- $160 million consolidated revenue for
full year 2017
- $40 million fourth quarter 2017
consolidated revenue, up 1.9% compared to third quarter 2017
- 1.1 million subscribers as of December
31, 2017
Intersections Inc. (NASDAQ: INTX) today announced financial
results for the quarter ended December 31, 2017.
“I am very pleased with the fourth quarter 2017 results, posting
an increase in total revenue compared to the third quarter,
generating consolidated income from continuing operations before
income taxes of $1.3 million after six consecutive loss quarters,
and reporting adjusted EBITDA of $4.0 million, which is the highest
of the last eight quarters,” said Michael R. Stanfield, Executive
Chairman and President. “After navigating the shock to our business
from the regulatory impact of the CFPB, and the disappointing
results of our non-identity theft protection ventures,
Intersections has effectively invested in and built new and
innovative tools for the world of identity fraud and data theft.”
Mr. Stanfield continued, “New marketing channels, an invigorated
team, and the highest level of compromised data and identity crimes
in history are creating a significant opportunity for success.”
Key Accomplishments and Developments:
- The Identity Guard® with Watson™
technology platform and product suite was launched on June 26,
2017. During the fourth quarter, development activities were
completed to expand the Identity Guard® with Watson™ platform to
offer consumers both an entry level service, Value, and a premium
service, Premier, in addition to our Total service plan. All three
tiers of service for Identity Guard® with Watson™ include an option
for a robust family coverage service. The Identity Guard® with
Watson™ product suite is now the Company’s primary offering.
- Successfully completed first business
development campaign working with employers and their employee
benefits advisors to make Identity Guard® offerings available to
employees across the U.S. New employer programs acquired were
launched in the fourth quarter of 2017 and the first quarter of
2018. As of December 31, 2017, contracts were in place with
employers with approximately 170,000 eligible employees.
- Significantly advanced the
transformation of sales and marketing capabilities by continuing to
invest in in-house business development capabilities covering
employee benefits, partner and breach channels as well as the
client support team. The cumulative month’s experience with
Intersections of the employee benefits sales team more than doubled
from 40 months to over 100 months during 2017 and the distribution
network was significantly expanded by establishing relationships
with 15 national and over 125 regional/local employee benefits
advisors and brokerages.
- The completion of the divestiture
program in the third quarter of 2017 eliminated discontinued
operations that used cash of $2.4 million and $17.2 million in 2017
and 2016, respectively.
Consolidated Fourth Quarter and Year-to-Date Results:
Consolidated revenue for the quarter ended December 31, 2017 was
$40.0 million, compared to $42.2 million for the quarter ended
December 31, 2016. Income (loss) from continuing operations before
income taxes for the quarter ended December 31, 2017 was $1.3
million, compared to $(1.2) million for the quarter ended December
31, 2016. Adjusted EBITDA for the quarter ended December 31, 2017
was $4.0 million, compared to $2.4 million for the quarter ended
December 31, 2016. Basic and diluted income (loss) from continuing
operations per share for the quarter ended December 31, 2017 was
$0.13, compared to $(0.06) for the quarter ended December 31,
2016.
Consolidated revenue for the year ended December 31, 2017 was
$159.6 million, compared to $175.6 million for the year ended
December 31, 2016. Loss from continuing operations before income
taxes for the year ended December 31, 2017 was $(13.7) million,
compared to $(3.4) million for the year ended December 31, 2016.
Adjusted EBITDA for the year ended December 31, 2017 was $3.2
million, compared to $10.7 million for the year ended December 31,
2016. Basic and diluted loss from continuing operations per share
for the year ended December 31, 2017 was $(0.49), compared to
$(0.15) for the year ended December 31, 2016.
Consolidated Fourth Quarter Highlights:
- Identity Guard® subscriber revenue was
$13.6 million for the quarter ended December 31, 2017,
compared to $12.4 million for the quarter ended September 30, 2017
and $12.1 million for the quarter ended December 31, 2016. The
Identity Guard® subscriber base was 359 thousand subscribers as of
December 31, 2017, compared to 338 thousand subscribers as of
September 30, 2017. The increase in the subscriber base was
primarily from growth in the direct to consumer and employee
benefits channels.
