (2,342 | ) | $ | 9,274 | $ | (2,427 | ) | $ | 10,034 | |||||
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | (707 | ) | (273 | ) | 245 | (34 | ) | ||||||||
Interest income | 5,791 | 3,343 | 11,979 | 10,519 | |||||||||||
Net credit derivative losses | (166 | ) | (786 | ) | (700 | ) | (2,307 | ) | |||||||
Service and administrative fees | 29,565 | — | 77,037 | — | |||||||||||
Ceding commissions | 11,515 | — | 31,600 | — | |||||||||||
Earned premiums, net | 43,884 | — | 120,944 | — | |||||||||||
Gain on sale of loans held for sale, net | 14,859 | 2,425 | 21,531 | 5,225 | |||||||||||
Loan fee income | 2,844 | 1,476 | 6,125 | 2,885 | |||||||||||
Rental revenue | 11,165 | 4,469 | 31,725 | 13,308 | |||||||||||
Other income | 2,681 | 398 | 8,219 | 1,202 | |||||||||||
Total revenues | 119,089 | 20,326 | 306,278 | 40,832 | |||||||||||
Expenses: | |||||||||||||||
Interest expense | 6,329 | 3,056 | 17,652 | 8,513 | |||||||||||
Payroll and employee commissions | 30,156 | 7,670 | 73,926 | 20,682 | |||||||||||
Commission expense | 30,891 | — | 71,346 | — | |||||||||||
Member benefit claims | 7,955 | — | 23,774 | — | |||||||||||
Net losses and loss adjustment expenses | 14,948 | — | 40,324 | — | |||||||||||
Professional fees | 5,521 | 3,001 | 13,820 | 5,991 | |||||||||||
Depreciation and amortization expenses | 10,034 | 1,733 | 36,857 | 5,063 | |||||||||||
Acquisition costs | — | — | 1,349 | — | |||||||||||
Other expenses | 15,391 | 2,731 | 39,464 | 7,746 | |||||||||||
Total expenses | 121,225 | 18,191 | 318,512 | 47,995 | |||||||||||
Results of consolidated CLOs: | |||||||||||||||
Income attributable to consolidated CLOs | 15,576 | 14,476 | 50,272 | 47,174 | |||||||||||
Expenses attributable to consolidated CLOs | 16,999 | 11,740 | 49,037 | 32,724 | |||||||||||
Net (loss) income attributable to consolidated CLOs | (1,423 | ) | 2,736 | 1,235 | 14,450 | ||||||||||
(Loss) income before taxes from continuing operations | (3,559 | ) | 4,871 | (10,999 | ) | 7,287 | |||||||||
Less: provision (benefit) for income taxes | 2,829 | (1,365 | ) | 962 | (3,097 | ) | |||||||||
(Loss) income from continuing operations | (6,388 | ) | 6,236 | (11,961 | ) | 10,384 | |||||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations, net | — | 1,807 | 6,999 | 5,283 | |||||||||||
Gain on sale of discontinued operations, net | — | — | 16,349 | — | |||||||||||
Discontinued operations, net | — | 1,807 | 23,348 | 5,283 | |||||||||||
Net (loss) income before non-controlling interests | (6,388 | ) | 8,043 | 11,387 | 15,667 | ||||||||||
Less: net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. | (1,661 | ) | 3,908 | 2,214 | 8,459 | ||||||||||
Less: net (loss) attributable to noncontrolling interests - Other | (174 | ) | (150 | ) | (257 | ) | (742 | ) | |||||||
Net (loss) income available to common stockholders | $ | (4,553 | ) | $ | 4,285 | $ | 9,430 | $ | 7,950 | ||||||
Net (loss) income per Class A common share: | |||||||||||||||
Basic, continuing operations, net | $ | (0.13 | ) | $ | 0.19 | $ | (0.25 | ) | $ | 0.48 | |||||
Basic, discontinued operations, net | — | 0.05 | 0.54 | 0.13 | |||||||||||
Basic earnings per share | (0.13 | ) | 0.24 | 0.29 | 0.61 | ||||||||||
Diluted, continuing operations, net | (0.13 | ) | 0.19 | (0.25 | ) | 0.48 | |||||||||
Diluted, discontinued operations, net | — | 0.05 | 0.54 | 0.13 | |||||||||||
Diluted earnings per share | $ | (0.13 | ) | $ | 0.24 | $ | 0.29 | $ | 0.61 | ||||||
Weighted average number of Class A common shares: | |||||||||||||||
Basic | 33,848,463 | 17,449,974 | 32,597,774 | 12,909,949 | |||||||||||
Diluted | 33,848,463 | 17,449,974 | 32,597,774 | 12,909,949 | |||||||||||
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Tiptree Financial Inc.
