- Revenues of $164.5 million for the quarter, up 24.5% from $132.2
million in the prior year period.
- Net loss of $3.4 million for the quarter, a decrease of $11.2
million from the prior year period, primarily driven by unrealized
losses on equity securities.
- Net loss attributable to Class A stockholders of $3.1 millionfor
the quarter, a decrease of $9.0 million from the prior year period.
- Adjusted EBITDA(1) of $4.8 million for the
quarter, down from $20.1 million in the prior year period.
- Book value per share, as exchanged(1) of
$9.67, down 2.6% compared to $9.93as of September 30, 2016.
- Declared dividend of $0.03 per share to Class A stockholders of
record on November 20, 2017 with a payment date of November 27, 2017.
NEW YORK--(BUSINESS WIRE)--
Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), which operates
in the specialty insurance, asset management, senior living and
specialty finance industries, today announced its financial results for
the three and nine months ended September 30, 2017.
Summary Consolidated Statements of Operations |
|
|
|
| ($ in millions, except for per share information) | Three Months Ended
September 30, |
| Nine Months Ended
September 30, |
GAAP: | 2017 |
| 2016 | | 2017 |
| 2016 |
|
Total revenues
|
$
|
164.5
| | |
$
|
132.2
| | |
$
|
486.3
| | |
$
|
395.1
|
|
Net income before non-controlling interests
|
(3.4
|
)
| |
7.8
| | |
(7.4
|
)
| |
22.3
|
|
Net income attributable to Tiptree Inc. Class A common stockholders
|
(3.1
|
)
| |
5.9
| | |
(6.5
|
)
| |
17.6
|
|
Diluted earnings per share
|
(0.11
|
)
| |
0.19
| | |
(0.22
|
)
| |
0.53
|
|
Cash dividends paid per common share
|
0.03
| | |
0.025
| | |
0.09
| | |
0.075
|
| | | | | | |
|
Non-GAAP:(1) | | | | | | | |
|
Adjusted EBITDA
|
$
|
4.8
| | |
$
|
20.1
| | |
$
|
23.3
| | |
$
|
52.9
|
|
Book Value per share, as exchanged
|
9.67
|
|
|
9.93
|
|
|
9.67
|
|
|
9.93
|
|
(1) For a reconciliation to U.S. GAAP, see “Non-GAAP
Reconciliations” below.
|
|
|
Earnings Conference Call
Tiptree will host a conference call on Wednesday, November 8, 2017 at
10:00 a.m. Eastern Time to discuss its third quarter 2017 financial
results. A copy of our investor presentation, 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.tiptreeinc.com.
The conference call will be available via live or archived webcast at http://www.investors.tiptreeinc.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, November 8, 2017
at 1:00 p.m. Eastern Time, until midnight Eastern on Wednesday, November
15, 2017. To listen to the replay, please dial 1-844-512-2921
(domestic) or 1-412-317-6671 (international), Passcode: 13672827.
3Q’17 Financial Overview
Consolidated Highlights
-
Net loss for the three and nine months primarily driven by unrealized
losses on our equities of $11.1 million and $21.2 million,
respectively.
-
Our specialty insurance operations continued to change the product mix
to achieve a balance between growing near-term earned premiums and
increasing investable assets. Gross written premiums were $209.2
million, up 15.3% from the prior year period, driven by growth in
warranty products with longer contract durations. Net written premiums
were $119.0 million, up from $56.0 million in the prior year period,
driven by the assumption of a portion of our credit reinsurance book
in late 2016. Net investments(1) grew to $364.0 million, an
increase of 20.6% year-over-year.
-
On October 16, 2017, our insurance business completed a 40 year $125
million Junior Subordinated Note offering which was used to repay the
existing credit facility and reposition the balance sheet,
strengthening our long-term capital position for future growth.
-
Our asset management operations contributed $3.0 million of pre-tax
income, down from $6.5 million in the prior year period as investments
in CLO subordinated notes reduced from 2016. In the quarter, we
completed our first risk retention compliant CLO, with a vertical
tranche purchased in our insurance investment portfolio.
-
We continue to focus on returning capital to shareholders through
dividends and share buybacks, totaling $10.6 million year-to-date
-
Additional senior living acquisitions have increased our gross
investments to $430 million as of October.
