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8-K - 8-K - TRINET GROUP, INC.tnet-8k_20150803.htm

Exhibit 99.1

 

TriNet Announces Second Quarter Fiscal 2015 Results

22% Growth in Total Revenues

17% Increase in Worksite Employees (WSEs), to approximately 302,000

 

SAN LEANDRO, Calif. August 3, 2015 TriNet Group, Inc. (NYSE: TNET), a leading provider of a comprehensive human resources solution for small to medium-sized businesses, today announced financial results for the second quarter ended June 30, 2015.

 

Selected second quarter results include:

·

Total revenues increased 22% to $640.0 million, while Net Service Revenues decreased 2% to $122.0 million compared to the same period last year, due primarily to unexpected large medical claims during the quarter.  

·

Total WSEs at June 30, 2015 increased 17% from June 30, 2014, to approximately 302,000.

·

Net loss was $1.3 million, or $0.02 per diluted share, compared to net income of $6.2 million, or $0.09 per diluted share, in the same period last year.

·

Adjusted Net Income was $10.5 million, or $0.14 per diluted share on a pro forma basis, compared to Adjusted Net Income of $17.4 million, or $0.24 per diluted share on a pro forma basis, in the same period last year.

·

Adjusted EBITDA was $24.7 million, a 37% decrease from the same period last year.

 

“We delivered double digit growth in our WSE base and professional service revenues during the second quarter, as our bundled HR product offering continues to resonate with a wide range of companies across our target verticals,” said Burton M. Goldfield, TriNet’s President and CEO.  “We also continued to grow our salesforce, ending the quarter with 486 quota carrying sales representatives, putting us ahead of our June 30th goal of 470, well on track to reach our annual goal.  These highly skilled professionals are focused on introducing our differentiated product solutions to potential clients in our target verticals, further penetrating fast growing sectors across the nation.”

 

Mr. Goldfield added, “While our growth momentum remains robust, our results were impacted this quarter by a higher than expected number of large medical claims. We were disappointed that these claims were well in excess of our expected claims volatility. We continue to analyze this part of our business and consider options for addressing variability in medical and the predictability of its contribution to Net Service Revenues and profitability.”

 

Results for the second quarter of 2015 reflect a net increase of 43,390 WSEs since June 30, 2014 representing 17% growth, as TriNet continued to utilize its growing salesforce to increase penetration of targeted customer verticals.  TriNet’s total revenues for the second quarter of 2015 increased 22% from the second quarter of 2014 to $640.0 million, while Net Service Revenues decreased 2% from the second quarter of 2014 to $122.0 million.  Net Service Revenues consisted of professional service revenues of $97.8 million and Net Insurance Service Revenues of $24.2 million.  Net Insurance Service Revenues consisted of insurance service revenues of $542.2 million, less insurance costs of $518.0 million.  Professional service revenues for the second quarter of 2015 increased 19%, and Net Insurance Service Revenues decreased 43%, compared to the second quarter of 2014. TriNet ended the second quarter with 486 Total Sales Representatives, up from 388 at the end of the second quarter of 2014, an increase of 25%.

 

At June 30, 2015, TriNet had cash and equivalents of $128.4 million and total debt of $509.7 million.

 

Earnings Conference Call and Audio Webcast

TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its quarterly results and the outlook for the full 2015 fiscal year. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: http://dpregister.com/10068732. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5426 and requesting the “TriNet Conference Call.”  The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at http://investor.trinet.com. A replay of the webcast will be available on this site for approximately one year. A telephonic replay will be available for one week following the conference call at +1 (412) 317-0088 conference ID: 10068732.

 

About TriNet

TriNet is a leading provider of a comprehensive human resources solution for small to medium-sized businesses, or SMBs. We enhance business productivity by enabling our clients to outsource their human resources, or HR, function to one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance. Our services are delivered by our expert team of HR professionals and enabled by our

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proprietary, cloud-based technology platform, which allows our clients and their employees to efficiently conduct their HR transactions anytime and anywhere. For more information, please visit http://www.trinet.com.

 

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to TriNets financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “Non-GAAP Financial Measures.”

