- Tiptree Financial Inc. GAAP net income of $5.6 million, up $6.6
million from a loss of $1.0 million in the prior year period.
- Tiptree Operating Company, LLC GAAP net income of $7.4 million, up
$9.4 million from a loss of $2.0 million in the prior year period.
- Tiptree Operating Company, LLC Total Adjusted EBITDA of $15.3
million, up 18% or $2.4 million from the prior year period.
- Declared dividend of $0.025 per share to Class A stockholders of
record on May 23, 2016 with a payment date of May 30, 2016.
- GAAP book value of $9.12 per Class A common share and $9.03 per
share of Tiptree Operating Company, LLC as of March 31, 2016.
NEW YORK--(BUSINESS WIRE)--
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 ended
March 31, 2016. This release reports both the results of Tiptree
Operating Company, LLC (“Tiptree” or the “Company”) and the results
available to Tiptree Financial’s Class A stockholders.
First Quarter 2016 Highlights
- Fortegra Financial Corporation (“Fortegra”) contributed $9.0 million
in pre-tax earnings to consolidated results for the three months ended
March 31, 2016 compared to $4.0 million for the prior year period.
-
Care acquired 2 seniors housing communities with assets of $55
million. As a result of acquisitions in 2015 and 2016, Care revenues
grew $4.5 million, or 47.4%.
-
Purchased an additional $11.9 million in non-performing residential
mortgage loans securing single family properties (“NPLs”), bringing
the Company’s total investment in NPLs to $51.6 million.
-
Simplified Tiptree Financial’s corporate structure by creating a
consolidated group among Tiptree Financial and its subsidiaries for
U.S. federal income tax purposes effective January 1, 2016.
-
Raised $22 million in proceeds through the sale of our tax exempt
portfolio in the quarter and Star Asia investment in early April,
available to redeploy into our core businesses.
First Quarter 2016 Financial Overview
Consolidated Results
The Company had net income before taxes from continuing operations of
$5.0 million for the three months ended March 31, 2016, which was an
increase of $10.8 million from the three months ended March 31, 2015.
The key drivers of pretax results from continuing operations were
improved revenues and investment income from our insurance and insurance
services segment, increased rental income in our senior housing real
estate operations, and unrealized gains on principal investments
partially offset by increased expenses in specialty finance and higher
corporate expenses associated with our effort to improve our controls
and financial reporting infrastructure.
For the three months ended March 31, 2016, the Company reported revenues
of $131.8 million, an increase of $42.7 million from the three months
ended March 31, 2015. The primary drivers of the increase in revenues
were period-over-period improvements in earned premiums, service and
administrative fees and investment income in our insurance and insurance
services segment, the acquisition of Reliance in specialty finance and
of senior housing properties at Care, and improvement in the performance
of our principal investments.
For the three months ended March 31, 2016, the Company had expenses of
$127.9 million, an increase of $33.3 million from the three months ended
March 31, 2015. The primary drivers of the increase in expenses were
commission expenses in insurance and insurance services as a result of
the growth in written premiums, higher payroll and commission expense
primarily related to the addition of Reliance volume and an increase in
headcount in specialty finance, increased operating expenses and
depreciation and amortization associated with our increased investments
in our real estate segment and increases in corporate payroll and
professional expenses to improve our reporting and controls
infrastructure.
For the three months ended March 31, 2016, the Company reported Adjusted
EBITDA from continuing operations of $15.3 million, an increase of $10.6
million from the three months ended March 31, 2015. The key drivers of
the change in Adjusted EBITDA were the same as those which impacted our
pretax income from continuing operations.
The Company reported total Adjusted EBITDA for the three months ended
March 31, 2016 of $15.3 million, an increase of $2.4 million from the
three months ended March 31, 2015. The primary drivers of the increase
were the same factors that impacted Adjusted EBITDA from continuing
operations, partially offset by the loss of income from discontinued
operations from 2015.
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. Because it is a Non-GAAP measure, it should be reviewed in
conjunction with the Company’s GAAP results. See “Non-GAAP Financial
Measures - EBITDA 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 acquisition of Fortegra resulted in purchase price accounting
adjustments in our insurance and insurance services segment giving
effect to the push-down accounting treatment of the acquisition. These
adjustments include 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 business acquired (“VOBA”). The application of push-down
accounting creates a modest impact to net income, but significantly
impacts individual assets, liabilities, revenues, and expenses. Due to
acquisition accounting, the line items through which revenue and
expenses relate to acquired contracts are recognized in a single line
item, depreciation and amortization, and are different than newly
originated contracts. To allow for better period-over-period comparison
of operations, we eliminated the effects of purchase accounting ("As
Adjusted"). The Company believes that As Adjusted information provides
useful supplemental information to investors, but should be reviewed in
conjunction with their nearest GAAP equivalent. See “Non-GAAP Financial
Measures - Fortegra” below for further information, including a
reconciliation from GAAP results to As Adjusted results.
Insurance and insurance services segment pre-tax income was $9.0 million
in the three months ended March 31, 2016, an increase of $5.0 million or
123.5% over the prior year period operating results. The primary drivers
of the improvement in period-over-period results was a reduction in
total operating expenses of $8.2 million, primarily in depreciation and
amortization expenses associated with the VOBA, partially offset by a
reductions in net revenues of $3.2 million driven by competition in the
warranty segment.
As Adjusted pre-tax income was $8.5 million for the three months ended
March 31, 2016, an increase of $5.0 million or 141.8%. The primary
drivers of the period-over-period improvement include an increase in net
revenues of $4.0 million driven by improvements in credit protection
investment income, earned premiums and service fees. As Adjusted
operating expenses were down $1.0 million as a result of cost actions
taken throughout 2015 to reduce headcount and professional fees.
For insurance and insurance services, the main components of revenue are
service and administrative fees, ceding commissions and earned premiums,
net. Total revenues were $89.3 million for the three months ended March
31, 2016, up $16.9 million, or 23.4% over the prior year period. The
increase was primarily driven by an increase in earned premiums of $7.3
million, or 19.4%, and increase of $8.4 million, or 38.2%, in service
and administrative fees, and an increase of $2.2 million in investment
income, all of which were slightly offset by a decrease of $5.4 million
in period-over-period impacts of purchase accounting.
As Adjusted net revenues were $30.7 million for the three months ended
March 31, 2016, up $4.0 million or 14.9% from the comparable 2015
period. The increase was primarily driven by improvements in the credit
protection and specialty products, as reduced claim activity and
investment income on float drove the year-over-year favorability. Those
improvements were dampened slightly by a reduction in period-over-period
As Adjusted net revenues for cell phone warranty contracts as
competitive pressures remain.
