Attached files
| file | filename |
|---|---|
| EX-99 - TRANSCRIPT - AutoWeb, Inc. | ex99-2.htm |
| 8-K - CURRENT REPORT - AutoWeb, Inc. | auto8k_aug052020.htm |
Exhibit 99.1
AutoWeb Reports Second Quarter 2020 Results
Gross Profit up 11% to $6.0 Million; Generated Strongest Level of
Gross Margin since 2016
Cost Controls and Operating Efficiencies Continue to Improve
Profitability
TAMPA, FL. – August 5, 2020 – AutoWeb, Inc.
(Nasdaq: AUTO), a robust digital marketing platform providing
digital advertising solutions for automotive dealers and OEMs, is
reporting financial results for the second quarter ended June 30,
2020.
“Our
second quarter performance demonstrates the strong progress we have
made in our turnaround, even as we navigate the effects of the
coronavirus pandemic,” said Jared Rowe, President and CEO of
AutoWeb. “Despite Q2 revenues declining in-line with the
broader automotive industry, we significantly expanded gross margin
to the highest level in several years, reduced our net loss and
achieved a critical milestone in turning adjusted EBITDA positive.
These results validate our disciplined approach to expense
management and running an efficient, flexible and sustainable
business capable of profitable growth in both good times and bad. I
am extremely proud of our team’s hard work during this
challenging time for our industry.”
Second Quarter 2020 Financial Summary
|
|
Q2 2020
|
Q1 2020
|
Q2 2019
|
|
Total
Revenues (millions)
|
$17.0
|
$24.5
|
$27.1
|
|
Advertising
Revenues (millions)
|
$2.8
|
$6.0
|
$5.4
|
|
Gross
Profit (millions)
|
$6.0
|
$5.4
|
$5.4
|
|
Gross
Margin
|
35.5%
|
21.9%
|
19.8%
|
|
Net
Income/(Loss) (millions)
|
$(1.4)
|
$(4.1)
|
$(5.0)
|
|
Net
Income/(Loss) per share
|
$(0.10)
|
$(0.31)
|
$(0.38)
|
|
Adjusted
EBITDA1 (millions)
|
$0.4
|
$(1.7)
|
$(2.1)
|
Second Quarter 2020 Key Operating Metrics2
|
|
Q2 2020
|
Q1 2020
|
Q2 2019
|
|
Lead
Traffic3
(millions)
|
18.3
|
27.3
|
33.1
|
|
Lead
Volume4
(millions)
|
1.2
|
1.5
|
1.8
|
|
Retail
Dealer Count5
|
1,854
|
1,822
|
2,510
|
|
Retail
Lead Capacity6
|
100,000
|
106,000
|
142,000
|
|
Click
Traffic7
(millions)
|
23.0
|
31.8
|
26.7
|
|
Click
Volume8
(millions)
|
5.5
|
8.6
|
5.9
|
|
Net
Revenue per Click9
|
$0.42
|
$0.63
|
$0.75
|
1 Refer to the Non-GAAP financial measures
discussed below.
2 Certain website properties have been added and
removed from tracking metrics as AutoWeb continues to refine its
website portfolio and its approach to tagging. These changes have
been made to the prior periods for lead traffic, click traffic, and
click volume as well for comparative purposes.
3 Lead traffic = total visits to AutoWeb’s
owned lead websites.
5 Retail dealer count = the number of franchised
dealers contracted for delivery of retail new vehicle leads plus
the number of vehicle dealers (franchised or independent)
contracted for delivery of retail used vehicle
leads.
6 Retail lead capacity = the number of new and used
vehicle leads contracted for by new or used retail vehicle dealers
that the dealers wish to receive each month (i.e.,
“targets”) at the end of the applicable
quarter.
7 Click traffic = total visits to AutoWeb’s
owned click referral websites and AutoWeb's Click Traffic Affiliate
Network websites.
8 Click volume = the number of times during the
applicable quarter that consumers clicked on advertisements on
AutoWeb’s owned click referral websites and on AutoWeb's
Click Traffic Affiliate Network websites.
