LOS ANGELES, CA--(Marketwire - November 2, 2010) - Internet Brands, Inc. (
NASDAQ:
INET)
-- Revenues: $29.1 million in third quarter, year-over-year growth of 15%
-- Adjusted EBITDA: $12.3 million in third quarter, year-over-year growth
of 15%
-- Net Income: $3.1 million in third quarter, $0.06 per diluted common
share
-- Unique Visitor growth of 39% year-over-year
Internet Brands, Inc. (
NASDAQ:
INET) today reported financial results for
the three and nine months ended September 30, 2010.
Third Quarter Operating Results
Total revenues for the third quarter of 2010 were $29.1 million, a 15%
increase from $25.3 million in the prior year period.
Consumer Internet advertising revenues increased by $4.3 million in the
third quarter of 2010 as compared to the prior year period, driven
primarily by growth from websites in the Company's Shopping, Careers, Auto
Enthusiast, and Legal verticals. Excluding automotive e-commerce, revenues
from websites grew organically by 14% in the third quarter of 2010 as
compared to the prior year period, and 12% for websites owned more than one
year. Overall, Consumer Internet revenues were $20.5 million in the third
quarter of 2010, a 23% increase from $16.6 million in the prior year
period. Licensing revenues were $8.6 million in the third quarter of 2010
as compared to $8.7 million in the prior year period.
Net income for the third quarter of 2010 was $3.1 million, or $0.06 per
diluted common share, compared to net income of $3.3 million, or $0.07 per
diluted common share, in the prior year period. During the third quarter
of 2010, the Company incurred approximately $2.2 million of non-recurring
costs associated with the potential merger with an affiliate of Hellman &
Friedman Capital Partners VI, L.P. These costs negatively impacted net
income in the third quarter of 2010 by $0.05 per diluted common share.
For the third quarter of 2010, Adjusted EBITDA grew 15% to $12.3 million
from $10.7 million in the prior year period.
Total monthly unique visitors to the Company's network of websites grew to
a monthly average of 69 million in the third quarter of 2010, a 39%
increase from 50 million in the third quarter of 2009. In each period,
more than 98% of the traffic to the Company's websites was derived from
non-paid sources.
Nine Months Ended 2010 Operating Results
Total revenues for the nine-month period ended September 30, 2010 were
$83.5 million, a 16% increase from $72.1 million in the prior year period.
Consumer Internet advertising revenues increased by $12.0 million for the
nine-month period ended September 30, 2010 as compared to the prior year
period, driven primarily by growth from websites in the Company's Auto
Enthusiast, Home, and Careers verticals. The increase in advertising
revenues was partially offset by a $3.7 million year-over-year decrease in
automotive e-commerce revenues. Overall, Consumer Internet revenues were
$56.9 million for the nine-month period ended September 30, 2010, a 17%
increase from $48.6 million in the prior year period.
Licensing revenues were $26.6 million for the nine-month period ended
September 30, 2010, a 13% increase from $23.5 million in the prior year
period. The increase was primarily the result of new client accounts and
the sale of additional services to existing clients at the Company's
Autodata division.
Net income for the nine-month period ended September 30, 2010 was $10.7
million, or $0.22 per diluted common share, compared to net income of $8.1
million, or $0.18 per diluted common share, in the prior year period.
For the nine-month period ended September 30, 2010, Adjusted EBITDA grew
22% to $34.5 million from $28.3 million in the same period last year.
Balance Sheet and Liquidity
As of September 30, 2010, the Company had $60.2 million of cash and
investments, and no outstanding debt under its $35 million revolving line
of credit.
Net cash provided by operating activities for the nine-month period ended
September 30, 2010 was $32.8 million compared to $27.1 million in the prior
year period, representing an increase of 21%.
Acquisitions
During the third quarter of 2010, the Company acquired five websites for an
aggregate purchase price of approximately $7.0 million. The five
acquisitions include two websites in the Auto Enthusiast vertical, one
website in the Health vertical, one website in the Money, Legal and
Business vertical, and one website in the Travel and Leisure vertical.
For the nine-month period ended September 30, 2010, the Company completed
fourteen website-related acquisitions for an aggregate purchase price of
approximately $23.3 million. Total cash spend related to acquisition
purchases, earnouts and holdbacks totaled $22.3 million for the nine-month
period ended September 30, 2010.
Non-GAAP Financial Measures
This press release includes a discussion of "Adjusted EBITDA," which is a
non-GAAP financial measure. The Company defines EBITDA as net income
before (a) investment and other income (expense); (b) income tax provision
(benefit); and (c) depreciation and amortization. The Company defines
Adjusted EBITDA as a further adjustment of EBITDA to exclude share-based
compensation expense related to the Company's grant of stock options and
other equity instruments, and transaction costs related to the potential
merger with Hellman & Friedman.
The Company believes these non-GAAP financial measures provide important
supplemental information to management and investors. These non-GAAP
financial measures reflect an additional way of viewing aspects of the
Company's operations that, when viewed with the GAAP results and the
accompanying reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of factors and trends affecting the
Company's business and results of operations.