-
As of October 1, 2017, we exited our position in Siena.
|
(1) For a reconciliation to U.S. GAAP, see “Non-GAAP
Reconciliations” below.
|
|
|
Consolidated Results of Operations
Revenues
For the three months ended September 30, 2017, the Company reported
revenues of $164.5 million, an increase of $32.4 million, or 24.5% from
the three months ended September 30, 2016. For the nine months ended
September 30, 2017, revenues were $486.3 million, an increase of $91.2
million or 23.1% from the nine months ended September 30, 2016. The
primary drivers of the increase in revenues for the three and nine
months were growth in earned premiums and net investment income in our
specialty insurance segment, increases in rental income attributable to
acquisitions of seniors housing properties and improved specialty
finance originations margins, partially offset by reduced service and
administrative fees, ceding commissions, and unrealized losses, as
compared to prior period gains, in our specialty insurance segment
investment portfolio.
Net Income before non-controlling interests
For the three months ended September 30, 2017, the Company incurred a
net loss of $3.4 million compared to net income of $7.8 million in the
2016 period. The primary drivers of the decline were the unrealized
losses in our specialty insurance investment portfolio in the three
months ended September 30, 2017 compared to unrealized gains in the 2016
period, run-off in our older vintage CLOs resulting in reduced
management fees, and reduced CLO distributions as the Company reduced
its investments over the last twelve months.
For the nine months ended September 30, 2017, the Company incurred a net
loss of $7.4 million compared to net income of $22.3 million in the 2016
period, a decrease of $29.6 million. The decline was primarily a result
of the unrealized losses in our specialty insurance investment portfolio
in the nine months ended September 30, 2017, compared to unrealized
gains in the prior period, combined with increased stock-based
compensation expense in the specialty insurance segment and an increase
in the fair value of the contingent earn-out liability associated with
our Reliance acquisition. These drivers were partially offset by reduced
losses in our senior living and improved operating results in our
specialty finance segments, excluding the impact of the Reliance
earn-out. Additionally, the tax provision has increased year-over-year
as a result of a $4.0 million tax benefit in the three months ended
March 31, 2016 which was driven by the tax reorganization effective
January 1, 2016. A discussion of the changes in revenues, expenses and
net income is presented below and in more detail in our segment analysis.
The following table highlights certain non-cash, key drivers impacting
our results for the three and nine months ended September 30, 2017 and
2016. We believe highlighting these significant, non-cash items provides
useful additional information to investors. For a further discussion on
these key drivers, see —“Management’s Discussion and Analysis of
Financial Conditions and Results of Operations — Results of Operations —
Consolidated Results of Operations” in our Form 10-Q for the quarter
ended September 30, 2017 and 2016.
Key Non-Cash Drivers of Pre-tax Income and Adjusted EBITDA
| ($ in thousands) |
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| | 2017 |
| 2016 |
| Variance | | 2017 |
| 2016 |
| Variance |
|
Unrealized & realized gains (losses) on equity securities
| |
$
|
(11,125
|
)
| |
$
|
1,365
| | |
$
|
(12,490
|
)
| |
$
|
(21,183
|
)
|
|
$
|
10,787
| | |
$
|
(31,970
|
)
|
|
Stock-based compensation
| |
(1,135
|
)
| |
(633
|
)
| |
(502
|
)
| |
(4,275
|
)
| |
(1,597
|
)
| |
(2,678
|
)
|
|
Reliance contingent earn-out liability (1) | |
422
| | |
—
| | |
422
| | |
(3,039
|
)
| |
—
| | |
(3,039
|
)
|
|
Depreciation and amortization (1) | |
(7,775
|
)
| |
(6,437
|
)
| |
(1,338
|
)
| |
(23,781
|
)
| |
(21,899
|
)
| |
(1,882
|
)
|
|
________________________________
|
(1)
|
|
Added back to Adjusted EBITDA. For a reconciliation of Adjusted
EBITDA to GAAP financials, see “—Non-GAAP Reconciliations.”
|
| |
|
Net Income (Loss) Available to Class A Common Stockholders
For the three months ended September 30, 2017, net loss available to
Class A common stockholders was $3.1 million, a decrease of $9.0 million
from the prior year period. For the nine months ended September 30,
2017, net income available to Class A common stockholders was $6.5
million, a decrease of $24.1 million from the prior year period. The key
drivers of net income available to Class A common stockholders were the
same factors which impacted the net income before non-controlling
interests.
