ValueClick Announces Fourth Quarter 2012 Results

  ValueClick Announces Fourth Quarter 2012 Results         Revenue Meets, Profitability Exceeds High-End of Guidance Ranges  Business Wire  WESTLAKE VILLAGE, Calif. -- February 13, 2013  ValueClick, Inc. (NASDAQ: VCLK) today reported financial results for the fourth quarter ended December 31, 2012. Revenue met the high-end of its guidance range, while Adjusted-EBITDA^1 and non-GAAP diluted net income^2 per common share exceeded the high-end of their respective guidance ranges.  "We are seeing the early results of our initiatives to elevate our conversations with advertisers to become a more strategic and persistent marketing partner, while also executing on our goals of strong organic growth and profitability," said John Giuliani, chief executive officer of ValueClick. "We expect 2013 to be a watershed year for ValueClick, and we look forward to articulating our vision and strategic initiatives in greater detail at our March 14th analyst and investor day."  Highlights from the fourth quarter of 2012 include:    *Revenue of $199.6 million, up 14 percent from the fourth quarter of 2011     (Q4 2011);   *Adjusted-EBITDA of $77.1 million, up 26 percent from Q4 2011;   *Adjusted-EBITDA margin of 38.6 percent versus 34.8 percent in Q4 2011;   *Income from operations of $63.0 million, up 43 percent from Q4 2011;   *Non-GAAP diluted net income of $0.56 per common share versus $0.46 in Q4     2011;   *GAAP net income from continuing operations of $0.47 per diluted share     versus $0.34 in Q4 2011; and   *Free cash flow (defined as cash from operations less capital expenditures)     for the twelve-month period ended December 31, 2012 of $139 million, up 34     percent from the prior year.  The consolidated balance sheet as of December 31, 2012 included approximately $136.6 million in cash and cash equivalents, and $142.5 million in total debt.  _____________________________  ^1 Adjusted-EBITDA is defined as GAAP (Generally Accepted Accounting Principles) net income from continuing operations before interest, income taxes, depreciation, amortization, stock-based compensation, and acquisition-related costs. 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 net 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 net income from continuing operations to non-GAAP diluted net income per common share.  Share Repurchase Program Update  During the quarter, the Company repurchased approximately 113,000 shares of its common stock for a total cost of $2.0 million. For the twelve-month period ended December 31, 2012, ValueClick repurchased 6.6 million shares of its common stock for a total cost of $110.8 million. As of today, ValueClick's share repurchase program authorization is $89.3 million.  Business Outlook  Today, ValueClick is announcing guidance for the first quarter of 2013:     Revenue                                                $165-$168 million       Adjusted-EBITDA                                        $53-$55 million       Non-GAAP diluted net income per common share           $0.39-$0.41       Impact of stock-based compensation and amortization of $(0.09)-$(0.10)       intangibles, net of tax       GAAP diluted net income per common share               $0.30-$0.31                                                                The consolidated revenue guidance range is based on the following segment-level assumptions for revenue growth rates, expressed as a percentage increase from first quarter 2012 reported revenue levels:      ■ Affiliate Marketing:  up mid to high single-digits         ■ Media:                 up high teens         ■ Owned & Operated:      up high single-digits                                    First quarter 2013 guidance assumes stock-based compensation of $5.0 million, amortization of intangible assets of $6.5 million (including $2.5 million recorded in Cost of revenue), net interest and other income of zero, a 40 percent effective tax rate, and 77 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 fourth quarter during a conference call and Webcast at 4:30 p.m. ET today. The live conference call can be accessed by dialing (888) 219-1420 or (913) 312-0420. Please dial in approximately ten minutes prior to the start time and provide the operator with pass code 9841608. A replay of the conference call will be available from Wednesday, February 13 at 7:30 p.m. ET through Wednesday, February 20 at 7:30 p.m. ET at (888) 203-1112 and (719) 457-0820 (pass code: 9841608). The live and archived Webcast of the conference call will be available at http://ir.valueclick.com.  Analyst and Investor Day: March 14  The Company recently announced that senior management will host an analyst and investor day on Thursday, March 14, at the Four Seasons Hotel in Westlake Village, California. The event is expected to begin at 7:30 a.m. PT and conclude at approximately 2:00 p.m. PT. Financial analysts and investors can register for this event by email at analystday@valueclick.com or by phone at (818) 575-4952. Registration is required for admittance.  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 29, 2012; 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)                                                                                                                     December 31,   December 31,                                                    2012           2011                                                    (Unaudited) ASSETS Current Assets: Cash and cash equivalents                          $  136,638     $   116,676 Accounts receivable, net                           147,487        129,076 Other current assets                               27,136        25,181 Total current assets                               311,261        270,933                                                                    Note receivable, less current portion              27,615         29,700 Property and equipment, net                        29,014         19,952 Goodwill                                           434,507        437,033 Intangible assets, net                             81,822         114,007 Other assets                                       15,477        9,086 TOTAL ASSETS                                       $  899,696    $   880,711                                                                    LIABILITIES AND STOCKHOLDERS' EQUITY Borrowings under credit facility, current          $  10,000      $   10,000 Other current liabilities                          132,401        124,046 Borrowings under credit facility, less current     132,500        157,500 portion Other non-current liabilities                      34,090        25,772 Total liabilities                                  308,991        317,318 Total stockholders' equity                         590,705       563,393 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $  899,696    $   880,711                                                                         VALUECLICK, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)                                                                                                              Three-month Period                                                        