UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 8, 2019

 


 

FOCUS FINANCIAL PARTNERS INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-38604

 

47-4780811

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

875 Third Avenue, 28th Floor

New York, NY 10022

(Address of principal executive offices)

(Zip Code)

 

(646) 519-2456

Registrant’s Telephone Number, Including Area Code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.01 per share

 

FOCS

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in  Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

 

 

 


 

Item 2.02                   Results of Operations and Financial Condition.

 

On August 8, 2019, Focus Financial Partners Inc. (the “Company”) issued a press release reporting results for its second quarter ended June 30, 2019. A copy of the press release is furnished with this Current Report on Form 8-K (this “Current Report”) as Exhibit 99.1.

 

Item 7.01                   Regulation FD Disclosure.

 

The information set forth under Item 2.02 is incorporated by reference as if fully set forth herein.

 

On August 8, 2019, the Company also posted a slide presentation entitled “2019 Second Quarter Earnings Release Supplement” dated August 8, 2019 to the “Events” section of the “Investor Relations” section of its website (www.focusfinancialpartners.com). A copy of the slide presentation is furnished with this Current Report as Exhibit 99.2.

 

The information in this Current Report, being furnished pursuant to Items 2.02, 7.01 and 9.01, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01                   Financial Statements and Exhibits.

 

(d)   Exhibits.

 

Exhibit No.

 

Description

99.1

 

Focus Financial Partners Inc. Press Release, dated August 8, 2019.

99.2

 

Focus Financial Partners Inc. Slide Presentation, dated August 8, 2019.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

FOCUS FINANCIAL PARTNERS INC.

 

 

 

By:

/s/ J. Russell McGranahan

 

 

J. Russell McGranahan

 

 

General Counsel

 

 

Dated: August 8, 2019

 

 

3


Exhibit 99.1

 

 

Focus Financial Partners Reports Second Quarter 2019 Results

 

Year-Over-Year Revenue Growth above 30%
for the Fifth Consecutive Quarter Reporting as a Public Company
 Growth Supported by Strong M&A Activity

 

New York, New York — August 8, 2019 — Focus Financial Partners Inc. (Nasdaq: FOCS) (“Focus Inc.”, “Focus”, the “Company”, “we”, “us” or “our”), a leading partnership of independent, fiduciary wealth management firms, today reported results for its second quarter ended June 30, 2019.

 

Second Quarter 2019 Highlights

 

·                  Total revenues of $301.5 million, reflecting year-over-year growth of 30.3%

·                  Organic revenue growth(1) rate of 18% year-over-year

·                  GAAP net income of $3.1 million

·                  GAAP basic and diluted net income per share of $0.02

·                  Adjusted Net Income(2) of $41.2 million, 42.1% higher than the prior year quarter

·                  Adjusted Net Income Per Share(2) of $0.55, reflecting year-over-year growth of 37.5%

·                  Closed on two new partner firms, added acquired base earnings(1) of $6.7 million

·                  Closed on nine mergers for existing partner firms

 


(1)         Please see footnotes 2 and 6 under “How We Evaluate Our Business” later in this press release

(2)         Non-GAAP financial measures. Please see “Reconciliation of Non-GAAP Financial Measures” later in this press release for a reconciliation and more information on these measures.

 

“We had an excellent second quarter and first half of 2019, characterized by the strong performance of our partner firms and access to highly attractive opportunities to deploy our capital,” said Rudy Adolf, Founder, CEO and Chairman. “Our model continues to resonate with wealth management firms and our momentum is excellent. We participate in a multi-trillion dollar industry that is experiencing rapid secular growth and consolidation. We are a significant beneficiary and driver of this evolution because we have the advantage of a long-standing track record and access to inexpensive debt capital, as well as industry-leading M&A expertise and the benefits of scale. We believe that we have established a unique position in this market with an enviable partnership of firms. We are excited about the future of our business.”

 

“Our business again generated year-over-year growth in excess of 30% for revenues and adjusted net income per share, well above our stated annual targets of 20% for each,” said Jim Shanahan, Chief Financial Officer. “Our IPO further raised our visibility, generating a far greater number of M&A opportunities than we had initially anticipated. We are capitalizing on these transactions because they represent substantial future growth and diversification benefits for our business, in turn creating attractive, incremental value for our shareholders. Year-to-date through August 8th, we closed 30 transactions, including 6 direct acquisitions and 24 mergers. We have

 

1


 

already exceeded our 2018 full-year deal volume by 20% and our second half transactional momentum remains strong.”

 

Presentation

 

This press release presents our results of operations and financial position, including consolidation of our investment in Focus Financial Partners, LLC (“Focus LLC”), since July 30, 2018.  Prior to July 30, 2018, the closing date of our initial public offering (“IPO”), the financial statements included herein represent those of Focus LLC. The financial results of Focus Inc. prior to July 30, 2018 have not been included in these financial statements as it had not engaged in any business activities during such period. Accordingly, these results do not purport to reflect what the results of operations of Focus Inc. would have been had Focus Inc.’s IPO and related transactions occurred prior to July 30, 2018.

 

2019 Second Quarter Financial Highlights

 

Total revenues were $301.5 million, 30.3%, or $70.1 million higher than the second quarter of the prior year.  The primary driver of this increase was revenue growth from our existing partner firms of approximately $41.5 million. The majority of this growth was the result of higher wealth management fees, which included the effect of mergers completed by our partner firms in the last twelve months. The balance of the increase of $28.6 million was due to revenue from new partner firms acquired over the twelve months ended June 30, 2019.

 

An estimated 70%, or approximately $212.2 million, of revenues were correlated to the financial markets, primarily equities and fixed income, of which 70%, or approximately $148.1 million, were generated from advance billings. The remaining 30%, or approximately $89.3 million, of revenues were not correlated to the markets. These revenues typically consist of fixed fees for investment advice, tax fees and family office type services, primarily for high and ultra-high net worth clients. In excess of 95% of total revenues were fee-based and recurring.

 

Organic revenue growth(1) was 18.0%, higher than the 16.7% for the prior year quarter, reflecting the positive impact of the 27 mergers we have completed since July 1, 2018. We anticipate that our organic revenue growth for the third quarter of 2019 will be in excess of 15%.

 

GAAP net income increased to $3.1 million compared to a net loss of $7.7 million in the prior year quarter. Adjusted Net Income(2) was $41.2 million, an increase of 42.1%, or $12.2 million over the prior year quarter. Adjusted Net Income Per Share(2) was $0.55 per share, $0.15, or 37.5%, higher year-over-year, reflecting acquisition activity completed over the past year as well as strong organic growth and the net reduction in interest expense primarily related to the repayment of our $207.0 million Second Lien Term Loan in July 2018.

 

2019 First Half Financial Highlights

 

Total revenues were $561.5 million, 31.3%, or $133.8 million higher than the first six months of the prior year. The primary driver of this increase was revenue growth from our existing partner firms of approximately $88.2 million. The majority of this growth was the result of higher wealth management fees, which include the effect of mergers completed by our partner firms in the last twelve months, as well as a full period of revenue

 

2


 

recognized during the first half of 2019 for partner firms that were acquired in the first half of 2018. The balance of the increase of $45.6 million was due to revenue from new partner firms acquired over the twelve months ended June 30, 2019.

 

Organic revenue growth(1) was 11.0%, compared to 16.9% for the prior year period. Organic growth in the first half of 2019 was strong despite the effect of the 2018 fourth quarter decline in the financial markets and the advanced billing structure utilized by certain of our partner firms.

 

GAAP net income increased to $0.3 million compared to a net loss of $19.7 million in the prior year period. Adjusted Net Income(2) was $76.9 million, an increase of 41.3%, or $22.5 million over the prior year period. Adjusted Net Income Per Share(2) was $1.03 per share, $0.27, or 35.5%, higher year-over-year, reflecting acquisition activity completed over the past year as well as strong organic growth and the net reduction in interest expense primarily related to the repayment of our $207.0 million Second Lien Term Loan in July 2018.

 


(1)         Please see footnote 2 under “How We Evaluate Our Business” later in this press release.

(2)         Non-GAAP financial measures. Please see “Reconciliation of Non-GAAP Financial Measures” later in this press release for a reconciliation and more information on these measures.