Non-GAAP
Management uses Adjusted EBITDA and book value per share, as exchanged
as measurements of operating performance which are non-GAAP measures.
Management believes that use of Adjusted EBITDA provides supplemental
information useful to investors as it is frequently used by the
financial community to analyze financial performance, and to analyze a
company’s ability to service its debt and to facilitate comparison among
companies. Adjusted EBITDA is also used in determining incentive
compensation for the Company’s executive officers. Adjusted EBITDA is
not a measurement of financial performance or liquidity under GAAP and
should not be considered as an alternative or substitute for GAAP net
income. Book value per share, as exchanged assumes full exchange of the
limited partners units of TFP for Tiptree Class A common stock.
Management believes that use of this financial measure provides
supplemental information useful to investors as it is frequently used by
the financial community to analyze company growth on a relative per
share basis.
Total Adjusted EBITDA for the three months ended September 30, 2017 was
$4.8 million compared to $20.1 million for the 2016 period, a decrease
of $15.3 million, or 76.0%. Total Adjusted EBITDA for the nine months
ended September 30, 2017 was $23.3 million compared to $52.9 million for
the 2016 period, a decrease of $29.5 million, or 55.8%. The key drivers
of the change in Adjusted EBITDA were the same as those which impacted
our net income, excluding the increase in the Reliance earn-out and the
year-over-year change in the tax provision. See “— Non-GAAP
Reconciliations” for a reconciliation to GAAP net income.
As exchanged book value per share for the period ended September 30,
2017 was $9.67, down from $9.93 as of September 30, 2016. The key
drivers of the year-over-year impact were increases from trailing twelve
month diluted earnings per share and re-purchases of 1.0 million shares
at an average 28% discount to book value. Those increases were more than
offset by cumulative dividends paid of $0.115, officer and director
compensation share issuances over the last twelve months and the
exercise of the Tricadia Option in June 2017 resulting in 1.5 million
shares being issued at $5.36 per share. Given the strike price of the
option, the impact was a $0.19 reduction to book value per share.
Results by Segment
Effective December 31, 2016, Tiptree realigned the principal investments
formerly reported in the corporate and other segment into their new
reportable segments to align with the Company’s operating strategy. The
table below reflects the credit and equity investments contributed to
our insurance subsidiary in the specialty insurance segment and the CLO
subordinated notes and related warehouse income in the asset management
segment for the three and nine months ended September 30, 2017 and 2016.
($ in thousands) |
|
|
| Three Months Ended
September 30, |
| Nine Months Ended
September 30, |
| | | | 2017 |
| 2016 | | 2017 |
| 2016 |
|
Specialty insurance
| | | |
$
|
(2,345
|
)
| |
$
|
10,659
| | |
$
|
1,724
| | |
$
|
35,627
| |
|
Asset management
| | | |
2,973
| | |
6,475
| | |
13,083
| | |
14,672
| |
|
Senior living
| | | |
(1,535
|
)
| |
(473
|
)
| |
(5,359
|
)
| |
(5,487
|
)
|
|
Specialty finance
| | | |
2,595
| | |
4,181
| | |
2,629
| | |
5,510
| |
|
Corporate and other
| | | |
(7,118
|
)
| |
(9,292
|
)
| |
(22,198
|
)
| |
(22,751
|
)
|
|
Pre-tax income
| | | |
$
|
(5,430
|
)
| |
$
|
11,550
|
| |
$
|
(10,121
|
)
| |
$
|
27,571
|
|
| | | |
|
| | | | Adjusted EBITDA(1) |
($ in thousands) | | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
|
Specialty insurance
| | | |
$
|
2,318
| | |
$
|
14,220
| | |
$
|
15,566
| | |
$
|
45,556
| |
|
Asset management
| | | |
2,973
| | |
6,475
| | |
13,083
| | |
14,672
| |
|
Senior living
| | | |
2,859
| | |
2,869
| | |
8,293
| | |
7,194
| |
|
Specialty finance
| | | |
2,382
| | |
4,479
| | |
6,288
| | |
6,327
| |
|
Corporate and other
| | | |
(5,756
|
)
| |
(7,915
|
)
| |
(19,897
|
)
| |
(20,867
|
)
|
|
Adjusted EBITDA
| | | |
$
|
4,776
|
| |
$
|
20,128
|
| |
$
|
23,333
|
| |
$
|
52,882
|
|
|
(1)
|
|
For further information relating to the Company’s Adjusted EBITDA,
including a reconciliation of the Company’s segments’ Adjusted
EBITDA to GAAP pre-tax income, see “—Non-GAAP Reconciliations” below.
|
| |
|
About Tiptree
Tiptree Inc. (NASDAQ:TIPT) is focused on enhancing shareholder value by
generating consistent growth and profitability at its operating
companies. The Company’s consolidated subsidiaries currently operate in
the following businesses - specialty insurance, asset management, senior
living and specialty finance. For more information about Tiptree visit www.tiptreeinc.com.
