ValueClick, Inc. (NASDAQ: VCLK) today reported financial results for the
second quarter ended June 30, 2013. Adjusted-EBITDA1 was
within its previously-issued guidance range.
"The continued strong performance by our higher value add offerings
demonstrate that we are moving in the right direction, as evidenced by
our strong earnings in the quarter and record free cash flow," said
John
Giuliani, president and chief executive officer of ValueClick. "Despite
some top line weakness in the quarter from our insertion order-driven
display business, we made great progress on our integration initiatives.
In addition, our significant affiliate marketing client wins during Q2
represent a great addition to our roster of direct, strategic
relationships with major advertisers and provide us with an even
stronger base for sustainable, profitable growth in the years to come."
Highlights from the second quarter of 2013 include:
Revenue increased 4 percent from the second quarter of 2012 (Q2 2012)
to $159.8 million;
Adjusted-EBITDA increased 12 percent from Q2 2012 to $53.1 million;
Adjusted-EBITDA margin increased to 33.2 percent from 30.9 percent in
Q2 2012;
Non-GAAP net income2 per diluted common share of $0.21 was
negatively impacted by an impairment charge on a note receivable.
Excluding this item, non-GAAP net income per diluted common share
would have been $0.39, an 11% increase from Q2 2012;
Record free cash flow (defined as cash from operations less capital
expenditures) for the six and twelve-month periods ended June 30, 2013
of $73.5 million and $152.2 million, respectively;
Repurchase of 2 million shares of common stock under the share
repurchase program for total cost of $52.1 million. Board of Directors
increased remaining share repurchase authorization to $200 million;
Ending cash and cash equivalents balance of $127.1 million and $102.5
million of total debt as of June 30, 2013.
___________________________
1Adjusted-EBITDA is defined as GAAP (Generally Accepted
Accounting Principles) net income from continuing operations before
interest, income taxes, depreciation, amortization, and stock-based
compensation. Please see the attached schedule for a reconciliation of
GAAP net income from continuing operations to adjusted-EBITDA, and a
discussion of why the Company believes adjusted-EBITDA is a useful
financial measure to investors and how Company management uses this
financial measure.
2 Non-GAAP net income is defined as GAAP income from
continuing operations before the impact of stock-based compensation and
amortization of intangible assets. Please see the attached schedule for
a reconciliation of GAAP income from continuing operations to non-GAAP
net income per diluted common share.
Non-Cash Note Impairment
ValueClick entered into a settlement agreement related to its note
receivable from the sale of the promotional lead generation business in
2010. Under the terms of the settlement, ValueClick received an upfront
payment of $5.5 million in July 2013 (included in "Other current assets"
on the June 30 balance sheet) and recorded a non-cash impairment charge
of $22.6 million (included in "Interest and other (expense) income, net"
in the second quarter). This charge, net of related tax benefits,
negatively impacted second quarter GAAP and non-GAAP net income per
diluted common share by approximately $0.18.
Business Outlook
Today, ValueClick is providing guidance for the third quarter of 2013:
Q3 Guidance
Revenue
$164-$168 million
Adjusted-EBITDA
$53-$55 million
Mid-Point Adjusted-EBITDA Margin
32.5%
Non-GAAP net income per diluted common share
$0.39-0.40
Impact of stock-based compensation and amortization of intangibles,
net of tax
$(0.09)
GAAP net income per diluted common share
$0.30-$0.31
The consolidated revenue guidance mid-point is based on the following
segment-level assumptions for revenue growth rates expressed as a
percentage change from third quarter 2012 reported revenue levels:
•
Affiliate Marketing:
Up low double-digits
•
Media:
Up low single-digits
•
Owned & Operated:
Flat
Third quarter 2013 guidance assumes: stock-based compensation of $5.5
million; amortization of intangible assets of $6.5 million ($2.5 million
of which will be classified in Cost of revenue); net interest and other
expense of $0.5 million; a 40 percent effective tax rate; and 76 million
diluted shares outstanding.
Conference Call Today at 4:30 p.m. ET
John Giuliani, chief executive officer, and
John Pitstick, chief
financial officer, will present an overview of the results and other
factors affecting ValueClick's financial performance for the second
quarter during a conference call and Webcast at 4:30 p.m. ET today. The
live conference call can be accessed by dialing (888) 204-4520 or (913)
981-5559. Please dial in approximately ten minutes prior to the start
time and provide the operator with the pass code 6717563. A replay of
the conference call will be available from Thursday, August 1 at 7:30
p.m. ET through Thursday, August 8 at 7:30 p.m. ET at (888) 203-1112 and
(719) 457-0820 (pass code: 6717563). The live and archived Webcast of
the conference call will be available at http://ir.conversantmedia.com.
