- Tiptree Financial Inc. GAAP net income of $5.8 million for 2015.
- Tiptree Operating Company, LLC GAAP net income of $8.8 million for
2015.
- Tiptree Operating Company, LLC total Adjusted EBITDA of $58.4
million for 2015.
- Declared dividend of $0.025 per share to Class A stockholders of
record on March 25, 2016 with a payment date of April 1, 2016.
- GAAP book value of $8.96 per Class A common share and $8.61 per
share of Tiptree Operating Company, LLC as of December 31, 2015.
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 year ended
December 31, 2015. 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.
2015 Highlights
- Fortegra Financial Corporation (“Fortegra”) contributed $29.8 million
in pre-tax earnings to consolidated results for 2015.
-
Completed the sale of Philadelphia Financial Group, Inc. (“PFG”) for
$142.8 million of proceeds to Tiptree and two future payments over the
two years following closing totaling approximately $7.3 million.
-
Completed the acquisition of Reliance First Capital, LLC (“Reliance”)
for $7.5 million and 1,625,000 shares of Class A common stock and an
earn out of up to 2 million shares of Class A common stock.
-
Care acquired 11 seniors housing communities for $84.9 million.
-
During 2015, the Company made principal investments in pools of
non-performing residential mortgage loans securing single family
properties ("NPLs") of approximately $39.7 million. In the first
quarter of 2016, the Company purchased an additional $8.0 million in
NPLs, bringing the Company's total investment in NPLs to $47.7 million.
-
Invested an aggregate of $70.0 million in both Telos 2016-7, Ltd.
("Telos 7"), which entered into a warehouse credit facility in
anticipation of launching a new CLO, and in a Telos managed credit
opportunity strategy which involves the leveraged purchase of
commercial loans.
-
Returned $7.3 million to Class A stockholders through dividends of
$3.3 million and stock repurchases of $4.0 million.
2015 Financial Overview
Consolidated Results
The Company had a net loss before taxes from continuing operations of
$12.4 million for the year ended December 31, 2015, which was a decrease
of $13.2 million from 2014. The key drivers of pretax results from
continuing operations were higher depreciation and amortization from new
investments in real estate at Care, realized and unrealized losses on
CLO subordinated note investments of $25.9 million, lower distributions
received on CLO subordinated notes due to sales of CLO subordinated
notes in the second quarter of 2015, and higher corporate expenses
associated with our effort to improve our controls and financial
reporting infrastructure offset in part 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 year ended December 31, 2014, there was a one-time gain
of $7.9 million from the repayment of the Westside Loan, which impacted
the year over year comparison.
For the year ended December 31, 2015, the Company reported Adjusted
EBITDA from continuing operations of $25.9 million, an increase of $1.8
million from the year earlier. The key drivers of the change in Adjusted
EBITDA were the same as those which impacted our pretax income from
continuing operations. The smaller decline versus that reported for
pretax income 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 at Fortegra.
The Company reported total Adjusted EBITDA for the year ended December
31, 2015 of $58.4 million, a decrease of $0.5 million from the year
ended December 31, 2014. The primary drivers of the decrease in this
metric were the same factors that impacted Adjusted EBITDA from
continuing operations combined with the positive impact of the gain on
sale from our sale of PFG, partially offset by the loss of income from
discontinued operations in the second half of the year.
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 - 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. Prior year results in this segment have been reclassified to
discontinued operations due to the sale of PFG. Comparisons to
Fortegra’s prior year operating results refer to Fortegra’s unaudited
financial information for the year ended December 31, 2014, without
taking into account the effects of purchase price accounting adjustments
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. The application of push-down accounting
creates a modest impact to net income, but significantly impacts
individual assets, liabilities, revenues, and expenses. See “Non-GAAP
Financial Measures - Fortegra pro forma” below for further information.
Insurance and insurance services segment pre-tax income was $29.8
million in the year ended December 31, 2015, an increase over the prior
year operating results. The primary drivers of the improvement in
year-over-year results was a reduction in total operating expenses,
primarily in payroll and other operating expenses, partially offset by a
reductions in revenues driven by competition in the warranty segment.
Net revenues, which is a Non-GAAP measure, were $135.6 million for the
year ended December 31, 2015. Adjusted for the impact of purchase
accounting, net revenues were $113.4 million for the year ended December
31, 2015, down slightly from 2014. While net revenues for cell phone
warranty contracts have been dampened by competitive pressures, slowing
growth in that area has been more than offset by combined growth in the
sale of credit life insurance, warranty and specialty insurance products
in the auto sector and for other consumer durables. See “Non-GAAP
Financial Measures - Net revenues” below for a reconciliation to GAAP
total revenue.
Credit protection net revenues for the year ended December 31, 2015 were
$64.7 million, higher than the previous year operating results. Cell
phone warranty products for the year ended December 31, 2015 were $33.2
million, down approximately the same amount as credit protections net
revenue were up from the prior year operating results. Improvement in
specialty products helped close the gap in net revenues for the year
ended December 31, 2015 due to the competitive pressures in the
cellphone warranty business. Specialty products net revenue for the year
ended December 31, 2015 was $5.5 million, up significantly from 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. See “Non-GAAP Financial Measures - Net
revenues” below for a reconciliation to GAAP total revenue.
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 year ended December 31, 2015
were $105.9 million, a meaningful increase from the previous year costs.
The primary driver of the year over year increase in costs was
attributable to higher depreciation and amortization expense as a result
of the purchase accounting impact on the amortization of the fair value
attributed to the insurance policies and contracts acquired of $19.3
million for the year ended December 31, 2015. The purchase accounting
expense was partially offset by cost reduction efforts throughout 2015.
Insurance and insurance services segment adjusted EBITDA was $41.1
million for the year ended December 31, 2015. The key drivers of
Adjusted EBITDA year over year growth was higher credit insurance and
specialty products revenues and lower 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 income was $6.3 million for 2015,
compared with a net loss of $2.0 million for 2014. The key drivers of
the increase were higher loan volume, including the impact from the
acquisition of Reliance.