9 Net revenue per click = total click revenue
divided by click volume for owned & affiliated
sites.
-1-
“Across
our business, our team has remained almost entirely intact with
limited furloughs or layoffs, even during the lowest points in
April. It was very important that we ensured job continuity for our
team and maintained critical health benefits for the few employees
that were furloughed. Since the lows in April, we have sequentially
grown revenue, gross margin and adjusted EBITDA every month during
the second quarter, and our overall operational and financial
performance in July continued this positive trajectory. Our retail
dealer ‘suspend status’ has also continued to improve
since our last corporate update and revenues in suspend status are
now down more than 75% from mid-April, which is when it
peaked.
“In
our clicks business, volumes remain challenged like other
traditional impression-based media, however our high-quality leads
have become an even more valuable asset. We have historically
referenced that dealers and OEMs turn to leads when there is market
uncertainty given their high attribution and ‘lower
funnel’ targeting. In fact, we recently conducted an email
survey of our users that showed more than 70% of respondents had no
plans to delay their automotive purchase due to COVID-19, which
indicates that AutoWeb’s leads are submitted by committed car
buyers, not just shoppers.
“One
of our key strategic decisions this quarter has also panned out.
Instead of implementing widespread product discounts, we focused on
matching our consumer marketing spend to projected industry selling
rates, which better aligned with the true consumer demand in the
market. By focusing on the changing market dynamics in a targeted
manner, we believe we were able to better meet the true needs of
our dealer and OEM customers by delivering them actionable car
buyers, not discounted traffic made up of shoppers.
“Throughout
the automotive industry, new car sales remain well below pre-COVID
levels, and dealers are still contending with the broader
macroeconomic impacts of the pandemic on consumer behavior.
Analysts project that second quarter U.S. vehicle sales have fallen
by about one-third, and high unemployment rates continue to affect
consumer confidence. We cannot predict how these market forces will
evolve in the coming months, but we will continue to support our
dealer and OEM customers as they continue to turn to leads to
support their sales recovery.
“The
progress we have made this quarter would not be possible without
our work to realign our organizational structure, reduce costs, and
improve our operational focus over the past two years. Our work in
this turnaround is not yet complete, however we remain optimistic
and focused on continuing our momentum to improve
profitability.”
Second Quarter 2020 Financial Results
Total
revenues in the second quarter of 2020 were $17.0 million compared
to $27.1 million in the year-ago quarter, with advertising revenues
of $2.8 million compared to $5.4 million in the year-ago quarter.
The expected decline in total revenues was primarily due to
continued challenges in the automotive industry in the wake of the
coronavirus pandemic. The company anticipated these challenges and
proactively reduced marketing spend to better align lead and click
volumes with market demand.
Gross
profit in the second quarter increased 11% to $6.0 million compared
to $5.4 million in the year-ago quarter. As a percentage of
revenue, gross profit increased significantly to 35.5% compared to
19.8%. The increase was driven by improved traffic acquisition and
lower costs per lead, as well as continued focus on higher-margin
distribution channels.
Total
operating expenses in the second quarter decreased 30% to $7.3
million compared to $10.4 million in the year-ago quarter,
primarily driven by continued prudent cost management across the
business.
Net
loss in the second quarter of 2020 improved significantly to $1.4
million or $(0.10) per share, compared to a net loss of $5.0
million or $(0.38) per share in the year-ago quarter.
Adjusted
EBITDA improved to $0.4 million compared to $(2.1) million in the
second quarter of 2019 (See “Note about Non-GAAP Financial
Measures” below for further discussion).
-2-
At June
30, 2020, cash, cash equivalents and restricted cash totaled $8.5
million compared to $7.9 million at March 31, 2020.
At June
30, 2020, AutoWeb had an outstanding balance of $7.2 million on its
revolving credit facility with CIT Northridge Credit compared to
$6.7 million at March 31, 2020.
