National Holdings Corporation (NHLD)

[glass99]

Another Question from transcripts:


My second question has to do with corporate overhead. In your 10-K it says that it went from $2.3 million to $4.2 million. It was an increase of 78%. I'm wondering why it went up so much more [than revenue]? What you are planning to do to reduce the increase in the corporate overhead going forward?

Robert Fagenson CEO
Well, part of that certainly is attributable to the fact that when we merged with Gilman, their business model is geared toward W-2 corporate-owned offices. So, a lot more of the expense come on to our corporate expense as opposed to our traditional model with National Securities which is primarily made up of independent offices where the overhead is principally borne by the branches themselves rather than corporate.
I can tell you that we are having an expense conference here on January 30th to take a look again at all corporate expenses on a zero-based budget and looking at everything. And we are determined to take that to the furthest point that we can, because our business model is such that, as an independent platform who retains the majority of our revenue on a retail dollar, as you've seen, we've moved aggressively towards a business mix and higher-margin businesses. But nothing exceeds the impact of a dollar of expenses saved because that goes dollar-for-dollar right to the bottom line.
So you should know that we're acutely aware of that, and we have undergone annual expense revenues and we will certainly be doing that again, and as I said at the end of January, we're having all our key folks in our business units come in, and we're going to do a full examination, to make sure that we can and continue to cut every dollar where we can, because, as I said, the impact of that goes right to the bottom line and then obviously every dollar we can bring to the bottom line is subject to a multiple when we look at our stock price. So, don't for a minute think that we're not acutely aware of that. Sensitive to it and working hard on it.
It's not just the units themselves. It was a different model, Jim. Gilman was W-2 which is higher fixed cost, higher margin variable cost basis it's a low-margin business. So we went into a whole new field which had higher costs, and that's the primary reason for the jump in expenses.

http://seekingalpha.com/article/2815265-national-holding-corporations-nhld-ceo-robert-fagenson-on-q4-fiscal-2014-results-earnings-call-transcript