Segment revenues were $55.0 million for 2015, compared with $15.2
million for 2014, an increase of $39.8 million or 262%. Segment expenses
were $48.7 million in 2015, compared with $17.2 million in 2014, an
increase of $31.5 million or 183%. Higher revenues more than offset
higher expenses resulting in improving operating margins, driven by the
scalability of our lending business.
The specialty finance segment benefited from an improving US economy.
The key drivers of the increase were both to higher volume and higher
margins in our mortgage origination business, including the impact from
the acquisition of Reliance and improved volume at luxury. The
improvement in margins was the result of Reliance’s focus on FHA/VA and
agency production, which are higher margin products compared to jumbo
mortgages. The improvement in Siena’s results were primarily the result
of increased loan originations, higher utilization rates of facilities
by borrowers and higher fee income. The combination produced average
earning assets of $56.0 million for the year ended December 31, 2015,
compared with $29.3 million for 2014, an increase of 91%.
Specialty finance segment Adjusted EBITDA was $5.9 million for the year
ended December 31, 2015 compared to a loss of $1.5 million in the prior
year period. Improvement in Adjusted EBITDA was driven by the increased
volume, higher revenue margins, and the benefit of scale and improved
income margins as described above. 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 net loss of $9.5 million for 2015, compared with
pre-tax net income of $3.2 million in 2014. In 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 (the “Westside Loan”). Care did
not have a similar gain in 2015. Additionally, Care made significant
investments in senior housing properties during the second half 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 $6.6 million for 2015 compared to $10.4
million in 2014 primarily due to the one-time December 2014 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 $5.4 million for
2015, compared with pre-tax net income of $6.2 million for 2014, a
decrease of $0.8 million. The principal reason for the decline was the
reduction in CLO management fees, driven by a combination of amortized
AUM in our older CLOs which have passed their reinvestment periods and
lower fees as described below.
Asset management segment adjusted EBITDA was $5.4 million for the year
ended December 31, 2015 compared to $6.2 million for the prior year
period. 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 net loss
from the Company’s CLOs was $720 thousand for 2015, compared with
pre-tax net income of $19.5 million in 2014. The primary driver of the
decline in 2015 were $17.9 million of higher realized and unrealized
losses incurred on the Company’s holdings of CLO subordinated notes. The
lower management fees were due to the runoff of Telos 1 and Telos 2,
which are past their reinvestment period and lower fees on later CLOs.
The Company realized GAAP losses from the sale of its subordinated notes
issued by Telos 2 and Telos 4 during 2015, which generated net cash
proceeds of $39.7 million and tax losses of approximately $12.5 million.
The unrealized loss in 2015 was due to the mark-to-market write-down in
our retained CLO subordinated note holdings. The lower distributions
from the subordinated notes in 2015 compared to the prior year is
primarily due to our sales of CLO subordinated notes in 2015. 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 year ended
December 31, 2015 was $44.3 million compared to $3.4 million for the
prior year period. The primary driver of the loss for the year ended
2015 was realized and unrealized net losses on CLO subordinated notes, a
$6.5 million separation payment for a former executive 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 Wednesday, March 16,
2016 at 10:00 a.m. Eastern Time to discuss its full year 2015 financial
results. A copy of our investor presentation for 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 Wednesday, March 16, 2016 at
1:00 p.m. Eastern Time, until midnight Eastern on Wednesday, March 23,
2016. To listen to the replay, please dial 1-877-870-5176 (domestic) or
1-858-384-5517 (international), Passcode: 13631467.
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, as of December 31, 2015 was owned 81% by Tiptree
Financial and 19% by Tiptree Financial Partners, L.P. (“TFP”). Effective
January 1, 2016, Tiptree Financial, TFP and the Company created a
consolidated group among themselves and several of the Company’s
subsidiaries for U.S. federal income tax purposes, with Tiptree
Financial being the parent company. In connection with the creation of
the consolidated group, TFP and the Company elected to be treated as
corporations for U.S. federal income tax purposes, and Tiptree Financial
contributed its 28% interest in the Company to TFP in exchange for
4,307,023 additional common units of TFP. As a result of these steps,
effective January 1, 2016, Tiptree Financial directly owns 81.29% of TFP
and TFP directly owns 100% of the Company.
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 (GAAP)
(unaudited,
in thousands except per share amounts) | | | | | December 31,
2015 |
|
|
| December 31,
2014 | | |
|
Cash and cash equivalents
| | | | |
$
|
69,400
| | | | |
$
|
52,987
| | | |
|
Restricted cash
| | | | |
18,778
| | | | |
6,812
| | | |
Securities, available for sale (cost or amortized cost: $185,046
at December 31, 2015 and
$171,679 at December 31, 2014)
| | | | |
184,703
| | | | |
171,128
| | | |
|
Loans, at fair value
| | | | |
273,559
| | | | |
2,601
| | | |
|
Loans owned, at amortized cost, net
| | | | |
52,531
| | | | |
36,095
| | | |
Mortgage loans held for sale, at fair value (pledged as
collateral: $112,743 at December 31,
