DG® (NASDAQ: DGIT)
- Q2 Financial results webcast moved to August 8 at 8:30 AM
EDT
- Online revenues increase 19%, Online Segment EBITDA grows
68%
DG® (NASDAQ: DGIT), the world's leading multiscreen ad
management company, today reported financial results for the second
quarter of 2013.
Consolidated revenues for the three months ended June 30, 2013
were unchanged at $96.3 million compared to the same period of
2012. DG's second quarter income from continuing operations was
$2.6 million, or $0.09 per diluted share, compared to income from
continuing operations of $0.5 million, or $0.02 per diluted share
in the prior year period. Second quarter adjusted EBITDA was $31.1
million, compared to $30.4 million reported in the second quarter
of 2012.
"We continue to make solid progress in our online business as
demand builds for our digital campaign management platform," said
Neil Nguyen, CEO of DG. "The 19% increase in our online business
this quarter reflects customers' growing use of video, data driven
campaign optimization and greater campaign insights through our new
analytics tools. It is clear to me that DG's ongoing development is
fully aligned with our customers in helping them reach, optimize,
analyze and deliver their online campaigns around the globe."
Second quarter highlights include:
- The Online Segment generated revenue of $41.3 million, an
increase of 19% from the second quarter of 2012.
- Online Segment Adjusted EBITDA before corporate overhead
margins improved to 24% from 17% in the second quarter of
2012.
- The Television Segment generated revenue of $55.0 million, a
decrease of 11% from the second quarter of 2012.
- High Definition (HD) penetration for the quarter increased to
41% from 26% in the second quarter of 2012.
- TV Segment Adjusted EBITDA before corporate overhead includes
an $800,000 credit for the reversal of an earnout related to the
Match Point acquisition completed in 2010.
- Operating income included $1.0 million of acquisition,
integration and other related expenses.
- Cash flow from operations increased by 67% to $50.7 million in
the first half of 2013 from $30.3 million in the prior year
period.
- The Company repaid $8.6 million of outstanding debt under its
credit facility; resulting in $394.7 million outstanding.
- As of June 30, 2013, DG reported $56.0 million of cash.
Guidance
For 2013, the Company continues to expect the following:
- Total revenue for the full year 2013 is expected to be in the
range of $370-$400 million.
- Adjusted EBITDA is expected to be in the range of $105-$125
million.
Second Quarter 2013 Financial Results
Webcast
The Company will host a conference call and webcast at 8:30 ET
on August 8, 2013. Participants can access the webcast at
www.DGIT.com. For the webcast, please allow 15 minutes to register
and download any necessary software. Questions and answers will be
taken only from participants on the conference call. Following the
call's completion, a replay will also be available for 30 days on
the Company's website.
Acquisitions / Discontinued Operations
The Company has completed two acquisitions that have impacted
the comparability of the operating results presented. The results
of operations for each of the following entities have been included
in the Company's results since the acquisition date.
- Peer 39, Inc. ("Peer 39") on April 30, 2012 (included in online
segment)
- NCMG, Inc. ("North Country") on July 31, 2012 (included in
television segment)
We sold the net assets of our Springbox unit effective June 1,
2012 for estimated proceeds of $0.9 million, resulting in an after
tax loss of $0.6 million. Results of our Springbox unit have been
included in discontinued operations for 2012.
Non-GAAP Financial Measures
In addition to providing financial measurements based on
generally accepted accounting principles in the United States of
America (GAAP), the Company has historically provided additional
financial measures that are not prepared in accordance with GAAP
(non-GAAP). We believe that the inclusion of Adjusted EBITDA and
Segment Adjusted EBITDA before corporate overhead as non-GAAP
financial measures in this press release helps investors to gain a
meaningful understanding of our past performance and future
prospects, consistent with how management measures and forecasts
our performance, especially when comparing such results to previous
periods or forecasts. Our management uses Adjusted EBITDA and
Segment Adjusted EBITDA before corporate overhead as non-GAAP
financial measures, in addition to GAAP financial measures, as the
basis for measuring our core operating performance and comparing
such performance to that of prior periods and to the performance of
our competitors.
We use Adjusted EBITDA and Segment Adjusted EBITDA before
corporate overhead to measure the operating performance of our
business. These measures are used by management in its financial
and operational decision-making. There are limitations associated
with reliance on any non-GAAP financial measures because they are
specific to our operations and financial performance, which makes
comparisons with other companies' financial results more
challenging. By providing both GAAP and non-GAAP financial
measures, we believe that investors are able to compare our GAAP
results to those of other companies while also gaining a better
understanding of our operating performance as evaluated by
management.
The Company considers Adjusted EBITDA to be an important
indicator of the overall performance of the Company because it
eliminates the effects of events that are non-cash, or are not
expected to recur as they are not part of our ongoing
operations.
The Company defines "Adjusted EBITDA" as income (loss) from
operations, before depreciation and amortization, share-based
compensation, acquisition, integration and other expenses, and
restructuring / impairment charges and benefits. The Company
considers Adjusted EBITDA to be an important indicator of the
Company's operational strength and performance and a good measure
of the Company's historical operating trends.
