2014

Bankrate Announces Third Quarter 2013 Financial Results

NEW YORK, Oct. 30, 2013 /PRNewswire/ --

($ in millions, except per share amounts)








Nine months ended



Q3-13


Q3-12


2013


2012

Revenue


$

121.2


$

116.8


$

335.2


$

363.9














Net Income













GAAP



(7.8)



2.6



(6.5)



29.0

Adjusted



13.5



12.6



36.0



49.6














Diluted Earnings per Share (EPS)













GAAP


$

(0.08)


$

0.03


$

(0.06)


$

0.29

Adjusted



0.13



0.13



0.36



0.49














Adjusted EBITDA



31.9



29.8



86.5



105.2

 

Bankrate, Inc. (NYSE: RATE) today reported financial results for the third quarter ended September 30, 2013. Total revenue for the third quarter was $121.2 million compared to $116.8 million in the third quarter of 2012, an increase of 4%.  Net loss for the quarter was $7.8 million or approximately $0.08 per fully diluted share, compared to net income of $2.6 million, or $0.03 per fully diluted share in the third quarter of 2012.

(Logo: http://photos.prnewswire.com/prnh/20040122/FLTHLOGO )

Adjusted EPS, as outlined in the attached reconciliation, were $0.13 for the third quarter of 2013, which is consistent with the third quarter of 2012.  Adjusted EBITDA, as outlined in the attached reconciliation, were $31.9 million, with a margin of 26%, in the third quarter of 2013 compared to $29.8 million, with a margin of 26%, in the third quarter of 2012, an increase of 7%.

Results for Nine Months Ended September 30, 2013

Total revenue for the nine months ended September 30, 2013 was $335.2 million compared to $363.9 million in the comparable period in 2012, representing a $28.8 million or 8% decrease. 

Net loss was $6.5 million or $0.06 per fully diluted share for the period in 2013, compared to net income of $29.0 million, or $0.29 per fully diluted share in the comparable period in 2012. Adjusted EPS were $0.36 for the period in 2013, compared to $0.49 for the same period in 2012, representing a decrease of 27%.

Adjusted EBITDA for the period were $86.5 million in 2013, compared to $105.2 million in the comparable period in 2012, a decrease of 18%.

"The improvement of the business has continued into the second half of the year with both the insurance and credit card verticals gaining momentum," stated Thomas R. Evans, President and CEO of Bankrate, Inc. "Our insurance business continues to be on a great trajectory and credit card issuers are back marketing aggressively.  While the mortgage re-fi business has slowed down, the deposit business is showing signs of improvement," Mr. Evans added.

Fourth Quarter Guidance

For the fourth quarter of 2013, Bankrate expects to show an overall revenue increase in the mid to upper 20% range with an Adjusted EBITDA increase of over 70% compared to the fourth quarter of 2012 at a margin in the mid to high 20% range.

"We're confident with our position on revenue and EBITDA guidance as we are seeing our initiatives pay off in our insurance vertical and with higher than expected margins and strong growth in our credit card business," Mr. Evans stated.

Kenneth Esterow appointment to President and CEO effective January 1, 2014

The company also announced that Thomas R. Evans will be stepping down as President and CEO and as a member of the company's Board of Directors at the end of 2013.  Kenneth Esterow, who joined the company in September as the Chief Operating Officer will be taking over as the President and Chief Executive Officer on January 1, 2014 and will join the company's Board at that time. 

"After almost 10 years as Bankrate's CEO, I wanted to step away from the day-to-day activity, but wanted to do so when there was clear momentum in the business.  With the successful transition of the insurance business, the improvement of the credit cards business, resilience in the banking business, and a great management team in place, it seemed like this was a good time to do so.  The company is in great shape going into the fourth quarter and poised for meaningful growth in 2014," stated Mr. Evans.

Following his resignation, Mr. Evans will continue to be engaged with the company as an advisor to the Board. 

"I am looking forward to working closely with Ed DiMaria and all of the other world class executives at Bankrate," said Mr. Esterow.  "Under Tom Evans' leadership, Bankrate delivered remarkably strong growth over the past decade, while successfully extending the platform into multiple verticals.  Bankrate is enjoying renewed traction and remains incredibly well-positioned.  It is a privilege to work with Tom through this transition and I am excited to extend Bankrate's role as the preeminent provider of online personal finance information."

