Bankrate Announces Fourth Quarter & Full Year 2012 Financial Results

NEW YORK--()--Bankrate, Inc. (NYSE: RATE):

                             
($ in millions, except per share amounts)
                Q4-12 Q4-11 FY-12 FY-11
Revenue $ 93.2 $ 113.8 $ 457.2 $ 424.2
 
Net Income
GAAP 0.3 14.0 29.3 (13.4 )
Adjusted 5.8 19.1 56.0 62.1
 
Diluted Earnings per Share (EPS)
GAAP $ 0.00 $ 0.14 $ 0.29 ($0.14 )
Adjusted $ 0.06 $ 0.19 $ 0.56 $ 0.61
 
Adjusted EBITDA 17.9 38.5 123.1 135.4
 
 

Bankrate, Inc. (NYSE: RATE) today reported financial results for the fourth quarter and full fiscal year ended December 31, 2012. Total revenue for the fourth quarter was $93.2 million compared to $113.8 million in the fourth quarter of 2011, a decrease of 18%. Revenue for the full year ended December 31, 2012 was $457.2 million compared to $424.2 million in 2011, representing a $33.0 million or 8% increase.

Net income for the quarter was $0.3 million or approximately zero cents per fully diluted share, compared to net income of $14.0 million, or $0.14 per fully diluted share in the fourth quarter of 2011. For the full year 2012, net income was $29.3 million or $0.29 per fully diluted share, compared to a net loss of $13.4 million, or $0.14 per fully diluted share in 2011.

Adjusted EPS, as outlined in the attached reconciliation, were $0.06 for the fourth quarter of 2012, compared to Adjusted EPS of $0.19 for the fourth quarter of 2011, representing a decrease of 68%. Adjusted EPS were $0.56 for the full year 2012, compared to $0.61 in 2011, representing a decrease of 8%.

Adjusted EBITDA, as outlined in the attached reconciliation, were $17.9 million, with a margin of 19%, in the fourth quarter of 2012 compared to $38.5 million, with a margin of 34%, in the fourth quarter of 2011, a decrease of 53%. For the full year 2012, Adjusted EBITDA were $123.1 million, compared to $135.4 million in 2011, a decrease of 9%.

2013 Guidance

Bankrate expects revenue for 2013 to be relatively flat compared to 2012 with an Adjusted EBITDA margin in the low to mid 20% range. In addition, the Company expects the first half of 2013 to show a year over year decrease in revenue of 10% to 20%, and the second half of 2013 to post a year over year revenue increase of 10% to 20%.

"In insurance, the strategic transition to higher quality, high-margin leads is moving even more aggressively forward --- and with our deep cuts of poor performing traffic behind us in Q4, is now on-track in many of our key criteria, such as agent sign ups and retention," said Thomas R. Evans, President and CEO of Bankrate, Inc. "That's why we see Q4 as the bottoming out of that transition curve that we've discussed in the last two quarters. Encouragingly, in credit cards, we’re beginning to see the increased marketing activity across our portfolio of card issuers after a period of marketplace caution," Mr. Evans added.

Fourth Quarter & Full Year 2012 Financial Highlights

  • Total revenue for the quarter was $93.2 million, a decrease of 18%, or $20.5 million from the $113.8 million in 2011. Revenue for the full year totaled $457.2 million, up 8% or $33.0 million vs. 2011.
  • Adjusted EBITDA of $17.9 million in the fourth quarter was 53% or $20.6 million lower compared to the fourth quarter of 2011. For the full year 2012, Adjusted EBITDA was $123.1 million vs. $135.4 million in 2011 or down 9%.
  • Display advertising, or CPM revenue, in the fourth quarter was 18% higher compared to the same period last year. For the full year 2012, CPM product revenue was up 26% vs. the prior year.
  • Hyperlink, or CPC revenue, for the quarter was 18% higher compared to the same period last year. Full year 2012 CPC revenue was up 65% vs. 2011.
  • Lead generation revenue, which consists of CPA and CPL revenue, was 29% lower compared to the fourth quarter 2011. For the full year 2012, lead generation revenue was 5% lower vs. 2011. Marketing by credit card issuers on the Company’s platform was significantly lower compared to historically high Q4 2011 and full year 2011 levels. In addition the Company continues to transition its insurance business to higher quality, higher converting volume and to reduce lesser converting lead sources. As a result, low agent termination rates in Q4 2012 led to a sequential increase in the number of purchasing agents in January 2013.
  • At the end of the fourth quarter, the company’s leverage ratio was 0.9x on a net debt basis based on the company’s trailing twelve month Adjusted EBITDA of $123.1 million compared to 0.9x at the end of the third quarter of 2012.

Share Repurchase Program

Bankrate’s Board of Directors has authorized a $70 million share repurchase program. The program is effective immediately and authorizes the repurchase of up to $70 million of Bankrate’s common stock in open market or private transactions. The timing of the repurchases will depend on several factors, including prevailing market conditions and prices. The program will expire on December 31, 2014.

