- National Launch of Identity Guard® with
Watson™ as Part of Employee Benefit Programs
- Activated Expanded Service Tiers of
Identity Guard® with Watson™
- Divestiture of Non-Core Businesses
completed in Third Quarter
Intersections Inc. (NASDAQ: INTX) today announced financial
results for the quarter ended September 30, 2017.
“This has been an eventful quarter for the Company, as we
completed the divestiture of all non-core businesses, and developed
additional service tiers and expanded sales channels for Identity
Guard® with Watson™,” stated Johan Roets, Chief Executive Officer.
“In addition, the cybersecurity incident announced by Equifax Inc.
on September 7, 2017, potentially impacting approximately 145
million U.S. consumers, and its subsequent response thereto, have
impacted our industry profoundly. Equifax has offered credit locks
for life and free credit monitoring for at least twelve months to
nearly all U.S. consumers. The fact that such critical data
containing social security numbers, driver’s license numbers, full
names and dates of birth have been exposed – data that will never
change during one’s lifetime – means that nearly every adult U.S.
citizen may now have to deal with the risk of identity misuse and
financial crime for an unknown, extended period of time. As a
result, we believe that the first significant effects of such
criminal activities may not occur until after the Equifax free
credit monitoring expires in a year’s time. We expect the already
complex relationships between the three major U.S. credit reporting
agencies and the consumers whose data they collect will become even
more problematic as consumers object to their lack of control over
how these organizations store, use and share their most personal
and sensitive data. We believe that as the largest independent
provider of identity theft protection and privacy services to
consumers in the U.S., Intersections stands to gain from consumers
who want someone other than the credit agencies to protect
them.
“As we look ahead to the fourth quarter and 2018, we are
optimistic about the Company’s future, with a renewed focus,
best-in-class products, and strong consumer need for comprehensive
identity protection solutions,” continued Mr. Roets. “As the
Company focuses on growing its business, we continue to
successfully build our distribution pipeline through marketing
partners and the employee benefit broker channel. We have seen some
substantial wins in both channels. Additionally, deals won by
Equifax in the employee benefit arena have been re-tendered in the
aftermath of their data breach.”
Key Accomplishments and Developments:
- The Identity Guard® with Watson™
technology platform and product suite was launched on June 26,
2017. During the third quarter, development activities expanded the
platform to support additional service tiers that will be available
by the first quarter of 2018, including both an entry level Value
service and a premium service, Premier, to go with our Total
service plan. All three tiers of service for Identity Guard® with
Watson™ also include an option for a robust family coverage
service. The Company expects the Identity Guard® with Watson™
product suite to be its primary offering starting in January
2018.
- A successful business development
campaign began in the third quarter to work with employers and
their employee benefits advisors to make Identity Guard® identity
theft protection available to employees across the U.S. Employers
responded favorably to our programs and plan to begin covering new
employee populations in the fourth quarter of 2017.
- The Company completed the divestiture
of its Pet Health Monitoring business, known as Voyce, effective
July 31, 2017. The Voyce sale, along with the sales of
the Company’s Bail Bond Industry Solutions business in the first
quarter of 2017 and its insurance consulting business in the second
quarter of 2017, completes the Company’s previously announced
program to divest all non-core businesses and focus solely on the
personal identity theft protection market for consumers.
- The completed divestiture program
allows management to exclusively focus on the full market launch of
Identity Guard® with Watson™, executing new partner opportunities,
fine-tuning its direct-to-consumer marketing, and continuing its
pursuit of cost control through streamlining and optimizing
processes.
- Identity Guard® and the Canadian
business achieved year over year revenue growth of 0.2% and 7.9%,
respectively, compared to the third quarter of 2016.
Consolidated Third Quarter Results:
Consolidated revenue for the quarter ended September 30, 2017
was $39.2 million, compared to $43.0 million for the quarter ended
September 30, 2016. Loss from continuing operations before income
taxes for the quarter ended September 30, 2017 was $(3.4) million,
compared to $(2.2) million for the quarter ended September 30,
2016. Consolidated adjusted EBITDA (loss) before share related
compensation and non-cash impairment charges (“Adjusted EBITDA”)
for the quarter ended September 30, 2017 was $958 thousand,
compared to $1.8 million for the quarter ended September 30, 2016.
