U.S. markets open in 6 hours 4 minutes
  • S&P Futures

    3,846.25
    +27.00 (+0.71%)
     
  • Dow Futures

    31,908.00
    +132.00 (+0.42%)
     
  • Nasdaq Futures

    12,479.00
    +181.75 (+1.48%)
     
  • Russell 2000 Futures

    2,217.30
    +16.50 (+0.75%)
     
  • Crude Oil

    64.73
    -0.32 (-0.49%)
     
  • Gold

    1,693.90
    +15.90 (+0.95%)
     
  • Silver

    25.57
    +0.30 (+1.19%)
     
  • EUR/USD

    1.1882
    +0.0030 (+0.25%)
     
  • 10-Yr Bond

    1.5960
    0.0000 (0.00%)
     
  • Vix

    25.47
    +0.81 (+3.28%)
     
  • GBP/USD

    1.3868
    +0.0046 (+0.34%)
     
  • USD/JPY

    108.8800
    -0.0210 (-0.02%)
     
  • BTC-USD

    53,918.13
    +4,069.87 (+8.16%)
     
  • CMC Crypto 200

    1,086.49
    +62.28 (+6.08%)
     
  • FTSE 100

    6,708.90
    -10.23 (-0.15%)
     
  • Nikkei 225

    29,027.94
    +284.69 (+0.99%)
     

Marcus & Millichap, Inc. Reports Results for Fourth Quarter and Full-Year 2020

  • Oops!
    Something went wrong.
    Please try again later.
·23 min read
  • Oops!
    Something went wrong.
    Please try again later.

Q4 Quarterly Revenues Increased 5.2% to All-time Record

Marcus & Millichap, Inc. (the "Company", "Marcus & Millichap", "MMI") (NYSE: MMI), a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, today reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Results and Highlights

  • Total revenues were $250.2 million, increasing by 57.8% sequentially and by 5.2% year-over-year

  • Net income of $23.6 million, or $0.59 per common share, diluted, compared to $6.0 million, or $0.15 per common share, diluted, in the third quarter of 2020 and $20.7 million, or $0.52 per common share, diluted, in the fourth quarter of 2019

  • Adjusted EBITDA of $36.9 million, compared to $12.2 million in the third quarter of 2020 and $32.5 million in the fourth quarter of 2019

  • Revenue from financing fees were $26.9 million, increasing by 72.0% sequentially and by 42.8% year-over-year

  • Private Client brokerage revenue increased 41.9% sequentially and decreased 2.0% year-over-year

  • Middle Market and Larger Transaction brokerage revenue increased 91.8% sequentially and 6.0% year-over-year

  • Completed two business acquisitions

Full Year 2020 Results and Highlights

  • Total revenues were $716.9 million, compared to $806.4 million in 2019

  • Net income of $42.8 million, or $1.08 per common share, diluted, compared to $76.9 million, or $1.95 per common share, diluted, in 2019

  • Adjusted EBITDA of $75.7 million, compared to $115.6 million in 2019

  • Revenue from financing fees increased 6.4% to $70.5 million

  • Number of investment sales professionals was 2,006, increasing by 4.2% over the past 12 months

  • Completed four business acquisitions

Hessam Nadji, President and CEO commented, "We concluded a tumultuous year with a record fourth quarter, which was bolstered by our intensified investor outreach, signature internal collaboration which helps clients solve problems and act on opportunities as well as the further resurrection of previously cancelled or delayed deals." He added, "Positive vaccine news, investor urgency to close transactions before year-end and historically low interest rates helped spur transaction activity. For the year, the Company successfully preserved its strong balance sheet, added to its roster of experienced professionals, completed four strategic acquisitions, implemented a number of technology enhancements and outpaced the market by a healthy margin."

Mr. Nadji continued, "While the pace of improvement in the transaction market is likely to be slower in the first quarter, we are encouraged by many positive factors that support rising transaction volumes as the year progresses. Expectation of widespread vaccinations, more robust job numbers and additional stimulus should lead to the release of pent-up demand in the second half of the year. We continue to strengthen our tools and technology, as well as make strategic investments, positioning us to create long-term shareholder value."

