Local Corporation (NASDAQ:LOCM), a leading local search and
advertising technology company, announced preliminary financial
results for its fourth quarter ended Dec. 31, 2014 and provided
guidance for full year 2015.
Fourth quarter 2014 revenue is expected to be between $16.0
million and $16.5 million, below guidance given on Nov. 12, 2014 of
$20 million to $23 million. Fourth quarter net loss is anticipated
to be in the range of breakeven to $200,000 and Adjusted EBITDA* in
the range of $100,000 to $300,000. Full year 2014 revenue is
expected to be between $82.8 million and $83.3 million, compared
with prior guidance of $87 million to $90 million. Full year 2014
net loss is expected to be in the range of $5.5 million to $5.7
million. Adjusted EBITDA* is expected to be in the range of $2.2
million to $2.4 million, in line with previous guidance of $2.0
million to $2.4 million. These preliminary financial results are
subject to completion of the company’s customary quarterly closing
and review procedures and audit by the company’s independent
registered public accounting firm.
* Adjusted EBITDA is defined as net income (loss) excluding:
provision for income taxes; interest and other income (expense),
net; depreciation; amortization; stock-based compensation charges;
gain or loss on derivatives’ revaluation; net income (loss) from
discontinued operations; accrued lease liability/asset; and
severance charges.
“While we are disappointed in our top-line results, we achieved
our eighth consecutive quarter of positive Adjusted EBITDA,” said
Local Corporation chairman and CEO, Fred Thiel. “In the fourth
quarter, Network revenue increased. However, it was more than
offset by a decrease in Owned and Operated (O&O) revenue, which
was negatively impacted by changes in traffic sources and editorial
requests from ad partners. This resulted in lower than anticipated
traffic and monetization. We are adapting to these changes and
expect O&O to trend positively in the first quarter, compared
to the fourth quarter.”
Monthly unique visitors were 55 million in the fourth quarter,
compared to 66 million in the third quarter of 2014 and 80 million
in the fourth quarter of 2013. O&O properties, primarily driven
by the company’s flagship site, Local.com, delivered revenue per
thousand visitors (RKV) of $154, which would have been seasonally
comparable excluding the fourth quarter 2014 advertiser adjustment.
RKV was $201 in the third quarter of 2014 and $178 in the fourth
quarter of 2013.
“We are continuing to transform our business for long-term
growth and focus on core initiatives to leverage our proprietary
assets and diversify our revenue streams,” added Thiel. We are
expanding our mobile search footprint with nQuery™, our private
label mobile search solution that serves mobile carriers worldwide.
Additionally, we are utilizing programmatic exchanges to further
monetize our local audience of 200 million annual unique visitors
to help advertisers capture the right audience on the right
platform. These initiatives are supported by our advanced traffic
quality solution, nTegrity™. In 2015, we anticipate our efforts
will strengthen our business and grow revenue. Improved top-line
results combined with cost reduction actions taken in the fourth
quarter of 2014 are expected to improve annual Adjusted EBITDA
profitability over the course of 2015.”
2015 Financial Guidance:
Revenue for 2015 is expected to be in the range of $82 million
to $86 million. Adjusted EBITDA for 2015 is expected to be in the
range of $3 million to $4 million, or between $0.13 per diluted
share and $0.17 per diluted share, assuming diluted weighted
average shares of 24 million and taking into account the dilutive
effect of stock options and warrants.
Projected 2015 Adjusted EBITDA Factors:
- Interest expense of $1.1 million
- Income tax provision of $100,000
- Depreciation expense of $4.5
million
- Amortization expense of $150,000
- Stock compensation expense of
$600,000
- Warrant and conversion option
revaluation expense items are undeterminable, but may be
significant non-cash gains or losses**
** The valuation of the warrant liability and the conversion
option liability is based in large part on the underlying price and
volatility of the company’s common stock during the period. Since
the company cannot predict this, the company cannot project the
non-cash gain or loss in connection with these warrants and the
conversion option, and therefore, cannot reasonably project its
GAAP net income (loss). Therefore, the company cannot provide GAAP
guidance, but does report GAAP results.
Fourth Quarter 2014 Conference Call
Information
Chairman and CEO Fred Thiel and CFO Ken Cragun intend to host a
conference call in early March.
About Local Corporation
Local Corporation (NASDAQ:LOCM) is a leading local search
and advertising technology company that aggregates and curates the
most relevant and rich personalized content and presents it to
millions of consumers wherever and however they search for
information, while providing significant reach and value to the
company’s advertisers and partners. For more information,
visit: http://www.localcorporation.com or visit the company’s
flagship site: http://www.local.com.
