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Exhibit 99.1

 

LOGO

News release

 

Tuesday, February 25    For immediate release

Endurance International Group Reports 2013 Fourth Quarter and Full Year Results

BURLINGTON, MA (February 25, 2014) — Endurance International Group Holdings, Inc. (NASDAQ: EIGI), a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online, today reported financial results for the fourth quarter and full year ended December 31, 2013.

“We’re excited to report another great quarter, capping off a truly historic year for our company. We demonstrated strong organic revenue growth while increasing adjusted EBITDA and unlevered free cash flow. Our company’s strategy is based on two simple principles: adding more high quality subscribers to our platform and selling our subscribers more value added solutions. During the year, we added over 279,000 net new subscribers, bringing our total number of subscribers to just over 3.5 million. Further, we continued to increase our average revenue per subscriber (ARPS), which grew to $13.15 for the quarter,” commented Hari Ravichandran, CEO and Founder of Endurance International Group.

Fourth Quarter Highlights

 

    Revenue increased 17% to $136.4 million compared to $117.0 million for the fourth quarter of 2012.

 

    Adjusted EBITDA increased 40% to $46.2 million compared to $33.1 million for the fourth quarter of 2012.

 

    Net loss attributable to Endurance International Group Holdings, Inc. was $67.5 million, or $(0.57) per diluted share, compared to a net loss of $72.6 million, or $(0.75) per diluted share, for the fourth quarter of 2012. The net loss included the impact of $33.6 million of IPO related charges.

 

    Unlevered free cash flow (UFCF) increased 37% to $37.5 million, compared to $27.4 million for the fourth quarter of 2012.

 

    Free cash flow (FCF) more than doubled in the fourth quarter of 2013 to $18.9 million, compared to $7.7 million for the fourth quarter of 2012.

 

    Total subscribers were approximately 3.502 million as of December 31, 2013, a sequential increase of approximately 62,000 from 3.440 million as of September 30, 2013, and a year-over-year increase of approximately 279,000 from 3.223 million as of December 31, 2012.

 

    ARPS was $13.15 for the fourth quarter of 2013, representing a sequential increase of $0.01 from $13.14 for the third quarter of 2013. Apart from acquisitions completed in 2012, ARPS grew 9%, or $0.96, to $11.54 for the fourth quarter of 2013 from $10.58 for the fourth quarter of 2012.

 

    Monthly recurring revenue (MRR) retention rate remained at 99%, consistent with our MRR retention rate for the third quarter of 2013 and the fourth quarter of 2012.

Full Year 2013 Highlights

 

    Revenue increased 78% to $520.3 million compared to $292.2 million for 2012. Adjusted revenue increased 11% to $528.1 million compared to $474.1 million for 2012. Apart from acquisitions completed in 2012, adjusted revenue grew 17%, from $272.9 million for 2012 to $318.2 million for 2013.


    Adjusted EBITDA increased 55% to $207.9 million compared to $133.7 million for 2012.

 

    Net loss attributable to Endurance International Group Holdings, Inc. was $159.2 million, or $(1.55) per basic and diluted share, compared to a net loss attributable to common shareholders of $139.3 million, or $(1.44) per basic and diluted share, for 2012.

 

    UFCF increased 64% to $166.5 million, compared to $101.7 million for 2012.

 

    FCF increased 69% to $83.4 million, compared to $49.4 million for 2012.

Adjusted revenue, Adjusted EBITDA, UFCF, FCF and ARPS are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to their most comparable measure calculated in accordance with GAAP is provided in the financial statement tables included at the end of this press release. An explanation of these measures is also provided below under the heading “Use of Non-GAAP Financial Measures”.

On November 25, 2013, the company refinanced its bank debt, repaying its $315 million second lien term loan using proceeds from its initial public offering, cash on hand and an incremental first lien term loan facility. The new facility consists of a single tranche of first lien term debt of $1.05 billion, which will lower the company’s annualized term loan interest expense by approximately $35 million, based on the current loan balance and interest rates.

