SOURCE: Fortegra Financial

Fortegra Financial

March 01, 2012 16:15 ET

Fortegra Financial Corporation Reports Fourth Quarter and Full Year 2011 Results

Quarterly Net Revenues Grew 27.1%; Quarterly Direct and Assumed Written Premiums Climb 14.7%; Quarterly Operating Expenses Stable at $18.2 Million

JACKSONVILLE, FL--(Marketwire - Mar 1, 2012) - Fortegra Financial Corporation (NYSE: FRF), an insurance services company providing distribution and administration services and insurance-related products, today reported results for the fourth quarter and full year ended December 31, 2011:

  • Fourth quarter net revenues increased 27.1% YOY to $30.3 million
  • Continued strong direct and assumed written premiums for the fourth quarter and full year of $94.2 million and $336.2 million, respectively, in Payment Protection, net of a $2.7 million assumption reinsurance transaction in both periods
  • Operating expenses for the fourth quarter were $18.2 million, consistent with the third quarter of 2011
  • Diluted earnings per share (EPS) for the fourth quarter were $0.25 on a GAAP basis and $0.27 on a non-GAAP basis
  • Fourth quarter adjusted EBITDA increased 22.6% YOY to $12.6 million and adjusted EBITDA margin was 41.5%
  • Through December 31, 2011, the Company repurchased 471,554 shares for a total cost of $2.6 million as part of its $10 million stock repurchase program

"In 2011, we delivered solid year over year top line growth, posted record high direct and assumed written premiums, and successfully executed on our cost control goals," said Richard S. Kahlbaugh, Chairman and Chief Executive Officer of Fortegra. "It was an important year for Fortegra, as we completed our first year as a public company, advanced our growth strategy and acquired multiple businesses. As we look ahead to 2012, our recently acquired direct response marketing operation, Pacific Benefits Group (PBG), provides Fortegra with the technologies, expertise and experience to maximize per-client revenue and facilitate cross-selling opportunities throughout the Company. We have the pieces in place to deliver sustainable growth for our shareholders in years to come."

Fourth Quarter Results
Total revenues increased 20.4% to $60.3 million for the fourth quarter of 2011, compared to $50.1 million for the fourth quarter of 2010. Net revenues (total revenues less net losses and loss adjustment and commissions expenses) increased 27.1% to $30.3 million for the fourth quarter of 2011, compared to $23.8 million for the prior-year period.

Net income for the fourth quarter 2011 was $5.2 million, or $0.25 per diluted share, compared to $4.5 million, or $0.25 per diluted share, for the quarter ended December 31, 2010. Adjusted net income for the fourth quarter of 2011 was $5.6 million, or $0.27 per diluted share, compared to adjusted net income of $4.7 million, or $0.26 per diluted share, for the prior-year period.

Adjusted EBITDA for the fourth quarter of 2011 was $12.6 million, compared to $10.2 million for the fourth quarter of 2010 and compared to $10.7 million in the third quarter of 2011. Adjusted EBITDA margin for the fourth quarter of 2011 was 41.5%, compared to 43.0% for the prior-year period and 37.2% in the third quarter of 2011.

Full Year 2011 Results
For the twelve months ended December 31, 2011, total revenues increased 10.3% to $225.3 million compared to $204.3 million for the prior-year period. Net revenues increased 16.3% to $113.1 million for the twelve months ended December 31, 2011 compared to $97.3 million for the prior-year period.

Net income was $14.5 million, or $0.68 per diluted share, for the twelve months ended December 31, 2011 compared to $16.2 million, or $0.94 per diluted share, for the prior-year period. Net income included $2.5 million and $1.6 million in one-time charges respectively for the twelve months ended December 31, 2011 and December 31, 2010. Excluding these one-time items, net income for the twelve months ended December 31, 2011 was $17.0 million, or $0.80 per diluted share, compared to $17.8 million, or $1.03 per diluted share for the prior-year period.

Adjusted EBITDA for the twelve months ended December 31, 2011 was $40.1 million, compared to $40.1 million for the prior-year period. Adjusted EBITDA margin for the twelve months ended December 31, 2011 was 35.5%, compared to 41.3% for the prior-year period.