Management uses EBITDA and Adjusted EBITDA as measurements of the Company's
operating performance because they provide information related to the
Company's ability to provide cash flows for acquisitions, capital
expenditures and working capital requirements. Internally, these non-GAAP
measures are also used by management for planning purposes, including the
preparation of internal budgets; to allocate resources to enhance financial
performance; to evaluate the effectiveness of operational strategies; and
to evaluate the Company's capacity to fund capital expenditures and to
expand its business. The Company also believes that analysts and investors
use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the
overall operating performance of companies in its industry.
These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP and should not
be relied upon to the exclusion of GAAP financial measures. Management
strongly encourages investors to review the Company's consolidated
financial statements in their entirety and to not rely on any single
financial measure. Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial measures
with other companies' non-GAAP financial measures having the same or
similar names. In addition, the Company expects to continue to incur
expenses similar to the non-GAAP adjustments described above, and exclusion
of these items from the Company's non-GAAP measures should not be construed
as an inference that these costs are unusual, infrequent or non-recurring.
The table below reconciles net income and Adjusted EBITDA for the periods
presented (in thousands):
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2010 2009 2010 2009
--------- --------- --------- ---------
(unaudited)
Net income $ 3,058 $ 3,295 $ 10,699 $ 8,103
Provision for income taxes 2,455 2,323 7,681 5,669
Depreciation and amortization 4,377 4,194 13,157 12,020
Stock-based compensation 1,494 874 4,033 2,418
Investment and other income
(expense) (1,311) 8 (3,299) 85
Transaction costs 2,207 - 2,207 -
--------- --------- --------- ---------
Adjusted EBITDA $ 12,280 $ 10,694 $ 34,478 $ 28,295
========= ========= ========= =========
About Internet Brands, Inc.
Internet Brands, Inc. (
NASDAQ:
INET) is a unique and leading Internet media
company. INET owns and operates more than 100 websites that are leaders in
their vertical markets. These websites include ApartmentRatings.com,
CarsDirect.com, CruiseReviews.com, DavesGarden.com, DoItYourself.com,
FitDay.com, FlyerTalk.com, HealthNews.org, Loan.com, Wikitravel.org, and
many more. In total, these sites organically attract (without paid
marketing) approximately 69 million unique visitors per month. The vast
majority of these sites have very strong community participation.
INET is also unique in its ability to monetize Internet audiences. The
company's proprietary platform optimizes yields from its more than 40,000
direct advertisers spanning seven vertical categories. The platform is also
core to the company's acquisitions strategy, providing a cost-efficient and
scalable approach to expanding the company's online footprint.
Important Additional Information
In connection with the proposed merger with affiliates of Hellman &
Friedman Capital Partners VI, L.P., Internet Brands filed a Preliminary
Proxy Statement on Schedule 14A and a Schedule 13E-3 on September 30, 2010,
and will file a definitive proxy statement and other materials with the
Securities and Exchange Commission ("SEC") at a later date. WE URGE
INVESTORS TO READ THE PRELIMINARY PROXY STATEMENT, SCHEDULE 13E-3, AND THE
DEFINITIVE PROXY STATEMENT (WHEN IT BECOMES AVAILABLE), ALL RELATED
SUPPLEMENTS AND AMENDMENTS (IF ANY AND WHEN THEY BECOME AVAILABLE) AND ALL
OTHER RELATED MATERIALS CAREFULLY BECAUSE THEY CONTAIN AND WILL CONTAIN
IMPORTANT INFORMATION ABOUT INTERNET BRANDS AND THE PROPOSED TRANSACTION.
Investors may obtain free copies of the Preliminary Proxy Statement and the
Schedule 13E-3 (and the definitive proxy statement and other related
materials when they become available) as well as other filed documents
containing information about Internet Brands at
http://www.sec.gov, the
SEC's free internet site. Free copies of Internet Brands' SEC filings
including the Preliminary Proxy Statement and Schedule 13E-3 (and the
definitive proxy statement when available) are also available on Internet
Brands' internet site at
http://www.internetbrands.com/ under "Investors."
Internet Brands and its executive officers and directors may be deemed,
under SEC rules, to be participants in the solicitation of proxies from
Internet Brands' stockholders with respect to the proposed transaction.
Information regarding the executive officers and directors of Internet
Brands is included in the Preliminary Proxy Statement on Schedule 14A filed
with the SEC on September 30, 2010 under "Important Information Regarding
Internet Brands -- Directors and Executive Officers of Internet Brands" and
"Important Information Regarding Internet Brands -- Ownership of Common
Stock by Certain Beneficial Owners and Directors and Executive Officers."
The Preliminary Proxy Statement also contains a description of the parties
involved in the potential merger and their direct or indirect interests in
the Company under "Summary Term Sheet -- The Parties Involved in the
Merger," "The Parties to the Merger," "Important Information Regarding
Internet Brands -- Ownership of Common Stock by Certain Beneficial Owners
and Directors and Executive Officers," and "Important Information Regarding
Parent, Merger Sub and the H&F Filing Persons."
