DHI Group, Inc. Reports Second Quarter 2018 Earnings Results
New CEO Completes 100-Day Review, Affirms Growth Strategy
NEW YORK, New York August 2, 2018 - DHI Group, Inc. (NYSE: DHX) (“DHI” or the “Company”), today announced the following results for the second quarter ended June 30, 2018:
| |
| ▪ | Revenues of $41.6 million; Adjusted Revenues1 (excluding the effect of divested businesses) of $39.7 million |
| |
| ▪ | Net loss of $0.2 million, or $0.00 per share, which includes $2.6 million, or $0.05 per diluted share, from disposition related and other costs, a loss on the sale of Hcareers, and higher discrete tax expense related to the vesting of stock based compensation |
| |
| ▪ | Adjusted EBITDA1 of $7.5 million and Adjusted EBITDA margin1 of 19% |
"I have completed my 100-day review and I am genuinely excited about the prospects for our business," said Art Zeile, President and Chief Executive Officer of DHI Group, Inc. “What I have learned over the last three months has confirmed that our strategy for growth is the right one. Although competitive pressures are high, market conditions support a business model based on a specialized offering for technology professionals, which plays to our strengths. We are moving aggressively to streamline our business in order to capitalize on this opportunity. We are also carefully managing our profitability and have a strong balance sheet. We are confident that the combination of these factors will enable DHI to deliver superior value to its shareholders over the long-term."
Quarterly Financial Highlights
| |
| ▪ | Tech-focused revenues were $38.3 million, 2% lower year over year, including a 2 percentage point benefit from foreign exchange, but a 1% increase sequentially |
| |
| ▪ | Dice2 revenues were $23.5 million, an 8% decline year over year but a 1% increase sequentially |
| |
| ▪ | eFinancialCareers revenues were $8.5 million, up 6% year over year, including a 5 percentage point benefit from foreign exchange |
| |
| ▪ | ClearanceJobs revenues were $5.1 million, 23% higher year over year, the tenth consecutive quarter of greater than 20% year over year revenue growth |
| |
| ▪ | Divested Hcareers for $16.5 million, substantially completing the disposition of non-tech businesses |
| |
| ▪ | Improved metrics for Dice2 recruitment package customers |
| |
| ▪ | Increased quarterly revenue renewal rate to 78%, up 4 percentage points year over year and the highest rate since the third quarter of 2016 |
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| ▪ | 6,200 customers in the 2018 second quarter, an 8% decrease year over year but unchanged sequentially |
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| ▪ | Debt outstanding of $19 million as of June 30, 2018, down by 73% year over year |
1 See "Notes Regarding the Use of Non-GAAP Financial Measures" later in this press release.
2 Includes Targeted Job Fairs.
Quarterly Business Highlights
Dice
| |
| ▪ | Initiated beta testing of Talent Search 4.0, one of the most innovative enhancements to Dice's search capabilities in years. This new platform is scheduled for launch in September 2018. It incorporates Intellisearch and brings significant new workflow and candidate interaction features to recruiters in order to drive greater efficiencies in the time they spend searching for candidates. |
ClearanceJobs
| |
| ▪ | Reached a record of 37,000 jobs posted on the site during the 2018 second quarter, reflecting the industry-leading relevance of ClearanceJobs to sourcing candidates with government clearance. |
eFinancialCareers
| |
| ▪ | Launched new Job Search platform in 18 countries, offering candidates a better job search and match experience on both desktop and mobile devices. |
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| ▪ | Published the Ideal Employer rankings for the third consecutive year through Ideal Employer Live, reinforcing eFinancialCareers as a source of highly relevant content on employment trends among leading financial institutions. |
Summary Financial Results
($ in millions, except per share data)
|
| | | | | | | | | | | | | | |
| | | Q2 2018 | | Q2 2017 | | Change | | Fx Impact |
| Revenues | | | | | | | | |
| Tech-focused | | $ | 38.3 |
| | $ | 39.3 |
| | (2)% | | $ | 0.5 |
|
Healthcare (1) | | — |
| | 6.6 |
| | n.m. | | — |
Corporate & Other (1) | | 3.3 |
| | 6.6 |
| | (50)% | | — |
| Total Revenues | | $ | 41.6 |
| | $ | 52.4 |
| | (21)% | | $ | 0.5 |
|
| Net Income (Loss) | | $ | (0.2 | ) | | $ | 1.8 |
| | n.m. | | |
| Diluted earnings per share | | $ | — |
| | $ | 0.04 |
| | n.m. | | |
|
| | | | | | | | | | | | | | |
| | | YTD 2018 | | YTD 2017 | | Change | | Fx Impact |
| Revenues | | | | | | | | |
| Tech-focused | | $ | 76.3 |
| | $ | 78.8 |
| | (3)% | | $ | 1.4 |
|
Healthcare (1) | | — |
| | 13.3 |
| | n.m. | | — |
Corporate & Other (1) | | 8.4 |
| | 12.5 |
| | (33)% | | — |
| Total Revenues | | $ | 84.7 |
| | $ | 104.6 |
| | (19)% | | $ | 1.4 |
|
| Net Income | | $ | 3.3 |
| | $ | 3.2 |
| | 4% | | |
| Diluted earnings per share | | $ | 0.07 |
