Fortegra Financial Corporation (NYSE: FRF), an insurance services
company providing distribution and administration services and
insurance-related products, today reported results for the first
quarter ended March 31, 2012.
- Total revenues climbed 7.3% compared to the prior year
- Direct and assumed written premiums increased 16.0%
year-over-year to $79.2 million
- Operating expenses were in line with expectations
- First quarter adjusted EBITDA was $9.5 million ($0.46 per
diluted share) with adjusted EBITDA margin of 34.8%
- The Company repurchased 195,760 shares for a total cost of $1.4
million
"I am pleased to report a positive quarter as demonstrated by
increased net revenues and continued operating expense discipline,"
said Richard S. Kahlbaugh, Chairman, President and Chief Executive
Officer of Fortegra. "Importantly, the cross selling of our
services and products and the leveraging of our competitive
advantages demonstrates the strength of our long term strategy.
Additionally, we've seen significant new wins in Payment
Protection, and we have generated over 100 leads since kicking off
our "PLUS1" direct response marketing and cross selling
initiatives. Our brokerage business posted double digit revenue
growth and solid margin improvement. I firmly believe the company
is well positioned to deliver shareholder value and we remain on
track to achieve our financial goals for the year."
First Quarter Results
Total revenues increased 7.3% to $58.7 million for the first
quarter of 2012, compared to $54.7 million for the first quarter of
2011. Net revenues (total revenues less net losses and loss
adjustment and commissions expenses) increased 2.2% to $27.4
million for the first quarter of 2012, compared to $26.8 million
for the prior-year period. Operating expenses were $18.1 million,
comparable to the prior year.
Net income for the first quarter 2012 was $3.5 million, or $0.17
per diluted share, compared to $3.4 million, or $0.16 per diluted
share, for the quarter ended March 31, 2011. During the quarter, we
experienced an increase in intangible amortization expense,
equivalent to $0.02 per share, which resulted from the purchase
accounting valuations of our eReinsure and Pacific Benefits Group
acquisitions during 2011. Non-GAAP net income for the first quarter
of 2012 was $3.7 million, or $0.18 per diluted share, compared to
Non-GAAP net income of $4.3 million, or $0.20 per diluted share,
for the prior-year period.
Adjusted EBITDA for the first quarter of 2012 was $9.5 million,
compared to $9.0 million for the first quarter of 2011. Adjusted
EBITDA margin for the first quarter of 2012 was 34.8%, compared to
33.8% for the prior-year period.
During the first quarter of 2012, Fortegra adopted Accounting
Standards Update 2010-26, "Accounting for Costs Associated with
Acquiring and Renewing Insurance Contracts," effective January 1,
2012. The company adopted this new accounting standard on a
retrospective basis, through which prior periods are restated to
reflect the results as if this change had been effective in all
periods presented. Fortegra's adoption of the new standard resulted
in a $7.2 million reduction of deferred policy acquisition costs
asset and a $4.7 million decrease to consolidated shareholders'
equity, net of a $2.5 million deferred income tax benefit at
December 31, 2011. Net income from March 31, 2011 was reduced by
$0.2 million, or $0.01 per share on both a basic and diluted basis,
to reflect this retrospective adoption.
Segment Results Payment Protection For the
three months ended March 31, 2012, net revenues for the Payment
Protection segment was $13.2 million, compared to $14.4 million for
the prior-year period. EBITDA for the Payment Protection segment
was $5.3 million for the first quarter of 2012, compared to $5.6
million for the prior-year period. EBITDA margin for the Payment
Protection segment was 39.9% for the first quarter of 2012,
compared to 38.9% for the prior-year period.
Business Process Outsourcing (BPO) Net revenues for the BPO
segment increased to $4.2 million for the first quarter of 2012,
compared to $3.6 million for the first quarter of 2011. EBITDA for
the BPO segment was $1.1 million for the first quarter of 2012,
compared to $0.9 million for the prior-year period. EBITDA margin
for the BPO segment was 25.5% for the first quarter of 2012,
compared to 26.5% for the prior-year period.