2015 and $28,049 at
December 31, 2014)
| | | | |
120,836
| | | | |
28,661
| | | |
|
Notes receivable, net
| | | | |
21,696
| | | | |
21,916
| | | |
|
Accounts and premiums receivable, net
| | | | |
57,056
| | | | |
39,666
| | | |
|
Reinsurance receivables
| | | | |
352,926
| | | | |
264,776
| | | |
|
Deferred acquisition costs
| | | | |
57,858
| | | | |
8,616
| | | |
|
Real estate, net
| | | | |
203,961
| | | | |
131,308
| | | |
| Goodwill and intangible assets, net
| | | | |
186,107
| | | | |
212,152
| | | |
|
Other receivables
| | | | |
62,247
| | | | |
36,428
| | | |
|
Other assets
| | | | |
110,758
| | | | |
83,869
| | | |
|
Assets of consolidated CLOs
| | | | |
728,812
| | | | |
1,978,094
| | | |
|
Assets held for sale
| | | | |
—
|
| | | |
5,129,745
|
| | |
|
Total assets
| | | | |
$
|
2,501,228
|
| | | |
$
|
8,204,854
|
| | |
| Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Liabilities | | | | | | | | | | | |
|
Debt, net
| | | | |
673,210
| | | | |
363,199
| | | |
|
Unearned premiums
| | | | |
389,699
| | | | |
299,826
| | | |
|
Policy liabilities and unpaid claims
| | | | |
80,663
| | | | |
63,365
| | | |
|
Deferred revenue
| | | | |
63,081
| | | | |
45,393
| | | |
|
Reinsurance payables
| | | | |
65,840
| | | | |
19,717
| | | |
|
Commissions payable
| | | | |
14,866
| | | | |
12,983
| | | |
|
Deferred tax liabilities
| | | | |
22,699
| | | | |
45,925
| | | |
|
Other liabilities and accrued expenses
| | | | |
94,420
| | | | |
68,547
| | | |
|
Liabilities of consolidated CLOs
| | | | |
698,316
| | | | |
1,877,377
| | | |
|
Liabilities held for sale and discontinued operations
| | | | |
740
|
| | | |
5,006,901
|
| | |
|
Total liabilities
| | | | |
$
|
2,103,534
|
| | | |
$
|
7,803,233
|
| | |
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, 34,899,833 and
31,830,174 shares issued and
outstanding respectively
| | | | |
35
| | | | |
32
| | | |
Common stock - Class B: $0.001 par value, 50,000,000 shares
authorized, 8,049,029 and
9,770,367 shares issued and
outstanding respectively
| | | | |
8
| | | | |
10
| | | |
|
Additional paid-in capital
| | | | |
297,063
| | | | |
271,090
| | | |
Accumulated other comprehensive (loss), net of tax
| | | | |
(111
|
)
| | | |
(49
|
)
| | |
|
Retained earnings
| | | | |
15,845
|
| | | |
13,379
|
| | |
|
Total stockholders’ equity to Tiptree Financial Inc. | | | | |
312,840
| | | | |
284,462
| | | |
Non-controlling interests (including $69,278 and $90,144
attributable to Tiptree Financial
Partners, L.P.,
respectively)
| | | | |
84,854
|
| | | |
117,159
|
| | |
|
Total stockholders’ equity
| | | | |
397,694
|
| | | |
401,621
|
| | |
|
Total liabilities and stockholders’ equity
| | | | |
$
|
2,501,228
|
| | | |
$
|
8,204,854
|
| | |
| | | | |
| | | |
| | |
| Book Value Per Share - Tiptree Financial Inc. | | | | | December 31,
2015 | | | | December 31,
2014 | | |
|
Total stockholders’ equity of Tiptree Financial Inc. | | | | |
$
|
312,840
| | | | |
$
|
284,462
| | | |
|
Class A common stock outstanding
| | | | |
34,900
| | | | |
31,830
| | | |
|
Class A book value per common share (1) | | | | |
$
|
8.96
| | | | |
$
|
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) | | | | | Year Ended December 31, | | |
| | | | | 2015 |
|
|
| 2014 | | |
| Revenues: | | | | | | | | | | | |
|
Net realized and unrealized (losses) gains
| | | | |
$
|
|
|
|
(1,282
|
)
| | | |
$
|
|
|
|
7,355
| | | |
|
Interest income
| | | | |
19,930
| | | | |
14,845
| | | |
|
Service and administrative fees
| | | | |
106,525
| | | | |
8,657
| | | |
|
Ceding commissions
| | | | |
43,217
| | | | |
3,737
| | | |
|
Earned premiums, net
| | | | |
166,265
| | | | |
12,827
| | | |
|
Gain on sale of loans held for sale, net
| | | | |
33,849
| | | | |
7,154
| | | |
|
Loan fee income
| | | | |
9,373
| | | | |
3,736
| | | |
|
Rental revenue
| | | | |
43,065
| | | | |
19,747
| | | |
|
Other income
| | | | |
19,174
|
| | | |
2,255
|
| | |
Total revenues
| | | | |
440,116
|
| | | |
80,313
|
| | |
| | | | | | | | | | |
|
| Expenses: | | | | | | | | | | | |
|
Interest expense
| | | | |
23,491
| | | | |
12,541
| | | |
|
Payroll and employee commissions
| | | | |
107,810
| | | | |
32,540
| | | |
|
Commission expense
| | | | |
105,751
| | | | |
4,287
| | | |
|
Member benefit claims
| | | | |
29,744
| | | | |
2,676
| | | |
|
Net losses and loss adjustment expense
| | | | |
56,568
| | | | |
3,153
| | | |
|
Professional fees
| | | | |
22,529
| | | | |
10,502
| | | |
|
Depreciation and amortization
| | | | |
45,124
| | | | |
11,945
| | | |
|
Acquisition and transaction costs
| | | | |
1,859
| | | | |
6,121
| | | |
|
Other expenses
| | | | |
52,790
|
| | | |
15,285
|
| | |
|
Total expenses
| | | | |
445,666
|
| | | |
99,050
|
| | |
| | | | | | | | | | |
|
| Results of consolidated CLOs: | | | | | | | | | | | |
|
Income attributable to consolidated CLOs
| | | | |
23,613
| | | | |
64,681
| | | |
|
Expenses attributable to consolidated CLOs
| | | | |
30,502
|
| | | |
45,156
|
| | |
Net (loss) income attributable to consolidated CLOs
| | | | |
(6,889
|
)
| | | |
19,525
|
| | |
| (Loss) income before taxes from continuing operations | | | | |
(12,439
|
)
| | | |
788
| | | |
|
Less: provision for income taxes
| | | | |
1,377
|
| | | |
4,141
|
| | |
|
(Loss) from continuing operations
| | | | |
(13,816
|
)
| | | |
(3,353
|
)
| | |
| | | | | | | | | | |
|
| Discontinued operations: | | | | | | | | | | | |
|
Income from discontinued operations, net
| | | | |
6,999
| | | | |
7,937
| | | |
|
Gain on sale of discontinued operations, net
| | | | |
15,619
|
| | | |
—
|
| | |
|
Discontinued operations, net
| | | | |
22,618
|
| | | |
7,937
|
| | |
|
Net income before non-controlling interests
| | | | |
8,802
| | | | |
4,584
| | | |
|
Less: net income attributable to non-controlling interests - Tiptree
Financial Partners, L.P.