Safe Harbor Statement
Some of the statements in this press release may constitute forward-looking
information and statements. These statements are based on our management's
current expectations and beliefs, as well as a number of assumptions
concerning future events. Such forward-looking statements are subject to
known and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our management's control that could
cause actual results to differ materially from the results discussed in the
forward-looking statements. These risks, uncertainties, assumptions and
other important factors include, but are not limited to, our pursuit of an
acquisition-based growth strategy entailing significant execution,
integration and operational risks, the impact of the recent downturn in the
economy and the automotive industry in particular on our revenues from
automotive dealers and manufacturers, our ability to compete effectively
against a variety of Internet and traditional offline competitors, our
reliance on the public to continue to contribute content without
compensation to our websites that depend on such content, and risks
associated with our ability to close the previously-disclosed merger with
an affiliate of Hellman & Friedman Capital Partners VI, L.P. For more
information on factors that may affect future performance, please review
the reports filed by us with the U.S. Securities and Exchange Commission
(SEC), in particular our Annual Report on Form 10-K for the annual period
ended December 31, 2009, filed with the SEC on March 3, 2010. You should
consider these factors in evaluating forward-looking statements. For
additional information regarding the risks related to our business, see our
prospectus in the Registration Statement, and other related documents, that
we have filed with the SEC. You may get these documents for free by
visiting EDGAR on the SEC website at
http://www.sec.gov. All information
provided in this release is as of November 2, 2010 and should not be unduly
relied upon because we undertake no duty to update this information.
INTERNET BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, December 31,
2010 2009
------------- -------------
Unaudited
ASSETS
Current assets
Cash and cash equivalents $ 43,591 $ 38,408
Investments, available for sale 16,615 21,736
Accounts receivable, less allowances for
doubtful accounts of $514 and $618 at
September 30, 2010 and December 31, 2009,
respectively 15,511 15,416
Deferred income taxes 11,732 16,184
Prepaid expenses and other current assets 1,655 1,212
------------- -------------
Total current assets 89,104 92,956
Property and equipment, net 18,483 15,125
Goodwill 247,438 223,925
Intangible assets, net 16,069 20,080
Deferred income taxes 37,350 39,255
Other assets 594 602
------------- -------------
Total assets $ 409,038 $ 391,943
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 15,028 $ 13,957
Deferred revenue 5,295 6,414
------------- -------------
Total current liabilities 20,323 20,371
Other liabilities 144 258
Stockholders' equity
Common stock, Class A, $.001 par value;
125,000,000 shares authorized and
43,293,067 and 42,095,325 issued and
outstanding at September 30, 2010 and
December 31, 2009 43 42
Common stock, Class B, $.001 par value;
6,050,000 authorized and 3,025,000 shares
issued and outstanding at September 30, 2010
and December 31, 2009 3 3
Additional paid-in capital 620,848 612,528
Accumulated deficit (231,107) (241,806)
Accumulated other comprehensive (loss)
income (1,216) 547
------------- -------------
Total stockholders' equity 388,571 371,314
------------- -------------
Total liabilities and stockholders' equity $ 409,038 $ 391,943
============= =============
INTERNET BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenues
Consumer Internet $ 20,453 $ 16,648 $ 56,910 $ 48,624
Licensing 8,615 8,674 26,608 23,454
---------- ---------- ---------- ----------
Total revenues 29,068 25,322 83,518 72,078
Costs and operating
expenses
Cost of revenues 5,128 4,470 15,233 13,659
Sales and marketing 5,634 4,675 16,049 14,012
Technology 2,812 2,660 7,688 7,066
General and
administrative 4,708 3,697 14,103 11,464
Depreciation and
amortization of
intangibles 4,377 4,194 13,157 12,020
Transaction costs 2,207 - 2,207 -
---------- ---------- ---------- ----------
Total costs and operating
expenses 24,866 19,696 68,437 58,221
---------- ---------- ---------- ----------
Income from operations 4,202 5,626 15,081 13,857
Investment and other
(expense) income 1,311 (8) 3,299 (85)
---------- ---------- ---------- ----------
Income before income taxes 5,513 5,618 18,380 13,772
Provision for income taxes 2,455 2,323 7,681 5,669
---------- ---------- ---------- ----------
Net income $ 3,058 $ 3,295 $ 10,699 $ 8,103
========== ========== ========== ==========
Basic net income per share
- Class A and B $ 0.07 $ 0.08 $ 0.24 $ 0.19
Diluted net income per
share - Class A and B $ 0.06 $ 0.07 $ 0.22 $ 0.18
Class A and B weighted
average number of shares
- Basic 44,767,237 43,623,449 44,497,500 43,434,920
Class A and B weighted
average number of shares
- Diluted 48,346,678 46,498,811 47,881,373 45,846,679
Stock-based compensation
expense by function
Sales and marketing $ 210 $ 108 $ 572 $ 301
Technology 135 50 343 144
General and administrative 1,149 716 3,118 1,973