Conference Call
AutoWeb
will hold a conference call today at 5:00 p.m. Eastern time to
discuss its second quarter results, followed by a
question-and-answer session.
Date:
Wednesday, August 5, 2020
Time:
5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free
dial-in number: 1-877-852-2929
International
dial-in number: 1-404-991-3925
Conference
ID: 8050647
The
conference call will also be broadcast live at www.autoweb.com
(click on “Investors” and then click on “Events
& Presentations”). Please visit the website at least 15
minutes prior to the start of the call to register and download any
necessary software. For those who will be joining the call by
phone, please call the conference telephone number 5-10 minutes
prior to the start time, and an operator will register your name
and organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
1-949-574-3860.
A
replay of the conference call will be available after 8:00 p.m.
Eastern time on the same day through August 12, 2020. The call will
also be archived in the Investors section of the company’s
website for one year.
Toll-free
replay number: 1-855-859-2056
International
replay number: 1-404-537-3406
Replay
ID: 8050647
Tax Benefit Preservation Plan
At
December 31, 2019, the company had approximately $100.5 million in
available net operating loss carryforwards (NOLs) for U.S. federal
income tax purposes. AutoWeb reminds stockholders about its Tax
Benefit Preservation Plan dated May 26, 2010, as amended (the
“Plan”) between the company and Computershare Trust
Company, N.A., as rights agent.
The
Plan was adopted by the company’s board of directors to
preserve the company’s NOLs and other tax attributes, and
thus reduce the risk of a possible change of ownership under
Section 382 of the Internal Revenue Code. Any such change of
ownership under Section 382 would limit or eliminate the ability of
the company to use its existing NOLs for federal income tax
purposes. In general, an ownership change will occur if the
company’s 5% shareholders, for purposes of Section 382,
collectively increase their ownership in the company by an
aggregate of more than 50 percentage points over a rolling
three-year period. The Plan is designed to reduce the likelihood
that the company experiences such an ownership change by
discouraging any person or group from becoming a new 5% shareholder
under Section 382. Rights issued under the Plan could be triggered
upon the acquisition by any person or group of 4.9% or more of the
company’s outstanding common stock and could result in
substantial dilution of the acquirer’s percentage ownership
in the company. There is no guarantee that the Plan will achieve
the objective of preserving the value of the company’s
NOLs.
As of
June 30, 2020, there were 13,146,831 shares of the company’s
common stock, $0.001 par value, outstanding. Persons or groups
considering the acquisition of shares of beneficial ownership of
the company’s common stock should first evaluate their
percentage ownership based on this revised outstanding share number
to ensure that the acquisition of shares does not result in
beneficial ownership of 4.9% or more of outstanding shares. For
more information about the Plan, please visit investor.autoweb.com/tax.cfm.
-3-
About AutoWeb, Inc.
AutoWeb,
Inc. provides high-quality consumer leads, clicks and associated
marketing services to automotive dealers and manufacturers
throughout the United States. The company also provides consumers
with robust and original online automotive content to help them
make informed car-buying decisions. The company pioneered the
automotive Internet in 1995 and has since helped tens of millions
of automotive consumers research vehicles; connected thousands of
dealers nationwide with motivated car buyers; and has helped every
major automaker market its brand online.
Investors
and other interested parties can receive AutoWeb news alerts by
accessing the online registration form at investor.autoweb.com/alerts.cfm.
Note about Non-GAAP Financial Measures
AutoWeb
has disclosed Adjusted EBITDA in this press release, which is a
non-GAAP financial measure as defined by SEC Regulation G. The
company defines Adjusted EBITDA as net loss before interest, taxes,
depreciation, amortization, non-cash stock-based compensation,
non-cash gains or losses, and other extraordinary items. A table
providing a reconciliation of Adjusted EBITDA is included at the
end of this press release.