Fourth Quarter 2020 Results Compared to Fourth Quarter 2019

Total revenues for the fourth quarter of 2020 were $250.2 million, compared to $237.9 million for the same period in the prior year, increasing 5.2%. The growth in total revenues was driven by the increase in real estate brokerage commissions, financing fees and other revenues. Real estate brokerage commissions of $217.1 million rose modestly from the prior year. Financing fees increased 42.8% to $26.9 million primarily due to an increase in overall financing volume, partially offset by a decrease in average fee rates. Other revenues increased 75.0% to $6.2 million.

Total operating expenses for the fourth quarter of 2020 increased 4.4% to $220.2 million, compared to $210.8 million for the same period in the prior year. The increase was primarily driven by a 3.5% increase in cost of services and a 5.9% increase in selling, general and administrative expense. Cost of services as a percent of total revenues decreased 100 basis points to 64.2% compared to the same period in the prior year, primarily due to the mix in closed deals by seniority/experience level of our investment sales and financing professionals.

Selling, general and administrative expense for the fourth quarter of 2020 increased 5.9% to $56.4 million, compared to the same period in the prior year. The increase was primarily due to higher costs associated with (i) compensation related costs, including salaries and related benefits and variable employee incentive compensation; (ii) business development, marketing and other support related to the long-term retention of our sales and financing professionals, as well as recent additions of experienced professionals; and (iii) our acquisition activities. These increases were partially offset by reductions in (i) legal costs and (ii) net other expense categories, including events, travel and other related expenses.

Net income for the fourth quarter of 2020 was $23.6 million, or $0.59 per common share, basic and diluted, compared to $20.7 million, or $0.53 per common share, basic and $0.52 per common share, diluted, for the same period in the prior year. Adjusted EBITDA for the fourth quarter of 2020 was $36.9 million, compared to $32.5 million for the same period in the prior year.

Full Year 2020 Results Compared to Full Year 2019

Total revenues for 2020 were $716.9 million, compared to $806.4 million for the same period in the prior year, a decrease of $89.5 million, or 11.1%. Total operating expenses for 2020 decreased by 6.6% to $663.3 million compared to $710.0 million for the same period in the prior year. Cost of services as a percent of total revenues increased to 62.5%, up 60 basis points compared to the same period in the prior year reflecting a higher proportion of transactions completed by our more senior investment sales and financing professionals in a challenging environment. The Company reported net income for 2020 of $42.8 million, or $1.08 per common share, basic and diluted, compared with net income of $76.9 million, or $1.95 per common share, basic and diluted for the same period in the prior year. Adjusted EBITDA for 2020 decreased by 34.5% to $75.7 million, from $115.6 million for the same period in the prior year. As of December 31, 2020, the Company had 2,097 investment sales and financing professionals, a net gain of 76 over the prior year.

Impact of COVID-19

Since the declaration of the COVID-19 pandemic in mid-March, the Company has implemented recommendations and protocols from the Centers for Disease Control, the World Health Organization and federal, state and local authorities where it operates to ensure the safety and well-being of its clients, employees, and agents. The Company quickly implemented work from home protocols for all offices and has been conducting business using its extensive technology platform. To mitigate the impact of COVID-19 on our business, the Company has assessed its cost structure and instituted expense reductions to preserve the Company’s strong balance sheet and financial position.

The impact of shelter-in-place orders, widespread travel restrictions and disruptions to the financial markets in response to the economic uncertainty introduced by the pandemic had an adverse impact on the real estate investment sales market. The slower transaction market in the first half of 2020, impacted the Company’s business, resulting in a reduction in sales volume, revenues, Adjusted EBITDA and earnings per share. The duration of the disruptive nature of the pandemic on the Company’s business as well as the financial impact is unknown but has been diminishing since the onset of the pandemic. During the fourth quarter of 2020, we continued to see a recovery in transaction activity and availability of capital from the initial shock of COVID-19.

Business Outlook

Notwithstanding the impact of the COVID-19 pandemic on the current business environment, we believe that the Company is positioned to achieve long-term growth by leveraging a number of factors. These include our leading national brand and market position within the Private Client Market segment, growth opportunities in the Middle Market and Larger Transaction Market segments, significant growth potential in our financing division, Marcus & Millichap Capital Corporation, and supplementing our organic growth through incremental strategic acquisitions. The Company’s growth plan also includes further expansion of investment brokerage services in office, industrial and various specialty property types such as hospitality, self-storage and seniors housing.

