EX-99.1 2 v192683_ex99-1.htm
Vertro, Inc.
Press Release

Alex Vlasto
VP, Marketing & Communications
alex.vlasto@vertro.com
(212) 231-2000
 


Vertro, Inc. Announces Second Quarter 2010 Results

Revenue from Continuing Operations Up Approximately 42% Year-Over-Year

$0.2 million in GAAP Net Income and $0.5 million in Adjusted EBITDA from Continuing Operations

NEW YORK, NY – August 5, 2010 – Vertro, Inc. (NASDAQ: VTRO) today reported financial results for the second quarter ended June 30, 2010.

Summary of Second Quarter 2010 Results from Continuing Operations:

·
Revenue of $8.5 million in Q2 2010, compared to revenue of $8.1 million in Q1 2010;

·
Gross margins of 96% in Q2 2010, compared to the 94% gross margins in Q1 2010;

·
GAAP net income from continuing operations of $0.2 million or $0.01 per basic share in Q2 2010, compared to GAAP net income from continuing operations of $0.5 million or $0.02 per basic share in Q1 2010. Q1 2010 GAAP net income included a non-recurring $0.3 million gain from the sale of an Internet domain name;

·
EBITDA of $0.2 million in Q2 2010, compared to EBITDA of $0.5 million in Q1 2010. Q2 2010 EBITDA included $0.2 million of non-cash compensation expense. Q1 2010 EBITDA included $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name; and

·
Adjusted EBITDA of $0.5 million in Q2 2010, compared to Adjusted EBITDA of $0.4 million in Q1 2010. Q2 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense. Q1 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.

“Q2 was another solid quarter. We delivered approximately 42% year-over-year revenue growth, added cash to the balance sheet, and posted our third consecutive quarter of profitability. We achieved continued growth in our user base both nationally and internationally, and we continued to expand the portfolio of apps we offer our toolbar and homepage users,” commented Peter Corrao, Vertro’s President and CEO.

“While we are pleased to have continued our recent trend of increasing sequential quarterly revenue, we believe our growth in the second quarter was tempered by our focus on regaining compliance with NASDAQ’s shareholder equity requirement. We cautiously managed our customer acquisition program during the quarter to try and ensure that we could regain compliance with only a minimal capital raise. We are pleased to have now regained compliance with the NASDAQ shareholder equity requirement and expect to get back to more robust revenue growth for the remainder of 2010 and beyond.”

 
 

 

Second Quarter 2010 Results from Continuing Operations

Revenue was $8.5 million in Q2 2010, compared to Q1 2010 revenue of $8.1 million.

Gross margins were 96% in Q2 2010, compared to 94% in Q1 2010. Gross margin excludes customer acquisition costs of $5.2 million in Q2 2010 and $4.9 million in Q1 2010, which is included in consolidated operating expenses within the marketing and sales category.

Operating expenses were $7.9 million in Q2 2010, compared to $7.4 million in Q1 2010. The operating expenses in both Q1 and Q2 2010 included $0.2 million of non-cash compensation expense.

GAAP net income from continuing operations was $0.2 million or $0.01 per basic share in Q2 2010, compared to $0.5 million or $0.02 per basic share in Q1 2010. Q1 2010 GAAP net income included a non-recurring $0.3 million gain from the sale of an Internet domain name.

Adjusted net income was $0.5 million or $0.02 per diluted share in Q2 2010, compared to Adjusted net income of $0.4 million or $0.01 per diluted share in Q1 2010. Q2 2010 Adjusted net income excluded $0.2 million of non-cash compensation expense. Q1 2010 Adjusted net income excluded $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.

EBITDA was $0.2 million in Q2 2010, compared to EBITDA of $0.5 million in Q1 2010. Q2 2010 EBITDA included $0.2 million of non-cash compensation expense. Q1 2010 EBITDA included $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.

Adjusted EBITDA was $0.5 million in Q2 2010 compared to Adjusted EBITDA of $0.4 million in Q1 2010. Q2 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense. Q1 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.

Cash and cash equivalents were $5.9 million at June 30, 2010, an increase of $0.7 million from March 31, 2010 cash of $5.2 million. The increase was primarily a result of gains from operations and the execution of a $0.25 million Stock Purchase Agreement between the Company, Red Oak Fund, LP and Pinnacle Fund, LLLP.

