Infogroup (NASDAQ: IUSA), the leading provider of data driven
and interactive resources for targeted sales, marketing and
research solutions today reported preliminary unaudited financial
results for the first quarter of 2010 ended on March 31, 2010.
FIRST QUARTER 2010
RESULTS
GAAP Results
During the first quarter of 2010, Infogroup recorded net sales
of $124.2 million, compared to $127.5 million for the same period
in 2009, representing a decline of $3.3 million or 3%. On a
currency neutral basis, net sales declined by 4% year over year.
Net sales for the Data Group for the first quarter of 2010 were
$64.0 million, a 5% decrease from $67.3 million for the same period
in 2009. Net sales for the Services Group for the first quarter of
2010 were $35.8 million, flat from $35.8 million for the same
period in 2009. Net sales for the Marketing Research Group for the
first quarter of 2010 were $24.4 million, a decrease of $0.1
million from $24.5 million for the same period in 2009.
Infogroup’s operating income for the first quarter of 2010 was
$12.3 million, which included $5.2 million of restructuring,
non-recurring and non-cash charges, compared to operating income of
$2.7 million in the first quarter of 2009, which included $8.8
million of comparable charges. Operating income for the Data Group
for the first quarter of 2010 was $17.5 million, or 27% of net
sales, compared to $12.9 million, or 19% of net sales for the same
period in 2009. Operating income for the Services Group for the
first quarter of 2010 was $4.5 million, or 13% of net sales,
compared to $5.0 million, or 14% of net sales for the same period
in 2009. Operating loss for the Marketing Research Group was $0.04
million, or 0.2% of revenue, compared to $0.2 million, or 0.8% of
net sales for the same period in 2009. Operating loss for Corporate
Activities for the first quarter of 2010 was $9.7 million, compared
to $15.1 million for the same period in 2009.
Infogroup’s net income from continuing operations for the first
quarter of 2010 was $7.3 million, or earnings per share from
continuing operations of $0.13, compared to a net loss from
continuing operations of $0.7 million, or a loss per share from
continuing operations of $0.01 in the first quarter of 2009.
Non-GAAP Results
Infogroup’s adjusted earnings per share from continuing
operations for the first quarter of 2010, excluding the
restructuring, non-recurring and non-cash charges, was $0.17,
compared to $0.09 for the first quarter of 2009, an increase of
$0.08.
In the first quarter of 2010, EBITDA was $21.8 million compared
to $9.8 million in the first quarter of 2009. Adjusted EBITDA,
which excludes certain restructuring, non-recurring and non-cash
charges, was $24.8 million in the first quarter of 2010, compared
to $19.1 million in the first quarter of 2009. Adjusted EBITDA for
the Data Group in the first quarter of 2010 was $22.8 million,
compared to $19.1 million for the same period in 2009. Adjusted
EBITDA for the Services Group in the first quarter of 2010 was $7.6
million, compared to $8.1 million for the same period in 2009.
Adjusted EBITDA for the Marketing Research Group in the first
quarter of 2010 was $2.3 million, compared to $1.7 million for the
same period in 2009. Adjusted EBITDA for Corporate Activities in
the first quarter of 2010 was a loss of $7.9 million, compared to a
loss of $9.9 million for the same period in 2009.
In total, the Company recorded $4.0 million in costs during the
first quarter of 2010 for restructuring, non-recurring and non-cash
charges. This included restructuring costs for severance associated
with headcount reductions and facility closures of $3.0 million,
merger related expenses of $2.0 million, accelerated tradename
amortization expense of $0.9 million, SEC investigation expenses of
$0.2 million and litigation settlement charges of $0.1 million.
These charges were offset by non-recurring benefits of $2.3
million. This included $1.3 million of realized gains primarily
related to the sale of marketable securities and $1.0 million net
benefit from non-cash stock compensation expense resulting from a
$1.3 million reversal of prior expense for stock awards forfeited
during the quarter. Of these charges, $4.3 million was recorded in
selling, general and administrative expenses, $0.9 million was
recorded in amortization of intangible assets expenses, and income
of $1.3 million was recorded in investment income. During the first
quarter of 2009, the Company recorded $9.3 million of comparable
charges.