| | | | |
2,630
| | | | |
6,790
| | | |
|
Less: net income attributable to non-controlling interests - Other
| | | | |
393
|
| | | |
(496
|
)
| | |
| Net income (loss) available to common stockholders | | | | | $ |
|
|
| 5,779 |
| | | | $ |
|
|
| (1,710 | ) | | |
| | | | | | | | | | |
|
| Net (loss) income per Class A common share: | | | | | | | | | | | |
|
Basic, continuing operations, net
| | | | |
$
| | | |
(0.26
|
)
| | | |
$
| | | |
(0.31
|
)
| | |
|
Basic, discontinued operations, net
| | | | |
0.43
|
| | | |
0.21
|
| | |
|
Basic earnings per share
| | | | |
0.17
|
| | | |
(0.10
|
)
| | |
| | | | | | | | | | |
|
|
Diluted, continuing operations, net
| | | | |
(0.26
|
)
| | | |
(0.31
|
)
| | |
|
Diluted, discontinued operations, net
| | | | |
0.43
|
| | | |
0.21
|
| | |
|
Diluted earnings per share
| | | | |
$
|
|
|
|
0.17
|
| | | |
$
|
|
|
|
(0.10
|
)
| | |
| | | | | | | | | | |
|
| Weighted average number of Class A common shares: | | | | | | | | | | | |
|
Basic
| | | | |
33,202,681
| | | | |
16,771,980
| | | |
|
Diluted
| | | | |
33,202,681
| | | | |
16,771,980
| | | |
| | | | | | | | | | | | |
|
|
| |
| Tiptree Financial Inc. | | |
Segment Statements of Operations | | |
(Unaudited, in thousands) | | |
| |
|
|
|
|
|
| Year ended December 31, 2015 | | |
| | | | | Insurance
and insurance
services |
|
|
| Specialty
finance |
|
|
| Real estate |
|
|
| Asset
management |
|
|
| Corporate
and other |
|
|
| Total | | |
|
Net realized and unrealized (losses) gains
| | | | |
$
|
(58
|
)
| | | |
$
|
(178
|
)
| | | |
$
|
(194
|
)
| | | |
$
|
—
| | | | |
$
|
(1,743
|
)
| | | |
$
|
(2,173
|
)
| | |
Net realized and unrealized gains on mortgage
pipeline and
associated hedging instruments
| | | | |
—
| | | | |
891
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
891
| | | |
|
Interest income
| | | | |
5,113
| | | | |
8,336
| | | | |
95
| | | | |
—
| | | | |
6,386
| | | | |
19,930
| | | |
|
Service and administrative fees
| | | | |
106,525
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
106,525
| | | |
|
Ceding commissions
| | | | |
43,217
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
43,217
| | | |
|
Earned premiums, net
| | | | |
166,265
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
166,265
| | | |
|
Gain on sale of loans held for sale, net
| | | | |
—
| | | | |
33,849
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
33,849
| | | |
|
Loan fee income
| | | | |
—
| | | | |
9,373
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
9,373
| | | |
|
Rental revenue
| | | | |
—
| | | | |
—
| | | | |
43,065
| | | | |
—
| | | | |
—
| | | | |
43,065
| | | |
|
Other income
| | | | |
6,642
|
| | | |
2,728
|
| | | |
3,162
|
| | | |
6,524
|
| | | |
118
|
| | | |
19,174
|
| | |
|
Total revenue
| | | | |
327,704
|
| | | |
54,999
|
| | | |
46,128
|
| | | |
6,524
|
| | | |
4,761
|
| | | |
440,116
|
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Interest expense
| | | | |
6,135
| | | | |
3,558
| | | | |
6,796
| | | | |
—
| | | | |
7,002
| | | | |
23,491
| | | |
|
Payroll and employee commissions
| | | | |
38,786
| | | | |
31,633
| | | | |
18,479
| | | | |
4,687
| | | | |
14,225
| | | | |
107,810
| | | |
|
Commission expense
| | | | |
105,751
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
105,751
| | | |
|
Member benefit claims
| | | | |
29,744
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
29,744
| | | |
|
Net losses and loss adjustment expense
| | | | |
56,568
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
56,568
| | | |
|
Depreciation and amortization expense
| | | | |
29,673
| | | | |
760
| | | | |
14,546
| | | | |
—
| | | | |
145
| | | | |
45,124
| | | |
|
Other expenses
| | | | |
31,269
|
| | | |
12,783
|
| | | |
15,842
|
| | | |
573
|
| | | |
16,711
|
| | | |
77,178
|
| | |
|
Total expense
| | | | |
297,926
| | | | |
48,734
| | | | |
55,663
| | | | |
5,260
| | | | |
38,083
| | | | |
445,666
| | | |
|
Net income attributable to consolidated CLOs
| | | | |
—
|
| | | |
—
|
| | | |
—
|
| | | |
4,131
|
| | | |
(11,020
|
)
| | | |
(6,889
|
)
| | |
|
Pre-tax income (loss)
| | | | |
$
|
29,778
|
| | | |
$
|
6,265
|
| | | |
$
|
(9,535
|
)
| | | |
$
|
5,395
|
| | | |
$
|
(44,342
|
)
| | | |
$
|
(12,439
|
)
| | |
|
Less: provision for income taxes
| | | | | | | | | | | | | | | | | | | | | | | | |
1,377
| | | |
|
Discontinued operations, net
| | | | | | | | | | | | | | | | | | | | | | | | |
22,618
|
| | |
|
Net income before non-controlling interests
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
8,802
| | | |
Less: net income attributable to non-controlling
interests
from continuing operations and
discontinued operations -
Tiptree Financial
Partners, L.P. | | | | | | | | | | | | | | | | | | | | | | | | |
2,630
| | | |
Less: net income attributable to non-controlling
interests
from continuing operations and
discontinued operations - Other
| | | | | | | | | | | | | | | | | | | | | | | | |
393
|
| | |
|
Net income available to common stockholders
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
5,779
|
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Segment Assets as of December 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Segment assets
| | | | |
$
|
931,073
| | | | |
$
|
208,840
