ValueClick Announces First Quarter 2013 Results

  ValueClick Announces First Quarter 2013 Results  Business Wire  WESTLAKE VILLAGE, Calif. -- May 07, 2013  ValueClick, Inc. (NASDAQ: VCLK) today reported financial results for the first quarter ended March 31, 2013. Revenue was within its guidance range, while adjusted-EBITDA^1, GAAP net income from continuing operations per diluted share, and non-GAAP net income^2 per diluted share exceeded the high-end of their respective guidance ranges.  “2013 is a transformational year for ValueClick, as we raise our long-term growth potential by integrating our multiple offerings and leveraging our core strengths in data, personalization and cross-device targeting,” said John Giuliani, president and chief executive officer of ValueClick. “As we mentioned during our recent analyst day, short-term disruptions will occur as we integrate multiple offerings and geographies. We are confident that our strategic initiatives will best serve the long-term interests of our advertisers and shareholders.”  Mr. Giuliani continued, “In addition to integration initiatives, we are focused today on capitalizing on the unprecedented short-term opportunity in affiliate marketing. Google's recent decision to exit this market is a seismic shift in the competitive landscape, and we are prioritizing resources to take full advantage. The affiliate marketing industry and its customers are at an inflection point, and ValueClick stands alone as the company with affiliate marketing at its core.”  Highlights from the first quarter of 2013 include:    *Revenue increased 13 percent from the first quarter of 2012 (Q1 2012) to     $165.4 million;   *Adjusted-EBITDA increased 21 percent from Q1 2012 to $56.3 million;   *Adjusted-EBITDA margin increased to 34.0 percent from 31.7 percent in Q1     2012;   *Income from operations increased 45 percent from Q1 2012 to $41.8 million;   *Non-GAAP diluted net income of $0.42 per common share versus $0.36 in Q1     2012;   *GAAP diluted income from continuing operations of $0.34 per common share     versus $0.25 in Q1 2012; and   *Free cash flow (defined as cash from operations less capital expenditures)     for the three-month period ended March 31, 2013, of $48.1 million.  The consolidated balance sheet as of March 31, 2013 included approximately $129.1 million in cash and cash equivalents, and $80.0 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, and stock-based compensation. 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 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 income from continuing operations to non-GAAP diluted net income per common share.  Share Repurchase Program Authorization Increased to $150 Million  Today, ValueClick also announced that its board of directors has authorized an increase to the Company's share repurchase program of approximately $61 million, raising the Company's total authorization to $150 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. No shares were repurchased in the three-month period ended March 31, 2013.  Business Outlook  Today, ValueClick is providing guidance for the second quarter of 2013:                                                    Q2 Guidance           Revenue                                       $164-$168 million           Adjusted-EBITDA                               $52-$54 million           Mid-Point Adjusted-EBITDA Margin              31.9%           Non-GAAP diluted net income per common        $0.38-0.40           share           Impact of stock-based compensation and        $(0.09) - $(0.10)           amortization of intangibles, net of tax           GAAP diluted net income per common share      $0.29-$0.30                                                          The consolidated revenue guidance mid-point is based on the following segment-level assumptions for revenue growth rates expressed as a percentage change from second quarter 2012 reported revenue levels:     •  Affiliate Marketing:   Up high single-digits       •   Media:                   Up high single-digits       •   Owned & Operated:        Up mid single-digits                                      Second quarter 2013 guidance assumes: stock-based compensation of $5.5 million; amortization of intangible assets of $6.5 million ($2.5 million of which will be classified in Cost of revenue); net interest and other income of zero; a 39 percent effective tax rate; and 78 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 first quarter during a conference call and Webcast at 4:30 p.m. ET today. The live conference call can be accessed by dialing (888) 329-8893 or (719) 325-2494. Please dial in approximately ten minutes prior to the start time and provide the operator with the pass code 2102101. A replay of the conference call will be available from Tuesday, May 7, at 7:30 p.m. ET through Tuesday, May 14, at 7:30 p.m. ET at (888) 203-1112 and (719) 457-0820 (pass code: 2102101). The live and archived Webcast of the conference call will be available at http://ir.valueclick.com.  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 27, 2013; 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)                                                                                                                                                                                         March 31,       December 31,                                                   2013            2012                                                   (Unaudited) ASSETS Current Assets: Cash and cash equivalents                         $ 129,134       $   136,638 Accounts receivable, net                          123,017         147,487 Other current assets                              26,284         27,136 Total current assets                              278,435         311,261                                                                    Note receivable, less current portion             27,117          27,615 Property and equipment, net                       29,429          29,014 Goodwill                                          434,265         434,507 Intangible assets, net                            75,346          81,822 Other assets                                      13,778         15,477 TOTAL ASSETS                                      $ 858,370      $   899,696                                                                    LIABILITIES AND STOCKHOLDERS' EQUITY Borrowings under credit facility, current         $ 10,000        $   10,000 Other current liabilities                         115,826         132,401 Borrowings under credit facility, less            70,000          132,500 current portion Other non-current liabilities                     35,546         34,090 Total liabilities                                 231,372         308,991 Total stockholders' equity                        626,998        590,705 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 858,370      $   899,696                                                                                                                                                                                                                                                        VALUECLICK, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)                                                                                                                                                                  Three-month Period                                                      Ended March 31,                                                      2013          2012                                                      (Unaudited) Revenue                                              $ 165,438       $ 146,432 Cost of revenue                                      62,355         54,685 Gross profit                                         