NEW YORK--(BUSINESS WIRE)--Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), which operates in the specialty insurance, asset management, senior living and specialty finance industries, today announced its financial results for the year ended December 31, 2016.
Summary Consolidated Statements of Operations (2) |
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($ in millions, except for per share information) | Year Ended December 31, | ||||||||||
GAAP: |
2016 | 2015 | |||||||||
Total revenues | $ | 567.2 | $ | 438.5 | |||||||
Income (loss) from continuing operations | $ | 32.3 | $ | (13.8 | ) | ||||||
Net income attributable to Class A common stockholders | $ | 25.3 | $ | 5.8 | |||||||
Diluted earnings per share | $ | 0.78 | $ | 0.17 | |||||||
Cash dividends paid per common share | $ | 0.10 | $ | 0.10 | |||||||
Non-GAAP: (1) |
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Adjusted EBITDA | $ | 78.9 | $ | 58.4 | |||||||
Book Value per share, as exchanged | $ | 10.14 | $ | 8.90 |
(1) | For a reconciliation to U.S. GAAP, see “Non-GAAP Financial Measures” below. | |||
(2) |
Revenues of $40.5 million, net income of $7.0 million and gain on sale of $15.6 million attributable to PFG for the year ended December 31, 2015 are included in Discontinued operations, net. |
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Earnings Conference Call
Tiptree will host a conference call on Tuesday, March 14, 2017 at 10:00 a.m. Eastern Time to discuss its full year 2016 financial results. A copy of our investor presentation, to be used during the conference call, as well as this press release, will be available in the Investor Relations section of the Company’s website, located at www.tiptreeinc.com.
The conference call will be available via live or archived webcast at http://www.investors.tiptreeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. To participate in the telephone conference call, please dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). Please dial in at least five minutes prior to the start time.
A replay of the call will be available from Tuesday, March 14, 2017 at 1:00 p.m. Eastern Time, until midnight Eastern on Tuesday, March 21, 2017. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13656479.
2016 Financial Overview
Consolidated Highlights
- Specialty insurance operations produced gross written premiums of $708 million, up 3.3%, while maintaining strong underwriting performance. The investment portfolio grew to $352.3 million of net investments(1) and yielded a 8.0% average annualized return(1).
- Our asset management operations contributed $25.3 million of pre-tax profits, up from a loss of $6.8 million in 2015, with fee-earning AUM remaining steady at $1.9 billion.
- Senior living operations completed five acquisitions for $106 million, bringing total aggregate purchase price of Care’s portfolio to $338.4 million. Revenues were $60.7 million in 2016, up 31.7% from prior year while expanding margins at existing properties.
- Mortgage originations in the specialty finance sector were $1.9 billion, a 49.1% increase from 2015.
- The Company returned $47.8 million to shareholders through $43.8 million of share buy-backs and $4.0 million of dividends.
(1) | For a reconciliation to U.S. GAAP, see “Non-GAAP Financial Measures” below. | |||
Consolidated Results
For the year ended December 31, 2016, the Company reported revenues of $567.2 million, an increase of $128.7 million or 29.4% from the year ended December 31, 2015. The primary drivers of the increase in revenues were improvements in earned premiums, service and administrative fees and investment income in our specialty insurance segment, increases in management incentive fees and returns on associated investments in our asset management segment, improvement in rental income attributable to acquisitions of senior housing properties and increased mortgage volume.
For the year ended December 31, 2016, income from continuing operations was $32.3 million compared to a loss of $13.8 million in 2015. The key drivers of the $46.2 million increase were improved profitability in our specialty insurance segment driven by higher revenues and investment income, increased profits from our asset management segment as a result of incentive fees and CLO subordinated note returns, increased rental income in our senior living operations, and increases in mortgage volume and margins due to improving market conditions. This increased income was partially offset by higher corporate expenses from increased performance related incentive compensation and costs associated with our effort to improve our controls and financial reporting infrastructure. Additionally, a tax benefit of $4.0 million was recognized in the first quarter 2016, which was driven by the tax reorganization effective January 1, 2016. A discussion of the changes in revenues, expenses and net income is presented below and in more detail in our segment analysis.