- Revenue from U.S. financial institution
clients was $20.0 million for the quarter ended
December 31, 2017 compared to revenue of $20.8 million
for the quarter ended September 30, 2017. Revenue decreased on
average by 1.2% per month during the fourth quarter, which the
Company believes is representative of normal attrition given the
discontinuation of marketing and retention efforts for this
population.
- Income (loss) from continuing
operations before income taxes for the quarter ended December 31,
2017 was $1.3 million, compared to $(3.0) million for the quarter
ended September 30, 2017, and $(1.2) million for the quarter ended
December 31, 2016.
- Adjusted EBITDA for the quarter ended
December 31, 2017 was $4.0 million, compared to $1.0 million for
the quarter ended September 30, 2017 and $2.4 million for the
quarter ended December 31, 2016. The fourth quarter marked the
third consecutive quarter of improvement in Adjusted EBITDA and the
second consecutive quarter of positive Adjusted EBITDA.
Liquidity:
As of December 31, 2017, the Company had a cash balance of $8.5
million, and an outstanding principal balance of $21.5 million
under its new credit agreement, as amended. Cash (used in)
operating activities of continuing operations for the year ended
December 31, 2017 was $(50) thousand. Cash provided by operating
activities of continuing operations for the quarter ended December
31, 2017 was $1.8 million.
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 2017. As
a result, cash used in operating activities for the year includes
approximately $4.7 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 2017 for 2018.
Cash used in operating activities included $6.9 million in the
year ended December 31, 2017 for deferred subscription and
solicitation costs related to our direct-to-consumer marketing,
including $595 thousand in the fourth 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 into 2018.
The Company continued to develop new product features primarily
for the Identity Guard® with Watson™ platform during the year ended
December 31, 2017. As a result, the Company invested approximately
$4.5 million in internally developed capitalized software for the
year. The Company expects to continue its investments in product
development at approximately the same level as 2017 for 2018.
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
Annual Report on Form 10-K.
Fourth Quarter 2017 Business Update Conference Call:
The Company will hold a conference call to provide a fourth
quarter 2017 business update on Tuesday, April 3, 2018 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. Fourth Quarter 2017
Conference Call
WHEN: April 3, 2018 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: 7563542#
To pre-register for the conference, please
click here.
The replay of the webcast will be available April 3, 2018 at
7:00 p.m. (Eastern Time) through April 10, 2018 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 7563542#.
Non-GAAP Financial Measures:
“Adjusted EBITDA” represents consolidated (loss) income from
continuing operations before income taxes plus (minus): 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; (benefit) from change in vacation policy;
depreciation and amortization; and interest expense.
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 meet the targets disclosed by management
with respect to costs and revenue, and that these targets do not
represent historical performance, projected results or guidance;
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 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; the impact of our recent senior management
changes; 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 software
solutions to help consumers and businesses manage the potential
risks associated with the proliferation of their data in the
virtual world. Under its IDENTITY GUARD® brand, the company
utilizes advanced data-enabled technologies, including artificial
intelligence, to help monitor, manage and protect sensitive
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, 2017 and 2016; for additional information,
please see "Note 2 — Basis of Presentation and Consolidation" in
our most recent Annual Report on Form 10-K.
