Tree.com Reports Record Third Quarter 2013 Financial Results

         Tree.com Reports Record Third Quarter 2013 Financial Results

- Revenue of $37.3 million; 60% above third quarter 2012

- Record Variable Marketing Margin of $15.1 million; 29% over third quarter
2012

- Net Income from Continuing Operations of $0.3 million

- Record Adjusted EBITDA of $5.4 million; 38% over third quarter 2012

- Results exceeded quarterly guidance on all metrics

- Raising 2013 outlook and introducing 2014 guidance

PR Newswire

CHARLOTTE, N.C., Nov. 7, 2013

CHARLOTTE, N.C., Nov. 7, 2013 /PRNewswire/ --Tree.com, Inc. (NASDAQ: TREE),
operator of LendingTree.com, the nation's leading online source for
competitive home loan offers, today announced results for the quarter ended
September 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20110518/MM04466LOGO )

"We've delivered another great quarter of financial and operating results,
with new records in both Variable Marketing Margin and Adjusted EBITDA," said
Doug Lebda, Chairman & CEO of Tree.com. "Despite a significant drop in
mortgage originations in the market overall, revenue from our mortgage
products held steady and we gained considerable market share in our core
business. And our diversification strategy is paying off well, as revenue in
our non-mortgage products grew 22% sequentially from the second quarter."

Chief Financial Officer Alex Mandel added, "Our third quarter results are
evidence that our foresight, preparation and execution are paying off. We
exceeded our previous financial guidance on all metrics. In updating our
full-year 2013 outlook, we now anticipate exceeding the top end of our
previous range for revenue. And we are affirming the higher ends of our
previous guidance ranges for Variable Marketing Margin and Adjusted EBITDA.
We are also introducing guidance for full year 2014 that reflects continued
growth in all three of these measures."

Third Quarter 2013 Business Highlights

  oDiverging from overall market trends, revenue from mortgage products was
    up 73% in the third quarter from the same period last year, while total
    mortgage market originations fell by 27% during this time.
  oThe company's purchase mortgage strategy continued to produce impressive
    results in the third quarter, with revenue from purchase mortgage products
    up 250% from the same period in 2012.
  oWith four consecutive quarters of growth, the number of mortgage lenders
    on the LendingTree network has increased by 96% over the third quarter
    2012.

Tree.com Financial Metrics
$s in millions
                                                Q/Q                  Y/Y
                           Q3 2013   Q2 2013    % Change   Q3 2012   % Change
Revenue by Product
Mortgage Products (1)      $ 32.6    $ 32.9     (1)%       $ 18.9    73%
Non-Mortgage Products (2)  4.7       3.9        22%        4.2       13%
Corporate                  —         0.6        (100)%     0.3       (100)%
Total Revenue              $ 37.3    $ 37.4     (0)%       $ 23.3    60%
Non-Mortgage %             13     %  10      %             18     %
Selling and Marketing
Expense
Exchanges Marketing        $ 22.3    $ 23.7     (6)%       $ 11.6    93%
Expense (3)
Other Marketing            2.6       2.7        (4)%       1.8       42%
Selling and Marketing      $ 24.8    $ 26.4     (6)%       $ 13.4    86%
Expense
Variable Marketing Margin  $ 15.1    $ 13.7     10%        $ 11.7    29%
(4)
Variable Marketing Margin  40     %  37      %             50     %
% of Revenue
Net Income/(Loss) from     $ 0.3     $ (2.0)    NM         $ 0.3     17%
Continuing Operations
Adjusted EBITDA (5)        $ 5.4     $ 3.4      60%        $ 3.9     38%
Adjusted EBITDA % of       14     %  9       %             17     %
Revenue (5)



(1) Includes the purchase mortgage and refinance mortgage products within the
    company's Mortgage reporting segment.
    Includes the home equity, reverse mortgage and rate table products
(2) included within the company's Mortgage reporting segment and all products
    within the Non-mortgage reporting segment.
    Defined as the portion of selling and marketing expense attributable to
(3) variable costs paid for advertising, direct marketing and related
    expenses, which excludes overhead, fixed costs and personnel-related
    expenses.
(4) Defined as revenue minus Exchanges marketing expense and is considered an
    operating metric.
    Adjusted EBITDA and adjusted EBITDA % of revenue are non-GAAP measures.
(5) Please see "Tree.com's Reconciliation of Non-GAAP Measures to GAAP" and
    "Tree.com's Principles of Financial Reporting" below for more information.