 

Balance Sheet and Liquidity

 

As of June 30, 2019, cash and cash equivalents were $37.9 million and debt outstanding under the Company’s credit facilities was approximately $1.1 billion.

 

Of the total debt outstanding as of June 30, 2019, approximately $795.0 million were borrowings under our First Lien Term Loan (“Term Loan”) and $320.0 million were borrowings under our First Lien Revolver (“Revolver”). Our net leverage ratio at June 30, 2019 was 4.05x, reflecting our continued strong M&A momentum during the second quarter.

 

At the end of July 2019, we took advantage of the positive credit environment and closed on an incremental $350.0 million Term Loan (upsized by $50 million as a result of strong lender demand), the proceeds of which were used to reset our Revolver dry powder for M&A activity. There were no changes to the existing terms of our Term Loan or Revolver as a result of this transaction, other than an increase in the Term Loan quarterly amortization payment from $2.0 million to $2.9 million. While we continue to prudently manage our credit and leverage profile, this transaction will increase our flexibility to capitalize on the secular tailwinds shaping the RIA industry and position our business for future growth.

 

Teleconference, Webcast and Presentation Information

 

Founder, CEO and Chairman, Rudy Adolf, and Chief Financial Officer, Jim Shanahan, will host a conference call today, August 8, 2019 at 8:30 a.m. Eastern Time to discuss the Company’s 2019 second quarter results and outlook. The call can be accessed by dialing +1-877-504-6131 (inside the U.S.) or +1-786-815-8445 (outside the U.S.) and entering the passcode 7789612.

 

3


 

A live, listen-only webcast, together with a slide presentation titled “2019 Second Quarter Earnings Release Supplement” dated August 8, 2019, will be available under “Events” in the “Investor Relations” section of the Company’s website, www.focusfinancialpartners.com. A webcast replay of the call will be available shortly after the event at the same address.

 

About Focus Financial Partners Inc.

 

Focus Financial Partners is a leading partnership of independent, fiduciary wealth management firms. Focus provides access to best practices, resources, and continuity planning for its partner firms who serve individuals, families, employers and institutions with comprehensive wealth management services. Focus partner firms maintain their operational independence, while they benefit from the synergies, scale, economics and best practices offered by Focus to achieve their business objectives.

 

Cautionary Note Concerning Forward-Looking Statements

 

The foregoing information contains certain forward-looking statements that reflect the Company’s current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the Company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company’s financial results may be found in the Company’s annual report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission.

 

Investor and Media Contact Information

 

Tina Madon

Head of Investor Relations & Corporate Communications

Tel: (646) 813-2909

tmadon@focuspartners.com

 

4


 

How We Evaluate Our Business

 

We focus on several key financial metrics in evaluating the success of our business, the success of our partner firms and our resulting financial position and operating performance. Key metrics for the three and six months ended June 30, 2018 and 2019 include the following:

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2018

 

2019

 

2018

 

2019

 

 

 

(dollars in thousands, except share and per share data)

 

Revenue Metrics:

 

 

 

 

 

 

 

 

 

Revenues

 

$

231,435

 

$

301,545

 

$

427,664

 

$

561,469

 

Revenue growth (1) from prior period

 

47.2

%

30.3

%

46.1

%

31.3

%

Organic revenue growth (2) from prior period

 

16.7

%

18.0

%

16.9

%

11.0

%

 

 

 

 

 

 

 

 

 

 

Management Fees Metrics (operating expense):

 

 

 

 

 

 

 

 

 

Management fees

 

$

60,559

 

$

79,252

 

$

106,859

 

$

136,258

 

Management fees growth (3) from prior period

 

53.1

%

30.9

%

46.8

%

27.5

%

Organic management fees growth (4) from prior period

 

22.1

%

16.5

%

22.4

%

6.6

%

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Metrics:

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (5)

 

$

51,890

 

$

62,953

 

$

96,111

 

$

117,467

 

Adjusted EBITDA growth (5) from prior period

 

58.9

%

21.3

%

58.0

%

22.2

%

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Metrics:

 

 

 

 

 

 

 

 

 

Adjusted Net Income (5) 

 

$

29,012

 

$

41,232

 

$

54,468

 

$

76,946

 

Adjusted Net Income growth (5) from prior period

 

37.6

%

42.1

%

38.1

%

41.3

%

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share Metrics:

 

 

 

 

 

 

 

 

 

Adjusted Net Income Per Share (5)

 

$

0.40

 

$

0.55

 

$

0.76

 

$

1.03

 

Adjusted Net Income Per Share growth (5) from prior period

 

37.6

%

37.5

%

38.1

%

35.5

%

Adjusted Shares Outstanding (5)

 

71,843,916

 

74,444,102

 

71,843,916

 

74,422,405

 

 

 

 

 

 

 

 

 

 

 

Other Metrics:

 

 

 

 

 

 

 

 

 

Acquired Base Earnings (6)

 

$

23,800

 

$

6,725

 

$

26,550

 

$

18,638

 

Number of partner firms at period end (7)

 

56

 

62

 

56

 

62

 

 


(1)         Represents period-over-period growth in our GAAP revenue.

 

(2)         Organic revenue growth represents the period-over-period growth in revenue related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by our partner firms and partner firms that have merged, that for the entire periods presented, are included in our consolidated statements of operations for each of the entire periods presented. We believe these growth statistics are useful in that they present full-period revenue growth of partner firms on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods.

 

(3)         The terms of our management agreements entitle the management companies to management fees typically consisting of all Earnings Before Partner Compensation (“EBPC”) in excess of Base Earnings up to Target Earnings, plus a percentage of any EBPC in excess of Target Earnings. Management fees growth represents the growth in GAAP management fees earned by management companies. While an expense, we believe that growth in management fees reflect the strength of the partnership.

 

(4)         Organic management fee growth represents the period-over-period growth in management fees earned by management companies related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by our partner firms and partner firms that have merged, that for the entire periods presented, are included in our consolidated statements

 

5


 

of operations for each of the entire periods presented.  We believe that these growth statistics are useful in that they present full-period growth of management fees on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods.

 

(5)         For additional information regarding Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share and Adjusted Shares Outstanding, including a reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income Per Share to the most directly comparable GAAP financial measure, please read ‘‘Reconciliation of Non-GAAP Financial Measures—Adjusted EBITDA’’ and ‘‘Reconciliation of Non-GAAP Financial Measures —Adjusted Net Income and Adjusted Net Income Per Share’’.

 

(6)         The terms of our management agreements entitle the management companies to management fees typically consisting of all future EBPC of the acquired wealth management firm in excess of Base Earnings up to Target Earnings, plus a percentage of any EBPC in excess of Target Earnings. Acquired Base Earnings is equal to our retained cumulative preferred position in Base Earnings. We are entitled to receive these earnings notwithstanding any earnings that we are entitled to receive in excess of Target Earnings. Base Earnings may change in future periods for various business or contractual matters. For example, from time to time when a partner firm consummates an acquisition, the management agreement among the partner firm, the management company and the principals is amended to adjust Base Earnings and Target Earnings to reflect the projected post-acquisition earnings of the partner firm.

 

(7)         Represents the number of partner firms on the last day of the period presented. The number includes new partner firms acquired during the period reduced by any partner firms that merged with existing partner firms prior to the last day of the period.

 

6


 

Unaudited Condensed Consolidated Financial Statements

 

FOCUS FINANCIAL PARTNERS INC.

