MIAMI–(BUSINESS WIRE)–Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS, LTSL,
LTS PrA, LTSF, LTSK) today announced that the Company sent the following
annual letter to its shareholders from the Company’s Chairman, President
and CEO, Richard J. Lampen:
Dear Fellow Shareholder:
2018 was a year of strong performance for Ladenburg in financial,
operational and strategic terms, as we broadened and deepened our
position as a leader in the independent retail financial advice space,
while continuing to generate robust results from our capital markets and
investment banking business.
Ladenburg’s revenues for the year increased 9.7% from the prior year
period to $1.4 billion, the majority of which originated from our
independent advisory and brokerage (IAB) segment.
These numbers not only underscore ongoing favorable market conditions –
including the positive effects of a higher interest rate environment –
but more importantly, spotlight the strength of our long-term strategy,
and its focus on profitably growing our independent advisory and
brokerage (IAB)-related businesses.
2018 Financial Performance Summary Highlights
Our robust financial performance for 2018 encompasses the following
summary highlights:
- Revenues were $1.4 billion, an increase of 9.7% from the prior year.
-
2018 net income was $33.8 million and EBITDA, as adjusted, was $100.4
million. -
Revenues for our IAB segment increased 1.8% compared to the prior year
to $1.16 billion, including advisory fees, trailing commissions,
interest income and service fees, compared to $1.14 billion in IAB
segment revenues from 2017. -
Total client assets of $158.6 billion at December 31, 2018, including
advisory assets under management of $72.8 billion. - Recurring revenue of 77.3% for fiscal 2018 in our IAB segment.
-
Ladenburg Thalmann Asset Management (LTAM) – our internal wealth
management division that supports our IAB segment’s financial advisors
and their clients – ended 2018 with approximately $2.5 billion of
assets under management. -
Complementing the robust performance of our IAB segment, our
investment banking group turned in solid results as well, with revenue
from capital raising activities increasing nearly 30% from the prior
year.
Ladenburg’s Independent Advisory and Brokerage (IAB) Segment
Going beyond financial performance numbers, we are excited about the
strategic and operating success of our independent advisory and
brokerage (IAB) segment. This segment encompasses our five firms that
collectively support over 4,400 financial advisors across the country,
including Securities America, Triad Advisors, Investacorp, KMS Financial
Services and Securities Service Network.
Our focus on our IAB segment reflects Ladenburg’s passionate belief in
the power of objective and professional guidance, delivered by trusted
financial advisors, to help many thousands of individuals, families and
business owners reach their life goals.
We are proud of the role we play in delivering access to professional
advice and planning to individuals and households with $100,000 to
$2,000,000 in net investible assets. This is an underserved retail
investor segment, estimated by third-party industry experts to represent
an asset base of roughly $17 trillion. Equally important, it is a
population segment that encompasses members of the Millennial, Gen X and
Baby Boomer generations, many of whom are experiencing significant life
inflection points, and who increasingly recognize the value of
professional financial advice.
With this context in mind, our IAB segment’s continued success has been
built on four unique strengths of Ladenburg:
-
First, we translate our intellectual and financial capital,
technology and other resources into platforms and tools that directly
support the success of our financial advisors. This core
strength makes Ladenburg a top destination for experienced and
successful advisors seeking to deliver a personalized, planning-based
service experience to individuals, families and business owners. -
Second, we are a leading innovator of the network model in the
independent financial advice space. We support a true
multi-brand structure that embraces distinct advisor service cultures,
while also delivering on the enterprise-level stability, security and
business growth tools that independent advisors demand in a rapidly
consolidating landscape. All of this enables us to appeal to the
widest possible range of advisor preferences and needs in recruiting
and retaining successful and experienced financial advisors to each of
our IAB firms. -
Third, we invest in visionary innovation that directly benefits
our financial advisors. We do so by recognizing social,
cultural and economic trends that can fundamentally transform the
delivery and consumption of financial advice, while also identifying
early-stage technology firms with tools we can adapt for our financial
advisors that place them nicely ahead of the curve in capturing major
new opportunities arising from these trends. This marks a clear
departure from the way innovation is frequently viewed in the narrow
context of incremental improvements to daily-use technologies. -
Our culture of authentic collaboration inspires different firms,
teams and individuals to come together proactively and capture growth
opportunities while solving challenges. We leverage the
diversity of best practices and thought leadership that exists across
each corner of our organization to the advantage of the financial
advisors we serve.