INTERSECTIONS INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
Year Ended December 31,
2017 2016 REVENUE $ 159,620 $ 175,592
OPERATING EXPENSES: Marketing 11,330 13,156 Commission 38,386
42,775 Cost of revenue 51,710 53,797 General and administrative
62,530 59,671 Loss on dispositions of Captira and Habits at Work
106 — Impairment of intangibles and other assets — 1,428
Depreciation 5,485 4,763 Amortization 152 513
Total operating expenses 169,699
176,103 LOSS FROM OPERATIONS (10,079 ) (511 ) Interest
expense, net (2,227 ) (2,366 ) Loss on extinguishment of debt
(1,525 ) — Other income (expense), net 126
(487 ) LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (13,705
) (3,364 ) Income tax benefit (expense) from continuing operations
1,915 (75 ) LOSS FROM CONTINUING OPERATIONS
(11,790 ) (3,439 ) Loss from discontinued operations, net of tax
(2,534 ) (27,030 ) NET LOSS $ (14,324 ) $ (30,469 )
Basic and diluted loss per common share: Loss from continuing
operations $ (0.49 ) $ (0.15 ) Loss from discontinued operations
(0.11 ) (1.16 ) Net loss per common share, basic and
diluted $ (0.60 ) $ (1.31 ) Weighted average common shares
outstanding, basic and diluted 23,885 23,259
INTERSECTIONS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par
value)
December 31, 2017
2016 ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 8,502 $ 10,797 Accounts receivable, net of allowance
for doubtful accounts of $34 (2017) and $15 (2016) 8,225 9,449
Prepaid expenses and other current assets 3,232 3,711 Income tax
receivable 2,545 3,314 Deferred subscription solicitation and
commission costs 1,655 5,050 Current assets of discontinued
operations and assets held for sale — 575
Total current assets 24,159 32,896 PROPERTY AND EQUIPMENT,
net 11,040 10,611 GOODWILL 9,763 9,763 INTANGIBLE ASSETS, net 58
210 OTHER ASSETS 1,459 862 TOTAL ASSETS
$ 46,479 $ 54,342
LIABILITIES AND STOCKHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 3,498 $ 2,000
Accrued expenses and other current liabilities 8,533 10,978 Accrued
payroll and employee benefits 1,501 4,128 Commissions payable 141
99 Current portion of long-term debt, net — 2,146 Capital leases,
current portion 423 471 Deferred revenue 7,759 11,430 Current
liabilities of discontinued operations and liabilities held for
sale — 858 Total current liabilities
21,855 32,110 LONG-TERM DEBT, net 20,736 10,092 OBLIGATIONS UNDER
CAPITAL LEASES, less current portion 392 865 OTHER LONG-TERM
LIABILITIES 2,895 3,436 DEFERRED TAX LIABILITY, net 7
1,905 TOTAL LIABILITIES 45,885
48,408 STOCKHOLDERS’ EQUITY: Common stock at $0.01
par value, shares authorized 50,000; shares issued 28,194 (2017)
and 27,303 (2016); shares outstanding 24,102 (2017) and 23,733
(2016) 282 273 Additional paid-in capital 150,305 142,247 Warrants
2,840 — Treasury stock, shares at cost; 4,092 (2017) and 3,570
(2016) (35,745 ) (33,822 ) Accumulated deficit (117,088 )
(102,764 ) TOTAL STOCKHOLDERS’ EQUITY 594
5,934 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $
46,479 $ 54,342
INTERSECTIONS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
Year Ended December 31,
2017 2016 CASH FLOWS FROM OPERATING
ACTIVITIES: Net loss $ (14,324 ) $ (30,469 ) Loss from discontinued
operations, net of tax (2,534 ) (27,030 ) Loss from
continuing operations (11,790 ) (3,439 ) Adjustments to reconcile
net loss to cash flows used in operating activities: Depreciation
and amortization 5,637 5,275 Deferred income tax, net (1,898 )
—
Amortization of debt issuance cost 200 884 Accretion of debt
discount 104
—
Provision for doubtful accounts 19 (89 ) Loss on disposal of fixed
assets — 267 Share based compensation 8,530 4,745 Amortization of
deferred subscription solicitation and commission costs 10,326
12,655 Loss on disposition of Captira Analytical 130 — Gain on
disposition of Habits at Work (24 ) — Loss on extinguishment of
debt 1,525 — Impairment of goodwill, intangibles and other assets —
1,428 Changes in assets and liabilities: Accounts receivable 1,204
65 Prepaid expenses, other current assets and other assets (91 )
796 Income tax receivable, net 769 4,415 Deferred subscription
solicitation and commission costs (6,931 ) (10,744 ) Accounts
payable and accrued liabilities (3,608 ) (8,308 ) Commissions
payable 28 (59 ) Deferred revenue (3,639 ) 5,925 Other long-term
liabilities (541 ) (554 ) Cash flows (used in)
provided by continuing operations (50 ) 13,262 Cash flows used in
discontinued operations (2,398 ) (17,183 ) Net cash
