Vertro, Inc. Announces Third Quarter 2009 Results
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Revenue from Continued Operations up 23% Quarter over Quarter; EBITDA Loss from Continued Operations Halved
NEW YORK--(BUSINESS WIRE)-- Vertro, Inc. (NASDAQ: VTRO), today reported financial results for the third quarter ended September 30, 2009.
Summary of Third Quarter 2009 Results from Continuing Operations:
-- Revenue of $7.4 million in Q3 2009, compared to revenue of $6.0 million
in Q2 2009;
-- Gross margins of 94% in Q3 2009, comparable to the 93% gross margins in
Q2 2009;
-- EBITDA loss of $1.6 million in Q3 2009, compared to an EBITDA loss of
$3.4 million in Q2 2009. Both Q2 and Q3 2009 EBITDA included $0.2
million non-cash compensation expense;
-- Adjusted EBITDA loss of $1.4 million in Q3 2009, compared to Adjusted
EBITDA loss of $3.2 million in Q2 2009; and
-- GAAP net loss from continuing operations of $1.8 million or $(0.05) per
basic share in Q3 2009, compared to GAAP net loss from continuing
operations of $3.9 million or $(0.11) per basic share in Q2 2009.
"Vertro delivered strong quarter over quarter results, with revenue from continuing operations up 23% and our EBITDA loss from continuing operations more than halved. We executed on our strategy of sustained and focused advertising spend and this enabled us to grow our user base and increase the number of revenue generating events being conducted across our product portfolio. We believe that our improved third quarter performance has laid the foundations required for us to achieve EBITDA profitability from continuing operations in the fourth quarter," commented Peter Corrao, Vertro's President and Chief Executive Officer.
Third Quarter Results from Continuing Operations
Revenue was $7.4 million in Q3 2009, compared to Q2 2009 revenue from continuing operations of $6.0 million.
Gross margins were 94% in Q3 2009, compared to 93% in Q2 2009. Gross margin excludes advertising spend of $6.0 million in Q3 2009 and $5.8 million in Q2 2009, which is included in consolidated operating expenses within the marketing, sales and service category.
Operating expenses were $8.6 million in Q3 2009, compared to $9.0 million in Q2 2009. The operating expenses in Q3 2009 included $0.2 million of non-cash compensation expense; Q2 2009 operating expenses included $0.2 million of non-cash compensation expense and accelerated recognition of $0.6 million of unamortized loan expense relating to our line of credit with Bridge Bank, N.A.
EBITDA was a loss of $1.6 million in Q3 2009, compared to an EBITDA loss of $3.4 million in Q2 2009. Both Q2 and Q3 2009 EBITDA included $0.2 million non-cash compensation expense.
Adjusted EBITDA was a loss of $1.4 million in Q3 2009, compared to Adjusted EBITDA loss of $3.2 million in Q2 2009. Both Q2 and Q3 2009 Adjusted EBITDA excluded $0.2 million non-cash compensation expense.
GAAP net loss from continuing operations of $1.8 million or $(0.05) per basic share in Q3 2009, compared to GAAP net loss from continuing operations of $3.9 million or $(0.11) per basic share in Q2 2009. The $1.8 million GAAP net loss from continuing operations in Q3 2009 was approximately $0.5 million less than the estimated $2.3 million GAAP net loss reported in a press release issued on November 3, 2009. This reduction resulted from a final adjustment to our exchange rate loss during the quarter close.
Adjusted net loss from continuing operations was $1.5 million or $(0.04) per diluted share in Q3 2009, compared to Adjusted net loss from continuing operations of $3.6 million or $(0.11) per diluted share in Q2 2009. Both Q2 and Q3 2009 Adjusted net loss excluded $0.2 million in non-cash compensation expense.
Cash and cash equivalents were $6.3 million at September 30, 2009, a decrease of $2.0 million from June 30, 2009 cash of $8.3 million. The decrease was primarily a result of the net loss in the quarter as well as certain anticipated one-time expenses.
As of September 30, 2009, the Company had an active base of approximately 50 full time employees, which was unchanged from the number reported on June 30, 2009.
Selected quarterly metrics from continuing operations are available on Vertro's investor relations website at: http://ir.vertro.com/results.cfm
Management Conference Call
Management will participate in a conference call to discuss the full results for the Company on November 11, 2009, at approximately 5:00 p.m. ET. Details of the call for interested parties are as follows:
Date: Wednesday, November 11, 2009 Time: 5:00 p.m. ET Dial-in number: 888-364-3111 / 719-325-2455 (Intl.) Live webcast: http://ir.vertro.com/events.cfm Conference call replay: http://ir.vertro.com/events.cfm
Vertro believes that "EBITDA", "Adjusted EBITDA", "Adjusted net income/loss" and "Adjusted net income/loss per share" provide meaningful measures for comparison of the Company's current and projected operating performance with its historical results due to the significant changes in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off. Vertro defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. Vertro uses EBITDA and Adjusted EBITDA as internal measures of its business and believes they are utilized as important measures of performance by the investment community. Vertro sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. Vertro defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. Vertro believes the use of these measures does not lessen the importance of GAAP measures.