Brokerage Net revenues for the Brokerage segment increased 12.7%
to $10.0 million for the first quarter of 2012 compared to $8.9
million in the first quarter of 2011. EBITDA for the Brokerage
segment was $2.9 million for the first quarter of 2012, compared to
$2.1 million for the prior-year period. EBITDA margin for the
Brokerage segment was 29.3% for the first quarter of 2012, compared
to 23.3% for the prior-year period.
Balance Sheet Total invested assets and
cash and cash equivalents amounted to $116.3 million as of March
31, 2012 compared to $127.1 million as of December 31, 2011. Cash
and cash equivalents decreased to $18.7 million from $31.3 million
as of December 31, 2011. Unearned premiums were $221.1 million as
of March 31, 2012 compared to $227.9 million as of December 31,
2011. Total debt outstanding as of March 31, 2012 increased to
$109.7 million compared to $108.0 million as of December 31, 2011.
Stockholder's equity increased to $130.3 million as of March 31,
2012 compared to $127.6 million as of December 31, 2011.
In November 2011, the Company's Board of Directors approved a
share repurchase program for up to $10 million. During the first
quarter of 2012, the Company repurchased 195,760 shares at a total
cost of $1.4 million. Since inception and through April 30, 2012,
the Company repurchased 722,259 shares for a total cost of $4.4
million. Approximately $5.6 million remains available in the
repurchase program.
Conference Call Information Fortegra's
executive management will host a conference call to discuss its
first quarter 2012 results tomorrow, Friday, May 11, 2012 at 8:30
a.m. Eastern Time. To participate in the live call, dial (877)
407-3982 within the U.S., or (201) 493-6780 for international
callers. A live audio webcast will also be available on the
Investors page of the company's website: http://www.fortegra.com. A
replay of the call will be available beginning May 11, 2012 at
11:30 a.m. ET and ending on May 18, 2012 11:59 p.m. ET on the
company's website, and by dialing (877) 870-5176 in the U.S. or
(858) 384-5517 for international callers. The passcode for the
replay is 392799.
Statistical Supplement In addition, the
company has provided a statistical supplement which can be accessed
through the Investor Relations section of Fortegra's website at
http://www.fortegra.com.
About Fortegra Fortegra Financial
Corporation is an insurance services company that provides
distribution and administration services and insurance-related
products to insurance companies, insurance brokers and agents and
other financial services companies in the United States. It sells
services and products directly to businesses rather than directly
to consumers. Fortegra's brands include: Life of the South,
Consecta, Bliss & Glennon (B&G), eReinsure (eRe), Motor
Clubs, Pacific Benefits Group (PBG), Universal Equipment Recovery
Group (UERG), and South Bay Acceptance Corporation (SBAC).
Use of Non-GAAP Financial Information
Fortegra presents certain additional financial measures related to
its Business Segments that are "Non-GAAP measures" within the
meaning of Regulation G under the Securities Act of 1934. Fortegra
presents these Non-GAAP measures to provide investors with
additional information to analyze Fortegra's performance from
period to period. Management also uses these measures to assess
performance for Fortegra's segments and to allocate resources in
managing Fortegra's businesses. However, investors should not
consider these Non-GAAP measures as a substitute for the financial
information that Fortegra reports in accordance with GAAP. These
Non-GAAP measures reflect subjective determinations by management,
and may differ from similarly titled Non-GAAP measures presented by
other companies.
We present EBITDA and Adjusted EBITDA in this Earning Release to
provide investors with a supplemental measure of our operating
performance and, in the case of Adjusted EBITDA, information
utilized in the calculation of the financial covenants under our
revolving credit facility and in the determination of compensation.