Adjusted EBITDA eliminates items that are either not part of our
core operations, such as acquisition, integration and other
expenses or do not require a cash outlay, such as share-based
compensation and impairment charges. Adjusted EBITDA also excludes
depreciation and amortization expense, which is based on the
Company's estimate of the useful life of tangible and intangible
assets. These estimates could vary from actual performance of the
asset, are based on historical costs, and may not be indicative of
current or future capital expenditures.
Segment Adjusted EBITDA before corporate overhead represents
Adjusted EBITDA before corporate overhead on a segment by segment
basis.
Adjusted EBITDA and Segment Adjusted EBITDA before corporate
overhead should be considered in addition to, not as a substitute
for, the Company's operating income, as well as other measures of
financial performance reported in accordance with GAAP.
Reconciliation of Non-GAAP Financial
Measures
In accordance with the requirements of Regulation G issued by
the Securities and Exchange Commission, the Company is presenting
the most directly comparable GAAP financial measure and reconciling
the non-GAAP financial measures to the comparable GAAP measure.
About DG
DG (NASDAQ: DGIT) is the leading global multiscreen advertising
management and distribution platform, fueling campaign management
across TV, online, mobile and beyond. Through a combination of
technology and services, DG empowers brands and advertisers to work
faster, smarter and more competitively. Boasting the world's
largest hybrid satellite and Internet network for broadcast video
delivery, the Company's unparalleled campaign management
encompasses multiscreen ad delivery, cross-channel research and
analytics, and unified asset management. The DG product portfolio
consists of two overarching product lines for online and video
campaign management: MediaMind and VideoFusion.
With New York as a center of operations, DG is a global company
that connects over 14,000 advertisers and 7,400 agencies worldwide
with their targeted audiences through an expansive network of over
50,000 media destinations across TV broadcast and digital
advertising in about 78 countries, managing approximately ten
percent of the world's media assets. For more information, visit
http://www.dgit.com.
Forward-Looking Statements
This release contains forward-looking statements relating to the
Company. These forward-looking statements involve risks and
uncertainties, which could cause actual results to differ
materially from those projected. Such risks and uncertainties
include, among other things;
- our ability to further identify, develop and achieve commercial
success for new products;
- delays in product development;
- the development of competing distribution and online services
and products, and the pricing of competing services and
products;
- our ability to protect our proprietary technologies;
- the shift of advertising spending by our customers to online
and non-traditional media from television and radio;
- the demand for HD ad delivery by our customers;
- integrating MediaMind and other acquisitions with our
operations, systems, personnel and technologies;
- our ability to successfully transition customers from our
previous online acquisitions to our MediaMind digital platform for
ad delivery;
- operating in a variety of foreign jurisdictions;
- fluctuations in currency exchange rates;
- adaptation to new, changing, and competitive technologies;
- potential additional impairment of our goodwill and potential
impairment of our other long-lived assets;
and other risks relating to DG's business which are set forth in
the Company's filings with the Securities and Exchange Commission.
DG assumes no obligation to publicly update or revise any
forward-looking statements.
(Financial Tables Follow)
Digital Generation, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ---------------------
2013 2012 2013 2012
-------- -------- --------- ---------
Revenues $ 96,316 $ 96,336 $ 188,293 $ 189,185
Cost of revenues 33,650 34,839 66,631 67,336
Research and development 5,122 5,713 10,030 11,845
Sales and marketing 17,464 14,704 34,715 28,135
General and administrative 9,020 10,658 17,443 21,882
-------- -------- --------- ---------
Operating expenses, excluding
depreciation and amortization,
share-based compensation and
acquisition, integration and
other expenses 65,256 65,914 128,819 129,198
-------- -------- --------- ---------
Adjusted EBITDA 31,060 30,422 59,474 59,987
Depreciation and amortization 13,731 13,632 28,735 26,861
Share-based compensation 3,207 4,906 6,425 9,377
Acquisition, integration and
other expenses 1,025 2,707 3,687 4,177
-------- -------- --------- ---------
Operating income 13,097 9,177 20,627 19,572
Other (income) expense, net 97 364 (77) 354
Interest expense 8,435 7,838 17,396 15,931
-------- -------- --------- ---------
Interest expense and other, net 8,532 8,202 17,319 16,285
-------- -------- --------- ---------
Income before income taxes from
continuing operations 4,565 975 3,308 3,287
Provision for income taxes 1,967 457 1,838 1,490
-------- -------- --------- ---------
Income from continuing
operations 2,598 518 1,470 1,797
Loss from discontinued
operations, net of tax -- (789) -- (1,080)
-------- -------- --------- ---------
Net income (loss) $ 2,598 $ (271) $ 1,470 $ 717
======== ======== ========= =========
Basic earnings (loss) per
share:
Continuing operations $ 0.09 $ 0.02 $ 0.05 $ 0.07
Discontinued operations -- (0.03) -- (0.04)
-------- -------- --------- ---------
Total $ 0.09 $ (0.01) $ 0.05 $ 0.03
======== ======== ========= =========
Diluted earnings (loss) per
share:
Continuing operations $ 0.09 $ 0.02 $ 0.05 $ 0.07
Discontinued operations -- (0.03) -- (0.04)
-------- -------- --------- ---------
Total $ 0.09 $ (0.01) $ 0.05 $ 0.03
======== ======== ========= =========
Weighted average common shares
outstanding:
Basic 27,753 27,458 27,711 27,334
Diluted 27,985 27,458 27,984 27,452
Digital Generation, Inc.
