National Investment Managers Inc. Reports Record Results with EBITDA SBC Increasing 28% for 2008

Business Wire, April 01, 2009

Revenue Increases 17.7% to $42 Million, Also a Record

Continued Growth Expected for 2009

DUBLIN, Ohio -- National Investment Managers Inc. (OTC BB: NIVM), a nationally-based and regionally-operated retirement plan administration and investment management company, announced record results for its 2008 revenue and earnings.

Financial highlights for 2008 include:

• 2008 annual revenues of $41.7 million in 2008 compared with revenues of $35.4 for the same period of 2007, an increase of 17.7%;
• Full year EBITDA SBC of $8.0 million in 2008 compared with EBITDA SBC of $6.3 million in the same period in 2007, an increase of approximately $1.7 million, or 28%;
• Positive cash flow from operations for 2008 of $4.2 million;
• Operating margins improved to 19.3% for the full year, compared with 17.7% last year;
• NIVM closed six acquisitions in 2008: on California Investment Annuity Sales, Alaska Pension Services, Kanter & Associates, Retirement Employee Benefit Specialists, Reptech and The Pension Group;
• National Investment Managers now has operations across 15 states, and administers over $9 billion in assets across more than 12,000 retirement plans.

Net loss for the year ended December 31, 2008 improved to approximately $130 thousand with preferred dividends of approximately $2.0 million, resulting in a net loss available to common shareholders of approximately $2.1 million, or $0.06 per fully diluted share. For the same period in 2007, the net loss stood at approximately $7.0 million with approximately $2.1 million in preferred dividends, resulting in a net loss available to common shareholders of approximately $9.1 million, or $0.32 per fully diluted share. The weighted average number of common shares outstanding stood at roughly 37.3 million at the end of 2008 and 28.0 million at the end of 2007.

Steven Ross, CEO of National Investment Managers said, “Our dramatic improvement in financial results demonstrates the strength of our investment thesis, especially considering the overall economic conditions in 2008. As an early mover in consolidating an extremely fragmented industry, National Investment Managers has created a dominant retirement market franchise by acquiring the best-in-class Third Party Administrators (“TPAs”). These profitable, market share leading TPAs are characterized by high recurring revenue streams, strong cash flow, solid organic growth, long-term customer relationships and extremely low turnover. Building a national retirement services business around these TPAs has demonstrated the viability of our consolidation strategy, and has driven NIVM to our record results.”

He continued, “We are especially pleased with the significant growth in 2008 in EBITDA SBC, which we believe is the most precise measure of our progress. Focusing on earnings before interest, taxes, dividends, depreciation, amortization, change in derivative financial instruments and stock-based compensation (i.e., EBITDA SBC) is important because purchase accounting rules require us to book a significant portion of the acquisition cost to amortizing Balance Sheet accounts. It is the accounting consequence of a strategy to acquire services businesses (i.e., businesses without significant tangible assets), and, as we continued our strategy of adding profitable and cash flow positive field operations through acquisition in 2008, our non-cash expenses actually increased.”

John Davis, President and Chief Operating Officer said, “The majority of our revenue and profitability this year came from our retirement plan design, consulting and administration services. The continued organic growth in this area demonstrates the viability of our business model, even in the midst of a weak economy. The strength in retirement plan services was offset somewhat by the results of our investment advisory business, which was below last year’s level. Our investment advisory business was impacted by the dramatic decline in the equity markets, and was particularly hard hit in the fourth quarter of the year.”

Davis continued, “During the past year we focused on continued growth, both organically and through acquisitions, as well as the design, development and implementation of our national technology strategy and operational platform that is the blueprint for our administrative business model across the country. We have already made significant strides this year in the implementation of the technology infrastructure, which is evidenced by our increase in operating margins. We also benefited from the high quality services that our associates have delivered to their clients, services which have proven to be even more important now in these volatile economic conditions than in any other time in our history. Quality service has led to customer loyalty, which, combined with our superior reputation and referral network, has resulted in a significant recurring revenue base. While 2008’s operating results reflect an improvement over prior years’, they do not fully reflect the benefits of our recent and soon to be implemented technology and operational initiatives, from which we expect to benefit significantly in 2009 and beyond.”