Net Debt as of March 31, 2010 was $163.3 million, compared to
$174.1 million as of December 31, 2009, representing a decline of
$10.8 million.
During the first quarter of 2010 the Company implemented and
realized cost savings of approximately $4.0 million. These cost
savings in addition to those implemented in 2009 contributed to
lower overall adjusted selling, general and administrative expenses
by approximately $8.3 million. The first quarter of 2010 cost
savings initiatives will have a realized impact of approximately
$15.0 million for the full year of 2010, with an annualized impact
of approximately $16.0 million.
NON-GAAP
INFORMATION
In addition to presenting results determined in accordance with
generally accepted accounting principles, or GAAP, this release
also presents non-GAAP financial measures. Investors are referred
to the tables included in this press release for a reconciliation
of these non-GAAP measures to GAAP financial measures.
Management considers GAAP and non-GAAP financial measures in
evaluating the operating performance of the Company. EBITDA is
commonly used as an analytical indicator within Infogroup’s
industry. Adjusted EBITDA, adjusted earnings per share, non-GAAP
selling, general and administrative expenses and non-GAAP operating
income exclude items that management believes result from events
that are not recurring and are not part of on-going operations.
Additionally management discloses non-GAAP net debt, which deducts
cash and marketable securities from GAAP debt. Management believes
these non-GAAP financial measures also provide useful supplemental
information to investors in evaluating the aggregate performance of
the Company’s operating businesses.
All companies do not calculate non-GAAP measures in the same
manner and the non-GAAP financial measures presented in this press
release may not be comparable to similar measures used by other
companies. Non-GAAP measures should be considered supplemental to,
and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. The non-GAAP financial measures
should not be considered in isolation or as a substitute for
analysis of the Company’s results as reported under GAAP.
CONFERENCE CALL
Given the pending transaction with CCMP Capital Advisors, LLC
announced on March 8, 2010, the Company will not hold a conference
call to discuss its quarterly results.
About Infogroup
Infogroup (NASDAQ: IUSA) is the leading provider of data and
interactive resources that enables targeted sales, effective
marketing and insightful research solutions. Our information powers
innovative tools and insight for businesses to efficiently reach
current and future customers through multiple channels, including
the world’s most dominant and powerful Internet search engines and
GPS navigation systems. Infogroup’s headquarters are located at
5711 South 86th Circle, Omaha, NE 68127. For more information, call
(402) 593-4500 or visit www.infogroup.com.
Forward-Looking Statements
Statements in this announcement other than historical data and
information constitute forward looking statements that involve
risks and uncertainties that could cause actual results to differ
materially from those stated or implied by such forward-looking
statements. Forward looking statements can be identified by
terminology such as “may,” “will,” “should,” “could,” “would,”
“expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “continues” or the negative
of these terms or other comparable terminology. The potential risks
and uncertainties include, but are not limited to, recent changes
in senior management, risks associated with litigation, the
successful completion of the Company’s proposed merger, integration
of future acquisitions, fluctuations in operating results, failure
to successfully carry out our Internet strategy or to grow our
Internet revenue, effects of leverage, changes in technology and
increased competition. More information about potential factors
that could affect the company's business and financial results is
included in the Company's filings with the Securities and Exchange
Commission.
