Monster Worldwide Reports Second Quarter 2016 Financial Results

MONSTER WORLDWIDE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Revenue

$          150,912

$          167,730

$          308,699

$          340,612

Salaries and related

78,317

85,363

156,466

174,713

Office and general

44,387

42,998

86,168

87,792

Marketing and promotion

33,426

30,416

62,908

61,047

Restructuring and other special charges

-

5,915

-

26,007

Goodwill impairment

142,002

-

142,002

-

Impairment of indefinite lived intangible assets

3,400

-

3,400

-

301,532

164,692

450,944

349,559

Operating (loss) income

(150,620)

3,038

(142,245)

(8,947)

Gain on partial sale of equity method investment

-

-

-

8,849

Interest and other, net

(2,929)

(3,409)

(6,406)

(6,615)

Loss before income taxes and (loss) income in equity interests

(153,549)

(371)

(148,651)

(6,713)

(Benefit from) provision for income taxes

(29,435)

1,819

(26,128)

(12,126)

(Loss) income in equity interests, net

(41)

292

209

72

(Loss) income from continuing operations

(124,155)

(1,898)

(122,314)

5,485

Income from discontinued operations, net of tax

-

2,036

-

3,842

Net (loss) income 

(124,155)

138

(122,314)

9,327

Net income attributable to noncontrolling interest

-

(1,181)

-

(2,200)

Net (loss) income attributable to Monster Worldwide, Inc.

$         (124,155)

$             (1,043)

$         (122,314)

$              7,127

Basic (loss) earnings per share attributable to Monster Worldwide, Inc.:

(Loss) income from continuing operations

$               (1.40)

$               (0.02)

$               (1.38)

$                0.06

Income from discontinued operations, net of tax 

-

0.01

-

0.02

Basic (loss) earnings per share attributable to Monster Worldwide, Inc.

$               (1.40)

$               (0.01)

$               (1.38)

$                0.08

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:

(Loss) income from continuing operations

$               (1.40)

$               (0.02)

$               (1.38)

$                0.06

Income from discontinued operations, net of tax 

-

0.01

-

0.02

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.

$               (1.40)

$               (0.01)

$               (1.38)

$                0.08

Weighted average shares outstanding:

Basic

88,683

90,067

88,802

89,605

Diluted 

88,683

90,067

88,802

93,218

Reconciliation of (loss) income from continuing operations to Cash EBITDA and Adjusted EBITDA

(Loss) income from continuing operations

$         (124,155)

$             (1,898)

$         (122,314)

$              5,485

Loss (income) in equity interests, net

41

(292)

(209)

(72)

(Benefit from) provision for income taxes

(29,435)

1,819

(26,128)

(12,126)

Interest and other, net

2,929

3,409

6,406

6,615

Impairment of indefinite lived intangible assets

3,400

-

3,400

-

Goodwill impairment

142,002

-

142,002

-

Gain on partial sale of equity method investment

-

-

-

(8,849)

Depreciation and amortization of intangibles

10,230

11,109

20,255

22,599

Stock-based compensation

1,972

3,613

3,051

8,018

Restructuring non-cash charges

-

-

-

4,226

$              6,984

$            17,760

$            26,463

$            25,896

Management advisory fees

2,194

-

3,752

-

Separation charges

-

2,000

417

2,000

Restructuring and other special charges, less non-cash items

-

5,915

-

21,781

Adjusted EBITDA

$              9,178

$            25,675

$            30,632

$            49,677

MONSTER WORLDWIDE, INC.

UNAUDITED STATEMENTS OF OPERATIONS AND NON-GAAP RECONCILIATIONS

(in thousands, except per share amounts)

Three Months Ended June 30, 2016

Three Months Ended June 30, 2015

As Reported

Non GAAPAdjustments

ConsolidatedNon GAAP

As Reported

Non GAAPAdjustments

ConsolidatedNon GAAP

Revenue

$     150,912

$                -

$     150,912

$     167,730

$                -

$     167,730

      Salaries and related

78,317

(1,972)

 a 

76,345

85,363

(5,612)

 a 

79,751

      Office and general

44,387

(2,194)

 c 

42,193

42,998

-

42,998

      Marketing and promotion

33,426

-

33,426

30,416

-

30,416

      Restructuring and other special charges

-

-

-

5,915

(5,915)

 b 

-

      Goodwill impairment

142,002

(142,002)

 e 

-

-

-

-

      Impairment of indefinite lived intangible assets

3,400

(3,400)

 d 

-

-

-

-

            Total operating expenses

301,532

(149,568)

151,964

164,692

(11,527)

153,165

Operating (loss) income 

(150,620)

149,568

(1,052)

3,038

11,527

14,565

      Operating margin

(99.8%)

(0.7%)

1.8%

8.7%

      Interest and other, net

(2,929)

887

 f 

(2,042)

(3,409)

1,253

 f 

(2,156)

(Loss) income before income taxes and (loss) income in equity interests

(153,549)

150,455

(3,094)

(371)

12,780

12,409

      (Benefit from) provision for income taxes

(29,435)

28,352

 h 

(1,083)

1,819

2,525

 h 

4,344

      (Loss) income in equity interests, net

(41)

-

(41)

292

-

292

(Loss) income from continuing operations

(124,155)

122,103

(2,052)

(1,898)

10,255

8,357

Income from discontinued operations, net of tax

-

-

-

2,036

(2,036)

 i 

-

Net (loss) income 

(124,155)

122,103

(2,052)

138

8,219

8,357

Net income attributable to noncontrolling interest

-

-

-

(1,181)

1,181

-

Net (loss) income attributable to Monster Worldwide, Inc.

