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National Holdings Corporation Reports Fiscal First Quarter 2017 Results

/EIN News/ -- NEW YORK, Feb. 15, 2017 (GLOBE NEWSWIRE) -- National Holdings Corporation (NASDAQ:NHLD) (“National” or the “Company”), a leading full service independent brokerage, investment banking and asset management firm providing diverse services including tax preparation, today announced its financial results for the fiscal first quarter 2017 ended December 31, 2016.

First Quarter Fiscal 2017 Financial Highlights:

  • Revenue of $44.6 million, versus $39.6 million for the first quarter of fiscal 2016
  • Investment banking revenue increased 59% to $9.7 million
  • Commissions and related revenues increased 6.5% over the prior year comparative quarter
  • Pre-tax earnings of $5.7 million
    -  $4.1 million of pre-tax earnings was due to a non-operating, non-taxable income adjustment, due to a change in the fair value of the firm's warrant liability
    -  Adjusted pre-tax earnings (minus the warrant liability valuation change) was $1.6 million versus a loss of $.6 million in first quarter 2016

Management Commentary

Michael Mullen, Chief Executive Officer of National stated, "The first quarter of fiscal 2017 kicked off on a positive note after the close of the Fortress tender offer near the end of the fiscal 2016 fourth quarter, and ended even stronger with tremendous current period results from our investment banking division. This quarter truly marked the beginning of a new focus and unified vision for our company that hinges on the premise of streamlining our business and focusing on creating value for our clients and shareholders. With our management team’s support and dedication, we have seen growth across very important lines of our business and believe our Company is on the path for great success.“

Fiscal First Quarter 2017 Financial Results

National reported first quarter revenue of $44.6 million, up $4.9 million or 12.5% over the first quarter of fiscal 2016. Total expenses increased $2.7 million or 6.6% to $42.9 million in the quarter.

Investment banking revenue increased to $9.7 million in fiscal 2017, up 59% from a very good quarter in fiscal 2016.

Net dealer inventory gains were essentially flat at $2.5 million; Investment Advisory was down $.3 million to $3.4 million, principally due to the elimination of an unprofitable business in December 2015; and Tax preparation and accounting services was essentially flat to the prior year in an off-season quarter.  Each of these businesses has been reviewed for efficiency and is operating profitably.

Total expenses increased $2.7 million in the comparative quarter, and $2.5 million of that was in the commissions, compensation and fees category. The increase in this category of expense is due to the increase in Investment banking and commission revenue and associated compensation agreements.

Pre-tax earnings were positively impacted by $4.1 million, due to the change in the fair value of warrants issuable in the current quarter, as the value of the warrant liability declined at the December 31, 2016 measurement date. This adjustment is a non-operating, non-taxable income adjustment and should be viewed as such. 

As a result of the positive operating and non-operating pre-tax results, net income increased to $5.7 million in the current quarter, versus a loss of $.6 million in the comparative prior year quarter.  Earnings per share, basic and fully diluted, were $.41 and $(.04) respectively.

Adjusted EBITDA increased to $2.1 million in the quarter from $(0.2) million in the first quarter of fiscal 2016.

Balance Sheet 

As of December 31, 2016, National had $26.2 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 1,100 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.