| | | | |
$
|
235,636
| | | | |
$
|
2,451
| | | | |
$
|
394,416
| | | | |
$
|
1,772,416
| | | |
|
Assets of consolidated CLOs
| | | | | | | | | | | | | | | | | | | | | | | | |
728,812
| | | |
|
Assets held for sale
| | | | | | | | | | | | | | | | | | | | | | | | |
—
|
| | |
|
Total assets
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
2,501,228
|
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| |
| Tiptree Financial Inc. | | |
Segment Statements of Operations | | |
(Unaudited, in thousands) | | |
| |
|
|
|
|
|
| Year ended December 31, 2014 | | |
| | | | | Insurance and
insurance
services |
|
|
| Specialty
finance |
|
|
| Real estate |
|
|
| Asset
management |
|
|
| Corporate
and other |
|
|
| Total | | |
|
Net realized and unrealized gains (losses) on investments
| | | | |
$
|
5
| | | | |
$
|
244
| | | | |
$
|
7,006
| | | | |
$
|
—
| | | | |
$
|
(320
|
)
| | | |
$
|
6,935
| | | |
Net realized and unrealized gains on mortgage
pipeline and
associated hedging instruments
| | | | |
—
| | | | |
420
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
420
| | | |
|
Interest income
| | | | |
196
| | | | |
3,611
| | | | |
1,529
| | | | |
—
| | | | |
9,509
| | | | |
14,845
| | | |
|
Service and administrative fees
| | | | |
8,657
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
8,657
| | | |
|
Ceding commissions
| | | | |
3,737
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
3,737
| | | |
|
Earned premiums, net
| | | | |
12,827
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
12,827
| | | |
|
Gain on sale of loans held for sale, net
| | | | |
—
| | | | |
7,154
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
7,154
| | | |
|
Loan fee income
| | | | |
—
| | | | |
3,736
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
3,736
| | | |
|
Rental revenue
| | | | |
—
| | | | |
52
| | | | |
19,695
| | | | |
—
| | | | |
—
| | | | |
19,747
| | | |
|
Other income
| | | | |
753
|
| | | |
6
|
| | | |
1,051
|
| | | |
278
|
| | | |
167
|
| | | |
2,255
|
| | |
|
Total revenue
| | | | |
26,175
|
| | | |
15,223
|
| | | |
29,281
|
| | | |
278
|
| | | |
9,356
|
| | | |
80,313
|
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
Interest expense
| | | | |
637
| | | | |
1,530
| | | | |
4,111
| | | | |
—
| | | | |
6,263
| | | | |
12,541
| | | |
|
Payroll and employee commissions
| | | | |
3,483
| | | | |
10,690
| | | | |
8,056
| | | | |
5,117
| | | | |
5,194
| | | | |
32,540
| | | |
|
Commission expense
| | | | |
4,287
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
4,287
| | | |
|
Member benefit claims
| | | | |
2,676
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
2,676
| | | |
|
Net losses and loss adjustment expenses
| | | | |
3,153
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
3,153
| | | |
|
Depreciation and amortization expenses
| | | | |
4,265
| | | | |
499
| | | | |
7,181
| | | | |
—
| | | | |
—
| | | | |
11,945
| | | |
|
Other expenses
| | | | |
10,845
|
| | | |
4,466
|
| | | |
6,762
|
| | | |
774
|
| | | |
9,061
|
| | | |
31,908
|
| | |
|
Total expense
| | | | |
29,346
| | | | |
17,185
| | | | |
26,110
| | | | |
5,891
| | | | |
20,518
| | | | |
99,050
| | | |
|
Net income attributable to consolidated CLOs
| | | | |
—
|
| | | |
—
|
| | | |
—
|
| | | |
11,770
|
| | | |
7,755
|
| | | |
19,525
|
| | |
|
Pre-tax income (loss)
| | | | |
$
|
(3,171
|
)
| | | |
$
|
(1,962
|
)
| | | |
$
|
3,171
|
| | | |
$
|
6,157
|
| | | |
$
|
(3,407
|
)
| | | |
$
|
788
|
| | |
|
Less: Provision (benefit) for income taxes
| | | | | | | | | | | | | | | | | | | | | | | | |
4,141
| | | |
|
Discontinued operations
| | | | | | | | | | | | | | | | | | | | | | | | |
7,937
|
| | |
|
Net income before non-controlling interests
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
4,584
| | | |
Less: net income attributable to non-controlling
interests
from continuing operations and
discontinued operations -
Tiptree Financial
Partners, L.P. | | | | | | | | | | | | | | | | | | | | | | | | |
6,790
| | | |
Less: net income attributable to non-controlling
interests
from continuing operations and
discontinued operations - Other
| | | | | | | | | | | | | | | | | | | | | | | | |
(496
|
)
| | |
|
Net income available to common stockholders
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
(1,710
|
)
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Segment Assets as of December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Segment assets
| | | | |
$
|
767,914
| | | | |
$
|
79,147
| | | | |
$
|
179,822
| | | | |
$
|
2,871
| | | | |
$
|
67,261
| | | | |
$
|
1,097,015
| | | |
|
Assets of consolidated CLOs
| | | | | | | | | | | | | | | | | | | | | | | | |
1,978,094
| | | |
|
Assets held for sale
| | | | | | | | | | | | | | | | | | | | | | | | |
5,129,745
|
| | |
|
Total assets
| | | | | | | | | | | | | | | | | | | | | | | | |
$
|
8,204,854
|
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
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. Beginning in 2016, the Company’s Adjusted EBITDA will also be
used in determining incentive compensation for the Company’s executive
officers. 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 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) significant one-time expenses.
