Attached files
| file | filename |
|---|---|
| 8-K - 8-K - BLUCORA, INC. | d678625d8k.htm |
| EX-99.1 - EX-99.1 - BLUCORA, INC. | d678625dex991.htm |
Exhibit 99.2
Blucora, Inc.
Q4 2013 Earnings
Supplemental Information
Table of Contents
| Financial Information |
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| Summary - Consolidated Financial Results |
2 | |||
| Reconciliation of Non-GAAP Financial Measures |
4 | |||
| Stock Price Sensitivity Analysis for Diluted Shares |
5 | |||
| Operating Metrics |
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| Search |
6 | |||
| Pro-Forma Information |
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| Q4 Year-over-Year and FY 2013 Quarterly E-Commerce |
7 | |||
| Last 12 Months - Pro Forma Results |
8 | |||
| Last 12 Months - Levered Free Cash Flow |
9 | |||
| Reconciliation Pro Forma Non-GAAP Financial Measures |
10 | |||
1
Blucora Consolidated Financial Results
(in thousands except net income per share, rounding differences may exist)
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | 3Q13 | 4Q13 | FYE 12/31 | ||||||||||||||||||||||||||||||||||
| Segment Revenue |
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| Search |
$ | 228,814 | $ | 75,295 | $ | 81,808 | $ | 91,408 | $ | 96,303 | $ | 344,814 | $ | 100,601 | $ | 94,497 | $ | 107,742 | $ | 125,624 | $ | 428,464 | ||||||||||||||||||||||
| Tax Preparation (1) |
— | 40,401 | 19,075 | 1,462 | 1,167 | 62,105 | 64,737 | 22,684 | 1,749 | 2,043 | 91,213 | |||||||||||||||||||||||||||||||||
| E-Commerce (2) |
— | — | — | — | — | — | — | — | 14,630 | 39,673 | 54,303 | |||||||||||||||||||||||||||||||||
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| Total |
$ | 228,814 | $ | 115,696 | $ | 100,883 | $ | 92,870 | $ | 97,470 | $ | 406,919 | $ | 165,338 | $ | 117,181 | $ | 124,121 | $ | 167,340 | $ | 573,980 | ||||||||||||||||||||||
| Segment Income (Loss) (3) |
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| Search |
$ | 46,206 | $ | 13,373 | $ | 15,078 | $ | 16,356 | $ | 17,378 | $ | 62,185 | $ | 18,270 | $ | 17,912 | $ | 21,319 | $ | 25,003 | $ | 82,504 | ||||||||||||||||||||||
| Tax Preparation (1) |
— | 22,135 | 11,954 | (1,561 | ) | (2,476 | ) | 30,052 | 30,784 | 14,438 | (1,605 | ) | (3,018 | ) | 40,599 | |||||||||||||||||||||||||||||
| E-Commerce (2) |
— | — | — | — | — | — | — | — | 906 | 4,061 | 4,967 | |||||||||||||||||||||||||||||||||
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| Total |
$ | 46,206 | $ | 35,508 | $ | 27,032 | $ | 14,795 | $ | 14,902 | $ | 92,237 | $ | 49,054 | $ | 32,350 | $ | 20,620 | $ | 26,046 | $ | 128,070 | ||||||||||||||||||||||
| Segment Income (Loss) % of Revenue |
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| Search |
20 | % | 18 | % | 18 | % | 18 | % | 18 | % | 18 | % | 18 | % | 19 | % | 20 | % | 20 | % | 19 | % | ||||||||||||||||||||||
| Tax Preparation |
na | 55 | % | 63 | % | (107 | %) | (212 | %) | 48 | % | 48 | % | 64 | % | (92 | %) | (148 | %) | 45 | % | |||||||||||||||||||||||
| E-Commerce |
na | na | na | na | na | na | na | na | 6 | % | 10 | % | 9 | % | ||||||||||||||||||||||||||||||
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| Total |
20 | % | 31 | % | 27 | % | 16 | % | 15 | % | 23 | % | 30 | % | 28 | % | 17 | % | 16 | % | 22 | % | ||||||||||||||||||||||
| Unallocated Corporate Operating Expense |
$ | 9,583 | $ | 3,806 | (4) | $ | 2,525 | $ | 2,695 | $ | 2,772 | $ | 11,794 | $ | 3,198 | $ | 3,135 | $ | 4,025 | (5) | $ | 3,471 | $ | 13,829 | ||||||||||||||||||||
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| Adjusted EBITDA |
$ | 36,623 | $ | 31,702 | $ | 24,507 | $ | 12,100 | $ | 12,130 | $ | 80,439 | $ | 45,856 | $ | 29,215 | $ | 16,595 | $ | 22,575 | $ | 114,241 | ||||||||||||||||||||||
| Other Unallocated |
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| Depreciation |
