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Bankrate Announces Third Quarter 2012 Financial Results

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; our ability to successfully execute on our strategy, including our 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, as filed with the SEC and 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.

Reminder -- Conference Call and Webcast Today at 4:30 P.M. Eastern Time

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-Financial Statements Follow-

 
Bankrate, Inc. and SubsidiariesCondensed Consolidated Balance Sheets ($ In thousands, except per share data)
        (Unaudited)      
September 30, December 31,

2012

2011

 
Assets
Cash and cash equivalents $ 71,109 $ 56,213
Accounts receivable, net of allowance for doubtful accounts of
$1,501 and $1,534 at September 30, 2012 and December 31, 2011 60,445 60,543
Deferred income taxes 25,131 24,690
Prepaid expenses and other current assets   7,706     2,535  
Total current assets 164,391 143,981
 
Furniture, fixtures and equipment, net of accumulated depreciation of
$11,302 and $6,676 at September 30, 2012 and December 31, 2011 10,009 9,065
Intangible assets, net of accumulated amortization of $115,510 and
$81,212 at September 30, 2012 and December 31, 2011 395,135 378,240
Goodwill 602,768 595,522
Other assets   12,092     10,604  
Total assets $ 1,184,395   $ 1,137,412  
 
Liabilities and Stockholders' Equity
 
Liabilities
Accounts payable $ 7,668 $ 9,564
Accrued expenses 24,674 26,288
Deferred revenue and customer deposits 3,375 5,891
Accrued interest 4,898 10,588
Other current liabilities   13,632     3,969  
Total current liabilities 54,247 56,300
 
Deferred income taxes 82,670 82,670
Senior secured notes, net of unamortized discount 193,857 193,613
Other liabilities   28,120     16,367  
Total liabilities   358,894     348,950  
 
Commitments and contingencies
 
Stockholders' equity
Common stock, par value $.01 per share - 300,000,000 shares
authorized at September 30, 2012 and December 31, 2011;
100,097,969 and 99,992,000 shares issued at September 30, 2012 and
December 31, 2011; 100,047,525 and 99,992,000 shares
outstanding at September 30, 2012 and December 31, 2011 1,000 1,000
Additional paid-in capital 841,101 832,797
Accumulated deficit (15,608 ) (44,595 )
Less: Treasury stock, at cost 50,444 and 0 shares at September 30, 2012 and December 31, 2011 (591 ) -
Accumulated other comprehensive loss   (401 )   (740 )
Total stockholders' equity   825,501     788,462  
Total liabilities and stockholders' equity $ 1,184,395   $ 1,137,412  
 
 
Bankrate, Inc. and SubsidiariesCondensed Consolidated Statements of Operations ($ In thousands, except per share data)
                           
(Unaudited) Three months ended (Unaudited) Nine months ended
September 30, September 30, September 30, September 30,

2012

2011

2012

2011

Revenue $ 116,775 $ 112,904 $ 363,920 $ 310,431
Cost of revenue (excludes depreciation and amortization)   37,682     38,071     115,569     111,346  
Gross margin   79,093     74,833     248,351     199,085  
67.7 % 66.3 % 68.2 % 64.1 %
Operating expenses:
Sales 4,123 3,620 12,077 9,578
Marketing 34,986 24,007 97,787 59,709
Product development 4,082 3,696 12,652 10,818
General and administrative 8,302 9,990 27,469 24,978
Legal settlements 833 - 898 -
Acquisition, offering and related expenses and related party fees (512 ) 1,163 367 40,858
Restructuring charges - - - 238
Depreciation and amortization   14,103     10,899     38,459     32,565  
  65,917     53,375     189,709     178,744  
Income from operations 13,176 21,458 58,642 20,341
 
Interest and other expenses, net (8,107 ) (6,519 ) (21,417 ) (25,439 )
Loss on early extinguishment of debt   -     -     -     (16,629 )
 
Income (loss) before income taxes 5,069 14,939 37,225 (21,727 )
Income tax expense   2,509     7,807     8,238     5,740  
Net income (loss) $ 2,560   $ 7,132   $ 28,987   $ (27,467 )
 
Basic and diluted net income (loss) per share:
Basic $ 0.03 $ 0.07 $ 0.29 $ (0.30 )
Diluted 0.03 0.07 0.29 (0.30 )
Weighted average common shares outstanding:
Basic 99,918,198 99,879,865 99,948,113 92,233,345
Diluted 100,541,993 100,427,391 101,157,285 92,233,345
 
Comprehensive income (loss) $ 2,716   $ 7,000   $ 29,326   $ (27,410 )
 
                 
Bankrate, Inc. and SubsidiariesCondensed Consolidated Statements of Operations - NON-GAAP ($ In thousands, except per share data)
 
