Press Releases

August 1, 2013 |  Westlake Village, CA

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.

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