Operating expenses in the insurance and insurance services segment are
composed of payroll and employee commissions, interest expense,
professional fees, depreciation and amortization expenses and other
expenses. Segment operating expenses in the three months ended March 31,
2016 were $23.6 million, a decrease of $8.2 million or 25.8% as compared
to the previous year period costs. The primary driver of the
period-over-period decrease was attributable to lower depreciation and
amortization expense as a result of the decline in purchase accounting
impact from the amortization of the fair value attributed to the
insurance policies and contracts acquired, which was $1.5 million for
the three months ended March 31, 2016 versus $9.4 million in the
comparable 2015 period. As Adjusted operating expenses of $22.2 million
were down period-over-period as a result of continued cost reduction
efforts.
Insurance and insurance services segment adjusted EBITDA was $12.0
million for the three months ended March 31, 2016 an increase of $3.8
million for the same period year-over-year. The key drivers of Adjusted
EBITDA growth was higher credit insurance and specialty products
revenues and flat operating expenses, adjusted for the impact of
purchase accounting effects, partially offset by lower warranty revenues
driven by competition in the cell phone warranty business. 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 loss was $1.0 million for three months
ended March 31, 2016, compared with pre-tax income of $0.4 million for
the same period in 2015. The key driver of the decrease was higher
expense growth relative to volume growth, caused by investment in
marketing expenses and costs of additional sales personnel. Growth in
volume tends to lag the hiring of new loan officers as the full ramp up
of productivity takes four to six months.
Segment revenues were $16.6 million for the three months ended March 31,
2016, compared with $6.3 million for the comparable 2015 period, an
increase of $10.3 million or 164.8%. Segment expenses were $17.5 million
in the three months ended March 31, 2016, compared with $5.8 million in
the comparable 2015 period, an increase of $11.7 million or 201.5%.
Higher expenses more than offset higher revenues, resulting in declining
profitability year-over-year. Primarily drivers include unfavorable
market conditions which dampened organic origination growth excluding
the impact of the Reliance acquisition, increasing payroll expenses as
the businesses expand headcount to produce future originations, and
increased professional expenses for audit and internal control over
financial reporting.
Specialty finance segment Adjusted EBITDA was a loss of $0.7 million for
the three months ended March 31, 2016 compared to income of $0.6 million
in the prior year period. The decline in Adjusted EBITDA was driven by
the increased expenses, which more than offset increases in volume and
revenue from the Reliance acquisition. See “Non-GAAP Financial Measures
- EBITDA and Adjusted EBITDA” below for further information relating to
the Company’s adjusted EBITDA measure, including a reconciliation to
GAAP net income.
Real Estate segment
Care had a pre-tax loss of $3.9 million for three months ended March 31,
2016, compared with pre-tax loss of $4.2 million for the same period in
2015. In February and March of 2015, Care made significant investments
in 11 senior housing properties. The increase in the number of
properties in the first quarter of 2016 and 2015 generated higher rental
and other income in the 2016 period compared with the comparable 2015
period, however the Company also incurred additional depreciation,
amortization and interest expenses as a consequence of the growth in
Care’s property portfolio.
Care’s segment NOI was $4.9 million for the three months ended March 31,
2016, compared with $3.1 million in the prior year period, an increase
of $1.8 million or 56.7%, primarily as a result of an increase in rental
revenue partially offset by increased property operating expenses.
Care had Adjusted EBITDA of $2.1 million for the three months ended
March 31, 2016, compared to $0.6 million in the three months ended March
31, 2015 with the drivers being the same as mentioned above for pre-tax
income. 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 $1.7 million for
three months ended March 31, 2016, compared with pre-tax net income of
$1.9 million for the prior year period, a decrease of $0.2 million. The
key drivers of decline were a reduction in management fees by $0.2
million, offset by an increase an increase in other income of $0.3
million, and further reduced by an increase of payroll and employee
commissions of $0.4 million. The reduction in management fees was driven
by a combination of AUM declines in our older CLOs which are past their
reinvestment periods and lower fees as described below. The other income
was a gain on extinguishment of an obligation to share future management
fees for an amount that was significantly below its carrying value.
Asset management segment adjusted EBITDA was $1.7 million for 2016
compared to $1.9 million in the prior year. The decline was driven by
the same factors discussed above. See “Non-GAAP Financial Measures -
EBITDA and Adjusted EBITDA” below for a reconciliation to GAAP net
income.
Net Income attributable to CLOs managed by the Company
Including the net income from our deconsolidated CLOs, pre-tax income
from the Company’s CLO business was $2.8 million for the three months
ended March 31, 2016, compared with pre-tax income of $0.7 million in
2015. The primary driver of the year-over-year increase of $2.1 million
was lower realized and unrealized losses incurred on the Company’s
holdings of subordinated notes which was only partially offset by
reduced distributions from the subordinated notes. The lower management
fees were due to the runoff of Telos 1 and Telos 2, which are past their
reinvestment period, plus the impact of lower fees on later CLOs. The
lower distributions from the subordinated notes in 2016 compared to the
prior year is primarily due to our sales of CLO subordinated notes
during the second quarter of 2015. The realized and unrealized losses in
the three months ended March 31, 2016 and March 31, 2015 were due to the
mark-to-market write-down in our retained CLO subordinated note holdings.
See “Non-GAAP Financial Measures - CLO Net Income” below for a
reconciliation to GAAP net income.
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 three months
ended March 31, 2016 was $0.8 million compared to $8.0 million in the
prior year period. The primary drivers of this difference is the result
of a pre-tax gain of $2.8 million in our credit investments, consisting
primarily of interest income from our Telos 7 warehouse and our credit
opportunities fund, which were not formed in the prior year period, as
well as a $5.8 million unrealized gains on investments compared with net
unrealized losses of $0.7 million in the prior year period, offset by
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 Wednesday, May 11, 2016
at 10:00 a.m. Eastern Time to discuss its first quarter 2016 financial
results. A copy of our investor presentation for the first quarter 2016,
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 Wednesday, May 11, 2016 at
1:00 p.m. Eastern Time, until midnight Eastern on Wednesday, May 18,
2016. To listen to the replay, please dial 1-877-870-5176 (domestic) or
1-858-384-5517 (international), Passcode: 13635901.
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.
Tiptree Financial operates its business through Tiptree Operating
Company, LLC, which, effective January 1, 2016 was economically owned
81% by Tiptree Financial.