| | $ | 0.07 |
| | —% | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted Revenues (2) (3) | | Adjusted EBITDA (2) (3) | | Margin | | |
| Non-GAAP (2) (3) | | Q2 2018 | | Q2 2017 | | Change | | | Q2 2018 | | Q2 2017 | | Q2 2018 | | Q2 2017 | | |
| Tech-focused | | $ | 38.3 |
| | $ | 39.3 |
| | (2 | )% | | | $ | 10.3 |
| | $ | 13.5 |
| | 27 | % | | 34 | % | |
|
| Corporate and other | | 1.4 |
| | 1.3 |
| | (3 | )% | | | (2.8 | ) | | (4.2 | ) | | n.m. |
| | n.m. |
| |
|
| Total | | $ | 39.7 |
| | $ | 40.6 |
| | (2 | )% | | | $ | 7.5 |
| | $ | 9.3 |
| | 19 | % | | 23 | % | |
|
| | | | | | | | | |
|
| |
|
| | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | Adjusted Revenues (2) (3) | | Adjusted EBITDA (2) (3) | | Margin | | |
| Non-GAAP (2) (3) | | YTD 2018 | | YTD 2017 | | Change | | | YTD 2018 | | YTD 2017 | | YTD 2018 | | YTD 2017 | | |
| Tech-focused | | $ | 76.3 |
| | $ | 78.8 |
| | (3 | )% | | | $ | 21.1 |
| | $ | 27.3 |
| | 28 | % | | 35 | % | | |
| Corporate and other | | 2.6 |
| | 2.6 |
| | 1 | % | | | (5.7 | ) | | (8.5 | ) | | n.m. |
| | n.m. |
| | |
| Total | | $ | 78.9 |
| | $ | 81.4 |
| | (3 | )% | | | $ | 15.4 |
| | $ | 18.8 |
| | 20 | % | | 23 | % | | |
| | | | | | | | | | | | | | | | | | |
| (1) The Company sold Health eCareers on December 4, 2017, the RigLogix portion of the Rigzone business on February 20, 2018, and Hcareers on May 22, 2018. Transferred majority ownership of BioSpace to BioSpace management on January 31, 2018. |
(2) See "Notes Regarding the Use of Non-GAAP Financial Measures" later in this press release.
|
| (3) Reconciliations of Revenues to Adjusted Revenues and Net Income, Operating Income, and Operating Cash Flows to Adjusted EBITDA are included toward the end of this press release. |
Revenues
Revenues were $41.6 million for the 2018 second quarter, 21% lower year over year. The decrease was primarily attributable to the divestitures of the Company’s non-tech businesses, including the sale of Hcareers for $16.5 million in the 2018 second quarter. This sale substantially completed the Company’s divestiture process, consistent with its strategy to focus on bringing relevant career opportunities to technology professionals and qualified technology talent to employers.
The decrease was also due to an 8% year over year decline in Dice2 revenues, resulting from a decrease in recruitment package customers during the same period. Partially offsetting the year -over-year revenue decline was a 23% increase in ClearanceJobs revenues and a 6% increase in eFinancialCareers revenues, which included a 5 percentage point benefit from foreign exchange.
Operating Expenses
Operating expenses were $39.7 million for the 2018 second quarter, 18% lower year over year. The decrease was primarily attributable to a $10.5 million reduction from the divestitures of the Company's non-tech businesses and $0.8 million related to the ongoing Rigzone business. The decrease was partially offset by $3.1 million of increased operating costs in the Company's tech-focused business, primarily related to increased marketing, product development, professional fees (which are included in general and administrative expenses) and disposition related and other costs.
Income Tax Expense
The effective income tax rate for the 2018 second quarter was 137%. The increase above the Company’s expected effective tax rate of 25% was primarily caused by the vesting of stock based compensation during the quarter.
Net Loss
The Company recorded a net loss of $0.2 million for the 2018 second quarter, or $0.00 per share, due to lower revenues and increased expenses in its tech-focused business. Also contributing to the net loss were $2.6 million, or $0.05 per diluted share, of disposition related and other costs, a loss on the sale of Hcareers, and higher discrete tax expense related to the vesting of stock-based compensation.
Adjusted EBITDA and Adjusted EBITDA Margin1
Adjusted EBITDA1 excludes the effects of the Company’s divested businesses, disposition related and other costs, and loss on sale of businesses from both the current and prior year periods. This presentation provides for better comparability of results.
Adjusted EBITDA1 was $7.5 million for the 2018 second quarter, declining 20% year over year. This decrease was primarily attributable to lower revenues and higher operating expenses for the tech-focused business, and resulted in an Adjusted EBITDA margin1 of 19%.
1 See "Notes Regarding the Use of Non-GAAP Financial Measures" later in this press release.
2 Includes Targeted Job Fairs.
Operating Net Cash Flows
Operating net cash flows were $1.4 million for the 2018 second quarter, a decrease of $7.8 million year over year. The decline was attributable to lower net earnings of approximately $2 million and working capital changes of $5 million. Theses changes resulted from an adjustment to the Company's billing terms to bring them in line with market standards. This change did not impact the average length of our contract commitments, which remain slightly over one year.