(Unaudited) (Unaudited)
Three months ended Nine months ended
September 30, September 30, September 30, September 30,

2012

2011

2012

2011

Revenue $ 116,775 $ 112,904 $ 363,920 $ 310,431
Cost of revenue (excludes depreciation and amortization)   37,559     37,868     115,098     111,109  
Gross margin excluding stock based compensation   79,216     75,036     248,822     199,322  
67.8 % 66.5 % 68.4 % 64.2 %
Operating expenses:
Sales 3,781 3,205 11,043 9,094
Marketing 34,719 23,785 97,045 59,450
Product development 3,744 3,248 11,501 10,295
General and administrative 7,127 8,769 24,025 23,554
Legal settlements 833 - 898 -
Acquisition, offering and related expenses and related party fees (512 ) 1,163 367 40,858
Restructuring charges - - - 238
Stock based compensation 2,245 2,509 6,842 2,927
Depreciation and amortization   14,103     10,899     38,459     32,565  
  66,040     53,578     190,180     178,981  
Income from operations 13,176 21,458 58,642 20,341
 
Interest and other expenses, net (8,107 ) (6,519 ) (21,417 ) (25,439 )
Loss on early extinguishment of debt   -     -     -     (16,629 )
 
Income (loss) before income taxes 5,069 14,939 37,225 (21,727 )
Income tax expense   2,509     7,807     8,238     5,740  
Net income (loss) $ 2,560   $ 7,132   $ 28,987   $ (27,467 )
 
Basic and diluted net income (loss) per share:
Basic $ 0.03 $ 0.07 $ 0.29 $ (0.30 )
Diluted 0.03 0.07 0.29 (0.30 )
Weighted average common shares outstanding:
Basic 99,918,198 99,879,865 99,948,113 92,233,345
Diluted 100,541,993 100,427,391 101,157,285 92,233,345
 
Comprehensive income (loss) $ 2,716   $ 7,000   $ 29,326   $ (27,410 )
 
 
Bankrate, Inc. and SubsidiariesNon-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,

2012

2011

2012

2011

Revenue $ 116,775 $ 112,904 $ 363,920 $ 310,431
 

Gross margin excluding stock based compensation (1)

$ 79,216   $ 75,036   $ 248,822   $ 199,322  
Gross margin excluding stock based compensation % 67.8 % 66.5 % 68.4 % 64.2 %
 
Adjusted EBITDA (2) $ 29,845   $ 36,029   $ 105,208   $ 96,929  
Adjusted EBITDA margin 25.6 % 31.9 % 28.9 % 31.2 %
 
Adjusted net income (3) $ 12,691   $ 17,712   $ 49,620   $ 42,964  
Adjusted EPS $ 0.13   $ 0.18   $ 0.49   $ 0.43  
 
Common shares outstanding (5): 100,541,993 100,427,391 101,157,285 100,427,391
 

(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 $ 79,093 $ 74,833 $ 248,351 $ 199,085
Stock based compensation   123     203     471     237  
Gross margin excluding stock based compensation $ 79,216   $ 75,036   $ 248,822   $ 199,322  

(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; and stock based compensation.
 
Reconciliation of adjusted EBITDA
Income from operations $ 13,176 $ 21,458 $ 58,642 $ 20,341
Legal settlements 833 - 898 -
Acquisition, offering and related expenses and related party fees (512 ) 1,163 367 40,858
Restructuring Charges - - - 238
Stock based compensation 2,245 2,509 6,842 2,927
Depreciation and amortization   14,103     10,899     38,459     32,565  
Adjusted EBITDA $ 29,845   $ 36,029   $ 105,208   $ 96,929  

(3)

 

Adjusted net income adds back legal settlements; acquisition, offering and related expenses and related party fees; restructuring charges; stock based compensation; and amortization.
 
Reconciliation of adjusted net income
Income (loss) before income taxes $ 5,069 $ 14,939 $ 37,225 $ (21,727 )
Other income (135 ) - (135 ) -
Loss on early extinguishment of debt - - - 16,629
Legal settlements 833 - 898 -
Acquisition, offering and related expenses and related party fees (512 ) 1,163 367 40,858
Restructuring Charges - - - 238
Stock based compensation 2,245 2,509 6,842 2,927
Amortization   13,305     10,425     36,147     31,507  
Adjusted income before tax 20,805 29,036 81,344 70,432
Income tax (3)   8,114     11,324     31,724     27,468  
Adjusted net income $ 12,691   $ 17,712   $ 49,620   $ 42,964  

(4)

 

Assumes 39% income tax rate.

(5)

 

Pro forma for post-IPO share count for 2011 periods presented.
 




Stock quotes in this article: RATE 

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