Inuvo, Inc. (NYSE MKT: INUV) (the "Company" or "Inuvo"), an Internet marketing and technology company that develops consumer applications and delivers targeted advertisements onto websites reaching desktop and mobile, today announced its financial results for the fourth quarter and full year ended December 31, 2012. "The Company had a strong fourth quarter and fiscal year in 2012,” stated Richard Howe, Chairman and Chief Executive Officer of Inuvo. “Not only did revenue and Adjusted EBITDA increased sequentially and year over year, but the business itself grew 26% organically between Q2 and Q4 following the Vertro acquisition in Q1. We expect these positive trends to continue into 2013, and we anticipate Q1 2013 revenue to range between $16.2 and $16.5 million.” In its efforts to become profitable, the Company recently announced the relocation of its headquarters to Conway, Arkansas funded by a $1.75 million dollar grant from the Arkansas Economic Development Commission that, depending on the final terms of exiting the Company’s New York City office lease, is expected to yield monthly operating expense savings of approximately $80 to $120 thousand starting in Q2 2013. Additionally, the Company continues to expand its Network into mobile and is taking its local.alot.com site, a complement to its ALOT AppBar, Global through an expansion into Europe starting in Q2 2013. Fourth Quarter 2012 Highlights
- Net revenue of $16.2 million, increased $9.6 million or 145% compared to the fourth quarter of 2011, and an increase of 5% compared to the third quarter 2012.
- Gross profit of $8.8 million, increased 366% compared to $1.9 million in the fourth quarter of 2011.
- Adjusted EBITDA, a non-GAAP measure, increased to $1.0 million compared to negative $226 thousand in the fourth quarter of 2011.
- Net revenue for the Network segment was $9.5 million and gross profit was $2.8 million, an increase of 44% and 50% from the fourth quarter of 2011, respectively.
- Net revenue for the Applications segment was $6.8 million and gross profit was $6.0 million compared to $17 thousand net revenue and $16 thousand gross profit in fourth quarter 2011.
- Net revenue of $53.4 million, an increase of $17.5 million or 49% compared to 2011.
- Gross profit of $27.7 million, an increase of $12.7 million or 85% compared to 2011.
- Adjusted EBITDA, a non-GAAP measure, increased to $2.5 million compared to negative $270 thousand in 2011.
For the quarter ended December 31, 2012, Adjusted EBITDA, a non-GAAP measure, increased to $1.0 million compared to negative $226 thousand in the fourth quarter of 2011. The Company reported a net loss of approximately $864 thousand, or $0.04 per share loss, for the three months ended December 31, 2012, compared to a net loss of $4.4 million, or $0.44 per share loss, for the corresponding period last year. The current year loss includes a charge of $505 thousand in severance payments to the company’s former CEO.Financial results for the year ended December 31, 2012 In the year ended December 31, 2012, net revenues increased 49% to $53.4 million compared to the same period in 2011. Gross profit increased by 85% to $27.7 million in the year ended December 31, 2012 compared to the same period of 2011. These increases were due primarily to revenue from the Applications segment as a result of the Vertro acquisition in March 2012. Net revenues from the Applications segment were $24.5 million for the year ended December 31 , 2012. Net revenue from the Network segment was $28.9 million for the year ended December 31, 2012, accounting for 54% of total revenues in the year, had decreased 19% compared to the same period in 2011. This was primarily the result of reduced transactions within the Company’s owned and operated websites and weak performance from third party affiliates in the first quarter of 2012 which subsequently recovered by the fourth quarter of 2012. For the year ended December 31, 2012, Adjusted EBITDA, a non-GAAP measure, increased to $2.5 million compared to negative $270 thousand in 2011. The Company reported a net loss for the year ended December 31, 2012, of $7.0 million, or $0.34 per share, compared to $9.0 million, or $0.96 per share for the same period in 2011.