Basic and diluted loss from continuing operations per share for the
quarter ended September 30, 2017 was $(0.14), compared to $(0.09)
for the quarter ended September 30, 2016.
Consolidated revenue for the nine months ended September 30,
2017 was $119.6 million, compared to $133.4 million for the nine
months ended September 30, 2016. Loss from continuing operations
before income taxes for the nine months ended September 30, 2017
was $(13.0) million, compared to $(2.2) million for the nine months
ended September 30, 2016. Consolidated Adjusted EBITDA (loss) for
the nine months ended September 30, 2017 was $(777) thousand,
compared to $8.4 million for the nine months ended September 30,
2016. Basic and diluted loss from continuing operations per share
for the nine months ended September 30, 2017 was $(0.55), compared
to $(0.09) for the nine months ended September 30, 2016.
Consolidated Third Quarter Highlights:
- Identity Guard® subscriber revenue of
$12.4 million for the quarter ended September 30, 2017,
remained consistent with revenue of $12.5 million for the quarter
ended June 30, 2017 and revenue of $12.4 million for the quarter
ended September 30, 2016. The Identity Guard® subscriber base was
338 thousand subscribers as of September 30, 2017, compared to 329
thousand subscribers as of June 30, 2017. Subscriber growth late in
the third quarter is expected to have a positive impact on revenue
in the fourth quarter of 2017.
- Revenue from U.S. financial institution
clients was $20.8 million for the quarter ended
September 30, 2017 compared to revenue of $21.4 million
for the quarter ended June 30, 2017. Revenue decreased by 0.9% per
month during the third quarter, which the Company believes is
representative of normal attrition given the discontinuation of
marketing and retention efforts for this population.
- Loss from continuing operations before
income taxes for the quarter ended September 30, 2017 was $(3.4)
million, compared to $(5.3) million for the quarter ended June 30,
2017, and $(2.2) million for the quarter ended September 30, 2016.
The improvement in the third quarter results compared to the second
quarter 2017 was primarily due to the negative impact in the second
quarter of a $1.5 million non-cash loss on extinguishment of debt
as a result of the term loan refinancing closed in April 2017, and
an increase of $1.0 million in the estimated liability for
non-income business taxes.
- Adjusted EBITDA (loss) for the quarter
ended September 30, 2017 was $958 thousand, compared to $(735)
thousand for the quarter ended June 30, 2017 and $1.8 million for
the quarter ended September 30, 2016. The increase compared to the
second quarter 2017 was primarily due to the negative impact of a
$1.0 million increase in the estimated liability for non-income
business taxes in the second quarter.
Liquidity:
As of September 30, 2017, the Company had a cash balance of $7.0
million, and an outstanding principal balance of $20.0 million
under its new credit agreement, as amended. Cash (used in)
operating activities of continuing operations for the nine months
ended September 30, 2017 was $(1.8) million. Cash provided by
operating activities of continuing operations for the quarter ended
September 30, 2017 was $81 thousand.
The Company began expanding its business development
capabilities in 2016 to address market channel and distribution
opportunities and continued the expansion of this team in the first
nine months of 2017. As a result, cash used in operating activities
for the nine-month period includes approximately $3.6 million for
business development activities, the significant majority of which
is personnel cost. The Company expects to continue its spending on
business development activities at approximately the same level as
the first nine months of 2017 for the remainder of 2017.
Cash used in operating activities included $6.3 million in the
nine months ended September 30, 2017 for deferred subscription and
solicitation costs related to our direct-to-consumer marketing,
including $1.0 million in the third quarter. The Company
implemented changes beginning in the second quarter to reduce the
cash marketing spending in this channel and expects the use of cash
for this purpose to continue to decline for the remainder of
2017.
The Company continued to develop new product features primarily
for the Identity Guard® with Watson™ platform during the nine-month
period ending September 30, 2017. As a result, the Company invested
approximately $2.7 million in internally developed capitalized
software for the nine-month period. The Company expects to continue
its investments in product development at approximately the same
level as the first nine months of 2017 for the remainder of
2017.
For additional information, Please see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources” in our most recent Form
10-Q.
Third Quarter 2017 Business Update Conference Call:
The Company will hold a conference call to provide a third
quarter 2017 business update on Monday, November 13, 2017 at 4:30
p.m. Eastern Time.