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,” “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.
|
| |
| Tiptree Financial Inc. | | As of |
Consolidated Balance Sheets
(unaudited, in
thousands except per share amounts) | | March 31,
2016 |
| December 31,
2015 |
| Assets | |
(Unaudited)
| | |
|
Cash and cash equivalents
| |
$
|
43,225
| | |
$
|
69,400
| |
|
Restricted cash
| |
21,951
| | |
18,778
| |
Securities, available for sale (cost or amortized cost: $182,821
at March 31, 2016 and $185,046 at
December 31, 2015)
| |
185,092
| | |
184,703
| |
|
Loans, at fair value
| |
325,912
| | |
273,559
| |
|
Loans owned, at amortized cost, net
| |
58,897
| | |
52,531
| |
Mortgage loans held for sale, at fair value (pledged as
collateral: $84,745 at March 31, 2016 and
$112,743 at
December 31, 2015)
| |
93,532
| | |
120,836
| |
|
Notes receivable, net
| |
21,532
| | |
21,696
| |
|
Accounts and premiums receivable, net
| |
78,134
| | |
57,056
| |
|
Reinsurance receivables
| |
373,854
| | |
352,926
| |
|
Deferred acquisition costs
| |
56,185
| | |
57,858
| |
|
Real estate, net
| |
254,072
| | |
203,961
| |
| Goodwill and intangible assets, net
| |
184,021
| | |
186,107
| |
|
Other receivables
| |
69,919
| | |
62,247
| |
|
Other assets
| |
111,165
| | |
104,500
| |
|
Assets of consolidated CLOs
| |
722,418
|
| |
728,812
|
|
|
Total assets
| |
$
|
2,599,909
|
| |
$
|
2,494,970
|
|
| Liabilities and Stockholders’ Equity | | | | |
Liabilities | | | | |
|
Debt, net
| |
$
|
713,071
| | |
$
|
666,952
| |
|
Unearned premiums
| |
404,100
| | |
389,699
| |
|
Policy liabilities and unpaid claims
| |
89,927
| | |
80,663
| |
|
Deferred revenue
| |
58,646
| | |
63,081
| |
|
Reinsurance payables
| |
71,932
| | |
65,840
| |
|
Commissions payable
| |
15,358
| | |
14,866
| |
|
Deferred tax liabilities
| |
19,069
| | |
22,699
| |
|
Other liabilities and accrued expenses
| |
123,342
| | |
94,420
| |
|
Liabilities of consolidated CLOs
| |
694,012
| | |
698,316
| |
|
Liabilities held for sale and discontinued operations
| |
734
|
| |
740
|
|
|
Total liabilities
| |
$
|
2,190,191
|
| |
$
|
2,097,276
|
|
Stockholders’ Equity | | | | |
|
Preferred stock: $0.001 par value, 100,000,000 shares authorized,
none issued or outstanding
| |
$
|
—
| | |
$
|
—
| |
Common stock - Class A: $0.001 par value, 200,000,000 shares
authorized, 34,914,772 and
34,899,833 shares issued and
outstanding, respectively
| |
35
| | |
35
| |
Common stock - Class B: $0.001 par value, 50,000,000 shares
authorized, 8,049,029 and
8,049,029 shares issued and
outstanding, respectively
| |
8
| | |
8
| |
|
Additional paid-in capital
| |
296,531
| | |
297,063
| |
|
Accumulated other comprehensive income (loss), net of tax
| |
1,277
| | |
(111
|
)
|
|
Retained earnings
| |
20,522
|
| |
15,845
|
|
|
Total stockholders’ equity to Tiptree Financial Inc. | |
318,373
| | |
312,840
| |
Non-controlling interests (including $72,721 and $69,278
attributable to Tiptree Financial Partners,
L.P.,
respectively)
| |
91,345
|
| |
84,854
|
|
|
Total stockholders’ equity
| |
409,718
|
| |
397,694
|
|
Total liabilities and stockholders’ equity
| |
$
|
2,599,909
|
| |
$
|
2,494,970
|
|
| |
| |
|
| Book Value Per Share - Tiptree Financial Inc. | | March 31,
2016 | | December 31,
2015 |
|
Total stockholders’ equity of Tiptree Financial Inc. | |
$
|
318,373
| | |
$
|
312,840
| |
|
Class A common stock outstanding
| |
34,915
| | |
34,900
| |
|
Class A book value per common share (1) | |
$
|
9.12
| | |
$
|
8.96
| |
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 |
|
|
|
| Three Months Ended March 31, |
| | 2016 |
| 2015 |
| Revenues: | | | | |
|
Net realized and unrealized gains (losses)
| |
$
|
6,177
| | |
$
|
(98
|
)
|
|
Interest income
| |
7,685
| | |
2,883
| |
|
Service and administrative fees
| |
30,310
| | |
21,927
| |
|
Ceding commissions
| |
10,703
| | |
9,937
| |
|
Earned premiums, net
| |
44,615
| | |
37,353
| |
|
Gain on sale of loans held for sale, net
| |
13,515
| | |
2,731
| |
|
Loan fee income
| |
2,334
| | |
1,399
| |
|
Rental revenue
| |
12,724
| | |
9,369
| |
|
Other income
| |
3,743
|
| |
3,562
|
|
|
Total revenues
| |
131,806
|
| |
89,063
|
|
| | | |
|
| Expenses: | | | | |
|
Interest expense
| |
6,480
| | |
5,129
| |
|
Payroll and employee commissions
| |
30,608
| | |
20,341
| |
|
Commission expense
| |
33,038
| | |
16,528
| |
|
Member benefit claims
| |
5,750
| | |
7,579
| |
|
Net losses and loss adjustment expense
| |
17,948
| | |
12,450
| |
|
Professional fees
| |
7,362
| | |
4,628
| |
|
Depreciation and amortization
| |
8,377
| | |
15,464
| |
|
Acquisition and transaction costs
| |
383
| | |
1,349
| |
|
Other expenses
| |
17,990
|
| |
11,144
|
|
|
Total expenses
| |
127,936
|
| |
94,612
|
|
| | | |
|
| Results of consolidated CLOs: | | | | |
|
Income attributable to consolidated CLOs
| |
7,677
| | |
9,050
| |
|
Expenses attributable to consolidated CLOs
| |
6,572
|
| |
9,361
|
|
|
Net income (loss) attributable to consolidated CLOs
| |
1,105
|
| |
(311
|
)
|
| Income (loss) before taxes from continuing operations | |
4,975
| | |
(5,860
|
)
|
|
Less: provision (benefit) for income taxes
| |
(2,439
|
)
| |
(1,496
|
)
|
|
Income (loss) from continuing operations
| |
7,414
| | |
(4,364
|
)
|
| | | |
|
| Discontinued operations: | | | | |
|
Income from discontinued operations, net
| |
—
|
| |
2,345
|
|
|
Discontinued operations, net
| |
—
|
| |
2,345
|
|
|
Net income (loss) before non-controlling interests
| |
7,414
| | |
(2,019
|
)
|
|
Less: net income (loss) attributable to non-controlling interests -
Tiptree Financial Partners, L.P.
| |
2,629
| | |
(860
|
)
|
|
Less: net (loss) attributable to non-controlling interests - Other
| |
(770
|
)
| |
(180
|
)
|
| Net income (loss) available to common stockholders | | $ | 5,555 |
| | $ | (979 | ) |
| | | |
|
| Net income (loss) per Class A common share: | | | | |
|
Basic, continuing operations, net
| |
$
|
0.16
| | |
$
|
(0.08
|
)
|
|
Basic, discontinued operations, net
| |
—
|
| |
0.05
|
|
|
Basic earnings per share
| |
0.16
|
| |
(0.03
|
)
|
| | | |
|
|
Diluted, continuing operations, net
| |
0.16
| | |
(0.08
|
)
|
|
Diluted, discontinued operations, net
| |
—
|
| |
0.05
|
|
|
Diluted earnings per share
| |
$
|
0.16
|
| |
$
|
(0.03
|
)
|
| | | |
|
| Weighted average number of Class A common shares: | | | | |
|
Basic
| |
34,976,485
| | |
32,138,455
| |
|
Diluted
| |
35,084,505
| | |
32,138,455
| |
| | | | | |
|
|
|
Tiptree Financial Inc.