Unaudited condensed consolidated statements of operations

(In thousands, except share and per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2018

 

2019

 

2018

 

2019

 

REVENUES:

 

 

 

 

 

 

 

 

 

Wealth management fees

 

$

216,328

 

$

283,296

 

$

400,651

 

$

526,380

 

Other

 

15,107

 

18,249

 

27,013

 

35,089

 

Total revenues

 

231,435

 

301,545

 

427,664

 

561,469

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Compensation and related expenses

 

81,273

 

105,531

 

154,622

 

206,979

 

Management fees

 

60,559

 

79,252

 

106,859

 

136,258

 

Selling, general and administrative

 

41,493

 

59,736

 

77,780

 

111,993

 

Management contract buyout

 

 

 

 

1,428

 

Intangible amortization

 

22,290

 

31,221

 

41,784

 

59,962

 

Non-cash changes in fair value of estimated contingent consideration

 

11,944

 

3,847

 

18,315

 

11,261

 

Depreciation and other amortization

 

2,162

 

2,425

 

4,044

 

4,738

 

Total operating expenses

 

219,721

 

282,012

 

403,404

 

532,619

 

INCOME FROM OPERATIONS

 

11,714

 

19,533

 

24,260

 

28,850

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income

 

235

 

339

 

377

 

536

 

Interest expense

 

(18,212

)

(14,424

)

(32,484

)

(27,283

)

Amortization of debt financing costs

 

(929

)

(782

)

(1,888

)

(1,564

)

Gain on sale of investment

 

 

 

5,509

 

 

Loss on extinguishment of borrowings

 

 

 

(14,011

)

 

Other income (expense) —net

 

203

 

(468

)

296

 

(704

)

Income from equity method investments

 

79

 

329

 

153

 

643

 

Total other expense—net

 

(18,624

)

(15,006

)

(42,048

)

(28,372

)

INCOME (LOSS) BEFORE INCOME TAX

 

(6,910

)

4,527

 

(17,788

)

478

 

INCOME TAX EXPENSE

 

746

 

1,425

 

1,922

 

204

 

NET INCOME (LOSS)

 

$

(7,656

)

3,102

 

$

(19,710

)

274

 

Non-controlling interest

 

 

 

(2,306

)

 

 

(2,420

)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

 

 

$

796

 

 

 

$

(2,146

)

 

 

 

 

 

 

 

 

 

 

Income (loss) per share of Class A common stock:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

0.02

 

 

 

$

(0.05

)

Diluted

 

 

 

$

0.02

 

 

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

46,696,200

 

 

 

46,455,238

 

Diluted

 

 

 

46,721,559

 

 

 

46,455,238

 

 

7


 

FOCUS FINANCIAL PARTNERS INC.

Unaudited condensed consolidated balance sheets

(In thousands, except share and per share data)

 

 

 

December 31,

 

June 30,

 

 

 

2018

 

2019

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

33,213

 

$

37,944

 

Accounts receivable less allowances of $576 at 2018 and $785 at 2019

 

98,596

 

118,674

 

Prepaid expenses and other assets

 

76,150

 

70,950

 

Fixed assets—net

 

24,780

 

34,363

 

Operating lease assets

 

 

168,867

 

Debt financing costs—net

 

12,340

 

10,993

 

Deferred tax assets—net

 

70,009

 

77,045

 

Goodwill

 

860,495

 

988,706

 

Other intangible assets—net

 

762,195

 

913,110

 

TOTAL ASSETS

 

$

1,937,778

 

$

2,420,652

 

LIABILITIES AND EQUITY

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Accounts payable

 

$

8,935

 

$

12,216

 

Accrued expenses

 

36,252

 

45,456

 

Due to affiliates

 

39,621

 

23,156

 

Deferred revenue

 

6,215

 

6,183

 

Other liabilities

 

158,497

 

178,016

 

Operating lease liabilities

 

 

180,451

 

Borrowings under credit facilities (stated value of $838,985 and $1,114,970 at December 31, 2018 and June 30, 2019, respectively)

 

836,582

 

1,112,784

 

Tax receivable agreements obligation

 

39,156

 

46,535

 

TOTAL LIABILITIES

 

1,125,258

 

1,604,797

 

EQUITY

 

 

 

 

 

Class A common stock, par value $0.01, 500,000,000 shares authorized; 46,265,903 and 47,116,817 shares issued and outstanding at December 31, 2018 and June 30, 2019, respectively

 

462

 

471

 

Class B common stock, par value $0.01, 500,000,000 shares authorized; 22,823,272 and 22,308,446 shares issued and outstanding at December 31, 2018 and June 30, 2019, respectively

 

228

 

223

 

Additional paid-in capital

 

471,386

 

489,566

 

Accumulated deficit

 

(590

)

(2,736

)

Accumulated other comprehensive loss

 

(1,824

)

(2,000

)

Total shareholders’ equity

 

469,662

 

485,524

 

Non-controlling interest

 

342,858

 

330,331

 

Total equity

 

812,520

 

815,855

 

TOTAL LIABILITIES AND EQUITY

 

$

1,937,778

 

$

2,420,652

 

 

8


 

FOCUS FINANCIAL PARTNERS INC.

Unaudited condensed consolidated statements of cash flows

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2018

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income (loss)

 

$

(19,710

)

$

274

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities—net of effect of acquisitions:

 

 

 

 

 

Intangible amortization

 

41,784

 

59,962

 

Depreciation and other amortization

 

4,044

 

4,738

 

Amortization of debt financing costs

 

1,888

 

1,564

 

Non-cash equity compensation expense

 

7,555

 

9,099

 

Non-cash changes in fair value of estimated contingent consideration

 

18,315

 

11,261

 

Income from equity method investments

 

(153

)

(643

)

Distributions received from equity method investments

 

613

 

618

 

Other non-cash items

 

(203

)

843

 

Loss on extinguishment of borrowings

 

14,011

 

 

Changes in cash resulting from changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(21,467

)

(18,219

)

Prepaid expenses and other assets

 

(14,791

)

3,220

 

Accounts payable

 

3,324

 

389

 

Accrued expenses

 

12,358

 

25,166

 

Due to affiliates

 

(7,548

)

(16,518

)

Other liabilities

 

(2,600

)

(24,848

)

Deferred revenue

 

(268

)

(1,688

)

Net cash provided by operating activities

 

37,152

 

55,218

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Cash paid for acquisitions and contingent consideration—net of cash acquired

 

(215,332

)

(289,101

)

Purchase of fixed assets

 

(4,429

)

(10,060

)

Investment and other

 

(24,300

)

 

Net cash used in investing activities

 

(244,061

)

(299,161

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Borrowings under credit facilities

 

200,000

 

370,000

 

Repayments of borrowings under credit facilities

 

(4,477

)

(94,014

)

Contingent consideration paid

 

(4,814

)

(16,293

)

Payments of debt financing costs

 

(1,981

)

 

Proceeds from exercise of stock options

 

 

796

 

Payments on finance lease obligations

 

(116

)

(94

)

Distributions for unitholders

 

(506

)

(11,734

)

Net cash provided by financing activities

 

188,106

 

248,661

 

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

 

(80

)

13

 

CHANGE IN CASH AND CASH EQUIVALENTS

 

(18,883

)

4,731

 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

Beginning of period

 

51,455

 

33,213

 

End of period

 

$

32,572

 

$

37,944

 

 

9


 

Reconciliation of Non-GAAP Financial Measures

 

Adjusted EBITDA

 

Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is defined as net income (loss) excluding interest income, interest expense, income tax expense (benefit), amortization of debt financing costs, intangible amortization and impairments, if any, depreciation and other amortization, non-cash equity compensation expense, non-cash changes in fair value of estimated contingent consideration, gain on sale of investment, loss on extinguishment of borrowings, other expense/income, net, other one-time transaction expenses, and management contract buyout, if any. We believe that Adjusted EBITDA, viewed in addition to and not in lieu of, our reported GAAP results, provides additional useful information to investors regarding our performance and overall results of operations for various reasons, including the following:

 

·                  Non-cash equity grants made to employees or non-employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; stock-based compensation expense is not a key measure of our operating performance;

 

·                  Contingent consideration or earn outs can vary substantially from company to company and depending upon each company’s growth metrics and accounting assumption methods, the non-cash changes in fair value of estimated contingent consideration is not considered a key measure in comparing our operating performance; and

 

·                  Amortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods; the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; the amortization of intangible assets obtained in acquisitions are not considered a key measure in comparing our operating performance.

 

We use Adjusted EBITDA:

 

·                  As a measure of operating performance;

 

·                  For planning purposes, including the preparation of budgets and forecasts;

 

·                  To allocate resources to enhance the financial performance of our business; and

 

·                  To evaluate the effectiveness of our business strategies.

 

Adjusted EBITDA does not purport to be an alternative to net income (loss) or cash flows from operating activities. The term Adjusted EBITDA is not defined under GAAP, and Adjusted EBITDA is not a measure of net income (loss), operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

·                  Adjusted EBITDA does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;

 

·                  Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; and

 

·                  Adjusted EBITDA does not reflect the interest expense on our debt or the cash requirements necessary to service interest or principal payments.

 

10


 

In addition, Adjusted EBITDA can differ significantly from company to company depending on strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We compensate for these limitations by relying also on the GAAP results and using Adjusted EBITDA as supplemental information.