Capital
Weighted average diluted shares outstanding in the 2018 second quarter was 49.9 million. In May 2018 the Company’s Board of Directors authorized a stock repurchase program that permits the purchase of up to $7 million of the Company's common stock. Under the plan, management has discretion in determining the conditions under which shares may be purchased. During the 2018 second quarter, the Company repurchased approximately 55,000 shares under this authorization. The authorization will remain in effect until May 2019, unless terminated earlier by the Company.
Repurchases will be made in accordance with applicable securities laws in the open market, in privately negotiated transactions or through other means. Depending on acquisition opportunities, market conditions and other factors, these repurchases may commence or cease from time to time without prior notice.
Business Outlook
The Company believes that the high demand for technology professionals and current competitive dynamics will continue. The Company expects a gradual abatement in the rate of revenue decline for Dice2 if current revenue renewal rates are maintained, and slightly slower top-line growth for ClearanceJobs due to higher year-over-year comparatives and the extremely tight labor market for cleared professionals. eFinancialCareers revenue trends are expected to continue for the near term. Expense management will remain an important focus, as will maintaining a 20% Adjusted EBITDA margin1 for the 2018 full year.
Recent Developments
The Company announced the closure of its Dice Europe operations effective August 31, 2018 to focus its efforts on eFinancialCareers, where the Company has a strong competitive opportunity to serve professionals in the financial services industry globally. The closure of Dice Europe is not expected to have an impact on DHI's results of operations in the 2018 third quarter or in future periods.
1 See "Notes Regarding the Use of Non-GAAP Financial Measures" later in this press release.
2 Includes Targeted Job Fairs.
Conference Call Information
Art Zeile, President and Chief Executive Officer, and Luc Grégoire, Chief Financial Officer, will host a conference call today, August 2, 2018, at 8:30 a.m. Eastern Time to discuss the Company’s financial results, recent developments, and progress on its tech-focused strategy.
The call can be accessed by dialing +1-844-890-1790 (in the U.S.) or +1-412-380-7407. (outside the U.S.). Please ask to join the DHI Group, Inc. call. The call will also be available as a webcast through the Investor Relations section of the Company’s website, http://www.dhigroupinc.com.
For those unable to listen to the live broadcast, a replay will be available one hour after the call and can be accessed by dialing +1-877-344-7529 (in the U.S.) or +1-412-317-0088 (outside the U.S.), passcode 10122512. The replay will be available until August 9, 2018.
Investor Contact
Arbor Advisory Group
212-448-4181
ir@dhigroupinc.com
Media Contact
Rachel Ceccarelli
Director of Corporate Communications
212-448-8288
media@dhigroupinc.com
About DHI Group, Inc.
DHI Group, Inc. (NYSE:DHX) is a leading provider of data, insights and employment connections through our specialized services for technology professionals and other select online communities. Our mission is to empower tech professionals and organizations to compete and win through expert insights and relevant employment connections. Employers and recruiters use our websites and services to source, hire and connect with the most qualified and highly-skilled tech professionals, while professionals use our websites and services to find ideal employment opportunities, relevant job advice and tailored career-related data. For over 25 years, we have built our Company on providing employers and professionals with career connections, news, tools and information. Today, we serve multiple markets located throughout North America, Europe, the Middle East and the Asia Pacific region.
Notes Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain non-GAAP financial information as additional information for its operating results. These measures are not in accordance with, or an alternative for, measurements in accordance with generally accepted accounting principles in the United States (“GAAP”) and may be different from similarly titled non-GAAP measures reported by other companies. The Company believes that its presentation of non-GAAP measures, such as Adjusted Revenues, adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock based compensation expense, other non-recurring income or expense (“Adjusted EBITDA”) and Adjusted EBITDA margin provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, the Company’s management uses these measures for reviewing the financial results of the Company and for budgeting and planning purposes. The non-GAAP measures apply to consolidated results and results by segment or other measure as shown within this document. The Company has provided required reconciliations to the most comparable GAAP measures elsewhere in the document.
Adjusted Revenues
Adjusted Revenues is a non-GAAP metric used by management to measure operating performance. Adjusted Revenues represents Revenues less the revenues of divested businesses. We consider Adjusted Revenues to be an important measure to evaluate the performance of our ongoing businesses and provide comparable results excluding our divestitures.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics used by management to measure operating performance. Management uses Adjusted EBITDA as a performance measure for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors. The Company also uses this measure to calculate amounts of performance based compensation under the senior management incentive bonus program. Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, non-cash stock based compensation, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those businesses, certain writeoffs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, transaction costs in connection with the credit agreement, deferred revenues written off in connection with acquisition purchase accounting adjustments, writeoff of non-cash stock compensation expense, severance and retention costs related to dispositions and reorganizations of the Company, losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, interest income, business interruption insurance proceeds, and any income or gain resulting from certain dispositions outside the ordinary course of business, including prior positive operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent.
The Company modified its definition of Adjusted EBITDA during the first quarter of 2018 to also exclude severance and retention costs related to dispositions or reorganizations of the Company, the prior operating results of divested businesses, and losses related to legal claims and fees that are unusual in nature or infrequent. The Company changed its definition of Adjusted EBITDA to provide a more transparent and comparable view of its financial performance. Accordingly, all prior periods presented have been recast to reflect the current definition.