For the year ended December 31, 2016 net income available to Class A common shareholders was $25.3 million, an increase of $19.5 million, or 338.1% from the prior year period. The key drivers of net income available to Class A common shareholders were the same factors which impacted the positive year-over-year change in income from continuing operations, and which were partially offset by the loss of the $22.6 million of earnings from discontinued operations recorded in the year ended December 31, 2015, which included the one-time net gain on the sale of PFG of $15.6 million.
Adjusted EBITDA - Non-GAAP
Management uses Adjusted EBITDA and book value per share, as exchanged as measurements of operating performance which are non-GAAP measures. Management believes that use of Adjusted EBITDA provides supplemental information useful to investors as it is frequently used by the financial community to analyze financial performance, and to analyze a company’s ability to service its debt and to facilitate comparison among companies. Adjusted EBITDA is also used in determining incentive compensation for the Company’s executive officers. Adjusted EBITDA is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. Book value per share, as exchanged assumes full exchange of the limited partners units of TFP for Tiptree Class A common stock. Management believes that use of this financial measure provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis.
Total Adjusted EBITDA for the year ended December 31, 2016 was $78.9 million compared to $58.4 million for 2015, an increase of $20.5 million or 35.1%. The key drivers of the change in Adjusted EBITDA were the same as those which impacted our income from continuing operations, and which were partially offset by the loss of $32.5 million of Adjusted EBITDA in the year ended December 31, 2015 related to discontinued operations. See “Non-GAAP Reconciliations” below for a reconciliation to GAAP net income.
Results by Segment
Year Ended December 31, | |||||||||||||||||||
($ in thousands, unaudited) | Revenues | Pre-tax income (loss) | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Specialty insurance | $ | 394,170 | $ | 330,888 | $ | 46,804 | $ | 32,012 | |||||||||||
Asset management | 13,114 | 6,770 | 25,264 | (6,753 | ) | ||||||||||||||
Senior living | 60,731 | 46,128 | (5,824 | ) | (9,535 | ) | |||||||||||||
Specialty finance | 95,431 | 54,999 | 8,170 | 6,265 | |||||||||||||||
Corporate and other | 3,708 | (326 | ) | (31,098 | ) | (34,428 | ) | ||||||||||||
Total | $ | 567,154 | $ | 438,459 | $ | 43,316 | $ | (12,439 | ) | ||||||||||
Effective December 31, 2016, Tiptree realigned the principal investments formerly reported in the corporate and other segment into their new reportable segments to align with the Company’s operating strategy. The table above reflects the credit and equity investments contributed to our insurance subsidiary in the specialty insurance segment and the CLO subordinated notes and related warehouse income in the asset management segment for the years ended December 31, 2016 and 2015.
Adjusted EBITDA by Segment - Non-GAAP (1)
($ in thousands, unaudited) | Year Ended December 31, | ||||||||||
2016 | 2015 | ||||||||||
Specialty insurance | $ | 60,526 | $ | 43,349 | |||||||
Asset management | 25,264 | (6,753 | ) | ||||||||
Senior living | 10,469 | 6,590 | |||||||||
Specialty finance | 10,513 | 5,895 | |||||||||
Corporate and other | (27,856 | ) | (23,164 | ) | |||||||
Adjusted EBITDA from Continuing Operations | $ | 78,916 | $ | 25,917 | |||||||
Discontinued Operations | — | 32,502 | |||||||||
Total Adjusted EBITDA | $ | 78,916 | $ | 58,419 |
(1) | For further information relating to the Company’s segment Adjusted EBITDA, including a reconciliation to GAAP pre-tax income, see“—Non-GAAP Reconciliations” below. | |||
About Tiptree
Tiptree Inc. (NASDAQ:TIPT) is focused on enhancing shareholder value by generating consistent growth and profitability at its operating companies. The Company’s consolidated subsidiaries currently operate in the following businesses - specialty insurance, asset management, senior living and specialty finance. For more information about Tiptree visit www.tiptreeinc.com.
Forward-Looking Statements
This release contains “forward-looking statements” which involve risks, uncertainties and contingencies, many of which are beyond the Company’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “target,” “will,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K, and as described in the Company’s other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statements.