Segment Statements of Operations
(Unaudited, in thousands)
Three Months Ended September 30, 2015 | |||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | (56 | ) | $ | (51 | ) | $ | (580 | ) | $ | — | $ | (1,655 | ) | $ | (2,342 | ) | ||||||
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — | (707 | ) | — | — | — | (707 | ) | |||||||||||||||
Interest income | 1,350 | 2,374 | 25 | — | 2,042 | 5,791 | |||||||||||||||||
Service and administrative fees | 29,565 | — | — | — | — | 29,565 | |||||||||||||||||
Ceding commissions | 11,515 | — | — | — | — | 11,515 | |||||||||||||||||
Earned premiums, net | 43,884 | — | — | — | — | 43,884 | |||||||||||||||||
Gain on sale of loans held for sale, net | — | 14,859 | — | — | — | 14,859 | |||||||||||||||||
Loan fee income | — | 2,844 | — | — | — | 2,844 | |||||||||||||||||
Rental revenue | — | (24 | ) | 11,189 | — | — | 11,165 | ||||||||||||||||
Other income | 1,733 | 53 | 926 | (13 | ) | (184 | ) | 2,515 | |||||||||||||||
Total revenue | 87,991 | 19,348 | 11,560 | (13 | ) | 203 | 119,089 | ||||||||||||||||
Interest expense | 1,735 | 1,217 | 1,828 | — | 1,549 | 6,329 | |||||||||||||||||
Payroll and employee commissions | 9,543 | 11,816 | 4,171 | 339 | 4,287 | 30,156 | |||||||||||||||||
Commission expense | 30,891 | — | — | — | — | 30,891 | |||||||||||||||||
Member benefit claims | 7,955 | — | — | — | — | 7,955 | |||||||||||||||||
Net losses and loss adjustment expenses | 14,948 | — | — | — | — | 14,948 | |||||||||||||||||
Depreciation and amortization expenses | 5,765 | 269 | 3,932 | — | 68 | 10,034 | |||||||||||||||||
Other expenses | 7,031 | 4,795 | 4,241 | 155 | 4,690 | 20,912 | |||||||||||||||||
Total expense | 77,868 | 18,097 | 14,172 | 494 | 10,594 | 121,225 | |||||||||||||||||
Net intersegment revenue/(expense) | — | — | — | — | — | — | |||||||||||||||||
Net income attributable to consolidated CLOs | — | — | — | 2,646 | (4,069 | ) | (1,423 | ) | |||||||||||||||
Pre-tax income (loss) | $ | 10,123 | $ | 1,251 | $ | (2,612 | ) | $ | 2,139 | $ | (14,460 | ) | $ | (3,559 | ) | ||||||||
Less: Provision (benefit) for income taxes | 2,829 | ||||||||||||||||||||||
Discontinued operations | — | ||||||||||||||||||||||
Net income before non-controlling interests | $ | (6,388 | ) | ||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Tiptree Financial Partners, L.P. | (1,661 | ) | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Other | (174 | ) | |||||||||||||||||||||
Net income available to common stockholders | $ | (4,553 | ) | ||||||||||||||||||||
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Tiptree Financial Inc.
