UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 of 15(d)
of the Securities Exchange Act of 1934
January 12, 2015
Date of Report (Date of earliest event reported)
LOCAL
CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware |
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001-34197 |
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33-0849123 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
7555 Irvine Center Drive
Irvine, California 92618
(Address of principal executive offices, zip code)
(949) 784-0800
(Registrants telephone number, including area code)
N/A
(Former name or
former address, if changed since last report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the issuer under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 |
Results of Operations and Financial Condition. |
On January 12, 2015, the Registrant issued a press
release announcing its preliminary financial results for the completed quarter and full year ended December 31, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.
The information contained in this Current Report, including the accompanying exhibit, is being furnished and shall not be deemed filed for the
purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report is not incorporated by reference into any filings of Local Corporation made
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated
so therein.
The Registrant made reference to non-GAAP financial information in the press release and included a reconciliation of those non-GAAP
financial measures to the comparable GAAP financial measures in the press release as well.
Item 7.01 |
Regulation FD Disclosure. |
The information in Item 2.02 above is incorporated herein by reference.
Item 9.01 |
Financial Statements and Exhibits. |
Exhibit 99.1 Press
release of Registrant dated January 12, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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LOCAL CORPORATION |
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Date: January 12, 2015 |
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By: |
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/s/ Kenneth S. Cragun |
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Kenneth S. Cragun |
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Chief Financial Officer and Secretary |
Exhibit Index
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Exhibit
Number |
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Description |
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99.1 |
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Press release of Registrant dated January 12, 2015. |
Exhibit 99.1
Local Corporation Announces Preliminary Fourth Quarter 2014
Financial Results and Provides 2015 Guidance
IRVINE, Calif., Jan. 12, 2015 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 companys customary quarterly closing
and review procedures and audit by the companys 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 companys 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.
1
Projected 2015 Adjusted EBITDA Factors:
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Interest expense of $1.1 million |
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Income tax provision of $100,000 |
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Depreciation expense of $4.5 million |
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Amortization expense of $150,000 |
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Stock compensation expense of $600,000 |
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Warrant and conversion option revaluation expense items are undeterminable, but may be significant non-cash gains or losses** |
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The valuation of the warrant liability and the conversion option liability is based in large part on the underlying price and volatility of the companys 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 companys advertisers and partners. For more information, visit: http://www.localcorporation.com or visit the companys 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
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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 companys performance because it eliminates the effects of
period-to-period changes in income from interest on the companys cash, expense from the companys 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 companys business operations. Management
uses Adjusted EBITDA in evaluating the overall performance of the companys business operations.
A limitation of non-GAAP Adjusted EBITDA is that it
excludes items that often have a material effect on the companys 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 companys 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 companys 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.
# # #
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Investor Relations Contact: |
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Media Relations Contact: |
LHA |
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Local Corporation |
Kirsten Chapman, 415-433-3777 |
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Cameron Triebwasser, 949-789-5223 |
local@lhai.com |
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ctriebwasser@local.com |
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LOCAL CORPORATION
RECONCILIATION OF EXPECTED GAAP NET INCOME (LOSS) TO EXPECTED ADJUSTED EBITDA
(in thousands, except per share amounts)
(Unaudited)
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Year Ended December 31
2014 |
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Three
Months Ended December 31, 2014 |
Expected GAAP net income (loss) |
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($5,700) - ($5,500) |
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($200) - $0 |
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Less interest and other income (expense), net |
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2,200 |
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500 |
Plus provision (benefit) for income taxes |
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100 |
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Plus depreciation and amortization |
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4,600 |
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1,100 |
Plus stock-compensation |
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800 |
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200 |
Less revaluation of derivatives |
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(900) |
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(1,000) |
Plus net income from discontinued operations |
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(700) |
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(700) |
Plus severance charges |
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1,800 |
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200 |
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Expected Adjusted EBITDA |
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$2,200 - $2,400 |
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$100 - $300 |
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GAAP net income (loss) per diluted share |
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($0.25) - ($0.24) |
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($0.01) - $0.00 |
Adjusted EBITDA per diluted share |
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$0.09 - $0.10 |
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$0.00 - $0.01 |
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Diluted weighted average shares used for GAAP |
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23,200 |
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23,200 |
Diluted weighted average shares used for Adjusted EBITDA per share |
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23,350 |
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23,300 |
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