Segment Results
Payment Protection
Net revenues for the Payment Protection segment increased 18.4% to $16.7 million in the fourth quarter of 2011, compared to $14.1 million for the prior-year period. The increase was driven by strong premium volume growth, and the impact of the Auto Knight Motor Club acquisition which contributed $0.7 million in additional revenues. For the twelve months ended December 31, 2011, revenues for the Payment Protection segment increased 19.1% to $60.5 million, compared to $50.8 million for the prior-year period. The increase was primarily driven by the impact of the three car club acquisitions which contributed $6.9 million.

EBITDA for the Payment Protection segment was $9.3 million for the fourth quarter of 2011, compared to $8.2 million for the prior-year period. For the twelve months ended December 31, 2011, EBITDA for the Payment Protection segment was $27.8 million, compared to $27.3 million for the prior-year period. EBITDA for the Payment Protection segment included $1.3 million and $1.8 million in transaction costs and other one-time expenses for the twelve months ended December 31, 2011 and 2010, respectively. Excluding these one-time expenses, adjusted EBITDA for the Payment Protection segment was $29.1 million for both the twelve months ended December 31, 2011 and 2010.

Adjusted EBITDA margin for the Payment Protection segment was 56.7% for the fourth quarter of 2011, compared to 59.7% for the prior-year period and 47.3% during the third quarter of 2011. For the twelve months ended December 31, 2011, adjusted EBITDA margin for the Payment Protection segment was 48.0%, compared to 57.2% in the prior-year period.

Business Process Outsourcing (BPO)
Net revenues for the BPO segment increased 29.8% to $4.5 million for the fourth quarter of 2011, compared to $3.5 million for the fourth quarter of 2010. For the twelve months ended December 31, 2011, revenues for the BPO segment decreased 8.7% to $15.6 million, compared to $17.1 million for the prior-year period. The full year over year decrease in revenue was primarily due to regulatory changes that continue to impact production at one of the segment's clients.

Adjusted EBITDA for the BPO segment decreased 26.1% to $1.1 million for the fourth quarter of 2011 compared to $1.5 million for the prior-year period. For the twelve months ended December 31, 2011, adjusted EBITDA for the BPO segment decreased 43.5% to $4.1 million compared to $7.3 million for the prior-year period, primarily related to the decrease in revenue.

Adjusted EBITDA margin for the BPO segment was 24.4% for the fourth quarter of 2011, compared to 42.8% for the prior-year period and 29.2% during the third quarter of 2011. For the twelve months ended December 31, 2011, adjusted EBITDA margin for the BPO segment was 26.5%, compared to 42.8% in the prior-year period.

Brokerage
Net revenues for the Brokerage segment increased 45.3% to $9.1 million for the fourth quarter of 2011 compared to $6.3 million in the fourth quarter of 2010, primarily due to $3.0 million in fees from the acquisition of eReinsure. For the twelve months ended December 31, 2011, revenues for the Brokerage segment increased 26.1% to $37.0 million compared to $29.4 million for the prior-year period due to $8.8 million in fees from the acquisition of eReinsure.

Adjusted EBITDA for the Brokerage segment increased to $2.0 million for the fourth quarter of 2011, compared to $0.4 million for the prior-year period, primarily due to the acquisition of eReinsure. For the twelve months ended December 31, 2011, adjusted EBITDA for the Brokerage segment increased 47.1% to $8.7 million, compared to $5.9 million for the prior-year period.

Adjusted EBITDA margin for the Brokerage segment was 22.1% for the fourth quarter of 2011, compared to 6.8% for the prior-year period and 23.8% during the third quarter of 2011. For the twelve months ended December 31, 2011, adjusted EBITDA margin for the Brokerage segment was 23.5%, compared to 20.1% in the prior-year period.

Balance Sheet
Total invested assets and cash amounted to $127.1 million as of December 31, 2011 compared to $110.6 million as of September 30, 2011. Cash and cash equivalents increased to $31.3 million from $23.1 million as of September 30, 2011. Unearned premiums were $227.9 million as of December 31, 2011 compared to $217.0 million as of September 30, 2011. Total debt outstanding as of December 31, 2011 was $108.0 million compared to $99.0 million as of September 30, 2011. Stockholder's equity increased to $132.3 million as of December 31, 2011 compared to $130.5 million as of September 30, 2011.