$ | 4,861 | $ | 951 | $ | 956 | $ | 988 | $ | 917 | $ | 3,812 | $ | 1,003 | $ | 990 | $ | 1,126 | $ | 1,357 | $ | 4,476 | ||||||||||||||||||||||
| Amortization of intangible assets |
2,595 | 3,624 | (6) | 5,248 | 5,183 | 5,144 | 19,193 | 5,109 | 5,095 | 6,090 | (7) | 7,495 | 23,789 | |||||||||||||||||||||||||||||||
| Stock-based compensation |
7,687 | 6,708 | (8) | 2,020 | 2,195 | 2,300 | 13,215 | 2,485 | 2,753 | 3,252 | (9) | 3,037 | 11,527 | |||||||||||||||||||||||||||||||
| Interest income |
(369 | ) | (9 | ) | (52 | ) | (18 | ) | (52 | ) | (131 | ) | (55 | ) | (109 | ) | (42 | ) | (94 | ) | (300 | ) | ||||||||||||||||||||||
| Interest expense |
73 | 844 | 1,009 | 794 | 875 | 3,522 | 1,148 | 2,890 | (10) | 2,669 | 2,756 | 9,463 | ||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs |
— | 331 | 332 | 83 | 74 | 820 | 107 | 476 | (10) | 258 | 267 | 1,108 | ||||||||||||||||||||||||||||||||
| Accretion of debt discounts |
— | 135 | 124 | 34 | 31 | 324 | 161 | 949 | (10) | 862 | 866 | 2,838 | ||||||||||||||||||||||||||||||||
| (Gain) loss on derivative instrument |
— | 272 | (333 | ) | 4,335 | (1,928 | ) | 2,346 | (348 | ) | 2,323 | 3,956 | 5,721 | (11) | 11,652 | |||||||||||||||||||||||||||||
| Impairment of equity investment in privately-held company |
— | — | — | — | — | — | — | — | 3,711 | — | 3,711 | |||||||||||||||||||||||||||||||||
| Loss on debt extinguishment and modification expense |
— | — | — | — | — | — | — | — | 1,593 | — | 1,593 | |||||||||||||||||||||||||||||||||
| Other (income) loss, net |
1,541 | (18 | ) | (150 | ) | (32 | ) | (4 | ) | (204 | ) | (8 | ) | (225 | ) | 111 | (320 | ) | (442 | ) | ||||||||||||||||||||||||
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| Total |
$ | 16,388 | $ | 12,838 | $ | 9,154 | $ | 13,562 | $ | 7,357 | $ | 42,911 | $ | 9,602 | $ | 15,142 | $ | 23,586 | $ | 21,085 | $ | 69,415 | ||||||||||||||||||||||
| Income (Loss) Before Taxes |
20,235 | 18,864 | 15,353 | (1,462 | ) | 4,773 | 37,528 | 36,254 | 14,073 | (6,991 | ) | 1,490 | 44,826 | |||||||||||||||||||||||||||||||
| Income Tax (Benefit) Expense |
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| Cash |
$ | 1,712 | $ | 861 | $ | 474 | $ | (185 | ) | $ | 293 | $ | 1,443 | $ | 1,472 | $ | 435 | $ | (517 | ) | $ | 498 | $ | 1,888 | ||||||||||||||||||||
| Non-cash (12) |
(13,000 | ) | 6,597 | 5,181 | 1,121 | 660 | 13,559 | 11,174 | 5,232 | 7 | 2,126 | 18,539 | ||||||||||||||||||||||||||||||||
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| Total |
$ | (11,288 | ) (13) | $ | 7,458 | $ | 5,655 | $ | 936 | $ | 953 | $ | 15,002 | $ | 12,646 | $ | 5,667 | $ | (510 | ) | $ | 2,624 | $ | 20,427 | ||||||||||||||||||||
| Income (Loss) from Continuing Operations |
31,523 | 11,406 | 9,698 | (2,398 | ) | 3,820 | 22,526 | 23,608 | 8,406 | (6,481 | ) | (1,134 | ) | 24,399 | ||||||||||||||||||||||||||||||
| Discontinued Operations Loss (14) |
(9,927 | ) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| GAAP Net Income (Loss) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | $ | (6,481 | ) | $ | (1,134 | ) | $ | 24,399 | |||||||||||||||||||
| GAAP Net Income (Loss) Per Share - diluted |
$ | 0.56 | $ | 0.28 | $ | 0.23 | (15) | $ | (0.06 | ) | $ | 0.04 | (15) | $ | 0.54 | $ | 0.53 | (16) | $ | 0.20 | $ | (0.16 | ) | $ | (0.03 | ) | $ | 0.56 | ||||||||||||||||
| Non-GAAP Net Income |
$ | 28,765 | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | $ | 12,970 | $ | 18,095 | $ | 97,694 | ||||||||||||||||||||||
| Non-GAAP Net Income Per Share - diluted |
$ | 0.74 | $ | 0.70 | $ | 0.53 | $ | 0.25 | (17) | $ | 0.24 | $ | 1.70 | $ | 0.95 | $ | 0.58 | $ | 0.30 | (18) | $ | 0.40 | (19) | $ | 2.25 | |||||||||||||||||||
| Outstanding Shares |
39,534 | 39,804 | 40,334 | 40,633 | 40,832 | 40,832 | 40,933 | 41,143 | 41,176 | 42,083 | 42,083 | |||||||||||||||||||||||||||||||||