Recent Developments

On January 23, 2014, Endurance closed its acquisition of the web presence business of Directi Holdings, substantially expanding our footprint into emerging markets.

2014 Guidance

The company is providing fiscal year 2014 guidance as follows:

 

    Adjusted Revenue of approximately $630-635 million, including $145-147 million in the first quarter;

 

    Adjusted EBITDA of approximately $230-235 million, including $55-57 million in the first quarter; and

 

    UFCF of approximately $180-190 million, including $42-44 million in the first quarter.

Conference Call and Webcast Information

Endurance International Group’s fourth quarter and full year 2013 teleconference and webcast is scheduled to begin at 4:30 p.m. ET on Tuesday, February 25, 2014. To participate on the live call, analysts and investors should dial (888) 734-0328 at least ten minutes prior to the call. Endurance International Group will also offer a live and archived webcast of the conference call, accessible from the “Investor Relations” section of the Company’s website at http://ir.enduranceinternational.com/.

Use of Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we use certain “non-GAAP financial measures” described below to evaluate the operating and financial performance of our business, identify trends affecting our business, develop projections and make strategic business decisions. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flow that includes or excludes amounts that are included or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor the non-GAAP financial measures described below, and we believe they are helpful to investors, because we believe they reflect the operating performance of our business and help management and investors gauge our ability to generate cash flow, excluding some recurring and non-recurring expenses that are included in the most directly comparable measures calculated and presented in accordance with GAAP.

 

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We are including one non-GAAP financial measure in this earnings release, FCF, that we have not previously provided. We believe that reporting FCF will be helpful to investors because we believe FCF helps investors to gauge our ability to generate cash flow after taking into consideration cash interest associated with our indebtedness. In addition, in connection with adding this financial measure, we have revised the definitions of adjusted net income and adjusted EBITDA previously reported in our final prospectus filed with the SEC on October 25, 2013 pursuant to Rule 424(b) under the Securities Act in connection with our initial public offering and our Form 10-Q for the period ended September 30, 2013 filed with the SEC on December 6, 2013, since we believe that including these revisions is appropriate in order to reconcile cash flows from (used in) operating activities to FCF.

We believe that our revisions to the amounts previously reported for adjusted net income and adjusted EBITDA are not material.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to adjustments for integration and restructuring expenses. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on our reported financial results. Furthermore, interest expense, which is excluded from some of our non-GAAP measures, has been and will continue to be for the foreseeable future a significant recurring expense in our business. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Adjusted Net Income

Adjusted net income is a non-GAAP financial measure that we calculate as consolidated net income (loss) plus (i) changes in deferred revenue inclusive of purchase accounting adjustments related to acquisitions, amortization, stock-based compensation expense, loss of unconsolidated entities, net loss on sale of property and equipment, expenses related to integration of acquisitions and restructurings, any dividend-related payments accounted for as compensation expense, transaction expenses and charges including costs associated with certain litigation matters and preparation for our initial public offering, less (ii) earnings of unconsolidated entities and net gain on sale of property and equipment, and (iii) the estimated tax effects of the foregoing adjustments. Due to our history of acquisitions and financings, we have incurred accounting charges and expenses that obscure the operating performance of our business. We believe that adjusting for these items and the use of adjusted net income is useful to investors in evaluating the performance of our company.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as adjusted net income plus interest expense, depreciation, and change in income tax expense (benefit). We manage our business based on the cash collected from our subscribers and the cash required to acquire and service those subscribers. We

 

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believe highlighting cash collected and cash spent in a given period is valuable insight for an investor to gauge the overall health of our business. Under GAAP, although subscription fees are paid in advance, we recognize the associated revenue over the subscription term, which does not fully reflect short-term trends in our operating results.

Unlevered Free Cash Flow

Unlevered free cash flow, or UFCF, is a non-GAAP financial measure that we calculate as adjusted EBITDA plus change in operating assets and liabilities (other than deferred revenue) net of acquisitions less capital expenditures and income taxes excluding deferred tax. We believe the most useful indicator of our operating performance is the cash generating potential of our company prior to any accounting charges related to our acquisitions. We have substantial indebtedness primarily as a result of the December 2011 acquisition of a controlling interest in our company by investment funds and entities affiliated with Warburg Pincus and Goldman Sachs and a substantial dividend payment in November 2012. We also believe that because our business has meaningful data center and related infrastructure requirements, the level of capital expenditures required to run our business is an important factor for investors. We believe UFCF is a useful measure that captures the effects of these issues.