Infogroup INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
per share amounts) THREE MONTHS
ENDED March 31, 2010
2009 (UNAUDITED) Net sales $ 124,218 $ 127,537 Costs
and expenses: Cost of goods and services 46,394 46,989 Selling,
general and administrative 57,433 70,136 Depreciation and
amortization of operating assets 4,884 4,759 Amortization of
intangible assets 3,169 2,934 Total
operating costs and expenses 111,880 124,818
Operating income 12,338 2,719 Investment income (expense)
1,278 (2 ) Other income (expense) 127 (625 ) Interest expense
(1,763 ) (3,246 ) Other expense, net (358 )
(3,873 ) Income (loss) before income taxes 11,980 (1,154 )
Income tax expense (benefit) 4,668 (427 ) Net
income (loss) from continuing operations 7,312 (727 ) Loss from
discontinued operations, net of tax (13 ) (8,612 )
Net income (loss) $ 7,299 $ (9,339 ) BASIC
EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations
$ 0.13 $ (0.01 ) Loss from discontinued operations $ - $
(0.15 ) Net income (loss) $ 0.13 $ (0.16 ) Basic weighted
average shares outstanding 57,861 57,113
DILUTED EARNINGS (LOSS) PER SHARE: Income (loss) from
continuing operations $ 0.13 $ (0.01 ) Loss from discontinued
operations $ - $ (0.15 ) Net income (loss) $ 0.13 $
(0.16 ) Diluted weighted average shares outstanding 58,247
57,113
Infogroup INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, December 31, 2010 2009
(UNAUDITED) ASSETS Current assets: Cash and cash
equivalents $ 16,506 $ 5,784 Marketable securities 74 1,773 Trade
accounts receivable, net 43,086 61,947 List brokerage trade
accounts receivable, net 67,943 81,033 Unbilled services 9,163
8,487 Deferred income taxes 480 1,184 Prepaid expenses 10,911 8,702
Deferred marketing costs 1,052 742 Escrow, current 10,037 - Assets
held for sale 1,132 1,457 Total current
assets 160,384 171,109 Property and
equipment, net 48,747 50,285 Goodwill 346,451 346,265 Intangible
assets, net 60,360 61,828 Other assets 3,694 3,736 Escrow,
noncurrent - 10,029 $ 619,636 $
643,252
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current portion of long-term debt $ 70,066 $ 2,692
Accounts payable 10,967 18,500 List brokerage trade accounts
payable 54,021 65,936 Accrued payroll expenses 25,398 31,767
Accrued expenses 12,526 11,370 Income taxes payable 1,145 3,751
Deferred revenue 60,197 62,582 Total
current liabilities 234,320 196,598
Long-term debt, net of current portion 109,850 179,010 Deferred
income taxes 7,086 5,774 Other liabilities 11,119 11,034
Stockholders’ equity: Common stock 145 144 Paid-in capital 154,557
151,529 Retained earnings 114,829 107,530 Note receivable -
shareholder (9,790 ) (6,800 ) Accumulated other comprehensive loss
(2,480 ) (1,567 ) Total stockholders’ equity
257,261 250,836 $ 619,636 $ 643,252
Infogroup INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands) THREE MONTHS ENDED
March 31,
2010
2009
(UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income
(loss) $ 7,299 $ (9,339 ) Net loss from discontinued operations
(13 ) (8,612
) Net income (loss) from continuing operations 7,312
(727 ) Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization of operating
assets 4,884 4,759 Amortization of intangible assets 3,169 2,934
Amortization of deferred financing fees 388 312 Deferred income
taxes 2,585 (2,873 ) Non-cash stock compensation expense (benefit)
(1,046 ) 428 Non-cash 401(k) contribution in common stock and other
non-cash expense 754 821 (Gain) loss on sale of assets and
marketable securities (1,298 ) 29 Asset impairment charges - 2,060
Changes in assets and
liabilities:
Trade accounts receivable and unbilled services 17,860 13,302 List
brokerage trade accounts receivable 13,090 10,137 Prepaid expenses