About ValueClick
ValueClick, Inc. (NASDAQ: VCLK) is one of the world's largest digital
marketing companies. Through a unique combination of data, technology
and services, ValueClick increases brand awareness and drives customer
acquisition at scale for the world's largest advertisers, and maximizes
advertising revenue for tens of thousands of online and mobile
publishers. The Company is based in Westlake Village, California, and
has offices in major advertising markets worldwide. For more
information, please visit www.valueclick.com.
This release contains forward-looking statements that involve risks
and uncertainties, including, but not limited to, the risk that market
demand for on-line advertising in general, and performance based on-line
advertising in particular, will not grow as rapidly as predicted, and
the risk that legislation and governmental regulation could negatively
impact the Company's performance. Actual results may differ materially
from the results predicted, and reported results should not be
considered an indication of future performance. Important factors that
could cause actual results to differ materially from those expressed or
implied in the forward-looking statements are detailed under "Risk
Factors" and elsewhere in filings with the Securities and Exchange
Commission made from time to time by ValueClick, including, but not
limited to: its annual report on Form 10-K filed on February 27, 2013;
recent quarterly reports on Form 10-Q; and other current reports on Form
8-K.
The Business Outlook contained in this release is based on current
expectations. These statements are forward-looking, and actual results
may differ materially. These statements do not include the potential
impact of any mergers, acquisitions or other business combinations that
may be completed after the date of this release. Actual stock-based
compensation may differ from these estimates based on the timing and
amount of stock awards granted, the assumptions used in stock award
valuation and other factors. Actual income tax expense may differ from
these estimates based on tax planning, changes in tax accounting rules
and laws, and other factors.
ValueClick undertakes no obligation to release publicly any revisions
to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
VALUECLICK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
December 31,
2013
2012
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
127,068
$
136,638
Accounts receivable, net
109,790
147,487
Other current assets
57,121
27,136
Total current assets
293,979
311,261
Note receivable, less current portion
—
27,615
Property and equipment, net
28,463
29,014
Goodwill
433,931
434,507
Intangible assets, net
68,892
81,822
Other assets
14,950
15,477
TOTAL ASSETS
$
840,215
$
899,696
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings under credit facility, current
$
10,000
$
10,000
Other current liabilities
109,080
132,401
Borrowings under credit facility, less current portion
92,500
132,500
Other non-current liabilities
35,815
34,090
Total liabilities
247,395
308,991
Total stockholders' equity
592,820
590,705
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
840,215
$
899,696
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three-month Period
Six-month Period
Ended June 30,
Ended June 30,
2013
2012
2013
2012
(Unaudited)
(Unaudited)
Revenue
$
159,756
$
153,985
$
325,194
$
300,417
Cost of revenue
61,978
60,377
124,333
115,062
Gross profit
97,778
93,608
200,861
185,355
Operating expenses:
Sales and marketing (Note 1)
22,828
20,649
45,293
41,576
General and administrative (Note 1)
15,708
19,519
33,921
39,091
Technology (Note 1)
17,110
16,887
33,810
32,967
Amortization of intangible assets acquired in
business combinations
3,919
6,321
7,842
12,645
Total operating expenses
59,565
63,376
120,866
126,279
Income from operations
38,213
30,232
79,995
59,076
Interest and other (expense) income, net
(23,308
)
1,497
(23,903
)
1,726
Income before income taxes
14,905
31,729
56,092
60,802
Income tax expense
5,510
13,028
20,414
21,903
Net income from continuing operations
9,395
18,701
35,678
38,899
Net income from discontinued operations
2,480
1,635
2,480
3,008
Net income
$
11,875
$
20,336
$
38,158
$
41,907
Net income from continuing operations
per common share - basic
$
0.12
$
0.24
$
0.47
$
0.49
Net income from continuing operations
per common share - diluted
$
0.12
$
0.23
$
0.46
$
0.48
Net income per common share - basic
$
0.16
$
0.26
$
0.50
$
0.53
Net income per common share - diluted
$
0.15
$
0.25
$
0.49
$
0.52
Weighted-average shares used to compute net
income per common share - basic
75,531
78,720
75,590
79,529
Weighted-average shares used to compute net
income per common share - diluted
77,413