 

Set forth below is a reconciliation of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2018 and 2019:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2018

 

2019

 

2018

 

2019

 

 

 

(In thousands)

 

Net income (loss)

 

$

(7,656

)

$

3,102

 

$

(19,710

)

$

274

 

Interest income

 

(235

)

(339

)

(377

)

(536

)

Interest expense

 

18,212

 

14,424

 

32,484

 

27,283

 

Income tax expense

 

746

 

1,425

 

1,922

 

204

 

Amortization of debt financing costs

 

929

 

782

 

1,888

 

1,564

 

Intangible amortization

 

22,290

 

31,221

 

41,784

 

59,962

 

Depreciation and other amortization

 

2,162

 

2,425

 

4,044

 

4,738

 

Non-cash equity compensation expense

 

3,701

 

5,178

 

7,555

 

9,099

 

Non-cash changes in fair value of estimated contingent consideration

 

11,944

 

3,847

 

18,315

 

11,261

 

Gain on sale of investment

 

 

 

(5,509

)

 

Loss on extinguishment of borrowings

 

 

 

14,011

 

 

Other expense (income), net

 

(203

)

468

 

(296

)

704

 

Management contract buyout

 

 

 

 

1,428

 

Other one-time transaction expenses

 

 

420

 

 

1,486

 

Adjusted EBITDA

 

$

51,890

 

$

62,953

 

$

96,111

 

$

117,467

 

 

Adjusted Net Income and Adjusted Net Income Per Share

 

We analyze our performance using Adjusted Net Income and Adjusted Net Income Per Share. Adjusted Net Income and Adjusted Net Income Per Share are non-GAAP measures. We define Adjusted Net Income as net income (loss) excluding income tax expense (benefit), amortization of debt financing costs, intangible amortization and impairments, if any, non-cash equity compensation expense, non-cash changes in fair value of estimated contingent consideration, gain on sale of investment, loss on extinguishment of borrowings,  management contract buyout, if any, and other one-time transaction expenses. The calculation of Adjusted Net Income also includes adjustments to reflect (i) a pro forma 27% income tax rate assuming all earnings of Focus LLC were recognized by Focus Inc. and no earnings were attributable to non-controlling interests and (ii) tax adjustments from intangible asset related income tax benefits from acquisitions based on a pro forma 27% tax rate.

 

Adjusted Net Income Per Share for the three and six months ended June 30, 2019 is calculated by dividing Adjusted Net Income by the Adjusted Shares Outstanding. Adjusted Shares Outstanding for the three and six months ended June 30, 2019 includes: (i) the weighted average shares of Class A common stock outstanding during the periods, (ii) the weighted average incremental shares of Class A common stock related to stock options and unvested Class A common stock, if any, outstanding during the periods, (iii) the weighted average

 

11


 

number of Focus LLC common units outstanding during the periods (assuming that 100% of such Focus LLC common units have been exchanged for Class A common stock) and (iv) the weighted average number of common unit equivalents of Focus LLC vested and unvested incentive units outstanding during the periods based on the closing price of our Class A common stock on the last trading day of the periods (assuming that 100% of such Focus LLC common units have been exchanged for Class A common stock).

 

Adjusted Net Income Per Share for the periods prior to July 30, 2018 is calculated by dividing Adjusted Net Income by the Adjusted Shares Outstanding. Adjusted Shares Outstanding for the periods prior to July 30, 2018 was 71,843,916 and includes all vested and unvested shares of Class A common stock issued in connection with the IPO and Reorganization Transactions, assumes that all vested non-compensatory stock options and unvested compensatory stock options outstanding at the closing of the IPO have been exercised (assuming vesting of unvested compensatory stock options and a then-current value of the Class A common stock equal to the $33.00 IPO price) and assumes that 100% of the Focus LLC common units and vested and unvested incentive units outstanding at the closing of the IPO have been exchanged for Class A common stock (assuming vesting of the unvested incentive units and a then-current value of the Focus LLC common units equal to the $33.00 IPO price).

 

We believe that Adjusted Net Income and Adjusted Net Income Per Share, viewed in addition to and not in lieu of, our reported GAAP results, provide additional useful information to investors regarding our performance and overall results of operations for various reasons, including the following:

 

·                  Non-cash equity grants made to employees or non-employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; stock-based compensation expense is not a key measure of our operating performance;

 

·                  Contingent consideration or earn outs can vary substantially from company to company and depending upon each company’s growth metrics and accounting assumption methods; the non-cash changes in fair value of estimated contingent consideration is not considered a key measure in comparing our operating performance; and

 

·                  Amortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; the amortization of intangible assets obtained in acquisitions are not considered a key measure in comparing our operating performance.

 

Adjusted Net Income and Adjusted Net Income Per Share do not purport to be an alternative to net income (loss) or cash flows from operating activities. The terms Adjusted Net Income and Adjusted Net Income Per Share are not defined under GAAP, and Adjusted Net Income and Adjusted Net Income Per Share are not a measure of net income (loss), operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, Adjusted Net Income and Adjusted Net Income Per Share have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

·                  Adjusted Net Income and Adjusted Net Income Per Share do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;

 

12


 

·                  Adjusted Net Income and Adjusted Net Income Per Share do not reflect changes in, or cash requirements for, working capital needs; and

 

·                  Other companies in the financial services industry may calculate Adjusted Net Income and Adjusted Net Income Per Share differently than we do, limiting its usefulness as a comparative measure.

 

In addition, Adjusted Net Income and Adjusted Net Income Per Share can differ significantly from company to company depending on strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We compensate for these limitations by relying also on the GAAP results and use Adjusted Net Income and Adjusted Net Income Per Share as supplemental information.

 

13


 

Set forth below is a reconciliation of net income (loss) to Adjusted Net Income and Adjusted Net Income Per Share for the three and six months ended June 30, 2018 and 2019:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2018

 

2019

 

2018

 

2019

 

 

 

(In thousands, except share and per share data)

 

Net income (loss)

 

$

(7,656

)

$

3,102

 

$

(19,710

)

$

274

 

Income tax expense

 

746

 

1,425

 

1,922

 

204

 

Amortization of debt financing costs

 

929

 

782

 

1,888

 

1,564

 

Intangible amortization

 

22,290

 

31,221

 

41,784

 

59,962

 

Non-cash equity compensation expense

 

3,701

 

5,178

 

7,555

 

9,099

 

Non-cash changes in fair value of estimated contingent consideration

 

11,944

 

3,847

 

18,315

 

11,261

 

Gain on sale of investment

 

 

 

(5,509

)

 

Loss on extinguishment of borrowings

 

 

 

14,011

 

 

Management contract buyout

 

 

 

 

1,428

 

Other one-time transaction expenses (1)

 

 

420

 

 

1,486

 

Subtotal

 

$

31,954

 

$

45,975

 

$

60,256

 

$

85,278

 

Pro forma income tax expense (27%) (2)

 

(8,628

)

(12,413

)

(16,269

)

(23,025

)

Tax Adjustments (2) (3)

 

5,686

 

7,670

 

10,481

 

14,693

 

Adjusted Net Income

 

$

29,012

 

$

41,232

 

$

54,468

 

$

76,946

 

Adjusted Shares Outstanding (4)

 

71,843,916

 

74,444,102

 

71,843,916

 

74,422,405

 

Adjusted Net Income Per Share

 

$

0.40

 

$

0.55

 

$

0.76

 

$

1.03

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Shares Outstanding:

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding—basic (5)

 

 

46,696,200

 

 

46,455,238

 

Adjustments:

 

 

 

 

 

 

 

 

 

Shares of Class A common stock issued in connection with the IPO and Reorganization Transactions (6)

 

42,529,651

 

 

42,529,651

 

 

Weighted average incremental shares of Class A common stock related to stock options and unvested Class A common stock (7)

 

 

25,359

 

 

16,607

 

Weighted average Focus LLC common units outstanding (8)

 

22,499,665

 

22,488,713

 

22,499,665

 

22,635,388

 

Weighted average common unit equivalent of Focus LLC incentive units outstanding (9)

 

6,814,600

 

5,233,830

 

6,814,600

 

5,315,172

 

Adjusted Shares Outstanding (4)

 

71,843,916

 

74,444,102

 

71,843,916

 

74,422,405

 

 


(1)   Relates to one-time expenses related to (a) Loring Ward severance cash compensation of $280 during the three months ended March 31, 2019, which were recorded in compensation and related expenses and (b) transaction expenses of $786 and $420, associated with the acquisition of Loring Ward, which were recorded in selling, general and administrative expenses during the three months ended March 31, 2019 and June 30, 2019, respectively.