Reflecting these core strengths, our key business highlights for our IAB
segment for 2018 include the following:
-
The enterprise-level platforms and functions we rolled out last
year are now fully operational and driving significant value-add.
Our new enterprise-level due diligence platform has been delivering
scalable due diligence solutions to our financial advisors,
significantly supplementing existing IAB resources. Similarly, our
Ladenburg Innovation Lab, which serves as the primary vehicle for our
commitment to visionary innovation, has already established a
recurring and highly collaborative innovation investing process that
involves growth-oriented financial advisors, leaders across our
organization and members of the early-stage technology start-up and
venture capital communities. -
We continue to invest in existing enterprise-level functions to
deliver additional resources to support the growth and success of our
financial advisors. We continued to expand Ladenburg Practice
Management, which partners closely with our IAB subsidiaries and their
advisors to identify and roll-out strategies, tools and platforms that
enable our advisors to operate more effectively their businesses and
distinguish their value proposition. -
Our Ladenburg Advantage platform continues to serve as a key
differentiator for our company. We made enhancements to our
Ladenburg Advantage platform, which delivers a differentiated set of
resources and services available through our various affiliated
companies that are strategically adjacent to the work our financial
advisors do. The platform encompasses Ladenburg’s proprietary
research, investment banking and capital markets services, fixed
income trading and syndicate products, Highland Capital’s insurance
and annuity expertise, Premier Trust’s trust services and Ladenburg
Thalmann Asset Management’s turnkey asset management solutions.In
2018, we generated significant momentum in building out the product,
consulting and marketing capabilities of Highland Capital, our
insurance and annuity distribution subsidiary. This reflects the
growing importance of providing high-touch consultative support for
financial advisors in this increasingly crucial area of financial
planning solutions for an aging population. This effort included
Highland Capital’s acquisition of the distribution business of Kestler
Financial Group, as well as key assets of Four Seasons Financial
Group, both longstanding insurance and annuity industry leaders. -
We have integrated planning, platforms and expertise throughout
Ladenburg to support the launch and consolidation of advisor-facing
events that can accelerate the success of our IABs and financial
advisors. In 2018, we hosted our second annual Ladenburg
Advisory Symposium, designed to provide our financial advisors with
the resources and expertise they need to grow their fee-based advisory
work, with attendance and positive attendee feedback once again
significantly exceeding expectations.Leveraging our
approach to the Ladenburg Advisory Symposium as a blueprint for
organizing other enterprise-level events, we are now well-positioned
to deliver successful and effective national conferences that
consolidate national conference activities that previously existed
across each of our five firms. Most importantly, we look forward to
delivering a consolidated national conference experience that drives
significantly enhanced professional development and learning
experiences for our advisors, as well as networking, practice
acquisition and succession planning opportunities, while providing
measurable value for our strategic partners.
As we move forward, we will continue to focus on multiple opportunities
to significantly accelerate our growth on an organic basis. From
intensifying our ongoing advisor recruiting efforts across each of our
firms, to maximizing advisor retention, to identifying opportunities to
enhance the financial advisor service experience, Ladenburg’s IAB
segment is well-positioned for future success.
We also intend to take an opportunistic approach in seeking to identify
potential acquisitions of firms that would be a strong fit with our
existing IABs, as well as other businesses that offer a unique
advisor-facing solution set or service that can further create value for
the financial advisors we support, and by extension, Ladenburg’s
shareholders.
Ladenburg’s Investment Banking & Capital Markets Business
Revenues from our investment banking & capital markets segment for 2018
increased by 17% to $78.1 million, compared to $66.7 million in 2017.
The segment’s success was driven by the nearly 30% increase in revenue
from capital raising activities for small and mid-cap public companies.