Third Quarter and Year to Date 2013 Highlights

  • Display advertising, or CPM revenue, in the third quarter increased 5% compared to the same period last year and increased 6% in the first nine months of 2013 compared to the same period in 2012.
  • Overall lead generation revenue, which consists of CPA (primarily attributed to credit card products) and CPL (primarily attributed to insurance products) revenue, increased 11% compared to the third quarter 2012. In the first nine months of 2013, lead generation revenue declined by 8% versus the first nine months of last year due to the strategic quality initiative that the Company implemented in its insurance business.
  • Within lead generation revenues, both CPA revenues and CPL revenues increased sequentially from the previous quarter. CPA revenue increased on strong credit card issuer marketing activities, while CPL revenues increased due to higher conversion rates, higher carrier & agent demand and increased monetization.
  • Hyperlink, or CPC revenue, for the quarter decreased 13% compared to the same period last year, with the overall decline driven by a decrease in the Company's banking CPC product revenue, mainly as a result of lower refinancing activity in mortgages. However, the overall decline in CPC was partially offset by low teens growth in our insurance CPC business as the Company continued to gain traction with its quality initiative. For the nine months ended September 30, 2013 hyperlink revenue declined by 11% compared to the same period in 2012.
  • During the third quarter, the Company successfully refinanced the entire $195 million, 11.75% notes due 2015, with $300 million, 6.125% notes due 2018. At the end of the third quarter, the Company's leverage ratio to trailing twelve months Adjusted EBITDA was 1.0x on a net debt basis.
  • The Company recently completed the mobile optimization of Bankrate.com, as well as other owned and operated sites, which are now responsive to fit smaller mobile screen sizes.

October 30, 2013 Conference Call Interactive Dial-In and Webcast Information:

To participate in the teleconference please call: (877) 703-6108, passcode 41369648.  International participants should dial: (857) 244-7307, passcode 41369648.  Please access at least 10 minutes prior to the time the conference is set to begin. A webcast of this call can be accessed at Bankrate's website: http://investor.bankrate.com/.

Replay Information:

A replay of the conference call will be available beginning October 30, 2013 at 8:30 p.m. ET / 5:30 p.m. PT through November 6, 2013 at 11:59 p.m. ET / 8:59 p.m. PT.  To listen to the replay, call (888) 286-8010 and enter the passcode: 10989684.  International callers should dial (617) 801-6888 and enter the passcode: 10989684.

Non-GAAP Measures:

To supplement Bankrate's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), Bankrate uses non-GAAP measures of certain components of financial performance, including EBITDA, Adjusted EBITDA, Adjusted EPS, and Gross Margin excluding stock based compensation, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses.  These non-GAAP measures are provided to enhance investors' overall understanding of Bankrate's current financial performance and its prospects for the future.  Specifically, Bankrate believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results.  In addition, because Bankrate has historically reported certain non-GAAP results to investors, Bankrate believes the inclusion of non-GAAP measures provides consistency in its financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the financial tables below.

About Bankrate, Inc.

Bankrate is a leading publisher, aggregator and distributor of personal finance content on the Internet.  Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, our flagship website, and other owned and operated personal finance websites, including, but not limited to, CreditCards.com, Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, InsuranceQuotes.com, CarInsuranceQuotes.com, AutoInsuranceQuotes.com, InsureMe.com, and NetQuote.com.  Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of approximately 600 local markets in all 50 U.S. states, Bankrate generates over 172,000 distinct rate tables capturing, on average, over three million pieces of information weekly.  Bankrate develops and provides web services to over 75 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, CNN Money, CNBC and Comcast. In addition, Bankrate licenses editorial content to over 100 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times and The Boston Globe.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

Certain matters included in this press release may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team. Such forward-looking statements include, without limitation, statements made with respect to future revenue, revenue growth, market acceptance of our products, our strategy and profitability. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known or unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: the willingness of our advertisers to advertise on our websites; increased competition and its effect on our website traffic, advertising rates, margins and market share; our dependence on internet search engines to attract a significant portion of the visitors to our websites; the number of consumers seeking information on the financial products we have on our websites; interest rate volatility; technological changes; our ability to manage traffic on our websites and service interruptions; our ability to maintain and develop our brands and content; the fluctuations of our results of operations from period to period; our indebtedness and the effect such indebtedness may have on our business; our need and our ability to incur additional debt or equity financing; our ability to integrate the operations and realize the expected benefits of businesses that we have acquired and may acquire in the future; the effect of unexpected liabilities we assume from our acquisitions; changes in application approval rates by our credit card issuer customers; our ability to successfully execute on our strategy, including without limitation our insurance quality initiative and our mobile strategy, and the effectiveness of our strategy; our ability to attract and retain executive officers and personnel; the impact of defense of and resolution of lawsuits to which we are a party; our ability to protect our intellectual property; the effects of facing liability for content on our websites; our ability to establish and maintain distribution arrangements; our ability to maintain good working relationships with our customers and third-party providers and to continue to attract new customers; the effect of our expansion of operations in the United Kingdom and China and possible expansion to other international markets, in which we may have limited experience; the willingness of consumers to accept the Internet and our online network as a medium for obtaining financial product information; the strength of the U.S. economy in general and the financial services industry in particular; changes in monetary and fiscal policies of the U.S. Government; changes in consumer spending and saving habits; changes in the legal and regulatory environment; changes in accounting principles, policies, practices or guidelines; and our ability to manage the risks involved in the foregoing. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2012. These documents are available on the SEC's website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition. We undertake no obligation to update or revise forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.