Free Cash Flow

Free cash flow, or FCF, is a non-GAAP financial measure that we calculate as unlevered free cash flow less interest expense. We believe that this presentation of free cash flow provides investors with an additional indicator of our ability to generate positive cash flows after meeting our obligations with regards to payment of interest on our outstanding indebtedness.

Adjusted Revenue

Adjusted revenue is a non-GAAP financial measure that we calculate as GAAP revenue adjusted to exclude the impact of any fair value adjustments to deferred revenue resulting from acquisitions and to include the revenue generated from subscribers we added through business acquisitions as if those acquired subscribers had been our subscribers since the beginning of the period presented. We believe that excluding fair value adjustments to deferred revenue is useful to investors because it shows our revenue prior to purchase accounting adjustments related to our acquisitions, and that including revenue from acquired subscribers in this manner provides a helpful comparison of the organic revenue generated from our subscribers from period to period.

Average Revenue per Subscriber

Average revenue per subscriber, or ARPS, is a non-GAAP financial measure that we calculate as the amount of adjusted revenue we recognize from subscribers in a period divided by the average of the number of total subscribers at the beginning of the period and at the end of the period. We believe ARPS is an indicator of our ability to optimize our mix of products and services and pricing, and sell products and services to new and existing subscribers.

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial guidance for fiscal year 2014 and our expectations regarding future interest expense. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates”, “confident”, “position”, variations of such words or words of similar

 

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meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on December 6, 2013 and other reports we file with the SEC. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

About Endurance International Group

Endurance International Group is a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online. Less than 20 years old, Endurance serves over 3.5 million subscribers through a family of brands that includes Bluehost, HostGator, Domain.com, FatCow, iPage, BigRock and MOJO Marketplace. Endurance is headquartered in Burlington, Massachusetts, has a presence in Asia and the Americas, and employs over 2,600 people. Endurance provides a comprehensive suite of over 150 products and services that includes web presence and mobile sites, email and e-commerce solutions, as well as more advanced offerings, such as SEO services, scalable computing, security, storage and backup, online marketing and productivity solutions. For more information, please visit www.endurance.com.

Endurance International Group and the compass logo are trademarks of The Endurance International Group, Inc. Other brand names of Endurance International Group are trademarks of The Endurance International Group, Inc. or its subsidiaries.

Investor Contacts:

Blake Cunneen

Endurance International Group

ir@endurance.com

Jonathan Schaffer

The Blueshirt Group

(212) 871-3953

ir@endurance.com

Press Contacts:

Kim Hughes

The Blueshirt Group

(415) 516-6187

press@endurance.com

 

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Endurance International Group Holdings, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

 

     December 31,
2012
     December 31,
2013
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 23,245       $ 66,815   

Restricted cash

     888         1,983   

Accounts receivable

     5,824         7,160   

Deferred tax asset—short term

     12,093         12,981   

Prepaid expenses and other current assets

     26,093         29,862   
  

 

 

    

 

 

 

Total current assets

     68,143         118,801   

Property and equipment—net

     34,604         49,715   

Goodwill

     936,746         984,207   

Other intangible assets—net

     480,690         406,140   

Deferred financing costs

     1,481         430   

Investment

     10,227         6,535   

Other assets

     6,245         15,110   
  

 

 

    

 

 

 

Total assets

   $ 1,538,136       $ 1,580,938   
  

 

 

    

 

 

 

Liabilities, redeemable non-controlling interest and stockholders’ equity

     

Current liabilities:

     

Accounts payable

   $ 8,007       $ 7,950   

Accrued expenses

     31,267         35,433   

Deferred revenue

     151,078         194,196   

Current portion of notes payable

     23,000         10,500   

Deferred consideration—short term

     52,878         24,437   

Other current liabilities

     5,766         6,796   
  

 