The Company benefits from its experienced management team, infrastructure investments, industry-leading market research and proprietary technology. The size and fragmentation of the Private Client Market segment continues to offer long-term growth opportunities through consolidation. This market segment consistently accounts for over 80% of all commercial property sales transactions and over 60% of the commission pool and is highly fragmented. The top 10 brokerage firms led by MMI have an estimated 22% share of this segment by transaction count.

Key factors that may influence the Company’s business during 2021 include:

  • Hampered transaction velocity as a result of the impact of COVID-19 on the market and the Company’s transaction volume, revenues and earnings per share

  • Volatility in market sales and investor sentiment driven by:

    • Slowdown in market sales in the short- to mid-term due to local and regional surges of COVID-19 cases, interest rate fluctuations, increasing bid-ask spread between buyers and sellers and economic trends

    • Possible boost to investor sentiment and sales activity based on perceived bottoming of interest rates, easing cycle, increased COVID-19 vaccine supply and distribution and economic initiatives which may increase real estate investor demand, particularly in the second half of 2021

    • Possible impediment of investor sentiment related to regulatory changes at the local, state and national level

  • Experienced sales and financing professionals’ larger share of revenue production in a more challenging market environment, resulting in a higher cost of services

  • Volatility in the Company’s Middle and Larger Transaction Market segments

  • Global geopolitical uncertainty, which may cause investors to refrain from transacting

  • The potential for accretive acquisition activity and subsequent integration

Conference Call Details

Marcus & Millichap will host a conference call today to discuss the results at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. To participate in the conference call, callers from the United States and Canada should dial (877) 407-9208 ten minutes prior to the scheduled call time. International callers should dial (201) 493-6784. For those unable to participate during the live broadcast, a telephonic replay of the call will also be available from 5:00 p.m. Pacific Time/8:00 p.m. Eastern Time on Thursday, February 18, 2021, through 8:59 p.m. Pacific Time/11:59 p.m. Eastern Time on Thursday, March 4, 2021, by dialing (844) 512-2921 in the United States and Canada or (412) 317-6671 internationally and entering passcode 13713798.

About Marcus & Millichap, Inc.

Marcus & Millichap, Inc. is a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of December 31, 2020, the Company had 2,097 investment sales and financing professionals in 84 offices who provide investment brokerage and financing services to sellers and buyers of commercial real estate. The Company also offers market research, consulting and advisory services to our clients. Marcus & Millichap closed 8,954 transactions in 2020, with a sales volume of approximately $43.4 billion. For additional information, please visit www.MarcusMillichap.com.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements, including the Company’s business outlook for 2021, the potential continuing impact of the COVID-19 pandemic, and expectations for changes (or fluctuations) in market share growth. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

  • uncertainties relating to the continuing impact of the COVID-19 pandemic, including the length and severity of such pandemic and the federal government’s proposed stimulus response package, and the pace of recovery following such pandemic;

  • general uncertainty in the capital markets and a worsening of economic conditions and the rate and pace of economic recovery following an economic downturn;

  • changes in our business operations, including restrictions on business activities, resulting from the COVID-19 pandemic;

  • market trends in the commercial real estate market or the general economy;

  • our ability to attract and retain qualified senior executives, managers and investment sales and financing professionals;

  • the effects of increased competition on our business;

  • our ability to successfully enter new markets or increase our market share;

  • our ability to successfully expand our services and businesses and to manage any such expansions;

  • our ability to retain existing clients and develop new clients;

  • our ability to keep pace with changes in technology;

  • any business interruption or technology failure and any related impact on our reputation;

  • changes in interest rates, tax laws, employment laws or other government regulation affecting our business;

  • our ability to successfully identify, negotiate, execute and integrate accretive acquisitions; and

  • other risk factors included under "Risk Factors" in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

In addition, in this release, the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "predict," "potential," "should" and similar expressions, as they relate to our company, our business and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Forward-looking statements speak only as of the date of this release. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended

December 31,

Year Ended

December 31,

2020

2019

2020

2019

Revenues:

Real estate brokerage commissions

$

217,120

$

215,541

$

633,164

$

729,356

Financing fees

26,864

18,806

70,538

66,293

Other revenues

6,230

3,561

13,204

10,779

Total revenues

250,214

237,908

716,906

806,428

Operating expenses:

Cost of services

160,672

155,196

447,879

498,878

Selling, general and administrative

56,413

53,265

204,514

203,110

Depreciation and amortization

3,077

2,343

10,899

8,017

Total operating expenses

220,162

210,804

663,292

710,005

Operating income

30,052

27,104

53,614

96,423

Other income (expense), net

2,426

3,410

6,650

12,477

Interest expense

(205

)

(370

)

(900

)

(1,388

)

Income before provision for income taxes

32,273

30,144

59,364

107,512

Provision for income taxes

8,651

9,423

16,526

30,582

Net income

23,622

20,721

42,838

76,930

Other comprehensive income (loss):

Marketable debt securities, available-for-sale:

Change in net unrealized gains (losses)

112

(52

)

799

1,822

Less: reclassification adjustment for net losses (gains) included in other income (expense), net

2

(2

)

34

(43

)

Net change, net of tax of $40, $(6), $286 and $611 for the three months ended December 31, 2020 and 2019 and the years ended December 31, 2020 and 2019, respectively

114

(54

)

833

1,779

Foreign currency translation loss, net of tax of $0 for the three months ended December 31, 2020 and 2019 and the years ended December 31, 2020 and 2019

(491

)

(376

)

(237

)

(576

)

Total other comprehensive (loss) income

(377

)

(430

)

596

1,203

Comprehensive income

$

23,245

$

20,291

$

43,434

$

78,133

Earnings per share:

Basic

$

0.59

$

0.53

$

1.08

$

1.95

Diluted

$

0.59

$

0.52

$

1.08

$

1.95

Weighted average common shares outstanding:

Basic

39,715

39,468

39,642

39,404

Diluted

39,967

39,640

39,735

39,548

MARCUS & MILLICHAP, INC.
KEY OPERATING METRICS SUMMARY
(Unaudited)

Total sales volume was $15.6 billion for the three months ended December 31, 2020, encompassing 2,978 transactions consisting of $11.2 billion for real estate brokerage (2,071 transactions), $3.1 billion for financing (642 transactions) and $1.3 billion in other transactions, including consulting and advisory services (265 transactions). Total sales volume was $43.4 billion for the year ended December 31, 2020, encompassing 8,954 transactions consisting of $32.1 billion for real estate brokerage (6,288 transactions), $7.7 billion for financing (1,943 transactions) and $3.6 billion in other transactions, including consulting and advisory services (723 transactions). As of December 31, 2020, the Company had 2,006 investment sales professionals and 91 financing professionals. Key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:

Three Months Ended

December 31,

Year Ended

December 31,

Real Estate Brokerage

2020

2019

2020

2019

Average Number of Investment Sales Professionals

1,948

1,882

1,920

1,843

Average Number of Transactions per Investment Sales Professional

1.06

1.09

3.28

3.82

Average Commission per Transaction

$

104,838

$

105,142

$

100,694

$

103,572

Average Commission Rate

1.94

%

1.97

%

1.98

%

1.98

%

Average Transaction Size (in thousands)

$

5,404

$

5,341

$

5,097

$

5,234

Total Number of Transactions

2,071

2,050

6,288

7,042

Total Sales Volume (in millions)

$

11,191

$

10,950

$

32,052

$

36,858

Three Months Ended

December 31,

Year Ended

December 31,

Financing (1)

2020

2019

2020

2019

Average Number of Financing Professionals

87

96

86

102

Average Number of Transactions per Financing Professional

7.38

6.06

22.59

19.06

Average Fee per Transaction

$

38,083

$

31,034

$

33,747

$

32,680

Average Fee Rate

0.80

%

0.83

%

0.85

%

0.88

%

Average Transaction Size (in thousands)

$

4,789

$

3,729

$

3,948

$

3,693

Total Number of Transactions

642

582

1,943

1,944

Total Financing Volume (in millions)

$

3,075

$

2,170

$

7,672

$

7,180

(1) Operating metrics calculated excluding certain financing fees not directly associated to transactions.

