Inuvo, Inc. (NYSE MKT:INUV), an Internet marketing and technology company that delivers targeted advertisements into websites and applications reaching desktop and mobile devices, today announced net income of $675,000 or $0.03 per basic and diluted share for the first quarter of 2014, a significant improvement over the net loss of $291,000, or $0.01 per share loss in the prior year. Revenue for the first quarter of 2014 was $10.1 million compared to $15.9 million for the first quarter of 2013. Adjusted EBITDA was $1.3 million compared to $1.4 million in the first quarter of 2013. "The first quarter’s results and the second quarter’s upward revenue trajectory, give us confidence that the foundation we’ve built can deliver both growth and profit. While revenue was light in the first quarter, this was expected and directly related to the announced transition from toolbar to content rich websites / mobile applications and masks the 44% quarter over quarter underlying growth rate in the latter,” stated, Richard Howe, Chairman and Chief Executive Officer of Inuvo. First Quarter 2014 Highlights
- Net income was $675,000, up $965,000 from a net loss of $291,000 in the first quarter of 2013.
- Shareholder equity increased to approximately $6.1 million at March 31, 2014, which we believe is compliant with the listing requirements of the NYSE.
- ALOT sites revenue was $3.7 million in the first quarter of 2014, a 162% improvement over the first quarter of 2013 and a 44% improvement over the immediate prior quarter.
- Earnings per diluted share were $0.03, up from loss of $0.01 per share in the first quarter of 2013.
- Operating profit was up over $1 million dollars as operating expenses improved 35% from $8.8 million in 2013 to $5.8 million in 2014.
- Adjusted EBITDA, a non-GAAP measure, was $1.3 million.
- The launch of new ALOT branded websites at www.travel.alot.com and www.finance.alot.com/legal.
The Inuvo business is managed along two segments, the Partner Network and the Owned and Operated Network. The Partner Network facilitates transactions between advertisers and our partners' websites and applications. The Owned and Operated Network designs, builds and markets mobile-ready consumer websites and applications under the ALOT brand. The segments share the utilization of the company’s core technology platform.Three-month financial results for the period ended March 31, 2014 Net revenues for the three months ended March 31, 2014, were $10.1 million as compared to $15.9 million for the three months ended March 31, 2013. The lower year over year revenue comparison for the quarter was primarily due to a planned transition out of toolbar, which had revenue of $981 thousand in the first quarter of 2014 compared to $4.8 million in the same quarter last year. Improved margins in the quarter were the result of enforcing publisher contract terms and conditions and our Network operating policies, including validating traffic sources, improved technological detection, periodic publisher auditing, and where appropriate, modifying publisher payment terms. This resulted in lower revenues but higher margins in the first quarter that should return to normal operating levels in subsequent quarters. Revenue in our Owned and Operated Network was $4.7 million in the first quarter of 2014 compared to $7.0 million in the same quarter last year and reflects the transition from toolbar to content rich websites and applications within the segment. Gross profit decreased in the current quarter compared to the same quarter last year reflecting the lower revenues. Operating expenses also improved in the current quarter compared to the same quarter last year due to lower marketing costs and in large part to the move to Arkansas in 2013. For the quarter ended March 31, 2014, Adjusted EBITDA, a non-GAAP measure was $1.3 million compared to $1.4 million in the first quarter of 2013. The Company reported net income of $675,000, or $0.03 per diluted share, for the three months ended March 31, 2014, compared to a net loss of $291,000, or $0.01 per share loss for the corresponding period last year.
Balance Sheet as of March 31, 2014Cash and cash equivalents totaled $2.7 million at March 31, 2014. Current assets and total assets were $7.1 million and $24.4 million, respectively and current liabilities and total liabilities were $13.7 million and $18.4 million, respectively, as of March 31, 2014. Bank debt was reduced to $5.5 million from $6.1 million at December 31, 2013. Shareholders’ equity was approximately $6.1 million at March 31, 2014.
|Conference Call Information|
|Date: Wednesday, April 24, 2014|
|Time: 4:30 p.m. EDT|
|Domestic Dial-in number: 1-877-941-2069|
|International Dial-in number: 1-480-629-9713|
|Live webcast: http://public.viavid.com/index.php?id=108880|
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, 2013. 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.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|March 31,||December 31,|
|Accounts receivable, net||3,928,792||3,609,825|
|Prepaid expenses and other current assets||474,504||510,968|
|Total current assets||7,142,572||7,282,418|
|Property and equipment, net||1,081,744||1,188,566|
|Intangible assets, net||10,125,825||10,324,326|
|Liabilities and Stockholders’ Equity|
|Accrued expenses and other current liabilities||2,461,105||2,386,226|
|Term and credit notes payable, current portion||5,548,830||2,548,333|
|Total current liabilities||13,734,354||11,170,092|
|Deferred tax liability||3,713,205||3,788,903|
|Term and credit notes payable, long term||-||3,595,300|
|Other long-term liabilities||925,476||1,039,470|
|Total stockholders' equity||6,050,784||5,341,866|
|Total liabilities and stockholders' equity||$24,423,819||$24,935,631|
|CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)|
|Three Months Ended|
|March 31,||March 31,|
|Cost of revenue||3,676,755||7,480,868|
|Selling, general and administrative||1,010,609||2,144,831|
|Total operating expenses||5,774,211||8,831,045|
|Other expense, net||(97,802)||(106,669)|
|Net income (loss) from continuing operations before taxes||572,949||(498,803)|
|Income tax benefit (expense)||75,699||83,000|
|Net income (loss) from continuing operations||648,648||(415,803)|
|Net income (loss) from discontinued operations||26,111||125,093|
|Net income (loss)||674,759||(290,710)|
|Foreign currency valuation||-||3|
|Total comprehensive income (loss)||$674,759||($290,713)|
|Earnings per share, basic and diluted|
|From continuing operations||$0.03||($0.02)|
|From discontinued operations||.-||0.01|
|Net income (loss)||$0.03||($0.01)|
|Weighted average shares outstanding|
|By Segment (Unaudited):|
|Owned and Operated Network||4,670,100||7,002,782|
|Owned and Operated Network||4,586,559||6,636,553|
|RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES TO ADJUSTED|
|Three Months Ended|
|March 31,||March 31,|
|Net income (loss) from continuing operations before taxes||$572,949||($498,803)|
|Interest expense, net||97,802||106,669|
In addition to disclosing financial results in accordance with United States generally accepted accounting principles (“GAAP”), our earnings release contains the non-GAAP financial measure “Adjusted EBITDA.”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 income (loss) from continuing operations before taxes plus (i) interest expense, net, (ii) depreciation, (iii) amortization, (iv) stock-based compensation, and (v) accrued severances. 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.