 

Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, forward-looking statements including, among other things, TriNet’s expectations regarding: the growth of its salesforce and its customer base; its ability to generate returns through its vertical sales strategy and penetration of the SMB market; its ability to forecast future revenues, insurance claims and costs, Net Insurance Service Revenues, Net Service Revenues, professional service revenues, expenses, net income, Adjusted Net Income and Adjusted EBITDA; and its ability to address insurance cost and claims variability in its business model. These statements are not guarantees of future performance, but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: risks associated with the market acceptance of outsourcing the HR function, and the anticipated benefits associated with the use of a bundled HR solution; our ability to continue to expand our direct sales force and the efficacy of our sales and marketing efforts; our ability to gain new clients, and our clients’ ability to grow and gain more employees; our ability to effectively acquire and integrate new businesses; the effects of seasonal trends on our results of operations; the unpredictable nature of our costs and operating expenses, in particular our insurance costs; changes to and our ability to comply with laws and regulations, including both those applicable to the co-employment relationship as well as those applicable to our clients’ businesses and their employees; the implementation of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, and its application to the co-employer relationship; our ability to effectively manage our growth; the effects of increased competition and our ability to compete effectively; and our ability to comply with the restrictions of our credit facility and meet our debt obligations.

 

Further information on risks that could affect TriNets results is included in our filings with the Securities and Exchange Commission, including our most recently filed Quarterly Report on Form 10-Q, which could cause actual results to vary from expectations. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

 

Contacts:

 

Investors:

Media:

Alex Bauer

Jock Breitwieser

TriNet

TriNet

Investorrelations@TriNet.com

Jock.Breitwieser@TriNet.com

(510) 875-7201

(510) 875-7250

 

TriNet, Ambitions Realized and the TriNet logo are registered trademarks of TriNet.


2

 


TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

2015

 

 

 

2014

 

 

 

2015

 

 

 

2014

 

Professional service revenues

 

$

97,799

 

 

$

82,260

 

 

$

194,815

 

 

$

165,135

 

Insurance service revenues

 

 

542,208

 

 

 

442,746

 

 

 

1,070,770

 

 

 

868,783

 

Total revenues

 

 

640,007

 

 

 

525,006

 

 

 

1,265,585

 

 

 

1,033,918

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance costs

 

 

517,994

 

 

 

400,195

 

 

 

1,001,197

 

 

 

781,352

 

Cost of providing services (exclusive of depreciation and

   amortization of intangible assets)

 

 

37,672

 

 

 

34,034

 

 

 

74,042

 

 

 

67,677

 

Sales and marketing

 

 

41,119

 

 

 

34,992

 

 

 

78,743

 

 

 

66,829

 

General and administrative

 

 

15,801

 

 

 

12,682

 

 

 

31,265

 

 

 

27,019

 

Systems development and programming costs

 

 

7,633

 

 

 

6,565

 

 

 

14,858

 

 

 

12,459

 

Amortization of intangible assets

 

 

10,608

 

 

 

13,267

 

 

 

21,825

 

 

 

26,816

 

Depreciation

 

 

3,195

 

 

 

3,242

 

 

 

6,629

 

 

 

6,460

 

Total costs and operating expenses

 

 

634,022

 

 

 

504,977

 

 

 

1,228,559

 

 

 

988,612

 

Operating income

 

 

5,985

 

 

 

20,029

 

 

 

37,026

 

 

 

45,306

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense and bank fees

 

 

(4,764

)

 

 

(8,860

)

 

 

(9,968

)

 

 

(30,712

)

Other, net

 

 

68

 

 

 

(25

)

 

 

518

 

 

 

78

 

Income before provision for income taxes

 

 

1,289

 

 

 

11,144

 

 

 

27,576

 

 

 

14,672

 

Provision for income taxes

 

 

2,597

 

 

 

4,923

 

 

 

13,073

 

 

 

6,911

 

Net income (loss)

 

$

(1,308

)

 

$

6,221

 

 

$

14,503

 

 

$

7,761

 

Net income  (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

 

$

0.09

 

 

$

0.21

 

 

$

0.13

 

Diluted

 

$

(0.02

)

 

$

0.09

 

 

$

0.20

 

 

$

0.12

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

70,305,185

 

 

 

69,053,403

 

 

 

70,251,980

 

 

 

42,914,458

 

Diluted

 

 

72,888,817

 

 

 

72,658,822

 

 

 

73,090,962

 

 

 

46,028,300

 

 

 


3

 


TriNet Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

June 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

128,413

 

 

$

134,341

 

Restricted cash

 

14,550

 

 

 

14,543

 

Prepaid income taxes

 

20,431

 

 

 

26,711

 

Prepaid expenses

 

14,541

 

 

 

9,336

 

Deferred loan costs and other current assets

 

4,148

 

 

 

4,271

 

Worksite employee related assets

 

838,239

 

 

 

1,635,136

 

Total current assets

 

1,020,322

 

 

 

1,824,338

 

Workers compensation receivable

 

37,238

 

 

 

31,905

 