Third Quarter 2013 Financial and Operating Highlights

  oThird quarter 2013 revenue of $37.3 million exceeded prior guidance and
    represents an increase of $14.0 million, or 60%, over revenue in the third
    quarter 2012.
  oVariable marketing margin of $15.1 million in the third quarter 2013 was
    the highest level achieved since we began reporting this operating
    metric.
  oAdjusted EBITDA of $5.4 million also represents a record result and
    exceeds the high end of our guidance range of $4.0 - $5.0 million. This
    represents increases of $2.0 million, or 60%, over the second quarter 2013
    and $1.5 million, or 38%, over the third quarter 2012.
  oWorking capital was $71.7 million at September 30, 2013. Working capital
    is calculated as current assets (including unrestricted and restricted
    cash) minus current liabilities (including loan loss reserves).
  oDuring the third quarter 2013, the company repurchased approximately $1.8
    million of its common stock.

Business Outlook - 2013

Tree.com is providing revenue, variable marketing margin and Adjusted EBITDA
guidance for full year 2013 and 2014 as follows:

For 2013:

  oTree.com expects to exceed its previous revenue guidance. Full year 2013
    revenue is now anticipated to be in the range of $135 - $138 million.
    This implies fourth quarter revenue in the range of $32.2 - $35.2
    million.
  oVariable Marketing Margin for full year 2013 is anticipated to be in the
    range of $54 - $56 million, implying fourth quarter VMM in the range of
    $11.8 - $13.8 million.
  oAdjusted EBITDA for full year 2013 is anticipated to be in the range of
    $16 - $17 million, implying fourth quarter Adjusted EBITDA in the range of
    $3.2 - $4.2 million.

For 2014:

  oRevenue is anticipated to grow by 10% - 15% over 2013.
  oVariable Marketing Margin is anticipated to be in the range of $62 - $66
    million, representing growth of approximately 13% - 20% over the mid-point
    of 2013 guidance.
  oAdjusted EBITDA is anticipated to be in the range of $20 - $21 million,
    representing growth of 21% - 27% over the mid-point of 2013 guidance.

Quarterly Conference Call
A conference call to discuss Tree's third quarter 2013 financial results will
be webcast live today at 11:00 AM Eastern Time (ET). The live audiocast is
open to the public and available on Tree's investor relations website at
http://investor-relations.tree.com/. For those without access to the
Internet, the call may be accessed toll-free via phone at (877) 606-1416.
Callers outside the United States may dial (707) 287-9313. Following
completion of the call, a recorded replay of the webcast will be available on
Tree's investor relations website until 11:59 PM ET on Saturday, November 16,
2013. To listen to the telephone replay, call toll-free (855) 859-2056 with
passcode #92480337. Callers outside the United States may dial (404) 537-3406
with passcode #92480337.



TREE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                   Three Months Ended   Nine Months Ended
                                   September 30,        September 30,
                                   2013       2012       2013        2012
                                   (Inthousands,exceptpershareamounts)
Revenue                            $ 37,343   $ 23,296   $ 102,829   $ 53,501
Costs and expenses:
Cost of revenue (exclusive of
depreciation shown separately      1,733      1,231      5,039       2,830
below)
Selling and marketing expense      24,832     13,376     68,473      34,997
General and administrative expense 5,610      5,532      17,817      16,166
Product development                1,217      853        3,914       2,383
Depreciation                       891        934        2,648       3,204
Amortization of intangibles        33         101        119         314
Restructuring and severance        (70)       (48)       76          (109)
Litigation settlements and         2,875      510        6,812       948
contingencies
Total costs and expenses           37,121     22,489     104,898     60,733
Operating income (loss)            222        807        (2,069)     (7,232)
Other income (expense):
Interest expense                   (4)        (349)      (18)        (606)
Income (loss) before income taxes  218        458        (2,087)     (7,838)
Income tax benefit (provision)     98         (188)      97          3,086
Net income (loss) from continuing  316        270        (1,990)     (4,752)
operations
Discontinued operations:
Gain from sale of discontinued     —          —          10,101      24,313
operations, net of tax
Income (loss) from operations of
discontinued operations, net of    (529)      4,112      (3,962)     24,745
tax
Income (loss) from discontinued    (529)      4,112      6,139       49,058
operations
Net income (loss)                  $ (213)    $ 4,382    $ 4,149     $ 44,306
Weighted average basic shares      11,017     10,771     11,039      10,670
outstanding
Weighted average diluted shares    11,720     11,385     11,039      10,670
outstanding
Net income (loss) per share from
continuing operations:
Basic                              $ 0.03     $ 0.03     $ (0.18)    $ (0.45)
Diluted                            $ 0.03     $ 0.02     $ (0.18)    $ (0.45)
Net income (loss) per share from
discontinued operations:
Basic                              $ (0.05)   $ 0.38     $ 0.56      $ 4.60
Diluted                            $ (0.05)   $ 0.36     $ 0.56      $ 4.60
Net income (loss) per share:
Basic                              $ (0.02)   $ 0.41     $ 0.38      $ 4.15
Diluted                            $ (0.02)   $ 0.38     $ 0.38      $ 4.15