Tiptree Inc. Consolidated Balance Sheet |
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As of December 31, | ||||||||||
2016 | 2015 | |||||||||
Assets | ||||||||||
Investments: | ||||||||||
Available for sale securities, at fair value | $ | 146,171 | $ | 184,703 | ||||||
Loans, at fair value | 373,089 | 394,395 | ||||||||
Loans at amortized cost, net | 113,838 | 52,531 | ||||||||
Equity securities, trading, at fair value | 48,612 | 12,727 | ||||||||
Real estate, net | 309,423 | 206,158 | ||||||||
Other investments | 25,467 | 31,524 | ||||||||
Total investments | 1,016,600 | 882,038 | ||||||||
Cash and cash equivalents | 63,010 | 69,400 | ||||||||
Restricted cash | 24,472 | 18,778 | ||||||||
Notes and accounts receivable, net | 157,500 | 136,808 | ||||||||
Reinsurance receivables | 296,234 | 352,926 | ||||||||
Deferred acquisition costs | 126,608 | 57,858 | ||||||||
Goodwill and intangible assets, net | 178,245 | 186,107 | ||||||||
Other assets | 37,886 | 62,243 | ||||||||
Assets of consolidated CLOs | 989,495 | 728,812 | ||||||||
Total assets | $ | 2,890,050 | $ | 2,494,970 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Liabilities |
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Debt, net | $ | 793,009 | $ | 666,952 | ||||||
Unearned premiums | 414,960 | 389,699 | ||||||||
Policy liabilities and unpaid claims | 103,391 | 80,663 | ||||||||
Deferred revenue | 52,254 | 63,081 | ||||||||
Reinsurance payable | 70,588 | 65,840 | ||||||||
Other liabilities and accrued expenses | 133,735 | 132,725 | ||||||||
Liabilities of consolidated CLOs | 931,969 | 698,316 | ||||||||
Total liabilities | $ | 2,499,906 | $ | 2,097,276 | ||||||
Commitments and contingencies (see Note 22) | ||||||||||
Stockholders’ Equity |
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Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued or outstanding | $ | — | $ | — | ||||||
Common stock - Class A: $0.001 par value, 200,000,000 shares authorized, 34,983,616 and 34,899,833 shares issued and outstanding, respectively | 35 | 35 | ||||||||
Common stock - Class B: $0.001 par value, 50,000,000 shares authorized, 8,049,029 and 8,049,029 shares issued and outstanding, respectively | 8 | 8 | ||||||||
Additional paid-in capital | 297,391 | 297,063 | ||||||||
Accumulated other comprehensive income (loss), net of tax | 555 | (111 | ) | |||||||
Retained earnings | 37,974 | 15,845 | ||||||||
Class A common stock held by subsidiaries, 6,596,000 and 0 shares, respectively | (42,524 | ) | — | |||||||
Class B common stock held by subsidiaries, 8,049,029 and 0 shares, respectively | (8 | ) | — | |||||||
Total Tiptree Inc. stockholders’ equity | 293,431 | 312,840 | ||||||||
Non-controlling interests (including $76,077 and $69,278 attributable to Tiptree Financial Partners, L.P., respectively) | 96,713 | 84,854 | ||||||||
Total stockholders’ equity | 390,144 | 397,694 | ||||||||
Total liabilities and stockholders’ equity | $ | 2,890,050 | $ | 2,494,970 |
Tiptree Inc. Consolidated Statements of Operations |
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Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2014 | ||||||||||||
Revenues: | ||||||||||||||
Earned premiums, net | 229,436 | 166,265 | 12,827 | |||||||||||
Service and administrative fees | 109,348 | 106,525 | 8,657 | |||||||||||
Ceding commissions | 24,784 | 43,217 | 3,737 | |||||||||||
Net investment income | 12,981 | 5,455 | 279 | |||||||||||
Net realized and unrealized gains (losses) | 87,300 | 31,275 | 14,509 | |||||||||||
Rental and related revenue | 59,636 | 45,372 | 20,242 | |||||||||||
Other income | 43,669 | 40,350 | 20,062 | |||||||||||
Total revenues | 567,154 | 438,459 | 80,313 | |||||||||||
Expenses: | ||||||||||||||
Policy and contract benefits | 106,784 | 86,312 | 5,829 | |||||||||||
Commission expense | 147,253 | 105,751 | 4,287 | |||||||||||
Employee compensation and benefits | 139,612 | 107,810 | 32,540 | |||||||||||
Interest expense | 29,701 | 23,491 | 12,541 | |||||||||||
Depreciation and amortization | 28,468 | 45,124 | 11,945 | |||||||||||