We also consider Adjusted EBITDA, as defined above, to be an important indicator to investors because it provides information related to our ability to provide cash flows to meet future debt service, capital expenditures and working capital requirements and to fund future growth. We present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information to measure our performance, provide comparisons from period to period and company to company by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value.
Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Adjusted Revenues. Adjusted Revenues, Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to net income, operating income, revenue or any other performance measures derived in accordance with GAAP as a measure of our profitability.
Forward-Looking Statements
This press release and oral statements made from time to time by our representatives contain forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include, without limitation, information concerning our possible or assumed future results of operations. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to execute our tech-focused strategy, the review of potential dispositions of certain of our businesses and the terms and timing of any such transactions, competition from existing and future competitors in the highly competitive market in which we operate, failure to adapt our business model to keep pace with rapid changes in the recruiting and career services business, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers who purchase recruitment packages, cyclicality or downturns in the economy or industries we serve, the uncertainty surrounding the United Kingdom’s future departure from the European Union, including uncertainty in respect of the regulation of data protection and data privacy, failure to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, failure to successfully identify or integrate acquisitions, U.S. and foreign government regulation of the Internet and taxation, our ability to borrow funds under our revolving credit facility or refinance our indebtedness and restrictions on our current and future operations under such indebtedness. These factors and others are discussed in more detail in the Company’s filings with the Securities and Exchange Commission, all of which are available on the Investors page of our website at www.dhigroupinc.com, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should keep in mind that any forward-looking statement made by the Company or its representatives herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.
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| | | | | | | | | | | | | | | | | | |
| DHI GROUP, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| (in thousands except per share amounts) |
| | | | | | | | | | | |
| | | | | For the three months ended June 30, | | For the six months ended June 30, |
| | | | | 2018 | | 2017 | | 2018 | | 2017 |
| | | | | | | | | | | |
| Revenues | $ | 41,595 |
| | $ | 52,400 |
| | $ | 84,666 |
| | $ | 104,590 |
|
| | | | | | | | | | | |
| Operating expenses: | | | | | | | |
| Cost of revenues | 4,749 |
| | 7,668 |
| | 9,906 |
| | 15,065 |
|
| Product development | 5,129 |
| | 6,356 |
| | 10,592 |
| | 12,807 |
|
| Sales and marketing | 16,387 |
| | 19,751 |
| | 32,654 |
| | 39,650 |
|
| General and administrative | 8,787 |
| | 10,046 |
| | 19,169 |
| | 21,325 |
|
| Depreciation | 2,325 |
| | 2,819 |
| | 4,615 |
| | 5,127 |
|
| Amortization of intangible assets | 191 |
| | 571 |
| | 482 |
| | 1,132 |
|
| Disposition related and other costs | 2,118 |
| | 1,187 |
| | 3,129 |
| | 1,187 |
|
| | | Total operating expenses | 39,686 |
| | 48,398 |
| | 80,547 |
| | 96,293 |
|
| Gain (loss) on sale of businesses | (839 | ) | | — |
| | 3,800 |
| | — |
|
| Operating income | 1,070 |
| | 4,002 |
| | 7,919 |
| | 8,297 |
|
| Interest expense | (489 | ) | | (814 | ) | | (1,035 | ) | | (1,604 | ) |
| Other expense | (24 | ) | | 9 |
| | (33 | ) | | (7 | ) |
| Income before income taxes | 557 |
| | 3,197 |
| | 6,851 |
| | 6,686 |
|
| Income tax expense | 762 |
| | 1,375 |
| | 3,553 |
| | 3,524 |
|
| Net income (loss) | $ | (205 | ) | | $ | 1,822 |
| | $ | 3,298 |
| | $ | 3,162 |
|
| | | | | | | | | | | |
| Basic earnings per share | $ | — |
| | $ | 0.04 |
| | $ | 0.07 |
| | $ | 0.07 |
|
| Diluted earnings per share | $ | — |
| | $ | 0.04 |
| | $ | 0.07 |
| | $ | 0.07 |
|
| | | | | | | | | | | |
| Weighted average basic shares outstanding | 48,722 |
| | 47,953 |
| | 48,491 |
| | 47,775 |
|
| Weighted average diluted shares outstanding | 48,722 |
| | 48,268 |
| | 49,406 |
| | 48,308 |
|
| | | | | | | | | | | |
| | |
|
| | | | | | | | | | | | | | | | | |
| DHI GROUP, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| (in thousands) |
| | | | | | | | | | |
| | | | For the three months ended June 30, | | For the six months ended June 30, |
| | | | 2018 | | 2017 | | 2018 | | 2017 |
| Cash flows from operating activities: | | | | | | | |