 

(2)   For periods ended prior to the closing of the IPO and the consummation of the related reorganization transactions on July 30, 2018, these adjustments are being made for comparative purposes only.

 

(3)   As of June 30, 2019, estimated tax adjustments from intangible asset related income tax benefits from closed acquisitions based on a pro forma 27% tax rate for the next 12 months is $30,769.

 

(4)   For historical periods prior to the closing of the IPO and consummation of the related reorganization transactions on July 30, 2018, the Adjusted Shares Outstanding are deemed to be outstanding for comparative purposes only.

 

14


 

(5)   Represents our GAAP weighted average Class A common stock outstanding—basic.

 

(6)   The issuance of Class A common stock that occurred upon closing of the IPO and the consummation of related reorganization transactions on July 30, 2018 is assumed to have occurred as of January 1, 2018 for comparative purposes.

 

(7)   The incremental shares for the six months ended June 30, 2019 related to unvested Class A common stock as calculated using the treasury stock method were not included in the calculation of the GAAP weighted average shares of Class A common stock—diluted as the result would have been anti-dilutive.

 

(8)   Assumes that 100% of the Focus LLC common units were exchanged for Class A common stock.

 

(9)   Assumes that 100% of the vested and unvested Focus LLC incentive units were converted into Focus LLC common units based on the closing price of our Class A common stock at the end of the respective period and such Focus LLC common units were exchanged for Class A common stock. For the periods ending prior to July 30, 2018, the conversion to Focus LLC common units was based on the $33.00 IPO price.

 

15


 

Supplemental Information

 

Economic Ownership

 

The following table provides supplemental information regarding the economic ownership of Focus Financial Partners, LLC, as of June 30, 2019:

 

 

 

As of June 30, 2019

 

 

 

Interest

 

%

 

Economic Ownership of Focus Financial Partners, LLC Interests:

 

 

 

 

 

Focus Financial Partners Inc. (1)

 

47,116,817

 

63.2

%

Non-Controlling Interests (2)

 

27,434,034

 

36.8

%

Total

 

74,550,851

 

100.0

%

 


(1)   Includes 118,169 unvested common units.

 

(2)   Includes 5,125,588 Focus LLC common units issuable upon conversion of the outstanding 17,830,564 vested and unvested incentive units (assuming vesting of the unvested incentive units and a June 30, 2019 period end value of the Focus LLC common units equal to $27.31).

 

Class A and Class B Common Stock Outstanding

 

The following table provides supplemental information regarding the Company’s Class A and Class B common stock:

 

 

 

Q2 2019 Weighted
Average
Outstanding

 

Number of Shares
Outstanding at
June 30, 2019

 

Number of Shares
Outstanding at
August 5, 2019

 

Class A

 

46,696,200

 

47,116,817

 

47,116,817

 

Class B

 

22,488,713

 

22,308,446

 

22,308,446

 

 

Incentive Units

 

The following table provides supplemental information regarding the outstanding Focus LLC vested and unvested Incentive Units (“IUs”) at June 30, 2019. The vested IUs in future periods can be exchanged into shares of Class A common stock (after conversion into a number of Focus LLC common units that takes into account the then-current value of common units and such IUs aggregate hurdle amount), and therefore, the Company calculates the Class A common stock equivalent of such IUs for purposes of calculating Adjusted Net Income per Share.  The period-end share price of the Company’s Class A common stock is used to calculate the intrinsic value of the outstanding Focus LLC IUs in order to calculate a Focus LLC common unit equivalent of the Focus LLC IUs.

 

16


 

Focus Financial Partners, LLC Incentive Units by Hurdle at June 30, 2019:

 

Hurdle
Rates

 

Number
Outstanding

 

$

1.42

 

175,421

 

5.50

 

97,798

 

6.00

 

56,702

 

7.00

 

482,545

 

9.00

 

2,001,982

 

11.00

 

1,271,965

 

12.00

 

520,000

 

13.00

 

842,418

 

14.00

 

56,205

 

16.00

 

168,552

 

17.00

 

80,000

 

19.00

 

865,731

 

21.00

 

3,975,500

 

22.00

 

1,289,667

 

23.00

 

524,828

 

27.00

 

29,484

 

28.50

 

1,646,766

 

33.00

 

3,715,000

 

36.64

 

30,000

 

 

 

17,830,564

 

 

17


Exhibit 99.2

 

Focus Financial Partners Inc. 2019 Second Quarter Earnings Release Supplement August 8, 2019

GRAPHIC

 

Disclaimer Special Note Regarding Forward-Looking Statements Some of the information in this presentation may contain forward-looking statements. Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” “continue,” “will” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this presentation. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include fluctuations in wealth management fees, our reliance on our partner firms and the principals who manage their businesses, our ability to make successful acquisitions, unknown liabilities of or poor performance by acquired businesses, harm to our reputation, our inability to facilitate smooth succession planning at our partner firms, our inability to compete, our reliance on key personnel, our inability to attract, develop and retain talented wealth management professionals, our inability to retain clients following an acquisition, write down of goodwill and other intangible assets, our failure to maintain and properly safeguard an adequate technology infrastructure, cyber-attacks, our inability to recover from business continuity problems, inadequate insurance coverage, the termination of management agreements by management companies, our inability to generate sufficient cash to service all of our indebtedness, the failure of our partner firms to comply with applicable U.S. and non-U.S. regulatory requirements, legal proceedings and governmental inquiries and certain other factors. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Our forward-looking statements speak only as of the date of this presentation or as of the date as of which they are made. Except as required by applicable law, including federal securities laws, we do not intend to update or revise any forward-looking statements. Non-GAAP Financial Measures Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is defined as net income (loss) excluding interest income, interest expense, income tax expense (benefit), amortization of debt financing costs, intangible amortization and impairments, if any, depreciation and other amortization, non-cash equity compensation expense, non-cash changes in fair value of estimated contingent consideration, loss on extinguishment of borrowings, other expense/income, net, other one-time transaction expenses, and management contract buyout, if any. We believe that Adjusted EBITDA, viewed in addition to and not in lieu of, our reported GAAP results, provides additional useful information to investors regarding our performance and overall results of operations for various reasons, including the following: (i) non-cash equity grants made to employees or non-employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; stock-based compensation expense is not a key measure of our operating performance, (ii) contingent consideration or earn outs can vary substantially from company to company and depending upon each company’s growth metrics and accounting assumption methods; the non-cash changes in fair value of estimated contingent consideration is not considered a key measure in comparing our operating performance, and (iii) amortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; the amortization of intangible assets obtained in acquisitions are not considered a key measure in comparing our operating performance. We use Adjusted EBITDA (i) as a measure of operating performance, (ii) for planning purposes, including the preparation of budgets and forecasts, (iii) to allocate resources to enhance the financial performance of our business, and (iv) to evaluate the effectiveness of our business strategies. Adjusted EBITDA does not purport to be an alternative to net income (loss) or cash flows from operating activities. The term Adjusted EBITDA is not defined under GAAP, and Adjusted EBITDA is not a measure of net income (loss), operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments, (ii) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs, and (iii) Adjusted EBITDA does not reflect the interest expense on our debt or the cash requirements necessary to service interest or principal payments. In addition, Adjusted EBITDA can differ significantly from company to company depending on strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We compensate for these limitations by relying also on the GAAP results and using Adjusted EBITDA as supplemental information. We analyze our performance using Adjusted Net Income and Adjusted Net Income Per Share. Adjusted Net Income and Adjusted Net Income Per Share are non-GAAP measures. We define Adjusted Net Income as net income (loss) excluding income tax expense (benefit), amortization of debt financing costs, intangible amortization and impairments, if any, non-cash equity compensation expense, non-cash changes in fair value of estimated contingent consideration, loss on extinguishment of borrowings, management contract buyout, if any, and other one-time transaction expenses. The calculation of Adjusted Net Income also includes adjustments to reflect (i) a pro forma 27% income tax rate assuming all earnings of Focus LLC were recognized by Focus Inc. and no earnings were attributable to non-controlling interests and (ii) tax adjustments from intangible asset related income tax benefits from acquisitions based on a pro forma 27% tax rate. We believe that Adjusted Net Income and Adjusted Net Income Per Share, viewed in addition to and not in lieu of, our reported GAAP results, provide additional useful information to investors regarding our performance and overall results of operations for various reasons, including the following: (i) non-cash equity grants made to employees or non-employees at a certain price and point in time do not necessarily reflect how our business is performing at any particular time; stock-based compensation expense is not a key measure of our operating performance, (ii) contingent consideration or earn outs can vary substantially from company to company and depending upon each company’s growth metrics and accounting assumption methods; the non-cash changes in fair value of estimated contingent consideration is not considered a key measure in comparing our operating performance, and (iii) amortization expenses can vary substantially from company to company and from period to period depending upon each company’s financing and accounting methods, the fair value and average expected life of acquired intangible assets and the method by which assets were acquired; the amortization of intangible assets obtained in acquisitions are not considered a key measure in comparing our operating performance. Adjusted Net Income and Adjusted Net Income Per Share do not purport to be an alternative to net income (loss) or cash flows from operating activities. The terms Adjusted Net Income and Adjusted Net Income Per Share are not defined under GAAP, and Adjusted Net Income and Adjusted Net Income Per Share are not a measure of net income (loss), operating income or any other performance or liquidity measure derived in accordance with GAAP. Therefore, Adjusted Net Income and Adjusted Net Income Per Share have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: (i) Adjusted Net Income and Adjusted Net Income Per Share do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments, (ii) Adjusted Net Income and Adjusted Net Income Per Share do not reflect changes in, or cash requirements for, working capital needs, and (iii) Other companies in the financial services industry may calculate Adjusted Net Income and Adjusted Net Income Per Share differently than we do, limiting its usefulness as a comparative measure. In addition, Adjusted Net Income and Adjusted Net Income Per Share can differ significantly from company to company depending on strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We compensate for these limitations by relying also on the GAAP results and use Adjusted Net Income and Adjusted Net Income Per Share as supplemental information. 2