The
company’s management believes that presenting Adjusted EBITDA
provides useful information to investors regarding the underlying
business trends and performance of the company’s ongoing
operations, as well as providing for more consistent
period-over-period comparisons. This non-GAAP measure assists
management in its operational and financial decision-making and
monitoring the company’s performance. In addition, we use
Adjusted EBITDA as a measure for determining incentive compensation
targets. Adjusted EBITDA is used in addition to and in conjunction
with results presented in accordance with GAAP and should not be
relied upon to the exclusion of GAAP financial measures. Management
strongly encourages investors to review the company’s
consolidated financial statements in their entirety and to not rely
on any single financial measure.
Forward-Looking Statements Disclaimer
The
statements contained in this press release or that may be made
during the conference call described above that are not historical
facts are forward-looking statements under the federal securities
laws. Words such as “anticipates,” “could,”
“may,” “estimates,” “expects,”
“projects,” “intends,”
“pending,” “plans,” “believes,”
“will” and words of similar substance, or the negative
of those words, used in connection with any discussion of future
operations or financial performance identify forward-looking
statements. In particular, statements regarding expectations and
opportunities, new product expectations and capabilities,
projections, statements regarding future events, and our outlook
regarding our performance and growth are forward-looking
statements. These forward-looking statements, including, that (i)
while the company cannot predict how market forces will evolve in
the coming months, the company will continue to support its dealer
and OEM customers as they continue to turn to leads to support
their sales recovery; and (ii) while the company’s work in
its turnaround is not yet complete, the company remains remain
optimistic and focused on continuing its momentum to improve
profitability, are not guarantees of future performance and involve
assumptions and risks and uncertainties that are
difficult to predict. Actual outcomes and results may differ
materially from what is expressed in, or implied by, these
forward-looking statements. AutoWeb undertakes no obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or otherwise. Among the important
factors that could cause actual results to differ materially from
those expressed in, or implied by, the forward-looking statements
are changes in general economic conditions; the financial condition
of automobile manufacturers and dealers; disruptions in automobile
production; changes in fuel prices; the economic impact of
terrorist attacks, political revolutions or military actions;
failure of our internet security measures; dealer attrition;
pressure on dealer fees; increased or unexpected competition; the
failure of new products and services to meet expectations; failure
to retain key employees or attract and integrate new employees;
actual costs and expenses exceeding charges taken by AutoWeb;
changes in laws and regulations; costs of legal matters, including,
defending lawsuits and undertaking investigations and related
matters; and other matters disclosed in AutoWeb’s filings
with the Securities and Exchange Commission. Investors are strongly
encouraged to review the company’s Annual Report on Form 10-K
for the year ended December 31, 2019 and other filings with the
Securities and Exchange Commission for a discussion of risks and
uncertainties that could affect the business, operating results or
financial condition of AutoWeb and the market price of the
company’s stock.
Company Contact
J.P.
Hannan
Chief
Financial Officer
1-949-437-4651
jp.hannan@autoweb.com
Investor Relations Contact:
Sean
Mansouri, CFA or Cody Slach
Gateway
Investor Relations
1-949-574-3860
AUTO@gatewayir.com
-4-
|
AUTOWEB, INC.
