United Online Reports Fourth Quarter and Full Year 2012 Results
United Online Reports Fourth Quarter and Full Year 2012 Results
Progress Continues Toward Planned Spin-off of FTD
Quarterly Consolidated Revenues of $219.0 Million
Quarterly Consolidated Operating Loss of $14.9 Million Due to a $26.9 Million Non-Cash Impairment Charge on the MyPoints Business
Quarterly Consolidated Adjusted OIBDA of $32.7 Million
Quarterly FTD Segment Revenues Increase 7% Year-Over-Year
WOODLAND HILLS, Calif.--(BUSINESS WIRE)-- United Online, Inc. (NAS: UNTD) , a leading provider of consumer products and services over the Internet, today reported financial results for its fourth quarter and full year ended December 31, 2012.
"We are continuing to work toward our planned spin-off of FTD as an independent, publicly-traded company, and expect to complete this transaction by the end of the third quarter of 2013. We already have submitted our request for a private letter ruling from the Internal Revenue Service regarding the tax-free status of the spin-off," said Mark R. Goldston, Chairman, President and Chief Executive Officer of United Online. "We also are continuing to explore strategic alternatives for our other businesses and monetization opportunities for our patent portfolio."
"Fourth quarter 2012 results were in line with expectations, as consolidated revenues and adjusted OIBDA were within our guidance range," Goldston said. "FTD segment revenues for the fourth quarter and full year 2012 increased 7% and 4%, respectively, compared to the year-ago periods, driven by increases in consumer orders. FTD segment adjusted OIBDA for the fourth quarter and full year 2012 increased 2% and 4%, respectively, compared to the year-ago periods. During the quarter, the FTD segment achieved its eighth consecutive quarter of year-over-year revenue growth, when prior periods are adjusted for the timing of the U.K. Mother's Day in 2011."
"In our Communications segment, quarterly revenues increased 6% compared to the third quarter of 2012, the largest sequential-quarter increase in almost eight years," Goldston continued. "This increase was driven by increased advertising revenues, which are seasonally stronger in the fourth quarter, and by growth in the number of accounts in our NetZero 4G mobile broadband business, which reached approximately 32,000 at year-end 2012. In our Content & Media segment, pay accounts declined by 123,000 during the quarter, the smallest net decrease in two and a half years. The quarterly net decrease in segment pay accounts has now improved for four consecutive quarters."
"Consolidated cash flows from operating activities and free cash flow for the quarter were $41.7 million and $41.8 million, respectively, representing increases of 6% and 19%, respectively, compared to the year-ago quarter. These increases resulted primarily from favorable changes in net working capital and a decrease in capital expenditures, partially offset by decreased adjusted OIBDA," said Neil P. Edwards, Executive Vice President and Chief Financial Officer. "In the fourth quarter, the company recorded a $26.9 million goodwill and intangible asset impairment charge due to a material decline in the fair value of our MyPoints reporting unit. This was a non-cash charge, which did not impact adjusted OIBDA, cash flows from operating activities or free cash flow."
Summary Results for Fourth Quarter Ended December 31, 2012:
The following table summarizes key financial results for the fourth quarter ended December 31, 2012:
(in millions, except per share amounts and percentages) | ||||||||||||||||
Financial Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
FTD revenues | $ | 153.2 | $ | 143.3 | 7 | % | ||||||||||
Content & Media revenues | 39.5 | 45.7 | (13 | %) | ||||||||||||
Communications revenues | 26.7 | 29.3 | (9 | %) | ||||||||||||
Intersegment eliminations | (0.4 | ) | (0.3 | ) | (9 | %) | ||||||||||
Consolidated revenues | $ | 219.0 | $ | 217.9 | - | |||||||||||
GAAP operating income (loss) | $ | (14.9 | ) | $ | 23.7 | (163 | %) | |||||||||
Adjusted OIBDA(1) | $ | 32.7 | $ | 47.0 | (30 | %) | ||||||||||
GAAP net income (loss) attributable to common stockholders | $ | (12.8 | ) | $ | 12.5 | (202 | %) | |||||||||
GAAP diluted net income (loss) per common share | $ | (0.14 | ) | $ | 0.14 | (200 | %) | |||||||||
Adjusted net income attributable to common stockholders(2) | $ | 13.2 | $ | 22.7 | (42 | %) | ||||||||||
Adjusted diluted net income per common share(2) | $ | 0.14 | $ | 0.25 | (44 | %) | ||||||||||
Consolidated revenues were $219.0 million, a slight increase compared to the year-ago quarter.