Segment Statements of Operations
(Unaudited, in thousands)
Three Months Ended September 30, 2014 | |||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | — | $ | 1 | $ | 8,102 | $ | — | $ | 1,171 | $ | 9,274 | |||||||||||
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — | (273 | ) | — | — | — | (273 | ) | |||||||||||||||
Interest income | — | 629 | 139 | — | 2,575 | 3,343 | |||||||||||||||||
Service and administrative fees | — | — | — | — | — | — | |||||||||||||||||
Ceding commissions | — | — | — | — | — | — | |||||||||||||||||
Earned premiums, net | — | — | — | — | — | — | |||||||||||||||||
Gain on sale of loans held for sale, net | — | 2,425 | — | — | — | 2,425 | |||||||||||||||||
Loan fee income | — | 1,476 | — | — | — | 1,476 | |||||||||||||||||
Rental revenue | — | 17 | 4,452 | — | — | 4,469 | |||||||||||||||||
Other income | — | 120 | 212 | 66 | (786 | ) | (388 | ) | |||||||||||||||
Total revenue | — | 4,395 | 12,905 | 66 | 2,960 | 20,326 | |||||||||||||||||
Interest expense | — | 495 | 974 | — | 1,587 | 3,056 | |||||||||||||||||
Payroll and employee commissions | — | 3,151 | 1,773 | 366 | 2,380 | 7,670 | |||||||||||||||||
Commission expense | — | — | — | — | — | — | |||||||||||||||||
Member benefit claims | — | — | — | — | — | — | |||||||||||||||||
Net losses and loss adjustment expenses | — | — | — | — | — | — | |||||||||||||||||
Depreciation and amortization expenses | — | 142 | 1,591 | — | — | 1,733 | |||||||||||||||||
Other expenses | — | 1,197 | 1,564 | 215 | 2,756 | 5,732 | |||||||||||||||||
Total expense | — | 4,985 | 5,902 | 581 | 6,723 | 18,191 | |||||||||||||||||
Net intersegment revenue/(expense) | — | (113 | ) | — | — | 113 | — | ||||||||||||||||
Net income attributable to consolidated CLOs | — | — | — | 2,856 | (120 | ) | 2,736 | ||||||||||||||||
Pre-tax income (loss) | $ | — | $ | (703 | ) | $ | 7,003 | $ | 2,341 | $ | (3,770 | ) | $ | 4,871 | |||||||||
Less: Provision (benefit) for income taxes | (1,365 | ) | |||||||||||||||||||||
Discontinued operations | 1,807 | ||||||||||||||||||||||
Net income before non-controlling interests | $ | 8,043 | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Tiptree Financial Partners, L.P. | 3,908 | ||||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Other | (150 | ) | |||||||||||||||||||||
Net income available to common stockholders | $ | 4,285 | |||||||||||||||||||||
Page 9
Tiptree Financial Inc.
Segment Statements of Operation
(Unaudited, in thousands)
Nine Months Ended September 30, 2015 | |||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | (56 | ) | $ | (51 | ) | $ | (696 | ) | $ | — | $ | (1,624 | ) | $ | (2,427 | ) | ||||||
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — | 245 | — | — | — | 245 | |||||||||||||||||
Interest income | 3,774 | 5,549 | 69 | — | 2,587 | 11,979 | |||||||||||||||||
Service and administrative fees | 77,037 | — | — | — | — | 77,037 | |||||||||||||||||
Ceding commissions | 31,600 | — | — | — | — | 31,600 | |||||||||||||||||
Earned premiums, net | 120,944 | — | — | — | — | 120,944 | |||||||||||||||||
Gain on sale of loans held for sale, net | — | 21,531 | — | — | — | 21,531 | |||||||||||||||||
Loan fee income | — | 6,125 | — | — | — | 6,125 | |||||||||||||||||
Rental revenue | — | — | 31,725 | — | — | 31,725 | |||||||||||||||||