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 Inc. Condensed Consolidated Balance Sheet (Unaudited) ($ in thousands, except share data) |
|
| As of |
| | September 30,
2017 |
| December 31,
2016 |
| Assets | | | | |
|
Investments:
| | | | |
|
Available for sale securities, at fair value
| |
$
|
164,093
| | |
$
|
146,171
| |
|
Loans, at fair value
| |
323,122
| | |
373,089
| |
|
Loans at amortized cost, net
| |
150,596
| | |
113,838
| |
|
Equity securities, trading, at fair value
| |
28,106
| | |
48,612
| |
|
Real estate, net
| |
371,137
| | |
309,423
| |
|
Other investments
| |
27,191
|
| |
25,467
|
|
|
Total investments
| |
1,064,245
| | |
1,016,600
| |
|
Cash and cash equivalents
| |
111,751
| | |
63,010
| |
|
Restricted cash
| |
23,400
| | |
24,472
| |
|
Notes and accounts receivable, net
| |
178,726
| | |
157,500
| |
|
Reinsurance receivables
| |
333,023
| | |
296,234
| |
|
Deferred acquisition costs
| |
139,471
| | |
126,608
| |
| Goodwill and intangible assets, net
| |
176,820
| | |
178,245
| |
|
Other assets
| |
48,544
| | |
37,886
| |
|
Assets of consolidated CLOs
| |
372,774
|
| |
989,495
|
|
|
Total assets
| |
$
|
2,448,754
|
| |
$
|
2,890,050
|
|
| | | |
|
| Liabilities and Stockholders’ Equity | | | | |
Liabilities | | | | |
|
Debt, net
| |
$
|
865,629
| | |
$
|
793,009
| |
|
Unearned premiums
| |
475,047
| | |
414,960
| |
|
Policy liabilities and unpaid claims
| |
110,928
| | |
103,391
| |
|
Deferred revenue
| |
53,930
| | |
52,254
| |
|
Reinsurance payable
| |
81,887
| | |
70,588
| |
|
Other liabilities and accrued expenses
| |
115,858
| | |
133,735
| |
|
Liabilities of consolidated CLOs
| |
354,337
|
| |
931,969
|
|
|
Total liabilities
| |
$
|
2,057,616
|
| |
$
|
2,499,906
|
|
| | | |
|
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, 35,003,004 and 34,983,616 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
| |
296,476
| | |
297,391
| |
|
Accumulated other comprehensive income (loss), net of tax
| |
1,223
| | |
555
| |
|
Retained earnings
| |
28,913
| | |
37,974
| |
|
Class A common stock held by subsidiaries, 5,209,523 and 6,596,000
shares, respectively
| |
(34,664
|
)
| |
(42,524
|
)
|
|
Class B common stock held by subsidiaries, 8,049,029 and 8,049,029
shares, respectively
| |
(8
|
)
| |
(8
|
)
|
| Total Tiptree Inc. stockholders’ equity
| |
291,983
| | |
293,431
| |
|
Non-controlling interests (including $74,074 and $76,077
attributable to Tiptree Financial Partners, L.P., respectively)
| |
99,155
|
| |
96,713
|
|
|
Total stockholders’ equity
| |
391,138
|
| |
390,144
|
|
|
Total liabilities and stockholders’ equity
| |
$
|
2,448,754
|
| |
$
|
2,890,050
|
|
| | | | | | | |
|
Tiptree Inc. Condensed Consolidated Statements of Operations (Unaudited) ($ in thousands, except share data) |
|
| Three Months Ended
September 30, |
| Nine Months Ended
September 30, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
Revenues: | | | | | | | | |
|
Earned premiums, net
| |
$