Interested parties can access the live webcast on the Investor's
page at Intersections Inc.’s website www.intersections.com. The
live call can be accessed by dialing the toll free numbers below.
Those who wish to participate in the Q&A session must dial
in.
WHAT: Intersections Inc. Third Quarter 2017
Conference Call
WHEN: November 13, 2017 4:30 p.m.
Eastern Time
HOW: Dial in: 888-771-4384
International: 847-585-4409
For a current list of alternate local and
International Freephone telephone numbers, please click here.
Participant Pass code: 7033124#
To pre-register for the conference, please
click here.
The replay of the webcast will be available November 13, 2017 at
7:00 p.m. (Eastern Time) through November 19, 2017 at 11:59 PM
(Eastern Time). The dial-in for the replay is 888-843-7419 or
630-652-3042 with the replay access code of 7033124#.
Non-GAAP Financial Measures:
Intersections' Consolidated Financial Statements, "Other Data"
and reconciliations of these non-GAAP financial measures to the
most directly comparable GAAP financial measures and related notes
can be found in the accompanying tables and footnotes to this
release and in the "GAAP and Non-GAAP Measures" link under the
"Investor & Media" page on our website at
www.intersections.com.
Forward-Looking Statements:
Statements in this release relating to future plans, results,
performance, expectations, achievements and the like are considered
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as “anticipate,” “estimate,” “expect,” “project,'' “plan,”
“intend,” “believe,” “may,” “should,” “can have,” “likely” and
other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events. Those forward-looking statements
involve known and unknown risks and uncertainties and are subject
to change based on various factors and uncertainties that may cause
actual results to differ materially from those expressed or implied
by those statements, including the success of our strategic
objectives; our ability to generate revenue from our partner sales
strategy and business development pipeline with our distribution
partners; the impact of shutting down and then divesting our Pet
Health Monitoring segment; the timing and success of new product
launches and other growth initiatives, including our Identity
Guard® with Watson™ product; the continuing impact of the
regulatory environment on our business; the continued dependence on
a small number of financial institutions for a majority of our
revenue and to service our U.S. financial institution customer
base; our ability to execute our strategy and previously announced
transformation plan; our incurring additional restructuring
charges; our incurring additional charges for non-income business
taxes or otherwise, or impairment costs or charges on goodwill
and/or other assets; our ability to control costs; our expectations
about marketing and investment expenditures described under
“Liquidity” above; our failure to protect private data due to a
security breach or other unauthorized access; our ability to
maintain sufficient liquidity and produce sufficient cash flow to
fund our business, growth strategy and debt service obligations;
our ability to complete the proposed amendment to our New Credit
Agreement; and our needs for additional capital to grow our
business, including our ability to maintain compliance with the
covenants under our term loan or seek additional sources of debt
and/or equity financing. Factors and uncertainties that may cause
actual results to differ include but are not limited to the risks
disclosed under “Forward-Looking Statements,” “Item 1.
Business—Government Regulation” and “Item 1A. Risk Factors” in the
Company’s most recent Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q and in its recent other filings with the U.S.
Securities and Exchange Commission. The Company undertakes no
obligation to revise or update any forward-looking statements
unless required by applicable law.
About Intersections:
Intersections Inc. (Nasdaq: INTX) provides innovative,
information based solutions that help consumers manage risks and
make better informed life decisions. Under its Identity Guard®
brand and other brands, the Company helps consumers monitor, manage
and protect against the risks associated with their identities and
personal information. Headquartered in Chantilly, Virginia, the
Company was founded in 1996. To learn more, visit
www.intersections.com.
Explanatory Note:
The information in the following tables is presented giving
effect to the disposal of Voyce, with its historical financial
results reflected as discontinued operations. We made adjustments
to our historical financial results for certain costs and overhead
allocations to either discontinued or continuing operations for the
year ended December 31, 2016 and nine months ended September 30,
2017; for additional information, please see "Note 2 — Basis of
Presentation and Consolidation" in our most recent Form 10-Q.