Our investment bankers remain focused on healthcare and biotechnology
companies, as well as the energy and technology sectors. Consistent with
our long-term strategy of seeking to mobilize our distribution network,
we are also focused on yield-oriented equities that are attractive to
both institutional and individual investors.
In 2018, our investment bank participated in 82 underwritten offerings
that raised an aggregate of approximately $6.1 billion. Our investment
bank also placed 15 registered direct and PIPE offerings, which raised
an aggregate of approximately $334 million.
Quarterly Cash Dividend, Management and Board of Directors Update
We were pleased to increase our quarterly cash dividend on our common
stock to $0.05 per share in 2018, while continuing to invest in our
business. Cash dividends of $8.8 million were paid to common
shareholders in 2018.
Since the beginning of 2018, we made some key additions to strengthen
our management team. Erinn Ford joined us as President of KMS Financial
Services in February 2018 and recently assumed the additional position
of CEO. Erinn, who is one of the most visible leaders in the retail
financial advice space, especially in the Pacific Northwest where KMS is
based, brought to us her extensive experience as a senior executive in
our industry. We were also pleased to announce in April 2019 that
veteran industry operations and technology leader David Ballard has
joined us at our parent company as Senior Vice President, Enterprise
Services.
Additionally, we updated our Board composition in 2018 and early 2019. I
was privileged to take on the role of Board Chairman, in tandem with my
ongoing position as President and CEO of Ladenburg, while Adam Malamed,
our EVP and Chief Operating Officer, also joined the Board as a fellow
member. We were also pleased to welcome to our Board both Glenn C. Davis
– a veteran CPA and strategic consultant with senior experience across
firms such as CohnReznick LLP and Coopers & Lybrand – as well as Michael
Liebowitz, President and CEO of Harbor Group Consulting, an insurance
advisory firm.
At the same time, the Ladenburg Board and executive team extends our
deepest sympathies to the friends and family of Jeffrey S. Podell, a
long-serving member of our Board who passed away in August 2018. We will
miss the expertise Jeff brought to our Board, and we are grateful for
his many contributions to the Company.
While our Board membership has been updated, as major shareholders in
Ladenburg, the interests of our Board directors and our senior
leadership team remain directly aligned with our shareholders, and we
all remain completely focused on the creation of long-term value for our
shareholders as our foremost priority.
Ladenburg’s Commitment to Corporate Citizenship
Ladenburg has a deep and longstanding commitment to good corporate
citizenship, even as we remain focused on creating long-term shareholder
value through profitable growth across our business segments.
We believe our company’s position as a leader in the independent retail
financial advice space imparts on us a unique responsibility for driving
broader changes that benefit both the financial advisor community, as
well as individuals and households who deserve access to high quality,
professional financial guidance to meet their life goals.
In keeping with this sense of responsibility and our passion for
supporting the financial advice profession, Ladenburg was proud to form
the Ladenburg Institute of Women & Finance (LIWF) in 2012, which today
is a leading force in supporting the inclusion and business success of
female financial advisors and executives in our industry.
In 2018, we were proud to convene our seventh annual Ladenburg Institute
of Women & Finance Symposium, an invitation-only event that brings
together leading women advisors from Ladenburg’s independent advisory
and brokerage firms to share insights on how female advisors in
particular can best position themselves for professional success with
respect to ongoing shifts in client expectations, demographics and
technology. In addition, the 2018 Symposium celebrated the success of
Ladenburg’s IAB subsidiaries in bolstering the ranks of women advisors
in the profession. In June 2018, Financial Planning magazine recognized
that 28% of advisors affiliated with both Securities America and Triad
Advisors are female, while women make up 22% of KMS’s advisors.
Separately, a May 2018 article in Investment News recognized Securities
America for increasing the firm’s proportion of women advisors as a
percentage of total advisors by 1.3% from the previous year.
On a closely related note, our LIFT Mentoring Program of LIWF continues
to play an instrumental role as it advances into its sixth year since
inception in helping younger female advisors in the Ladenburg community
benefit from the guidance and insights of more experienced female
advisors.
