Tiptree Reports Q3 2020 Results

November 4, 2020 4:01 PM EST

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  • Revenues of $224.0 million for the quarter, up $34.8 million or 18.4% from the prior year period. Year-to-date revenues of $552.9 million, down 2% from the prior year period, driven by unrealized investment mark-to-market losses. Excluding marks, year-to-date revenues up 16.9% versus 2019.
  • Operating EBITDA(1) of $31.9 million increased 84.4% from the prior year period. Year-to-date Operating EBITDA of $69.9 million, increased 64.1% from prior year period. Improvements versus prior year driven by growth in insurance premiums and mortgage volumes, and improving margins in both businesses.
  • Book value per share of $10.36 as of September 30, 2020, an increase of 4.3% (including dividends paid of $0.04) from prior quarter driven by strong underlying operations and year-to-date repurchases of 1.477 million shares at an average 37% discount to book value.
  • Declared a dividend of $0.04 per share to stockholders of record on November 23, 2020 with a payment date of November 30, 2020.

NEW YORK--(BUSINESS WIRE)-- Tiptree Inc. (NASDAQ: TIPT) (“Tiptree” or the “Company”), a holding company that combines specialty insurance operations with investment management, today announced its financial results for the three and nine months ended September 30, 2020.

($ in millions, except per share information)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

GAAP:

2020

 

2019

 

2020

 

2019

Total revenues

$

224.0

 

 

$

189.2

 

 

$

552.9

 

 

$

564.2

 

Net income (loss) attributable to common stockholders

$

12.8

 

 

$

(1.5)

 

 

$

(43.4)

 

 

$

14.2

 

Diluted earnings per share

$

0.35

 

 

$

(0.04)

 

 

$

(1.27)

 

 

$

0.39

 

Cash dividends paid per common share

$

0.04

 

 

$

0.04

 

 

$

0.12

 

 

$

0.115

 

 

 

 

 

 

 

 

 

Non-GAAP: (1)

 

 

 

 

 

 

 

Operating EBITDA

$

31.9

 

 

$

17.3

 

 

$

69.9

 

 

$

42.6

 

Book value per share

$

10.36

 

 

$

11.43

 

 

$

10.36

 

 

$

11.43

 

____________________________

(1) For further information relating to the Company’s Operating EBITDA and Book value per share, including a reconciliation to GAAP financials, see “—Non-GAAP Reconciliations” below.

Earnings Conference Call

Tiptree will host a conference call on Thursday, November 5, 2020 at 9:00 a.m. Eastern Time to discuss its Q3 2020 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 Thursday, November 5, 2020 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday, November 12, 2020. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13708726.

Financial Overview

Overall:

  • Net income was $12.8 million for the quarter, an increase of $14.3 million over prior year driven by increases in operational performance.
  • Operating EBITDA of $31.9 million for the quarter, up $14.6 million, from growth in insurance and mortgage operations.
  • Book value per share of $10.36 as of September 30, 2020, when combined with dividends paid, increased 4.3% from the prior quarter, driven by a combination of earnings and share repurchases in the quarter. Book value per share as of September 30, 2020, when combined with dividends paid, represents a decrease of 8.0% from September 30, 2019, primarily driven by unrealized mark-to-market losses on our investment in Invesque.
  • Year-to-date, we purchased and retired 1,477,302 shares of our common stock for $9.2 million, at an average 37% discount to book.
  • Cash and cash equivalents of $103.5 million as of September 30, 2020, of which $72.4 million resides outside our statutory insurance subsidiaries.

Insurance:

  • Gross written premiums and premium equivalents for the quarter were $464.6 million, up 25.0% versus the prior year period, driven by growth in warranty service contracts and specialty programs. Year-to-date premiums and equivalents of $1,175.6 million, up 25.5% from prior year driven by growth in warranty and specialty programs, and premium finance volumes. Excluding the incremental premium equivalents from our acquisition of Smart AutoCare, premiums and equivalents increased 7.4% for the quarter and 9.7% for the year-to-date period.
  • Operating EBITDA was $19.1 million for the quarter, up $3.1 million, or 19.4%, from growth in warranty and specialty programs and improved margins. Year-to-date Operating EBITDA of $48.1 million, up 8.0% from increases in premium and equivalents.
  • Quarterly combined ratio of 90.4% declined from 92.1% in the prior year period driven by improved underwriting performance and the overall shift in product mix.
  • In September 2020, we announced the formation of a new excess and surplus lines subsidiary, Fortegra Specialty Insurance Company, which we expect will broaden our product reach and scope within the U.S.
  • In October 2020, we refinanced and increased our premium finance asset-based facility as we continue to expand our vertically integrated product offerings.