Other income | 5,592 | 184 | 2,236 | 88 | (581 | ) | 7,519 | ||||||||||||||||
Total revenue | 238,891 | 33,583 | 33,334 | 88 | 382 | 306,278 | |||||||||||||||||
Interest expense | 5,249 | 2,562 | 4,968 | — | 4,873 | 17,652 | |||||||||||||||||
Payroll and employee commissions | 29,626 | 20,060 | 12,223 | 1,151 | 10,866 | 73,926 | |||||||||||||||||
Commission expense | 71,346 | — | — | — | — | 71,346 | |||||||||||||||||
Member benefit claims | 23,774 | — | — | — | — | 23,774 | |||||||||||||||||
Net losses and loss adjustment expenses | 40,324 | — | — | — | — | 40,324 | |||||||||||||||||
Depreciation and amortization expenses | 24,977 | 515 | 11,265 | — | 100 | 36,857 | |||||||||||||||||
Other expenses | 23,146 | 8,192 | 13,640 | 492 | 9,163 | 54,633 | |||||||||||||||||
Total expense | 218,442 | 31,329 | 42,096 | 1,643 | 25,002 | 318,512 | |||||||||||||||||
Net intersegment revenue/(expense) | — | — | — | — | — | — | |||||||||||||||||
Net income attributable to consolidated CLOs | — | — | — | 8,219 | (6,984 | ) | 1,235 | ||||||||||||||||
Pre-tax income (loss) | $ | 20,449 | $ | 2,254 | $ | (8,762 | ) | $ | 6,664 | $ | (31,604 | ) | $ | (10,999 | ) | ||||||||
Less: Provision (benefit) for income taxes | 962 | ||||||||||||||||||||||
Discontinued operations | 23,348 | ||||||||||||||||||||||
Net income before non-controlling interests | $ | 11,387 | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Tiptree Financial Partners, L.P. | 2,214 | ||||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Other | (257 | ) | |||||||||||||||||||||
Net income available to common stockholders | $ | 9,430 | |||||||||||||||||||||
Segment Assets as of September 30, 2015 | |||||||||||||||||||||||
Segment assets | $ | 900,571 | $ | 206,928 | $ | 237,383 | $ | 2,706 | $ | 385,163 | $ | 1,732,751 | |||||||||||
Assets of consolidated CLOs | 1,766,036 | ||||||||||||||||||||||
Assets held for sale | — | ||||||||||||||||||||||
Total assets | $ | 3,498,787 | |||||||||||||||||||||
Page 10
Tiptree Financial Inc.
Segment Statements of Operation
(Unaudited, in thousands)
Nine Months Ended September 30, 2014 | |||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | $ | — | $ | 1 | $ | 7,378 | $ | — | $ | 2,655 | $ | 10,034 | |||||||||||
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments | — | (34 | ) | — | — | — | (34 | ) | |||||||||||||||
Interest income | — | 1,849 | 1,504 | — | 7,166 | 10,519 | |||||||||||||||||
Service and administrative fees | — | — | — | — | — | — | |||||||||||||||||
Ceding commissions | — | — | — | — | — | — | |||||||||||||||||
Earned premiums, net | — | — | — | — | — | — | |||||||||||||||||
Gain on sale of loans held for sale, net | — | 5,225 | — | — | — | 5,225 | |||||||||||||||||
Loan fee income | — | 2,885 | — | — | — | 2,885 | |||||||||||||||||
Rental revenue | — | 34 | 13,274 | — | — | 13,308 | |||||||||||||||||
Other income | — | 212 | 598 | 224 | (2,139 | ) | (1,105 | ) | |||||||||||||||
Total revenue | — | 10,172 | 22,754 | 224 | 7,682 | 40,832 | |||||||||||||||||
Interest expense | — | 950 | 2,930 | — | 4,633 | 8,513 | |||||||||||||||||
Payroll and employee commissions | — | 7,543 | 5,287 | 1,396 | 6,456 | 20,682 | |||||||||||||||||
Commission expense | — | — | — | — | — | — | |||||||||||||||||
