Bankrate (RATE) Reports In-Line Q1 EPS; Announces Results of Internal Review
Bankrate (NYSE: RATE) reported Q1 EPS of $0.19, in-line with the analyst estimate of $0.19. Revenue for the quarter came in at $141.5 million versus the consensus estimate of $137.98 million.
Bankrate also announced the results of the internal review conducted by the Audit Committee of the Bankrate Board of Directors and the restatement of its financial statements for fiscal years 2011, 2012 and 2013, the fiscal quarters within those years, and the fiscal quarters ended March 31, 2014 and June 30, 2014. The restated financial statements, as well as the financial statements for the quarter ended September 30, 2014 and the fiscal year ended December 31, 2014, are included within the Bankrate Annual Report on Form 10-K for the year ended December 31, 2014, which will be filed with the Securities and Exchange Commission today.
In a separate release, Bankrate announced its results for the first quarter of 2015.
Completion of Internal Review
As previously announced, Bankrate's Audit Committee, with the assistance of independent counsel and independent forensic accountants, conducted an internal review of years 2011, 2012 and 2013. During the course of that review, Bankrate's Audit Committee concluded that the accounting for certain historical business activities had been recorded in a manner that was not consistent with generally accepted accounting principles in the United States (GAAP). The Company determined that entries related to the aforementioned business activities should be (and have been) adjusted in the applicable financial statements whether or not material, individually or in the aggregate. The Company also made certain adjustments, including certain corrections that had been previously identified but not recorded, because at the time identified they were deemed to be not material in the aggregate to the Company's consolidated financial statements. These include adjustments to purchase accounting, equity compensation expense, certain accruals and revenue recognition, as well as tax related entries. A summary of the restatement is set forth in the table below.
Effects of Restatement
The table below sets forth the effects of the restatement on our previously reported Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011, and for the year to date June 30, 2014. The Company has also classified its operations in China as discontinued operations throughout the restated periods, which is reflected in the table below. The restatement has no material effect on our cash flows or liquidity in any of the restated periods.
Year to Date | Year Ended December 31, | ||||||||||||||
(In thousands, except per share amounts) | June 30, 2014 | 2013 | 2012 | 2011 | Total | ||||||||||
Revenue (as previously reported) | $ | 267,138 | $ | 457,433 | $ | 457,164 | $ | 424,201 | $ | 1,605,936 | |||||
Adjustments | - | 200 | (944) | 460 | (284) | ||||||||||
Discontinued operations | (496) | (697) | (251) | (336) | (1,780) | ||||||||||
Revenue (as restated) | $ | 266,642 | $ | 456,936 | $ | 455,969 | $ | 424,325 | $ | 1,603,872 | |||||
Net income (loss) (as previously reported) | $ | 2,586 | $ | (10,002) | $ | 29,331 | $ | (13,422) | $ | 8,493 | |||||
Adjustments | (693) | (1,194) | (2,286) | 523 | (3,650) | ||||||||||
Discontinued operations | 812 | 1,243 | 1,101 | 1,169 | 4,325 | ||||||||||
Net income (loss) from continuing operations (as restated) | $ | 2,705 | $ | (9,953) | $ | 28,146 | $ | (11,730) | $ | 9,168 | |||||
Diluted earnings per share (as previously reported) | $ | 0.03 | $ | (0.10) | $ | 0.29 | $ | (0.14) | |||||||
Adjustments | (0.01) | (0.01) | (0.02) | - | |||||||||||
Discontinued operations | 0.01 | 0.01 | 0.01 | 0.02 | |||||||||||
Diluted earnings per share from continuing operations (as restated) | $ | 0.03 | $ | (0.10) | $ | 0.28 | $ | (0.12) | |||||||
The net impact of the correction of the misstatements and the other adjustments on our aggregate Adjusted EBITDA over the restated periods was a reduction of $5.2 million, during which periods our total Adjusted EBITDA as previously reported was $448.4 million. The impact on Adjusted EBITDA of reclassifying our operations in China as discontinued through the restated periods offset the restatement adjustments by $3.3 million. The calculation of Adjusted EBITDA, a non-GAAP measure utilized by the Company, was revised to include the add-back of costs related to the restatement, the internal review, the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) investigations and related litigation (collectively the "Restatement Costs"), which had the effect of offsetting by $3.8 million the impact of the restatement adjustments. Without the offsetting impact of reclassifying discontinued operations and the add-back of the Restatement Costs, the impact of the restatement adjustments over the Restated Periods on Adjusted EBITDA would have been $12.4 million. The following table summarizes the impact of the restatement on Adjusted EBITDA. See Item 6. Selected Financial Data of the 2014 Annual Report on Form 10-K for more detail.
