National Holdings Corporation Reports Financial Results for Fiscal Third Quarter 2017

NEW YORK, Aug. 14, 2017 (GLOBE NEWSWIRE) -- National Holdings Corporation (NASDAQ:NHLD) (“National” or the “Company”), a leading full service independent brokerage, investment banking, trading and asset management firm providing diverse services including tax preparation, today announced its financial results for the fiscal third quarter ended June 30, 2017.

Third Quarter Fiscal 2017 Financial Highlights (GAAP Reconciliation below):

  • Revenue of $48.0 million, versus $46.3 million for the third quarter of fiscal 2016.

  • Investment banking continued to produce excellent results, generating $12.6 million of revenue, versus $10.7 million in the prior year quarter.

  • Adjusted EBITDA increased to $1.2 million from $0.2 million in the prior year quarter.

  • Adjusted pre-tax earnings of $0.6 million.

    • Pre-tax loss of $62,000 includes a non-operating, non-taxable expense of $642,000 related to the change in the fair value of the firm’s warrant liability.

  • Cash and cash equivalents of $32.6 million and no debt as of June 30, 2017, versus $27.5 million as of the fiscal year-end of 2016.

  • Equity of $35.0 million as of June 30, 2017.

Management Commentary

Michael Mullen, Chief Executive Officer of National Holdings Corporation stated, “Quarter over quarter I continue to be extremely impressed by the progress our business has made. The team has been hard at work focusing on our core principles and it is clearly showing in our financials. The third quarter of fiscal 2017 showed continued revenue growth driven largely by our investment banking business, which has been one of the areas of focus for our Company.”

Mr. Mullen continued, “In addition to continued growth seen in our fiscal Q3 revenue figures, I am also extremely pleased by the growth the team has shown this year. We recently announced two key new hires, which will complement our existing team quite nicely, and be helpful in continuing to achieve the high level of success we have seen already this year.”

Fiscal Third Quarter 2017 Financial Results

National reported fiscal third quarter revenue of $48.0 million, up $1.7 million or 3.7% over the third quarter of 2016. Total expenses increased $0.8 million or 1.8% to $47.5 million in the quarter.


The revenue growth was driven by investment banking, which increased to $12.6 million in fiscal 2017, up 17.6% on quality issuance and strong demand from our clients. While investment advisory revenue increased to $3.6 million, commissions and transfer fees and clearing services decreased $0.1 million to $26.5 million in fiscal 2017, down less than 1%, and net dealer inventory gains declined to $1.8 million as a review of clients during the quarter resulted in the elimination of a specific relationship. Tax revenue rebounded slightly on completion of extensions, up 5.9% to $2.5 million


Total expenses increased to $47.5 million in the current quarter, up $0.8 million from the comparative quarter. The net increase is attributable to the increase in variable compensation costs, directly associated with the increase in revenue, and higher provisions for potential litigation exposure. Of further note, seven of the nine categories of expenses reported declined during the quarter.

Pre-tax Earnings

Pre-tax earnings were negatively impacted by $0.6 million, due to the change in the fair value of the firm’s warrant liability, which increased from the March 31, 2017 measurement date. This adjustment is a non-operating, non-taxable income adjustment and should be viewed as such.

Net Income

The net loss of $24,000 during the current quarter, when adjusted for the non-operating, non-taxable warrant liability adjustment, amounted to net income of $618,000 for the quarter, versus a net loss of $161,000 in the previous year quarter. Earnings per share, basic and fully diluted, were $.00 and ($.01) in the respective quarters.

Adjusted EBITDA increased to $1.2 million in the quarter from $0.2 million in the prior year quarter.

Balance Sheet

As of June 30, 2017, National had $32.6 million of cash and cash equivalents, versus $27.5 million as of September 30, 2016. The Company's balance sheet remains debt free.

About National Holdings Corporation

National Holdings Corporation is a full-service investment banking and asset management firm that provides a range of services, including independent retail brokerage and advisory services, investment banking, institutional sales and trading and equity research, financial planning, market making, tax preparation, insurance and annuities, to corporations, institutional investors and high net-worth clients. With over 1,000 independent advisors, registered reps, traders, sales associates and corporate staff, the Company is a leading Independent Advisor and Broker services company. National operates through five subsidiaries: National Securities Corporation, vFinance Investments, Inc., National Insurance Corporation, National Asset Management, Inc. and Gilman Ciocia, Inc. The Company’s National Securities subsidiary was founded in 1947. National was organized in 1999 and is headquartered in New York and Florida. For more information, visit


This press release may contain certain forward-looking statements. Any such statements, other than statements of historical fact, are based on management’s current expectations, estimates, projections, beliefs and assumptions about the Company, its current and prospective portfolio investments, and its industry. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Company’s control, difficult to predict and could cause actual results to differ materially from those expected or forecasted in such forward-looking statements. Actual developments and results are likely to vary materially from these estimates and projections as a result of a number of factors, including those described from time to time in National’s filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and National undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