| | Net income (loss) | $ | (205 | ) | | $ | 1,822 |
| | $ | 3,298 |
| | $ | 3,162 |
|
| Adjustments to reconcile net income to net cash flows from operating activities: | | | | | | | |
| | Depreciation | 2,325 |
| | 2,819 |
| | 4,615 |
| | 5,127 |
|
| | Amortization of intangible assets | 191 |
| | 571 |
| | 482 |
| | 1,132 |
|
| | Deferred income taxes | 458 |
| | 426 |
| | 540 |
| | 648 |
|
| | Amortization of deferred financing costs | 48 |
| | 81 |
| | 97 |
| | 162 |
|
| | Stock based compensation | 1,580 |
| | 2,086 |
| | 4,089 |
| | 4,588 |
|
| | Impairment of fixed and intangible assets | 168 |
| | — |
| | 168 |
| | — |
|
| | Change in accrual for unrecognized tax benefits | 100 |
| | 35 |
| | 320 |
| | 70 |
|
| | Net (gain) loss on sale of businesses | 839 |
| | — |
| | (3,800 | ) | | — |
|
| Changes in operating assets and liabilities: | | | | | | | |
| | Accounts receivable | 2,526 |
| | 6,205 |
| | 13,482 |
| | 11,231 |
|
| | Prepaid expenses and other assets | (275 | ) | | 412 |
| | 795 |
| | (1,082 | ) |
| | Capitalized contract costs | (360 | ) | | — |
| | (1,758 | ) | | — |
|
| | Accounts payable and accrued expenses | 2,162 |
| | 1,342 |
| | (3,845 | ) | | (1,007 | ) |
| | Income taxes receivable/payable | (1,109 | ) | | (2,883 | ) | | 567 |
| | (1,465 | ) |
| | Deferred revenue | (6,947 | ) | | (3,750 | ) | | (10,692 | ) | | 1,101 |
|
| | Other, net | (122 | ) | | 27 |
| | (61 | ) | | 45 |
|
| Net cash flows from operating activities | 1,379 |
| | 9,193 |
| | 8,297 |
| | 23,712 |
|
| Cash flows from (used in) investing activities: | | | | | | | |
| | Net cash received from sale of businesses | 14,022 |
| | — |
| | 17,542 |
| | — |
|
| | Purchases of fixed assets | (2,411 | ) | | (3,535 | ) | | (4,236 | ) | | (7,730 | ) |
| Net cash flows from (used in) investing activities | 11,611 |
| | (3,535 | ) | | 13,306 |
| | (7,730 | ) |
| Cash flows used in financing activities: | | | | | | | |
| | Payments on long-term debt | (22,000 | ) | | (7,000 | ) | | (28,000 | ) | | (15,000 | ) |
| | Proceeds from long-term debt | 3,000 |
| | — |
| | 5,000 |
| | — |
|
| | Payments under stock repurchase plan | (95 | ) | | — |
| | (95 | ) | | — |
|
| | Proceeds from stock option exercises | — |
| | — |
| | — |
| | 403 |
|
| | Purchase of treasury stock related to vested restricted stock | (142 | ) | | (17 | ) | | (467 | ) | | (1,109 | ) |
| Net cash flows used in financing activities | (19,237 | ) | | (7,017 | ) | | (23,562 | ) | | (15,706 | ) |
| Effect of exchange rate changes | (411 | ) | | 150 |
| | (560 | ) | | 193 |
|
| Net change in cash for the period | (6,658 | ) | | (1,209 | ) | | (2,519 | ) | | 469 |
|
| Cash, beginning of period | 16,207 |
| | 24,665 |
| | 12,068 |
| | 22,987 |
|
| Cash, end of period | $ | 9,549 |
| | $ | 23,456 |
| | $ | 9,549 |
| | $ | 23,456 |
|
|
| | | | | | | | | |
| DHI GROUP, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| (in thousands) |
| | | | | | |
| ASSETS | June 30, 2018 | | December 31, 2017 |
| Current assets | | | |
| | Cash | $ | 9,549 |
| | $ | 12,068 |
|
| | Accounts receivable, net | 21,980 |
| | 38,769 |
|
| | Income taxes receivable | 2,248 |
| | 2,617 |
|
| | Prepaid and other current assets | 7,709 |
| | 5,086 |
|
| | | Total current assets | 41,486 |
| | 58,540 |
|
| Fixed assets, net | 15,259 |
| | 16,147 |
|
| Acquired intangible assets, net | 39,000 |
| | 45,737 |
|
| Capitalized contract costs | 6,806 |
| | — |
|
| Goodwill | 156,174 |
| | 170,791 |
|
| Deferred income taxes | 307 |
| | 469 |
|
| Other assets | 2,501 |
| | 4,034 |
|
| | | Total assets | $ | 261,533 |
| | $ | 295,718 |
|
| | | | | | |
| | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities | | | |
| | Accounts payable and accrued expenses | $ | 18,244 |
| | $ | 22,196 |
|
| | Deferred revenue | 64,194 |
| | 83,646 |
|
| | Income taxes payable | 1,268 |
| | 1,129 |
|
| | | Total current liabilities | 83,706 |
| | 106,971 |
|
| Long-term debt, net | 18,547 |
| | 41,450 |
|
| Deferred income taxes | 8,434 |
| | 8,245 |
|
| Deferred revenue | 1,737 |
| | — |
|
| Income taxes payable | 1,489 |
| | 1,489 |
|
| Accrual for unrecognized tax benefits | 3,179 |
| | 2,859 |
|
| Other long-term liabilities | 1,996 |
| | 2,063 |
|
| | | Total liabilities | 119,088 |
| | 163,077 |
|
| | | Total stockholders’ equity | 142,445 |
| | 132,641 |
|
| | | Total liabilities and stockholders’ equity | $ | 261,533 |
| | $ | 295,718 |
|
| | | | | | |
Supplemental Information and Non-GAAP Reconciliations
On the pages that follow, the Company has provided certain supplemental information that we believe will assist the reader in assessing our business operations and performance, including certain non-GAAP financial information and required reconciliations to the most comparable GAAP measure. A statement of operations and statement of cash flows for the three and six month periods ended June 30, 2018 and 2017 and a balance sheet as of June 30, 2018 and December 31, 2017 are provided elsewhere in this press release.