Segment Statements of
Operations
(Unaudited, in thousands) |
|
|
|
| Three months ended March 31, 2016 |
| | Insurance
and insurance
services |
| Specialty
finance |
| Real estate |
| Asset
management |
| Corporate
and other |
| Total |
|
Net realized and unrealized (losses) gains
| |
$
|
2,108
| | |
$
|
(96
|
)
| |
$
|
—
| | |
$
|
—
| | |
$
|
5,884
| | |
$
|
7,896
| |
Net realized and unrealized gains on mortgage
pipeline and
associated hedging instruments
| |
—
| | |
(1,719
|
)
| |
—
| | |
—
| | |
—
| | |
(1,719
|
)
|
|
Interest income
| |
1,312
| | |
2,356
| | |
20
| | |
—
| | |
3,997
| | |
7,685
| |
|
Service and administrative fees
| |
30,310
| | |
—
| | |
—
| | |
—
| | |
—
| | |
30,310
| |
|
Ceding commissions
| |
10,703
| | |
—
| | |
—
| | |
—
| | |
—
| | |
10,703
| |
|
Earned premiums, net
| |
44,615
| | |
—
| | |
—
| | |
—
| | |
—
| | |
44,615
| |
|
Gain on sale of loans held for sale, net
| |
—
| | |
13,515
| | |
—
| | |
—
| | |
—
| | |
13,515
| |
|
Loan fee income
| |
—
| | |
2,334
| | |
—
| | |
—
| | |
—
| | |
2,334
| |
|
Rental revenue
| |
—
| | |
—
| | |
12,724
| | |
—
| | |
—
| | |
12,724
| |
|
Other income
| |
264
|
| |
176
|
| |
1,146
|
| |
2,006
|
| |
151
|
| |
3,743
|
|
|
Total revenue
| |
89,312
| | |
16,566
| | |
13,890
| | |
2,006
| | |
10,032
| | |
131,806
| |
| | | | | | | | | | | |
|
|
Interest expense
| |
1,155
| | |
1,185
| | |
1,854
| | |
—
| | |
2,286
| | |
6,480
| |
|
Payroll and employee commissions
| |
9,587
| | |
11,468
| | |
5,638
| | |
1,241
| | |
2,674
| | |
30,608
| |
|
Commission expense
| |
33,038
| | |
—
| | |
—
| | |
—
| | |
—
| | |
33,038
| |
|
Member benefit claims
| |
5,750
| | |
—
| | |
—
| | |
—
| | |
—
| | |
5,750
| |
|
Net losses and loss adjustment expense
| |
17,948
| | |
—
| | |
—
| | |
—
| | |
—
| | |
17,948
| |
|
Depreciation and amortization
| |
3,983
| | |
202
| | |
4,130
| | |
—
| | |
62
| | |
8,377
| |
|
Other expenses
| |
8,854
|
| |
4,694
|
| |
6,127
|
| |
105
|
| |
5,955
|
| |
25,735
|
|
|
Total expense
| |
80,315
| | |
17,549
| | |
17,749
| | |
1,346
| | |
10,977
| | |
127,936
| |
|
Net income attributable to consolidated CLOs
| |
—
|
| |
—
|
| |
—
|
| |
1,000
|
| |
105
|
| |
1,105
|
|
|
Pre-tax income (loss)
| |
$
|
8,997
|
| |
$
|
(983
|
)
| |
$
|
(3,859
|
)
| |
$
|
1,660
|
| |
$
|
(840
|
)
| |
$
|
4,975
|
|
|
Less: provision for income taxes
| | | | | | | | | | | |
(2,439
|
)
|
|
Net income before non-controlling interests
| | | | | | | | | | | |
$
|
7,414
| |
Less: net income attributable to non-controlling
interests
from continuing operations and
discontinued operations
| | | | | | | | | | | |
1,859
|
|
|
Net income available to common stockholders
| | | | | | | | | | | |
$
|
5,555
|
|
| | | | | | | | | | | |
|
| Segment Assets as of March 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
| |
$
|
981,412
| | |
$
|
186,260
| | |
$
|
278,634
| | |
$
|
1,966
| | |
$
|
429,219
| | |
$
|
1,877,491
| |
|
Assets of consolidated CLOs
| | | | | | | | | | | |
722,418
|
|
|
Total assets
| | | | | | | | | | | |
$
|
2,599,909
|
|
| | | | | | | | | | | | | |
|
|
|
Tiptree Financial Inc.