Restricted cash and investments

 

82,853

 

 

 

69,447

 

Property and equipment, net

 

36,134

 

 

 

32,298

 

Goodwill

 

288,857

 

 

 

288,857

 

Other intangible assets, net

 

59,893

 

 

 

81,718

 

Deferred and other long term income taxes

 

21,715

 

 

 

7,184

 

Deferred loan costs and other assets

 

10,033

 

 

 

12,017

 

Total assets

$

1,557,045

 

 

$

2,347,764

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

12,354

 

 

$

12,273

 

Accrued corporate wages

 

26,250

 

 

 

29,179

 

Deferred income taxes

 

67,777

 

 

 

65,713

 

Current portion of notes payable and borrowings under capital leases

 

20,272

 

 

 

20,738

 

Other current liabilities

 

10,410

 

 

 

10,303

 

Worksite employee related liabilities

 

832,531

 

 

 

1,630,555

 

Total current liabilities

 

969,594

 

 

 

1,768,761

 

Notes payable and borrowings under capital leases, less current portion

 

489,553

 

 

 

524,412

 

Workers compensation liabilities

 

99,125

 

 

 

75,448

 

Other liabilities

 

6,715

 

 

 

4,902

 

Total liabilities

 

1,564,987

 

 

 

2,373,523

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;

   no shares issued and outstanding at June 30, 2015 and December 31, 2014

 

 

 

 

 

Common stock, $.000025 per share stated value; 750,000,000 shares authorized;

   70,489,820 and 69,811,326 shares issued and outstanding at June 30, 2015

   and December 31, 2014, respectively

 

476,426

 

 

 

442,682

 

Accumulated deficit

 

(483,982

)

 

 

(468,127

)

Accumulated other comprehensive loss

 

(386

)

 

 

(314

)

Total stockholders’ deficit

 

(7,942

)

 

 

(25,759

)

Total liabilities and stockholders’ deficit

$

1,557,045

 

 

$

2,347,764

 

 

 

 

 

 

 

 

 

 

4

 


 

 

 

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

 

2015

 

 

 

2014

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

14,503

 

 

$

7,761

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

28,302

 

 

 

39,070

 

Deferred income taxes

 

 

1,977

 

 

 

2,276

 

Stock-based compensation

 

 

8,803

 

 

 

5,070

 

Excess tax benefit from equity incentive plan activity

 

 

(17,673

)

 

 

(3,029

)

Accretion of workers compensation and leases fair value adjustment

 

 

(358

)

 

 

(695

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Restricted cash and investments

 

 

(13,413

)

 

 

10,520

 

Prepaid expenses and other current assets

 

 

(5,082

)

 

 

(3,960

)

Workers compensation receivables

 

 

(5,083

)

 

 

(14,737

)

Other assets

 

 

(14,509

)

 

 

4,871

 

Accounts payable

 

 

(35

)

 

 

3,405

 

Prepaid income taxes

 

 

23,953

 

 

 

(6,461

)

Other current liabilities

 

 

(612

)

 

 

(753

)

Other liabilities

 

 

25,532

 

 

 

11,745

 

Worksite employee related assets

 

 

796,897

 

 

 

108,158

 

Worksite employee related liabilities

 

 

(798,024

)

 

 

(109,584

)

Net cash provided by operating activities

 

 

45,178

 

 

 

53,657

 

Investing activities

 

 

 

 

 

 

 

 

Purchase of debt securities

 

 

 

 

 

(16,789

)

Purchase of property and equipment

 

 

(10,349

)

 

 

(8,709

)

Net cash used in investing activities

 

 

(10,349

)

 

 

(25,498

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

 

 

 

218,613

 

Proceeds from issuance of common stock on exercised options

 

 

4,639

 

 

 

631

 

Proceeds from issuance of common stock for employee stock purchase plan

 

 

2,723

 

 

 

 

Excess tax benefit from equity incentive plan activity

 

 

17,673

 

 

 

3,029

 

Repayment of notes payable

 

 

(35,187

)

 

 

(243,025

)

Repayments under capital leases

 

 

(138

)

 

 

(188

)

Repurchase of common stock

 

 

(30,358

)

 

 

(1,288

)

Net cash used in financing activities

 

 

(40,648

)

 

 

(22,228

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(109

)

 

 

1

 

Net increase (decrease) in cash and cash equivalents

 

 

(5,928

)

 

 

5,932

 

Cash and cash equivalents at beginning of period

 

 

134,341

 

 

 

94,356

 

Cash and cash equivalents at end of period

 

$

128,413

 

 

$

100,288

 