The following table sets forth the number of transactions, sales volume and revenues by commercial real estate market segment for real estate brokerage:

Three Months Ended,

December 31, 2020

September 30, 2020

Change

Real Estate Brokerage

Number

Volume

Revenues

Number

Volume

Revenues

Number

Volume

Revenues

(in millions)

(in thousands)

(in millions)

(in thousands)

(in millions)

(in thousands)

<$1 million

295

$

190

$

7,906

241

$

156

$

6,290

54

$

34

$

1,616

Private Client Market ($1 - <$10 million)

1,570

4,908

138,830

1,168

3,592

97,856

402

1,316

40,974

Middle Market ($10 - <$20 million)

112

1,526

29,719

70

945

17,643

42

581

12,076

Larger Transaction Market (≥$20 million)

94

4,567

40,665

48

2,302

19,055

46

2,265

21,610

2,071

$

11,191

$

217,120

1,527

$

6,995

$

140,844

544

$

4,196

$

76,276

Three Months Ended December 31,

2020

2019

Change

Real Estate Brokerage

Number

Volume

Revenues

Number

Volume

Revenues

Number

Volume

Revenues

(in millions)

(in thousands)

(in millions)

(in thousands)

(in millions)

(in thousands)

<$1 million

295

$

190

$

7,906

278

$

183

$

7,404

17

$

7

$

502

Private Client Market ($1 - <$10 million)

1,570

4,908

138,830

1,558

5,080

141,717

12

(172

)

(2,887

)

Middle Market ($10 - <$20 million)

112

1,526

29,719

129

1,768

31,297

(17

)

(242

)

(1,578

)

Larger Transaction Market (≥$20 million)

94

4,567

40,665

85

3,919

35,123

9

648

5,542

2,071

$

11,191

$

217,120

2,050

$

10,950

$

215,541

21

$

241

$

1,579

Year Ended December,

2020

2019

Change

Real Estate Brokerage

Number

Volume

Revenues

Number

Volume

Revenues

Number

Volume

Revenues

(in millions)

(in thousands)

(in millions)

(in thousands)

(in millions)

(in thousands)

<$1 million

944

$

600

$

24,456

1,011

$

657

$

27,012

(67

)

$

(57

)

$

(2,556

)

Private Client Market ($1 - <$10 million)

4,773

15,115

421,767

5,311

17,239

487,528

(538

)

(2,124

)

(65,761

)

Middle Market ($10 - <$20 million)

316

4,311

81,621

441

6,002

107,818

(125

)

(1,691

)

(26,197

)

Larger Transaction Market (≥$20 million)

255

12,026

105,320

279

12,960

106,998

(24

)

(934

)

(1,678

)

6,288

$

32,052

$

633,164

7,042

$

36,858

$

729,356

(754

)

$

(4,806

)

$

(96,192

)

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for shares and par value)

December 31, 2020

(Unaudited)

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

243,152

$

232,670

Commissions receivable, net

10,391

5,003

Prepaid expenses

10,153

10,676

Income tax receivable

4,999

Marketable debt securities, available-for-sale (includes amortized cost of $158,148 and $150,517 at December

31, 2020 and 2019, respectively, and $0 allowance for credit losses)

158,258

150,752

Advances and loans, net

2,413

2,882

Other assets

4,711

3,185

Total current assets

429,078

410,167

Property and equipment, net

23,436

22,643

Operating lease right-of-use assets, net

84,024

90,535

Marketable debt securities, available-for-sale (includes amortized cost of $45,181 and $59,468 at December 31,

2020 and 2019, respectively, and $0 allowance for credit losses)