103,083         91,747 Operating expenses: Sales and marketing (Note 1)                         22,465          20,927 General and administrative (Note 1)                  18,213          19,572 Technology (Note 1)                                  16,700          16,080 Amortization of intangible assets acquired in        3,923          6,324 business combinations Total operating expenses                             61,301         62,903 Income from operations                               41,782          28,844 Interest and other (expense) income, net             (595      )     229 Income before income taxes                           41,187          29,073 Income tax expense                                   14,904         8,875 Net income from continuing operations                26,283          20,198 Net income from discontinued operations              —              1,373 Net income                                           $ 26,283       $ 21,571                                                                       Basic income from continuing operations per          $ 0.35         $ 0.25 common share Diluted income from continuing operations per        $ 0.34         $ 0.25 common share Basic net income per common share                    $ 0.35         $ 0.27 Diluted net income per common share                  $ 0.34         $ 0.26 Weighted-average shares used to compute basic        75,648         80,339 net income per common share Weighted-average shares used to compute              77,567         82,106 diluted net income per common share                                                                                                                                             Note 1 - Includes stock-based compensation as follows:                                                      Three-month Period                                                      Ended March 31,                                                      2013            2012                                                      (Unaudited) Sales and marketing                                  $ 1,174         $ 1,654 General and administrative                           2,439           3,026 Technology                                           1,184          1,406 Total stock-based compensation                       $ 4,797        $ 6,086                                                                                                                                                                                                                                                          VALUECLICK, INC.  RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS  TO ADJUSTED-EBITDA (Note 1)  (In thousands)                                                                                                                                                                  Three-month Period                                                      Ended March 31,                                                      2013         2012                                                      (Unaudited) Net income from continuing operations                $ 26,283       $ 20,198 Interest and other expense (income), net             595            (229     ) Income tax expense                                   14,904         8,875 Amortization of acquired intangible assets           2,494          2,493 included in cost of revenue Amortization of acquired intangible assets           3,923          6,324 included in operating expenses Depreciation and leasehold amortization              3,292          2,614 Stock-based compensation                             4,797         6,086     Adjusted-EBITDA                                      $ 56,288      $ 46,361                                                                                 Note 1 - “Adjusted-EBITDA” (GAAP net income from continuing operations before interest, income taxes, depreciation, amortization, and stock-based compensation) 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 March 31,                                                      2013         2012                                                      (Unaudited) Net income from continuing operations                $ 26,283       $ 20,198 Stock-based compensation                             4,797          6,086 Amortization of acquired intangible assets           2,494          2,493 included in cost of revenue Amortization of acquired intangible assets           3,923          6,324 included in operating expenses Tax impact of above items                            (4,784   )     (5,250   ) Non-GAAP net income                                  $ 32,713      $ 29,851  Non-GAAP diluted net income per common share         $ 0.42        $ 0.36    Weighted-average shares used to compute              77,567        82,106    non-GAAP 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 intangible assets) 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                                                    Ended March 31,                                                    2013          2012                                                    (Unaudited) Affiliate Marketing: Revenue                                            $ 38,311        $ 37,107 Cost of revenue                                    4,562          4,176      Gross profit                                       33,749          32,931 Operating expenses                                 10,824         9,993      Segment income from operations                     $ 22,925       $ 22,938                                                                       Media: Revenue                                            $ 96,256        $ 80,749 Cost of revenue                                    35,839         30,603     Gross profit                                       60,417          50,146 Operating expenses                                 29,094         27,742     Segment income from operations                     $ 31,323       $ 22,404                                                                       Owned & Operated Websites: Revenue                                            $ 30,955        $ 28,675 Cost of revenue                                    19,516         17,457     Gross profit                                       11,439          11,218 Operating expenses                                 5,819          5,885      Segment income from operations                     $ 5,620        $ 5,333                                                                        Reconciliation of segment income from operations to consolidated income from operations: Total segment income from operations               $ 59,868        $ 50,675 Corporate expenses                                 (6,872    )     (6,928    ) Stock-based compensation                           (4,797    )     (6,086    ) Amortization of acquired intangible assets         (2,494    )     (2,493    ) included in cost of revenue Amortization of acquired intangible assets         (3,923    )     (6,324    ) included in operating expenses Consolidated income from operations                $ 41,782       $ 28,844                                                                       Reconciliation of segment revenue to consolidated revenue: Affiliate Marketing                                $ 38,311        $ 37,107 Media                                              96,256          80,749 Owned & Operated Websites                          30,955          28,675 Inter-segment eliminations                         (84       )     (99       ) Consolidated revenue                               $ 165,438      $ 146,432                                                                                 Contact:  ValueClick, Inc. Gary J. Fuges, CFA 1.818.575.4677