INTERSECTIONS INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share
data) (unaudited) Three Months Ended
Nine Months Ended September 30, September 30,
2017 2016 2017 2016
REVENUE $ 39,248 43,027 $ 119,631 133,392 OPERATING EXPENSES:
Marketing 2,682 3,202 9,294 10,292 Commission 9,462 10,527 28,966
32,636 Cost of revenue 13,126 13,723 39,694 41,294 General and
administrative 15,230 15,729 47,151 45,310 Loss on dispositions of
Captira and Habits at Work — — 106 — Depreciation 1,378 1,085 3,966
3,521 Amortization 29 82 123 431 Total
operating expenses 41,907 44,348 129,300
133,484 LOSS FROM OPERATIONS (2,659 ) (1,321 ) (9,669 ) (92
) Interest expense, net (701 ) (621 ) (1,895 ) (1,702 ) Loss on
extinguishment of debt — — (1,525 ) — Other (expense) income, net
(3 ) (234 ) 133 (419 ) LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (3,363 ) (2,176 ) (12,956 ) (2,213 ) Income tax
(expense) benefit (6 ) 76 23 69 LOSS FROM
CONTINUING OPERATIONS (3,369 ) (2,100 ) (12,933 ) (2,144 ) Loss
from discontinued operations, net of tax (1,030 ) (6,008 ) (2,449 )
(15,538 ) NET LOSS $ (4,399 ) $ (8,108 ) $ (15,382 ) $ (17,682 )
Basic and diluted loss per common share: Loss from continuing
operations $ (0.14 ) $ (0.09 ) $ (0.55 ) $ (0.09 ) Loss from
discontinued operations (0.04 ) (0.26 ) (0.10 ) (0.67 ) Net loss
per common share—basic and diluted $ (0.18 ) $ (0.35 ) $ (0.65 ) $
(0.76 ) Weighted average common shares outstanding—basic and
diluted 23,953 23,378 23,818 23,178
INTERSECTIONS
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands, except par value) (unaudited)
September 30, December 31, 2017 2016
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,970 $
10,797 Accounts receivable, net of allowance for doubtful accounts
of $0 (2017) and $15 (2016) 6,496 7,964 Prepaid expenses and other
current assets 3,861 3,711 Income tax receivable 2,548 3,314
Deferred subscription solicitation and commission costs 2,904 5,050
Current assets of discontinued operations and assets held for sale
— 575 Total current assets 22,779 31,411 PROPERTY AND
EQUIPMENT, net 10,430 10,611 GOODWILL 9,763 9,763 INTANGIBLE
ASSETS, net 88 210 OTHER ASSETS 1,170 862 TOTAL
ASSETS $ 44,230 $ 52,857
LIABILITIES AND
STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $
2,912 $ 2,000 Accrued expenses and other current liabilities 11,009
10,978 Accrued payroll and employee benefits 2,581 4,128
Commissions payable 360 316 Current portion of long-term debt, net
— 2,146 Capital leases, current portion 467 471 Deferred revenue
5,852 8,295 Current liabilities of discontinued operations and
liabilities held for sale — 858 Total current
liabilities 23,181 29,192 LONG-TERM DEBT, net 19,182 10,092
OBLIGATIONS UNDER CAPITAL LEASES, less current portion 484 865
OTHER LONG-TERM LIABILITIES 3,107 3,436 DEFERRED TAX LIABILITY, net
1,905 1,905 TOTAL LIABILITIES 47,859 45,490
COMMITMENTS AND CONTINGENCIES (see Notes 13 and 15 in most
recent Form 10-Q) STOCKHOLDERS’ (DEFICIT) EQUITY: Common stock at
$0.01 par value, shares authorized 50,000; shares issued 28,179
(2017) and 27,303 (2016); shares outstanding 24,122 (2017) and
23,733 (2016) 282 273 Additional paid-in capital 146,291 142,247
Warrants 2,140 — Treasury stock, shares at cost; 4,057 (2017) and
3,570 (2016) (35,628 ) (33,822 ) Accumulated deficit (116,714 )
(101,331 ) TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY (3,629 ) 7,367
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY $
44,230 $ 52,857
INTERSECTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands, unaudited) Nine Months Ended September
30, 2017 2016 CASH FLOWS FROM OPERATING
ACTIVITIES: Net loss $ (15,382 ) $ (17,682 ) Loss from discontinued
operations, net of tax (2,449 ) (15,538 ) Loss from continuing
operations (12,933 ) (2,144 ) Adjustments to reconcile net loss to
cash flows used in operating activities: Depreciation and
amortization 4,089 3,951 Amortization of debt issuance costs 184
658 Accretion of debt discount 66 — Provision for doubtful accounts
(15 ) (54 ) (Gain) loss on disposal of fixed assets — 261 Share