Balance Sheet as of December 31, 2012Cash and cash equivalents totaled $3.4 million at December 31, 2012. As of December 31, 2012, the working capital deficit was $3.5 million compared to $2.0 million on December 31, 2011. Current assets and total assets were $9.9 million and $29.1 million, respectively and current liabilities and total liabilities were $13.4 million and $24.9 million, respectively, as of December 31, 2012 and December 31, 2011.
|Conference Call Information|
|Date: Wednesday, March 13, 2013|
|Time: 4:30 p.m. EDT|
|Domestic Dial-in number: 1-877-941-4774|
|International Dial-in number: 1-480-629-9760|
|Live webcast: http://public.viavid.com/index.php?id=103735|
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, statements made with respect to expectations with respect to our lack of profitable operating history, changes in our business, potential need for additional capital, fluctuations in demand; changes to economic growth in the U.S. economy; and government policies and regulations, including, but not limited to those affecting the Internet, all as set forth in our Annual Report on Form 10-K for the year ended December 31, 2012. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Inuvo and are difficult to predict. Inuvo undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
|INUVO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS|
|December 31,2012||December 31,2011|
|Accounts receivable, net||5,400,290||5,426,865|
|Other current assets||854,841||1,430,679|
|Total current assets||9,937,307||7,337,543|
|Property and equipment, net||2,110,771||1,590,011|
|Liabilities and stockholders’ (deficit) equity|
|Term and credit notes payable – current portion||$||1,333,333||$||452,000|
|Accrued expenses and other current liabilities||1,872,722||1,611,831|
|Current liabilities of discontinued operations||-||160,000|
|Total current liabilities||13,402,985||9,352,180|
|Deferred tax liability||4,099,000||-|
|Term and credit notes payable – long-term||6,488,889||2,454,303|
|Other long-term liabilities||932,377||300,124|
|Total stockholders’ (deficit)equity||4,206,352||(1,010,266)|
|Total liabilities and stockholders’ (deficit)equity||$||29,129,603||$||11,096,341|
|INUVO, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|Three Months Ended December 31,||Year Ended December 31,|
|Cost of revenue||7,445,389||4,725,572||25,635,510||20,831,759|
|Compensation & telemarketing||2,244,595||1,303,432||6,816,013||7,670,869|
|Selling, general and administrative||2,515,261||1,548,144||9,249,678||5,567,103|
|Total operating expenses||9,851,263||3,548,577||34,255,334||20,684,088|
|Interest and other expenses, net||164,388||2,712,437||638,198||3,529,780|
|Loss from continuing operations beforetaxes||(1,220.653||)||(4,376,236||)||(7,166,097||)||(9,225,631||)|
|Income tax benefit (expense)||397,446||(7,735||)||326,779||(7,876||)|
|Net loss from continuing operations||( 823,207||)||(4,383,971||)||(6,839,318||)||(9,233,507||)|
|Net income (loss) from discontinuedoperations||(40,751||)||-||(183,527||)||257,136|
|Per common share data:|
|Basic and diluted:|
|Net loss from continuing operations||$||(0.04||)||$||(0.44||)||$||(0.33||)||$||(0.99||)|
|Net income(loss) from discontinuedoperations||-||-||(0.01||)||0.03|
|Weighted average shares|
|(Basic and diluted)||23,176,878||10,035,791||21,004,235||9,364,038|
|By Segment: (unaudited)|
|Three Months Ended December 31,||Year Ended December 31,|
|INUVO, INC. RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA (Unaudited)|
|Three Months Ended December 31||Year Ended December 31,|
|Net loss from continuing operations||$||(823,207||)||$||(4,383,971||)||$||(6,839,318||)||$||(9,233,507||)|
|Interest expense, net||164,388||67,443||563,198||330,880|
|Income tax expense (benefit)||(397,446||)||7,735||(326,779||)||7,876|
|Indirect costs related to merger||-||436,458|
|Charge for former CEO||505,000||-||505,000||-|
|Stock based payments||210,275||441,223||842,752||1,780,287|
Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, management believes that Adjusted EBITDA is useful to investors in evaluating the Company’s performance because Adjusted EBITDA is a commonly used financial analysis tool for measuring and comparing companies in the Company’s industry in areas of operating performance.Management believes that the disclosure of Adjusted EBITDA offers an additional view of the Company’s operations that, when coupled with the GAAP results and the reconciliation to GAAP net loss, provides a more complete understanding of the Company’s results of operations and the factors and trends affecting the Company’s business. We present Adjusted EBITDA as a supplemental measure of our performance. We defined Adjusted EBITDA as net loss from continuing operations plus (i) interest expense, net, (ii) provision for taxes, (iii) depreciation and amortization, (iv) stock based payments, (v) indirect costs incurred during the merger with Vertro and (vi) the accrual of severance expense related to the departure of the former CEO. These further adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same or similar to some of the adjustments in the presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.