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Table of Contents Pages 2019 Second Quarter Financial Snapshot 4-5 Key Performance and Growth Trends 6-8 2019 YTD M&A Activity 9-10 Balance Sheet Metrics 11-12 Outlook 13 Top 5 Takeaways 14 Appendix 15-18 3

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2019 Second Quarter Financial Snapshot Revenues Adjusted EBITDA Adjusted Net Income and ANI per Share Revenues: $301.5 million, +30.3% year-over-year growth Organic revenue growth:1 +18.0% Fee-based and recurring revenues: 95+% Split between market correlated and non-correlated revenues: ~70% / ~30% Market correlated revenues billed in advance: ~70% Revenue attributable to new partner firm closings: $7.3 million* * Relates to the 2 partner firms closed during Q2, both of which closed on 4/1/19 Adjusted EBITDA:2 $63.0 million, +21.3% year-over-year growth Adjusted EBITDA Margin:3 20.9% Adjusted EBITDA attributable to new partner firm closings: $1.9 million* * Relates to the 2 partner firms closed during Q2, both of which closed on 4/1/19 Adjusted Net Income:2 $41.2 million, +42.1% year-over-year growth Adjusted Net Income Per Share:2 $0.55, +37.5% year-over-year growth Adjusted Shares Outstanding for purposes of calculating ANI:2 74.4 million Organic revenue growth represents the period-over-period growth in revenues related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by our partner firms and partner firms that have merged, that for the entire periods presented, are included in our consolidated statements of operations for each of the entire periods presented. We believe these growth statistics are useful in that they present full period revenue growth of partner firms on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods. Non-GAAP financial measure. See Appendix for reconciliations. Calculated as Adjusted EBITDA divided by revenues. 4

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Majority of revenues are correlated to equity and fixed income markets Amount fluctuates quarter to quarter based on revenue composition of acquired firms and mergers Partner firms generally bill quarterly in advance for correlated revenues, impacting how market movements are reflected in quarterly revenues 5 2019 Second Quarter Revenue Composition Market-Correlated Revenues ~70% $212.2 million

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Fifth Consecutive Quarter1 of Revenue and Adjusted Net Income Per Share2 Growth Above 30% 6 Growth well above stated annual targets of 20% for each Since reporting as a public company. Non-GAAP financial measure. See Appendix for reconciliations. $0.40 $0.46 $0.51 $0.47 $0.55 37.6% 39.4% 54.5% 34.3% 37.5% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Quarterly ANI Per Share 2 and Growth % ANI Per Share YOY growth % $231.4 $235.7 $247.5 $259.9 $301.5 47.2% 30.8% 30.4% 32.5% 30.3% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Quarterly Revenues and Growth % ($ in millions) Revenues YOY growth %

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Organic Revenue Growth Trend is Strong 7 Q2 2019 year-over-year organic revenue growth1 was 18.0% Trailing 10-quarter average was 13.4% Organic revenue growth represents the period-over-period growth in revenue related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by Focus's partner firms and partner firms that have merged, that for the entire periods presented are included in Focus's consolidated statements of operations for the entire periods presented. Focus believes these growth statistics are useful in that they present full-period revenue growth of partner firms on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods. 9.3% 11.9% 14.4% 17.9% 17.6% 16.7% 9.7% 10.7% 7.7% 18.0% 13.4% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Quarterly Organic Revenue Growth 1 Percentage Organic Revenue Growth Average

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Mergers More Than Double Our Partner Firms’ Revenue Growth 8 Partner firms who take advantage of M&A in addition to traditional asset gathering have transformed their businesses though accelerated growth M&A enables efficient monetization of large pools of client assets and client leads, as well as addition of exceptional advisor talent The weightings are based on the June 30, 2019 LTM revenues of the respective partner firms. Inception means first full four quarters as a Focus partner firm and reflects activity through all market cycles during that time. The analysis includes the 46 firms since inception (out of the 62 firms) that have been with us for at least 2 years as of June 30, 2019 in order to determine a baseline revenue growth rate. If Focus partner firms merged together, their financials have been combined. The 46 partner firms have been with Focus for a weighted average of 6.5 years. Entire portfolio of 46 partner firms has delivered weighted average revenue CAGR of over 13% since joining Focus(3) (1) (1) 7.0% 15.4% Firms that have not completed a merger (19 firms - weighted average of 4 years with Focus) Firms that have completed at least one merger (27 firms - weighted average of 7 years with Focus) Weighted Average (1) Revenue CAGR Since Inception (2)

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M&A Volumes Reflect Attractiveness of Our Differentiated Model As of August 8, 2019 63 partner firms 32 transactions pending/closed 2019 YTD, already exceeding 2018 full year transaction activity $35.1 million in Acquired Base Earnings1 for 6 partner firms acquired 2019 YTD = 9 Signed and pending close. Additionally, the transaction for new partner firm Lanham O’Dell & Company is signed, however, is not expected to close in 2019 and is not included in pending transactions. The terms of our management agreements entitle the management companies to management fees typically consisting of all future EBPC of the acquired wealth management firm in excess of Base Earnings up to Target Earnings, plus a percentage of any EBPC in excess of Target Earnings. Acquired Base Earnings is equal to our retained cumulative preferred position in Base Earnings. We are entitled to receive these earnings notwithstanding any earnings that we are entitled to receive in excess of Target Earnings. Base Earnings may change in future periods for various business or contractual matters. Type Firm Name Partner Firm (for Mergers) Closing Date Primary Office Location Q3 2019 (to date) Partner Firm Acquisitions 1. Williams, Jones & Associates 8/1/19 New York, NY Mergers 1. Stevens First Principles Investment Advisors Benefit Financial Services Group 7/1/19 Newport Beach, CA 2. Catamount Management Group Crestwood Advisors 7/1/19 Westport, CT 3. Hines & Warner Wealth Management Vista Wealth Management 7/1/19 Portland, OR 4. Lodestar Investment Counsel Bartlett Wealth Management 7/1/19 Chicago, IL 5. TMD & Associates One Charles Private Wealth 7/1/19 Scottsdale, AZ 6. HORNE Wealth Advisors Buckingham 7/1/19 Ridgeland, MS 7. Roof Advisory Group Fort Pitt Capital Group * Harrisburg, PA 8. Smiley TrinityPoint Wealth * Charlotte, NC Q2 2019 Partner Firm Acquisitions 1. Escala Partners 4/1/19 Melbourne, Australia 2. Sound View Wealth Advisors 4/1/19 Savannah, GA Mergers 1. MacGuire, Cheswick & Tuttle Crestwood Advisors 4/1/19 Darien, CT 2. Weatherstone Capital Management Carnick & Kubik Group 4/1/19 Denver, CO 3. Bullard, McLeod and Associates Atlas Private Wealth Management 4/1/19 Albany, NY 4. Anthony Smith Advisors Patton Albertson Miller Group 4/1/19 Atlanta, GA 5. Skeet Kaye Hopkins Gelfand, Rennert & Feldman 4/2/19 London, United Kingdom 6. Massingale Summit Financial 5/1/19 Ruston, LA 7. Steinberg Global Asset Management The Colony Group 5/1/19 Boca Raton, FL 8. Lake Mary Wealth Management Buckingham 6/1/19 Maitland, FL 9. Collings The Colony Group 6/18/19 Boston, MA