Segment Statements of
Operations
(Unaudited, in thousands) |
|
|
|
| Three months ended March 31, 2015 |
| | Insurance
and insurance
services |
| Specialty
finance |
| Real estate |
| Asset
management |
| Corporate
and other |
| Total |
|
Net realized and unrealized gains (losses) on investments
| |
$
|
(5
|
)
| |
$
|
715
| | |
$
|
(485
|
)
| |
$
|
—
| | |
$
|
(323
|
)
| |
$
|
(98
|
)
|
|
Interest income
| |
1,230
| | |
1,353
| | |
19
| | |
—
| | |
281
| | |
2,883
| |
|
Service and administrative fees
| |
21,927
| | |
—
| | |
—
| | |
—
| | |
—
| | |
21,927
| |
|
Ceding commissions
| |
9,937
| | |
—
| | |
—
| | |
—
| | |
—
| | |
9,937
| |
|
Earned premiums, net
| |
37,353
| | |
—
| | |
—
| | |
—
| | |
—
| | |
37,353
| |
|
Gain on sale of loans held for sale, net
| |
—
| | |
2,731
| | |
—
| | |
—
| | |
—
| | |
2,731
| |
|
Loan fee income
| |
—
| | |
1,399
| | |
—
| | |
—
| | |
—
| | |
1,399
| |
|
Rental revenue
| |
—
| | |
17
| | |
9,352
| | |
—
| | |
—
| | |
9,369
| |
|
Other income
| |
1,937
|
| |
40
|
| |
538
|
| |
1,047
|
| |
—
|
| |
3,562
|
|
|
Total revenue
| |
72,379
| | |
6,255
| | |
9,424
| | |
1,047
| | |
(42
|
)
| |
89,063
| |
| | | | | | | | | | | |
|
|
Interest expense
| |
1,739
| | |
511
| | |
1,330
| | |
—
| | |
1,549
| | |
5,129
| |
|
Payroll and employee commissions
| |
10,405
| | |
3,724
| | |
3,923
| | |
848
| | |
1,441
| | |
20,341
| |
|
Commission expense
| |
16,528
| | |
—
| | |
—
| | |
—
| | |
—
| | |
16,528
| |
|
Member benefit claims
| |
7,579
| | |
—
| | |
—
| | |
—
| | |
—
| | |
7,579
| |
|
Net losses and loss adjustment expense
| |
12,450
| | |
—
| | |
—
| | |
—
| | |
—
| | |
12,450
| |
|
Depreciation and amortization
| |
11,954
| | |
122
| | |
3,388
| | |
—
| | |
—
| | |
15,464
| |
|
Other expenses
| |
7,698
|
| |
1,463
|
| |
4,964
|
| |
162
|
| |
2,834
|
| |
17,121
|
|
|
Total expense
| |
68,353
| | |
5,820
| | |
13,605
| | |
1,010
| | |
5,824
| | |
94,612
| |
|
Net income (loss) attributable to consolidated CLOs
| |
—
|
| |
—
|
| |
—
|
| |
1,837
|
| |
(2,148
|
)
| |
(311
|
)
|
|
Pre-tax income (loss)
| |
$
|
4,026
|
| |
$
|
435
|
| |
$
|
(4,181
|
)
| |
$
|
1,874
|
| |
$
|
(8,014
|
)
| |
$
|
(5,860
|
)
|
|
Less: (benefit) for income taxes
| | | | | | | | | | | |
(1,496
|
)
|
|
Discontinued operations
| | | | | | | | | | | |
2,345
|
|
|
Net (loss) before non-controlling interests
| | | | | | | | | | | |
$
|
(2,019
|
)
|
Less: net (loss) attributable to non-controlling
interests
from continuing operations and
discontinued operations
| | | | | | | | | | | |
(1,040
|
)
|
|
Net (loss) available to common stockholders
| | | | | | | | | | | |
$
|
(979
|
)
|
| | | | | | | | | | | |
|
| Segment Assets as of December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
| |
$
|
929,054
| | |
$
|
208,201
| | |
$
|
230,546
| | |
$
|
1,820
| | |
$
|
396,537
| | |
$
|
1,766,158
| |
|
Assets of consolidated CLOs
| | | | | | | | | | | |
728,812
|
|
|
Total assets
| | | | | | | | | | | |
$
|
2,494,970
|
|
| | | | | | | | | | | | | |
|
|
|
Tiptree Financial Inc. |
Non-GAAP Financial Measures |
(Unaudited, in thousands) |
|
|
Non-GAAP Financial Measures - EBITDA and
Adjusted EBITDA
Management uses EBITDA and Adjusted EBITDA, which are non-GAAP financial
measures. The Company believes that use of these financial measures on a
consolidated basis and for each segment 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. The
Company believes segment EBITDA and Adjusted EBITDA provides additional
supplemental information to compare results among our segments. Adjusted
EBITDA is also used in determining incentive compensation for the
Company’s executive officers. These measures are not a measurement of
financial performance or liquidity under GAAP and should not be
considered as an alternative or substitute for net income. The Company’s
presentation of these measures may differ from similarly titled non-GAAP
financial measures used by other companies. The Company defines 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 its financial statements and
Adjusted EBITDA as EBITDA adjusted to (i) subtract interest expense on
asset-specific debt incurred in the ordinary course of its subsidiaries’
business operations, (ii) adjust for the effect of purchase accounting,
(iii) add back significant acquisition related costs, (iv) adjust for
significant relocation costs and (v) any significant one-time expenses.
|
|
Reconciliation from the Company’s GAAP net income to Non-GAAP
financial measures - EBITDA and Adjusted
EBITDA
(Unaudited) |
|
($ in thousands)
|
|
|
| Three months ended
March 31, |
| | | | 2016 |
|
| 2015 |
| Net income available to Class A common stockholders | | | | $ | 5,555 | | | | $ | (979 | ) |
|
Add: net income attributable to non-controlling interests
| | | |
1,859
| | | |
(1,040
|
)
|
|
Less: net income from discontinued operations
|
|
|
|
—
|
|
|
|
2,345
|
|
| (Loss) income from Continuing Operations of the Company | | | | $ | 7,414 | | | | $ | (4,364 | ) |
|
Consolidated interest expense
| | | |
6,480
| | | |
5,129
| |
|
Consolidated income taxes
| | | |
(2,439
|
)
| | |
(1,496
|
)
|
|
Consolidated depreciation and amortization expense
|
|
|
|
8,377
|
|
|
|
15,464
|
|
|
EBITDA from Continuing Operations
| | | |
$
|
19,832
| | | |
$
|
14,733
| |
|
Consolidated non-corporate and non-acquisition related interest
expense(1) | | | |
(4,278
|
)
| | |
(1,841
|
)
|
|
Effects of purchase accounting(2) | | | |
(2,030
|
)
| | |
(9,483
|
)
|
|
Non-cash fair value adjustments(3) | | | |
1,416
| | | |
—
| |
|
Significant acquisition expenses(4) |
|
|
|
383
|
|
|
|
1,349
|
|
| Subtotal Adjusted EBITDA from Continuing Operations of the Company |
|
|
| $ | 15,323 |
|
|
| $ | 4,758 |
|
| | | | | | |
|
|
Income from Discontinued Operations of the Company
| | | |
$
|
—
| | | |
$
|
2,345
| |
|
Consolidated interest expense
| | | |
—
| | | |
2,654
| |
|
Consolidated income taxes
| | | |
—
| | | |
2,742
| |
|
Consolidated depreciation and amortization expense
|
|
|
|
—
|
|
|
|
457
|
|
|
EBITDA from Discontinued Operations
|
|
|
|
$
|
—
|
|
|
|
$
|
8,198
|
|
| Subtotal Adjusted EBITDA from Discontinued Operations of the
Company |
|
|
| $ | — |
|
|
| $ | 8,198 |
|
|
|
|
|
|
|
|
|
|
| Total Adjusted EBITDA of the Company |
|
|
| $ | 15,323 |
|
|
| $ | 12,956 |
|
| | | | | | | | | | |
|
Notes |
|
(1)
|
|
The consolidated non-corporate and non-acquisition related interest
expense is subtracted from EBITDA to arrive at Adjusted EBITDA. This
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.
|
| |
|
|
(2)
| |
Following the purchase accounting adjustments, current period
expenses associated with deferred costs were more favorably stated
by $4.4 million and current period income associated with deferred
revenues were less favorably stated by $2.4 million. Thus, the
purchase accounting effect related to Fortegra, increased EBITDA in
the first quarter of 2016 by $2.0 million above what the historical
basis of accounting would have generated. The impact of this
purchase accounting adjustments have been reversed to reflect an
adjusted EBITDA without such purchase accounting effect.
