Transaction Follows Comprehensive Process Run
by Board to Maximize Value for Shareholders
Represents 78% Premium to Carbonite’s
Unaffected Stock Price on September 5, 2019
Announces Third Quarter 2019 Financial
Results
Carbonite, Inc. (NASDAQ: CARB), a global leader in data
protection and cybersecurity, today announced that it has entered
into a definitive agreement to be acquired by OpenTextTM (NASDAQ:
OTEX, TSX:OTEX), a market leader in Enterprise Information
Management software and solutions, for $23.00 per Carbonite share
in cash. The transaction values Carbonite at an enterprise value of
approximately $1.42 billion and represents a 78% premium to
Carbonite’s unaffected closing stock price on September 5, 2019,
the last trading day before a media report was published
speculating about a potential sale process.
“Following expressions of interest from multiple parties, the
Carbonite Board conducted a thorough and comprehensive process,
which included contact with a number of strategic and financial
parties, to identify the best way to maximize shareholder value,”
said Steve Munford, Interim Chief Executive Officer and
President/Executive Chairman of the Board of Carbonite. “The Board
strongly believes that a transaction with OpenText delivers
compelling, immediate and substantial cash value to
shareholders.
Munford continued, “Carbonite has expanded its solutions to
become a leader in cyber resiliency. We have grown through both
organic and inorganic opportunities over the years, enhancing our
routes to market, diversifying our customer base, and assembling a
talented workforce, while adding meaningful scale. Joining with
OpenText is an exciting next step for Carbonite.”
OpenText is a leader in Enterprise Information Management (EIM),
both on-premises and for cloud services, offering the only complete
solution for EIM with a comprehensive view of all the information
within an organization. OpenText operates in 40 countries,
providing a tested platform for growth and new sales
opportunities.
The transaction is subject to customary closing conditions,
including the tender of a majority of the outstanding shares of
Carbonite common stock and regulatory approvals.
J.P. Morgan Securities LLC acted as financial advisor to
Carbonite, and Skadden, Arps, Slate, Meagher & Flom LLP acted
as legal advisor.
Third Quarter 2019 Results:
Carbonite also announced financial results for the third quarter
ended September 30, 2019:
- Revenue of $125.6 million increased 62% year-over-year.
- Non-GAAP revenue of $135.0 million increased 71%
year-over-year.1
- Net loss was ($14.0) million, compared to net income of $0.6
million in 2018.
- Net loss per share was ($0.40) (basic and diluted), as compared
to net income per share of $0.02 (basic and diluted) in 2018.
- Non-GAAP net income per share was $0.61 (basic) and $0.60
(diluted), as compared to $0.53 (basic) and $0.48 (diluted) in
2018.2
- Adjusted EBITDA of $40.2 million, or 30% of non-GAAP revenue,
compared to $23.0 million, or 29% of non-GAAP revenue in
2018.3
Conference Call
The public is invited to listen to the OpenText conference call
today at 9:00 a.m. ET (6:00 a.m. PT) by dialing 1-800-319-4610
(toll-free) or +1-604-638-5340 (international). Please dial-in 15
minutes ahead of time to ensure proper connection. Alternatively, a
live webcast of the conference call will be available on the
Investor Relations section of the Company's website at
investors.opentext.com.
A replay of the call will be available beginning November 11,
2019 at 10:30 a.m. ET through 11:59 p.m. on November 25, 2019 and
can be accessed by dialing 1-855-669-9658 (toll-free) or
+1-604-674-8052 (international) and using passcode 3870 followed by
the number sign.
In light of the transaction with OpenText announced today,
Carbonite has cancelled its third quarter results conference call
that had been scheduled for Tuesday, November 12, 2019 at 5:30 pm
ET and will not be providing a business outlook for the fourth
quarter of 2019.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in
accordance with GAAP, this press release contains non-GAAP
financial measures, including non-GAAP revenue, non-GAAP net income
and non-GAAP net income per share, and adjusted EBITDA.