Unaudited Segment Information
(In thousands)
Three Months Ended June Three Months Ended June
30, 2013 30, 2012
-------------------------- --------------------------
Consolid- Consolid-
Television Online ated Television Online ated
-------- -------- -------- -------- -------- --------
Revenues $ 55,049 $ 41,267 $ 96,316 $ 61,601 $ 34,735 $ 96,336
Segment Adjusted
EBITDA before
corporate overhead 28,088 9,828 37,916 31,261 5,850 37,111
Less corporate
overhead (6,856) (6,689)
-------- --------
Adjusted EBITDA 31,060 30,422
Less:
Depreciation and
amortization (13,731) (13,632)
Share-based
compensation (3,207) (4,906)
Acquisition,
integration and
other (1,025) (2,707)
-------- --------
Income from
operations $ 13,097 $ 9,177
======== ========
Six Months Ended June 30, Six Months Ended June 30,
2013 2012
-------------------------- --------------------------
Consolid- Consolid-
Television Online ated Television Online ated
-------- -------- -------- -------- -------- --------
Revenues $112,957 $ 75,336 $188,293 $123,432 $ 65,753 $189,185
Segment Adjusted
EBITDA before
corporate overhead 58,021 14,111 72,132 65,453 7,186 72,639
Less corporate
overhead (12,658) (12,652)
-------- --------
Adjusted EBITDA 59,474 59,987
Less:
Depreciation and
amortization (28,735) (26,861)
Share-based
compensation (6,425) (9,377)
Acquisition,
integration and
other (3,687) (4,177)
-------- --------
Income from
operations $ 20,627 $ 19,572
======== ========
Digital Generation, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended
June 30,
-----------------------
2013 2012
---------- ----------
Cash flows from operating activities:
Net income $ 1,470 $ 717
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property and equipment 13,724 12,156
Amortization of intangibles 15,011 14,705
Deferred income taxes 2,279 (2,806)
Provision for accounts receivable losses 1,187 1,503
Share-based compensation 6,425 9,377
Loss on sale of Springbox unit -- 1,000
Other 746 423
Changes in operating assets and liabilities:
Accounts receivable 7,849 6,243
Other assets 3,967 2,995
Accounts payable and other liabilities (2,230) (15,435)
Deferred revenue 251 (579)
---------- ----------
Net cash provided by operating activities 50,679 30,299
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (5,697) (13,815)
Capitalized costs of developing software (7,526) (6,274)
Acquisitions, net of cash acquired -- (8,594)
Long-term investment -- (1,017)
Proceeds from sale of short-term investments 314 10,390
Other 1,117 1,037
---------- ----------
Net cash used in investing activities (11,792) (18,273)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of
costs 585 127
Payment of debt amendment costs (2,635) --
Repayments of capital leases and other (3,778) (266)
Repayments of long-term debt (59,800) (27,450)
---------- ----------
Net cash used in financing activities (65,628) (27,589)
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (1,778) 16
---------- ----------
Net decrease in cash and cash equivalents (28,519) (15,547)
Cash and cash equivalents at beginning of year 84,520 72,575
---------- ----------
Cash and cash equivalents at end of period $ 56,001 $ 57,028
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 14,231 $ 14,195
Cash (received) paid for income taxes $ (143) $ (1,112)
Non-cash component of purchase price to acquire
a business $ -- $ 5,645
Landlord lease incentives $ -- $ 5,599
Digital Generation, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2013 2012
------------- -------------
(unaudited)
Cash and short-term investments $ 56,001 $ 84,834
Accounts receivable, net 88,229 97,583
Property and equipment, net 64,894 66,169
Goodwill 368,148 369,137
Intangibles, net 164,525 180,156
Other 37,635 39,332
------------- -------------
Total assets $ 779,432 $ 837,211
============= =============
Accounts payable and accrued liabilities $ 37,864 $ 46,085
Deferred revenue 1,864 1,627
Deferred income taxes 30,445 28,065
Debt 394,743 453,918
Other 18,565 16,322
------------- -------------
Total liabilities 483,481 546,017
Total stockholders' equity 295,951 291,194
------------- -------------
Total liabilities and stockholders' equity $ 779,432 $ 837,211
============= =============
For more information contact: JoAnn Horne Market Street Partners
415/445-3233
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