In July 2018, Jim Nagengast, the President and CEO of Securities
America, our largest IAB firm, was elected to a large firm seat on the
FINRA Board of Governors, where he helps oversee the organization
dedicated to investor protections and market integrity. We thank Jim for
his commitment to our industry and recognize the high respect that he
and Securities America are held in by our peer firms.
Additionally, Ladenburg continues to work closely with the Financial
Services Institute (FSI), the industry’s leading association of
independent firms and advisors. Our company’s focus in this regard is to
promote broad access to competent and affordable financial advice,
products and services, together with a well-functioning regulatory
environment for independent financial services firms, their advisors and
their clients. Ladenburg’s executives are active volunteer members of
FSI’s Board of Directors, as well as the organization’s various advocacy
and action committees.
2019 Outlook
I am pleased to have this opportunity to share our 2018 performance
summary and highlights, communicating to you all in my first annual
shareholder letter as Chairman of the Board. My role as Chairman of the
Board is new, but the dedication that I share with my fellow Board
members and colleagues on Ladenburg’s executive leadership team to
creating sustained, long-term value for our shareholders remains a
constant part of our vision, planning and execution with all that we do.
As we advance into 2019, we are confident that our growth prospects for
this year and beyond are bright. We have carefully built the groundwork
needed to position ourselves for continued industry leadership and
success, and we expect the forward momentum we have created to continue
at a healthy clip.
On behalf of the Board of Directors and the management team, we extend
our gratitude to all of who have contributed to our company’s success.
We thank you for your continued support and your ongoing confidence in
Ladenburg.
Sincerely,
Richard J. Lampen
Chairman, President & CEO
About Ladenburg
Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS, LTSL,
LTS PrA, LTSF, LTSK) is a publicly-traded diversified financial services
company based in Miami, Florida. Ladenburg’s subsidiaries include
industry-leading independent advisory and brokerage (IAB) firms
Securities America, Triad Advisors, Securities Service Network,
Investacorp and KMS Financial Services, as well as Premier Trust,
Ladenburg Thalmann Asset Management, Highland Capital Brokerage, a
leading independent life insurance brokerage company and full-service
annuity processing and marketing company, and Ladenburg Thalmann & Co.
Inc., an investment bank which has been a member of the New York Stock
Exchange for over 135 years. The company is committed to investing in
the growth of its subsidiaries while respecting and maintaining their
individual business identities, cultures, and leadership. For more
information, please visit www.ladenburg.com.
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding future financial performance, future
growth, future demand for financial services, growth of our independent
advisory and brokerage business, growth of our investment banking and
capital markets business, the amount and timing of future quarterly
dividends on the Company’s common stock, recruitment of financial
advisors, changes in interest rates, future levels of recurring revenue,
future acquisitions, future synergies, future investments and future
services. These statements are based on management’s current
expectations or beliefs and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from those expressed
or implied by the statements herein due to changes in economic,
business, competitive and/or regulatory factors, including the SEC’s
proposed rules and interpretations concerning the standards of conduct
for broker dealers and investment advisers when dealing with retail
investors, future cash flows, a change in the Company’s dividend policy
by the Company’s Board of Directors (which has the ability in its sole
discretion to increase, decrease or eliminate entirely the Company’s
dividend at any time) and other risks and uncertainties affecting the
operation of the Company’s business. These risks, uncertainties and
contingencies include those set forth in the Company’s annual report on
Form 10-K for the fiscal year ended December 31, 2018 and other factors
detailed from time to time in its other filings with the Securities and
Exchange Commission. The information set forth herein should be read in
light of such risks. Further, investors should keep in mind that the
Company’s quarterly revenue and profits can fluctuate materially
depending on many factors, including the number, size and timing of
completed offerings and other transactions. Accordingly, the Company’s
revenue and profits in any particular quarter may not be indicative of
future results. The Company is under no obligation to, and expressly
disclaims any obligation to, update or alter its forward-looking
statements, whether as a result of new information, future events,
changes in assumptions or otherwise, except as required by law.
Contacts
For Ladenburg Thalmann:
Sard Verbinnen & Co
Emily
Claffey/Benjamin Spicehandler
212-687-8080
