Commenting on the results, Jessica M. Bibliowicz, chairman and chief executive officer, said, "For the quarter, we reported revenue growth of 6.7%, organic revenue growth of 4.1% and demonstrated growth in Adjusted EBITDA and margins, mostly driven by strength in our Corporate Client Group."
Further, the firm stated that the net income was negatively impacted by impairments, management contract buyout expenses and a change in estimated acquisition earn-out payables, totaling US$10.2 million net of tax.
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These charges are said to be a result of the execution of the business strategy which entails management contract buyouts and the disposition of non-core assets. Also, the impairments were associated only with management contracts, not goodwill.
Further, Q2 2012 cash earnings were US$27.1 million, or US$0.66 per diluted share, compared with US$21.6 million, or US$0.48 per diluted share, in Q2 2011.
The net income and cash earnings in Q2 2012 include a US$4.0 million pre-tax net gain on sale of businesses, which favorably impacted the tax rate. Excluding this gain, cash earnings was US$23.7 million, or US$0.57 per diluted share, in Q2 2012.
Additionally, compared to 42.6 million shares for the first quarter 2012, NFP had 41.3 million weighted average fully diluted shares outstanding for the second quarter 2012, the decrease of which is attributed to a decline in the shares that may be issued upon conversion of NFP’s senior convertible notes from 1.5 million shares in the first quarter 2012 to 0.6 million shares as of the end of the second quarter 2012.
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By GlobalDataThe adjusted EBITDA in the Q2 2012 was US$33.0 million, an increase of 9.6%, compared with US$30.1 million in the second quarter 2011.
Adjusted EBITDA margin of 12.9% in the second quarter 2012 grew compared with an Adjusted EBITDA margin of 12.6% in the prior year period.
Revenue was US$255.4 million in the second quarter 2012, an increase of $16.0 million, or 6.7%, compared with $239.4 million in the second quarter 2011, while organic revenue grew 4.1% in the second quarter 2012, compared with the prior year period.
Total operating expenses were US$245.9 million in the second quarter 2012, compared with $221.2 million in the prior year period, which were driven by the addition of operating expenses of acquired companies, impairments on management contracts related to management contract buyouts and anticipated dispositions, and the adjustment in expected contingent consideration payments from acquisitions that are performing at a level where the expected payment has increased.
The cash flow from operations for the second quarter 2012 was US$19.5 million compared with cash flow from operations of US$39.9 million in the second quarter 2011.
During the second quarter 2012, the company used US$13.0 million for a legal settlement and other payments and expects to be reimbursed for a significant portion of these items in the second half of 2012.
Corporate Client Group (CCG) accounted for 44.1% of NFP’s revenue in the second quarter 2012 and 39.4% in the second quarter 2011. CCG revenue was US$112.6 million in the second quarter 2012 compared with US$94.3 million in the prior year period, an increase of US$18.3 million or 19.4%. CCG organic revenue growth was 7.2%.