47,773

60,809

Assets held in rabbi trust

10,295

9,452

Deferred tax assets, net

21,374

22,122

Goodwill and other intangible assets, net

52,053

22,312

Advances and loans, net

106,913

66,647

Other assets

4,176

4,347

Total assets

$

779,122

$

709,034

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable and other liabilities

$

18,288

$

10,790

Notes payable to former stockholders

6,564

Deferred compensation and commissions

58,106

44,301

Income tax payable

3,726

Operating lease liabilities

19,190

17,762

Accrued bonuses and other employee related expenses

21,007

22,388

Total current liabilities

120,317

101,805

Deferred compensation and commissions

38,745

45,628

Operating lease liabilities

59,408

63,155

Other liabilities

13,816

3,539

Total liabilities

232,286

214,127

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value:

Authorized shares – 25,000,000; issued and outstanding shares – none at December 31, 2020 and 2019,

respectively

Common stock, $0.0001 par value:

Authorized shares – 150,000,000; issued and outstanding shares – 39,401,976 and 39,153,195 at

December 31, 2020 and 2019, respectively

4

4

Additional paid-in capital

113,182

104,658

Stock notes receivable from employees

(4

)

Retained earnings

431,076

388,271

Accumulated other comprehensive income

2,574

1,978

Total stockholders’ equity

546,836

494,907

Total liabilities and stockholders’ equity

$

779,122

$

709,034

MARCUS & MILLICHAP, INC.
OTHER INFORMATION
(Unaudited)

Adjusted EBITDA Reconciliation

Adjusted EBITDA, which the Company defines as net income before (i) interest income and other, including net realized gains (losses) on marketable debt securities, available-for-sale and cash and cash equivalents, (ii) interest expense, (iii) provision for income taxes, (iv) depreciation and amortization, (v) stock-based compensation, and (vi) non-cash mortgage servicing rights ("MSRs") activity. The Company uses Adjusted EBITDA in its business operations to evaluate the performance of its business, develop budgets and measure its performance against those budgets, among other things. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate its overall operating performance. However, Adjusted EBITDA has material limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under U.S. generally accepted accounting principles ("U.S. GAAP"). The Company finds Adjusted EBITDA to be a useful tool to assist in evaluating performance, because Adjusted EBITDA eliminates items related to capital structure, taxes and non-cash items. In light of the foregoing limitations, the Company does not rely solely on Adjusted EBITDA as a performance measure and also considers its U.S. GAAP results. Adjusted EBITDA is not a measurement of the Company’s financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures calculated in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.

A reconciliation of the most directly comparable U.S. GAAP financial measure, net income, to Adjusted EBITDA is as follows (in thousands):

Three Months Ended

Year Ended

December 31, 2020

September 30, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Net income

$

23,622

$

6,040

$

20,721

$

42,838

$

76,930

Adjustments:

Interest income and other (1)

(958

)

(889

)

(2,494

)

(5,048

)

(10,322

)

Interest expense

205

199

370

900

1,388

Provision for income taxes

8,651

1,916

9,423

16,526

30,582

Depreciation and amortization

3,077

2,606

2,343

10,899

8,017

Stock-based compensation

2,354

2,383

2,238

9,905

9,278

Non-cash MSR activity (2)

(9

)

(26

)

(90

)

(321

)

(322

)

Adjusted EBITDA(3)

$

36,942

$

12,229

$

32,511

$

75,699

$

115,551

(1)

Other includes net realized gains (losses) on marketable debt securities available-for-sale.

(2)

Non-cash MSR activity includes the assumption of servicing obligations.

(3)

The increase in Adjusted EBITDA for the three months ended December 31, 2020 compared to the same period in 2019 is primarily due to an increase in total revenues and a lower proportion of operating expenses compared to total revenues, while the decrease for the year ended December 31, 2020 compared to the same period in 2019 is primarily due to a decrease in total revenues and a higher proportion of operating expenses compared to total revenues.

Glossary of Terms

  • Private Client Market segment: transactions with values from $1 million to up to but less than $10 million

  • Middle Market segment: transactions with values from $10 million to up to but less than $20 million

  • Larger Transaction Market segment (previously Institutional Market segment): transactions with values of $20 million and above

  • Acquisitions: acquisitions of teams and/or acquisitions as business combinations under accounting standards

View source version on businesswire.com: https://www.businesswire.com/news/home/20210218006020/en/

Contacts

Investor Relations Contact:
ICR, Inc.
Evelyn Infurna, (203) 682-8265
evelyn.infurna@icrinc.com