used in operating activities (2,448 ) (3,921 ) 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 135 (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 (6,077 ) (5,764 ) Cash flows used in
continuing operations (6,387 ) (5,578 ) Cash flows provided by
(used in) discontinued operations 4 (1,031 )
Net cash used in investing activities (6,383 ) (6,609
) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of
debt 21,500 20,000 Repayments of debt (13,920 ) (6,568 ) Repurchase
of common stock (1,511 ) — Proceeds from issuance of warrants 2,200
— Cash paid for debt and equity issuance costs (322 ) (1,990 )
Capital lease payments (548 ) (719 ) Withholding tax payment on
vesting of restricted stock units (1,244 ) (486 ) Net
cash provided by financing activities 6,155
10,237 DECREASE IN CASH AND CASH EQUIVALENTS (2,676 ) (293 )
CASH AND CASH EQUIVALENTS — Beginning of period 10,797 11,471 Cash
reclassified to assets held for sale at beginning of period 381 —
Less: cash reclassified to assets held for sale at end of period
— (381 ) CASH AND CASH EQUIVALENTS — End of
period $ 8,502 $ 10,797 SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION: Cash paid for interest $ 1,874 $ 1,641 Cash
paid for taxes $ 9 $ 28 SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES: Equipment obtained under
capital lease, including acquisition costs $ 202 $ 241 Equipment
additions accrued but not paid $ 22 $ 173 Withholding tax payments
accrued on vesting of restricted stock units and stock option
exercises $ 27 $ — Shares withheld in lieu of withholding taxes on
vesting of restricted stock awards $ 35 $ 39
INTERSECTIONS INC.
OTHER DATA
(in thousands)
(unaudited)
Revenue
The following tables provide comparative details of our
revenue information for the quarters ended December 31, 2017,
September 30, 2017 and December 31, 2016, and for the years ended
December 31, 2017 and 2016:
Quarter Ended
December 31, 2017 September 30, 2017
Change December 31, 2016
Change Identity Guard® (1) $ 13,618 $ 12,396 9.9 % $
12,097 12.6 % Canadian business 3,412 3,405 0.2 % 3,084 10.6 % U.S.
financial institutions 20,022 20,774 (3.6 )% 22,803 (12.2 )% Breach
services & other (1) 1,266 1,270 (0.3 )%
1,601 (20.9 )% Personal Information Services revenue 38,318 37,845
1.2 % 39,585 (3.2 )% Other business units 1,670 1,403
19.0 % 2,615 (36.1 )% Consolidated revenue $ 39,988 $ 39,248
1.9 % $ 42,200 (5.2 )%
Year Ended December
31, 2017 2016 Change
Identity Guard® (1) $ 50,507 $ 50,571 (0.1 )% Canadian business
13,096 12,488 4.9 % U.S. financial institutions 84,064 96,202 (12.6
)% Breach services & other (1) 5,484 4,441 23.5 %
Personal Information Services revenue 153,151 163,702 (6.4 )% Other
business units 6,469 11,890 (45.6 )% Consolidated
revenue $ 159,620 $ 175,592 (9.1 )%
_____________________________
(1) We periodically refine the criteria used to calculate
and report our subscriber data. In the year ended December 31,
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
months and year ended December 31, 2017:
Three months ended:
Financial
Institution
Identity Guard®
(1)
Canadian
Business Lines
Total (in thousands) Balance at September 30, 2017
640 338 159 1,137 Additions — 44 25 69 Cancellations (20 ) (23 )
(23 ) (66 ) Balance at December 31, 2017 620 359 161
1,140
Year ended:
Financial
Institution
Identity Guard®
(1)
Canadian
Business Lines
Total (in thousands) Balance at December 31, 2016 705
317 162 1,184 Additions 2 160 106 268 Cancellations (87 ) (118 )
(107 ) (312 ) Balance at December 31, 2017 620 359
161 1,140
_____________________________
(1) We periodically refine the criteria used to calculate
and report our subscriber data. In the year ended December 31,
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 tables below include 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. Adjusted EBITDA (as
defined below) 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), general and administrative
expense, 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.
Adjusted EBITDA represents consolidated (loss) income from
continuing operations before income taxes plus (minus): 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; (benefit) from change in vacation policy;
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. 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 Adjusted EBITDA to evaluate the operating
performance of the Company. In addition, consolidated Adjusted
EBITDA, as defined in our 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 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.