based compensation 4,564 4,658 Amortization of deferred
subscription solicitation costs 8,482 9,981 Loss on disposition of
Captira Analytical 130 — Gain on disposition of Habits at Work (24
) — Loss on extinguishment of debt 1,525 — Changes in assets and
liabilities: Accounts receivable 1,483 (1,092 ) Prepaid expenses,
other current assets and other assets (412 ) 709 Income tax
receivable, net 766 594 Deferred subscription solicitation and
commission costs (6,336 ) (7,164 ) Accounts payable and accrued
liabilities (677 ) (5,569 ) Commissions payable 29 (71 ) Deferred
revenue (2,411 ) 618 Other long-term liabilities (329 ) (382 ) Cash
flows (used in) provided by continuing operations (1,819 ) 4,954
Cash flows used in discontinued operations (2,313 ) (11,687 ) Net
cash used in operating activities (4,132 ) (6,733 ) CASH FLOWS FROM
INVESTING ACTIVITIES: Cash received for the liquidating
distribution of White Sky, Inc. — 57 Net cash paid for the
disposition of Captira Analytical (315 ) — Decrease (increase) in
restricted cash 115 (265 ) Cash paid for withholding tax on vesting
of RSUs in exchange for promissory note (130 ) — Proceeds from sale
of property and equipment — 394 Acquisition of property and
equipment (3,964 ) (4,591 ) Cash flows used in continuing
operations (4,294 ) (4,405 ) Cash flows provided by (used in)
discontinued operations 4 (853 ) Net cash used in investing
activities (4,290 ) (5,258 ) CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 20,000 20,000 Repayments of debt
(13,920 ) (2,895 ) Repurchase of common stock (1,510 ) — Proceeds
from issuance of warrants 1,500 — Cash paid for debt and equity
issuance costs (323 ) (1,856 ) Capital lease payments (411 ) (524 )
Withholding tax payment on vesting of restricted stock units (1,122
) (408 ) Cash flows provided by financing activities 4,214
14,317 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(4,208 ) 2,326 CASH AND CASH EQUIVALENTS — Beginning of period
10,857 11,471 Cash reclassified to assets held for sale at
beginning of period 321 — CASH AND CASH EQUIVALENTS —
End of period $ 6,970 $ 13,797 SUPPLEMENTAL
DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment obtained under capital lease, including acquisition costs
$ 40 $ 101 Equipment additions accrued but not paid $
209 $ 490 Shares withheld in lieu of withholding
taxes on vesting of restricted stock awards $ 117 $ 15
INTERSECTIONS INC.OTHER
DATA(in thousands)(unaudited)
Revenue
The following tables provide comparative details of our revenue
information for the three-month periods ended September 30, 2017,
June 31, 2017 and September 30, 2016, and for the nine-month
periods ended September 30, 2017 and 2016:
Quarter Ended September 30, 2017
June 30, 2017 Change
September 30, 2016 Change Identity
Guard® (1) $ 12,396 $ 12,482 (0.7 )% $ 12,369 0.2 %
Canadian business 3,405 3,220 5.7 % 3,157 7.9 % U.S. financial
institutions 20,774 21,365 (2.8 )% 23,533 (11.7 )% Breach services
& other (1) 1,270 1,311 (3.1 )% 1,012 25.5
% Personal Information Services revenue 37,845 38,378 (1.4 )%
40,071 (5.6 )% Other business units 1,403 1,557 (9.9
)% 2,956 (52.5 )% Consolidated revenue $ 39,248 $ 39,935
(1.7 )% $ 43,027 (8.8 )%
Nine Months Ended
September 30, 2017 2016 Change
Identity Guard® (1) $ 36,889 $ 38,474 (4.1 )% Canadian business
9,684 9,404 3.0 % U.S. financial institutions 64,042 73,399 (12.7
)% Breach services & other (1) 4,217 2,841 48.4 %
Personal Information Services revenue 114,832 124,118 (7.5 )% Other
business units 4,799 9,274 (48.3 )% Consolidated
revenue $ 119,631 $ 133,392 (10.3 )%
______________________
(1)
We periodically refine the criteria used
to calculate and report our subscriber data. In the nine months
ended September 30, 2017, we determined that certain subscribers
who receive our breach response services should no longer be
included in the presentation of Identity Guard® subscribers or
revenue due to the nonrecurring nature of our breach response
services. For comparability, all periods presented have been recast
to reflect this change in subscribers and revenue.