In November 2011, the Company's Board of Directors approved a share repurchase program for up to $10 million. Under this program and through December 31, 2011, the Company repurchased 471,554 shares for a total cost of $2.6 million.

Conference Call Information
Fortegra's executive management will host a conference call to discuss its fourth quarter and full year 2011 results tomorrow 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 March 2, 2012 at 11:30 a.m. ET and ending on March 9, 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 388579.

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, primarily 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®, Continental Car Club™, Auto Knight Motor Club™, United Motor Club™, Consecta™, Pacific Benefits Group™, Bliss & Glennon™ and eReinsure™.

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.

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 For the Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Revenues:
Service and administrative fees $ 10,159 $ 8,098 $ 38,200 $ 34,145
Brokerage commissions and fees 8,710 5,452 34,396 24,620
Ceding commission 8,067 6,299 29,495 28,767
Net investment income 732 1,274 3,368 4,073
Net realized gains 1,770 494 4,193 650
Net earned premium 30,857 28,388 115,503 111,805
Other income 32 110 170 230
Total revenues 60,327 50,115 225,325 204,290
Net losses and loss adjustment expenses 9,611 8,949 37,949 36,035
Commissions 20,465 17,372 74,231 71,003
Net revenues 30,251 23,794 113,145 97,252
Expenses:
Personnel costs (includes non-cash stock based compensation of $69 and $48 for the Three Months Ended December 31, 2011 and 2010, respectively, and $609 and $167 for the Twelve Months Ended December 31, 2011 and 2010, respectively) 11,182 8,422 44,547 36,361
Other operating expenses (includes non-cash stock based compensation of $79 and $9 for the Three Months Ended December 31, 2011 and 2010, respectively, and $154 and $9 for the Twelve Months Ended December 31, 2011 and 2010, respectively) 7,031 5,346 30,362 22,873
Depreciation 794 406 3,077 1,396
Amortization of intangibles 1,524 886 4,952 3,232
Interest expense 1,779 2,342 7,641 8,464
Loss on sale of subsidiary - - 477 -
Total expenses 22,310 17,402 91,056 72,326
Income before income taxes and non-controlling interest 7,941 6,392 22,089 24,926
Income taxes 2,742 1,831 7,745 8,703
Income before non-controlling interest 5,199 4,561 14,344 16,223
Less: net income (loss) attributable to non-controlling interest 1 51 (170 ) 20
Net income $ 5,198 $ 4,510 $ 14,514 $ 16,203
Earnings per share:
Basic $ 0.25 $ 0.28 $ 0.71 $ 1.02
Diluted $ 0.25 $ 0.25 $ 0.68 $ 0.94
Weighted average common shares outstanding:
Basic 20,343,038 16,483,626 20,352,027 15,929,181
Diluted 20,955,690 17,703,334 21,265,801 17,220,029
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(All Amounts in Thousands Except Share Amounts)
December 31, 2011 December 31, 2010
Assets:
Investments
Fixed maturity securities available-for-sale at fair value $ 93,509 $ 85,786
Equity securities available-for-sale at fair value 1,219 1,935
Short-term investments 1,070 1,170
Total investments 95,798 88,891
Cash and cash equivalents 31,339 43,389
Restricted cash 14,180 15,722
Accrued investment income 929 880
Notes receivable 3,603 1,485
Other receivables 29,345 25,473
Reinsurance receivables 194,740 169,382
Deferred acquisition costs 62,687 65,142
Property and equipment, net 15,529 11,996
Goodwill 108,797 74,047
Other intangibles, net 47,022 39,997
Other assets 5,943 5,505
Total assets $ 609,912 $ 541,909
Liabilities:
Unpaid claims $ 32,583 $ 32,693
Unearned premiums 227,929 210,430
Policyholder account balances 28,040 -
Accrued expenses, accounts payable and other liabilities 35,283 41,844
Deferred revenue 20,781 25,611
Notes payable 73,000 36,713
Preferred trust securities 35,000 35,000
Redeemable preferred stock - 11,040
Deferred income taxes 25,019 24,691
Total liabilities 477,635 418,022
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; 20,561,328 and 20,256,735 shares issued at December 31, 2011 and 2010, respectively, including shares in treasury 206 203
Treasury stock, at cost, 516,132 shares and 44,578 shares at December 31, 2011 and 2010, respectively (2,728 ) (176 )
Additional paid-in capital 96,199 95,556
Accumulated other comprehensive (loss) income, net of tax (expense) of $944 and $(1,235), in 2011 and 2010, respectively (1,754 ) 2,293