TREE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
                                                   September30,  December31,
                                                   2013           2012
                                                   (Unaudited)
ASSETS:
Cash and cash equivalents                          $  87,752      $  80,190
Restricted cash and cash equivalents               26,018         29,414
Accounts receivable, net of allowance of $485 and  15,446         11,488
$503, respectively
Prepaid and other current assets                   2,043          773
Current assets of discontinued operations          31             407
Total current assets                               131,290        122,272
Property and equipment, net                        5,537          6,155
Goodwill                                           3,632          3,632
Intangible assets, net                             10,712         10,831
Other non-current assets                           110            152
Non-current assets of discontinued operations      129            129
Total assets                                       $  151,410     $  143,171
LIABILITIES:
Accounts payable, trade                            $  3,034       $  2,741
Deferred revenue                                   8              648
Accrued expenses and other current liabilities     24,562         19,960
Current liabilities of discontinued operations     31,946         31,017
Total current liabilities                          59,550         54,366
Other non-current liabilities                      481            936
Deferred income taxes                              4,595          4,694
Non-current liabilities of discontinued operations 151            253
Total liabilities                                  64,777         60,249
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock $.01 par value; authorized         —              —
5,000,000 shares; none issued or outstanding
Common stock $.01 par value; authorized 50,000,000
shares; issued 12,505,331 and 12,195,209shares,   125            122
respectively, and outstanding 11,136,399 and
11,006,730 shares, respectively
Additional paid-in capital                         906,572        903,692
Accumulated deficit                                (807,331)      (811,480)
Treasury stock 1,368,932 and 1,188,479 shares,     (12,733)       (9,412)
respectively
Total shareholders' equity                         86,633         82,922
Total liabilities and shareholders' equity         $  151,410     $  143,171



TREE.COM'S RECONCILIATION OF NON-GAAP MEASURES TO GAAP

Below is a reconciliation of Adjusted EBITDA to net income (loss) for
continuing operations. See "Tree.com's Principles of Financial Reporting" for
further discussion of the Company's use of these Non-GAAP measures.

                            Three Months Ended
                                                June 30,
                            September 30, 2013              September 30, 2012
                                                2013
                            (Inthousands)
Adjusted EBITDA             $     5,364         $ 3,359     $     3,897
Adjustments to reconcile to
net income (loss) from
continuing operations:
Amortization of intangibles (33)                (43)        (101)
Depreciation                (891)               (872)       (934)
Restructuring and severance 70                  (148)       48
Loss on disposal of assets  (1)                 —           (284)
Non-cash compensation       (1,412)             (1,432)     (1,309)
Litigation settlements and  (2,875)             (2,909)     (510)
contingencies
Other expense, net          (4)                 (7)         (349)
Income tax benefit          98                  19          (188)
(provision)
Net income (loss) from      $     316           $ (2,033)   $     270
continuing operations



TREE.COM'S PRINCIPLES OF FINANCIAL REPORTING
Tree.com reports Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA"), and adjusted for certain items discussed below
("Adjusted EBITDA") and Adjusted EBITDA % of revenue as supplemental measures
to GAAP. These measures are primary metrics by which Tree.com evaluates the
performance of its businesses, on which its marketing expenditures are based
and, in the case of Adjusted EBITDA, by which management and many employees
are compensated. Tree.com believes that investors should have access to the
same set of tools that it uses in analyzing its results. These non-GAAP
measures should be considered in addition to results prepared in accordance
with GAAP, but should not be considered a substitute for or superior to GAAP
results. Tree.com provides and encourages investors to examine the reconciling
adjustments between the GAAP and non-GAAP measures set forth above. Tree.com
is not able to provide a reconciliation of projected Adjusted EBITDA to
expected reported results due to the unknown effect, timing and potential
significance of the effects of the wind-down of discontinued operations and
tax considerations.