Ended December 31,                                                        2012         2011                                                        (Unaudited) Revenue                                                $ 199,577     $ 175,437 Cost of revenue (Note 1)                               71,054       69,357 Gross profit                                           128,523       106,080 Operating expenses: Sales and marketing (Note 2)                           22,806        22,002 General and administrative (Note 2)                    21,782        18,171 Technology (Note 2)                                    16,900        15,551 Amortization of intangible assets acquired in          3,993        6,327 business combinations Total operating expenses                               65,481       62,051 Income from operations                                 63,042        44,029 Interest and other (expense) income, net               (768      )   1,434 Income before income taxes                             62,274        45,463 Income tax expense                                     26,146       17,441 Net income from continuing operations                  36,128        28,022 Income from discontinued operations, net of tax        151          1,355 Net income                                             $ 36,279     $ 29,377                                                                       Basic net income from continuing operations per        $ 0.48       $ 0.34 common share Diluted net income from continuing operations per      $ 0.47       $ 0.34 common share Basic net income per common share                      $ 0.48       $ 0.36 Diluted net income per common share                    $ 0.47       $ 0.35 Weighted-average shares used to compute basic net      75,225       81,505 income per common share Weighted-average shares used to compute diluted net    76,687       82,963 income per common share                                                                                                                                             Note 1 - Includes amortization of intangible assets acquired in business combinations of $2.5 million for the three-month periods ended December 31, 2012 and 2011.                                                                       Note 2 - Includes stock-based compensation as follows:                                                        Three-month Period                                                        Ended December 31,                                                        2012          2011                                                        (Unaudited) Sales and marketing                                    $ 1,039       $ 1,675 General and administrative                             2,342         2,663 Technology                                             996          1,438 Total stock-based compensation                         $ 4,377      $ 5,776                                                                          VALUECLICK, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)                                                                                                              Year Ended December 31,                                                        2012         2011                                                        (Unaudited) Revenue                                                $ 660,878     $ 528,753 Cost of revenue (1)                                    249,259      221,403 Gross profit                                           411,619       307,350 Operating expenses: Sales and marketing (Note 2)                           85,470        64,976 General and administrative (Note 2)                    81,050        58,517 Technology (Note 2)                                    66,324        49,060 Amortization of intangible assets acquired in          22,420       16,646 business combinations Total operating expenses                               255,264      189,199 Income from operations                                 156,355       118,151 Interest and other income, net                         1,151        4,666 Income before income taxes                             157,506       122,817 Income tax expense                                     61,575       28,627 Net income from continuing operations                  95,931        94,190 Income from discontinued operations, net of tax        4,805         6,940 Gain on sale, net of tax                               980          — Net income                                             $ 101,716    $ 101,130                                                                       Basic net income from continuing operations per        $ 1.24       $ 1.17 common share Diluted net income from continuing operations per      $ 1.22       $ 1.16 common share Basic net income per common share                      $ 1.32       $ 1.26 Diluted net income per common share                    $ 1.29       $ 1.24 Weighted-average shares used to compute basic net      77,342       80,323 income per common share Weighted-average shares used to compute diluted net    78,898       81,489 income per common share                                                                                                                                             Note 1 - Includes amortization of intangible assets acquired in business combinations of $10.0 million and $9.6 million for the years ended December 31, 2012 and 2011, respectively.                                                                       Note 2 - Includes stock-based compensation as follows:                                                        Year Ended December 31,                                                        2012          2011                                                        (Unaudited) Sales and marketing                                    $ 4,918       $ 3,320 General and administrative                             11,492        7,829 Technology                                             5,357        2,873 Total stock-based compensation                         $ 21,767     $ 14,022                                                                          VALUECLICK, INC.  RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS  TO ADJUSTED-EBITDA (Note 1)  (In thousands)                                                                                                            Three-month Period                                                      Ended December 31,                                                      2012         2011                                                      (Unaudited) Net income from continuing operations                $ 36,128      $ 28,022 Interest and other expense (income), net             768           (1,434    ) Provision for income tax                             26,146        17,441 Amortization of acquired intangible assets included  2,491         2,498 in cost of revenue Amortization of acquired intangible assets included  3,993         6,327 in operating expenses Depreciation and leasehold amortization              3,232         2,455 Stock-based compensation                             4,377        5,776      Adjusted-EBITDA                                      $ 77,135     $ 61,085                                                                                                                                                                                                Year Ended December 31,                                                      2012          2011                                                      (Unaudited) Net income from continuing operations                $ 95,931      $ 94,190 Interest and other income, net                       (1,151    )   (4,666    ) Provision for income tax                             61,575        28,627 Amortization of acquired intangible assets included  9,995         9,633 in cost of revenue Amortization of acquired intangible assets included  22,420        16,646 in operating expenses Depreciation and leasehold amortization              11,723        7,914 Stock-based compensation                             21,767        14,022 Acquisition-related costs                            —            412        Adjusted-EBITDA                                      $ 222,260    $ 166,778                                                                                 Note 1 - “Adjusted-EBITDA” (GAAP net income from continuing operations before interest, income taxes, depreciation, amortization, stock-based compensation, and acquisition-related costs) 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                                                      Ended December 31,                                                      2012         2011                                                      (Unaudited) Net income from continuing operations                $ 36,128      $ 28,022 Stock-based compensation                             4,377         5,776 Amortization of acquired intangible assets           2,491         2,498 included in cost of revenue Amortization of acquired intangible assets           3,993         6,327 included in operating expenses Tax impact of above items                            (4,175    )   (4,693    ) Non-GAAP net income                                  $ 42,814     $ 37,930   Non-GAAP diluted net income per common share         $ 0.56       $ 0.46     Weighted-average shares used to compute non-GAAP     76,687       82,963     diluted net income per common share                                                                                                                          Year Ended December 31,                                                      2012          2011                                                      (Unaudited) Net income from continuing operations                $ 95,931      $ 94,190 Stock-based compensation                             21,767        14,022 Amortization of acquired intangible assets           9,995         9,633 included in cost of revenue Amortization of acquired intangible assets           22,420        16,646 included in operating expenses Tax impact of above items                            (19,636   )   (14,377   ) Non-GAAP net income                                  $ 130,477    $ 120,114  Non-GAAP diluted net income per common share         $ 1.65       $ 1.47     Weighted-average shares used to compute non-GAAP     78,898       81,489     diluted net income per common share                                                                                Note 1 - “Non-GAAP diluted net income per common share” (GAAP diluted net income from continuing operations per common share before the impact of stock-based compensation and amortization of intangibles) included in this press release is a non-GAAP financial measure.  Non-GAAP diluted net income per common share, as defined above, may not be similar to non-GAAP diluted net income per common share measures used by other companies and is not a measurement under GAAP. Management believes that non-GAAP diluted net income per 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 diluted net income per common share in evaluating the overall performance of the Company's business operations.  Though management finds non-GAAP diluted net income per 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 diluted net income per common share in conjunction with GAAP earnings and earnings per common share measures. The Company believes that non-GAAP diluted net income per 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          Year Ended                          Ended December 31,          December 31,                          2012         2011          2012         2011                          (Unaudited)                 (Unaudited) Affiliate Marketing: Revenue                  $ 43,944      $ 39,794      $ 149,527     $ 139,409 Cost of revenue          4,656        4,227        17,546       17,125     Gross profit             39,288        35,567        131,981       122,284 Operating expenses       10,913       9,407        40,631       37,711     Segment income from      $ 28,375     $ 26,160     $ 91,350     $ 84,573   operations Media: Revenue                  $ 122,694     $ 102,029     $ 390,635     $ 261,324 Cost of revenue          45,971       42,229       152,197      113,763    Gross profit             76,723        59,800        238,438       147,561 Operating expenses       31,690       27,839       118,233      72,984     Segment income from      $ 45,033     $ 31,961     $ 120,205    $ 74,577   operations Owned & Operated Websites: Revenue                  $ 33,009      $ 33,703      $ 121,058     $ 128,419 Cost of revenue          17,967       20,438       69,678       81,118     Gross profit             15,042        13,265        51,380        47,301 Operating expenses       6,265        5,170        23,337       21,468     Segment income from      $ 8,777      $ 8,095      $ 28,043     $ 25,833   operations Reconciliation of segment income from operations to consolidated income from operations: Total segment income     $ 82,185      $ 66,216      $ 239,598     $ 184,983 from operations Corporate expenses       (8,282    )   (7,586    )   (29,061   )   (26,531   ) Stock-based              (4,377    )   (5,776    )   (21,767   )   (14,022   ) compensation Amortization of acquired intangible assets included          (2,491    )   (2,498    )   (9,995    )   (9,633    )  in consolidated cost of revenue Amortization of acquired intangible assets included          (3,993    )   (6,327    )   (22,420   )   (16,646   )  in consolidated operating expense Consolidated income      $ 63,042     $ 44,029     $ 156,355    $ 118,151  from operations Reconciliation of segment revenue to consolidated revenue: Affiliate Marketing      $ 43,944      $ 39,794      $ 149,527     $ 139,409 Media                    122,694       102,029       390,635       261,324 Owned & Operated         33,009        33,703        121,058       128,419 Websites Inter-segment            (70       )   (89       )   (342      )   (399      ) eliminations Consolidated revenue     $ 199,577    $ 175,437    $ 660,878    $ 528,753                                                                                 Contact:  ValueClick, Inc. Gary J. Fuges, CFA 1.818.575.4677