and other assets (2,227 ) (3,999 ) Deferred marketing costs (310 )
(82 ) Accounts payable (8,048 ) (13,509 ) List brokerage trade
accounts payable (11,915 ) (9,937 ) Income taxes receivable and
payable, net (4,612 ) 51,580 Accrued expenses and other liabilities
(4,995 ) (2,442 ) Deferred revenue
(1,994
) (1,536 ) Net cash
provided by operating activities – continuing operations 13,597
51,257 Net cash used in operating activities – discontinued
operations
(21 )
(34,531 ) Net cash provided by operating
activities
13,576
16,726 CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 1,674 9 Proceeds from
sale of property and equipment 322 776 Purchases of property and
equipment (1,398 ) (1,659 ) Software and database development costs
and purchases of other intangibles
(3,494
) (1,900 ) Net cash
used in investing activities – continuing operations (2,896 )
(2,774 ) Net cash provided by investing activities – discontinued
operations
- 128,428
Net cash provided by (used in) investing activities
(2,896 ) 125,654
CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of
long-term debt (6,786 ) (105,429 ) Proceeds from long-term debt
5,000 4,000 Deferred financing costs paid - (1,085 ) Tax benefit
related to issuance of common stock 127 - Proceeds from shareholder
pursuant to stipulation of settlement
2,200
2,200 Net cash provided by (used
in) financing activities – continuing operations 541 (100,314 )
Effect of exchange rate fluctuations on cash and cash equivalents
(499 ) (449
) Net increase in cash and cash equivalents 10,722
41,617 Cash and cash equivalents, beginning
5,784 4,691 Cash and
cash equivalents, ending
$ 16,506
$ 46,308
The following provides a
reconciliation of GAAP net income (loss) to non-GAAP EBITDA,
non-GAAPadjusted EBITDA, as well as total adjustments included in
income (loss) before income taxes:
THREE MONTHS ENDED (in thousands)
March 31, 2010 2009 (UNAUDITED)
GAAP net income (loss) $ 7,299 $ (9,339 ) Loss from
discontinued operations, net of tax 13 8,612 Interest expense 1,763
3,246 Income tax expense (benefit) 4,668 (427 ) Depreciation and
amortization of operating assets 4,884 4,759 Amortization of
intangible assets 3,169 2,934 Non-GAAP
EBITDA $ 21,796 $ 9,785 EBITDA adjustments: SEC
investigation and merger related expenses $ 2,206 $ 3,832
Restructuring costs 3,017 2,638 Net impairments and write-down of
assets / (gains) on sale of assets (1,257 ) 2,183 Litigation
settlement charges 102 258 Non-cash stock compensation expense
(benefit) (1,046 ) 427 Total EBITDA
adjustments 3,022 9,338 Non-GAAP
adjusted EBITDA $ 24,818 $ 19,123 Total
adjustments: EBITDA adjustments $ 3,022 $ 9,338 Accelerated
tradename amortization expense 943 -
Total adjustments included in income (loss) before income taxes $
3,965 $ 9,338
The following provides a
reconciliation of GAAP basic earnings (loss) per share to
non-GAAPadjusted basic earnings (loss) per share:
THREE MONTHS ENDED (in thousands, except per share
amounts) March 31, 2010 2009
(UNAUDITED) GAAP basic earnings (loss) per share from
continuing operations $ 0.13 $ (0.01 ) Effect of adjustments (see
below) $ 0.04 $ 0.10 Non-GAAP adjusted basic earnings
per share from continuing operations $ 0.17 $ 0.09
GAAP basic earnings (loss) per share $ 0.13 $ (0.16 ) Effect
of adjustments (see below) $ 0.04 $ 0.10 Non-GAAP
adjusted basic earnings (loss) per share $ 0.17 $ (0.06 )
Adjustments (detail in above table) $ 3,965 $ 9,338 Income
tax effect of adjustments 1,547 3,595
Impact of adjustments on net income $ 2,418 $ 5,743
Basic weighted average shares outstanding 57,861
57,113
Effect of adjustments on basic
earnings (loss) per share from continuingoperations and basic
earnings per share
$ 0.04 $ 0.10