Other expenses | 92,274 | 75,521 | 31,908 | |||||||||||
Total expenses | 544,092 | 444,009 | 99,050 | |||||||||||
Results of consolidated CLOs: | ||||||||||||||
Income attributable to consolidated CLOs | 53,577 | 23,613 | 64,681 | |||||||||||
Expenses attributable to consolidated CLOs | 33,323 | 30,502 | 45,156 | |||||||||||
Net income (loss) attributable to consolidated CLOs | 20,254 | (6,889 | ) | 19,525 | ||||||||||
Income (loss) before taxes from continuing operations | 43,316 | (12,439 | ) | 788 | ||||||||||
Less: provision (benefit) for income taxes | 10,978 | 1,377 | 4,141 | |||||||||||
Income (loss) from continuing operations | 32,338 | (13,816 | ) | (3,353 | ) | |||||||||
Discontinued operations: | ||||||||||||||
Income from discontinued operations, net | — | 6,999 | 7,937 | |||||||||||
Gain on sale of discontinued operations, net | — | 15,619 | — | |||||||||||
Discontinued operations, net | — | 22,618 | 7,937 | |||||||||||
Net income (loss) before non-controlling interests | 32,338 | 8,802 | 4,584 | |||||||||||
Less: net income (loss) attributable to non-controlling interests - Tiptree Financial Partners, L.P. | 6,432 | 2,630 | 6,790 | |||||||||||
Less: net income (loss) attributable to non-controlling interests - Other | 586 | 393 | (496 | ) | ||||||||||
Net income (loss) attributable to Tiptree Inc. Class A common stockholders | $ | 25,320 | $ | 5,779 | $ | (1,710 | ) | |||||||
Net income (loss) per Class A common share: |
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Basic, continuing operations, net | $ | 0.79 | $ | (0.26 | ) | $ | (0.31 | ) | ||||||
Basic, discontinued operations, net | — | 0.43 | 0.21 | |||||||||||
Basic earnings per share | 0.79 | 0.17 | (0.10 | ) | ||||||||||
Diluted, continuing operations, net | 0.78 | (0.26 | ) | (0.31 | ) | |||||||||
Diluted, discontinued operations, net | — | 0.43 | 0.21 | |||||||||||
Diluted earnings per share | $ | 0.78 | $ | 0.17 | $ | (0.10 | ) | |||||||
Weighted average number of Class A common shares: | ||||||||||||||
Basic | 31,721,449 | 33,202,681 | 16,771,980 | |||||||||||
Diluted | 31,766,674 | 33,202,681 | 16,771,980 |
Tiptree Inc. Non-GAAP Financial Measures (Unaudited, in thousands)
Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
The Company defines EBITDA as GAAP net income of the Company adjusted to add consolidated interest expense, consolidated income taxes and consolidated depreciation and amortization expense as presented in its financial statements and Adjusted EBITDA as EBITDA adjusted to (i) subtract interest expense on asset-specific debt incurred in the ordinary course of its subsidiaries’ business operations, (ii) adjust for the effect of purchase accounting, (iii) add back significant acquisition related costs, (iv) adjust for significant relocation costs and (v) any significant one-time expenses. |
Reconciliation from GAAP net income to Non-GAAP financial measures - EBITDA and Adjusted EBITDA | ||||||||||
($ in thousands, unaudited) | Year Ended December 31, | |||||||||
2016 | 2015 | |||||||||
Net income (loss) available to Class A common stockholders | $ | 25,320 | $ | 5,779 | ||||||
Add: net (loss) income attributable to noncontrolling interests | 7,018 | 3,023 | ||||||||
Less: net income from discontinued operations | — | 22,618 | ||||||||
Income (loss) from Continuing Operations of the Company | $ | 32,338 | $ | (13,816 | ) | |||||
Consolidated interest expense | 29,701 | 23,491 | ||||||||
Consolidated income taxes | 10,978 | 1,377 | ||||||||
Consolidated depreciation and amortization expense | 28,468 | 45,124 | ||||||||
EBITDA from Continuing Operations | $ | 101,485 | $ | 56,176 | ||||||
Consolidated non-corporate and non-acquisition related interest expense(1) | (19,183 | ) | (11,861 | ) | ||||||
Effects of Purchase Accounting (2) | (5,054 | ) | (24,166 | ) | ||||||
Non-cash fair value adjustments (3) | 2,693 | (1,300 | ) | |||||||
Significant acquisition expenses (4) | 711 | 1,859 | ||||||||
Separation expense adjustments (5) | (1,736 | ) | 5,209 | |||||||
Adjusted EBITDA from Continuing Operations of the Company | $ | 78,916 | $ | 25,917 | ||||||