GAAP operating loss was $14.9 million, which included a $26.9 million goodwill and intangible asset impairment charge due to a material decline in the fair value of the MyPoints reporting unit. This was compared to GAAP operating income of $23.7 million in the year-ago quarter.
Consolidated adjusted OIBDA(1) was $32.7 million, a decrease of 30% versus the year-ago quarter.
Interest expense was $3.3 million, a decrease of 7% compared to the year-ago quarter.
The effective income tax rate for the full year 2012 was 38%, versus 31% in 2011.
GAAP diluted net loss per common share was $0.14, which was impacted by the $26.9 million goodwill and intangible asset impairment charge. This was compared to GAAP diluted net income per share of $0.14 in the year-ago quarter.
Adjusted diluted net income per common share(2) was $0.14, a decrease of 44% compared to the year-ago quarter.
Cash Flows, Balance Sheet and Dividend Highlights:
Cash flows from operating activities and free cash flow(3) for the quarter ended December 31, 2012 were $41.7 million and $41.8 million, respectively, increases of 6% and 19%, respectively, compared to the year-ago quarter.
Cash and cash equivalents at December 31, 2012 were $136.4 million, compared to $108.1 million at September 30, 2012.
Net debt at December 31, 2012 was $107.6 million, compared to $135.8 million at September 30, 2012. The company defines net debt as total debt, net of discounts, less cash and cash equivalents.
The company paid $9.4 million in cash dividends during the quarter.
In January 2013, the company's Board of Directors declared a quarterly cash dividend of $0.10 per share of common stock that is payable on February 28, 2013 to stockholders of record on February 14, 2013.
Segment Results for Fourth Quarter Ended December 31, 2012:
FTD: | ||||||||||||||||
(in millions, except percentages and metrics) | ||||||||||||||||
Financial Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Products revenues | $ | 123.1 | $ | 114.5 | 8 | % | ||||||||||
Services revenues | 30.0 | 28.8 | 4 | % | ||||||||||||
Segment revenues | $ | 153.2 | $ | 143.3 | 7 | % | ||||||||||
Segment income from operations | $ | 21.3 | $ | 19.9 | 7 | % | ||||||||||
Segment adjusted OIBDA(1) | $ | 22.4 | $ | 21.8 | 2 | % | ||||||||||
as a % of segment revenues(1) | 14.6 | % | 15.2 | % | ||||||||||||
Metrics Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Consumer orders(4) (in thousands) | 1,787 | 1,615 | 11 | % | ||||||||||||
Average order value(4) | $ | 60.13 | $ | 62.31 | (3 | %) | ||||||||||
British Pound / U.S. Dollar exchange rate (average) | 1.61 | 1.57 | 3 | % | ||||||||||||
Segment revenues were $153.2 million, an increase of 7% versus the year-ago quarter.
Segment income from operations was $21.3 million, an increase of 7% versus the year-ago quarter.
Segment adjusted OIBDA(1) was $22.4 million, an increase of 2% versus the year-ago quarter.
Consumer orders(4) were 1.8 million, an increase of 11% versus the year-ago quarter.
Average order value(4) (AOV) was $60.13, a decrease of 3% compared to the year-ago quarter. Excluding the impact of consumer orders from the Flying Flowers and Flowers Direct businesses acquired in 2012, which have lower AOVs, AOV was relatively flat compared to the year-ago quarter.