|
96,073
| | |
$
|
47,609
| | |
$
|
272,781
| | |
$
|
138,516
|
|
Service and administrative fees
| |
24,018
| | |
25,842
| | |
70,861
| | |
84,421
|
|
Ceding commissions
| |
2,513
| | |
1,397
| | |
6,801
| | |
22,645
|
|
Net investment income
| |
3,840
| | |
3,307
| | |
12,032
| | |
8,409
|
|
Net realized and unrealized gains (losses)
| |
7,526
| | |
26,215
| | |
35,183
| | |
65,954
|
|
Rental and related revenue
| |
19,170
| | |
15,371
| | |
54,819
| | |
43,389
|
|
Other income
| |
11,379
|
| |
12,419
|
| |
33,820
|
| |
31,725
|
Total revenues
| |
164,519
|
| |
132,160
|
| |
486,297
|
| |
395,059
|
| | | | | | | |
|
Expenses: | | | | | | | | |
|
Policy and contract benefits
| |
31,570
| | |
25,881
| | |
94,364
| | |
72,436
|
|
Commission expense
| |
63,066
| | |
24,032
| | |
176,405
| | |
91,906
|
|
Employee compensation and benefits
| |
36,596
| | |
38,767
| | |
109,437
| | |
102,175
|
|
Interest expense
| |
10,361
| | |
7,839
| | |
28,444
| | |
20,770
|
|
Depreciation and amortization
| |
7,775
| | |
6,437
| | |
23,781
| | |
21,899
|
|
Other expenses
| |
23,164
|
| |
21,686
|
| |
73,380
|
| |
68,351
|
|
Total expenses
| |
172,532
|
| |
124,642
|
| |
505,811
|
| |
377,537
|
| | | | | | | |
|
Results of consolidated CLOs: | | | | | | | | |
|
Income attributable to consolidated CLOs
| |
7,216
| | |
12,556
| | |
24,024
| | |
34,713
|
|
Expenses attributable to consolidated CLOs
| |
4,633
|
| |
8,524
|
| |
14,631
|
| |
24,664
|
|
Net income (loss) attributable to consolidated CLOs
| |
2,583
|
| |
4,032
|
| |
9,393
|
| |
10,049
|
| Income (loss) before taxes | |
(5,430
|
)
| |
11,550
| | |
(10,121
|
)
| |
27,571
|
|
Less: provision (benefit) for income taxes
| |
(2,052
|
)
| |
3,712
|
| |
(2,761
|
)
| |
5,298
|
| Net income (loss) before non-controlling interests | |
(3,378
|
)
| |
7,838
| | |
(7,360
|
)
| |
22,273
|
|
Less: net income (loss) attributable to non-controlling interests -
Tiptree Financial Partners, L.P.
| |
(595
|
)
| |
1,362
| | |
(1,432
|
)
| |
4,660
|
|
Less: net income (loss) attributable to non-controlling interests -
Other
| |
331
|
| |
571
|
| |
529
|
| |
20
|
| Net income (loss) attributable to Tiptree Inc. Class A common
stockholders | | $ | (3,114 | ) | | $ | 5,905 |
| | $ | (6,457 | ) | | $ | 17,593 |
| | | | | | | |
|
Net income (loss) per Class A common
share: | | | | | | | | |
|
Basic earnings per share
| |
$
|
(0.11
|
)
| |
$
|
0.20
| | |
$
|
(0.22
|
)
| |
$
|
0.53
|
| | | | | | | |
|
|
Diluted earnings per share
| |
$
|
(0.11
|
)
| |
$
|
0.19
| | |
$
|
(0.22
|
)
| |
$
|
0.53
|
| | | | | | | |
|
Weighted average number of Class A common
shares: | | | | | | | | |
|
Basic
| |
29,455,462
| | |
29,143,470
| | |
28,908,195
| | |
32,845,124
|
|
Diluted
| |
29,455,462
| | |
37,230,650
| | |
28,908,195
| | |
32,912,516
|
| | | | | | | |
|
|
Dividends declared per common share
| |
$
|
0.030
| | |
$
|
0.025
| | |
$
|
0.090
| | |
$
|
0.075
|
| | | | | | | | | | | | | | |
|
Tiptree Inc.