Tiptree Capital:

  • For the quarter, Operating EBITDA improved year over year by $11.2 million. Year-to-date Operating EBITDA was $36.1 million, up from $15.3 million in the prior year period driven by higher loan origination volume and margins in our mortgage business.
  • Low mortgage rates due to the Federal Reserve intervention in mortgage markets, combined with limitations on operating capacity driven by COVID-19, and rising home prices in certain markets has resulted in higher refinance mortgage volumes and margins.

Consolidated Results of Operations

Revenues

For the three months ended September 30, 2020, revenues were $224.0 million, which increased $34.8 million, or 18.4% compared to the prior year period primarily due to a combination of growth in service and administrative fees related to our warranty programs and gains on mortgage loans sold in our mortgage business. For the nine months ended September 30, 2020, revenues were $552.9 million, which decreased $11.3 million, or 2.0% compared to the prior year period, primarily due to net realized and unrealized losses on Invesque and other securities held at fair value. Earned premiums and service and administrative fees were $164.1 million for the three months ended September 30, 2020, up $8.8 million, or 5.7%, and $479.3 million for the nine months ended September 30, 2020, up $35.9 million, or 8.1%, driven by growth in warranty service contracts from our acquisition of Smart AutoCare and light commercial specialty programs. Also contributing to higher revenues in the quarter and the year to date were increases in net realized and unrealized gains on mortgage loans, which were up $21.7 million and $41.6 million, respectively. Offsetting all of these increases were net realized and unrealized losses of $7.7 million and $97.9 million for the three and nine month periods ended September 30, 2020, on Invesque and other equity holdings.

The combination of unearned premiums and deferred revenues on the balance sheet grew by $361.5 million, or 45.8%, from September 30, 2019 to September 30, 2020 as a result of increased written premiums and premium equivalents, primarily in warranty programs, including the acquisition of Smart AutoCare, which contributed $205.9 million of growth in deferred revenues, and in light commercial specialty programs.

The table below provides a break down between net realized and unrealized gains and losses from Invesque and from other securities which impacted our consolidated results on a pre-tax basis. Many of our investments are carried at fair value and marked to market through unrealized gains and losses. As a result, we expect our earnings relating to these investments to be relatively volatile between periods, which was highlighted by the market volatility in the first half of the year caused by uncertainly regarding the impact of COVID-19. Our fixed income securities are primarily marked to market through accumulated other comprehensive income (AOCI) in stockholders’ equity and do not impact net realized and unrealized gains and losses until they are sold.

($ in millions)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Net realized and unrealized gains (losses)(1)

$

1.5

 

 

$

(8.9)

 

 

$

(18.1)

 

 

$

1.3

 

Net realized and unrealized gains (losses) - Invesque

$

(9.2)

 

 

$

 

 

$

(79.8)

 

 

$

6.2

 

____________________________

(1) Excludes Invesque, Mortgage realized and unrealized gains and losses and NPLs.

Net Income (Loss) Attributable to Common Stockholders

For the three months ended September 30, 2020, net income available to common stockholders was $12.8 million, an increase of $14.3 million. For the nine months ended September 30, 2020, net loss available to common stockholders was $43.4 million, a decrease of $57.6 million. The increase in the quarter and the decrease year to date were primarily driven by the same factors that impacted revenues in the respective periods.

Non-GAAP

Management uses Operating EBITDA and book value per share as measurements of operating performance which are non-GAAP measures. Management believes the use of Operating 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. Management uses Operating EBITDA as part of its capital allocation process and to assess comparative returns on invested capital amongst our businesses and investments. Operating 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. Management believes the use of book value per share 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.