As of June 30, 2010, the Company had an active base of under 50 full time employees, which is compared to 42 full time employees as of March 31, 2010.

Selected metrics from continuing operations for Q2 2010 are available on Vertro’s investor relations website at: http://ir.vertro.com/results.cfm

Management Conference Call

Management will participate in a conference call to discuss the full results for the Company on Thursday, August 5, 2010, at approximately 4:30 p.m. ET. Details of the call for interested parties are as follows:

Date: Thursday, August 5, 2010
Time: 4:30 p.m. ET
Dial-in number: (877) 353-0044 / (970) 315-0525 (Intl.)
Live webcast: http://ir.vertro.com/events.cfm
Conference call replay: http://ir.vertro.com/events.cfm

 
 

 

Vertro believes that “EBITDA,” “Adjusted EBITDA,” “Adjusted net income/loss,” and “Adjusted net income/loss per share” provide meaningful measures for comparison of the Company’s current and projected operating performance with its historical results due to the significant changes in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off. Vertro defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. Vertro uses EBITDA and Adjusted EBITDA as internal measures of its business and believes they are utilized as important measures of performance by the investment community. Vertro sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. Vertro defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. Vertro believes the use of these measures does not lessen the importance of GAAP measures.

About Vertro, Inc.
Vertro, Inc. (NASDAQ:VTRO) is an Internet company that owns and operates the ALOT product portfolio. ALOT's products are designed to 'Make the Internet Easy' by enhancing the way consumers engage with content online. Through ALOT, Internet users can discover best-of-the-web content and display that content through customizable toolbar and homepage products. ALOT has millions of live users across its product portfolio. Together these users conduct high-volumes of type-in search queries, which are monetized through third-party search and content agreements.

Source: VTRO-E

Forward-looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate," "plan," "will," "intend," "believe" or "expect" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including (1) our ability to successfully execute upon our corporate strategies, (2) our ability to distribute and monetize our international products at rates sufficient to meet our expectations, (3) our ability to develop and successfully market new products and services, and (4) the potential acceptance of new products in the market. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009 and the Form 10-Qs for Q1 and Q2 2010.

Non-GAAP Financial Measures
This press release includes discussion of additional financial measures “EBITDA,” “Adjusted EBITDA,” “Adjusted Net Loss,” “Adjusted Net Income,” “Adjusted Net Loss Per Share” and “Adjusted Net Income Per Share,” which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Vertro provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to net income/loss and net income/loss per share for the three months ended June 30, 2010, are included in this press release below.

 
 

 

Vertro, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

   
For the Three Months For the Three Months
   
For the Six Months
   
For the Six Months
 
   
Ended June 30,
   
Ended June 30,
   
Ended June 30,
   
Ended June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Revenues
  $ 8,461       6,002     $ 16,565     $ 12,236  
Cost of services
    363       445       869       901  
                                 
Gross profit
    8,098       5,557       15,696       11,335  
                                 
Operating expenses
                               
Marketing and sales
    5,608       6,143       11,056       10,896  
General and administrative
    1,802       2,193       3,239       5,285  
Product development
    535       633       1,083       1,331  
Restructuring
    -       0               (15 )
Amortization
    -       40       -       40  
Total operating expenses
    7,945       9,009       15,378       17,537  
                                 
Income (loss) from operations
    153       (3,452 )     318       (6,202 )
Foreign exchange rate gain (loss)
    50       (398 )     119       (398 )
Gain on sale of domain name
    -       -       285       -  
Other Income (expense), net
    10       9       10       (72 )
                                 
Income (loss) before provision for income taxes
    213       (3,841 )     732       (6,672 )
                                 
Income tax expense
    17       14       42       27  
                                 
Income (loss) from continuing operations
    196       (3,855 )     690       (6,699 )
                                 
Income (loss) from discontinued operations, net of income taxes
    (51 )     491       753       (4,667 )
                                 
Gain on sale of discontinued operations, net of income taxes
    -       213       0       7,139  
                                 