Member benefit claims | — | — | — | — | — | — | |||||||||||||||||
Net losses and loss adjustment expenses | — | — | — | — | — | — | |||||||||||||||||
Depreciation and amortization expenses | — | 379 | 4,684 | — | — | 5,063 | |||||||||||||||||
Other expenses | — | 3,169 | 4,365 | 578 | 5,625 | 13,737 | |||||||||||||||||
Total expense | — | 12,041 | 17,266 | 1,974 | 16,714 | 47,995 | |||||||||||||||||
Net intersegment revenue/(expense) | — | (301 | ) | — | — | 301 | — | ||||||||||||||||
Net income attributable to consolidated CLOs | — | — | — | 8,988 | 5,462 | 14,450 | |||||||||||||||||
Pre-tax income (loss) | $ | — | $ | (2,170 | ) | $ | 5,488 | $ | 7,238 | $ | (3,269 | ) | $ | 7,287 | |||||||||
Less: Provision (benefit) for income taxes | (3,097 | ) | |||||||||||||||||||||
Discontinued operations | 5,283 | ||||||||||||||||||||||
Net income before non-controlling interests | $ | 15,667 | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Tiptree Financial Partners, L.P. | 8,459 | ||||||||||||||||||||||
Less: net income attributable to noncontrolling interests from continuing operations and discontinued operations - Other | (742 | ) | |||||||||||||||||||||
Net income available to common stockholders | $ | 7,950 | |||||||||||||||||||||
Segment Assets as of December 31, 2014 | |||||||||||||||||||||||
Segment assets | $ | 767,914 | $ | 79,147 | $ | 179,822 | $ | 2,871 | $ | 65,570 | $ | 1,095,324 | |||||||||||
Assets of consolidated CLOs | 1,978,094 | ||||||||||||||||||||||
Assets held for sale | 5,129,745 | ||||||||||||||||||||||
Total assets | $ | 8,203,163 | |||||||||||||||||||||
Page 11
Tiptree Financial Inc.
Non-GAAP Financial Measures
(Unaudited, in thousands)
Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
In addition to the results of operations presented in accordance with GAAP, management uses EBITDA and Adjusted EBITDA on a consolidated basis and for each segment, which are non-GAAP financial measures. We believe that consolidated EBITDA and Adjusted EBITDA provide supplemental information useful to investors as it is frequently used by the financial community to analyze performance period to period, to analyze a company’s ability to service its debt and to facilitate comparison among companies. We believe segment EBITDA and Adjusted EBITDA provides additional supplemental information to compare results among our segments. EBITDA and Adjusted EBITDA are not a measurement of financial performance or liquidity under GAAP; therefore, EBITDA and Adjusted EBITDA should not be considered as an alternative or substitute for GAAP. Our presentation of EBITDA and Adjusted EBITDA may differ from similarly titled non-GAAP financial measures used by other companies. We define EBITDA as GAAP net income of the Company adjusted to add consolidated interest expense, consolidated income taxes and consolidated depreciation and amortization expense as presented in our financial statements and Adjusted EBITDA as EBITDA adjusted to (i) subtract interest expense on asset-specific debt incurred in the ordinary course of our subsidiaries’ business operations, (ii) adjust for the effect of purchase accounting, (iii) add significant acquisition related costs and (iv) adjust for significant relocation costs.