| Basic Shares - GAAP |
37,954 | 39,692 | 40,116 | 40,511 | 40,789 | 40,279 | 40,911 | 41,050 | 41,088 | 41,566 | 41,201 | |||||||||||||||||||||||||||||||||
| Diluted Shares - GAAP |
38,621 | 40,978 | 41,245 | 40,511 | 42,411 | 41,672 | 44,294 | 42,724 | 41,088 | 41,566 | 43,480 | |||||||||||||||||||||||||||||||||
| Cash & Short-term Investments |
$ | 293,551 | $ | 129,868 | $ | 141,867 | $ | 150,417 | $ | 162,288 | $ | 162,288 | $ | 401,677 | $ | 415,493 | $ | 248,382 | $ | 333,705 | $ | 333,705 | ||||||||||||||||||||||
| Outstanding Debt - Principal Amount (20) |
— | 85,000 | 75,000 | 74,496 | 74,496 | 74,496 | 275,746 | 265,746 | 266,634 | 322,634 | 322,634 | |||||||||||||||||||||||||||||||||
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| Net Cash |
$ | 293,551 | $ | 44,868 | $ | 66,867 | $ | 75,921 | $ | 87,792 | $ | 87,792 | $ | 125,931 | $ | 149,747 | $ | (18,252 | ) | $ | 11,071 | $ | 11,071 | |||||||||||||||||||||
Notes to Consolidated Financial Results on next page
2
Notes to Consolidated Financial Results
| (1) | On January 31, 2012, the Company acquired TaxACT, Inc. , which operates the TaxACT tax preparation online service and software business. The TaxACT business consists of an online tax preparation service for individuals, tax preparation software for individuals and professional tax preparers, and ancillary services. TaxACT generates revenue primarily through its online service at www.taxact.com. As a highly seasonal business, almost all of the TaxACT revenue is generated in the first four months of the calendar year. Amounts for 2012 represented the results of operations for the TaxACT business from January 31, 2012 to December 31, 2012. |
| (2) | On August 22, 2013, the Company acquired Monoprice, Inc., an online provider of self-branded electronics and accessories for both consumers and businesses. Amounts for 2013 represented the results of operations for the Monoprice business from August 22, 2013 to December 31, 2013. |
| (3) | The Company does not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, depreciation, amortization of intangible assets, other income/loss, net, income tax benefit/expense, or discontinued operations to the reportable segments. The general and administrative costs are included in Unallocated Corporate Operating Expense. |
| (4) | Amount for 1Q12 included $1.1 million in transaction costs related to the TaxACT acquisition. |
| (5) | Amount for 3Q13 included $0.6 million in transaction costs related to the Monoprice acquisition. |
| (6) | Amount for 1Q12 included $3.4 million related to amortization of acquired intangible assets related to the TaxACT acquisition. |
| (7) | Amount for 3Q13 included $1.0 million related to amortization of acquired intangible assets related to the Monoprice acquisition. |
| (8) | In 1Q12, $5.2 million in stock-based compensation was recorded in association with the modification of the terms of a warrant and the vesting of non-employee performance-based stock options upon completion of the TaxACT acquisition. |
| (9) | In 3Q13, $0.5 million in stock-based compensation was recorded in association with the vesting of performance-based stock options upon completion of the Monoprice acquisition. |
| (10) | Interest expense, amortization of debt issuance costs, and accretion of debt discount included amounts associated with the convertible notes issued on March 15, 2013. |
| (11) | Warrant was exercised during 4Q13. |
| (12) | Amounts represent the non-cash portion of income tax expense from continuing operations. The Company excludes the non-cash portion of income tax expense because of its ability to offset a substantial portion of its cash tax liabilities by using deferred tax assets, which consist primarily of US federal net operating losses. The majority of these deferred tax assets will expire, if unutilized, between 2020 and 2024. |