Operating EBITDA for the three months ended September 30, 2020 was $31.9 million, an increase of $14.6 million, or 84.4% from the prior year period, and $69.9 million for the nine months ended September 30, 2020, an increase of $27.3 million, or 64.1%. For the three and nine months ended September 30, 2020, the key drivers of the increases were growth in warranty and specialty programs in our insurance business, and increases in volumes and margins in our mortgage business in Tiptree Capital.

Total stockholders’ equity was $361.7 million as of September 30, 2020 compared to $407.4 million as of September 30, 2019. Over the past twelve months, Tiptree returned $14.6 million to shareholders through share repurchases and dividends paid. Book value per share for the period ended September 30, 2020 was $10.36, a decrease from book value per share of $11.43 as of September 30, 2019, but up $0.39 per share versus the second quarter. The key drivers of the reduction from the year earlier period were losses per share and dividends paid of $0.16 per share. The decrease was partially offset by the purchase of 1.477 million shares at an average 37% discount to book value. The key driver of the improvement versus the prior quarter was positive net income, as our business operations showed positive momentum relative to the impact from COVID-19 in the first half of 2020.

Results by Segment

We classify our business into one reportable segment, Tiptree Insurance, with the remainder of our non-insurance operations aggregated into Tiptree Capital. Corporate activities include holding company interest expense, corporate employee compensation and benefits, and other expenses, including, but not limited to, public company expenses. The following table presents the components of total pre-tax income.

Pre-tax Income

($ in millions)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Tiptree Insurance

$

13.4

 

 

$

8.3

 

 

$

0.4

 

 

$

28.4

 

Tiptree Capital

9.5

 

 

(1.4)

 

 

(38.6)

 

 

16.2

 

Corporate

(9.0)

 

 

(8.6)

 

 

(25.2)

 

 

(25.4)

 

Pre-tax income (loss)

$

13.9

 

 

$

(1.7)

 

 

$

(63.4)

 

 

$

19.2

 

 

Operating EBITDA - Non-GAAP (1)

The following tables present the components of Operating EBITDA.

($ in millions)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Tiptree Insurance

$

19.1

 

 

$

16.0

 

 

$

48.1

 

 

$

44.5

 

Tiptree Capital

18.2

 

 

7.0

 

 

36.1

 

 

15.3

 

Corporate

(5.4)

 

 

(5.7)

 

 

(14.3)

 

 

(17.2)

 

Operating EBITDA (1)

$

31.9

 

 

$

17.3

 

 

$

69.9

 

 

$

42.6

 

____________________________

(1) For further information relating to the Company’s Operating EBITDA, including a reconciliation to pre-tax income, see “—Non-GAAP Reconciliations.”

About Tiptree

Tiptree Inc. (NASDAQ: TIPT) is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. Our principal operating business, Fortegra Financial, along with its subsidiaries, is a leading provider of specialty insurance, warranty products and related administration services. We also allocate capital to a diverse group of select investments that we refer to as Tiptree Capital. For more information, please 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.
Condensed Consolidated Balance Sheet
($ in thousands, except share data)

 

 

As of

 

September 30,
2020

 

December 31,
2019

Assets:

 

 

 

Investments:

 

 

 

Available for sale securities, at fair value, net of allowance for credit losses

$

369,914

 

 

$

335,192

 

Loans, at fair value

115,472

 

 

108,894

 

Equity securities

111,659

 

 

155,378

 

Other investments

214,192

 

 

137,472

 

Total investments

811,237

 

 

736,936

 

Cash and cash equivalents

103,502

 

 

133,117

 

Restricted cash

78,095

 

 

11,473

 

Notes and accounts receivable, net

361,747

 

 

286,968

 

Reinsurance receivables

646,571

 

 

539,833

 

Deferred acquisition costs

204,396

 

 

166,493

 

Goodwill

163,366

 

 

99,147

 

Intangible assets, net

134,199

 

 

47,974

 

Other assets

151,175

 

 

68,510

 

Assets held for sale

140,578

 

 

107,835

 

Total assets

$

2,794,866

 

 

$

2,198,286

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Liabilities:

 

 

 

Debt, net

$

397,764

 

 

$

374,454

 

Unearned premiums

792,533

 

 

754,993

 