Non-GAAP Reconciliations (Unaudited)
Non-GAAP Financial Measures — EBITDA and
Adjusted EBITDA
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.
|
($ in thousands)
|
| Three Months Ended
September 30, |
| Nine Months Ended
September 30, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
| Net income (loss) available to Class A common stockholders | | $ | (3,114 | ) | | $ | 5,905 | | | $ | (6,457 | ) | | $ | 17,593 | |
|
Add: net (loss) income attributable to noncontrolling interests
|
|
(264
|
)
| |
1,933
|
| |
(903
|
)
| |
4,680
|
|
| Income (loss) | | $ | (3,378 | ) | | $ | 7,838 | | | $ | (7,360 | ) | | $ | 22,273 | |
|
Consolidated interest expense
| |
10,361
| | |
7,839
| | |
28,444
| | |
20,770
| |
|
Consolidated income taxes
| |
(2,052
|
)
| |
3,712
| | |
(2,761
|
)
| |
5,298
| |
|
Consolidated depreciation and amortization expense
|
|
7,775
|
| |
6,437
|
| |
23,781
|
| |
21,899
|
|
| EBITDA | | $ | 12,706 | | | $ | 25,826 | | | $ | 42,104 | | | $ | 70,240 | |
|
Consolidated non-corporate and non-acquisition related interest
expense(1) | |
(7,340
|
)
| |
(4,989
|
)
| |
(19,510
|
)
| |
(13,223
|
)
|
|
Effects of Purchase Accounting (2) | |
(306
|
)
| |
(957
|
)
| |
(1,205
|
)
| |
(4,446
|
)
|
|
Non-cash fair value adjustments (3) | |
(309
|
)
| |
—
| | |
3,378
| | |
1,416
| |
|
Significant acquisition expenses (4) | |
25
| | |
248
| | |
302
| | |
631
| |
|
Separation expense adjustments (5) |
|
—
|
| |
—
|
| |
(1,736
|
)
| |
(1,736
|
)
|
| Adjusted EBITDA of the Company |
| $ | 4,776 |
| | $ | 20,128 |
| | $ | 23,333 |
| | $ | 52,882 |
|
______________________
|
|
(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 specialty insurance, asset management, senior
living and specialty finance segments.
|
|
(2)
| |
Following the purchase accounting adjustments, current period
expenses associated with deferred costs were more favorably stated
and current period income associated with deferred revenues were
less favorably stated. Thus, the purchase accounting effect
related to Fortegra increased EBITDA 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. The
impact for the three months ended September 30, 2017 and 2016 was
an effective increase to pre-tax earnings of $307 thousand and
$408 thousand, respectively.
|
|
(3)
| |
For our senior living segment, Adjusted EBITDA excludes the impact
of the change of fair value of interest rate swaps hedging the
debt at the property level. For Reliance, within our specialty
finance segment, Adjusted EBITDA excludes the impact of changes in
contingent earn-outs. For our specialty insurance segment,
depreciation and amortization on senior living real estate that is
within net investment income is added back to Adjusted EBITDA.
|
|
(4)
| |
Acquisition costs include legal, taxes, banker fees and other costs
associated with senior living acquisitions in 2017 and 2016.
|
|
(5)
| |
Consists of payments pursuant to a separation agreement, dated as of
November 10, 2015.
|
| |
|
Non-GAAP Financial Measures — Segment EBITDA
and Adjusted EBITDA from continuing operations
The tables below present EBITDA and Adjusted EBITDA by our four
reporting segments specialty insurance, asset management, senior living
and specialty finance. Corporate and other contains corporate expenses
no allocated to the operating business.