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M&A Volumes Reflect Attractiveness of Our Differentiated Model = 10 (Continued from Previous Page) Type Firm Name Partner Firm (for Mergers) Closing Date Primary Office Location Q1 2019 Partner Firm Acquisitions 1. Altman, Greenfield & Selvaggi 1/1/19 New York, NY 2. Prime Quadrant 2/15/19 Toronto, Canada 3. Foster Dykema Cabot 3/1/19 Boston, MA Mergers 1. Griffon Financial Planning Buckingham 1/1/19 Bend, OR 2. Northern Capital Management Kovitz Investment Group 1/1/19 Madison, WI 3. Alpern Wealth Management Buckingham 1/1/19 Pittsburgh, PA 4. David Weise & Associates NKSFB 1/1/19 Encino, CA 5. WG&S, LLP Gelfand, Rennert & Feldman 1/1/19 Los Angeles, CA 6. Aurora Financial Advisors The Colony Group 2/1/19 Wellesley, MA 7. Dan Goldie Financial Services Buckingham 2/1/19 Palo Alto, CA 8. Insero Wealth Strategies Buckingham 3/1/19 Buffalo, NY 9. Neuman + Associates NKSFB 3/1/19 Encino, CA Q2 2019 Partner Firm Acquisitions 1. Escala Partners 4/1/19 Melbourne, Australia 2. Sound View Wealth Advisors 4/1/19 Savannah, GA Mergers 1. MacGuire, Cheswick & Tuttle Crestwood Advisors 4/1/19 Darien, CT 2. Weatherstone Capital Management Carnick & Kubik Group 4/1/19 Denver, CO 3. Bullard, McLeod and Associates Atlas Private Wealth Management 4/1/19 Albany, NY 4. Anthony Smith Advisors Patton Albertson Miller Group 4/1/19 Atlanta, GA 5. Skeet Kaye Hopkins Gelfand, Rennert & Feldman 4/2/19 London, United Kingdom 6. Massingale Summit Financial 5/1/19 Ruston, LA 7. Steinberg Global Asset Management The Colony Group 5/1/19 Boca Raton, FL 8. Lake Mary Wealth Management Buckingham 6/1/19 Maitland, FL 9. Collings The Colony Group 6/18/19 Boston, MA Q3 2019 (to date) Partner Firm Acquisitions 1. Williams, Jones & Associates 8/1/19 New York, NY Mergers 1. Stevens First Principles Investment Advisors Benefit Financial Services Group 7/1/19 Newport Beach, CA 2. Catamount Management Group Crestwood Advisors 7/1/19 Westport, CT 3. Hines & Warner Wealth Management Vista Wealth Management 7/1/19 Portland, OR 4. Lodestar Investment Counsel Bartlett Wealth Management 7/1/19 Chicago, IL 5. TMD & Associates One Charles Private Wealth 7/1/19 Scottsdale, AZ 6. HORNE Wealth Advisors Buckingham 7/1/19 Ridgeland, MS 7. Roof Advisory Group Fort Pitt Capital Group * Harrisburg, PA 8. Smiley TrinityPoint Wealth * Charlotte, NC 8 6 17 24 25 30 2018 (Full Year) 2019 YTD (through August 8) Total Closed Deals Mergers Partner Firms

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Key Balance Sheet Metrics July 2019 Amendment $350 million increase in existing Term Loan closed on 7/26/19 Strong lender demand resulted in upsizing from $300 million indicated in 7/17/19 press release Same terms and conditions as the existing Term Loan Quarterly installment repayments increase from $2.0 million to $2.9 million Proceeds used to repay outstanding borrowings under $650 million Revolver and reset dry powder for M&A activity Borrowing Rates (as of June 30, 2019) Term Loan ($795.0 million outstanding) LIBOR + 250 bps Net Leverage Ratio Drawn Spread Undrawn Fee >4.00x LIBOR + 200 bps 50 bps >3.50x & <4.00x LIBOR + 175 bps 50 bps >3.00x & <3.50x LIBOR + 150 bps 37.5 bps <3.00x LIBOR + 125 bps 25 bps 11 Net leverage ratio represents the First Lien Leverage Ratio (as defined in the Credit Agreement), and means the ratio of amounts outstanding under the First Lien Term Loan and First Lien Revolver plus other outstanding debt obligations secured by a lien on the assets of Focus LLC (excluding letters of credit other than unpaid drawings thereunder) minus unrestricted cash and cash equivalents to Consolidated EBITDA (as defined in the Credit Agreement). Revolver ($320.0 million outstanding) Revolver grid pricing: $ in millions 6/30/19 Cash and cash equivalents $37.9 Borrowings outstanding $1,115.0 Net leverage ratio1 4.05x

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Earnings Preference Creates Structural Downside Protection 12 The analysis depicts the impact on our Net Leverage Ratio (as defined in the Credit Agreement) resulting from a hypothetical change in Q2 market correlated revenues only. All other revenues/expenses were kept constant except management fees, which are tied to the profitability of our partner firms. Net leverage ratio represents the First Lien Leverage Ratio (as defined in the Credit Agreement), +53% Focus maintains downside protection with earnings preference. A hypothetical decline of 10% to 20% in market-correlated revenues solely adjusting for Q2 2019, keeping all other revenues/expenses unchanged except for management fees, increases Net Leverage Ratio by ~0.1x and ~0.2x, respectively.(1) Illustrative example only. Partner firms would adjust cost structures in the event of a prolonged downturn. Reported Q2 2019 compensation and related expenses were $105.5 million and SG&A expenses were $59.7 million. Unique financial structure supports Net Leverage Ratio above 4x. Capitalizing on opportunities with substantial future growth potential and diversification benefits Earnings preference, fee-based recurring revenue and variable expenses create downside protection of earnings Cash flow would be used to de-lever if opportunity set becomes less attractive Hypothetical % decline in market correlated revenues(1) Reported (10)% (20)% ($ in millions) Q2'19 Revenue $ 301.5 $ 280.3 $ 259.1 Net Leverage Ratio(2) 4.05x 4.18x 4.26x $69.1 $105.9 $124.0 2017 2018 Q2 2019 LTM Cash Flow from Operating Activities ($ in millions)

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Outlook Organic revenue growth represents the period-over-period growth in revenue related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by our partner firms and partner firms that have merged, that for the entire periods presented, are included in our consolidated statements of operations for each of the entire periods presented. We believe these growth statistics are useful in that they present full period revenue growth of partner firms on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods. Calculated as Adjusted EBITDA divided by revenues. 13 Q3 2019 organic revenue growth1 is estimated to be greater than 15%. Adjusted EBITDA margin2 for Q3 2019 is estimated to be approximately 21%. Q3 2019 is estimated to include Williams Jones revenues of $7 million and Adjusted EBITDA of $2.7 million based on the August 1st mid-quarter closing. Expected annual revenues of $42 million and annual Adjusted EBITDA of $16.5 million. Intangible tax shield for Adjusted Net Income as of June 30, 2019 is expected to be $30.8 million for the next 12 months. On July 26, closed on an incremental $350 million Term Loan with original issue discount of $0.9 million and estimated fees of $3.8 million. Interest rate of LIBOR + 250 bps