Income from Discontinued Operations of the Company | $ | — | $ | 22,618 | ||||||
Consolidated interest expense | — | 5,226 | ||||||||
Consolidated income taxes | — | 3,796 | ||||||||
Consolidated depreciation and amortization expense | — | 862 | ||||||||
Adjusted EBITDA from Discontinued Operations of the Company | $ | — | $ | 32,502 | ||||||
Adjusted EBITDA of the Company | $ | 78,916 | $ | 58,419 |
(1) | The consolidated non-corporate and non-acquisition related interest expense is subtracted from EBITDA to arrive at Adjusted EBITDA. This includes interest expense associated with asset-specific debt at subsidiaries in the specialty insurance, asset management, senior living and specialty finance segments. | ||
(2) | Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to Fortegra increased EBITDA above what the historical basis of accounting would have generated. The impact of this purchase accounting adjustments have been reversed to reflect an adjusted EBITDA without such purchase accounting effect. | ||
(3) | For our senior living segment, Adjusted EBITDA excludes the impact of the change of fair value of interest rate swaps hedging the debt at the property level. For Reliance, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. | ||
(4) | Acquisition costs include legal, taxes, banker fees and other costs associated with senior living acquisitions in 2016 and 2015 and the Fortegra acquisition in 2014. | ||
(5) | Consists of payments pursuant to a separation agreement, dated as of November 10, 2015. |
Segment EBITDA and Adjusted EBITDA from continuing operations |
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($ in thousands) | Specialty insurance | Asset management | Senior living | Specialty finance | Corporate and other | Total | ||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||
Pre-tax income/(loss) | $ | 46,804 | $ | 32,012 | $ | 25,264 | $ | (6,753 | ) | $ | (5,824 | ) | $ | (9,535 | ) | $ | 8,170 | $ | 6,265 | $ | (31,098 | ) | $ | (34,428 | ) | $ | 43,316 | $ | (12,439 | ) | ||||||||||||||||||||
Add back: |
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Interest expense | 9,244 | 6,968 | 746 | 539 | 8,691 | 6,796 | 6,290 | 3,558 | 4,730 | 5,630 | 29,701 | 23,491 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expenses | 13,184 | 29,673 | — | — | 14,166 | 14,546 | 870 | 760 | 248 | 145 | 28,468 | 45,124 | ||||||||||||||||||||||||||||||||||||||
Segment EBITDA | $ | 69,232 | $ | 68,653 |
$ |
26,010 |
$ | (6,214 | ) |
$ |
17,033 |
$ | 11,807 |
$ |
15,330 |
$ | 10,583 |
$ |
(26,120 |
) |
$ | (28,653 | ) |
$ |
101,485 |
$ | 56,176 | |||||||||||||||||||||||
EBITDA adjustments: |
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Asset-specific debt interest | (3,652 | ) | (1,138 | ) | (746 | ) | (539 | ) | (8,691 | ) | (6,796 | ) | (6,094 | ) | (3,388 | ) | — | — | (19,183 | ) | (11,861 | ) | ||||||||||||||||||||||||||||
Effects of purchase accounting | (5,054 | ) | (24,166 | ) | — | — | — | — | — | — | — | — | (5,054 | ) | (24,166 | ) | ||||||||||||||||||||||||||||||||||
Non-cash fair value adjustments | — | — | — | — | 1,416 | — | 1,277 | (1,300 | ) | — | — | 2,693 | (1,300 | ) | ||||||||||||||||||||||||||||||||||||
Significant acquisition expenses | — | — | — | — | 711 | 1,579 | — | — | — | 280 | 711 | 1,859 | ||||||||||||||||||||||||||||||||||||||
Separation expenses | — | — | — | — | — | — | — | — |
(1,736 |
) |
5,209 | (1,736 | ) | 5,209 | ||||||||||||||||||||||||||||||||||||
Segment Adjusted EBITDA | $ | 60,526 | $ | 43,349 | $ | 25,264 | $ | (6,753 | ) | $ | 10,469 | $ | 6,590 | $ | 10,513 | $ | 5,895 | $ | (27,856 | ) | $ | (23,164 | ) | $ | 78,916 | $ | 25,917 | |||||||||||||||||||||||
Non-GAAP Financial Measures - Book value per share, as exchanged
Book value per share, as exchanged assumes full exchange of the limited partners units of TFP for Tiptree Class A common stock. Management believes the use of this financial measure provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares, for the fiscal years ended December 31, 2016 and 2015.