Reconciliation from the Company’s GAAP net income to | |||||||||||||||||||
Non-GAAP financial measures - EBITDA and Adjusted EBITDA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | Year ended December 31, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2014 | |||||||||||||||
Net income (loss) available to Class A common stockholders | $ | (4,553 | ) | $ | 4,285 | $ | 9,430 | $ | 7,950 | $ | (1,710 | ) | |||||||
Add: net income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. | (1,661 | ) | 3,908 | 2,214 | 8,459 | 6,791 | |||||||||||||
Add: net income (loss) attributable to noncontrolling interests - Other | (174 | ) | (150 | ) | (257 | ) | (742 | ) | (497 | ) | |||||||||
Less: net income from discontinued operations | — | 1,807 | 23,348 | 5,283 | (7,937 | ) | |||||||||||||
(Loss) from Continuing Operations of the Company | $ | (6,388 | ) | $ | 6,236 | $ | (11,961 | ) | $ | 10,384 | $ | (3,353 | ) | ||||||
Consolidated interest expense | 6,329 | 3,056 | 17,652 | 8,513 | 12,541 | ||||||||||||||
Consolidated income taxes | 2,829 | (1,365 | ) | 962 | (3,097 | ) | 4,141 | ||||||||||||
Consolidated depreciation and amortization expense | 10,034 | 1,733 | 36,857 | 5,063 | 11,945 | ||||||||||||||
EBITDA for Continuing Operations | $ | 12,804 | $ | 9,660 | $ | 43,510 | $ | 20,863 | $ | 25,274 | |||||||||
Consolidated non-corporate and non-acquisition related interest expense(1) | (3,484 | ) | (2,072 | ) | (8,127 | ) | (5,010 | ) | (7,236 | ) | |||||||||
Effects of Purchase Accounting related to the Fortegra acquisition(2) | (4,376 | ) | — | (19,977 | ) | — | (4,168 | ) | |||||||||||
Significant acquisition related costs(3) | — | — | 1,349 | — | 6,121 | ||||||||||||||
Subtotal Adjusted EBITDA for Continuing Operations of the Company | $ | 4,944 | $ | 7,588 | $ | 16,755 | $ | 15,853 | $ | 19,991 | |||||||||
Income from Discontinued Operations of the Company(4) | $ | — | $ | 1,807 | $ | 23,348 | $ | 5,283 | $ | 7,937 | |||||||||
Consolidated interest expense | — | 2,873 | 5,226 | 8,683 | 11,475 | ||||||||||||||
Consolidated income taxes | — | 1,345 | 3,796 | 4,003 | 5,525 | ||||||||||||||
Consolidated depreciation and amortization expense | — | 1,409 | 862 | 3,149 | 4,379 | ||||||||||||||
EBITDA for Discontinued Operations | $ | — | $ | 7,434 | $ | 33,232 | $ | 21,118 | $ | 29,316 | |||||||||
Significant relocation costs(5) | — | — | — | — | 5,477 | ||||||||||||||
Subtotal Adjusted EBITDA for Discontinued Operations of the Company | $ | — | $ | 7,434 | $ | 33,232 | $ | 21,118 | $ | 34,793 | |||||||||
Total Adjusted EBITDA of the Company | $ | 4,944 | $ | 15,022 | $ | 49,987 | $ | 36,971 | $ | 54,784 | |||||||||
Page 12
Notes:
(1) | The consolidated non-corporate and non-acquisition related interest expense subtracted from Adjusted EBITDA includes interest expense associated with asset-specific debt at subsidiaries in the insurance and insurance services, specialty finance, real estate and corporate and other segments. For the quarter ended September 30, 2015, interest expense for the asset-specific debt was $76.0 thousand for insurance and insurance services, $1.2 million for specialty finance, $1.8 million for real estate and $0.4 million for corporate and other, totaling $3.5 million. For the quarter ended September 30, 2014, interest expense for the asset-specific debt was $0.5 million for specialty finance, $1.0 million for real estate and $0.6 million for corporate and other, totaling $2.1 million. For the nine months ended September 30, 2015, interest expense for the asset-specific debt was $0.2 million for insurance and insurance services, $2.4 million for specialty finance, $5.0 million for real estate and $0.5 million for corporate and other, totaling $8.1 million. For the nine months ended September 30, 2014, interest expense for the asset-specific debt was $1.0 million for specialty finance, $2.9 million for real estate, and $1.1 million for corporate and other segments, totaling $5.0 million. |