Definition of Tree.com's Non-GAAP Measures
EBITDA is defined as operating income or loss (which excludes interest expense
and taxes) excluding amortization of intangibles and depreciation.

Adjusted EBITDA is defined as EBITDA excluding (1) non-cash compensation
expense, (2) non-cash intangible asset impairment charges, (3) gain/loss on
disposal of assets, (4) restructuring and severance expenses, (5) litigation
settlements and contingencies, (6) adjustments for significant acquisitions or
dispositions, and (7) one-time items. Adjusted EBITDA has certain limitations
in that it does not take into account the impact to Tree.com's statement of
operations of certain expenses, including depreciation, non-cash compensation
and acquisition-related accounting. Tree.com endeavors to compensate for the
limitations of the non-GAAP measures presented by also providing the
comparable GAAP measures with equal or greater prominence and descriptions of
the reconciling items, including quantifying such items, to derive the
non-GAAP measures.

Exchanges marketing expense is defined as the portion of selling and marketing
expense attributable to variable costs paid for advertising, direct marketing
and related expenses. This metric excludes overhead, fixed costs and
personnel-related expenses.

One-Time Items
Adjusted EBITDA is adjusted for one-time items, if applicable. Items are
considered one-time in nature if they are non-recurring, infrequent or
unusual, and have not occurred in the past two years or are not expected to
recur in the next two years, in accordance with SEC rules. For the periods
presented in this report, there are no adjustments for one-time items.

Non-Cash Expenses That Are Excluded From Tree.com's Adjusted EBITDA
Non-cash compensation expense consists principally of expense associated with
the grants of restricted stock units, stock options and restricted stock.
These expenses are not paid in cash and Tree.com will include the related
shares in its calculations of fully diluted shares outstanding. Upon
settlement of restricted stock units, vesting of certain stock options or
vesting of restricted stock awards, the awards may be settled on a net basis,
with Tree.com remitting the required tax withholding amounts from its current
funds.

Amortization of intangibles are non-cash expenses relating primarily to
acquisitions. At the time of an acquisition, the intangible assets of the
acquired company, such as purchase agreements, technology and customer
relationships, are valued and amortized over their estimated lives.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995
The matters contained in the discussion above may be considered to be
"forward-looking statements" within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. Those statements include statements regarding
the intent, belief or current expectations or anticipations of Tree.com and
members of our management team. Factors currently known to management that
could cause actual results to differ materially from those in forward-looking
statements include the following: adverse conditions in the primary and
secondary mortgage markets and in the economy, particularly interest rates;
seasonality of results; potential liabilities to secondary market purchasers;
changes in the Company's relationships with network lenders; breaches of
network security or the misappropriation or misuse of personal consumer
information; failure to provide competitive service; failure to maintain brand
recognition; ability to attract and retain customers in a cost-effective
manner; ability to develop new products and services and enhance existing
ones; competition; allegations of failure to comply with existing or changing
laws, rules or regulations, or to obtain and maintain required licenses;
failure of network lenders or other affiliated parties to comply with
regulatory requirements; failure to maintain the integrity of systems and
infrastructure; liabilities as a result of privacy regulations; failure to
adequately protect intellectual property rights or allegations of infringement
of intellectual property rights; and changes in management. These and
additional factors to be considered are set forth under "Risk Factors" in our
Annual Report on Form 10-K for the period ended December 31, 2012 and our
Quarterly Report on Form 10-Q for the period ended June 30, 2013, and in our
other filings with the Securities and Exchange Commission. We undertake no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results or expectations.

About Tree.com, Inc.
Tree.com, Inc. (NASDAQ: TREE) is the parent of several brands and
businessesthat provide information, tools, advice, products and services for
critical transactions in consumers' lives. Our family of brands includes:
LendingTree®, GetSmart®, DegreeTree®, LendingTreeAutos, DoneRight!®,
ServiceTree^SM and InsuranceTree®.Together, these brands serve as an ally for
consumers who are looking to comparison shop for loans, education, auto, home
services and other services from multiple businesses and professionals who
will compete for their business.

Tree.com, Inc. is headquartered in Charlotte, NC and maintains operations
solely in the United States. For more information, please visitwww.tree.com.

SOURCE Tree.com, Inc.

Website: http://www.tree.com
Contact: Investor Relations, 877-640-4856,
tree.com-investor.relations@tree.com
 
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