|
| |
|
|
(3)
| |
For Care, Adjusted EBITDA excludes the impact of the change of fair
value of interest rate swaps hedging the debt at the property level
to conform to our updated interest rate hedging policy.
|
| |
|
|
(4)
| |
For the first quarter of 2016, $0.4 million of acquisition related
costs represents costs in connection with Care’s acquisition of two
properties which included taxes, legal costs and other expenses.
|
| |
|
Segment EBITDA and Adjusted EBITDA from continuing operations - Three
Months Ended March 31, 2016 and March 31, 2015
|
($ in thousands)
|
| Segment EBITDA and Adjusted EBITDA - Three Months Ended March 31,
2016 and March 31, 2015 |
| | Insurance and
insurance services |
| Specialty finance |
| Real estate |
| Asset management |
| Corporate and
other |
| Totals |
| | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, |
| | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 |
|
Pre-tax income/(loss)
| |
$
|
8,997
| |
|
$
|
4,026
| | |
$
|
(983
|
)
|
|
$
|
435
| | |
$
|
(3,859
|
)
|
|
$
|
(4,181
|
)
| |
$
|
1,660
| |
|
$
|
1,874
| | |
$
|
(840
|
)
|
|
$
|
(8,014
|
)
| |
$
|
4,975
| |
|
$
|
(5,860
|
)
|
Add back: | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest expense
| |
1,155
| | |
1,739
| | |
1,185
| | |
511
| | |
1,854
| | |
1,330
| | |
—
| | |
—
| | |
2,286
| | |
1,549
| | |
6,480
| | |
5,129
| |
|
Depreciation and amortization expenses
| |
3,983
|
|
|
11,954
|
| |
202
|
|
|
122
|
| |
4,130
|
|
|
3,388
|
| |
—
|
|
|
—
|
| |
62
|
|
|
—
|
| |
8,377
|
|
|
15,464
|
|
|
Segment EBITDA
| |
$
|
14,135
| | |
$
|
17,719
| | |
$
|
404
| | |
$
|
1,068
| | |
$
|
2,125
| | |
$
|
537
| | |
$
|
1,660
| | |
$
|
1,874
| | |
$
|
1,508
| | |
$
|
(6,465
|
)
| |
$
|
19,832
| | |
$
|
14,733
| |
| | | | | | | | | | | | | | | | | | | | | | | |
|
EBITDA adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
|
Asset-specific debt interest
| |
(99
|
)
| |
—
| | |
(1,134
|
)
| |
(511
|
)
| |
(1,854
|
)
| |
(1,330
|
)
| |
—
| | |
—
| | |
(1,191
|
)
| |
—
| | |
(4,278
|
)
| |
(1,841
|
)
|
|
Effects of purchase accounting
| |
(2,030
|
)
| |
(9,483
|
)
| |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
(2,030
|
)
| |
(9,483
|
)
|
|
Non-cash fair value adjustments
| |
—
| | |
—
| | |
—
| | |
—
| | |
1,416
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
1,416
| | |
—
| |
|
Significant acquisition expenses
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
383
|
|
|
1,349
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
383
|
|
|
1,349
|
|
|
Segment Adjusted EBITDA
| |
$
|
12,006
|
|
|
$
|
8,236
|
| |
$
|
(730
|
)
|
|
$
|
557
|
| |
$
|
2,070
|
|
|
$
|
556
|
| |
$
|
1,660
|
|
|
$
|
1,874
|
| |
$
|
317
|
|
|
$
|
(6,465
|
)
| |
$
|
15,323
|
|
|
$
|
4,758
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Financial Measures - Fortegra
The following table presents our insurance and insurance services
segment results on a GAAP basis and an As Adjusted basis (a non GAAP
measure which excludes the effects of purchase price accounting which
management believes provides for better period-over-period comparison of
the underlying operating performance of the business and aligns more
closely with the basis upon which management performance is
measured). Due to acquisition accounting, the line items through which
revenue and expenses relate to acquired contracts are recognized in a
single line item, depreciation and amortization, and are different than
newly originated contracts. To allow for better period-over-period
comparison of operations, we eliminated the effects of purchase
accounting. The Company believes that As Adjusted information provides
useful supplemental information to investors, but should be reviewed in
conjunction with their nearest GAAP equivalent. Investors should not
consider these Non-GAAP financial measures as a substitute for the
financial information that Fortegra reports in accordance with U.S.
GAAP. These Non-GAAP financial measures reflect subjective
determinations by Fortegra management, and may differ from similarly
titled Non-GAAP financial measures presented by other companies. See the
below table for a reconciliation from actual to As Adjusted financials.
|
| |
| |
| | Three months ended March 31, 2016 | | Three months ended March 31, 2015 |
|
($ in thousands)
| |
GAAP
|
|
Adjustments
| |
Non-GAAP
As Adjusted
| |
GAAP
|
|
Adjustments
| |
Non-GAAP
As Adjusted
|
Revenues: | | | | | | | | | | | | |
|
Earned premiums
| |
$
|
44,615
| | |
$
|
—
| | |
$
|
44,615
| | |
$
|
37,353
| | |
$
|
—
| | |
$
|
37,353
|
|
Service and administrative fees
| |
30,310
| | |
2,196
| | (2) |
32,506
| | |
21,927
| | |
6,150
| | (2) |
28,077
|
|
Ceding commissions
| |
10,703
| | |
191
| | (3) |
10,894
| | |
9,937
| | |
1,602
| | (3) |
11,539
|
|
Interest income(1) | |
3,420
| | |
—
| | |
3,420
| | |
1,225
| | |
—
| | |
1,225
|
|
Other Income
| |
264
|
| |
—
|
| |
264
|
| |
1,937
|
| |
—
|
| |
1,937
|
|
Total revenues
| |
89,312
| | |
2,387
| | |
91,699
| | |
72,379
| | |
7,752
| | |
80,131
|
Less: | | | | | | | | | | | | |
|
Commission expense
| |
33,038
| | |
4,263
| | (4) |
37,301
| | |
16,528
| | |
16,854
| | (4) |
33,382
|
|
Member benefit claims
| |
5,750
| | |
—
| | |
5,750
| | |
7,579
| | |
—
| | |
7,579
|
|
Net losses and loss adjustment expenses
| |
17,948
|
| |
—
|
| |
17,948
|
| |
12,450
|
| |
—
|
| |
12,450
|
|
Net revenues
| |
32,576
| | |
(1,876
|
)
| |
30,700
| | |
35,822
| | |
(9,102
|
)
| |
26,720
|
Expenses: | | | | | | | | | | | | |
|
Interest expense
| |
1,155
| | |
—
| | |
1,155
| | |
1,739
| | |
—
| | |
1,739
|
|
Payroll and employee commissions
| |
9,587
| | |
—
| | |
9,587
| | |
10,405
| | |
—
| | |
10,405
|
|
Depreciation and amortization expenses
| |
3,983
| | |
(1,487
|
)
| (5) |
2,496
| | |
11,954
| | |
(9,389
|
)
| (5) |
2,565
|
|
Other expenses
| |
8,854
|
| |
153
|
| (6) |
9,007
|
| |
7,698
|
| |
816
|
| (6) |
8,514
|
|
Total operating expenses
| |
23,579
|
| |
(1,334
|
)
| |
22,245
|
| |
31,796
|
| |
(8,573
|
)
| |
23,223
|
|
Income before taxes from continuing operations
| |
$
|
8,997
|
| |
$
|
(542
|
)
| |
$
|
8,455
|
| |
$
|
4,026
|
| |
$
|
(529
|
)
| |
$
|
3,497
|
| | | | | | | | | | | | | | | | | | | | | | |
|
|
|
Notes: |
|
(1)
|
|
Includes net realized and unrealized gains and (losses) on
investments.