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 Adjusted EBITDA, as
defined, for the previous eight quarters through December 31, 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 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 (as recast
and revised):
2017 Quarter Ended
2016 Quarter Ended December 31
September 30 June 30
March 31 December 31 September
30 June 30 March 31
Reconciliation from consolidated income (loss) from continuing
operations before income taxes to consolidated Adjusted EBITDA:
Consolidated income (loss) from continuing operations before income
taxes (1) $ 1,270 $ (2,960 ) $ (7,765 ) $ (4,250 ) $ (1,150 ) $
(2,176 ) $ (668 ) $ 630 Non-cash share based compensation (1) 1,948
1,809 3,676 1,097 87 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 sales of
Captira Analytical and Habits at Work — — (24 ) 130 — — — — Loss on
extinguishment of debt — — 1,525 — — — — — Benefit from change in
vacation policy (1,113 ) — — — — — — — Depreciation and
amortization 1,548 1,407 1,336 1,346 1,323 1,167 1,359 1,426
Interest expense, net 332 701 603 591 664 621 839 242
Consolidated Adjusted EBITDA
$
3,985
$
957
$
(735
)
$
(1,000
)
$
2,358
$
1,833
$
3,150
$
3,376
Year Ended December 31,
2017 2016 Reconciliation from consolidated loss from
continuing operations before income taxes to consolidated Adjusted
EBITDA: Consolidated loss from continuing operations before income
taxes $ (13,705 ) $ (3,364 ) Non-cash share based compensation
8,530 4,745 Impairment of goodwill, intangibles and other assets —
1,428 Loss on disposal of fixed assets — 267 Loss on sales of
Captira Analytical and Habits at Work 106 — Loss on extinguishment
of debt 1,525 — Benefit from change in vacation policy (1,113 ) —
Depreciation and amortization 5,637 5,275 Interest expense, net
2,227 2,366 Consolidated Adjusted
EBITDA $ 3,207 $ 10,717 Consolidated Revenue from
Continuing Operations $ 159,620 $ 175,592
Consolidated Adjusted EBITDA % of Revenue 2.0 % 6.1 %
Note (1): The results of operations for the years ended December
31, 2017 and 2016 have been recast to show the effects of our
discontinued operations and to reflect an adjustment to our share
based compensation expense. For additional information, please see
Note 21 to our consolidated financial statements in our most recent
Form 10-K.
INTERSECTIONS INC.
OTHER DATA, continued
(in thousands, unaudited)
Consolidated Adjusted G&A Expense
(as recast and revised):
2017 Quarter Ended 2016 Quarter Ended
December 31 September 30 June 30 March
31 December 31 September 30 June 30
March 31 Reconciliation from consolidated general and
administrative expenses to Adjusted G&A Expense: Consolidated
general and administrative expenses (1) $ 13,361 $ 14,826 $ 17,962
$ 16,381 $ 14,361 $ 15,729 $ 15,940 $ 13,641 Non-cash share based
compensation (1) (1,948 ) (1,809 ) (3,676 ) (1,097 ) (87 ) (2,216 )
(1,364 ) (1,078 ) Benefit from change in vacation policy
1,113 — — —
— — — — Adjusted
G&A Expense $ 12,526 $ 13,017 $ 14,286 $
15,284 $ 14,274 $ 13,513 $ 14,576 $
12,563
Year Ended December 31,
2017 2017 Reconciliation from consolidated general
and administrative expenses to Adjusted G&A Expense:
Consolidated general and administrative expenses $ 62,530 $ 59,671
Non-cash share based compensation (8,530 ) (4,745 ) Benefit from
change in vacation policy 1,113 —
Adjusted G&A Expense $ 55,113 $ 54,926
Note (1): The results of operations for the years ended December
31, 2017 and 2016 have been recast to show the effects of our
discontinued operations and to reflect an adjustment to our share
based compensation expense. For additional information, please see
Note 21 to our consolidated financial statements in our most recent
Form 10-K.
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version on businesswire.com: https://www.businesswire.com/news/home/20180402005465/en/
Intersections Inc.Ron Barden,
CFO703-488-6810IR@intersections.com
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