Forward Looking
Statements
This press release contains certain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Words or
expressions such as 'anticipate,' 'believe,' 'estimate,' 'plans,'
'expect,' 'intend,' ‘project,’ ‘forecast,’ ‘potential,’ ‘feel’ and
similar expressions and phrases are intended to identify such
forward-looking statements. Any forward-looking statements are
based on the beliefs of our management as well as assumptions made
by and information currently available to our management. Actual
results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors,
including, but not limited to, our advertising partners paying less
revenue per click and revenues to us for our search results, our
ability to purchase advertising from third parties to drive users
to our sites and consumers to the sites of our advertisers,
including at a profit, our ability to retain a monetization partner
for the Local.com domain and other web properties under our
management that allows us to operate profitably, our ability to
develop, market and operate our local-search technologies, our
ability to maintain and grow the number of Network partner sites
and the aggregate levels of user traffic from such Network partner
sites while also maintaining the quality level of such traffic, our
ability to market the Local.com domain as a destination for
consumers seeking local-search results, our ability to adapt to
policy and technological changes promulgated by our advertising
partners and traffic acquisition partners, our ability to grow our
business by enhancing our local-search services, the possibility
that the information and estimates used to predict anticipated
revenues and expenses associated with the businesses we may acquire
are not accurate, difficulties executing integration strategies or
achieving planned synergies with acquisitions, the possibility that
integration costs and go-forward costs associated with the
businesses we may acquire will be higher than anticipated, the
possibility of impairment of assets associated with the businesses
we have acquired, our ability to successfully expand our sales
channels for new and existing products and services, our ability to
increase the number of businesses that purchase our advertising
products, our ability to expand our advertiser and distribution
networks, our ability to integrate and effectively utilize our
acquisitions' technologies, our ability to develop our products and
sales, marketing, finance and administrative functions and
successfully integrate our expanded infrastructure, as well as our
dependence on major advertisers, our ability to successfully assert
our intellectual property rights, competitive factors and pricing
pressures, changes in legal and regulatory requirements, and
general economic conditions, and our ability to fund our operations
from cash on hand, our existing credit facilities and any future
credit facilities or equity sales. Any forward-looking statements
reflect our current views with respect to future events and are
subject to these and other risks, uncertainties and assumptions
relating to our operations, results of operations, growth strategy
and liquidity. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by this paragraph. Unless
otherwise stated, all site traffic and usage statistics are from
third-party service providers engaged by the company.
Our most recent Annual Report on Form 10-K, our Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other
Securities and Exchange Commission filings discuss the foregoing
risks as well as other important risk factors that could contribute
to such differences or otherwise affect our business, results of
operations and financial condition. The forward-looking statements
in this release speak only as of the date they are made. We
undertake no obligation to revise or update publicly any
forward-looking statement for any reason.
Non-GAAP Financial
Measures
This press release includes the non-GAAP financial measures of
“Adjusted EBITDA.” Adjusted EBITDA is defined as net income (loss)
excluding: provision for income taxes; interest and other income
(expense), net; depreciation; amortization; stock based
compensation charges; gain or loss on derivatives’ revaluation; net
income (loss) from discontinued operations; accrued lease
liability/asset; and severance charges. Adjusted EBITDA is
reconciled to net income (loss), which we believe is the most
comparable GAAP measure. Adjusted EBITDA, as defined above, is not
a measurement under GAAP. A reconciliation of net income (loss) to
Adjusted EBITDA is set forth at the end of this press release.
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, expense from the company’s
financing transactions and the costs associated with income tax
expense, capital investments, stock-based compensation expense, net
income (loss) from discontinued operations, derivatives’
revaluation charges; accrued lease liability/asset; and severance
charges 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.
A limitation of non-GAAP Adjusted EBITDA is that it excludes
items that often have a material effect on the company’s net income
(loss) and earnings per common share calculated in accordance with
GAAP. Therefore, management compensates for this limitation by
using Adjusted EBITDA in conjunction with net income (loss) and net
income (loss) per 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 as a base-line 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
reconciliation to GAAP, it may provide greater insight into the
company’s financial results. The non-GAAP measures should be viewed
as a supplement to, and not as a substitute for, or superior to the
GAAP measures.
LOCAL CORPORATION
RECONCILIATION OF EXPECTED GAAP NET INCOME (LOSS) TO EXPECTED
ADJUSTED EBITDA
(in thousands, except per share
amounts)
(Unaudited)
Year Ended Three Months December 31
Ended December 31, 2014 2014 Expected GAAP net
income (loss) ($5,700) – ($5,500) ($200) – $0 Less interest
and other income (expense), net 2,200 500 Plus provision (benefit)
for income taxes 100 - Plus depreciation and amortization 4,600
1,100 Plus stock-compensation 800 200 Less revaluation of
derivatives (900) (1,000) Plus net income from discontinued
operations (700) (700) Plus severance charges 1,800 200 Expected
Adjusted EBITDA $2,200 – $2,400 $100 - $300 GAAP net income
(loss) per diluted share ($0.25) - ($0.24) ($0.01) - $0.00 Adjusted
EBITDA per diluted share $0.09 - $0.10 $0.00 - $0.01 Diluted
weighted average shares used for GAAP 23,200 23,200 Diluted
weighted average shares used for Adjusted EBITDA per share
23,350
23,300
Investor Relations
Contact:LHAKirsten Chapman,
415-433-3777local@lhai.comorMedia
Relations Contact:Local CorporationCameron Triebwasser,
949-789-5223ctriebwasser@local.com
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