80,336
77,490
81,221
Note 1 - Includes stock-based compensation as follows:
Three-month Period
Six-month Period
Ended June 30,
Ended June 30,
2013
2012
2013
2012
(Unaudited)
(Unaudited)
Sales and marketing
$
1,406
$
942
$
2,580
$
2,596
General and administrative
2,508
3,220
4,947
6,246
Technology
1,225
1,586
2,409
2,992
Total stock-based compensation
$
5,139
$
5,748
$
9,936
$
11,834
VALUECLICK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six-month Period
Ended June 30,
2013
2012
Cash flows from operating activities:
Net income
$
38,158
$
41,907
Adjustments to reconcile net income to net cash provided by
operating activities:
Loss on note receivable
22,556
—
Depreciation and amortization
19,434
23,063
Non-cash, stock-based compensation
9,936
11,834
Provision for doubtful accounts and sales credits
2,174
1,761
Amortization of discount on note receivable
(570
)
(1,203
)
Deferred income taxes
2,745
(1,781
)
Tax benefit from stock-based awards
2,831
1,825
Excess tax benefit from stock-based awards
(2,986
)
(1,927
)
Changes in operating assets and liabilities, excluding business
acquisitions
(14,809
)
(3,819
)
Net cash provided by operating activities
79,469
71,660
Cash flows from investing activities:
Purchases of property and equipment
(6,019
)
(11,665
)
Principal payments received on note receivable
1,960
2,120
Payments for acquisitions, net of cash acquired
—
(152
)
Net cash used in investing activities
(4,059
)
(9,697
)
Cash flows from financing activities:
Proceeds from borrowings under credit agreement
25,000
70,000
Repayments under credit agreement
(65,000
)
(65,000
)
Repurchases and retirement of common stock
(52,079
)
(99,568
)
Proceeds from shares issued under employee stock programs
6,349
3,605
Excess tax benefit from stock-based awards
2,986
1,927
Net cash used in financing activities
(82,744
)
(89,036
)
Effect of exchange rate changes on cash and cash equivalents
(2,236
)
(1,447
)
Net decrease in cash and cash equivalents
(9,570
)
(28,520
)
Cash and cash equivalents, beginning of period
136,638
116,676
Cash and cash equivalents, end of period
$
127,068
$
88,156
VALUECLICK, INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED-EBITDA (Note 1)
(In thousands)
Three-month Period
Six-month Period
Ended June 30,
Ended June 30,
2013
2012
2013
2012
(Unaudited)
(Unaudited)
Net income from continuing operations
$
9,395
$
18,701
$
35,678
$
38,899
Interest and other expense (income), net
23,308
(1,497
)
23,903
(1,726
)
Income tax expense
5,510
13,028
20,414
21,903
Amortization of acquired intangible assets included in cost of
revenue
2,491
2,492
4,985
4,985
Amortization of acquired intangible assets included in operating
expenses
3,919
6,321
7,842
12,645
Depreciation and leasehold amortization
3,315
2,787
6,607
5,401
Stock-based compensation
5,139
5,748
9,936
11,834
Adjusted-EBITDA
$
53,077
$
47,580
$
109,365
$
93,941
Note 1 - "Adjusted-EBITDA" (GAAP net income from continuing
operations before interest, income taxes, depreciation, amortization,
and stock-based compensation) included in this press release is a
non-GAAP financial measure.
Adjusted-EBITDA, as defined above, may not be similar to adjusted-EBITDA
measures used by other companies and is not a measurement under GAAP.
Management believes that adjusted-EBITDA provides useful information to
investors about the Company's performance because it eliminates the
effects of period-to-period changes in income from interest on the
Company's cash and cash equivalents, note receivable and borrowings, and
the costs associated with income tax expense, capital investments, and
stock-based compensation which are not directly attributable to the
underlying performance of the Company's business operations. Management
uses adjusted-EBITDA in evaluating the overall performance of the
Company's business operations.
Though management finds adjusted-EBITDA useful for evaluating aspects of
the Company's business, its reliance on this measure is limited because
excluded items often have a material effect on the Company's earnings
and earnings per common share calculated in accordance with GAAP.
Therefore, management uses adjusted-EBITDA in conjunction with GAAP
earnings and earnings per common share measures. The Company believes
that adjusted-EBITDA provides investors with an additional tool for
evaluating the Company's core performance, which management uses in its
own evaluation of overall performance, and a baseline for assessing the
future earnings potential of the Company. While the GAAP results are
more complete, the Company prefers to allow investors to have this
supplemental metric since, with a reconciliation to GAAP, it may provide
greater insight into the Company's financial results.
VALUECLICK, INC.