 

    

 

 

 

Total current liabilities

     271,996         279,312   

Long-term deferred revenue

     36,291         55,298   

 

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     December 31,
2012
    December 31,
2013
 

Notes payable—long term

     1,107,000        1,036,875   

Deferred tax liability—long term

     27,579        26,171   

Deferred consideration

     24,501        4,207   

Other liabilities

     614        3,041   
  

 

 

   

 

 

 

Total liabilities

   $ 1,467,981      $ 1,404,904   
  

 

 

   

 

 

 

Redeemable non-controlling interest

     —         20,772   

Commitments and contingencies

    

Stockholders’ equity (deficit):

    

Preferred Stock—par value $0.0001; 5,000,000 shares authorized; no shares issued or outstanding

     —         —    

Common Stock—par value $0.0001; 500,000,000 shares authorized; 105,187,363 and 124,788,853 shares issued at December 31, 2012 and December 31, 2013, respectively; 96,745,992 and 124,766,544 outstanding at December 31, 2012 and December 31, 2013, respectively

     11        13   

Additional paid-in capital

     509,714        754,720   

Accumulated other comprehensive loss

     —          (55

Accumulated deficit

     (439,570     (598,757
  

 

 

   

 

 

 

Total stockholders’ equity attributable to Endurance International Group Holdings, Inc.

     70,155        155,921   
  

 

 

   

 

 

 

Non-controlling interest in consolidated subsidiary

     —          (659
  

 

 

   

 

 

 

Total stockholders’ equity

     70,155        155,262   
  

 

 

   

 

 

 

Total liabilities, redeemable non-controlling interest and stockholders’ equity

   $ 1,538,136      $ 1,580,938   
  

 

 

   

 

 

 

 

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Endurance International Group Holdings, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands)

 

     Three Months ended
December 31,
    Year Ended
December 31,
 
     2012     2013     2012     2013  

Revenue

   $ 117,035      $ 136,420      $ 292,156      $ 520,296   

Cost of revenue

     87,119        87,758        237,179        350,103   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     29,916        48,662        54,977        170,193   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expense:

        

Sales and marketing

     23,952        30,458        83,110        117,689   

Engineering and development

     6,723        5,561        13,803        23,205   

General and administrative

     22,844        48,242        48,411        92,347   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

     53,519        84,261        145,324        233,241   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (23,603     (35,599     (90,347     (63,048
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense:

        

Interest income

     16        61        34        122   

Interest expense

     (88,560     (32,338     (126,165     (98,449
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense—net

     (88,544     (32,277     (126,131     (98,327
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and equity earnings of unconsolidated entities

     (112,147     (67,876     (216,478     (161,375

Income tax expense (benefit)

     (39,580     (2,169     (77,203     (3,596
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before equity earnings of unconsolidated entities

     (72,567     (65,707     (139,275     (157,779
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity loss of unconsolidated entities, net of tax

     23        2,426        23        2,067   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (72,590   $ (68,133   $ (139,298   $ (159,846
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to non-controlling interest

     —          (659     —          (659
    

 

 

     

 

 

 

Net loss attributable to Endurance International Group Holdings, Inc.

     (72,590     (67,474   $ (139,298   $ (159,187
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss:

        

Foreign currency translation adjustments

     —          (31     —          (55
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive loss

   $ (72,590   $ (67,505   $ (139,298   $ (159,242
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to Endurance International Group Holdings, Inc.– basic and diluted

   $ (0.75   $ (0.57   $ (1.44   $ (1.55
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.– basic and diluted

     96,576,438        117,770,547        96,562,674        102,698,773   

 

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Endurance International Group Holdings, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

     Three Months
Ended
December 31,
    Year Ended
December 31,
 
     2012     2013     2012     2013  

Cash flows from operating activities:

        

Net loss

   $ (72,590   $ (68,133   $ (139,298   $ (159,846

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

        