 


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Key Operating Metrics

We regularly review certain key operating metrics to evaluate growth trends, measure our performance and make strategic decisions. Our key operating metrics for the periods presented were as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net Insurance Service Revenues (in thousands)

 

$

24,214

 

 

$

42,551

 

 

$

69,573

 

 

$

87,431

 

Net Service Revenues (in thousands)

 

$

122,013

 

 

$

124,811

 

 

$

264,388

 

 

$

252,566

 

Total WSEs

 

 

302,375

 

 

 

258,985

 

 

 

 

 

 

 

 

 

Total Sales Representatives

 

 

486

 

 

 

388

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures

We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and, pro forma Adjusted Net Income per share – diluted to provide an additional view of our operational performance. Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted are financial measures that are not prepared in accordance with GAAP. We define Net Insurance Service Revenues as insurance service revenues less insurance costs, which include the premiums we pay to insurance carriers for the health and workers compensation insurance coverage provided to our clients and WSEs and the reimbursements we pay to the insurance carriers for claim payments within our insurance deductible layer. We define Net Service Revenues as the sum of professional service revenues and Net Insurance Service Revenues. We define Adjusted EBITDA as net income (loss), excluding the effects of our income tax provision, interest expense, depreciation, amortization of intangible assets, and stock-based compensation. We define Adjusted Net Income as net income (loss), excluding the effects of stock-based compensation, amortization of intangible assets, non-cash interest expense, debt prepayment premium and, the income tax effect of these pre-tax adjustments at our effective tax rate. For purposes of our non-GAAP financial presentation, as a result of a 2015 increase in New York City tax rates, we have adjusted the effective tax rate to 40.5% for the periods ended June 30, 2015, from 39.5% for the periods ended June 30, 2014. Each of these effective tax rates exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interest expense represents amortization and write-off of our debt issuance costs. We define pro forma Adjusted Net Income per share – diluted as Adjusted Net Income per basic share adjusted to reflect our equity structure as if our initial public offering and associated conversion of preferred stock had occurred at the beginning of the period and all option exercises that occurred during the period occurred at the beginning of the period, and then giving effect to all remaining potential shares of common stock issuable upon exercise of options or settlement of restricted stock units, to the extent dilutive.

We believe that the use of Net Insurance Service Revenues provides useful information as it presents a measure of revenues from our provision of insurance services to our clients that eliminates the cost to us of that insurance. We believe that Net Service Revenues provides a useful measure of total revenues for the two main components of our revenues calculated on a consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted provides additional period-to-period comparisons and analysis of trends in our business, as they exclude certain one-time and non-cash expenses. We believe that Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and pro forma Adjusted Net Income per share – diluted are useful for our stockholders and board of directors by helping them to identify trends in our business and understand how our management evaluates our business. We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted to monitor and evaluate our operating results and trends on an ongoing basis and internally for operating, budgeting and financial planning purposes, in addition to allocating our resources to enhance the financial performance of our business and evaluating the effectiveness of our business strategies. We also use Net Service Revenues and Adjusted EBITDA in determining the incentive compensation for management.

Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. As non-GAAP measures, Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In particular:

• Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to insurance carriers;

• Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

• Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

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• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted do not reflect the non-cash component of employee compensation;

• Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

• Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.

 

Because of these limitations, you should consider Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted alongside other financial performance measures, including total revenues, net income (loss) and our other financial results presented in accordance with GAAP.

 

The table below sets forth a reconciliation of GAAP insurance service revenues to Net Insurance Service Revenues:

 

 

 

Three months ended

 

 

Change

 

Six Months ended

 

 

Change

 

June 30,

 

 

2015 vs. 2014

 

June 30,

 

 

2015 vs. 2014

 

2015

 

 

2014

 

 

$

 

 

%

 

2015

 

 

2014

 

 

$

 

 

%

 

(in thousands, except percentages)

Insurance service revenues

$

542,208

 

 

$

442,746

 

 

$

99,462

 

 

22%

 

$

1,070,770

 

 

$

868,783

 

 

$

201,987

 

 

23%

Less:  Insurance costs

 

517,994

 

 

 

400,195

 

 

 

117,799

 

 

29%

 

 

1,001,197

 

 

 

781,352

 

 

 

219,845

 

 

28%

Net Insurance Service Revenues

$

24,214

 

 

$

42,551

 

 

$

(18,337

)

 

(43%)

 

$

69,573

 

 

$

87,431

 

 

$

(17,858

)

 

(20%)

 

The table below sets forth a reconciliation of GAAP total revenues to Net Service Revenues:

 

 