Retained earnings 39,822 25,308
Stockholders' equity before non-controlling interest 131,745 123,184
Non-controlling interest 532 703
Total stockholders' equity 132,277 123,887
Total liabilities and stockholders' equity $ 609,912 $ 541,909
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME - Segments (Unaudited)
(All Amounts in Thousands)
(Unaudited) For the Three Months Ended For the Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Segment Net Revenue
Payment Protection
Service and administrative fees $ 5,276 $ 3,887 $ 19,980 $ 12,459
Ceding commission 8,067 6,299 29,495 28,767
Net investment income 732 1,234 3,368 4,033
Net realized gains 1,770 494 4,193 650
Other income 32 87 170 151
Net earned premium 30,857 28,388 115,503 111,805
Net losses and loss adjustment expenses (9,611 ) (8,949 ) (37,949 ) (36,035 )
Commissions (20,465 ) (17,372 ) (74,231 ) (71,003 )
Total Payment Protection 16,658 14,068 60,529 50,827
BPO 4,496 3,464 15,584 17,069
Brokerage
Brokerage commissions and fees 8,710 5,576 34,396 24,739
Service and administrative fees 387 686 2,636 4,617
Total Brokerage 9,097 6,262 37,032 29,356
Total 30,251 23,794 113,145 97,252
Operating Expenses
Payment Protection 7,327 5,853 32,736 23,573
BPO 3,434 2,005 11,598 10,002
Brokerage (1) 7,452 5,842 29,289 23,529
Corporate - 68 1,763 2,130
Total 18,213 13,768 75,386 59,234
EBITDA
Payment Protection 9,331 8,215 27,793 27,254
BPO 1,062 1,459 3,986 7,067
Brokerage (1) 1,645 420 7,743 5,827
Corporate - (68 ) (1,763 ) (2,130 )
Total 12,038 10,026 37,759 38,018
Depreciation and Amortization
Payment Protection 1,001 970 4,205 2,352
BPO 300 (113 ) 1,124 598
Brokerage 1,017 435 2,700 1,678
Total 2,318 1,292 8,029 4,628
Interest
Payment Protection 1,027 1,959 4,649 7,197
BPO 161 109 419 433
Brokerage 591 274 2,573 834
Total 1,779 2,342 7,641 8,464
Income before income taxes and non-controlling interest
Payment Protection 7,303 5,286 18,939 17,705
BPO 601 1,463 2,443 6,036
Brokerage (1) 37 (289 ) 2,470 3,315
Corporate - (68 ) (1,763 ) (2,130 )
Total income before income taxes and non-controlling interest 7,941 6,392 22,089 24,926
Income Taxes 2,742 1,831 7,745 8,703
Less: net income (loss) attributable to non-controlling interest 1 51 (170 ) 20
Net income $ 5,198 $ 4,510 $ 14,514 $ 16,203
(1) - Includes loss on sale of subsidiary of $477 for the year ended December 31, 2011.
FORTEGRA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME - Segments (Unaudited)
(All Amounts in Thousands)
Reconciliation of Segment Net Revenue and EBITDA to Total Revenue and Net Income For the Three Months Ended For the Twelve Months Ended
(Unaudited) December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Revenue
Payment Protection $ 16,658 $ 14,068 $ 60,529 $ 50,827
BPO 4,496 3,464 15,584 17,069
Brokerage 9,097 6,262 37,032 29,356
Segment revenue 30,251 23,794 113,145 97,252
Net losses and loss adjustment expenses 9,611 8,949 37,949 36,035
Commissions 20,465 17,372 74,231 71,003
Total revenue 60,327 50,115 225,325 204,290
Operating Expenses
Payment Protection 7,327 5,853 32,736 23,573
BPO 3,434 2,005 11,598 10,002
Brokerage (1) 7,452 5,842 29,289 23,529
Corporate - 68 1,763 2,130
Total Operating Expenses 18,213 13,768 75,386 59,234
Net losses and loss adjustment expenses 9,611 8,949 37,949 36,035
Commissions 20,465 17,372 74,231 71,003
Total expenses before depreciation, amortization and interest 48,289 40,089 187,566 166,272
EBITDA
Payment Protection 9,331 8,215 27,793 27,254
BPO 1,062 1,459 3,986 7,067
Brokerage (1) 1,645 420 7,743 5,827
Corporate - (68 ) (1,763 ) (2,130 )
Total 12,038 10,026 37,759 38,018
Depreciation and amortization
Payment Protection 1,001 970 4,205 2,352
BPO 300 (113 ) 1,124 598
Brokerage 1,017 435 2,700 1,678
Total 2,318 1,292 8,029 4,628
Interest
Payment Protection 1,027 1,959 4,649 7,197
BPO 161 109 419 433
Brokerage 591 274 2,573 834
Total 1,779 2,342 7,641 8,464
Income before income taxes and non-controlling interest
Payment Protection 7,303 5,286 18,939 17,705
BPO 601 1,463 2,443 6,036
Brokerage (1) 37 (289 ) 2,470 3,315
Corporate - (68 ) (1,763 ) (2,130 )
Total Income before income taxes and non-controlling interest 7,941 6,392 22,089 24,926
Income taxes 2,742 1,831 7,745 8,703
Less: net income (loss) attributable to non-controlling interest 1 51 (170 ) 20
Net income $ 5,198 $ 4,510 $ 14,514 $ 16,203
(1) - Includes loss on sale of subsidiary of $477 for the year ended December 31, 2011.