The Company believes that these non-GAAP measures of financial
results provide useful information to management and investors
regarding certain financial and business trends relating to the
Company’s financial condition and ordinary results of operations.
The Company’s management uses these non-GAAP measures to compare
the Company’s performance to that of prior periods and uses these
measures in financial reports prepared for management and the
Company’s board of directors. The Company believes that the use of
these non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing the Company’s financial measures with other
software-as-a-service companies, many of which present similar
non-GAAP financial measures to investors.
The Company does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitation of these non-GAAP
financial measures is that they exclude significant items that are
required by GAAP to be recorded in the Company’s financial
statements. In addition, they are subject to inherent limitations
as they reflect the exercise of judgments by management. The
Company urges investors to review the reconciliation of its
non-GAAP financial measures to the comparable GAAP financial
measures provided in the tables at the end of this press release,
and not to rely on any single financial measure to evaluate the
Company’s business.
- Non-GAAP revenue excludes the impact of purchase accounting
adjustments for acquisitions.
- Non-GAAP net income and non-GAAP net income per share excludes
the impact of purchase accounting adjustments on acquired deferred
revenue, amortization expense on intangible assets, stock-based
compensation expense, litigation-related expense,
restructuring-related expense, acquisition-related expense,
non-cash debt interest expense, intangible asset impairment
charges, CEO recruitment expense, and the income tax effect of
non-GAAP adjustments.
- Adjusted EBITDA is calculated by excluding the impact of
interest expense, net, income taxes, depreciation, amortization,
purchase accounting adjustments on acquired deferred revenue,
stock-based compensation expense, litigation-related expense,
restructuring-related expense, intangible asset impairment charges,
acquisition-related expense, and CEO recruitment expense from net
(loss) income.
Notice to Investors and Security Holders
The offer referred to in this press release has not yet
commenced. The description contained in this press release is
neither an offer to purchase nor a solicitation of an offer to sell
any securities, nor is it a substitute for the tender offer
materials that OpenText and Merger Sub will file with the SEC. The
solicitation and offer to buy Shares will only be made pursuant to
an offer to purchase and related tender offer materials. At the
time the Offer is commenced, OpenText and Merger Sub will file a
tender offer statement on Schedule TO and thereafter Carbonite will
file a solicitation/recommendation statement on Schedule 14D-9 with
the SEC with respect to the Offer. THE TENDER OFFER MATERIALS
(INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL
AND CERTAIN OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL
CONTAIN IMPORTANT INFORMATION. ANY HOLDERS OF SHARES ARE URGED TO
READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS SHOULD
CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR
SHARES. The offer to purchase, the related letter of transmittal
and the solicitation/recommendation statement will be made
available for free at the SEC’s website at www.sec.gov. Additional
copies may be obtained for free by contacting OpenText or
Carbonite. Copies of the documents filed with the SEC by Carbonite
will be available free of charge on Carbonite’s internet website at
https://investor.carbonite.com or by contacting Carbonite’s
Investor Relations Department at (617) 587-1102. Copies of the
documents filed with the SEC by OpenText will be available free of
charge on OpenText’s internet website at
https://investors.opentext.com or by contacting OpenText’s Investor
Relations Department at (415) 963-0825.
In addition to the offer to purchase, the related letter of
transmittal and certain other tender offer documents, as well as
the solicitation/recommendation statement, Carbonite and OpenText
will each file annual, quarterly and current reports with the SEC.
You may read and copy any reports or other information filed by
OpenText or Carbonite at the SEC public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
room. Carbonite’s and OpenText’s filings with the SEC are also
available to the public from commercial document-retrieval services
and at the website maintained by the SEC at http://www.sec.gov.
Forward Looking Statements
The information contained in this press release is as of
November 11, 2019. Carbonite assumes no obligation to update
forward-looking statements contained in this press release as the
result of new information or future events or developments.