|
| | | | | | | | | | | | | | | | |
| DHI GROUP, INC. |
| NON-GAAP SUPPLEMENTAL DATA |
| (Unaudited) |
| (dollars in thousands except per customer data) |
| | | | | | | | | |
| | | | | | | | | |
| | | For the three months ended June 30, | | For the six months ended June 30, |
| | | 2018 | | 2017 | | 2018 | | 2017 |
| Reconciliation of Net Income to Adjusted EBITDA: | | | | | | | |
| Net income (loss) | $ | (205 | ) | | $ | 1,822 |
| | $ | 3,298 |
| | $ | 3,162 |
|
| | Interest expense | 489 |
| | 814 |
| | 1,035 |
| | 1,604 |
|
| | Income tax expense | 762 |
| | 1,375 |
| | 3,553 |
| | 3,524 |
|
| | Depreciation | 2,325 |
| | 2,819 |
| | 4,615 |
| | 5,127 |
|
| | Amortization of intangible assets | 191 |
| | 571 |
| | 482 |
| | 1,132 |
|
| | Non-cash stock based compensation | 1,580 |
| | 2,086 |
| | 4,089 |
| | 4,588 |
|
| | (Gain) loss on sale of businesses | 839 |
| | — |
| | (3,800 | ) | | — |
|
| | Costs related to strategic alternatives process | — |
| | (23 | ) | | — |
| | 807 |
|
| | Disposition related and other costs | 2,118 |
| | 1,187 |
| | 3,129 |
| | 1,187 |
|
| | Legal contingencies and fees | 232 |
| | 325 |
| | 1,620 |
| | 475 |
|
| | Divested businesses | (887 | ) | | (1,646 | ) | | (2,609 | ) | | (2,857 | ) |
| | Other | 24 |
| | (9 | ) | | 34 |
| | 7 |
|
| Adjusted EBITDA | $ | 7,468 |
| | $ | 9,321 |
| | $ | 15,446 |
| | $ | 18,756 |
|
| | | | | | | | |
| Reconciliation of Operating Cash Flows to Adjusted EBITDA: | | | | | | | |
| Net cash provided by operating activities | $ | 1,379 |
| | $ | 9,193 |
| | $ | 8,297 |
| | $ | 23,712 |
|
| | Interest expense | 489 |
| | 814 |
| | 1,035 |
| | 1,604 |
|
| | Amortization of deferred financing costs | (48 | ) | | (81 | ) | | (97 | ) | | (162 | ) |
| | Income tax expense | 762 |
| | 1,375 |
| | 3,553 |
| | 3,524 |
|
| | Deferred income taxes | (458 | ) | | (426 | ) | | (540 | ) | | (648 | ) |
| | Change in accrual for unrecognized tax benefits | (100 | ) | | (35 | ) | | (320 | ) | | (70 | ) |
| | Change in accounts receivable | (2,526 | ) | | (6,205 | ) | | (13,482 | ) | | (11,231 | ) |
| | Change in deferred revenue | 6,947 |
| | 3,750 |
| | 10,692 |
| | (1,101 | ) |
| | Costs related to strategic alternatives process | — |
| | (23 | ) | | — |
| | 807 |
|
| | Disposition related and other costs | 2,118 |
| | 1,187 |
| | 3,129 |
| | 1,187 |
|
| | Legal contingencies and fees | 232 |
| | 325 |
| | 1,620 |
| | 475 |
|
| | Divested businesses | (887 | ) | | (1,646 | ) | | (2,609 | ) | | (2,857 | ) |
| | Changes in working capital and other | (440 | ) | | 1,093 |
| | 4,168 |
| | 3,516 |
|
| Adjusted EBITDA | $ | 7,468 |
| | $ | 9,321 |
| | $ | 15,446 |
| | $ | 18,756 |
|
| | | | | | | | | |
| | | | | | | | | |
| Dice Recruitment Package Customers | | | | | | | |
| Beginning of period | 6,200 |
| | 6,800 |
| | 6,450 |
| | 7,050 |
|
| End of period | 6,200 |
| | 6,750 |
| | 6,200 |
| | 6,750 |
|
| | | | | | | | | |
| Average for the period (1) | 6,200 |
| | 6,750 |
| | 6,250 |
| | 6,800 |
|
| | | | | | | | | |
Dice Average Monthly Revenue per
Recruitment Package Customer (2) | $ | 1,110 |
| | $ | 1,108 |
| | $ | 1,111 |
| | $ | 1,109 |
|
| | | | | | | | | |
| | | | | | | | | |
(1) Reflects the daily average of recruitment package customers during the period. |
(2) Reflects the simple average of each period presented. |
|
| | | | | | | | | | | | | | | | |
| DHI GROUP, INC. |
| NON-GAAP SUPPLEMENTAL DATA (CONTINUED) |
| (Unaudited) |
| (in thousands) |
| | | | | | | | | |
| | | For the three months ended June 30, 2018 |
| Reconciliation of Operating Income (Loss) to Adjusted EBITDA: | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Operating income (loss) | $ | 6,330 |