EBITDA, as used in this Earnings Release is defined as net income
before interest expense, income taxes, non-controlling interest and
depreciation and amortization. Adjusted EBITDA differs from the
term "EBITDA" as it is commonly used. Adjusted EBITDA, as used in
this Earnings Release, means "Consolidated Adjusted EBITDA" as that
term is defined under our revolving credit facility, which is
generally consolidated net income before consolidated interest
expense, consolidated amortization expense, consolidated
depreciation expense and consolidated tax expense, in each case as
defined more fully in the agreement governing our revolving credit
facility. The other items excluded in this calculation include, but
are not limited to, specified acquisition costs and unusual or
non-recurring charges. The calculation below does not give effect
to certain additional adjustments that are permitted under our
revolving credit facility which, if included, would increase the
amount reflected in this table.
We believe EBITDA and Adjusted EBITDA are frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies in industries similar to ours. Adjusted
EBITDA is also used by management to measure operating performance
and by investors to measure a company's ability to service its debt
and other cash needs. Management believes the inclusion of the
adjustments to EBITDA and Adjusted EBITDA are appropriate to
provide additional information to investors about certain material
non-cash items and about unusual items that we do not expect to
continue at the same level in the future.
EBITDA and Adjusted EBITDA are not recognized terms under
accounting principles generally accepted in the United States, or
U.S. GAAP. Accordingly, they should not be used as an indicator of,
or alternative to, net income as a measure of operating
performance. Although we use EBITDA and Adjusted EBITDA as measures
to assess the operating performance of our business, EBITDA and
Adjusted EBITDA have significant limitations as analytical tools
because they exclude certain material costs. For example, they do
not include interest expense, which has been a necessary element of
our costs. Since we use capital assets, depreciation expense is a
necessary element of our costs and ability to generate service
revenues. In addition, the omission of the substantial amortization
expense associated with our intangible assets further limits the
usefulness of this measure. EBITDA and Adjusted EBITDA also do not
include the payment of taxes, which is also a necessary element of
our operations. Because EBITDA and Adjusted EBITDA do not account
for these expenses, its utility as a measure of our operating
performance has material limitations. Due to these limitations,
management does not view EBITDA and Adjusted EBITDA in isolation or
as a primary performance measure and also uses other measures, such
as net income. Because the definitions of EBITDA and Adjusted
EBITDA (or similar measures) may vary among companies and
industries, they may not be comparable to other similarly titled
measures used by other companies.
Forward-Looking Statements This press
release may contain forward-looking statements within the meaning
of the Private Securities Litigation Act of 1995. Such statements
are subject to risks and uncertainties. All statements other than
statements of historical fact included in this press release are
forward-looking statements. Forward-looking statements give our
current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future
performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as "anticipate," "estimate," "expect," "project,'' "plan,"
"intend," "believe," "may," "should," "can have," "likely" and
other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events.
The forward-looking statements contained in this press release
are based on assumptions that we have made in light of our industry
experience and our perceptions of historical trends, current
conditions, expected future developments and other factors we
believe are appropriate under the circumstances. As you read this
press release, you should understand that these statements are not
guarantees of performance or results. They involve risks,
uncertainties (some of which are beyond our control) and
assumptions. Although we believe that these forward-looking
statements are based on reasonable assumptions, you should be aware
that many factors could affect our actual financial results and
cause them to differ materially from those anticipated in the
forward-looking statements. We believe these factors include, but
are not limited to, those described under Item 1A. - "Risk Factors"
in Fortegra's Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q. Should one or more of these risks or uncertainties
materialize, or should any of these assumptions prove incorrect,
our actual results may vary in material respects from those
projected in these forward-looking statements.
Any forward-looking statement made by us in this press release
speaks only as of the date on which we make it. Factors or events
that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them. We
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Further information concerning Fortegra and its business,
including factors that potentially could materially affect
Fortegra's financial results, is contained in Fortegra's filings
with the SEC, which are available free of charge at the SEC's
website at http://www.sec.gov and from Fortegra's website in the
"Investor Relations" section under "SEC Filings" at
http://www.fortegra.com.