(2) | Tiptree’s purchase of Fortegra resulted in a number of purchase accounting adjustments being made as of the date of acquisition, which included setting deferred cost assets to a fair value of zero, modifying deferred revenue liabilities to their respective fair values, and recording a substantial intangible asset representing the value of the acquired insurance policies and contracts. Following the purchase accounting adjustments, for the quarter ended September 30, 2015, expenses associated with deferred costs were more favorably stated by $1.1 million and current period income associated with deferred revenues were less favorably stated by $5.5 million. For the nine months ended September 30, 2015, expenses associated with deferred costs were more favorably stated by $5.7 million and current period income associated with deferred revenues were less favorably stated by $25.7 million.Thus, the purchase accounting effect increased EBITDA by $4.3 million and $20.0 million in the quarter ended September 30, 2015 and the nine months ended September 30, 2015, respectively, above what the historical basis of accounting would have generated. The impact of purchase accounting has been reversed to reflect an adjusted EBITDA without the purchase accounting effect. |
(3) | Significant acquisition related costs in connection with Care’s acquisition of the Royal Portfolio and Greenfield II Portfolio properties included taxes of $504 thousand, legal costs of $414 thousand and $431 thousand of other property acquisition expenses. |
(4) | See Note 5—Dispositions, Asset Held for Sale and Discontinued Operations, in the accompanying consolidated financial statements contained in Tiptree Financial’s form 10-Q for the quarter ended September 30, 2015, for further discussion of discontinued operations. |
(5) | Significant relocation costs for discontinued operations included expenses incurred in connection with the move of PFAS’s physical location from New Jersey to Philadelphia for the year ended December 31, 2014. |
Segment EBITDA and ADJUSTED EBITDA - Three months ended September 30, 2015 and September 30, 2014 (Unaudited)
($ in thousands) | Segment EBITDA and ADJUSTED EBITDA - Three months ended September 30, 2015 and September 30, 2014 | |||||||||||||||||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | |||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||
2015 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||
Pre tax income/(loss) | $ | 10,123 | $ | 1,251 | $ | (703 | ) | $ | (2,612 | ) | $ | 7,003 | $ | 2,139 | $ | 2,341 | $ | (14,460 | ) | $ | (3,770 | ) | $ | (3,559 | ) | $ | 4,871 | |||||||||||
Add back: | ||||||||||||||||||||||||||||||||||||||
Interest expense | 1,735 | 1,217 | 495 | 1,828 | 974 | — | — | 1,549 | 1,587 | 6,329 | 3,056 | |||||||||||||||||||||||||||
Depreciation and amortization expenses | 5,765 | 269 | 142 | 3,932 | 1,591 | — | — | 68 | — | 10,034 | 1,733 | |||||||||||||||||||||||||||
Segment EBITDA | $ | 17,623 | $ | 2,737 | $ | (66 | ) | $ | 3,148 | $ | 9,568 | $ | 2,139 | $ | 2,341 | $ | (12,843 | ) | $ | (2,183 | ) | $ | 12,804 | $ | 9,660 | |||||||||||||
EBITDA adjustments: | ||||||||||||||||||||||||||||||||||||||
Asset-specific debt interest | (76 | ) | (1,167 | ) | (495 | ) | (1,828 | ) | (974 | ) | — | — | (413 | ) | (603 | ) | (3,484 | ) | (2,072 | ) | ||||||||||||||||||
Fortegra purchase accounting | (4,376 | ) | — | — | — | — | — | — | — | — | (4,376 | ) | — | |||||||||||||||||||||||||
Significant acquisition expenses | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Segment Adjusted EBITDA | $ | 13,171 | $ | 1,570 | $ | (561 | ) | $ | 1,320 | $ | 8,594 | $ | 2,139 | $ | 2,341 | $ | (13,256 | ) | $ | (2,786 | ) | $ | 4,944 | $ | 7,588 | |||||||||||||
Page 13
Segment EBITDA and ADJUSTED EBITDA - Nine Months Ended September 30, 2015 and September 30, 2014 (Unaudited)