Content & Media: | ||||||||||||||||
(in millions, except percentages and metrics) | ||||||||||||||||
Financial Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Products revenues | $ | 0.8 | $ | 0.8 | (6 | %) | ||||||||||
Services revenues | 22.2 | 28.4 | (22 | %) | ||||||||||||
Advertising revenues | 16.5 | 16.5 | - | |||||||||||||
Segment revenues | $ | 39.5 | $ | 45.7 | (13 | %) | ||||||||||
Segment income from operations | $ | (20.8 | ) | $ | 12.6 | (265 | %) | |||||||||
Segment adjusted OIBDA(1) | $ | 7.4 | $ | 14.9 | (50 | %) | ||||||||||
as a % of segment revenues(1) | 18.8 | % | 32.5 | % | ||||||||||||
Metrics Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Segment pay accounts(5) (in thousands) | 2,864 | 3,484 | (18 | %) | ||||||||||||
Net quarterly decline in segment pay accounts(5) (in thousands) | (123 | ) | (296 | ) | 58 | % | ||||||||||
Segment active accounts(5) (in millions) | 11.5 | 10.3 | 12 | % | ||||||||||||
ARPU(6) | $ | 2.52 | $ | 2.60 | (3 | %) | ||||||||||
Euro / U.S. Dollar Exchange Rate (average) | 1.30 | 1.35 | (4 | %) | ||||||||||||
Segment revenues were $39.5 million, a decrease of 13% versus the year-ago quarter.
Segment loss from operations was $20.8 million, which included a $26.9 million goodwill and intangible asset impairment charge due to a material decline in the fair value of the MyPoints reporting unit. This was compared to segment income from operations of $12.6 million in the year-ago quarter.
Segment adjusted OIBDA was $7.4 million, a decrease of 50% versus the year-ago quarter.
Segment pay accountsat December 31, 2012 were 2.9 million, a decrease of 18% versus December 31, 2011.
Segment ARPU(6) was $2.52, a decline of 3% versus the year-ago quarter. Excluding the unfavorable impact of foreign currency exchange rates, segment ARPU decreased by 2%.
Communications: | ||||||||||||||||
(in millions, except percentages and metrics) | ||||||||||||||||
Financial Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Products revenues | $ | 1.1 | $ | - | N/A | |||||||||||
Services revenues | 18.2 | 22.6 | (20 | %) | ||||||||||||
Advertising revenues | 7.4 | 6.7 | 11 | % | ||||||||||||
Segment revenues | $ | 26.7 | $ | 29.3 | (9 | %) | ||||||||||
Segment income from operations | $ | 7.4 | $ | 14.1 | (47 | %) | ||||||||||
Segment adjusted OIBDA(1) | $ | 8.0 | $ | 15.3 | (48 | %) | ||||||||||
as a % of segment revenues(1) | 30.0 | % | 52.3 | % | ||||||||||||
Metrics Highlights | Q4 2012 | Q4 2011 | % Change | |||||||||||||
Segment pay accounts(5) (in thousands) | 650 | 794 | (18 | %) | ||||||||||||
ARPU(6) | $ | 9.05 | $ | 9.09 | - | |||||||||||
Segment revenues were $26.7 million, a decrease of 9% versus the year-ago quarter.
Segment income from operations was $7.4 million, a decrease of 47% versus the year-ago quarter.
Segment adjusted OIBDA was $8.0 million, a decrease of 48% versus the year-ago quarter. The investment in the NetZero 4G mobile broadband business resulted in a negative adjusted OIBDA impact of $4.6 million during the fourth quarter of 2012.
Segment pay accounts at December 31, 2012 were 0.7 million, a decrease of 18% versus December 31, 2011.
Unallocated Corporate Expenses:
For the quarter ended December 31, 2012, the impact of unallocated corporate expenses on consolidated adjusted OIBDA was $5.0 million, flat compared to the year-ago quarter.
Business Outlook:
The following forward-looking information includes certain of the projections made by management as of the date of this press release. The company does not intend to revise or update this information, except as required by law, and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. Factors include, without limitation, the factors referenced later in this announcement under the caption "Cautionary Information Regarding Forward-Looking Statements." These and other factors are discussed in more detail in the company's filings with the Securities and Exchange Commission.
First Quarter 2013 Guidance:
First Quarter 2013 (in millions) | Guidance | ||||
Revenues | $243 - $248 | ||||
Adjusted OIBDA(1) | $28 - $32 | ||||
First Quarter 2013 Supplemental Information (in millions) | Guidance | ||||
Net interest expense | $3.1 | ||||
Shares used to calculate diluted net income per common share | 91.7 | ||||
Shares used to calculate adjusted diluted net income per common share(2) | 91.9 | ||||
The table below reconciles the company's guidance for operating income, a GAAP measure, to adjusted OIBDA.
First Quarter 2013 (in millions) | Guidance | ||||
Operating Income |