This press release contains forward-looking information related
to Carbonite, OpenText and the proposed acquisition of Carbonite by
OpenText that involves substantial risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied by such statements. Forward-looking statements
in this document and the accompanying exhibits include, among other
things, statements about the potential benefits of the proposed
acquisition, Carbonite’s and OpenText’s plans, objectives,
expectations and intentions, the anticipated timing of closing of
the proposed acquisition and expected plans for financing the
proposed acquisition. Risks and uncertainties include, among other
things, risks related to the satisfaction or waiver of the
conditions to closing the proposed acquisition (including the
failure to obtain necessary regulatory approvals) in the
anticipated timeframe or at all, including uncertainties as to how
many of Carbonite’s stockholders will tender their shares in the
tender offer and the possibility that the acquisition does not
close; the possibility that competing offers may be made; risks
related to obtaining the requisite consents to the acquisition,
including, without limitation, the timing (including possible
delays) and receipt of regulatory approvals from various
governmental entities (including any conditions, limitations or
restrictions placed on these approvals and the risk that one or
more governmental entities may deny approval); risks related to the
ability to realize the anticipated benefits of the proposed
acquisition, including the possibility that the expected benefits
and accretion from the proposed acquisition will not be realized or
will not be realized within the expected time period; the risk that
the businesses will not be integrated successfully; Carbonite’s
ability to integrate the Webroot acquisition and achieve the
expected benefits of such acquisition; Carbonite’s ability to
profitably attract new customers and retain existing customers;
Carbonite’s dependence on the market for cloud backup services, and
its ability to manage growth, changes in economic or regulatory
conditions or other trends affecting the Internet and the
information technology industry; disruption from the transaction
making it more difficult to maintain business and operational
relationships; significant transaction costs; unknown liabilities;
the risk of litigation and/or regulatory actions related to the
proposed acquisition; other business effects, including the effects
of industry, market, economic, political or regulatory conditions;
future exchange and interest rates; and changes in tax and other
laws, regulations, rates and policies.
A further description of risks and uncertainties relating to
Carbonite can be found in Carbonite Annual Report on Form 10-K for
the fiscal year ended December 31, 2018, and in its subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all
of which are filed with the SEC and available at www.sec.gov and
www.carbonite.com.
About Carbonite
Carbonite provides a robust Data Protection Platform for
businesses, including backup, disaster recovery, high availability
and workload migration technology. The Carbonite Data Protection
Platform supports businesses on a global scale with secure cloud
infrastructure. To learn more, visit www.carbonite.com and follow
us on Twitter at @Carbonite.
Carbonite, Inc. serves customers through three brands: Carbonite
data protection, Webroot cybersecurity, and MailStore email
archiving.
Carbonite, Inc.
Consolidated Statement of
Operations
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in thousands, except share and
per share amounts)
Revenue:
Services
$
118,824
$
70,290
$
304,758
$
193,678
Product
6,772
7,392
23,563
25,764
Total revenue
125,596
77,682
328,321
219,442
Cost of revenue:
Services
30,355
17,094
71,413
50,782
Product
540
417
1,363
1,348
Amortization of intangible assets
9,072
4,317
21,447
11,067
Total cost of revenue
39,967
21,828
94,223
63,197
Gross profit
85,629
55,854
234,098
156,245
Operating expenses:
Research and development
28,753
14,914
72,439
43,152
General and administrative
16,226
11,159
54,782
39,079
Sales and marketing
37,417
21,184
96,127
63,130
Amortization of intangible assets
10,134
3,924
24,199
8,515
Restructuring charges
—
357
702
1,260
Total operating expenses
92,530
51,538