Net income (loss)
  $ 145     $ (3,151 )     1,443     $ (4,227 )
                                 
Basic earnings (loss) per share
                               
Continuing operations
  $ 0.01     $ (0.11 )   $ 0.02     $ (0.20 )
Discontinued operations
  $ -     $ 0.02     $ 0.02     $ 0.07  
Total earnings (loss) per share
  $ 0.01     $ (0.09 )   $ 0.04     $ (0.13 )
                                 
Diluted earnings (loss) per share
                               
Continuing operations
  $ 0.01     $ (0.11 )   $ 0.02     $ (0.20 )
Discontinued operations
  $ -     $ 0.02     $ 0.02     $ 0.07  
Total earnings (loss) per share
  $ 0.01     $ (0.09 )   $ 0.04     $ (0.13 )
                                 
Weighted-average number of common shares outstanding
                               
Basic
    34,229       33,707       34,192       33,453  
Diluted
    35,379       33,707       35,341       33,453  
 
 
 

 
 
Vertro, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
   
For the Three Months
   
For the Three Months
 
   
Ended June 30,
   
Ended March 31,
 
   
2010
   
2010
 
Revenues
  $ 8,461     $ 8,104  
Cost of services
    363       506  
                 
Gross profit
    8,098       7,598  
                 
Operating expenses
               
Marketing and sales
    5,608       5,448  
General and administrative
    1,802       1,436  
Product development
    535       549  
Total operating expenses
    7,945       7,433  
                 
Income from operations
    153       165  
Foreign exchange rate gain
    50       70  
Gain on sale of domain name
    -       285  
Other Income, net
    10       -  
                 
Income before provision for income taxes
    213       520  
                 
Income tax expense
    17       25  
                 
Income from continuing operations
    196       495  
                 
Income (loss) from discontinued operations, net of income taxes
    (51 )     804  
                 
Net income
  $ 145     $ 1,299  
                 
Basic earnings per share
               
Continuing operations
  $ 0.01     $ 0.02  
Discontinued operations
  $ -     $ 0.02  
Earnings per share
  $ 0.01     $ 0.04  
                 
Diluted earnings per share
               
Continuing operations
  $ 0.01     $ 0.02  
Discontinued operations
  $ -     $ 0.02  
Earnings per share
  $ 0.01     $ 0.04  
                 
Weighted-average number of common shares outstanding
               
Basic
    34,229       34,154  
Diluted
    35,379       35,276  

 
 

 

Vertro, Inc.
Reconciliations to Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

   
Three Months
   
Three Months
   
Six Months
   
Six Months
 
Additional information:
 
Ended June 30, 2010
   
Ended June 30, 2009
   
Ended June 30, 2010
   
Ended June 30, 2009
 
                         
Adjusted EBITDA
    503       (3,166 )     891       (5,445 )
Adjusted net income (loss)
    532       (3,593 )     955       (5,992 )
Adjusted net income (loss) per share - basic
  $ 0.02     $ (0.11 )   $ 0.03     $ (0.18 )
Adjusted net income (loss) per share - diluted
  $ 0.02     $ (0.11 )   $ 0.03     $ (0.18 )

   
Three Months
   
Three Months
 
Additional information:
 
Ended June 30, 2010
   
Ended March 31, 2010
 
             
Adjusted EBITDA
    503       388  
Adjusted net income
    532       424  
Adjusted net income per share - basic
  $ 0.02     $ 0.01  
Adjusted net income per share - diluted
  $ 0.02     $ 0.01  

   
Three Months
   
Three Months
   
Six Months
   
Six Months
 
   
Ended June 30, 2010
   
Ended June 30, 2009
   
Ended June 30, 2010
   
Ended June 30, 2009
 
                         
Reconciliation of Net Income (Loss) to Adjusted EBITDA
                       
Income (Loss) from continuing operations
    196       (3,855 )     690       (6,699 )
Interest income (expense), net and exchange rate loss
    (60 )     389       (129 )     470  
Income tax expense
    17       14       42       27  
Depreciation
    14       24       23       50  
Amortization
    -       40       -       40  
EBITDA
    167       (3,388 )     626       (6,112 )
Gain on Sale of domain name
    -       -       (285 )     -  
Non-Cash Compensation
    218       222       432       682  
Restructuring
    -       -       -       (15 )
Severence
    118       -       118       -  
Adjusted EBITDA
    503       (3,166 )     891       (5,445 )