| (13) | Amount included an income tax benefit of $18.9 million, due to the release of the valuation allowance on deferred tax assets. |
| (14) | In the quarter ended June 30, 2011, the Company completed the sale of Mercantila. The operating results of that business have been presented as discontinued operations for all periods presented. |
| (15) | Calculation excludes the income effect of a dilutive derivative instrument. |
| (16) | Calculation excludes the income effect of a dilutive derivative instrument and the convertible notes in 1Q13. Related to the convertible notes, the Company received shareholder approval for flexible settlement in May 2013. |
| (17) | Calculation uses 42,048,000 fully-diluted shares due to non-GAAP net income. |
| (18) | Calculation uses 43,142,000 fully-diluted shares due to non-GAAP net income. |
| (19) | Calculation uses 45,716,000 fully-diluted shares due to non-GAAP net income. |
| (20) | 1Q12 includes the TaxAct 2012 credit facility, issued in January 2012 in connection with the TaxAct acquisition and refinanced during 3Q13 on more favorable terms (the TaxAct 2013 credit facility), 1Q13 includes the convertible notes issued in March 2013, and 4Q13 includes the Monoprice 2013 credit facility issued in November 2013. |
3
Blucora Non-GAAP Reconciliation (1)
(in thousands except net income per share, rounding differences may exist)
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | 3Q13 | 4Q13 | FYE 12/31 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA |
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| Net income (loss) (2) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | $ | (6,481 | ) | $ | (1,134 | ) | $ | 24,399 | |||||||||||||||||||
| Discontinued operations |
9,927 | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Depreciation |
4,861 | 951 | 956 | 988 | 917 | 3,812 | 1,003 | 990 | 1,126 | 1,357 | 4,476 | |||||||||||||||||||||||||||||||||
| Amortization of intangible assets |
2,595 | 3,624 | 5,248 | 5,183 | 5,144 | 19,199 | 5,109 | 5,095 | 6,090 | 7,495 | 23,789 | |||||||||||||||||||||||||||||||||
| Stock-based compensation |
7,687 | 6,708 | 2,020 | 2,195 | 2,300 | 13,223 | 2,485 | 2,753 | 3,252 | 3,037 | 11,527 | |||||||||||||||||||||||||||||||||
| Other (income) loss (3) |
1,245 | 1,555 | 930 | 5,196 | (1,004 | ) | 6,677 | 1,005 | 6,304 | 13,118 | 9,196 | 29,623 | ||||||||||||||||||||||||||||||||
| Income tax (benefit) expense |
(11,288 | ) | 7,458 | 5,655 | 936 | 953 | 15,002 | 12,646 | 5,667 | (510 | ) | 2,624 | 20,427 | |||||||||||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 36,623 | $ | 31,702 | $ | 24,507 | $ | 12,100 | $ | 12,130 | $ | 80,439 | $ | 45,856 | $ | 29,215 | $ | 16,595 | $ | 22,575 | $ | 114,241 | ||||||||||||||||||||||
| Non-GAAP Net Income |
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| Net income (loss) (2) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | $ | (6,481 | ) | $ | (1,134 | ) | $ | 24,399 | |||||||||||||||||||
| Discontinued operations |
9,927 | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Stock-based compensation |
7,687 | 6,708 | 2,020 | 2,195 | 2,300 | 13,223 | 2,485 | 2,753 | 3,252 | 3,037 | 11,527 | |||||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets |
2,595 | 3,624 | 5,248 | 5,183 | 5,144 | 19,199 | 5,109 | 5,095 | 6,090 | 7,495 | 23,789 | |||||||||||||||||||||||||||||||||
| Accretion of debt discount on convertible notes |
— | — | — | — | — | — | 132 | 841 | 843 | 858 | 2,674 | |||||||||||||||||||||||||||||||||
| (Gain) loss on derivative instrument |
— | 272 | (333 | ) | 4,335 | (1,928 | ) | 2,346 | (348 | ) | 2,323 | 3,956 | 5,721 | 11,652 | ||||||||||||||||||||||||||||||
| Impairment of equity investment in privately-held company |
— | — | — | — | — | — | — | — | 3,711 | — | 3,711 | |||||||||||||||||||||||||||||||||