RECONCILIATION OF GAAP NET INCOME FROM CONTINUING OPERATIONS TO
NON-GAAP DILUTED NET INCOME PER COMMON SHARE (Note 1)
(In thousands)
Three-month Period
Six-month Period
Ended June 30,
Ended June 30,
2013
2012
2013
2012
(Unaudited)
(Unaudited)
Net income from continuing operations
$
9,395
$
18,701
$
35,678
$
38,899
Stock-based compensation
5,139
5,748
9,936
11,834
Amortization of acquired intangible assets included in cost of
revenue
2,491
2,492
4,985
4,985
Amortization of acquired intangible assets included in operating
expenses
3,919
6,321
7,842
12,645
Tax impact of above items
(4,606
)
(5,015
)
(9,390
)
(10,265
)
Non-GAAP net income
$
16,338
$
28,247
$
49,051
$
58,098
Non-GAAP net income per diluted common share
$
0.21
$
0.35
$
0.63
$
0.72
Weighted-average shares used to compute non-GAAP net income per
diluted common share
77,413
80,336
77,490
81,221
Note 1 - "Non-GAAP net income per diluted common share" (GAAP net income
from continuing operations per diluted common share before the impact of
stock-based compensation and amortization of intangible assets) included
in this press release is a non-GAAP financial measure.
Non-GAAP net income per diluted common share, as defined above, may not
be similar to non-GAAP net income per diluted common share measures used
by other companies and is not a measurement under GAAP. Management
believes that non-GAAP net income per diluted common share provides
useful information to investors about the Company's performance because
it eliminates the effects of items which are not directly attributable
to the underlying performance of the Company's business operations.
Management uses non-GAAP net income per diluted common share in
evaluating the overall performance of the Company's business operations.
Though management finds non-GAAP net income per diluted common share
useful for evaluating aspects of the Company's business, its reliance on
this measure is limited because excluded items often have a material
effect on the Company's earnings and earnings per common share
calculated in accordance with GAAP. Therefore, management uses non-GAAP
net income per diluted common share in conjunction with GAAP earnings
and earnings per common share measures. The Company believes that
non-GAAP net income per diluted common share provides investors with an
additional tool for evaluating the Company's core performance, which
management uses in its own evaluation of overall performance, and a
baseline for assessing the future earnings potential of the Company.
While the GAAP results are more complete, the Company prefers to allow
investors to have this supplemental metric since, with a reconciliation
to GAAP, it may provide greater insight into the Company's financial
results.
VALUECLICK, INC.
SEGMENT OPERATING RESULTS
(In thousands)
Three-month Period
Six-month Period
Ended June 30,
Ended June 30,
2013
2012
2013
2012
(Unaudited)
(Unaudited)
Affiliate Marketing:
Revenue
$
36,622
$
33,605
$
74,933
$
70,712
Cost of revenue
4,526
4,200
9,088
8,376
Gross profit
32,096
29,405
65,845
62,336
Operating expenses
9,512
9,711
20,336
19,704
Segment income from operations
$
22,584
$
19,694
$
45,509
$
42,632
Media:
Revenue
$
91,490
$
91,088
$
187,746
$
171,837
Cost of revenue
35,377
36,888
71,216
67,491
Gross profit
56,113
54,200
116,530
104,346
Operating expenses
28,141
29,079
57,235
56,821
Segment income from operations
$
27,972
$
25,121
$
59,295
$
47,525
Owned & Operated Websites:
Revenue
$
31,662
$
29,401
$
62,617
$
58,076
Cost of revenue
19,590
16,846
39,106
34,303
Gross profit
12,072
12,555
23,511
23,773
Operating expenses
6,106
5,736
11,925
11,621
Segment income from operations
$
5,966
$
6,819
$
11,586
$
12,152
Reconciliation of segment income from operations to
consolidated income from operations:
Total segment income from operations
$
56,522
$
51,634
$
116,390
$
102,309
Corporate expenses
(6,760
)
(6,841
)
(13,632
)
(13,769
)
Stock-based compensation
(5,139
)
(5,748
)
(9,936
)
(11,834
)
Amortization of acquired intangible assets included in cost of
revenue
(2,491
)
(2,492
)
(4,985
)
(4,985
)
Amortization of acquired intangible assets included in operating
expenses
(3,919
)
(6,321
)
(7,842
)
(12,645
)
Consolidated income from operations
$
38,213
$
30,232
$
79,995
$
59,076
Reconciliation of segment revenue to consolidated revenue:
Affiliate Marketing
$
36,622
$
33,605
$
74,933
$
70,712
Media
91,490
91,088
187,746
171,837
Owned & Operated Websites
31,662
29,401
62,617
58,076
Inter-segment eliminations
(18
)
(109
)
(102
)
(208
)
Consolidated revenue
$
159,756
$
153,985
$
325,194
$
300,417
ValueClick, Inc.
John Pitstick, CFO
1-818-575-4583
Source: ValueClick, Inc.
News Provided by Acquire Media