| | $ | — |
| | $ | (5,260 | ) | | $ | 1,070 |
|
| | Depreciation | 2,210 |
| | — |
| | 115 |
| | 2,325 |
|
| | Amortization of intangible assets | — |
| | — |
| | 191 |
| | 191 |
|
| | Non-cash stock based compensation expense | 610 |
| | — |
| | 970 |
| | 1,580 |
|
| | Disposition related and other costs | 1,103 |
| | — |
| | 1,015 |
| | 2,118 |
|
| | Legal contingencies and fees | — |
| | — |
| | 232 |
| | 232 |
|
| | Divested businesses | — |
| | — |
| | (887 | ) | | (887 | ) |
| | Loss on sale of businesses | — |
| | — |
| | 839 |
| | 839 |
|
| Adjusted EBITDA | $ | 10,253 |
| | $ | — |
| | $ | (2,785 | ) | | $ | 7,468 |
|
| | | | | | | | | |
| | | For the three months ended June 30, 2017 |
| Reconciliation of Operating Income (Loss) to Adjusted EBITDA: | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Operating income (loss) | $ | 10,117 |
| | $ | (642 | ) | | $ | (5,473 | ) | | $ | 4,002 |
|
| | Depreciation | 1,792 |
| | 537 |
| | 490 |
| | 2,819 |
|
| | Amortization of intangible assets | 45 |
| | 163 |
| | 363 |
| | 571 |
|
| | Non-cash stock based compensation expense | 696 |
| | 141 |
| | 1,249 |
| | 2,086 |
|
| | Disposition related and other costs | 838 |
| | 123 |
| | 226 |
| | 1,187 |
|
| | Legal contingencies and fees | — |
| | — |
| | 325 |
| | 325 |
|
| | Divested businesses | — |
| | (322 | ) | | (1,324 | ) | | (1,646 | ) |
| | Other | — |
| | — |
| | (23 | ) | | (23 | ) |
| Adjusted EBITDA | $ | 13,488 |
| | $ | — |
| | $ | (4,167 | ) | | $ | 9,321 |
|
| | | | | | | | | |
| | | For the six months ended June 30, 2018 |
| Reconciliation of Operating Income (Loss) to Adjusted EBITDA: | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Operating income (loss) | $ | 13,413 |
| | $ | — |
| | $ | (5,494 | ) | | $ | 7,919 |
|
| | Depreciation | 4,351 |
| | — |
| | 264 |
| | 4,615 |
|
| | Amortization of intangible assets | — |
| | — |
| | 482 |
| | 482 |
|
| | Non-cash stock based compensation expense | 1,126 |
| | — |
| | 2,963 |
| | 4,089 |
|
| | Disposition related and other costs | 1,233 |
| | — |
| | 1,896 |
| | 3,129 |
|
| | Legal contingencies and fees | 1,000 |
| | — |
| | 620 |
| | 1,620 |
|
| | Divested businesses | — |
| | — |
| | (2,609 | ) | | (2,609 | ) |
| | Gain on sale of businesses | — |
| | — |
| | (3,800 | ) | | (3,800 | ) |
| | Other | — |
| | — |
| | 1 |
| | 1 |
|
| Adjusted EBITDA | $ | 21,123 |
| | $ | — |
| | $ | (5,677 | ) | | $ | 15,446 |
|
| | | | | | | | | |
| | | For the six months ended June 30, 2017 |
| Reconciliation of Operating Income (Loss) to Adjusted EBITDA: | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Operating income (loss) | $ | 21,215 |
| | $ | (1,092 | ) | | $ | (11,826 | ) | | $ | 8,297 |
|
| | Depreciation | 3,355 |
| | 1,045 |
| | 727 |
| | 5,127 |
|
| | Amortization of intangible assets | 80 |
| | 325 |
| | 727 |
| | 1,132 |
|
| | Non-cash stock based compensation expense | 1,768 |
| | 273 |
| | 2,547 |
| | 4,588 |
|
| | Costs related to strategic alternative process | — |
| | — |
| | 807 |
| | 807 |
|
| | Disposition related and other costs | 838 |
| | 123 |
| | 226 |
| | 1,187 |
|
| | Legal contingencies and fees | — |
| | — |
| | 475 |
| | 475 |
|
| | Divested businesses | — |
| | (674 | ) | | (2,183 | ) | | (2,857 | ) |
| Adjusted EBITDA | $ | 27,256 |
| | $ | — |
| | $ | (8,500 | ) | | $ | 18,756 |
|
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | For the three months ended June 30, 2018 |
| Reconciliation of Revenues to Adjusted Revenues | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Revenues | $ | 38,344 |
| | $ | — |
| | $ | 3,251 |
| | $ | 41,595 |
|
| | Divested businesses | — |
| | — |
| | (1,936 | ) | | (1,936 | ) |