| Loss on debt extinguishment and modification expense |
— | — | — | — | — | — | — | — | 1,593 | — | 1,593 | |||||||||||||||||||||||||||||||||
| Cash tax impact of adjustments to GAAP net income |
(40 | ) | (90 | ) | 3 | (15 | ) | 9 | (93 | ) | (163 | ) | (17 | ) | (1 | ) | (8 | ) | (189 | ) | ||||||||||||||||||||||||
| Non-cash income tax (benefit) expense from continuing operations (1) |
(13,000 | ) | 6,597 | 5,181 | 1,121 | 660 | 13,559 | 11,174 | 5,231 | 7 | 2,126 | 18,538 | ||||||||||||||||||||||||||||||||
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| Non-GAAP net income (5) |
$ | 28,765 | (4) | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | $ | 12,970 | $ | 18,095 | $ | 97,694 | |||||||||||||||||||||
| Non-GAAP Net Income Per Share |
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| Non-GAAP net income |
$ | 28,765 | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | $ | 12,970 | $ | 18,095 | $ | 97,694 | ||||||||||||||||||||||
| Non-GAAP net income per share |
$ | 0.74 | (4) | $ | 0.70 | $ | 0.53 | $ | 0.25 | $ | 0.24 | $ | 1.70 | $ | 0.95 | $ | 0.58 | $ | 0.30 | $ | 0.40 | $ | 2.25 | |||||||||||||||||||||
| Diluted shares |
38,621 | 40,978 | 41,245 | 42,048 | 42,411 | 41,672 | 44,294 | 42,724 | 43,142 | 45,716 | 43,480 | |||||||||||||||||||||||||||||||||
| (1) | For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure for the three and twelve months ended December 31, 2013 and 2012 in exhibit 99.1 to this Current Report on Form 8-K filed on February 20, 2014. |
| (2) | As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited). |
| (3) | Other income/loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment and modification expense, gains or losses on derivative instrument, other-than-temporary impairment losses on equity investments, and adjustments to the fair values of contingent liabilities related to business combinations. |
| (4) | Amounts previously disclosed have been revised to reflect the effect of classifying Mercantila as discontinued operations. |
| (5) | The Company defines Non-GAAP net income differently effective with the quarter ended March 31, 2013 to include accretion of debt discount on convertible notes, and effective with the quarter ended September 30, 2013 to include other-than-temporary impairment losses on equity investments and loss on debt extinguishment and modification expense. The Company’s new definition of non-GAAP net income did not impact presentation of this non-GAAP financial measure for prior periods. |
4
Blucora Stock Price Sensitivity Analysis for Diluted Shares
(in thousands except share prices)
The following table illustrates the potential impact of a change in average stock price on the number of shares included in diluted shares associated with the conversion premium on the convertible notes:
| Stock Price |
Diluted shares(a) | |||||
| $ | 21.66 | — | (b) | |||
| $ | 22.00 | 144 | ||||
| $ | 22.50 | 347 | ||||
| $ | 23.00 | 541 | ||||
| $ | 23.50 | 728 | ||||
| $ | 24.00 | 906 | ||||
| $ | 24.50 | 1,077 | ||||
| $ | 25.00 | 1,241 | ||||
| $ | 25.50 | 1,399 | ||||
| $ | 26.00 | 1,551 | ||||
| $ | 26.50 | 1,697 | ||||
| $ | 27.00 | 1,838 | (c) | |||
| $ | 27.50 | 1,973 | ||||
| $ | 28.00 | 2,104 | ||||
| $ | 28.50 | 2,230 | ||||
| $ | 29.00 | 2,352 | ||||
| $ | 29.50 | 2,470 | ||||
| $ | 30.00 | 2,583 | ||||
| (a) | Indicative shares associated with conversion premium on convertible notes |
| (b) | Approximate conversion price |
| (c) | Average stock price and dilutive share impact for 4Q13 |
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| Blucora Operating Metrics - Search | ||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | 3Q13 | 4Q13 | FYE 12/31 | ||||||||||||||||||||||||||||||||||
| Revenue by Source |
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| Owned & Operated (B2C) |