Year ended December 31, | ||||||||
($ in thousands, unaudited, except per share information) | 2016 | 2015 | ||||||
Total stockholders’ equity | $ | 390,144 | $ | 397,694 | ||||
Less non-controlling interest - other | 20,636 | 15,576 | ||||||
Total stockholders equity, net of non-controlling interests - other | $ | 369,508 | $ | 382,118 | ||||
Total Class A shares outstanding (1) | 28,388 | 34,900 | ||||||
Total Class B shares outstanding | 8,049 | 8,049 | ||||||
Total shares outstanding | 36,437 | 42,949 | ||||||
Book value per share, as exchanged | $ | 10.14 | $ | 8.90 |
(1) |
As of December 31, 2016, excludes 6,596,000 shares of Class A common stock held by subsidiaries of the Company. See Note 24—Earnings per Share, in the Form 10-K for December 31, 2016, for further discussion of potential dilution from warrants. |
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Non-GAAP Financial Measures - Specialty Insurance Investment Portfolio
In managing our investment portfolio we analyze net investments and net portfolio income, which are non-GAAP measures. Our presentation of net investments equals total investments plus cash and cash equivalents minus asset based financing of investments. Our presentation of net portfolio income equals net investment income plus realized and unrealized gains and losses and minus interest expense associated with asset based financing of investments. Net investments and net portfolio income are used to calculate average annualized yield, which management uses to analyze the profitability of our investment portfolio. Management believes this information is useful since it allows investors to evaluate the performance of our investment portfolio based on the capital at risk and on a non-consolidated basis. Our calculation of net investments and net portfolio income may differ from similarly titled non-GAAP financial measures used by other companies. Net investments and net portfolio income are not measures of financial performance or liquidity under GAAP and should not be considered a substitute for total investments or net investment income.
The following table provides a reconciliation between segment total investments and net investments for the fiscal years ended December 31, 2016, and 2015.
($ in thousands) | Year Ended December 31, | ||||||||||
2016 | 2015 | ||||||||||
Total Investments | $ | 472,800 | $ | 308,965 | |||||||
Investment portfolio debt (1) | (146,544 | ) | (54,011 | ) | |||||||
Cash and cash equivalents | 26,020 | 13,909 | |||||||||
Net investments - Non-GAAP | $ | 352,276 | $ | 268,863 | |||||||
Net investment income | 12,981 | 5,455 | |||||||||
Realized gains (losses) |
4,720 |
(568 |
) | ||||||||
Unrealized gains (losses) |
10,042 |
1,633 |
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Interest expense | (3,155 | ) | (832 | ) | |||||||
Net portfolio income - Non-GAAP | $ | 24,588 | $ | 5,688 | |||||||
Average Annualized Yield % (2) | 8.0 | % | 2.5 | % |
(1) | Consists of asset-based financing on certain credit investments and NPLs, net of deferred financing costs, see Note 13 - Debt, net in the Form 10-K for December 31, 2016. | ||
(2) |
Average Annualized Yield % represents the ratio of net investment income, realized and unrealized gains (losses) less investment portfolio interest expense to the average of the prior five quarters total investments less investment portfolio debt plus cash. |
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