February 12, 2013 Conference Call Interactive Dial-In and Webcast Information:

To participate in the teleconference please call: (866) 713-8566, passcode 40657231. International participants should dial: (617) 597-5325, passcode 40657231. 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 February 12, 2013 at 6:30 p.m. ET / 3:30 p.m. PT through February 19, 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: 43619501. International callers should dial (617) 801-6888 and enter the passcode: 43619501.

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, CreditCards.ca, 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!, AOL, CNBC and Bloomberg. 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 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 web site; 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; 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 the effectiveness of our strategy; our ability to attract and retain executive officers and personnel; the impact of 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 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, 2011, and additional information will also be set forth in our Annual Report on Form 10-K that will be filed 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
Consolidated Balance Sheets
($ In thousands, except per share data)
 
December 31, December 31,

2012

2011

 
Assets
Cash and cash equivalents $ 83,590 $ 56,213
Accounts receivable, net of allowance for doubtful accounts of
$658 and $1,534 at December 31, 2012 and 2011 52,598 60,543
Deferred income taxes 3,763 24,690
Prepaid expenses and other current assets   13,691     2,535  
Total current assets 153,642 143,981
 
Furniture, fixtures and equipment, net of accumulated depreciation of
$12,851 and $6,676 at December 31, 2012 and 2011 10,024 9,065
Intangible assets, net of accumulated amortization of $128,366 and
$81,212 at December 31, 2012 and 2011 382,732 378,240
Goodwill 602,173 595,522
Other assets   11,579     10,604  
Total assets $ 1,160,150   $ 1,137,412  
 
Liabilities and Stockholders' Equity
 
Liabilities
Accounts payable $ 8,227 $ 9,564
Accrued expenses 22,033 26,288
Deferred revenue and customer deposits 3,861 5,891
Accrued interest 10,588 10,588
Other current liabilities   6,399     3,969  
Total current liabilities 51,108 56,300
 
Deferred income taxes 64,482 82,670
Senior secured notes, net of unamortized discount 193,943 193,613
Other liabilities   22,466     16,367  
Total liabilities   331,999     348,950  
 
Commitments and contingencies
 
Stockholders' equity
Common stock, par value $.01 per share -
300,000,000 shares authorized at December 31, 2012 and 2011;
100,097,969 and 99,992,000 shares issued at December 31, 2012 and 2011;
100,047,441 and 99,992,000 shares outstanding at December 31, 2012 and 2011 1,000 1,000
Additional paid-in capital 843,393 832,797
Accumulated deficit (15,264 ) (44,595 )
Less: Treasury stock, at cost 50,528 and 0 shares at December 31, 2012 and 2011 (591 ) -
Accumulated other comprehensive loss   (387 )   (740 )
Total stockholders' equity   828,151     788,462  
Total liabilities and stockholders' equity $ 1,160,150   $ 1,137,412  
 
 
                             
 
Bankrate, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
($ In thousands, except per share data)
 
(Unaudited) (Unaudited)
Three months ended Twelve months ended
December 31, December 31, December 31, December 31,

2012

2011

2012

2011

Revenue $ 93,244 $ 113,769 $ 457,164 $ 424,200
Cost of revenue (excludes depreciation and amortization)   30,788     32,364     146,357     143,710  
Gross margin   62,456     81,405     310,807     280,490  
67.0 % 71.6 % 68.0 % 66.1 %
Operating expenses:
Sales 4,037 3,402 16,114 12,980
Marketing 28,435 26,344 126,222 86,053
Product development 4,371 4,048 17,023 14,866
General and administrative 9,962 11,684 37,431 36,662
Legal settlements (24 ) - 874 -
Acquisition, offering and related expenses and related party fees (32 ) 3,390 335 44,248
Restructuring charges - 1,034 - 1,272
Depreciation and amortization   14,395     10,971     52,854     43,536  
  61,144     60,873     250,853     239,617  
Income from operations 1,312 20,532 59,954 40,873
 
Interest and other expenses, net (6,494 ) (6,431 ) (25,771 ) (31,786 )
Change in fair value of contingent acquisition consideration 4,785 (208 ) 2,645 (292 )
Loss on early extinguishment of debt   -     -     -     (16,629 )
 
(Loss) income before income taxes (397 ) 13,893 36,828 (7,834 )
Income tax expense (benefit)   (741 )   (152 )   7,497     5,588  
Net income (loss) $ 344   $ 14,045   $ 29,331   $ (13,422 )
 
Basic and diluted net income (loss) per share:
Basic $ 0.00 $ 0.14 $ 0.29 $ (0.14 )
Diluted 0.00 0.14 0.29 (0.14 )
Weighted average common shares outstanding:
Basic 100,097,969 99,879,865 99,985,782 94,160,687
Diluted 100,101,578 100,933,237 100,831,459 94,160,687
 
Other comprehensive income (loss), net of tax:
Net income (loss) $ 344 $ 14,045 $ 29,331 $ (13,422 )
Foreign currency translation gain (loss)   14     (57 )   353     -  
Comprehensive income (loss) $ 358   $ 13,988   $ 29,684   $ (13,422 )
 