21 | % | 13 | % | 12 | % | 12 | % | 11 | % | 12 | % | 12 | % | 15 | % | 19 | % | 20 | % | 17 | % | ||||||||||||||||||||||
| Distribution (B2B) |
79 | % | 87 | % | 88 | % | 88 | % | 89 | % | 88 | % | 88 | % | 85 | % | 81 | % | 80 | % | 83 | % | ||||||||||||||||||||||
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E-Commerce Segment - Pro Forma 4Q Year-over-Year and FY 2013 Quarterly Results
Pro Forma 4Q Year-over-Year Results
(table in thousands except for %, rounding differences may exist)
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||||||||||||||
| 2013 | 2012 | Percentage Change |
(c) 2013 |
2012 | Percentage Change |
|||||||||||||||||||
| Pro Forma Revenue | $ | 39,673 | $ | 32,679 | 21 | % | $ | 144,905 | $ | 118,791 | 22 | % | ||||||||||||
| Pro Forma Segment Income | $ | 4,260 | (a) | $ | 3,267 | (b) | 30 | % | $ | 16,733 | (d) | $ | 12,674 | (b) | 32 | % | ||||||||
| Pro Forma Segment Margin | 11 | % | 10 | % | 12 | % | 11 | % | ||||||||||||||||
Pro Forma FY 2013 Quarterly Performance
| 1Q13 | 2Q13 | (c) 3Q13 |
4Q13 | (c) FY 2013 |
||||||||||||||||
| Pro Forma Revenue |
$ | 34,696 | $ | 33,493 | $ | 37,043 | $ | 39,673 | $ | 144,905 | ||||||||||
| Pro Forma Segment Income |
$ | 4,489 | (e) | $ | 3,791 | (f) | $ | 4,194 | (g) | $ | 4,260 | (a) | $ | 16,733 | (d) | |||||
| Pro Forma Segment Margin |
13 | % | 11 | % | 11 | % | 11 | % | 12 | % | ||||||||||
| (a) | Excludes $199,000 of charges to costs of revenues reported on a GAAP basis due to fair value purchase accounting on inventory. |
| (b) | Excludes $64,000 and $238,000 of founders salaries in the three and twelve months ended December 31, 2012, respectively. Includes $265,000 and $1.1 million for the three and twelve months ended December 31, 2012, in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. |
| (c) | Includes $682,000 in revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition. |
| (d) | Excludes $298,000 of charges to costs of revenues reported on a GAAP basis due to fair value purchase accounting on inventory, $138,000 of founders salaries, and $66,000 of other non-recurring charges in the period prior to acquisition. Includes $715,000 in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. |
| (e) | Excludes $55,000 of founders salaries, and $40,000 of other non-recurring charges in the period prior to acquisition. Includes $265,000 in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. |
| (f) | Excludes $61,000 of founders salaries, and $26,000 of other non-recurring charges in the period prior to acquisition. Includes $265,000 in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. |
| (g) | Excludes $99,000 of charges to costs of revenues reported on a GAAP basis due to fair value purchase accounting on inventory and $23,000 of founders salaries in the period prior to acquisition. Includes $185,000 in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. |
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Pro Forma - Consolidated Financial Performance
twelve months ending 12/31/2013
(table in thousands except net income per share, rounding differences may exist)
| (b) | (a) | |||||||||||||||||||
| Search | Tax Preparation |
E-Commerce | Corporate | Consolidated | ||||||||||||||||
| Pro Forma Revenue | $ | 428,464 | $ | 92,830 | $ | 144,905 | $ | — | $ | 666,199 | ||||||||||
| Pro Forma Segment Income | $ | 82,504 | $ | 42,216 | $ | 16,733 | $ | — | $ | 141,454 | ||||||||||
| Pro Forma Unallocated Corporate expenses |
$ | — | $ | — | $ | — | $ | (13,829 | ) | $ | (13,829 | ) | ||||||||
|
|
|
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| Pro Forma Adjusted EBITDA |
$ | 127,625 | ||||||||||||||||||
| Pro Forma Non-GAAP Net Income | $ | 105,983 | (c) | |||||||||||||||||
| Pro Forma Non-GAAP Net Income Per Share |
$ | 2.44 | ||||||||||||||||||
| Diluted shares |