|
|
(2)
| |
Represents service fee revenues that would have been recognized had
purchase accounting effects not been recorded. Deferred service fee
liabilities at the acquisition date were reduced to reflect the
purchase accounting fair value.
|
|
(3)
| |
Represents ceding commission revenues that would have been
recognized had purchase accounting effects not been recorded.
Deferred ceding commissions liabilities at the acquisition date were
reduced to reflect the purchase accounting fair value.
|
|
(4)
| |
Represents additional commissions expense that would have been
recorded without purchase accounting; the values of deferred
commission assets were eliminated in purchase accounting.
|
|
(5)
| |
Represents the removal of net additional depreciation and
amortization expense that would not have been recorded without
purchase accounting; fixed assets and amortizing intangible assets
were adjusted in purchase accounting based on fair value analyses.
|
|
(6)
| |
Represents additional premium tax and other acquisition expenses
that would have been recorded without purchase accounting; values of
deferred acquisition costs were eliminated in purchase accounting.
|
| |
|
Non-GAAP Financial Measures - Net revenues
For insurance and insurance services, Net revenues, which is a non-GAAP
financial measure, is shown as total revenue less commissions paid to
brokers, member benefit claims and net loss and loss adjustment
expenses. Year over year comparisons of total revenues are often
impacted by clients’ choice as to whether to retain risk. We use net
revenues as another means of understanding product contributions to our
results and provides a comparison of period-over-period risk retained by
the Company. Net revenues also adds supplemental information for
investors to understand profitability of various products after
reinsurance payments, claims and losses.
|
|
Reconciliation from GAAP Total revenue to
Non-GAAP
financial measure - Net revenues
(Unaudited) |
|
|
|
($ in thousands)
|
| Credit Protection |
| Warranty |
| Specialty Products |
| Services and Other(1) |
| Insurance Total |
| | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, | | Three Months
Ended March 31, |
| | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 | | 2016 |
| 2015 |
Income: | | |
| | | |
| | | |
| | | |
| | | |
| |
|
Earned premiums
| |
$
|
29,294
| | |
$
|
27,700
| | |
$
|
9,149
| | |
$
|
6,939
| | |
$
|
6,172
| | |
$
|
2,714
| | |
$
|
—
| | |
$
|
—
| | |
$
|
44,615
| | |
$
|
37,353
|
|
Service and administrative fees
| |
11,438
| | |
5,480
| | |
15,678
| | |
19,011
| | |
3,147
| | |
896
| | |
2,243
| | |
2,690
| | |
32,506
| | |
28,077
|
|
Ceding commissions
| |
10,893
| | |
11,529
| | |
1
| | |
10
| | |
—
| | |
—
| | |
—
| | |
—
| | |
10,894
| | |
11,539
|
|
Interest income (2) | |
2,955
| | |
707
| | |
—
| | |
—
| | |
—
| | |
—
| | |
465
| | |
518
| | |
3,420
| | |
1,225
|
|
Other income
| |
147
|
|
|
134
|
| |
93
|
|
|
1,777
|
| |
30
|
|
|
26
|
| |
(6
|
)
|
|
—
|
| |
264
|
|
|
1,937
|
|
Total revenue
| |
54,727
| | |
45,550
| | |
24,921
| | |
27,737
| | |
9,349
| | |
3,636
| | |
2,702
| | |
3,208
| | |
91,699
| | |
80,131
|
| | | | | | | | | | | | | | | | | | | |
|
Income Adjustments: | | | | | | | | | | | | | | | | | | | | |
|
Net losses and member benefit claims
| |
$
|
7,228
| | |
$
|
6,950
| | |
$
|
10,510
| | |
$
|
11,114
| | |
$
|
5,953
| | |
$
|
1,909
| | |
$
|
7
| | |
$
|
56
| | |
$
|
23,698
| | |
$
|
20,029
|
|
Commissions
| |
28,559
|
|
|
24,162
|
| |
7,628
|
|
|
8,825
|
| |
1,026
|
|
|
439
|
| |
88
|
|
|
(44
|
)
| |
37,301
|
|
|
33,382
|
|
Total income adjustments
| |
35,787
| | |
31,112
| | |
18,138
| | |
19,939
| | |
6,979
| | |
2,348
| | |
95
| | |
12
| | |
60,999
| | |
53,411
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
As Adjusted net revenues
| |
$
|
18,940
|
|
|
$
|
14,438
|
| |
$
|
6,783
|
|
|
$
|
7,798
|
| |
$
|
2,370
|
|
|
$
|
1,288
|
| |
$
|
2,607
|
|
|
$
|
3,196
|
| |
$
|
30,700
|
|
|
$
|
26,720
|
| | | | | | | | | | | | | | | | | | | |
|
|
(1) Services and Other include Consecta, Financial Services,
Insurance Services, ImageWorks, VOBA and Other
|
|
(2) Includes net realized and unrealized gains (losses) on
investments
|
|
|
Non-GAAP Financial Measures - NOI
We evaluate performance of our real estate segment based on net
operating income (“NOI”). We consider NOI as an important supplemental
measure used to evaluate the operating performance of our real estate
segment because it allows investors, analysts and our management to
assess our unleveraged property-level operating results and to compare
our operating results between periods and to the operating results of
other real estate companies on a consistent basis. In addition, NOI is
the basis upon which our partners in the Managed Properties are
compensated. We define NOI as total revenue less property operating
expense. Property operating expenses and resident fees and services are
not relevant to Care’s Triple Net Lease Properties since Care does not
manage the underlying operations and substantially all expenses are
passed through to the tenant. Our calculation of NOI may differ from
similarly titled non-GAAP financial measures used by other companies.