Three months ended

 

 

Change

 

Six Months ended

 

 

Change

 

 

June 30,

 

 

2015 vs. 2014

 

June 30,

 

 

2015 vs. 2014

 

 

2015

 

 

2014

 

 

$

 

 

%

 

2015

 

 

2014

 

 

$

 

 

%

 

 

(in thousands, except percentages)

 

Total revenues

$

640,007

 

 

$

525,006

 

 

$

115,001

 

 

22%

 

$

1,265,585

 

 

$

1,033,918

 

 

$

231,667

 

 

 

22

%

Less:  Insurance costs

 

517,994

 

 

 

400,195

 

 

 

117,799

 

 

29%

 

 

1,001,197

 

 

 

781,352

 

 

 

219,845

 

 

 

28

%

Net Service Revenues

$

122,013

 

 

$

124,811

 

 

$

(2,798

)

 

(2%)

 

$

264,388

 

 

$

252,566

 

 

$

11,822

 

 

 

5

%

 

The table below sets forth a reconciliation of GAAP net income to Adjusted EBITDA:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

(in thousands)

 

Net income (loss)

 

$

(1,308

)

 

$

6,221

 

 

$

14,503

 

 

$

7,761

 

Provision for income taxes

 

 

2,597

 

 

 

4,923

 

 

 

13,073

 

 

 

6,911

 

Stock-based compensation

 

 

4,883

 

 

 

2,923

 

 

 

8,803

 

 

 

5,070

 

Interest expense and bank fees

 

 

4,764

 

 

 

8,860

 

 

 

9,968

 

 

 

30,712

 

Depreciation

 

 

3,195

 

 

 

3,242

 

 

 

6,629

 

 

 

6,460

 

Amortization of intangible assets

 

 

10,608

 

 

 

13,267

 

 

 

21,825

 

 

 

26,816

 

Adjusted EBITDA

 

$

24,739

 

 

$

39,436

 

 

$

74,801

 

 

$

83,730

 

 


7

 


The table below sets forth a reconciliation of GAAP net income to Adjusted Net Income:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

(in thousands)

 

Net income (loss)

 

$

(1,308

)

 

$

6,221

 

 

$

14,503

 

 

$

7,761

 

Effective income tax rate adjustment

 

 

2,075

 

 

 

521

 

 

 

1,905

 

 

 

1,116

 

Stock-based compensation

 

 

4,883

 

 

 

2,923

 

 

 

8,803

 

 

 

5,070

 

Amortization of intangible assets

 

 

10,608

 

 

 

13,267

 

 

 

21,825

 

 

 

26,816

 

Non-cash interest expense

 

 

804

 

 

 

1,380

 

 

 

2,021

 

 

 

7,486

 

Debt prepayment premium

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,800

 

Income tax impact of pre-tax adjustments

 

 

(6,599

)

 

 

(6,940

)

 

 

(13,223

)

 

 

(17,053

)

Adjusted Net Income

 

$

10,463

 

 

$

17,372

 

 

$

35,834

 

 

$

34,996

 

 

The table below sets forth a reconciliation of GAAP weighted average shares of common stock – basic to pro forma weighted average shares of common stock - diluted and Adjusted Net Income per share – diluted as if the equity structure had been in place at the beginning of the periods presented:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

(in thousands, except per share data)

 

GAAP Weighted average shares of common stock - basic

 

70,305

 

 

 

69,053

 

 

 

70,252

 

 

 

42,914

 

Effect of IPO, conversion of preferred stock and

  exercise of stock options during the period included above

 

(228

)

 

 

(87

)

 

 

(115

)

 

 

(27,799

)

Adjustments as if the equity structure had occurred at the beginning of the periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of preferred stock

 

-

 

 

 

-

 

 

 

-

 

 

 

38,066

 

Common stock issued in connection with IPO

 

-

 

 

 

-

 

 

 

-

 

 

 

15,000

 

Common stock issued in connection with stock option exercises, net of stock repurchases

 

413

 

 

 

137

 

 

 

678

 

 

 

778

 

Dilutive effect of outstanding stock options and restricted stock units

 

2,164

 

 

 

3,470

 

 

 

2,116

 

 

 

2,567

 

Pro forma weighted average shares of common stock - diluted

 

72,654

 

 

 

72,574

 

 

 

72,931

 

 

 

71,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

$

10,463

 

 

$

17,372

 

 

$

35,834

 

 

$

34,996

 

Pro forma adjusted net income per share - diluted

$

0.14

 

 

$

0.24

 

 

$

0.49

 

 

$

0.49

 

 

8