$    (124,155)

$     122,103

$        (2,052)

$        (1,043)

$         9,400

$         8,357

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:

(Loss) income from continuing operations

$          (1.40)

$           1.38

$          (0.02)

$          (0.02)

$           0.11

$           0.09

Income from discontinued operations, net of tax

-

-

-

0.01

(0.01)

-

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:

$          (1.40)

$           1.38

$          (0.02)

$          (0.01)

$           0.10

$           0.09

Weighted average shares outstanding:

       Diluted 

88,683

-

88,683

90,067

807

 j,k 

90,874

Six Months Ended June 30, 2016

Six Months Ended June 30, 2015

As Reported

Non GAAPAdjustments

ConsolidatedNon GAAP

As Reported

Non GAAPAdjustments

ConsolidatedNon GAAP

Revenue

$     308,699

$                -

$     308,699

$     340,612

$                -

$     340,612

      Salaries and related

156,466

(3,468)

 a 

152,998

174,713

(10,017)

 a 

164,696

      Office and general

86,168

(3,752)

 c 

82,416

87,792

-

87,792

      Marketing and promotion

62,908

-

62,908

61,047

-

61,047

      Restructuring and other special charges

-

-

-

26,007

(26,007)

 b 

-

      Goodwill impairment

142,002

(142,002)

 e 

-

-

-

-

      Impairment of indefinite lived intangible assets

3,400

(3,400)

 d 

-

-

-

-

            Total operating expenses

450,944

(152,622)

298,322

349,559

(36,024)

313,535

Operating income (loss) 

(142,245)

152,622

10,377

(8,947)

36,024

27,077

      Operating margin

(46.1%)

3.4%

(2.6%)

7.9%

      Gain on partial sale of equity method investment

-

-

-

8,849

(8,849)

 g 

-

      Interest and other, net

(6,406)

2,132

 f 

(4,274)

(6,615)

2,537

 f 

(4,078)

(Loss) income before income taxes and income (loss) in equity interests

(148,651)

154,754

6,103

(6,713)

29,712

22,999

      (Benefit from) provision for income taxes

(26,128)

28,264

 h 

2,136

(12,126)

20,177

 h 

8,051

      Income in equity interests, net

209

-

209

72

-

72

(Loss) income from continuing operations

(122,314)

126,490

4,176

5,485

9,535

15,020

Income from discontinued operations, net of tax

-

-

-

3,842

(3,842)

 i 

-

Net (loss) income 

(122,314)

126,490

4,176

9,327

5,693

15,020

Net income attributable to noncontrolling interest

-

-

-

(2,200)

2,200

-

Net (loss) income attributable to Monster Worldwide, Inc.

$    (122,314)

$     126,490

$         4,176

$         7,127

$         7,893

$       15,020

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:

(Loss) income from continuing operations 

$          (1.38)

$           1.43

$           0.05

$           0.06

$           0.11

$           0.17

Income from discontinued operations, net of tax

-

-

-

0.02

(0.02)

-

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:

(1.38)

$           1.43

0.05

0.08

$           0.09

0.17

Weighted average shares outstanding:

       Diluted 

88,802

733

 k 

89,535

93,218

(2,417)

 j 

90,801

Note Regarding Non GAAP Adjustments:

The financial information included herein contains certain Non-GAAP financial measures.  This information is not intended to be used in place of the financial information prepared and presented in accordance with GAAP, nor is it intended to be considered in isolation. We believe that the above presentation of Non-GAAP measures provide useful information to management and investors regarding certain core operating and business trends relating to our results of operations, exclusive of certain restructuring related and other special charges. 

Non GAAP adjustments consist of the following:

a

Costs related to stock based compensation. Additionally, the Company incurred $0.4 million of separation charges in Q1 2016 primarily relating to the reorganization of the sales force in North America. 

b

Restructuring related charges pertaining to the "Reallocate to Accelerate" program announced in February 2015.

c

Charges incurred primarily related to management advisory fees. This engagement ended during Q2 2016 and no additional fees are expected in future periods.

d

Impairment of indefinite lived intangible assets recognized in Q2 2016.

e

The Company recognized an estimated pre-tax goodwill impairment charge of $142.0 million, or $114.9 million on a net of tax basis, to the Careers-North America reporting unit during Q2 2016.  Due to the complexities involved in estimating the fair value of certain assets and liabilities, the Company has not finalized its impairment analysis as of August 9, 2016.  The Company will complete a formal impairment analysis during Q3 2016 and recognize any adjustments to the estimated impairment charge at that time.  We believe that our preliminary estimate is reasonable and represents the Company's best estimate of the goodwill impairment loss to be incurred, however, it is possible that the completion of the formal analysis may result in a material adjustment to this preliminary estimate in Q3 2016.  This charge does not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.

f

Non-GAAP interest expense related to the debt discount and amortization of the deferred financing costs related to the Company's convertible notes due 2019. The charges in Q2 2016 were slightly offset by a $0.3 million gain recognized on the sale of domains during the quarter.

g

Gain on partial sale of equity method investment during Q2 2016.

h

Beginning in Q1 2015, the Non-GAAP income tax provision is calculated using a fixed long-term projected Non-GAAP tax rate of 35% as applied to Non-GAAP pre-tax income. Prior to Q1 2015, the Non-GAAP income tax adjustment was calculated using the effective rate of the reporting period, as adjusted for the effects of certain non-deductible stock based compensation and provisions for tax valuation allowances. 

i

Non-GAAP adjustment relates to the sale of our former subsidiary in South Korea in October 2015, and primarily includes the operations of our former subsidiary.

j

Non-GAAP adjustment includes the impact, based on the average share price for the period, of the Company's outstanding capped call transactions, which are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of the Company's convertible notes due 2019.

k

Non-GAAP adjustment includes the dilutive impact of the Company's non-vested stock under employee compensation plans as anitidilutive on a GAAP basis.