|
||
|
AUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
||
|
(Amounts in thousands, except share and per share data)
|
||
|
|
|
|
|
|
June 30,
|
December 31,
|
|
|
2020
|
2019
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$5,210
|
$892
|
|
Restricted
cash
|
3,300
|
5,054
|
|
Accounts receivable, net of allowances for bad debts and customer
credits of $638 at June 30, 2020,
|
|
|
|
and
net of allowances for bad debt and customer credits of $740 at
December 31, 2019
|
14,679
|
24,051
|
|
Prepaid
expenses and other current assets
|
1,939
|
1,265
|
|
Total
current assets
|
25,128
|
31,262
|
|
Property
and equipment, net
|
3,026
|
3,349
|
|
Right-of-use
assets
|
3,246
|
2,528
|
|
Intangibles
assets, net
|
5,537
|
7,104
|
|
Other
assets
|
745
|
661
|
|
Total
assets
|
$37,682
|
$44,904
|
|
|
|
|
|
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$5,899
|
$14,080
|
|
Borrowings
under revolving credit facility
|
7,181
|
3,745
|
|
Current
portion of PPP Loan
|
615
|
-
|
|
Accrued
employee-related benefits
|
1,928
|
1,004
|
|
Other
accrued expenses and other current liabilities
|
1,257
|
2,315
|
|
Current
portion of lease liabilities
|
820
|
1,167
|
|
Total
current liabilities
|
17,700
|
22,311
|
|
|
|
|
|
PPP
Loan
|
769
|
-
|
|
Lease
liabilities, net of current portion
|
2,524
|
1,497
|
|
Total
liabilities
|
20,993
|
23,808
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Preferred
stock, $0.001 par value; 11,445,187 shares authorized
|
|
|
|
Series
A Preferred stock, none issued and outstanding
|
-
|
-
|
|
Common
stock, $0.001 par value; 55,000,000 shares authorized;
|
|
|
|
13,146,831
shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively
|
13
|
13
|
|
Additional
paid-in capital
|
365,056
|
364,028
|
|
Accumulated
deficit
|
(348,380)
|
(342,945)
|
|
Total
stockholders' equity
|
16,689
|
21,096
|
|
Total
liabilities, minority interest and stockholders'
equity
|
$37,682
|
$44,904
|
-5-
|
AUTOWEB, INC.
|
||||
|
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||
|
(Amounts in thousands, except share and per share data)
|
||||
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six
Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenues:
|
|
|
|
|
|
Lead
generation
|
$14,263
|
$21,691
|
$32,723
|
$47,389
|
|
Digital
advertising
|
2,756
|
5,432
|
8,768
|
11,310
|
|
Other
|
14
|
19
|
14
|
47
|
|
Total
revenues
|
17,033
|
27,142
|
41,505
|
58,746
|
|
Cost
of revenues
|
10,993
|
21,758
|
30,108
|
47,605
|
|
Gross
profit
|
6,040
|
5,384
|
11,397
|
11,141
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
Sales
and marketing
|
2,026
|
2,956
|
4,158
|
5,834
|
|
Technology
support
|
1,786
|
2,182
|
3,643
|
4,962
|
|
General
and administrative
|
2,901
|
4,026
|
6,844
|
8,316
|
|
Depreciation
and amortization
|
559
|
1,201
|
1,281
|
2,440
|
|
Total
operating expenses
|
7,272
|
10,365
|
15,926
|
21,552
|
|
Operating
loss
|
(1,232)
|
(4,981)
|
(4,529)
|
(10,411)
|
|
Interest
and other income (expense), net
|
(142)
|
33
|
(906)
|
103
|
|
Loss
before income tax provision
|
(1,374)
|
(4,948)
|
(5,435)
|
(10,308)
|
|
Income
taxes provision
|
-
|
5
|
-
|
5
|
|
Net
loss and comprehensive loss
|
$(1,374)
|
$(4,953)
|
$(5,435) #
|
$(10,313)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share:
|
|
|
|
|
|
Basic
loss per common share
|
$(0.10)
|
$(0.38)
|
$(0.41)
|
$(0.78)
|
|
Diluted
loss per common share
|
$(0.10)
|
$(0.38)
|
$(0.41)
|
$(0.78)
|
|
|
|
|
|
|
|
Shares
used in computing net loss per share:
|
|
|
|
|
|
Basic
|
13,133
|
13,111
|
13,133
|
13,018
|
|
Diluted
|
13,133
|
13,111
|
13,133
|
13,018
|
-6-
|
AUTOWEB, INC.