Depreciation of property and equipment

     2,884        5,545        6,869        18,615   

Amortization of other intangible assets

     30,846        27,134        88,118        105,915   

Amortization of deferred financing costs

     39,592        2,579        43,405        2,768   

Amortization of net present value of deferred consideration

     587        197        1,093        1,590   

Stock-based compensation

     823        9,658        2,308        10,763   

Deferred tax benefit

     (39,981     (2,638     (77,610     (4,777

Loss on sale of property and equipment

     467        (23     469        309   

Loss of unconsolidated entities

     23        2,426        23        2,067   

(Benefit) loss on change in deferred consideration

       (466       (466

Financing costs expensed

     28,672        10,833        29,281        10,833   

Changes in operating assets and liabilities:

        

Accounts receivable

     1,900        (701     (268     (1,075

Prepaid expenses and other current assets

     (4,016     3,275        (22,199     (7,147

Accounts payable and accrued expenses

     13,007        (2,099     19,058        2,020   

Deferred revenue

     10,495        6,552        104,069        51,047   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     12,709        (5,861     55,318        32,616   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

        

Business acquired in purchase transaction, net of cash acquired

     (1,937     (22,339     (299,165     (38,659

Proceeds from sale of assets

     —          —          —          23   

Cash paid for minority investment

     111        —          (250     —     

Purchases of property and equipment

     (16,270     (8,139     (28,163     (33,523

Purchases of intangible assets

     —          (182     —          (751

Proceeds from sale of property and equipment

     12        41        127        54   

Net (deposits) and withdrawals of principal balances in restricted cash accounts

     3,715        53        3,947        (231
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (14,369     (30,566     (323,504     (73,087
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Proceeds from issuance of term loan

     1,115,000        1,055,000        1,925,000        1,145,000   

Proceeds from borrowing of revolver

     15,000        —          15,000        57,000   

Repayment of term loan

     (808,325     (1,206,399     (1,160,000     (1,212,625

Repayment of revolver

     —          —          —          (72,000

Payment of financing costs

     (30,192     (11,272     (52,890     (12,552

Deferred consideration

     (2     (2,529     (7,237     (55,635

Proceeds from issuance of common stock

     —          252,612        100        252,612   

Issuance costs of common stock

     —          (17,512     —          (17,512

Payment of dividends on common stock

     (289,479     —          (289,479     —     

Issuance costs of series E preferred stock

     —          —          (53     —     

Redemption of series E preferred stock

     —          —          (150,000     —     

Dividends paid on series E preferred stock

     —          —          (5,963     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     2,002        69,900        274,478        84,288   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net effect of exchange rate on cash and cash equivalents

     —          (41     —          (247

Net increase in cash and cash equivalents

     342        33,432        6,292        43,570   

Cash and cash equivalents:

        

Beginning of period

     22,903        33,383        16,953        23,245   
  

 

 

   

 

 

   

 

 

   

 

 

 

End of period

   $ 23,245      $ 66,815      $ 23,245      $ 66,815   
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental cash flow information:

        

Interest paid

   $ 37,375      $ 31,788      $ 70,176      $ 100,856   

Income taxes paid

   $ (33   $ 152      $ 796      $ 1,502   

 

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The following table reflects the reconciliation of adjusted net income, adjusted EBITDA, UFCF and FCF to net loss calculated in accordance with GAAP (unaudited; all data in thousands).

 

     Three Months Ended
December 31,
    Year Ended December 31,  
     2012     2013     2012     2013  

Net loss

   $ (72,590   $ (68,133   $ (139,298   $ (159,846

Stock-based compensation

     823        9,658        2,308        10,763   

(Gain) loss on sale of property and equipment

     467        (23     469        309   

Loss of unconsolidated entities

     23        2,426        23        2,067   

Dividend-related payments

     9,765        —          9,765        —     

Amortization of intangible assets

     30,846        27,134        88,118        105,915   

Amortization of deferred financing costs

     39,592        2,579        43,405        2,768   

Changes in deferred revenue (inclusive of impact of purchase accounting)