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. The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for each of the periods presented:

(Unaudited, all amounts in thousands) For the Three Months Ended For the Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Net income $ 5,198 $ 4,510 $ 14,514 $ 16,203
Depreciation 794 406 3,077 1,396
Amortization of intangibles 1,524 886 4,952 3,232
Interest expense 1,779 2,342 7,641 8,464
Income taxes 2,742 1,831 7,745 8,703
Net income (loss) attributable to non-controlling interest 1 51 (170 ) 20
EBITDA 12,038 10,026 37,759 38,018
Transaction costs (a) 160 98 989 486
Corporate governance study - - 248 -
Relocation expenses - - 207 -
Statutory audits - - 98 -
Loss on sale of subsidiary - - 477 -
Legal 360 - 360 -
Re-audit expenses - 116 - 1,644
Adjusted EBITDA $ 12,558 $ 10,240 $ 40,138 $ 40,148
(a) Represents transaction costs associated with acquisitions.
FORTEGRA FINANCIAL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Unaudited)
(All Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited) For the Three Months Ended For the Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
Net income $ 5,198 $ 4,510 $ 14,514 $ 16,203
Non-GAAP Adjustments, net of tax
Transaction costs associated with acquisitions 160 98 989 486
Corporate governance study - - 161 -
Relocation expenses - - 134 -
Statutory audits - - 64 -
Loss on sale of subsidiary - - 309 -
Re-audit expenses - 83 - 1,070
Legal 236 - 234 -
Retirement of debt - - 560 -
Total Non-GAAP adjustments, net of tax 396 181 2,451 1,556
Net income - Non-GAAP basis $ 5,594 $ 4,691 $ 16,965 $ 17,759
Earnings per share - basic $ 0.25 $ 0.28 $ 0.71 $ 1.02
Non-GAAP adjustments, net of tax 0.02 0.01 0.12 0.10
Non-GAAP Earnings per common share - basic $ 0.27 $ 0.29 $ 0.83 $ 1.12
Earnings per share - diluted $ 0.25 $ 0.25 $ 0.68 $ 0.94
Non-GAAP adjustments, net of tax 0.02 0.01 0.12 0.09
Non-GAAP Earnings per common share - diluted $ 0.27 $ 0.26 $ 0.80 $ 1.03
Weighted average common shares outstanding:
Basic 20,343,038 16,483,626 20,352,027 15,929,181
Diluted 20,955,690 17,703,334 21,265,801 17,220,029

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