Lion Street 2019 Annual Report FINAL - Page 4



1
L E T T ER TO OWNERS
Dear Fellow Stockholders,
Lion Street was founded on the basic principle that there is significant value in a
national network owned and governed by its producers. As a life-centric Firm, you
invested in what you know, alongside people you know, and where your production
and referrals can greatly influence the outcome of the Company, and consequently,
your investment.
Our vision is closing in on reality. We have quality Firms in nearly all significant
markets. Our “Firm behind the Firm” in Austin has more than 75 full-time
employees dedicated to helping Lion Street Owners grow and prosper.
In 2019, there were several notable financial events for your Company:
1.Recapitalization of the Company: In May 2019, Lion Street redeemed
all of the preferred shares of the Company plus the 8% coupon attached
to those shares. This $16 million return on investment went to all original
investors, including Austin Ventures and Series B investors. Your Company
accomplished this with cash on hand, plus a small amount of term debt from
Comerica. The Company has appropriate leverage for our cash flow, and we
will continue to monitor the capital structure of the Company to be most
efficient while reinvesting in growth.
2. B
roker-Dealer achieves profitability: After five years, Lion Street Financial
achieved profitability in 2019. Under Brian Murphy and John Burmeister’s
leadership, the Company began to hit the scale that created positive cash
flow. Reinvestment in the Company continues, as they carefully select new
registered representatives that fit the profile of Lion Street.
3.Significant stock buybacks: In 2019 and early 2020, Lion Street completed
stock buybacks of approximately 195,000 shares of common stock. The
fewer shares outstanding, of course, increases the value of each share.
These were all accomplished in a positive manner from Owners whose Firms
were not meeting minimum production requirements.
4.Record year for revenue and profit: On a consolidated basis, Lion Street
crossed $80 million of revenue and $10 million of profit. The Company was
able to grow revenue at twice the rate we grew expenses. Lion Street seeks
to always raise reinvestments in the Company on an annual basis, but
making sure revenue increases substantially more.
Lion Street is expecting our strong momentum to continue, supported by a healthy
pipeline of pending life insurance applications and executable growth plans for 2020.
Bob Carter
Founder and CEO

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