248,249
155,136
(Loss) income from operations
(6,901
)
4,316
(14,151
)
1,109
Interest expense
(10,795
)
(2,873
)
(26,650
)
(8,894
)
Interest income
212
390
1,595
803
Other income (expense), net
587
(147
)
974
48
(Loss) income before income taxes
(16,897
)
1,686
(38,232
)
(6,934
)
(Benefit) provision for income taxes
(2,941
)
1,100
(15,005
)
(13,777
)
Net (loss) income
$
(13,956
)
$
586
$
(23,227
)
$
6,843
Net (loss) income per share:
Basic
$
(0.40
)
$
0.02
$
(0.67
)
$
0.23
Diluted
$
(0.40
)
$
0.02
$
(0.67
)
$
0.21
Weighted-average shares outstanding:
Basic
34,639,762
32,876,529
34,423,099
29,965,390
Diluted
34,639,762
36,454,443
34,423,099
32,762,302
Carbonite, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
September 30, 2019
December 31, 2018
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
98,537
$
198,087
Trade accounts receivable, net
43,407
31,569
Prepaid expenses and other current
assets
22,854
10,409
Total current assets
164,798
240,065
Property and equipment, net
44,199
34,101
Right-of-use lease assets
44,826
—
Other assets
24,519
13,876
Acquired intangible assets, net
391,786
117,963
Goodwill
543,957
155,086
Total assets
$
1,214,085
$
561,091
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
7,355
$
2,114
Accrued compensation
20,388
11,620
Accrued expenses and other current
liabilities
32,499
15,844
Current portion of deferred revenue
183,361
121,553
Total current liabilities
243,603
151,131
Long-term debt
590,789
118,305
Long-term lease liabilities
43,404
—
Deferred revenue, net of current
portion
41,638
29,151
Long-term deferred tax liabilities
40,343
1,456
Other long-term liabilities
8,171
3,838
Total liabilities
967,948
303,881
Stockholders’ equity:
Common stock
374
366
Additional paid-in capital
466,738
451,618
Treasury stock, at cost
(47,593
)
(48,522
)
Accumulated other comprehensive (loss)
income
(2,253
)
1,650
Accumulated deficit
(171,129
)
(147,902
)
Total stockholders’ equity
246,137
257,210
Total liabilities and stockholders’
equity
$
1,214,085
$
561,091
Carbonite, Inc.
Consolidated Statement of Cash
Flows (Unaudited)
Nine Months Ended September
30,
2019
2018
(in thousands)
Operating activities
Net (loss) income
$
(23,227
)
$
6,843
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
57,685
29,622
Amortization of right-of-use lease
assets
5,776
—
Amortization of deferred costs
2,224
1,521
Gain on disposal of equipment
(114
)
(245
)
Impairment of other long-lived assets
6,000
—
Impairment of capitalized software
126
653
Stock-based compensation expense
15,005
13,461
Benefit for deferred income taxes
(15,131
)
(16,228
)
Non-cash interest expense related to
amortization of debt discount
6,260
4,712
Other non-cash items, net
(618
)
136
Changes in assets and liabilities, net of
acquisition:
Accounts receivable
6,586
(7,001
)
Prepaid expenses and other current
assets
(1,004
)
(2,281
)
Other assets
(2,125
)
(4,655
)
Accounts payable
4,665
(5,811
)
Accrued expenses and other current
liabilities
(1,745
)
3,341
Other long-term liabilities
(9,129
)
(38
)
Deferred revenue
17,054
9,784
Net cash provided by operating
activities
68,288
33,814
Investing activities
Purchases of property and equipment
(9,510
)
(9,927
)
Proceeds from sale of property and
equipment and businesses
138
657
Proceeds from maturities of
derivatives
1,809
2,596
Purchases of derivatives
(6
)
(1,403
)
Payment for intangibles
—
(5,750
)
Payment for acquisition, net of cash
acquired
(621,703
)
(144,597
)
Net cash used in investing activities
(629,272
)
(158,424
)
Financing activities
Proceeds from exercise of stock
options
340
1,139
Proceeds from issuance of common stock for
secondary offering
—
199,302
Proceeds from issuance of treasury stock
under employee stock purchase plan
1,582
1,215
Payments of withholding taxes in
connection with restricted stock unit vesting
(905
)
(2,154
)
Proceeds from long-term borrowings, net of
debt issuance costs
528,980
88,068
Payments on long-term borrowings
(65,000
)
(90,000
)
Net cash provided by financing
activities
464,997
197,570
Effect of currency exchange rate changes
on cash
(1,124
)
(210
)
Net decrease in cash, cash equivalents and
restricted cash
(97,111
)
72,750
Cash, cash equivalents and restricted
cash, beginning of period
198,087
128,231
Cash, cash equivalents and restricted
cash, end of period
$
100,976
$
200,981
Carbonite, Inc.