     10,495        6,552        104,069        51,047   

Loan prepayment penalty

     10,883        6,300        10,883        6,300   

Transaction expenses and charges

     1,470        27,579        12,119        38,736   

Integration and restructuring expenses

     —          5,368        294        45,594   

Tax-affected impact of adjustments

     (39,662     (756     (103,968     (5,929
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income (1)

   $ (7,888   $ 18,684      $ 28,187      $ 97,724   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation

     2,884        5,545        6,869        18,615   

Income tax expense (benefit)

     82        (1,413     26,765        2,333   

Interest expense, net (net of impact of amortization of deferred financing costs)

     38,069        23,398        71,843        89,259   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (2)

   $ 33,147      $ 46,214      $ 133,664      $ 207,931   
  

 

 

   

 

 

   

 

 

   

 

 

 

Change in operating assets and liabilities, net of acquisitions

     10,891        (93     (3,409     (6,770

Capital expenditures

     (16,270     (8,139     (28,163     (33,523

Income tax (excluding deferred tax)

     (401     (469     (407     (1,181
  

 

 

   

 

 

   

 

 

   

 

 

 

Unlevered free cash flow

   $ 27,367      $ 37,513      $ 101,685      $ 166,457   

Net cash interest paid (net of change in accrued loan interest)

     (19,654     (18,652     (52,280     (83,025
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 7,713      $ 18,861      $ 49,405      $ 83,432   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) The definition for adjusted net income has been revised to include adjustments for loss of unconsolidated entities and net gain or loss on sale of property and equipment. In addition, the transaction expenses and charges line item includes legal and professional expenses previously separately reported, and the integration and restructuring expenses line item includes severance previously separately reported.
(2) The definition for adjusted EBITDA has been revised to reflect the revision to the definition of adjusted net income and to exclude all income taxes, including changes in deferred income taxes. Previously, adjusted EBITDA excluded only changes in deferred income taxes.

 

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The following table reflects the reconciliation of GAAP operating cash flow to FCF (unaudited; all data in thousands):

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2013     2012     2013  

Cash provided (used) by operating activities (3)

   $ 12,709      $ (5,862   $ 55,318      $ 32,616   

Less:

    

Capital expenditures

     (16,270     (8,139     (28,163     (33,523

Plus:

    

Costs excluded in free cash flow net of costs also excluded in operating cash flow:

    

Dividend related payments

     9,765        —          9,765        —     

Transaction expenses and charges

     1,509        27,494        12,191        38,745   

Integration and restructuring expenses per table above

     —          5,368        294        45,594   
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow (3)

   $ 7,713      $ 18,861      $ 49,405      $ 83,432   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(3) Our operating cash flow and our transaction expenses for the year ended December 31, 2013 include approximately $24.9 million of cash payments to our Chief Executive Officer and other employees that were paid upon the closing of our initial public offering and $2.3 million of offering expenses.

The following table reflects the reconciliation of ARPS and adjusted revenue to revenue calculated in accordance with GAAP (unaudited; all data in thousands, except ARPS data):

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
     2012      2013      2012      2013  

Revenue

   $ 117,035       $ 136,420       $ 292,156       $ 520,296   

Purchase accounting adjustment

     6,816         529         64,123         7,311   

Pre-acquisition revenue from acquired properties

     1,399         —           117,836         512   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted revenue

   $ 125,250       $ 136,949       $ 474,115       $ 528,119   

Total subscribers

     3,223         3,502         3,223         3,502   

ARPS

   $ 13.14       $ 13.15       $ 12.92       $ 13.09   

Adjusted revenue attributable to 2012 acquisitions

   $ 50,896       $ 53,797       $ 201,205       $ 209,950   

Adjusted revenue excluding revenue attributable to 2012 acquisitions

   $ 74,354       $ 83,152       $ 272,910       $ 318,169   

Total subscribers excluding subscribers attributable to 2012 acquisitions

     2,224         2,372         2,224         2,372   

ARPS excluding 2012 acquisitions

   $ 11.19       $ 11.75       $ 10.58       $ 11.54   

 

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