  December 31,
  September 30,
Cash $ 22,176,000     $ 21,694,000  
Restricted cash 354,000     354,000  
Cash deposits with clearing organizations 1,030,000     1,030,000  
Securities owned, at fair value 1,206,000     2,357,000  
Receivables from broker-dealers and clearing organizations 2,858,000     3,357,000  
Forgivable loans receivable 1,528,000     1,712,000  
Other receivables, net 3,868,000     5,430,000  
Prepaid expenses 1,854,000     1,910,000  
Fixed assets, net 1,230,000     1,164,000  
Intangible assets, net 5,718,000     5,704,000  
Goodwill 6,531,000     6,531,000  
Deferred tax asset, net 8,690,000     8,958,000  
Other assets, principally refundable deposits 344,000     345,000  
Total Assets $ 57,387,000     $ 60,546,000  
Securities sold, but not yet purchased, at fair value $ 1,000     $ 298,000  
Accrued commissions and payroll payable 10,191,000     11,940,000  
Accounts payable and accrued expenses 5,213,000     7,166,000  
Deferred clearing and marketing credits 943,000     995,000  
Warrants issuable 9,963,000     14,055,000  
  Other 244,000     319,000  
Total Liabilities 26,555,000     34,773,000  
Stockholders’ Equity      
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding      
Common stock $0.02 par value, 150,000,000 shares authorized; 12,437,916 issued and outstanding at December 31, 2016 and September 30, 2016 248,000     248,000  
Additional paid-in-capital 66,353,000     66,353,000  
Accumulated deficit (35,784,000 )   (40,843,000 )
Total National Holdings Corporation Stockholders’ Equity 30,817,000     25,758,000  
Non-Controlling interest 15,000     15,000  
Total Stockholders’ Equity 30,832,000     25,773,000  
Total Liabilities and Stockholders’ Equity $ 57,387,000     $ 60,546,000  


  Three Month Period Ended
December 31,
  2016   2015
Commissions $ 24,506,000     $ 22,995,000  
Net dealer inventory gains 2,511,000     2,544,000  
Investment banking 9,726,000     6,117,000  
Investment advisory 3,385,000     3,660,000  
Interest and dividends 716,000     918,000  
Transaction fees and clearing services 2,498,000     2,372,000  
Tax preparation and accounting 856,000     900,000  
Other 371,000     116,000  
Total Revenues 44,569,000     39,622,000  
Operating Expenses      
Commissions, compensation and fees 37,258,000     34,710,000  
Clearing fees 738,000     763,000  
Communications 722,000     829,000  
Occupancy 1,008,000     935,000  
License and registration 405,000     355,000  
Professional fees 1,263,000     1,086,000  
Interest 4,000     1,000  
Depreciation and amortization 295,000     300,000  
Other administrative expenses 1,230,000     1,287,000  
Total Operating Expenses 42,923,000     40,266,000  
Income (Loss) before Other Income and Income Taxes 1,646,000     (644,000 )
Other Income      
Change in fair value of warrants issuable 4,092,000      
Total Other Income 4,092,000      
Income (Loss) before Income Taxes 5,738,000     (644,000 )
Income tax expense (benefit) 679,000     (191,000 )
Net Income (Loss) $ 5,059,000     $ (453,000 )
Net income (loss) per share - Basic $ 0.41     $ (0.04 )
Net income (loss) per share - Diluted $ 0.41     $ (0.04 )
Weighted average number of shares outstanding - Basic 12,437,916     12,446,064  
Weighted average number of shares outstanding - Diluted 12,438,474     12,446,064  

 Non-GAAP Financial Measures

To provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, the Company supplements its consolidated statements of income presented on a GAAP basis with non-GAAP financial measures of earnings. Please refer to the schedule in this release for a reconciliation of non-GAAP financial measures to GAAP measures.

Management uses Earnings before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA as financial measures to evaluate the profitability and efficiency of the Company’s business model. EBITDA and adjusted EBITDA are not presented in accordance with GAAP.

Investors should consider the non-GAAP measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, the Company’s non-GAAP measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures.

National Holdings Corporation
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
  Three Months Ended December 31,
  2016   2015
Net income (loss), as reported $ 5,059,000     $ (453,000 )
Interest expense 4,000     1,000  
Income taxes (benefit) 679,000     (191,000 )
Depreciation 98,000     107,000  
Amortization 197,000     193,000  
EBITDA 6,037,000     (343,000 )
Non-cash compensation expense     37,000  
Change in fair value of warrants issuable (4,092,000 )    
Forgivable loan amortization 201,000     141,000  
EBITDA, as adjusted $ 2,146,000     $ (165,000 )

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

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