Policy liabilities and unpaid claims

211,198

 

 

144,384

 

Deferred revenue

358,734

 

 

94,601

 

Reinsurance payable

189,500

 

 

143,869

 

Other liabilities and accrued expenses

351,234

 

 

172,140

 

Liabilities held for sale

132,212

 

 

102,430

 

Total liabilities

$

2,433,175

 

 

$

1,786,871

 

 

 

 

 

Stockholders’ Equity:

 

 

 

Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued or outstanding

$

 

 

$

 

Common stock: $0.001 par value, 200,000,000 shares authorized, 33,563,019 and 34,562,553 shares issued and outstanding, respectively

34

 

 

35

 

Additional paid-in capital

319,522

 

 

326,140

 

Accumulated other comprehensive income (loss), net of tax

5,662

 

 

1,698

 

Retained earnings

22,520

 

 

70,189

 

Total Tiptree Inc. stockholders’ equity

347,738

 

 

398,062

 

Non-controlling interests

13,953

 

 

13,353

 

Total stockholders’ equity

361,691

 

 

411,415

 

Total liabilities and stockholders’ equity

$

2,794,866

 

 

$

2,198,286

 

 

Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

Earned premiums, net

$

116,418

 

 

$

129,163

 

 

$

344,994

 

 

$

364,712

 

Service and administrative fees

47,701

 

 

26,058

 

 

134,290

 

 

78,681

 

Ceding commissions

5,157

 

 

1,598

 

 

16,217

 

 

7,150

 

Net investment income

3,023

 

 

2,984

 

 

8,803

 

 

10,713

 

Net realized and unrealized gains (losses)

38,959

 

 

15,302

 

 

6,628

 

 

58,746

 

Other revenue

12,783

 

 

14,080

 

 

41,974

 

 

44,158

 

Total revenues

224,041

 

 

189,185

 

 

552,906

 

 

564,160

 

Expenses:

 

 

 

 

 

 

 

Policy and contract benefits

57,738

 

 

43,993

 

 

167,761

 

 

124,256

 

Commission expense

68,868

 

 

77,430

 

 

207,172

 

 

225,070

 

Employee compensation and benefits

45,715

 

 

34,176

 

 

124,894

 

 

94,298

 

Interest expense

8,321

 

 

6,731

 

 

23,518

 

 

20,183

 

Depreciation and amortization

4,010

 

 

3,523

 

 

12,244

 

 

9,908

 

Other expenses

25,492

 

 

24,930

 

 

80,737

 

 

71,183

 

Total expenses

210,144

 

 

190,783

 

 

616,326

 

 

544,898

 

Income (loss) before taxes

13,897

 

 

(1,598)

 

 

(63,420)

 

 

19,262

 

Less: provision (benefit) for income taxes

(844)

 

 

(649)

 

 

(22,030)

 

 

3,706

 

Net income (loss) before non-controlling interests

14,741

 

 

(949)

 

 

(41,390)

 

 

15,556

 

Less: net income (loss) attributable to non-controlling interests

1,978

 

 

508

 

 

2,038

 

 

1,342

 

Net income (loss) attributable to common stockholders

$

12,763

 

 

$

(1,457)

 

 

$

(43,428)

 

 

$

14,214

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic earnings per share

$

0.37

 

 

$

(0.04)

 

 

$

(1.27)

 

 

$

0.40

 

Diluted earnings per share

$

0.35

 

 

$

(0.04)

 

 

$

(1.27)

 

 

$

0.39

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

Basic

33,684,301

 

 

34,552,171

 

 

34,076,837

 

 

34,583,709

 

Diluted

33,684,301

 

 

34,552,171

 

 

34,076,837

 

 

34,583,709

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.04

 

 

$

0.04

 

 

$

0.12

 

 

$

0.12

 

 

Tiptree Inc.
Non-GAAP Reconciliations (Unaudited)

Non-GAAP Financial Measures — Operating EBITDA

The Company defines Operating EBITDA as GAAP net income of the Company adjusted to add (i) corporate interest expense, consolidated income taxes and consolidated depreciation and amortization expense, (ii) adjust for the effect of purchase accounting, (iii) adjust for non-cash fair value adjustments, (iv) any significant non-recurring expenses, (v) stock based compensation expense, (vi) less realized and unrealized gains and losses, and (vii) less third party non-controlling interests. Operating 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.