The following provides a reconciliation of GAAP income (loss)
before income taxes by segment to non-GAAP EBITDA and non-GAAP
adjusted EBITDA by segment:
(in thousands) For the Three Months Ended March
31, 2010 Marketing
Condensed Services Research Corporate
Consolidated Data Group Group
Group Activities Total
(UNAUDITED)
GAAP income (loss) before income taxes $ 17,538 $ 4,513 $
(39 ) $ (10,032 ) $ 11,980 Interest expense - - - 1,763 1,763
Depreciation and amortization of operating assets 2,676 1,244 472
492 4,884 Amortization of intangible assets 757
634 1,778 - 3,169
Non-GAAP EBITDA $ 20,971 $ 6,391 $ 2,211
$ (7,777 ) $ 21,796 EBITDA adjustments: SEC
investigation and merger related expenses $ - $ - $ - $ 2,206 $
2,206 Restructuring costs 1,803 1,038 93 83 3,017 Net impairments
and write-down of assets / (gains) on sale of assets 19 - - (1,276
) (1,257 ) Litigation settlement charges - 102 - - 102 Non-cash
stock compensation expense (benefit) 16 44
18 (1,124 ) (1,046 ) Total
EBITDA adjustments 1,838 1,184
111 (111 ) 3,022 Non-GAAP adjusted
EBITDA $ 22,809 $ 7,575 $ 2,322 $ (7,888 ) $
24,818 Adjusted EBITDA percentage of net sales 36 % 21 % 10
% - 20 %
(in thousands) For the Three
Months Ended March 31, 2009 Marketing Condensed
Services Research Corporate
Consolidated Data Group Group
Group Activities Total
(UNAUDITED)
GAAP income (loss) before income taxes $ 12,917 $ 5,042 $
(164 ) $ (18,949 ) $ (1,154 ) Interest expense - - - 3,246 3,246
Depreciation and amortization of operating assets 2,406 1,089 501
763 4,759 Amortization of intangible assets 1,243
860 831 - 2,934
Non-GAAP EBITDA $ 16,566 $ 6,991 $ 1,168
$ (14,940 ) $ 9,785 EBITDA adjustments: SEC
investigation and merger related expenses $ - $ - $ - $ 3,832 $
3,832 Restructuring costs 1,214 861 560 3 2,638 Net impairments and
write-down of assets / (gains) on sale of assets 1,343 - 15 825
2,183 Litigation settlement charges 8 250 - - 258 Non-cash stock
compensation expense (benefit) - -
- 427 427 Total EBITDA
adjustments 2,565 1,111 575
5,087 9,338 Non-GAAP adjusted
EBITDA $ 19,131 $ 8,102 $ 1,743 $ (9,853 ) $
19,123 Adjusted EBITDA percentage of net sales 28 % 23 % 7 %
- 15 %
The following provides a reconciliation of GAAP selling, general
and administrative expenses to non-GAAP adjusted selling, general
and administrative expenses, excluding restructuring, non-recurring
and non-cash charges:
THREE MONTHS ENDED (in thousands) March
31, 2010 2009 (UNAUDITED)
GAAP selling, general and administrative expenses $ 57,433 $ 70,136
Less restructuring, non-recurring and non-cash charges 4,300
8,750
Non-GAAP adjusted selling, general
and administrative expenses, excludingrestructuring, non-recurring
and non-cash charges
$ 53,133 $ 61,386
The following provides a
reconciliation of GAAP operating income to non-GAAPoperating
income, excluding restructuring, non-recurring and non-cash
charges:
THREE MONTHS ENDED (in thousands) March
31, 2010 2009 (UNAUDITED) GAAP
operating income $ 12,338 $ 2,719 Plus restructuring, non-recurring
and non-cash charges 4,300 8,750 Plus acceleration of tradename
amortization expense 943 -
Non-GAAP operating income,
excluding restructuring, non-recurringand non-cash charges
$ 17,581 $ 11,469
The following provides a
reconciliation of GAAP debt to non-GAAP net debt:
(in thousands) March 31, December 31,
2010 2009 (UNAUDITED) GAAP
long-term debt, net of current portion $ 109,850 $ 179,010 GAAP
current portion of long-term debt 70,066 2,692 Total
GAAP debt 179,916 181,702 Less GAAP cash and GAAP marketable
securities: GAAP cash 16,506 5,784 GAAP marketable securities
74 1,773 Total GAAP cash and marketable securities
16,580 7,557 Non-GAAP net debt $ 163,336 $ 174,145
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