|
|
| Reconciliation from the Company’s GAAP net income to |
| Non-GAAP financial measures - EBITDA and Adjusted EBITDA |
| (Unaudited) |
| (in thousands) |
|
|
|
| Year Ended December 31, |
| | | | | 2015 |
|
|
| 2014 |
| Net income (loss) available to Class A common stockholders | | | | | $ |
|
| 5,779 | | | | | $ |
|
| (1,710 | ) |
|
Add: net income attributable to non-controlling interests
| | | | |
3,023
| | | | |
6,294
| |
|
Less: net income from discontinued operations
|
|
|
|
|
22,618
|
|
|
|
|
7,937
|
|
| (Loss) from Continuing Operations of the Company | | | | | $ | | | (13,816 | ) | | | | $ | | | (3,353 | ) |
|
Consolidated interest expense
| | | | |
23,491
| | | | |
12,541
| |
|
Consolidated income taxes
| | | | |
1,377
| | | | |
4,141
| |
|
Consolidated depreciation and amortization expense
|
|
|
|
|
45,124
|
|
|
|
|
11,945
|
|
|
EBITDA for Continuing Operations
| | | | |
$
| | |
56,176
| | | | |
$
| | |
25,274
| |
|
Consolidated non-corporate and non-acquisition related interest
expense(1) | | | | |
(11,861
|
)
| | | |
(7,265
|
)
|
|
Effects of purchase accounting(2) | | | | |
(24,166
|
)
| | | |
—
| |
|
Non-cash changes to contingent liability (3) | | | | |
(1,300
|
)
| | | |
—
| |
|
Significant acquisition expenses(4) | | | | |
1,859
| | | | |
6,121
| |
|
Separation expenses(5) |
|
|
|
|
5,209
|
|
|
|
|
—
|
|
| Subtotal Adjusted EBITDA for Continuing Operations of the Company |
|
|
|
| $ |
|
| 25,917 |
|
|
|
| $ |
|
| 24,130 |
|
| | | | | | | | |
|
|
Income from Discontinued Operations of the Company(6) | | | | |
$
| | |
22,618
| | | | |
$
| | |
7,937
| |
|
Consolidated interest expense
| | | | |
5,226
| | | | |
11,475
| |
|
Consolidated income taxes
| | | | |
3,796
| | | | |
5,525
| |
|
Consolidated depreciation and amortization expense
|
|
|
|
|
862
|
|
|
|
|
4,379
|
|
|
EBITDA for Discontinued Operations
| | | | |
$
| | |
32,502
| | | | |
$
| | |
29,316
| |
|
Significant relocation costs(7) |
|
|
|
|
—
|
|
|
|
|
5,477
|
|
| Subtotal Adjusted EBITDA for Discontinued Operations of the
Company |
|
|
|
| $ |
|
| 32,502 |
|
|
|
| $ |
|
| 34,793 |
|
|
|
|
|
|
|
|
|
|
|
|
| Total Adjusted EBITDA of the Company |
|
|
|
| $ |
|
| 58,419 |
|
|
|
| $ |
|
| 58,923 |
|
| | | | | | | | | | | | | | | | |
|
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. For the year ended December 31, 2015, interest expense
for the asset-specific debt was $0.3 million for insurance and
insurance services, $3.4 million for specialty finance, $6.8
million for real estate and $1.4 million for corporate and other,
totaling $11.9 million. For the year ended December 31, 2014,
interest expense for the asset-specific debt was $1.6 million for
specialty finance, $4.1 million for real estate, and $1.6 million
for corporate and other segments, totaling $7.3 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, current period
expenses associated with deferred costs were more favorably stated
by $47.1 million and current period income associated with deferred
revenues were less favorably stated by $22.9 million. Thus, the
purchase accounting effect related to Fortegra, increased EBITDA in
2015 by $24.2 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)
| |
Tiptree’s purchase of Reliance also resulted in a purchase
accounting adjustment which consists of a $1.3 million fair value
adjustment on the contingent consideration for the acquisition.
|
| |
|
|
(4)
| |
For 2015, significant acquisition related costs represents costs in
connection with Care’s acquisition of the Royal Portfolio and
Greenfield II Portfolio properties included taxes of $504 thousand,
legal costs of $644 thousand and $431 thousand of other property
acquisition expenses as well as $280 thousand related to the
Reliance acquisition. For 2014, significant non-recurring costs for
continuing operations included $6.1 million associated with the
Fortegra transaction.
|
| |
|
|
(5)
| |
Consists of future payments of $5.2 million to Geoffrey Kauffman,
our former Co-Chief Executive Officer, payable in three equal
installments in June 2016, January 2017 and January 2018 pursuant to
a separation agreement, dated as of November 10, 2015. Does not
include a separation payment of $1.3 million paid to Mr. Kauffman in
December 2015.
|
| |
|
|
(6)
| |
See Note 4—Dispositions, Asset Held for Sale and Discontinued
Operations, in the Form 10-K for the year ended December 31, 2015,
for further discussion of discontinued operations.
|
| |
|
|
(7)
| |
Significant relocation costs for discontinued operations included
expenses incurred in connection with the move of PFAS’s physical
location from New Jersey to Philadelphia for the year ended December
31, 2014.