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(All Amounts in Thousands Except Share and Per Share Amounts)
For the Three Months Ended
--------------------------
March 31, March 31,
2012 2011
------------ ------------
Revenues:
Service and administrative fees $ 9,340 $ 9,116
Brokerage commissions and fees 9,520 7,867
Ceding commission 7,064 8,158
Net investment income 743 941
Net realized gains (3) 95
Net earned premium 31,972 28,437
Other income 72 82
------------ ------------
Total revenues 58,708 54,696
------------ ------------
Net losses and loss adjustment expenses 11,266 9,373
Commissions 20,039 18,517
------------ ------------
Net revenues 27,403 26,806
------------ ------------
Expenses:
Personnel costs 11,272 10,781
Other operating expenses 6,680 7,157
Stock based compensation 179 268
Depreciation 738 583
Amortization of intangibles 1,482 1,052
Interest expense 1,652 2,031
------------ ------------
Total expenses 22,003 21,872
------------ ------------
Income before income taxes and non-controlling
interest 5,400 4,934
Income taxes 1,919 1,681
------------ ------------
Income before non-controlling interest 3,481 3,253
Less: net income (loss) attributable to non-
controlling interest 18 (174)
------------ ------------
Net income $ 3,463 $ 3,427
============ ============
Earnings per share:
Basic $ 0.17 $ 0.17
Diluted $ 0.17 $ 0.16
Weighted average common shares outstanding:
Basic 19,904,819 20,464,592
Diluted 20,739,196 21,668,333
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(All Amounts in Thousands Except Share Amounts)
March 31, December 31,
2012 2011
------------ ------------
Assets:
Investments
Fixed maturity securities available-for-sale
at fair value (amortized cost of $90,901 at
March 31, 2012 and $92,311 at December 31,
2011) $ 92,843 $ 93,509
Equity securities available-for-sale at fair
value (cost of $3,786 at March 31, 2012 and
$1,203 at December 31, 2011) 3,793 1,219
Short-term investments 970 1,070
------------ ------------
Total investments 97,606 95,798
Cash and cash equivalents 18,676 31,339
Restricted cash 18,959 14,180
Accrued investment income 927 929
Notes receivable 3,802 3,603
Other receivables 47,982 29,275
Reinsurance receivables 186,421 194,740
Deferred acquisition costs 52,517 55,467
Property and equipment, net 16,591 15,529
Goodwill 103,291 103,291
Other intangibles, net 52,928 54,410
Other assets 5,709 5,943
------------ ------------
Total assets $ 605,409 $ 604,504
============ ============
Liabilities:
Unpaid claims $ 32,497 $ 32,583
Unearned premiums 221,059 227,929
Policyholder account balances 27,565 28,040
Accrued expenses, accounts payable and other
liabilities 42,483 35,581
Deferred revenue 17,617 20,781
Notes payable 74,700 73,000
Preferred trust securities 35,000 35,000
Deferred income taxes 24,207 24,006
------------ ------------
Total liabilities $ 475,128 $ 476,920
============ ============
Stockholders' Equity:
Preferred stock, par value $0.01; 10,000,000
shares authorized; none issued - -
Common stock, par value $0.01; 150,000,000
shares authorized; 20,620,773 and 20,561,328
shares issued at March 31, 2012 and December
31, 2011, respectively, including shares in
treasury 206 206
Treasury stock, at cost, 711,892 shares and
516,132 shares at March 31, 2012 and December
31, 2011, respectively (4,122) (2,728)
Additional paid-in capital 96,378 96,199
Accumulated other comprehensive (loss) income (1,324) (1,754)
Retained earnings 38,613 35,150
------------ ------------
Stockholders' equity before non-controlling
interest 129,751 127,073
Non-controlling interest 530 511
------------ ------------
Total stockholders' equity 130,281 127,584