 
                                 
 
Bankrate, Inc. and Subsidiaries
Non-GAAP Measures (unaudited)
($ in thousands, except per share data)
 
(Unaudited) (Unaudited)
Three months ended Twelve months ended
December 31, December 31, December 31, December 31,

2012

2011

2012

2011

Revenue $ 93,244 $ 113,769 $ 457,164 $ 424,200
 
Gross margin excluding stock based compensation (1) $ 62,584   $ 81,613   $ 311,406   $ 280,935  
Gross margin excluding stock based compensation % 67.1 % 71.7 % 68.1 % 66.2 %
 
Adjusted EBITDA (2) $ 17,929   $ 38,509   $ 123,137   $ 135,438  
Adjusted EBITDA margin 19.2 % 33.8 % 26.9 % 31.9 %
 
Adjusted net income (3) $ 5,798   $ 19,096   $ 56,030   $ 62,060  
Adjusted EPS $ 0.06   $ 0.19   $ 0.56   $ 0.61  
 
Common shares outstanding (4): 100,101,578 100,933,237 100,831,459 100,933,237
 
(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 $ 62,456 $ 81,405 $ 310,807 $ 280,490
Stock based compensation   128     208     599     445  
Gross margin excluding stock based compensation $ 62,584   $ 81,613   $ 311,406   $ 280,935  
 
(2 ) Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization adjusted to exclude legal settlements; acquisition, offering and related expenses and related party fees; restructuring charges; stock based compensation; changes in fair value of contingent acquisitions consideration and loss on early extinguishment of debt.
Reconciliation of adjusted EBITDA
Income from operations $ 1,312 $ 20,532 $ 59,954 $ 40,873
Legal settlements (24 ) - 874 -
Acquisition, offering and related expenses and related party fees (32 ) 3,390 335 44,248
Restructuring charges - 1,034 - 1,272
Stock based compensation 2,278 2,582 9,120 5,509
Depreciation and amortization   14,395     10,971     52,854     43,536  
Adjusted EBITDA $ 17,929   $ 38,509   $ 123,137   $ 135,438  
 
(3 ) Adjusted net income adds back other income; change in fair value of contingent acquisition consideration; accretion interest included in change in fair value of contingent acquisition consideration; loss on early extinguishment of debt; legal settlements; acquisition, offering and related expenses and related party fees; restructuring charges; stock based compensation; and amortization; net of tax.
Reconciliation of adjusted net income
(Loss) income before income taxes $ (397 ) $ 13,893 $ 36,828 $ (7,834 )
Other income - - (135 ) -
Non-recurring change in fair value of contingent acquisition consideration (5) (5,816 ) - (4,812 ) -
Loss on early extinguishment of debt - - - 16,629
Legal settlements (24 ) - 874 -
Acquisition, offering and related expenses and related party fees (32 ) 3,390 335 44,248
Restructuring charges - 1,034 - 1,272
Stock based compensation (6) 2,278 2,582 9,120 5,509
Amortization   13,496     10,406     49,643     41,913  
Adjusted income before tax 9,505 31,305 91,853 101,737
Income tax (7)   3,707     12,209     35,823     39,677  
Adjusted net income $ 5,798   $ 19,096   $ 56,030   $ 62,060  
 
(4 ) Pro forma for post-IPO share count for 2011 periods presented.
 
(5 ) Non-recurring change in fair value of acquisition consideration represents changes in fair value attributable to lower than expected earnings of acquired businesses.
 
Reconciliation of non-recurring change in fair value of acquisition consideration
 
Change in fair value of contingent acquisition consideration $ 4,785 $ (208 ) $ 2,645 $ (292 )
Change in fair value due to passage of time   (1,031 )   (208 )   (2,167 )   (292 )
Non-recurring change in fair value of contingent acquisition consideration $ 5,816   $ -   $ 4,812   $ -  
 
(6 ) Stock based compensation is recorded in the following line items:
Cost of revenue $ 128 $ 208 $ 599 $ 445
Sales 353 415 1,387 899
Marketing 271 261 1,013 520
Product development 341 462 1,492 985
General and administrative   1,185     1,236     4,629     2,660  
Total stock based compensation expense $ 2,278   $ 2,582   $ 9,120   $ 5,509  
 
(7 ) Assumes 39% income tax rate.
 
 

Contacts

Bankrate, Inc.
Edward J. DiMaria, 917-368-8608
SVP, Chief Financial Officer
edimaria@bankrate.com
or
Bruce J. Zanca, 917-368-8648
SVP, Chief Communications/Marketing Officer
bzanca@bankrate.com
www.bankrate.com

Sharing

Contacts

Bankrate, Inc.
Edward J. DiMaria, 917-368-8608
SVP, Chief Financial Officer
edimaria@bankrate.com
or
Bruce J. Zanca, 917-368-8648
SVP, Chief Communications/Marketing Officer
bzanca@bankrate.com
www.bankrate.com