Year to Date | Year Ended December 31, | ||||||||||||||
(In thousands) | June 30, 2014 | 2013 | 2012 | 2011 | Total | ||||||||||
Adjusted EBITDA as previously reported | $ | 67,919 | $ | 121,907 | $ | 123,137 | $ | 135,438 | $ | 448,401 | |||||
Adjusted EBITDA as restated | 69,245 | 122,207 | 119,141 | 132,577 | 443,170 | ||||||||||
Net change | $ | 1,326 | $ | 300 | $ | (3,996) | $ | (2,861) | $ | (5,231) | |||||
Change related to Restatement adjustments | $ | (587) | $ | (1,851) | $ | (6,098) | $ | (3,827) | $ | (12,363) | |||||
Change related to the addback of Restatement costs | 1,280 | 1,269 | 1,249 | - | 3,798 | ||||||||||
Change related to discontinued operations | 633 | 882 | 853 | 966 | 3,334 | ||||||||||
$ | 1,326 | $ | 300 | $ | (3,996) | $ | (2,861) | $ | (5,231) | ||||||
Results for Year Ended December 31, 2014
Total revenue for the twelve months ended December 31, 2014 was $544.9 million, compared to $456.9 million for the restated full year 2013.
GAAP net income was $5.2 million, or $0.05 per fully diluted share in 2014, compared to restated GAAP net loss of $11.2 million, or $0.11 per fully diluted share, in 2013.
On a non-GAAP adjusted basis, adjusted net income, as outlined in the attached reconciliation, was $69.8 million and adjusted EPS was $0.68 for the full twelve months of 2014, compared to $51.9 million and adjusted EPS of $0.52 in 2013, representing adjusted EPS growth of 31%.
Adjusted EBITDA for 2014, as outlined in the attached reconciliation, was $143.0 million, compared to $122.2 million in the restated period 2013, an increase of 17%.
Supplementary information can be found in the "FY-14 & Q1-15 Earnings Call Presentation" located in the "Investor Overview" section on http://investor.bankrate.com/.
"The Company is pleased to have concluded this thorough review of its financial statements for 2011 through 2013 and to now be able to confirm 2014's record financial and operational performance," said Kenneth S. Esterow, Bankrate's president and CEO. "With this review process concluded, Bankrate can now turn its attention more fully towards execution and long-term growth," Mr. Esterow added.
Other MattersAs previously announced, the Securities and Exchange Commission (SEC) is conducting a non-public formal investigation of Bankrate's financial reporting with the principal focus on the quarters ending March 31, 2012 and June 30, 2012. The investigation is examining whether accounting entries may have improperly impacted the Company's reported results, including relative to market expectations at such time. The Company has agreed to the terms of a potential settlement of the SEC investigation that the SEC enforcement staff has indicated it is prepared to recommend to the Commission. The proposed settlement is subject to acceptance and authorization by the Commission and would, among other things, require the Company to pay a $15.0 million penalty. As a result, the Company recorded an accrual in the amount of $15.0 million as of September 30, 2014. However, the terms of the settlement have not been approved by the Commission and therefore there can be no assurance that the Company's efforts to resolve the SEC's investigation will be successful, that the settlement amount will be as anticipated or that the reserve with respect thereto will be sufficient, and the Company cannot predict the ultimate timing or the final terms of any settlement. The previously announced investigation by the Department of Justice is ongoing.
June 17, 2015 Conference Call Interactive Dial-In and Webcast Information:To participate in the teleconference please call: (877) 809-9810, passcode 67434357. International participants should dial: (330) 330-863-3286, passcode 67434357. Please access at least 10 minutes prior to the time the conference is set to begin. A webcast of this call can be accessed at Bankrate's website: http://investor.bankrate.com/.
For earnings history and earnings-related data on Bankrate (RATE) click here.