($ in thousands) | Segment EBITDA and ADJUSTED EBITDA - Nine months ended September 30, 2015 and September 30, 2014 | |||||||||||||||||||||||||||||||||||||
Insurance and insurance services | Specialty finance | Real estate | Asset management | Corporate and other | Totals | |||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
2015 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||
Pre tax income/(loss) | $ | 20,449 | $ | 2,254 | $ | (2,170 | ) | $ | (8,762 | ) | $ | 5,488 | $ | 6,664 | $ | 7,238 | $ | (31,604 | ) | $ | (3,269 | ) | $ | (10,999 | ) | $ | 7,287 | |||||||||||
Add back: | ||||||||||||||||||||||||||||||||||||||
Interest expense | 5,249 | 2,562 | 950 | 4,968 | 2,930 | — | — | 4,873 | 4,633 | 17,652 | 8,513 | |||||||||||||||||||||||||||
Depreciation and amortization expenses | 24,977 | 515 | 379 | 11,265 | 4,684 | — | — | 100 | — | 36,857 | 5,063 | |||||||||||||||||||||||||||
Segment EBITDA | $ | 50,675 | $ | 5,331 | $ | (841 | ) | $ | 7,471 | $ | 13,102 | $ | 6,664 | $ | 7,238 | $ | (26,631 | ) | $ | 1,364 | $ | 43,510 | $ | 20,863 | ||||||||||||||
EBITDA adjustments: | ||||||||||||||||||||||||||||||||||||||
Asset-specific debt interest | (219 | ) | (2,444 | ) | (950 | ) | (4,968 | ) | (2,930 | ) | — | — | (496 | ) | (1,130 | ) | (8,127 | ) | (5,010 | ) | ||||||||||||||||||
Fortegra purchase accounting | (19,977 | ) | — | — | — | — | — | — | — | — | (19,977 | ) | — | |||||||||||||||||||||||||
Significant acquisition expenses | — | — | — | 1,349 | — | — | — | — | — | 1,349 | — | |||||||||||||||||||||||||||
Segment Adjusted EBITDA | $ | 30,479 | $ | 2,887 | $ | (1,791 | ) | $ | 3,852 | $ | 10,172 | $ | 6,664 | $ | 7,238 | $ | (27,127 | ) | $ | 234 | $ | 16,755 | $ | 15,853 | ||||||||||||||
Page 14
Tiptree Financial Inc. and the Company
Book Value Per Share
(Unaudited, in thousands, except per share amounts)
Tiptree Financial’s book value per share was $9.12 as of September 30, 2015 compared with $8.94 as of December 31, 2014. Total stockholders' equity for the Company was $398.1 million as of September 30, 2015, which comprised total stockholders' equity of $406.8 million adjusted for $15.2 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company, such as Siena, Luxury and Care, and net liabilities of $6.6 million wholly owned by Tiptree Financial Inc. Total stockholders' equity for the Company was $381.3 million as of December 31, 2014, which comprised total stockholders' equity of $401.7 million adjusted for $27.1 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company and net liabilities of $6.7 million wholly owned by Tiptree Financial Inc. Additionally, the Company’s book value per share is based upon Class A common shares outstanding, plus Class A common stock issuable upon exchange of partnership units of TFP. The total shares as of September 30, 2015 and December 31, 2014 were 43.1 million and 41.6 million, respectively.
Tiptree Financial’s Class A book value per common share and the Company’s book value per share are presented below.
Book value per share - Tiptree Financial | |||||||
(in thousands, except per share data) | September 30, 2015 | December 31, 2014 | |||||
Total stockholders’ equity of Tiptree Financial | $ | 319,593 | $ | 284,462 | |||
Class A common stock outstanding | 35,039 | 31,830 | |||||
Class A book value per common share(1) | $ | 9.12 | $ | 8.94 | |||
Book value per share - the Company | |||||||
Total stockholders’ equity of the Company | $ | 398,113 | $ | 381,300 | |||
Class A common stock outstanding | 35,039 | 31,830 | |||||
Class A common stock issuable upon exchange of partnership units of TFP | 8,055 | 9,770 | |||||
Total shares | 43,094 | 41,600 | |||||
Company book value per share | $ | 9.24 | $ | 9.17 | |||
Notes:
(1) See Note 24—Earnings per Share, in the Form 10-Q for the quarter ended September 30, 2015, for further discussion of potential dilution from warrants.
Page 15