-Financial Statements Follow-

 


Bankrate, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

($ in thousands, except per share data)




September 30,


December 31,



2013


2012








Assets







Cash and cash equivalents


$

191,463


$

83,590

Accounts receivable, net of allowance for doubtful accounts of $499 and $658 at September 30, 2013 and December 31, 2012



68,478



52,598

Deferred income taxes



3,763



3,763

Prepaid expenses and other current assets



18,977



13,691

Total current assets



282,681



153,642








Furniture, fixtures and equipment, net of accumulated depreciation of $17,979 and $12,851 at September 30, 2013 and December 31, 2012



12,085



10,024

Intangible assets, net of accumulated amortization of $167,287 and $128,366 at September 30, 2013 and December 31, 2012



364,442



382,732

Goodwill



610,950



602,173

Other assets



14,183



11,579

Total assets


$

1,284,341


$

1,160,150








Liabilities and Stockholders' Equity














Liabilities







Accounts payable


$

9,869


$

8,227

Accrued expenses



28,582



22,033

Deferred revenue and customer deposits



3,777



3,861

Accrued interest



2,758



10,588

Other current liabilities



23,067



6,399

Total current liabilities



68,053



51,108








Deferred income taxes



64,482



64,482

Long-term debt, net of unamortized discount



296,882



193,943

Other liabilities



22,536



22,466

Total liabilities



451,953



331,999








Commitments and contingencies














Stockholders' equity







Common stock, par value $.01 per share - 300,000,000 shares authorized at September 30, 2013 and December 31, 2012; 101,523,781 shares and 100,097,969 shares issued at September 30, 2013 and December 31, 2012; 101,473,253 shares and 100,047,441 shares outstanding at September 30, 2013 and December 31, 2012



1,015



1,000

Additional paid-in capital



854,124



843,393

Accumulated deficit



(21,724)



(15,264)

Less: Treasury stock, at cost - 50,528 shares at September 30, 2013 and December 31, 2012



(591)



(591)

Accumulated other comprehensive loss



(436)



(387)

Total stockholders' equity



832,388



828,151

Total liabilities and stockholders' equity


$

1,284,341


$

1,160,150

 

Bankrate, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

($ in thousands, except per share data)




(Unaudited)



(Unaudited)


Three months ended


Nine months ended


September 30,


September 30,


September 30,


September 30,


2013


2012


2013


2012

Revenue

$

121,178


$

116,775


$

335,172


$

363,920

Cost of revenue (excludes depreciation and amortization)


40,524



37,682



114,035



115,569

Gross margin


80,654



79,093



221,137



248,351



67%



68%



66%



68%

Operating expenses:












Sales


3,934



4,123



11,482



12,077

Marketing


31,639



34,986



82,658



97,787

Product development


4,453



4,082



13,578



12,652

General and administrative


12,214



8,302



35,523



27,469

Legal settlements


-



833



-



898

Acquisition, offering and related expenses


30



(512)



50



367

Depreciation and amortization


14,730



14,103



44,085



38,459



67,000



65,917



187,376



189,709

Income from operations


13,654



13,176



33,761



58,642













Interest and other expenses, net


6,761



6,365



19,820



19,277

Changes in fair value of contingent acquisition consideration


2,142



1,742



6,240



2,140

Loss on extinguishment of debt


17,175



-



17,175



-

(Loss) income before income taxes


(12,424)



5,069



(9,474)



37,225

Income tax (benefit) expense


(4,673)



2,509



(3,014)



8,238

Net (loss) income

$

(7,751)


$

2,560


$

(6,460)


$

28,987













Basic and diluted net (loss) income per share:












Basic

$

(0.08)


$

0.03


$

(0.06)


$

0.29

Diluted


(0.08)



0.03



(0.06)



0.29

Weighted average common shares outstanding:












Basic


100,127,658



99,918,198



100,075,657



99,948,113

Diluted


100,127,658



100,541,993



100,075,657



101,157,285













Comprehensive (loss) income

$

(7,522)


$

2,716


$

(6,509)


$

29,326

 

Bankrate, Inc. and Subsidiaries

Non-GAAP Measures (unaudited)

($ in thousands, except per share data)




(Unaudited)