About Vertro, Inc.
Vertro, Inc. (NASDAQ: VTRO) is a software and technology company that owns and operates the ALOT product portfolio. ALOT's products are designed to 'Make the Internet Easy' by enhancing the way consumers engage with content online. Through ALOT, Internet users can discover best-of-the-web content and display that content through customizable toolbar, homepage and desktop products. ALOT has millions of live users across its product portfolio. Together these users conduct high-volumes of type-in search queries, which are monetized through third-party search and content agreements.
VTRO-E
Forward-looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate", "plan," "will," "intend," "believe" or "expect'" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including (1) our ability to successfully execute upon our corporate strategies, (2) our ability to distribute and monetize our international products at rates sufficient to meet our expectations, (3) our ability to develop and successfully market new products and services, and (4) the potential acceptance of new products in the market. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-Q for Q3 2009.
Non-GAAP Financial Measures
This press release includes discussion of additional financial measures "EBITDA", "Adjusted EBITDA," "Adjusted Net Loss," "Adjusted Net Income," "Adjusted Net Loss Per Share" and "Adjusted Net Income Per Share," which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Vertro provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. Reconciliations of net income/loss from continuing operations and net income/loss per share to these financial measures for the three month periods ended September 30, 2009 and 2008, and June 30, 2009, and for the nine month periods ended September 30, 2009 and 2008 are included in this press release as set forth below.
Vertro, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $ 7,389 $ 10,367 $ 19,625 $ 32,741
Cost of services 479 660 1,380 1,926
Gross profit 6,910 9,707 18,245 30,815
Operating
expenses
Marketing,
sales, and 6,350 6,882 17,246 22,653
service
General and 1,595 3,420 6,880 11,725
administrative
Product 596 861 1,927 2,703
development
Amortization 106 411 146 1,364
Restructuring - 110 (15 ) 661
Charges
Total operating 8,647 11,684 26,184 39,106
expenses
Loss from (1,737 ) (1,977 ) (7,939 ) (8,291 )
operations
Interest (2 ) 29 (75 ) 182
(expense), net
Exchange rate (89 ) - (487 ) -
gain (loss)
Loss before
provision for (1,828 ) (1,948 ) (8,501 ) (8,109 )
income taxes
Income tax
expense - (18 ) 27 67
(benefit)
Loss from
continuing $ (1,828 ) $ (1,930 ) $ (8,528 ) $ (8,176 )
operations
Income/(loss)
from $ 1,184 $ (8,596 ) $ (3,483 ) $ (13,942 )
discontinued
operations
Gain on sale of
discontinued 0 - 7,139 -
operations
Net loss $ (644 ) $ (10,526 ) $ (4,872 ) $ (22,118 )
Basic earnings
(loss) per share
Continuing $ (0.05 ) $ (0.06 ) $ (0.25 ) $ (0.25 )
operations
Discontinued $ 0.04 $ (0.26 ) $ 0.11 $ (0.43 )
operations
Diluted earnings
(loss) per share
Continuing $ (0.05 ) $ (0.06 ) $ (0.25 ) $ (0.25 )
operations
Discontinued $ 0.04 $ (0.26 ) $ 0.11 $ (0.43 )
operations
Weighted-average
number of common
shares
outstanding
Basic 33,784 32,641 33,564 32,596
Diluted 33,784 32,641 33,564 32,596
Vertro, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Three Months
Ended Ended
September 30, 2009 June 30, 2009
(unaudited) (unaudited)
Revenues $ 7,389 $ 6,002
Cost of services 479 445
Gross profit 6,910 5,557
Operating expenses
Marketing, sales, and service 6,350 6,143
General and administrative 1,595 2,193
Product development 596 633
Amortization 106 40
Restructuring Charges - -
Total operating expenses 8,647 9,009
Loss from operations (1,737 ) (3,452 )
Interest income, net (2 ) 9
Exchange rate gain (loss) (89 ) (398 )
Loss before provision for income taxes (1,828 ) (3,841 )
Income tax expense - 14
Loss from continuing operations $ (1,828 ) $ (3,855 )
Income/(loss) from discontinued operations $ 1,184 491
Gain on sale of discontinued operations 0 213
Net loss $ (644 ) $ (3,151 )
Basic earnings (loss) per share
Continuing operations $ (0.05 ) $ (0.11 )
Discontinued operations $ 0.04 $ 0.02
Diluted earnings (loss) per share
Continuing operations $ (0.05 ) $ (0.11 )
Discontinued operations $ 0.04 $ 0.02
Weighted-average number of common
shares outstanding
Basic 33,784 33,707
Diluted 33,784 33,707
Vertro, Inc.