INTERSECTIONS INC.OTHER DATA,
continued(in thousands)(unaudited)
Personal Information Services Segment Subscribers
The following tables provide details of our Personal Information
Services segment subscriber information for the three and nine
months ended September 30, 2017:
Three months ended:
FinancialInstitution
Identity Guard® (1) CanadianBusiness
Lines Total Balance at June 30, 2017 663 329 161 1,153
Additions — 38 23 61 Cancellations (23 ) (29 ) (25 ) (77 ) Balance
at September 30, 2017 640 338 159 1,137
Nine months ended:
FinancialInstitution
Identity Guard® (1) CanadianBusiness
Lines Total Balance at December 31, 2016 705 317 162
1,184 Additions 2 116 81 199 Cancellations (67 ) (95 ) (84 ) (246 )
Balance at September 30, 2017 640 338 159
1,137
______________________
(1) We periodically refine the criteria used to calculate
and report our subscriber data. In the nine months ended September
30, 2017, we determined that certain subscribers who receive our
breach response services should no longer be included in the
presentation of Identity Guard® subscribers or revenue due to the
nonrecurring nature of our breach response services. For
comparability, all periods presented have been recast to reflect
this change in subscribers and revenue.
INTERSECTIONS INC.OTHER DATA,
continued(unaudited)
Intersections Inc.Reconciliation of Non-GAAP
Financial Measures
The table below includes financial information prepared in
accordance with accounting principles generally accepted in the
United States, (“GAAP”), as well as other financial measures
referred to as non-GAAP financial measures. Consolidated adjusted
EBITDA (loss) before share related compensation and non-cash
impairment charges (“Adjusted EBITDA”) is presented in a manner
consistent with the way management evaluates operating results and
which management believes is useful to investors and others. Share
related compensation includes non-cash share based compensation. An
explanation regarding the Company’s use of non-GAAP financial
measures and a reconciliation of non-GAAP financial measures used
by the Company to GAAP measures is provided below. These non-GAAP
financial measures should be considered in addition to, but not as
a substitute for, net income (loss) and the other information
prepared in accordance with GAAP, and may not be comparable to
similarly titled measures reported by other companies. Management
strongly encourages shareholders to review our financial statements
and publicly-filed reports in their entirety and not to rely on any
single financial measure.
Consolidated Adjusted EBITDA represents consolidated (loss)
income from continuing operations before income taxes plus: share
related compensation; non-cash impairment of goodwill, intangibles
and other assets; loss on disposal of fixed assets; (gain) loss on
sale of Captira Analytical and Habits at Work; loss on
extinguishment of debt; depreciation and amortization; and interest
expense. We believe that the consolidated Adjusted EBITDA
calculation provides useful information to investors because they
are indicators of our operating performance, and we use these
measures in communications with our board of directors, creditors,
investors and others concerning our financial performance.
Consolidated Adjusted EBITDA is commonly used as a basis for
investors and analysts to evaluate and compare the periodic and
future operating performance and value of companies within our
industry. Our Board of Directors and management use consolidated
Adjusted EBITDA to evaluate the operating performance of the
Company. In addition, consolidated Adjusted EBITDA, as defined in
our New Credit Agreement with PEAK6 Investments, L.P., as amended,
is used to measure covenant compliance.
We provide this information to show the impact of share related
compensation on our operating results, as it is excluded from our
internal operating and budgeting plans and measurements of
financial performance; however, we do consider the dilutive impact
to our shareholders when awarding share related compensation and
consider both the Black-Scholes value and GAAP value (to the extent
applicable) in connection therewith, and value such awards
accordingly.
INTERSECTIONS INC.OTHER DATA,
continued(unaudited)
We do not consider share related compensation charges when we
evaluate the performance of our individual business groups or
formulate our short and long-term operating plans. Due to its
nature, individual managers generally are unable to project the
impact of share related compensation and accordingly we do not hold
them accountable for the impact of equity award grants. When we
consider making share related compensation grants, we primarily
take into account the need to attract and retain high quality
employees, overall shareholder dilution and the Black-Scholes
values of the equity grant to the recipient, rather than the
potential accounting charges associated with such grants. For
comparability purposes, we believe it is useful to provide a
non-GAAP financial measure that excludes share related compensation
in order to better understand the long-term performance of our core
business and to compare our results to the results of our peer
companies because of varying available valuation methodologies and
the variety of award types that companies can use under GAAP.