------------ ------------
Total liabilities and stockholders' equity $ 605,409 $ 604,504
============ ============
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME- Segments (Unaudited)
(All Amounts in Thousands)
For the Three Months
Ended
-------------------------
March 31, March 31,
2012 2011
Net Revenue
Payment Protection $ 13,175 $ 14,351
BPO 4,205 3,564
Brokerage 10,023 8,891
------------ ------------
Total Net Revenues 27,403 26,806
------------ ------------
Operating Expense
Payment Protection 7,913 8,768
BPO 3,133 2,619
Brokerage 7,085 6,819
------------ ------------
Total Operating Expenses 18,131 18,206
------------ ------------
EBITDA
Payment Protection 5,262 5,583
BPO 1,072 945
Brokerage 2,938 2,072
------------ ------------
Total EBITDA 9,272 8,600
------------ ------------
Depreciation and Amortization
Payment Protection 849 953
BPO 503 240
Brokerage 868 442
------------ ------------
Total Depreciation and Amortization 2,220 1,635
------------ ------------
Interest
Payment Protection 1,012 1,526
BPO 267 63
Brokerage 373 442
------------ ------------
Total Interest 1,652 2,031
------------ ------------
Income before income taxes and non-controlling
interest
Payment Protection 3,401 3,104
BPO 302 642
Brokerage 1,697 1,188
------------ ------------
Total income before income taxes and non-
controlling interest 5,400 4,934
Income Taxes 1,919 1,681
Less: net income (loss) attributable to non-
controlling interest 18 (174)
------------ ------------
Net income $ 3,463 $ 3,427
============ ============
FORTEGRA FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Unaudited)
ADJUSTED EBITDA
(All Amounts in Thousands Except Share and Per Share Amounts)
For the Three Months Ended
----------------------------
March 31, March 31,
2012 2011
------------- -------------
Net Income $ 3,463 $ 3,427
Depreciation 738 583
Amortization of intangibles 1,482 1,052
Interest expense 1,652 2,031
Income Taxes 1,919 1,681
Net income (loss) attributable to non-
controlling interest 18 (174)
------------- -------------
EBITDA 9,272 8,600
Transaction costs (a) 97 181
Stock based compensation 179 268
------------- -------------
Adjusted EBITDA $ 9,548 $ 9,049
EBITDA Margin 33.8% 32.1%
Adjusted EBITDA Margin 34.8% 33.8%
(a) Represents transaction costs associated with acquisitions.
FORTEGRA FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Unaudited)
NET INCOME
(All Amounts in Thousands Except Share and Per Share Amounts)
For the Three Months Ended
---------------------------
March 31, March 31,
2012 2011
------------- -------------
Net income $ 3,463 $ 3,427
Non-GAAP Adjustments, net of tax
Transaction costs associated with
acquisitions (1) 97 181
Stock based compensation 115 177
Retirement of debt (1) - 546
------------- -------------
Total Non-GAAP adjustments, net of tax 212 904
------------- -------------
Net income - Non-GAAP basis $ 3,675 $ 4,331
============= =============
GAAP Earnings per share - basic $ 0.17 $ 0.17
Non-GAAP adjustments, net of tax 0.01 0.04
------------- -------------
Non-GAAP Earnings per common share - basic $ 0.18 $ 0.21
============= =============
GAAP Earnings per share - diluted $ 0.17 $ 0.16
Non-GAAP adjustments, net of tax 0.01 $ 0.04
------------- -------------
Non-GAAP Earnings per common share - diluted $ 0.18 $ 0.20
============= =============
Weighted average common shares outstanding:
Basic 19,904,819 20,464,592
Diluted 20,739,196 21,668,333
(1) Adjustments not tax effected
Contacts: Stephanie Gannon 904-352-2759 Email Contact
The Fortegra (NYSE:FRF)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
The Fortegra (NYSE:FRF)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