43,480 | |||||||||||||||||||
| (a) | Includes $682,000 in revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition and $715,000 in proforma deferred transaction consideration arising from acquisition agreements accounted for under GAAP as compensation expense. Excludes $298,000 of charges to costs of revenues reported on a GAAP basis due to fair value purchase accounting on inventory, $138,000 of founders salaries, and $66,000 of other non-recurring charges in the period prior to acquisition. |
| (b) | Includes $1.6 million of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition in 2012. |
| (c) | Includes twelve months of pro forma cash interest and amortization of debt issuance costs on the convertible notes issued on March 15, 2013. Also includes twelve months of pro forma cash interest on the Monoprice 2013 credit facility, estimated at 4.0% on the $50.0 million principal balance for periods prior to issuance. |
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Pro-Forma Free Cash Flow (“FCF”)
twelve months ending 12/31/2013
(table in thousands, rounding differences may exist)
| Pro Forma Adjusted EBITDA |
$ | 127,625 | (a) | |
| Less - Pro Forma Capital Expenditures |
$ | (5,645 | ) (b) | |
| Less - Pro Forma Cash Taxes |
$ | (1,912 | ) | |
|
|
|
|||
| Unlevered FCF |
$ | 120,068 | ||
| Less - Pro Forma Cash Interest Expense |
$ | (12,848 | ) (c) | |
|
|
|
|||
| Levered FCF |
$ | 107,220 | ||
|
|
|
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| (a) | See reconciliation of Pro Forma Adjusted EBITDA on Blucora Pro Forma Non-GAAP Reconciliation. |
| (b) | Amount includes $1.3 million of costs associated with capitalized tenant improvement costs associated with the move of our Bellevue offices and $900,000 of capital expenditures from Monoprice prior to acquisition. |
| (c) | Amount represents cash interest expense on the TaxACT 2013 credit facility, the TaxACT 2012 credit facility prior to refinance in 3Q13, and the convertible notes. For periods prior to issuance, cash interest expense on the convertible notes is estimated at 4.25% on the $201.25m principal balance and cash interest expense on the Monoprice 2013 credit facility is estimated at 4.0% on the $50.0m principal balance. |
9
Blucora Pro Forma Non-GAAP Reconciliation (1)
twelve months ending 12/31/2013
(in thousands except net income per share, rounding differences may exist)
| Pro Forma Adjusted EBITDA |
||||
| Pro forma net income |
$ | 24,974 | ||
| Pro forma depreciation |
$ | 5,590 | ||
| Pro forma amortization of intangible assets |
$ | 29,971 | ||
| Pro forma stock-based compensation |
$ | 12,206 | ||
| Pro forma other loss, net |
$ | 34,239 | ||
| Pro forma income tax expense |
$ | 20,644 | ||
|
|
|
|||
| Pro Forma Adjusted EBITDA |
$ | 127,624 | ||
|
|
|
|||
| Pro Forma Non-GAAP Net Income |
||||
| Pro forma net income |
$ | 24,974 | ||
| Pro forma amortization of acquired intangible assets |
$ | 29,971 | ||
| Pro forma accretion of debt discount on convertible notes |
$ | 3,334 | ||
| Pro forma stock-based compensation |
$ | 12,206 | ||
| Loss on derivative instrument |
$ | 11,652 | ||
| Impairment of equity investment in privately-held company |
$ | 3,711 | ||
| Loss on debt extinguishment and modification expense |
$ | 1,593 | ||
| Pro forma cash tax impact of adjustments to GAAP net income |
$ | (190 | ) | |
| Pro forma non-cash income tax expense |
$ | 18,732 | ||
|
|
|
|||
| Pro forma non-GAAP net income |
$ | 105,983 | ||
|
|
|
|||
| Pro forma non-GAAP net income per share - diluted |
$ | 2.44 | ||
| Diluted shares |
43,480 | |||
| (1) | For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure for the three and twelve months ended December 31, 2013 and 2012 in exhibit 99.1 to this Current Report on Form 8-K filed on February 20, 2014. |
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