   
Three Months
   
Three Months
 
   
Ended June 30, 2010
   
Ended March 31, 2010
 
             
Reconciliation of Net Income to Adjusted EBITDA
           
Income from continuing operations
    196       495  
Interest income , net and exchange rate gain
    (60 )     (70 )
Income tax expense
    17       25  
Depreciation
    14       9  
EBITDA
    167       459  
Other Income
    -       (285 )
Non-Cash Compensation
    218       214  
Severence
    118       -  
Adjusted EBITDA
    503       388  

   
Three Months
   
Three Months
   
Six Months
   
Six Months
 
   
Ended June 30, 2010
   
Ended June 30, 2009
   
Ended June 30, 2010
   
Ended June 30, 2009
 
                         
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
                       
Income (loss) from continuing operations
    196       (3,855 )     690       (6,699 )
Gain on sale of domain name
    -       -       (285 )     -  
Non-cash compensation
    218       222       432       682  
Restructuring
    -       -       -       (15 )
Severence
    118       -       118       -  
Amortization
    -       40       -       40  
Adjusted net income (loss)
    532       (3,593 )     955       (5,992 )
Adjusted net income (loss) per share - basic
  $ 0.02     $ (0.11 )   $ 0.03     $ (0.18 )
Adjusted net income (loss) per share - diluted
  $ 0.02     $ (0.11 )   $ 0.03     $ (0.18 )
Shares used in per share calculation - basic
    34,229       33,707       34,192       33,453  
Shares used in per share calculation - diluted
    35,379       33,707       35,341       33,453  

   
Three Months
   
Three Months
 
   
Ended June 30, 2010
   
Ended March 31, 2010
 
             
Reconciliation of Net Income to Adjusted Net Income
           
Income from continuing operations
    196       495  
Gain on sale of domain name
    -       (285 )
Non-cash compensation
    218       214  
Severence
    118       -  
Adjusted net income
    532       424  
Adjusted net Income per share - basic
  $ 0.02     $ 0.01  
Adjusted net Income per share - diluted
  $ 0.02     $ 0.01  
Shares used in per share calculation - basic
    34,229       34,154  
Shares used in per share calculation - diluted
    35,379       35,276  

 
 

 

Vertro, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)

   
June 30,
   
December 31,
 
   
2010
   
2009
 
   
(Unaudited)
       
             
ASSETS
           
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 5,879     $ 4,837  
Accounts receivable, less allowances of $570 and $679 at June 30, 2010 and December 31, 2009
    2,991       3,041  
Income tax receivable
    320       695  
Prepaid expenses and other current assets
    546       651  
                 
TOTAL CURRENT ASSETS
    9,736       9,224  
                 
Property and equipment, net
    122       71  
Restricted cash
    200       200  
Other assets
    343       517  
                 
TOTAL ASSETS
  $ 10,401     $ 10,012  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES
               
Accounts payable
  $ 3,668     $ 4,706  
Accrued expenses
    2,571       2,778  
Income tax payable
    20       299  
Deferred revenue
    -       25  
                 
TOTAL CURRENT LIABILITIES
    6,259       7,808  
                 
Long-term liabilities
    1,306       1,365  
                 
TOTAL LIABILITIES
    7,565       9,173  
                 
STOCKHOLDERS’ EQUITY
               
Preferred stock, $.001 par value; authorized, 500 shares; none issued and outstanding
    -       -  
Common stock, $.001 par value; authorized, 200,000 shares; issued 36,191 and 35,642, respectively; outstanding 34,231 and 33,852, respectively
    36       35  
Additional paid-in capital
    271,316       270,690  
Treasury stock, 1,960 and 1,790 shares at cost, respectively
    (6,795 )     (6,722 )
Accumulated other comprehensive income
    12,914       12,914  
Accumulated deficit
    (274,635 )     (276,078 )
                 
TOTAL STOCKHOLDERS' EQUITY
    2,836       839  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 10,401     $ 10,012