Reconciliations to Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Three Months Nine Months Nine Months
Additional Ended Ended Ended Ended
information:
September 30, September 30, September 30, September 30, 2008
2009 2008 2009
Adjusted $ (1,365 ) $ (304 ) $ (6,811 ) $ (3,716 )
EBITDA
Adjusted net $ (1,486 ) $ (394 ) $ (7,480 ) $ (4,052 )
loss
Adjusted net $ (0.04 ) $ (0.01 ) $ (0.22 ) $ (0.12 )
loss per share
Three Months Three Months
Additional Ended Ended
information:
September 30, June 30, 2009
2009
Adjusted $ (1,365 ) $ (3,166 )
EBITDA
Adjusted net $ (1,486 ) $ (3,593 )
loss
Adjusted net $ (0.04 ) $ (0.11 )
loss per share
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Reconciliation
of Net Loss to September 30, September 30, September 30, September 30, 2008
Adjusted 2009 2008 2009
EBITDA
Loss from
continuing $ (1,828 ) $ (1,930 ) $ (8,528 ) $ (8,176 )
operations
Interest
income
(expense), net 91 (29 ) 562 (182 )
and exchange
rate loss
Income tax
expense - (18 ) 27 67
(benefit)
Depreciation 30 137 80 451
Amortization 106 411 146 1,364
EBITDA (1,601 ) (1,429 ) (7,713 ) (6,476 )
Restructuring - 110 (15 ) 661
Charges
Non cash
compensation 236 1,015 917 2,099
charge
Adjusted $ (1,365 ) $ (304 ) $ (6,811 ) $ (3,716 )
EBITDA
Three Months Three Months
Ended Ended
Reconciliation
of Net Loss to September 30, June 30, 2009
Adjusted 2009
EBITDA
Loss from
continuing $ (1,828 ) $ (3,855 )
operations
Interest
income
(expense), net 91 389
and exchange
rate loss
Income tax - 14
expense
Depreciation 30 24
Amortization 106 40
EBITDA (1,601 ) (3,388 )
Non cash
compensation 236 222
charge
Restructuring - -
charges
Adjusted $ (1,365 ) $ (3,166 )
EBITDA
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Reconciliation
of Net Loss to September 30, September 30, September 30, September 30, 2008
Adjusted Net 2009 2008 2009
Loss
Loss from
continuing $ (1,828 ) $ (1,930 ) $ (8,528 ) $ (8,176 )
operations
Amortization 106 411 146 1,364
Restructuring - 110 (15 ) 661
Charges
Non cash
compensation 236 1,015 917 2,099
charges
Adjusted net $ (1,486 ) $ (394 ) $ (7,480 ) $ (4,052 )
loss
Adjusted net (0.04 ) (0.01 ) (0.22 ) (0.12 )
loss per share
Shares used in
per share
calculation - 33,784 32,641 33,564 32,596
basic /
diluted
Three Months Three Months
Ended Ended
September 30, June 30, 2009
2009
Reconciliation
of Net Loss to
Adjusted Net
Loss
Loss from
continuing $ (1,828 ) $ (3,855 )
operations
Amortization 106 40
Non cash
compensation 236 222
charges
Adjusted net $ (1,486 ) $ (3,593 )
loss
Adjusted net $ (0.04 ) $ (0.11 )
loss per share
Shares used in
per share 33,784 33,707
calculation -
basic
Vertro, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
September 30, December 31,
ASSETS 2009 2008
(Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents $ 6,330 $ 6,699
Accounts receivable, less allowances of $891 and
$1,242
at September 30, 2009 and December 31, 2008. 2,741 11,204
Deferred tax assets 167 167
Income tax receivable 114 247
Prepaid expenses and other current assets 265 1,584
TOTAL CURRENT ASSETS 9,617 19,901
Property and equipment, net 53 4,975
Restricted cash 550 2,000
Other assets 500 703
TOTAL ASSETS $ 10,720 $ 27,579
LIABILITIES AND (CAPITAL DEFICIT) STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,152 $ 6,609
Accrued expenses 4,129 11,534
Other Current Liabilities 41 783
TOTAL CURRENT LIABILITIES 9,322 18,926
Deferred tax liabilities long-term 167 167
Long-term debt - 4,595
Other long-term liabilities 1,382 1,305
TOTAL LIABILITIES 10,871 24,993
(CAPITAL DEFICIT) STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized,
500 shares; none issued and outstanding - -
Common stock, $.001 par value; authorized, 200,000
shares; issued 35,552 and 34,480, respectively;
outstanding 33,786 and 32,731, respectively 35 34
Additional paid-in capital 270,457 268,841
Treasury stock; 1,766 and 1,749 shares at cost, (6,722 ) (6,719 )
respectively
Accumulated other comprehensive income 12,914 12,393
Accumulated Deficit (276,835 ) (271,963 )
TOTAL (CAPITAL DEFICIT) STOCKHOLDERS' EQUITY (151 ) 2,586
TOTAL LIABILITIES AND (CAPITAL DEFICIT) $ 10,720 $ 27,579
STOCKHOLDERS' EQUITY
Source: Vertro, Inc.
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