|
| |
|
Segment EBITDA and ADJUSTED EBITDA - Year Ended December 31, 2015 and
December 31, 2014 (Unaudited)
|
|
|
| | | | |
|
($ in thousands)
| | | | Segment EBITDA and ADJUSTED EBITDA - Years Ended December 31,
2015 and December 31, 2014 | |
| | | | Insurance and
insurance services |
|
|
| Specialty finance |
|
| Real estate |
|
| Asset management |
|
| Corporate and other |
|
| Totals | |
| | | | Year Ended
December 31, |
| | | Year Ended
December 31, | | | Year Ended
December 31, | | | Year Ended
December 31, | | | Year Ended
December 31, | | | Year Ended
December 31, | |
| | | | 2015 |
|
| 2014 |
| | | 2015 |
|
| 2014 | | | 2015 |
|
|
| 2014 | | | 2015 |
|
| 2014 | | | 2015 |
|
| 2014 | | | 2015 |
|
| 2014 | |
|
Pre tax income/(loss)
| | | |
$
|
|
29,778
| |
|
|
(3,171
|
)
| | |
$
|
6,265
| |
|
|
$
|
(1,962
|
)
| | |
$
|
(9,535
|
)
|
|
|
$
|
3,171
| | | |
$
|
|
5,395
| |
|
|
$
|
6,157
| | | |
$
|
|
(44,342
|
)
|
|
|
$
|
(3,407
|
)
| | |
$
|
(12,439
|
)
|
|
|
$
|
|
788
| | |
Add back: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest expense
| | | |
6,135
| | | |
637
| | | |
3,558
| | | |
1,530
| | | |
6,796
| | | |
4,111
| | | |
—
| | | |
—
| | | |
7,002
| | | |
6,263
| | | |
23,491
| | | |
12,541
| | |
|
Depreciation and amortization expenses
| | | |
29,673
|
|
|
|
4,265
|
| | |
760
|
|
|
|
499
|
| | |
14,546
|
|
|
|
7,181
|
| | |
—
|
|
|
|
—
|
| | |
145
|
|
|
|
—
|
| | |
45,124
|
|
|
|
11,945
|
| |
|
Segment EBITDA
| | | |
$
| |
65,586
| | | |
$
|
1,731
| | | |
$
|
10,583
| | | |
$
|
67
| | | |
$
|
11,807
| | | |
$
|
14,463
| | | |
$
| |
5,395
| | | |
$
|
6,157
| | | |
$
| |
(37,195
|
)
| | |
$
|
2,856
| | | |
$
|
56,176
| | | |
$
| |
25,274
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
EBITDA adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Asset-specific debt interest
| | | |
(306
|
)
| | |
(29
|
)
| | |
(3,388
|
)
| | |
(1,530
|
)
| | |
(6,796
|
)
| | |
(4,111
|
)
| | |
—
| | | |
—
| | | |
(1,371
|
)
| | |
(1,595
|
)
| | |
(11,861
|
)
| | |
(7,265
|
)
| |
|
Effects of purchase accounting
| | | |
(24,166
|
)
| | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
(24,166
|
)
| | |
—
| | |
|
Non-cash changes to Contingent Liability
| | | |
—
| | | |
—
| | | |
(1,300
|
)
| | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
—
| | | |
(1,300
|
)
| | |
—
| | |
|
Significant acquisition expenses
| | | |
—
| | | |
6,121
| | | |
—
| | | |
—
| | | |
1,579
| | | |
—
| | | |
—
| | | |
—
| | | |
280
| | | |
—
| | | |
1,859
| | | |
6,121
| | |
Separation expenses
| | | |
—
|
|
|
|
—
|
| | |
—
|
|
|
|
—
|
| | |
—
|
|
|
|
—
|
| | |
—
|
|
|
|
—
|
| | |
5,209
|
|
|
|
—
| | | |
5,209
|
|
|
|
—
|
| |
|
Segment Adjusted EBITDA
| | | |
$
|
|
41,114
|
|
|
|
7,823
|
| | |
$
|
5,895
|
|
|
|
$
|
(1,463
|
)
| | |
$
|
6,590
|
|
|
|
$
|
10,352
|
| | |
$
|
|
5,395
|
|
|
|
$
|
6,157
|
| | |
$
|
|
(33,077
|
)
|
|
|
$
|
1,261
|
| | |
$
|
25,917
|
|
|
|
$
|
|
24,130
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Financial Measures - Fortegra pro forma
Fortegra presents pro forma Total revenues and pro forma Net revenues
which are Non-GAAP financial measures to provide investors with
additional information to analyze its performance from period to period.
Management also uses these measures to assess performance and to
allocate resources in managing its businesses. However, 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 GAAP Total revenues to Net
revenues.
|
|
|
|
| |
| (Unaudited) | | | | | Year Ended December 31, |
|
($ in thousands)
| | | | | 2015 |
| 2014 (1) (2) |
| | | | | Actual |
| Adjustments |
| Pro Forma | |
|
Revenues: | | | | |
| |
| |
| |
|
|
Total revenues (3) | | | | |
327,704
| | |
22,928
| | |
350,632
| | |
354,630
|
Less: | | | | | | | | | | | |
|
Commission expense (4) | | | | |
105,751
| | |
45,166
| | |
150,917
| | |
159,048
|
|
Member benefit claims
| | | | |
29,744
| | |
—
| | |
29,744
| | |
39,465
|
|
Net losses and loss adjustment expenses
| | | | |
56,568
|
| |
—
|
| |
56,568
|
| |
41,355
|
|
Net revenues
| | | | |
135,641
| | |
(22,238
|
)
| |
113,403
| | |
114,762
|
Expenses: | | | | | | | | | | | |
|
Total operating expenses (5) (6) | | | | |
105,863
|
| |
(17,392
|
)
| |
88,471
|
| |
95,816
|
| Pre-tax income | | | | |
29,778
|
| |
(4,846
|
)
| |
24,932
|
| |
18,946
|
| | | | | | | | | | |
|
Add back | | | | | | | | | | | |
|
Interest Expense
| | | | |
6,135
| | |
—
| | |
6,135
| | |
4,014
|
|
Depreciation and amortization expenses
| | | | |
29,673
|
| |
(19,320
|
)
| |
10,353
|
| |
10,345
|
| EBITDA | | | | |
65,586
|
| |
(24,166
|
)
| |
41,420
|
| |
33,305
|
| | | | | | | | | | |
|
|
Transaction costs (7) | | | | | | | | |
—
| | |
1,642
|
|
Legal expenses
| | | | | | | | |
—
| | |
500
|
|
Stock based compensation expense (8) | | | | | | | | |
—
| | |
2,161
|
|
Loss on note receivable
| | | | | | | | |
—
| | |
1,317
|
|
Asset-specific debt interest
| | | | | | | | |
(306
|
)
| |
—
|
| Adjusted EBITDA | | | | | | | | |
41,114
|
| |
38,925
|
| | | | | | | | | | | |
|
(1) Tiptree Financial acquired Fortegra Financial Corporation
(“Fortegra”) on December 4, 2014. Only the revenues earned and expenses
incurred by Fortegra, as adjusted for purchase price accounting, have
been incorporated in Tiptree Financial’s consolidated statements of
operations for the year ended December 31, 2014. See Tiptree's Form
8-K/A filed February 17, 2015 and the 2014 Form 10-K for a description
of purchase price accounting adjustments.