June 30,
September 30, 2016

Cash$28,205,000 $ 21,694,000
Restricted cash1,380,000 354,000
Cash deposits with clearing organizations1,040,000 1,030,000
Securities owned, at fair value1,595,000 2,357,000
Receivables from broker-dealers and clearing organizations2,786,000 3,357,000
Forgivable loans receivable1,269,000 1,712,000
Other receivables, net4,748,000 5,430,000
Prepaid expenses1,155,000 1,910,000
Fixed assets, net2,192,000 1,164,000
Intangible assets, net5,119,000 5,704,000
Goodwill6,226,000 6,531,000
Deferred tax asset, net8,566,000 8,958,000
Other assets, principally refundable deposits339,000 345,000
Total Assets$64,620,000 $ 60,546,000
Securities sold, but not yet purchased, at fair value$ $298,000
Accrued commissions and payroll payable11,255,000 11,940,000
Accounts payable and accrued expenses8,508,000 7,166,000
Deferred clearing and marketing credits838,000 995,000
Warrants issued in 2017 and issuable in 20168,832,000 14,055,000
Other193,000 319,000
Total Liabilities29,626,000 34,773,000
Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding
Common stock $0.02 par value, authorized 75,000,000 shares at June 30, 2017 and 150,000,000 shares at September 30, 2016; 12,437,916 shares issued and outstanding at June 30, 2017 and September 30, 2016248,000 248,000
Additional paid-in-capital66,665,000 66,353,000
Accumulated deficit(31,934,000) (40,843,000)
Total National Holdings Corporation Stockholders’ Equity34,979,000 25,758,000
Non-Controlling interest15,000 15,000
Total Stockholders’ Equity34,994,000 25,773,000
Total Liabilities and Stockholders’ Equity$ 64,620,000 $ 60,546,000

Three Month Period Ended
June 30,
Nine Month Period Ended
June 30,
2017 2016 2017 2016
Commissions$ 24,881,000 $ 25,051,000 $ 73,380,000 $ 71,722,000
Net dealer inventory gains1,789,000 2,340,000 6,666,000 7,483,000
Investment banking12,623,000 10,735,000 38,532,000 22,921,000
Investment advisory3,604,000 3,361,000 10,480,000 10,337,000
Interest and dividends675,000 702,000 2,065,000 2,415,000
Transaction fees and clearing services1,649,000 1,591,000 5,834,000 5,512,000
Tax preparation and accounting2,527,000 2,386,000 6,527,000 7,222,000
Other299,000 176,000 1,016,000 385,000
Total Revenues48,047,000 46,342,000 144,500,000 127,997,000
Operating Expenses
Commissions, compensation and fees39,963,000 39,667,000 118,983,000 110,260,000
Clearing fees470,000 509,000 1,826,000 1,798,000
Communications690,000 786,000 2,094,000 2,427,000
Occupancy972,000 982,000 2,916,000 2,886,000
License and registration391,000 417,000 1,223,000 1,155,000
Professional fees1,083,000 2,327,000 3,336,000 4,897,000
Interest5,000 13,000 13,000 16,000
Depreciation and amortization288,000 302,000 871,000 898,000
Other administrative expenses3,610,000 1,624,000 7,315,000 3,973,000
Total Operating Expenses47,472,000 46,627,000 138,577,000 128,310,000
Income (Loss) before Other Income (Expense) and Income Taxes 575,000 (285,000) 5,923,000 (313,000)
Other Income (Expense)
Gain on disposal of Gilman branches 130,000
Change in fair value of warrants(642,000) 5,223,000
Other income5,000 10,000
Total Other Income (Expense)(637,000) 5,363,000
Income (Loss) before Income Taxes(62,000) (285,000) 11,286,000 (313,000)
Income tax expense (benefit)(38,000) (124,000) 2,377,000 (69,000)
Net Income (Loss)$(24,000) $(161,000) $8,909,000 $(244,000)
Net income (loss) per share - Basic$ $(0.01) $0.72 $(0.02)
Net income (loss) per share - Diluted$ $(0.01) $0.72 $(0.02)
Weighted average number of shares outstanding - Basic12,437,916 12,440,035 12,437,916 12,442,059
Weighted average number of shares outstanding - Diluted12,437,916 12,440,035 12,459,834 12,442,059

Three Months Ended
June 30,
Nine Months Ended
June 30,
2017 2016 2017 2016
Net income (loss), as reported$ (24,000) $ (161,000) $ 8,909,000 $ (244,000)
Interest expense5,000 13,000 13,000 16,000
Income taxes (benefit)(38,000) (124,000) 2,377,000 (69,000)
Depreciation91,000 122,000 278,000 345,000
Amortization197,000 180,000 593,000 553,000
EBITDA231,000 30,000 12,170,000 601,000
Non-cash compensation expense129,000 26,000 312,000 125,000
Change in fair value of warrants642,000 (5,223,000)
Forgivable loan amortization158,000 169,000 520,000 493,000
Gain on disposal of Gilman branches $ $ $(130,000) $
EBITDA, as adjusted$1,160,000 $225,000 $7,649,000 $1,219,000

Contacts: National Holdings Corporation: Michael Mullen, Chief Executive Officer, email:, Telephone: +1 212-417-8055 Investor Relations: Email:, Telephone: +1 212 554 4351

Source:National Holdings Corporation