|
| Three Months Ended September 30, |
| ($ in thousands) | | Specialty insurance |
| Asset management |
| Senior living |
| Specialty finance |
| Corporate and other |
| Total |
| | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 |
|
Pre-tax income/(loss)
| |
$
|
(2,345
|
)
|
|
$
|
10,659
| | | |
$
|
2,973
| |
|
$
|
6,475
| | |
$
|
(1,535
|
)
|
|
$
|
(473
|
)
| |
$
|
2,595
| |
|
$
|
4,181
| | |
$
|
(7,118
|
)
|
|
$
|
(9,292
|
)
| |
$
|
(5,430
|
)
|
|
$
|
11,550
| |
Add back: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest expense
| |
3,499
| | |
2,322
| | | |
5
| | |
—
| | |
3,609
| | |
2,271
| | |
1,949
| | |
1,932
| | |
1,299
| | |
1,314
| | |
10,361
| | |
7,839
| |
|
Depreciation and amortization expenses
| |
3,134
|
|
|
3,032
|
| | |
—
|
|
|
—
|
| |
4,369
|
|
|
3,094
|
| |
209
|
|
|
248
|
| |
63
|
|
|
63
|
| |
7,775
|
|
|
6,437
|
|
|
Segment EBITDA
| |
$
|
4,288
| | |
$
|
16,013
| | | |
$
|
2,978
| | |
$
|
6,475
| | |
$
|
6,443
| | |
$
|
4,892
| | |
$
|
4,753
| | |
$
|
6,361
| | |
$
|
(5,756
|
)
| |
$
|
(7,915
|
)
| |
$
|
12,706
| | |
$
|
25,826
| |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
EBITDA adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Asset-specific debt interest
| |
(1,777
|
)
| |
(836
|
)
| | |
(5
|
)
| |
—
| | |
(3,609
|
)
| |
(2,271
|
)
| |
(1,949
|
)
| |
(1,882
|
)
| |
—
| | |
—
| | |
(7,340
|
)
| |
(4,989
|
)
|
|
Effects of purchase accounting
| |
(306
|
)
| |
(957
|
)
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
(306
|
)
| |
(957
|
)
|
|
Non-cash fair value adjustments
| |
113
| | |
—
| | | |
—
| | |
—
| | |
—
| | |
—
| | |
(422
|
)
| |
—
| | |
—
| | |
—
| | |
(309
|
)
| |
—
| |
|
Significant acquisition expenses
| |
—
| | |
—
| | | |
—
| | |
—
| | |
25
| | |
248
| | |
—
| | |
—
| | |
—
| | |
—
| | |
25
| | |
248
| |
|
Separation expenses
| |
—
|
|
|
—
|
| | |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
|
|
Segment Adjusted EBITDA
| |
$
|
2,318
|
|
|
$
|
14,220
|
| | |
$
|
2,973
|
|
|
$
|
6,475
|
| |
$
|
2,859
|
|
|
$
|
2,869
|
| |
$
|
2,382
|
|
|
$
|
4,479
|
| |
$
|
(5,756
|
)
|
|
$
|
(7,915
|
)
| |
$
|
4,776
|
|
|
$
|
20,128
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| Nine Months Ended September 30, |
| ($ in thousands) | | Specialty insurance |
| Asset management |
| Senior living |
| Specialty finance |
| Corporate and other |
| Total |
| | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 | | 2017 |
| 2016 |
|
Pre-tax income/(loss)
| |
$
|
1,724
| |
|
$
|
35,627
| | |
$
|
13,083
| |
|
$
|
14,672
| | |
$
|
(5,359
|
)
|
|
$
|
(5,487
|
)
| |
$
|
2,629
| |
|
$
|
5,510
| | |
$
|
(22,198
|
)
|
|
$
|
(22,751
|
)
| |
$
|
(10,121
|
)
|
|
$
|
27,571
| |
Add back: | | | | | | | | | | | | | | | | | | | | | | | | |
|
Interest expense
| |
10,534
| | |
6,018
| | |
7
| | |
746
| | |
9,309
| | |
6,220
| | |
4,743
| | |
4,352
| | |
3,851
| | |
3,434
| | |
28,444
| | |
20,770
| |
|
Depreciation and amortization expenses
| |
9,625
|
|
|
10,414
|
| |
—
|
|
|
—
|
| |
13,350
|
|
|
10,634
|
| |
620
|
|
|
665
|
| |
186
|
|
|
186
|
| |
23,781
|
|
|
21,899
|
|
|
Segment EBITDA
| |
$
|
21,883
| | |
$
|
52,059
| | |
$
|
13,090
| | |
$
|
15,418
| | |
$
|
17,300
| | |
$
|
11,367
| | |
$
|
7,992
| | |
$
|
10,527
| | |
$
|
(18,161
|
)
| |
$
|
(19,131
|
)
| |
$
|
42,104
| | |
$
|
70,240
| |
| | | | | | | | | | | | | | | | | | | | | | | |
|
EBITDA adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
|
Asset-specific debt interest
| |
(5,451
|
)
| |
(2,057
|
)
| |
(7
|
)
| |
(746
|
)
| |
(9,309
|
)
| |
(6,220
|
)
| |
(4,743
|
)
| |
(4,200
|
)
| |
—
| | |
—
| | |
(19,510
|
)
| |
(13,223
|
)
|
|
Effects of purchase accounting
| |
(1,205
|
)
| |
(4,446
|
)
| |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
—
| | |
(1,205