 

($ in millions)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Net income (loss) attributable to common stockholders

$

12.8

 

 

$

(1.5)

 

 

$

(43.4)

 

 

$

14.2

 

Add: net (loss) income attributable to non-controlling interests

1.9

 

 

0.5

 

 

2.0

 

 

1.3

 

Income (loss)

$

14.7

 

 

$

(1.0)

 

 

$

(41.4)

 

 

$

15.5

 

Corporate debt related interest expense(1)

6.1

 

 

5.0

 

 

17.3

 

 

14.9

 

Consolidated income tax expense (benefit)

(0.8)

 

 

(0.7)

 

 

(22.0)

 

 

3.7

 

Depreciation and amortization expense(2)

3.9

 

 

3.4

 

 

12.0

 

 

9.5

 

Non-cash fair value adjustments

(2.5)

 

 

(0.3)

 

 

(3.1)

 

 

(0.5)

 

Non-recurring expenses(3)

0.2

 

 

0.5

 

 

2.9

 

 

2.5

 

Stock based compensation expense

2.6

 

 

1.5

 

 

6.2

 

 

4.5

 

Realized and unrealized (gain) loss(4)

7.7

 

 

8.9

 

 

97.9

 

 

(7.5)

 

Third party non-controlling interests(5)

 

 

 

 

0.1

 

 

 

Operating EBITDA

$

31.9

 

 

$

17.3

 

 

$

69.9

 

 

$

42.6

 

_______________________________

(1)

 

Corporate debt interest expense includes interest expense from secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in Tiptree Insurance and Tiptree Capital is not added-back for Operating EBITDA.

(2)

 

Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at our insurance companies. 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 our insurance companies increased EBITDA above what the historical basis of accounting would have generated.

(3)

 

Acquisition, start-up and disposition costs, including debt extinguishment, legal, taxes, banker fees and other costs.

(4)

 

Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs, as those are recurring in nature and align with those business models.

(5)

 

Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee-based shares.

Non-GAAP Financial Measures — Operating EBITDA

The tables below present Operating EBITDA by business component.

 

Three Months Ended September 30, 2020

($ in millions)

Specialty
Insurance

 

Tiptree
Capital

 

Corporate
Expenses

 

Total

Pre-tax income/(loss) from continuing operations

$

13.4

 

 

$

9.5

 

 

$

(9.0)

 

 

$

13.9

 

Adjustments:

 

 

 

 

 

 

 

Corporate debt related interest expense(1)

3.4

 

 

 

 

2.7

 

 

6.1

 

Depreciation and amortization expenses(2)

2.2

 

 

1.5

 

 

0.2

 

 

3.9

 

Non-cash fair value adjustments

 

 

(2.5)

 

 

 

 

(2.5)

 

Non-recurring expenses(3)

(0.1)

 

 

0.3

 

 

 

 

0.2

 

Stock-based compensation expense

0.6

 

 

1.3

 

 

0.7

 

 

2.6

 

Realized and unrealized (gain) loss(4)

(0.4)

 

 

8.1

 

 

 

 

7.7

 

Third party non-controlling interests(5)

 

 

 

 

 

 

 

Operating EBITDA

$

19.1

 

 

$

18.2

 

 

$

(5.4)

 

 

$

31.9

 

 

Nine Months Ended September 30, 2020

($ in millions)

Tiptree
Insurance

 

Tiptree
Capital

 

Corporate
Expenses

 

Total

Pre-tax income/(loss) from continuing operations

$

0.4

 

 

$

(38.6)

 

 

$

(25.2)

 

 

$

(63.4)

 

Adjustments:

 

 

 

 

 

 

 

Corporate debt related interest expense(1)

9.9

 

 

 

 

7.4

 

 

17.3

 

Depreciation and amortization expenses(2)

7.0

 

 

4.4

 

 

0.6

 

 

12.0

 

Non-cash fair value adjustments

 

 

(3.1)

 

 

 

 

(3.1)

 

Non-recurring expenses(3)

2.2

 

 

0.3

 

 