(Unaudited)


Three months ended


Nine months ended


September 30,


September 30,


September 30,


September 30,


2013


2012


2013


2012

Revenue

$

121,178


$

116,775


$

335,172


$

363,920













Gross margin excluding stock-based compensation (1)

$

80,895


$

79,216


$

221,696


$

248,822

Gross margin excluding stock-based compensation %


66.8%



67.8%



66.1%



68.4%













Adjusted EBITDA (2)

$

31,907


$

29,845


$

86,510


$

105,208

Adjusted EBITDA margin


26.3%



25.6%



25.8%



28.9%













Adjusted net income (3)

$

13,515


$

12,648


$

35,988


$

49,577

Adjusted EPS

$

0.13


$

0.13


$

0.36


$

0.49













Weighted average common shares outstanding (diluted):


100,127,658



100,541,993



100,075,657



101,157,285













(1) Gross margin excluding stock-based compensation represents gross margin plus stock-based compensation

classified as cost of revenue.










Reconciliation of gross margin excluding stock-based compensation












Gross margin

$

80,654


$

79,093


$

221,137


$

248,351

Stock-based compensation


241



123



559



471

Gross margin excluding stock-based compensation

$

80,895


$

79,216


$

221,696


$

248,822













(2) Adjusted EBITDA adds back interest and other expense; income tax (benefit) expense; depreciation and

amortization; changes in fair value of contingent acquisition consideration; loss on extinguishment of debt; legal

settlements; acquisition, offering and related expenses; and stock-based compensation.










Reconciliation of adjusted EBITDA












Net (loss) income

$

(7,751)


$

2,560


$

(6,460)


$

28,987

Interest and other expenses


6,761



6,365



19,820



19,277

Income tax (benefit) expense


(4,673)



2,509



(3,014)



8,238

Depreciation and amortization


14,730



14,103



44,085



38,459

Earnings before interest, taxes, depreciation and amortization (EBITDA)


9,067



25,537



54,431



94,961

Change in fair value of contingent acquisition consideration


2,142



1,742



6,240



2,140

Loss on extinguishment of debt


17,175



-



17,175



-

Legal settlements


-



833



-



898

Acquisition, offering and related expenses


30



(512)



50



367

Stock-based compensation (5)


3,493



2,245



8,614



6,842

Adjusted EBITDA

$

31,907


$

29,845


$

86,510


$

105,208













(3) Adjusted net income adds back income tax (benefit) expense; other income; non-recurring change in fair value of

contingent acquisition consideration; loss on extinguishment of debt; legal settlements; acquisition, offering and

related expenses; stock-based compensation; and amortization, net of tax.










Reconciliation of adjusted net income












Net (loss) income

$

(7,751)


$

2,560


$

(6,460)


$

28,987

Income tax (benefit) expense


(4,673)



2,509



(3,014)



8,238

Other income


-



(135)



-



(135)

Change in fair value of contingent acquisition consideration due to change in estimate (4)


307



(71)



1,700



(71)

Loss on extinguishment of debt


17,175



-



17,175



-

Legal settlements


-



833



-



898

Acquisition, offering and related expenses


30



(512)



50



367

Stock-based compensation (5)


3,493



2,245



8,614



6,842

Amortization


13,574



13,305



40,932



36,147

Adjusted income before tax


22,155



20,734



58,997



81,273

Income tax (6)


8,640



8,086



23,009



31,696

Adjusted net income

$

13,515


$

12,648


$

35,988


$

49,577













(4) Change in fair value of contingent acquisition consideration due to change in estimate represents changes in fair

value attributable to changes in expected earnings of acquired businesses.










Reconciliation of change in fair value of contingent acquisition consideration










Change in fair value of contingent acquisition consideration

$

2,142


$

1,742


$

6,240


$

2,140

Less: Change in fair value due to passage of time


1,835



1,813



4,540



2,211

Change in fair value of contingent acquisition consideration due to change in estimate

$

307


$

(71)


$

1,700


$

(71)













(5) Stock-based compensation is recorded in the following line items:










Cost of revenue

$

241


$

123


$

559


$

471

Sales


499



342



1,276



1,034

Marketing


393



267



970



742

Product development


487



338



1,201



1,151

General and administrative


1,873



1,175



4,608



3,444

Total stock-based compensation expense

$

3,493


$

2,245


$

8,614


$

6,842













(6) Assumes 39% income tax rate.












 

For more information contact:
Edward J. DiMaria
SVP, Chief Financial Officer
edimaria@bankrate.com
(917) 368-8608

Bruce J. Zanca
SVP, Chief Communications/Marketing Officer
bzanca@bankrate.com
(917) 368-8648

 

SOURCE Bankrate, Inc.



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