|
||
|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
|
||
|
(amounts in thousands)
|
||
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
2019
|
|
Cash
flows from operating activities:
|
|
|
|
Net
(loss) income
|
$(5,435)
|
$(10,313)
|
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
Depreciation
and amortization
|
2,278
|
3,509
|
|
Provision
for bad debt
|
94
|
122
|
|
Provision
for customer credits
|
33
|
120
|
|
Share-based
compensation
|
1,028
|
1,111
|
|
Right-of-use
assets
|
767
|
924
|
|
Lease
Liabilities
|
(805)
|
(924)
|
|
Changes
in assets and liabilities
|
|
|
|
Accounts
receivable
|
9,245
|
3,325
|
|
Prepaid
expenses and other current assets
|
(674)
|
(410)
|
|
Other
non-current assets
|
(84)
|
(303)
|
|
Accounts
payable
|
(8,181)
|
(1,945)
|
|
Accrued
expenses and other current liabilities
|
(135)
|
(787)
|
|
Net
cash (used in) provided by operating activities
|
(1,869)
|
(5,571)
|
|
Cash
flows from investing activities:
|
|
|
|
Purchases
of property and equipment
|
(388)
|
(990)
|
|
Net
cash (used in) provided by investing activities
|
(388)
|
(990)
|
|
Cash
flows from financing activities:
|
|
|
|
Borrowings
under PNC credit facility
|
28,564
|
16,940
|
|
Payments
under PNC credit facility
|
(32,308)
|
(16,940)
|
|
Borrowings
under CNC credit facility
|
33,201
|
-
|
|
Payments
under CNC credit facility
|
(26,020)
|
-
|
|
Borrowings
under the PPP Loan
|
1,384
|
-
|
|
Payments
on convertible note
|
-
|
(1,000)
|
|
Proceeds
from exercise of stock options
|
-
|
408
|
|
Net
cash provided by (used in) financing activities
|
4,821
|
(592)
|
|
Net
increase in cash and cash equivalents and restricted
cash
|
2,564
|
(7,153)
|
|
Cash
and cash equivalents and restricted cash at beginning of
period
|
5,946
|
13,600
|
|
Cash
and cash equivalents and restricted cash at end of
period
|
$8,510
|
$6,447
|
|
|
|
|
|
RECONCILIATION
OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
Cash
and cash equivalents at beginning of period
|
$892
|
$13,600
|
|
Restricted
cash at beginning of period
|
5,054
|
-
|
|
Cash
and cash equivalents and restricted cash at beginning of
period
|
$5,946
|
$13,600
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
$5,210
|
$1,431
|
|
Restricted
cash at end of period
|
3,300
|
5,016
|
|
Cash
and cash equivalents and restricted cash at end of
period
|
$8,510
|
$6,447
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash
paid for income taxes
|
-
|
1
|
|
Cash
refunds for income taxes
|
381
|
124
|
|
Cash
paid for interest
|
449
|
40
|
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
|
Right-of-use
assets obtained in exchange for operating lease
liabilities
|
1,485
|
-
|
-7-
|
AUTOWEB, INC.
|
||||
|
RECONCILIATION OF ADJUSTED EBITDA
|
||||
|
(Amounts in thousands)
|
||||
|
|
|
|
|
|
|
|
Three Months Ended
|
Three Months Ended
|
||
|
|
March 31, 2020
|
March 31, 2019
|
June 30, 2020
|
June 30, 2019
|
|
|
|
|
|
|
|
Net
loss
|
$(4,061)
|
$(5,360)
|
$(1,374)
|
$(4,953)
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
1,213
|
1,787
|
1,066
|
1,723
|
|
Interest
income
|
(12)
|
(6)
|
-
|
(20)
|
|
Interest
expense
|
844
|
5
|
205
|
56
|
|
Other
income (expense)
|
(6)
|
-
|
-
|
-
|
|
Income
taxes
|
(186)
|
-
|
(34)
|
5
|
|
Non-cash
stock compensation expense
|
509
|
551
|
518
|
560
|
|
Gain
on government grant
|
-
|
-
|
(10)
|
-
|
|
Personnel
Restructuring
|
-
|
-
|
-
|
496
|
|
Adjusted
EBITDA
|
$(1,699)
|
$(3,023)
|
$371
|
$(2,133)
|
-8-