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Top 5 Takeaways for Q2 2019 1 Delivered strong YOY growth in revenues (+30.3%) and Adjusted Net Income per Share1 (+37.5%) well in excess of 20% annual growth targets for each. Delivered strong year-over-year organic revenue growth2 (+18.0%). 2 3 4 5 Non-GAAP financial measure. See Appendix for reconciliations Organic revenue growth represents the period-over-period growth in revenue related to partner firms, including growth related to acquisitions of wealth management practices and customer relationships by our partner firms and partner firms that have merged, that for the entire periods presented, are included in our consolidated statements of operations for each of the entire periods presented. We believe these growth statistics are useful in that they present full period revenue growth of partner firms on a ‘‘same store’’ basis exclusive of the effect of the partial period results of partner firms that are acquired during the comparable periods. 14 Closed on $350 million of incremental borrowings under our Term Loan and used proceeds to repay outstanding borrowings under Revolver. Reset dry powder for M&A activity and future growth Year-to-date through August 8, 2019, $35.1 million in acquired base earnings for 6 closed new partner firms; supplemented by 24 mergers. No plan to issue equity in the near term unless in connection with M&A transactions that would be accretive to ANI per share. We believe benefits of pursuing unprecedented M&A opportunities outweigh drawback of increase in leverage above 4x.

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15 Appendix 15

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Net Income (Loss) to Adjusted EBITDA Reconciliation ($000s) 16 16 Represents one-time expenses primarily related to an acquisition and our IPO and Reorganization Transactions. Refer to our 10-Q and 10-K filings for additional details. For the Three Months Ended June 30, 2018 June 30, 2019 Net income (loss) $ (7,656) $ 3,102 Interest income (235) (339) Interest expense 18,212 14,424 Income tax expense 746 1,425 Amortization of debt financing costs 929 782 Intangible amortization 22,290 31,221 Depreciation and other amortization 2,162 2,425 Non-cash equity compensation expense 3,701 5,178 Non-cash changes in fair value of estimated contingent consideration 11,944 3,847 Other (income) expense, net (203) 468 Other one-time transaction expenses (1) - 420 Adjusted EBITDA $ 51,890 $ 62,953 Net income (loss) (7,656) $ 3,102 Income tax expense 746 1,425 Amortization of debt financing costs 929 782 Intangible amortization 22,290 31,221 Non-cash equity compensation expense 3,701 5,178 Non-cash changes in fair value of estimated contingent consideration 11,944 3,847 Loss on extinguishment of borrowings - - Management contract buyout - - Other one-time transaction expenses - 420 Subtotal 31,954 45,975 Pro forma tax (27%) (8,628) (12,413) Tax adjustment 5,686 7,670 Adjusted Net Income $ 29,012 $ 41,232 Adjusted Shares Outstanding (1) 71,843,916 74,444,102 Adjusted Net Income Per Share $ 0.40 $ 0.55 Calculation of Adjusted Shares Outstanding: Weighted average shares of Class A common stock outstanding—basic (2) – 46,696,200 Adjustments: Shares of Class A common stock issued in connection with 42,529,651 – the IPO and Reorganization Transactions (3) Weighted average incremental shares of Class A common – 25,359 stock related to stock options and unvested Class A common stock (4) Weighted average Focus LLC common units outstanding (5) 22,499,665 22,488,713 Weighted average common unit equivalent of Focus LLC incentive units outstanding (6) 6,814,600 5,233,830 Adjusted Shares Outstanding (1) 71,843,916 74,444,102

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Net Income (Loss) to Adjusted Net Income Reconciliation ($000s) 17 Represents one-time expenses primarily related to an acquisition and our IPO and Reorganization Transactions. Refer to our 10-Q and 10-K filings for additional details. For periods ended prior to the closing of the IPO and the consummation of the related reorganization transactions on July 30, 2018, these adjustments are being made for comparative purposes only. Represents tax adjustments from intangible asset related income tax benefits from closed acquisitions based on a pro forma 27% tax rate. 17 For the Three Months Ended June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 June 30, 2019 Net income (loss) $ (7,656) $ (38,924) $ 17,547 $ (2,828) $ 3,102 Income tax expense (benefit) 746 3,745 3,783 (1,221) 1,425 Amortization of debt financing costs 929 828 782 782 782 Intangible amortization 22,290 23,616 24,981 28,741 31,221 Non-cash equity compensation expense 3,701 24,057 12,856 3,921 5,178 Non-cash changes in fair value of estimated contingent consideration 11,944 10,564 (22,241) 7,414 3,847 Loss on extinguishment of borrowings - 7,060 - - - Management contract buyout - - - 1,428 - Other one-time transaction expenses (1) - 7,535 3,994 1,066 420 Subtotal 31,954 38,481 41,702 39,303 45,975 Pro forma tax (27%) (2) (8,628) (10,390) (11,260) (10,612) (12,413) Tax adjustments (2)(3) 5,686 6,040 6,307 7,023 7,670 Adjusted Net Income $ 29,012 $ 34,131 $ 36,749 $ 35,714 $ 41,232 Adjusted Shares Outstanding (1) 71,843,916 74,055,933 71,677,504 76,793,979 74,444,102 Adjusted Net Income Per Share $ 0.40 $ 0.46 $ 0.51 $ 0.47 $ 0.55 Calculation of Adjusted Shares Outstanding: Weighted average shares of Class A common stock outstanding—basic (2) – 42,351,043 43,651,256 46,211,599 46,696,200 Adjustments: Shares of Class A common stock issued in connection with 42,529,651 – – – – the IPO and Reorganization Transactions (3) Weighted average incremental shares of Class A common – 130,411 63,323 7,855 25,359 stock related to stock options and unvested Class A common stock (4) Weighted average Focus LLC common units outstanding (5) 22,499,665 22,695,798 22,823,272 22,783,692 22,488,713 Weighted average common unit equivalent of Focus LLC incentive units outstanding (6) 6,814,600 8,878,681 5,139,653 7,790,833 5,233,830 Adjusted Shares Outstanding (1) 71,843,916 74,055,933 71,677,504 76,793,979 74,444,102

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18 18 For historical periods prior to the closing of the IPO and consummation of the related reorganization transactions on July 30, 2018, the Adjusted Shares Outstanding are deemed to be outstanding for comparative purposes only. Represents our GAAP weighted average Class A common stock outstanding–basic. The issuance of Class A common stock that occurred upon closing of the IPO and the consummation of related reorganization transactions on July 30, 2018 is assumed to have occurred as of January 1, 2018 for comparative purposes. Represents the incremental shares related to stock options and unvested Class A common stock as calculated using the treasury stock method. Assumes that 100% of the Focus LLC common units were exchanged for Class A common stock. Assumes that 100% of the vested and unvested Focus LLC incentive units were converted into Focus LLC common units based on the closing price of our Class A common stock at the end of the respective period and such Focus LLC common units were exchanged for Class A common stock. For the periods ending prior to July 30, 2018, the exchange to Class A common stock was based on the $33.00 IPO price. Adjusted Net Income Per Share Reconciliation ($000s except share and per share amounts) For the Three Months Ended June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 June 30, 2019 Adjusted Net Income $ 29,012 $ 34,131 $ 36,749 $ 35,714 $ 41,232 Adjusted Shares Outstanding (1) 71,843,916 74,055,933 71,677,504 76,793,979 74,444,102 Adjusted Net Income Per Share $ 0.40 $ 0.46 $ 0.51 $ 0.47 $ 0.55 Calculation of Adjusted Shares Outstanding: Weighted average shares of Class A common stock outstanding—basic (2) – 42,351,043 43,651,256 46,211,599 46,696,200 Adjustments: Shares of Class A common stock issued in connection with 42,529,651 – – – – the IPO and Reorganization Transactions (3) Weighted average incremental shares of Class A common – 130,411 63,323 7,855 25,359 stock related to stock options and unvested Class A common stock (4) Weighted average Focus LLC common units outstanding (5) 22,499,665 22,695,798 22,823,272 22,783,692 22,488,713 Weighted average common unit equivalent of Focus LLC incentive units outstanding (6) 6,814,600 8,878,681 5,139,653 7,790,833 5,233,830 Adjusted Shares Outstanding (1) 71,843,916 74,055,933 71,677,504 76,793,979 74,444,102

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