Furthermore, the value of share related compensation is determined
using a complex formula that incorporates factors, such as market
volatility, that are beyond our control. Accordingly, we believe
that the presentation of consolidated Adjusted EBITDA when read in
conjunction with our reported GAAP results can provide useful
supplemental information to our management, to investors and to our
lenders regarding financial and business trends relating to our
financial condition and results of operations.
Consolidated Adjusted EBITDA has limitations due to the fact it
does not include all compensation related expenses. For example, if
we only paid cash based compensation as opposed to a portion in
share related compensation, the cash compensation expense included
in our general and administrative expenses would be higher. We
compensate for this limitation by providing information required by
GAAP about outstanding share based awards in the footnotes to our
financial statements in our SEC filings. We believe equity based
compensation is an important element of our compensation program
and all forms of share related awards are valued and included as
appropriate in our operating results.
The following tables reconcile consolidated (loss) income from
continuing operations before income taxes to consolidated Adjusted
EBITDA, as defined, for the previous seven quarters through
September 30, 2017. The information in the following tables is
presented giving effect to the disposal of Voyce, with its
historical financial results reflected as discontinued operations.
We made adjustments to our historical financial results for certain
costs and overhead allocations to either discontinued or continuing
operations for the year ended December 31, 2016 and nine months
ended September 30, 2017; for additional information, please see
"Note 2 — Basis of Presentation and Consolidation" in our most
recent Form 10-Q. In managing our business, we analyze our
performance quarterly on a consolidated income (loss) before income
tax basis.
In the second quarter of 2016, we ceased adding other expense
(income) to consolidated loss before income taxes as part of our
calculation of Adjusted EBITDA, to be consistent with the
definition of Adjusted EBITDA in our Prior Credit Agreement. Prior
periods have been recast to reflect the new presentation. For
additional information, Please see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources” in our most recent Form
10-Q.
INTERSECTIONS INC. OTHER DATA,
continued (in thousands) (unaudited)
Consolidated Adjusted EBITDA:
2017 Quarter Ended 2016 Quarter Ended
September 30 June 30 March 31
December 31 September 30 June 30
March 31 Reconciliation from consolidated (loss)
income from continuing operations before income taxes to
consolidated Adjusted EBITDA: Consolidated (loss) income from
continuing operations before income taxes $ (3,363 ) $ (5,344 ) $
(4,249 ) $ (1,151 ) $ (2,176 ) $ (668 ) $ 631 Non-cash share based
compensation 2,213 1,255 1,096 88 2,216 1,364 1,078 Impairment of
goodwill, intangibles and other assets — (86 ) 86 1,428 — — — Loss
on disposal of fixed assets — — — 6 5 256 — (Gain) loss on sale of
Captira Analytical and Habits at Work — (24 ) 130 — — — — Loss on
extinguishment of debt — 1,525 — — — — — Depreciation and
amortization 1,407 1,336 1,346 1,324 1,167 1,359 1,426 Interest
expense, net 701 603 591
664 621 839 242
Consolidated Adjusted EBITDA $ 958 $ (735 ) $ (1,000 ) $
2,359 $ 1,833 $ 3,150 $ 3,377
Nine
Months Ended September 30, 2017
2016 Reconciliation from consolidated
loss from continuing operations before income taxes to consolidated
Adjusted EBITDA: Consolidated loss from continuing operations
before income taxes $ (12,956 ) $ (2,213 ) Non-cash share based
compensation 4,564 4,658 Loss on disposal of fixed assets — 261
Loss on sale of Captira Analytical and Habits at Work 106 — Loss on
extinguishment of debt 1,525 — Depreciation and amortization 4,089
3,952 Interest expense, net 1,895 1,702
Consolidated Adjusted EBITDA $ (777 ) $ 8,360
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171113006285/en/
Intersections Inc.Ron Barden,
CFO703-488-6810IR@intersections.com
Intersections, Inc. (NASDAQ:INTX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Intersections, Inc. (NASDAQ:INTX)
Historical Stock Chart
From Apr 2023 to Apr 2024