| Adjusted Revenues | $ | 38,344 |
| | $ | — |
| | $ | 1,315 |
| | $ | 39,659 |
|
| | | | | | | | | |
| | | For the three months ended June 30, 2017 |
| Reconciliation of Revenues to Adjusted Revenues | Tech | | Healthcare | | Corporate & Other | | Total |
| Revenues | $ | 39,276 |
| | $ | 6,565 |
| | $ | 6,559 |
| | $ | 52,400 |
|
| | Divested businesses | — |
| | (6,565 | ) | | (5,205 | ) | | (11,770 | ) |
| Adjusted Revenues | $ | 39,276 |
| | $ | — |
| | $ | 1,354 |
| | $ | 40,630 |
|
| | | | | | | | | |
| | | For the six months ended June 30, 2018 |
| Reconciliation of Revenues to Adjusted Revenues | Tech-focused | | Healthcare | | Corporate & Other | | Total |
| Revenues | $ | 76,285 |
| | $ | — |
| | $ | 8,381 |
| | $ | 84,666 |
|
| | Divested businesses | — |
| | — |
| | (5,814 | ) | | (5,814 | ) |
| Adjusted Revenues | $ | 76,285 |
| | $ | — |
| | $ | 2,567 |
| | $ | 78,852 |
|
| | | | | | | | | |
| | | For the six months ended June 30, 2017 |
| Reconciliation of Revenues to Adjusted Revenues | Tech | | Healthcare | | Corporate & Other | | Total |
| Revenues | $ | 78,825 |
| | $ | 13,279 |
| | $ | 12,486 |
| | $ | 104,590 |
|
| | Divested businesses | — |
| | (13,279 | ) | | (9,949 | ) | | (23,228 | ) |
| Adjusted Revenues | $ | 78,825 |
| | $ | — |
| | $ | 2,537 |
| | $ | 81,362 |
|
|
| | | | | | | | |
| Segment Definitions: | | | | | | | |
| Tech-focused: Dice, Dice Europe, eFinancialCareers, ClearanceJobs, and Targeted Job Fairs. |
| Healthcare: Health eCareers | | | | |
| Corporate & Other: Hcareers, Rigzone, BioSpace, getTalent, and Corporate. |
| |
| | | | | | | | | |
|
| | | | | | | | | | | | | | |
| DHI GROUP, INC. |
| SUPPLEMENTAL DATA - REVENUE DETAIL |
| (Unaudited) |
| (in thousands) |
| | | Revenue |
| | | Q2 2018 |
| | Q2 2017 |
| | Change | | $ Fx Impact |
| Dice (1) | | $ | 23,489 |
| | $ | 25,425 |
| | (8)% | | $ | — |
|
| eFinancialCareers | | 8,467 |
| | 7,978 |
| | 6% | | 410 |
|
| ClearanceJobs | | 5,133 |
| | 4,185 |
| | 23% | | — |
|
| Dice Europe | | 1,255 |
| | 1,688 |
| | (26)% | | 85 |
|
| Tech-focused | | 38,344 |
| | 39,276 |
| | (2)% | | 495 |
|
| Healthcare (2) | | — |
| | 6,565 |
| | n.m. | | — |
|
| Hcareers (2) | | 1,936 |
| | 3,791 |
| | (49)% | | — |
|
| Rigzone (2) | | 1,315 |
| | 1,785 |
| | (26)% | | 15 |
|
| BioSpace (2) | | — |
| | 950 |
| | n.m. | | — |
|
| getTalent | | — |
| | 33 |
| | n.m. | | — |
|
| Corporate & Other | | 3,251 |
| | 6,559 |
| | (50)% | | 15 |
|
| Total | | $ | 41,595 |
| | $ | 52,400 |
| | (21)% | | $ | 510 |
|
| | | | | | | | | |
| | | Revenue |
| | | YTD 2018 |
| | YTD 2017 |
| | Change | | $ Fx Impact |
| Dice (1) | | $ | 46,771 |
| | $ | 51,304 |
| | (9)% | | $ | — |
|
| eFinancialCareers | | 17,030 |
| | 15,836 |
| | 8% | | 1,156 |
|
| ClearanceJobs | | 9,937 |
| | 8,178 |
| | 22% | | — |
|
| Dice Europe | | 2,547 |
| | 3,507 |
| | (27)% | | 240 |
|
| Tech-focused | | 76,285 |
| | 78,825 |
| | (3)% | | 1,396 |
|
| Healthcare (2) | | — |
| | 13,279 |
| | n.m. | | — |
|
| Hcareers (2) | | 5,329 |
| | 7,361 |
| | (28)% | | — |
|
| Rigzone (2) | | 2,840 |
| | 3,446 |
| | (18)% | | 54 |
|
| BioSpace (2) | | 212 |
| | 1,619 |
| | n.m. | | — |
|
| getTalent | | — |
| | 60 |
| | n.m. | | — |
|
| Corporate & Other | | 8,381 |
| | 12,486 |
| | (33)% | | 54 |
|
| Total | | $ | 84,666 |
| | $ | 104,590 |
| | (19)% | | $ | 1,450 |
|
| | | | | | | | | |
| (1) Includes Dice U.S. and Targeted Job Fairs |
| (2) Health eCareers was sold on December 4, 2017, BioSpace business was transferred to BioSpace management on January 31, 2018, the RigLogix portion of the Rigzone business was sold on February 20, 2018, and Hcareers was sold on May 22, 2018. |