(2) For informational purposes, Fortegra’s unaudited statements for
continuing operations for the year ended December 31, 2014. The 2014
pro-forma results represent twelve months of revenue and expenses
unadjusted for purchase price accounting adjustments.
(3) Represents service fee and ceding commission revenues that would
have been recognized had purchase accounting effects not been recorded.
Deferred service fee and ceding commission 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.
(7) Represents transaction costs associated with completed and/or
potential acquisition, including seller's costs associated with the
Tiptree acquisition.
(8) The year ended December 31, 2014 includes an additional $1.0 million
of stock-based compensation expense due to the acceleration of vesting
for certain restricted stock awards containing change in control
provisions associated with the Tiptree acquisition.
Non-GAAP Financial Measures - Net revenues
For insurance and insurance services, Net revenues, which is a non-GAAP
financial measure, is shown as total revenue less commissions paid to
brokers, member benefit claims and net loss and loss adjustment
expenses. We use Net revenues as another means of understanding product
contributions to our results. Year over year comparisons of total
revenues are often impacted by clients’ choice as to whether to retain
risk.
|
| |
Reconciliation from GAAP Total revenue to | | |
Non-GAAP financial measure - Net revenues | | |
(Unaudited) | | |
|
|
|
|
| | | |
|
($ in thousands)
| | | | | Year Ended December 31, 2015 | | |
| | | | | Credit
Protection |
|
| Warranty |
|
| Specialty
Products |
|
| Services and
Other (1) |
|
| Fortegra
Total | | |
|
Total revenue
| | | | |
206,555
| | | |
95,515
| | | |
20,353
| | | |
5,281
| | | |
327,704
| | | |
| Income Adjustments: | | | | | | | | | | | | | | | | | | | |
|
Net losses and member benefit claims
| | | | |
27,199
| | | |
46,373
| | | |
12,581
| | | |
159
| | | |
86,312
| | | |
|
Commissions
| | | | |
114,645
|
| | |
15,909
|
| | |
2,233
|
| | |
(27,036
|
)
| | |
105,751
|
| | |
|
Net revenues
| | | | |
$
|
|
64,711
|
| | |
$
|
|
33,233
|
| | |
$
|
|
5,539
|
| | |
$
|
|
32,158
|
| | |
$
|
|
|
135,641
|
| | |
| | | | | | | | | | | | | | | | | | |
|
(1) Services and Other include Consecta, Financial Services,
Insurance Services, ImageWorks, VOBA and Other
| | |
| |
|
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 year ended December 31, 2015 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 year ended December 31, 2015, which management believes
is helpful for year-over-year comparative purposes.
|
($ in thousands)
|
|
|
|
| Net Income attributable to CLOs managed by
the
Company |
| |
| | | | | Year ended December 31, | | |
| | | | | 2015 |
|
|
| 2014 | | |
| | | | | Consolidated |
|
|
| Other(1) |
|
|
| Total | | | |
| | |
|
Management fees paid by the CLOs to the Company
| | | | |
$
|
|
4,131
| |
|
|
|
$
|
|
|
6,383
| |
|
|
|
$
|
10,514
| | | | |
$
|
|
|
11,770
| | | |
|
Distributions from the subordinated notes held by the Company
| | | | |
14,460
| | | | |
216
| | | | |
$
|
14,676
| | | | |
15,720
| | | |
|
Realized and unrealized (losses) gains on subordinated notes held by
the Company
| | | | |
(25,480
|
)
|
|
|
|
(430
|
)
|
|
|
|
$
|
(25,910
|
)
| | | |
(7,965
|
)
| | |
|
Net (loss) income attributable to the CLOs
| | | | |
$
|
|
(6,889
|
)
|
|
|
|
$
|
|
|
6,169
|
|
|
|
|
$
|
(720
|
)
| | | |
$
|
|
|
19,525
|
| | |
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-K for the year ended December
31, 2015, regarding the deconsolidation of certain of our CLOs.
|
|
| |
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 $8.96 as of December 31,
2015 compared with $8.94 as of December 31, 2014. 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. Total stockholders’ equity for the Company was $381.3 million as of
December 31, 2014, which comprised total stockholders’ equity of $401.6
million adjusted for $27.0 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
December 31, 2015 and December 31, 2014 were 42.9 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) |
|
|
|
| December 31,
2015 |
|
|
| December 31,
2014 | | |
|
Total stockholders’ equity of Tiptree Financial
| | | | |
$
|
|
312,840
| | | | |
$
|
|
284,462
| | | |
|
Class A common stock outstanding
| | | | |
34,900
| | | | |
31,830
| | | |
|
Class A book value per common share(1) | | | | |
$
| |
8.96
| | | | |
$
| |
8.94
| | | |
|
|
|
|
|
|
|
|
|
|
| | |
| Book value per share - the Company | | |
|
Total stockholders’ equity
| | | | |
397,694
| | | | |
$
| |
401,621
| | | |
|
Less non-controlling interest at subsidiaries that are not wholly
owned
| | | | |
$
| |
15,576
| | | | |
$
| |
27,015
| | | |
|
Less tax receivable or tax liability wholly owned by Tiptree
Financial
| | | | |
$
|
|
12,456
|
| | | |
$
|
|
(6,694
|
)
| | |
|
Total stockholders’ equity
| | | | |
$
|
|
369,662
|
| | | |
$
|
|
381,300
|
| | |
| | | | | | | | | | |
|
|
Class A common stock outstanding
| | | | |
34,900
| | | | |
31,830
| | | |
|
Class A common stock issuable upon exchange of partnership units of
TFP
| | | | |
8,049
|
| | | |
9,770
|
| | |
|
Total shares
| | | | |
42,949
|
| | | |
41,600
|
| | |
| | | | | | | | | | |
|
|
Company book value per share
| | | | |
$
| |
8.61
| | | | |
$
| |
9.17
| | | |
Notes: |
|
(1) See Note 25—Earnings per Share, in the Form 10-K for the year
ended December 31, 2015, for further discussion of potential
dilution from warrants.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160315006762/en/
Tiptree Financial Inc.
Investor Relations, 212-446-1400
ir@tiptreefinancial.com
Source: Tiptree Financial Inc.