|
)
| |
(4,446
|
)
|
|
Non-cash fair value adjustments
| |
339
| | |
—
| | |
—
| | |
—
| | |
—
| | |
1,416
| | |
3,039
| | |
—
| | |
—
| | |
—
| | |
3,378
| | |
1,416
| |
|
Significant acquisition expenses
| |
—
| | |
—
| | |
—
| | |
—
| | |
302
| | |
631
| | |
—
| | |
—
| | |
—
| | |
—
| | |
302
| | |
631
| |
|
Separation expenses
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
—
|
|
|
—
|
| |
(1,736
|
)
|
|
(1,736
|
)
| |
(1,736
|
)
|
|
(1,736
|
)
|
|
Segment Adjusted EBITDA
| |
$
|
15,566
|
|
|
$
|
45,556
|
| |
$
|
13,083
|
|
|
$
|
14,672
|
| |
$
|
8,293
|
|
|
$
|
7,194
|
| |
$
|
6,288
|
|
|
$
|
6,327
|
| |
$
|
(19,897
|
)
|
|
$
|
(20,867
|
)
| |
$
|
23,333
|
|
|
$
|
52,882
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Financial Measures — Book value per
share, as exchanged
Book value per share, as exchanged assumes full exchange of the limited
partners units of TFP for Tiptree Class A common stock. Management
believes the use of this financial measure provides supplemental
information useful to investors as book value is frequently used by the
financial community to analyze company growth on a relative per share
basis. The following table provides a reconciliation between total
stockholders’ equity and total shares outstanding, net of treasury
shares, as of September 30, 2017 and September 30, 2016.
($ in thousands, except per share information) |
| Nine Months Ended September 30, |
| | 2017 |
| 2016 |
|
Total stockholders’ equity
| |
$
|
391,138
| | |
$
|
381,341
|
|
Less non-controlling interest - other
| |
25,081
|
| |
19,939
|
|
Total stockholders’ equity, net of non-controlling interests - other
| |
$
|
366,057
| | |
$
|
361,402
|
|
Total Class A shares outstanding (1) | |
29,793
| | |
28,351
|
|
Total Class B shares outstanding
| |
8,049
|
| |
8,049
|
|
Total shares outstanding
| |
37,842
|
| |
36,400
|
|
Book value per share, as exchanged
| |
$
|
9.67
|
| |
$
|
9.93
|
|
______________________
|
(1)
|
|
As of September 30, 2017, excludes 5,209,523 shares of Class A
common stock held by consolidated subsidiaries of the Company. For
further discussion of potential dilution from warrants, see Note
23—Earnings per Share, in the Company’s Form 10-Q for the quarter
ended September 30, 2017.
|
| |
|
Non-GAAP Financial Measures — Specialty
Insurance — Investment Portfolio
The following table provides a reconciliation between segment total
investments and net investments for the following periods.
($ in thousands) |
|
|
|
|
| As of September 30, |
| | | | | | 2017 |
| 2016 |
|
Total Investments
| | | | | |
$
|
426,753
| | |
$
|
398,505
| |
|
Investment portfolio debt (1) | | | | | |
(122,999
|
)
| |
(101,012
|
)
|
|
Cash and cash equivalents
| | | | | |
62,790
| | |
16,555
| |
|
Restricted cash (2) | | | | | |
3,637
| | |
$
|
6,683
| |
|
Receivable due from brokers (3) | | | | | |
1,505
| | |
$
|
—
| |
|
Liability due to brokers (3) | | | | | |
(7,733
|
)
| |
$
|
(18,836
|
)
|
|
Net investments - Non-GAAP
| | | | | |
$
|
363,953
|
| |
$
|
301,895
|
|
|
______________________
|
|
(1)
|
|
Consists of asset-based financing on loans, at fair value including
certain credit investments and NPLs, net of deferred financing
costs, For further details, see Note 11 - Debt, net, in the
Company’s Form 10-Q for the quarter ended September 30, 2017.
|
|
(2)
| |
Restricted cash available to invest within certain credit investment
funds which are consolidated under GAAP.
|
|
(3)
| |
Receivable due from and Liability due to brokers for unsettled
trades within certain credit investment funds which are consolidated
under GAAP.
|
| |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171107005469/en/
Tiptree Inc.
Investor Relations, 212-446-1400
ir@tiptreeinc.com
Source: Tiptree Inc.