Reconciliation of GAAP to
Non-GAAP Measures (Unaudited)
(In thousands, except share
and per share amounts)
Reconciliation of GAAP Revenue to Non-GAAP
Revenue
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP revenue
$
125,596
$
77,682
$
328,321
$
219,442
Add:
Fair value adjustment of acquired deferred
revenue
9,448
1,427
24,738
4,425
Non-GAAP revenue
$
135,044
$
79,109
$
353,059
$
223,867
Reconciliation of GAAP Net (Loss) Income and Net (Loss)
Income per Share to Non-GAAP Net Income and Net Income per
Share
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP net (loss) income
$
(13,956
)
$
586
$
(23,227
)
$
6,843
Add:
Fair value adjustment of acquired deferred
revenue
9,448
1,427
24,738
4,425
Amortization of intangibles
19,206
8,241
45,646
19,582
Stock-based compensation expense
5,288
4,983
15,005
13,461
Litigation-related expense
88
22
259
85
Restructuring-related expense
—
357
702
1,260
Acquisition-related expense
1,572
219
12,307
6,196
Intangible asset impairment charges
6,000
—
6,000
—
CEO recruitment expense
604
—
604
—
Non-cash debt interest expense
2,305
1,611
6,260
4,712
Less:
Income tax effect of non-GAAP
adjustments
9,367
126
31,822
16,944
Non-GAAP net income
$
21,188
$
17,320
$
56,472
$
39,620
GAAP net (loss) income per share:
Basic
$
(0.40
)
$
0.02
$
(0.67
)
$
0.23
Diluted
$
(0.40
)
$
0.02
$
(0.67
)
$
0.21
Non-GAAP net income per share:
Basic
$
0.61
$
0.53
$
1.64
$
1.32
Diluted
$
0.60
$
0.48
$
1.60
$
1.21
GAAP weighted-average shares
outstanding:
Basic
34,639,762
32,876,529
34,423,099
29,965,390
Diluted
34,639,762
36,454,443
34,423,099
32,762,302
Non-GAAP weighted-average shares
outstanding:
Basic
34,639,762
32,876,529
34,423,099
29,965,390
Diluted
35,176,186
36,454,443
35,248,853
32,762,302
Reconciliation of EBITDA and Adjusted EBITDA to Net
(Loss) Income
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net (loss) income
$
(13,956
)
$
586
$
(23,227
)
$
6,843
Adjustments:
Interest expense, net
10,583
2,483
25,055
8,091
Income tax (benefit) provision
(2,941
)
1,100
(15,005
)
(13,777
)
Depreciation and amortization
23,471
11,859
57,685
29,622
EBITDA
17,157
16,028
44,508
30,779
Adjustments to EBITDA:
Fair value adjustment of acquired deferred
revenue
9,448
1,427
24,738
4,425
Stock-based compensation expense
5,288
4,983
15,005
13,461
Litigation-related expense
88
22
259
85
Restructuring-related expense
—
357
702
1,260
Intangible asset impairment charges
6,000
—
6,000
—
Acquisition-related expense
1,572
219
12,307
6,196
CEO recruitment expense
604
—
604
—
Adjusted EBITDA
$
40,157
$
23,036
$
104,123
$
56,206
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191111005314/en/
Investor Relations Contact: Jeremiah Sisitsky Carbonite
781-928-0713 investor.relations@carbonite.com
Media Contact: Kristin Miller Carbonite 720-842-3481
media@carbonite.com
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