NOI is not a measure of financial performance or liquidity under GAAP
and should not be considered a substitute for pre-tax income. The
following tables present revenues and expenses, which include amounts
attributable to non-controlling interests, by property type in our real
estate segment for the three months ended March 31, 2016 and 2015,
respectively.
|
|
Reconciliation of NOI to Pre-tax Income |
|
|
|
| Three months ended March 31, 2016 |
| Three months ended March 31, 2015 |
| ($ in thousands) | | Triple Net
Lease
Operations |
| Managed
Properties |
| Consolidated | | Triple Net
Lease
Operations |
| Managed
Properties |
| Consolidated |
|
Revenues
| | | | | | | | | | | | |
|
Resident fees and services
| |
$
|
—
| | |
$
|
882
| | |
$
|
882
| | |
$
|
—
| | |
$
|
436
| | |
$
|
436
| |
|
Rental revenue
| |
$
|
1,844
| | |
10,880
| | |
12,724
| | |
$
|
1,058
| | |
8,294
| | |
9,352
| |
|
Less: Property operating expenses
| |
—
|
| |
8,705
|
| |
8,705
|
| |
—
|
| |
6,661
|
| |
6,661
|
|
|
Segment NOI
| |
$
|
1,844
|
| |
$
|
3,057
|
| |
$
|
4,901
|
| |
$
|
1,058
|
| |
$
|
2,069
|
| |
$
|
3,127
|
|
| | | | | | | | | | | |
|
|
Other income
| | | | | |
$
|
284
| | | | | | |
$
|
(365
|
)
|
| | | | | | | | | | | |
|
|
Less: Expenses
| | | | | | | | | | | | |
|
Interest expense
| | | | | |
1,854
| | | | | | |
1,330
| |
|
Payroll and employee commissions
| | | | | |
658
| | | | | | |
593
| |
|
Depreciation and amortization
| | | | | |
4,130
| | | | | | |
3,388
| |
|
Other expenses
| | | | | |
2,402
|
| | | | | |
1,632
|
|
|
Pre-tax income (loss)
| | | | | |
$
|
(3,859
|
)
| | | | | |
$
|
(4,181
|
)
|
| | | | | | | | | | | | | | | |
|
Non-GAAP Financial Measures - CLO Net Income
The Company deconsolidated the results of Telos 1, Telos 2, Telos 3 and
Telos 4 for the period that we did not own the subordinated notes for
the three months ended March 31, 2016 but not for the prior year period.
The table below shows the results attributable to the CLOs both on a
consolidated basis and an unconsolidated basis, which is a non-GAAP
measure, for the three months ended March 31, 2016. Management believes
is helpful to investors for year-over-year comparative purposes, given
that Telos 2 and Telos 4 were not deconsolidated until Q2 2015 when we
sold our retained interests in each CLO.
|
| |
|
($ in thousands)
| | Net Income attributable to CLOs managed by the Company |
| | Three months ended March 31, |
| | 2016 |
| 2015 |
| | Consolidated |
| Not
consolidated(1) |
| Non-GAAP
total | | Consolidated(2) |
| Not
consolidated(1) |
| Non-GAAP
total |
|
Management fees paid by the CLOs to the Company(3) | |
$
|
669
| | |
$
|
1,951
| | |
$
|
2,620
| | |
$
|
1,837
| | |
$
|
984
| | |
$
|
2,821
| |
Distributions from the subordinated notes
held by the Company
| |
2,749
| | |
72
| | |
2,821
| | |
5,657
| | |
69
| | |
5,726
| |
Realized and unrealized (losses) gains on
subordinated notes
held by the Company
| |
(2,313
|
)
| |
(292
|
)
| |
(2,605
|
)
| |
(7,805
|
)
| |
—
|
| |
(7,805
|
)
|
|
Net (loss) income attributable to the CLOs
| |
$
|
1,105
|
| |
$
|
1,731
|
| |
$
|
2,836
|
| |
$
|
(311
|
)
| |
$
|
1,053
|
| |
$
|
742
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
Notes: |
|
(1)
|
|
Represents amounts from Telos 1, Telos 2, Telos 3 and Telos 4, which
have been deconsolidated for the period that we did not own the
subordinated notes. See Note 16—Assets and Liabilities of
Consolidated CLOs, in the Form 10-Q for the quarter ended March 31,
2016, regarding the deconsolidation of certain of our CLOs.
|
|
(2)
| |
Includes amounts from Telos 2 and Telos 4 of $1.2 million which were
deconsolidated and sold in the second quarter of 2015.
|
|
(3)
| |
Management fees to Telos are shown net of any management fee
participation by Telos to others.
|
| |
|
|
|
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 March 31, 2016
compared with $8.96 as of December 31, 2015. Total stockholders’ equity
for the Company was $388.2 million as of March 31, 2016, which comprised
total stockholders’ equity of $409.7 million adjusted for $18.6 million
attributable to non-controlling interest at subsidiaries that are not
wholly owned by the Company and net assets of $2.9 million wholly owned
by Tiptree Financial Inc. Total stockholders’ equity for the Company was
$369.7 million as of December 31, 2015, which comprised total
stockholders’ equity of $397.7 million adjusted for $15.6 million
attributable to non-controlling interest at subsidiaries that are not
wholly owned by the Company, such as Siena, Luxury and Care and net
assets of $12.5 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 March 31,
2016 and December 31, 2015 were 42.96 million and 42.95 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) |
|
|
| March 31,
2016 |
|
| December 31,
2015 |
|
Total stockholders’ equity of Tiptree Financial
| | | |
$
|
318,373
| | | |
$
|
312,840
|
|
Class A common stock outstanding
| | | |
34,915
| | | |
34,900
|
|
Class A book value per common share(1) | | | |
$
|
9.12
| | | |
$
|
8.96
|
|
|
|
|
|
|
|
|
|
| Book value per share - the Company |
|
Total stockholders' equity
| | | |
$
|
409,718
| | | |
$
|
397,694
|
|
Less non-controlling interest at subsidiaries that are not wholly
owned
| | | |
$
|
18,624
| | | |
$
|
15,576
|
|
Less tax asset or (liability) wholly owned by Tiptree Financial
| | | |
$
|
2,927
|
| | |
$
|
12,456
|
|
Total stockholders’ equity
| | | |
$
|
388,167
|
| | |
$
|
369,662
|
| | | | | | |
|
|
Class A common stock outstanding
| | | |
34,915
| | | |
34,900
|
|
Class A common stock issuable upon exchange of partnership units of
TFP
| | | |
8,049
|
| | |
8,049
|
|
Total shares
| | | |
42,964
|
| | |
42,949
|
| | | | | | |
|
|
Company book value per share
| | | |
$
|
9.03
| | | |
$
|
8.61
|
| | | | | | | | | |
|
Notes: |
|
(1)
|
|
See Note 25—Earnings per Share, in the Form 10-Q for the quarter
ended March 31, 2016, for further discussion of potential dilution
from warrants.
|
| |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160510005590/en/
Tiptree Financial Inc.
Investor Relations, 212-446-1400
ir@tiptreefinancial.com
Source: Tiptree Financial Inc.