0.4

 

 

2.9

 

Stock-based compensation expense

1.4

 

 

2.3

 

 

2.5

 

 

6.2

 

Realized and unrealized (gain) loss(4)

27.2

 

 

70.7

 

 

 

 

97.9

 

Third party non-controlling interests(5)

 

 

0.1

 

 

 

 

0.1

 

Operating EBITDA

$

48.1

 

 

$

36.1

 

 

$

(14.3)

 

 

$

69.9

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

($ in millions)

Specialty
Insurance

 

Tiptree
Capital

 

Corporate
Expenses

 

Total

Pre-tax income/(loss) from continuing operations

$

8.3

 

 

$

(1.4)

 

 

$

(8.6)

 

 

$

(1.7)

 

Adjustments:

 

 

 

 

 

 

 

Corporate debt related interest expense(1)

3.4

 

 

 

 

1.6

 

 

5.0

 

Depreciation and amortization expenses(2)

2.2

 

 

0.9

 

 

0.3

 

 

3.4

 

Non-cash fair value adjustments

 

 

(0.3)

 

 

 

 

(0.3)

 

Non-recurring expenses(3)

0.3

 

 

 

 

0.2

 

 

0.5

 

Stock-based compensation expense

0.7

 

 

 

 

0.8

 

 

1.5

 

Realized and unrealized (gain) loss(4)

1.1

 

 

7.8

 

 

 

 

8.9

 

Third party non-controlling interests(5)

 

 

 

 

 

 

 

Operating EBITDA

$

16.0

 

 

$

7.0

 

 

$

(5.7)

 

 

$

17.3

 

 

 

Nine Months Ended September 30, 2019

($ in millions)

Tiptree
Insurance

 

Tiptree
Capital

 

Corporate
Expenses

 

Total

Pre-tax income/(loss) from continuing operations

$

28.4

 

 

$

16.2

 

 

$

(25.4)

 

 

$

19.2

 

Adjustments:

 

 

 

 

 

 

 

Corporate debt related interest expense(1)

10.1

 

 

 

 

4.8

 

 

14.9

 

Depreciation and amortization expenses(2)

6.5

 

 

2.5

 

 

0.5

 

 

9.5

 

Non-cash fair value adjustments

 

 

(0.5)

 

 

 

 

(0.5)

 

Non-recurring expenses(3)

1.7

 

 

0.2

 

 

0.6

 

 

2.5

 

Stock-based compensation expense

2.0

 

 

0.2

 

 

2.3

 

 

4.5

 

Realized and unrealized (gain) loss(4)

(4.2)

 

 

(3.3)

 

 

 

 

(7.5)

 

Third party non-controlling interests(5)

 

 

 

 

 

 

 

Operating EBITDA

$

44.5

 

 

$

15.3

 

 

$

(17.2)

 

 

$

42.6

 

_______________________________

The footnotes below correspond to the tables above, under “Non-GAAP Financial Measures — Operating EBITDA”

(1)

 

Corporate debt interest expense includes interest expense from secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in Tiptree Insurance and Tiptree Capital is not added-back for Operating EBITDA.

(2)

 

Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at our insurance companies. 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 our insurance companies increased EBITDA above what the historical basis of accounting would have generated.

(3)

 

Acquisition, start-up and disposition costs, including debt extinguishment, legal, taxes, banker fees and other costs.

(4)

 

Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs, as those are recurring in nature and align with those business models.

(5)

 

Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee-based shares.

Non-GAAP Financial Measures — Book value per share

Management believes the use of this financial measure provides supplemental information useful to investors as book value 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.

($ in millions, except per share information)

As of September 30, 2020

 

2020

 

2019

Total stockholders’ equity

$

361.7

 

 

$

407.4

 

Less: Non-controlling interests

14.0

 

 

12.6

 

Total stockholders’ equity, net of non-controlling interests

$

347.7

 

 

$

394.8

 

 

 

 

 

Total common shares outstanding

33.6

 

 

34.6

 

 

 

 

 

Book value per share

$

10.36

 

 

$

11.43

 

 

Tiptree Inc.
Investor Relations, 212-446-1400
ir@tiptreeinc.com

Source: Tiptree Inc.



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