5711 S 86TH CIR • PO BOX 27347 • Omaha NE 68127-0347
Executive Office: (402) 596-8900 • Fax (402) 592-4006
Internet: www.infoUSA.com
FOR IMMEDIATE RELEASE
October 14, 2004
CONTACT:
VIN GUPTA – CHAIRMAN & CHIEF EXECUTIVE OFFICER
Phone: (402) 596-8900 • Fax: (402) 339-0265
E-Mail: vin.gupta@infoUSA.com
RAJ DAS – CHIEF FINANCIAL OFFICER
Phone: (402) 593-4517 • Fax: (402) 339-0265
E-Mail: raj.das@infoUSA.com
LAUREL GUPTA – DIRECTOR, INVESTOR RELATIONS
Phone: (402) 593-4535 • Fax: (402) 339-0265
E-Mail: laurel.gupta@infousa.com
infoUSA Reports Record Revenue and Strong Results for Fiscal 2004 Third Quarter
• | GAAP Revenue of $90.2 Million, up 17% from last year, exceeds consensus Wall Street estimate | |||
• | GAAP EPS of 10 cents, up 43% from last year, exceeds consensus Wall Street estimate | |||
• | Confirms previous revenue and EPS guidance for 2004 and 2005 |
(OMAHA, NE) —infoUSA® (Nasdaq: IUSA). The following table presents the financial results, key financial highlights of the company’s operations, and selected balance sheet items for the third quarter of 2004 ending on September 30, 2004.
3rd Quarter | 3rd Quarter | Year-to-date | Year-to-date | |||||||||||||
(amounts in thousands, except per share amounts) | 2003 | 2004 | 2003 | 2004 | ||||||||||||
Net sales | $ | 77,379 | $ | 90,172 | $ | 232,290 | $ | 254,777 | ||||||||
EBITDA (see table on income statement) | 14,902 | 18,515 | 55,250 | 49,467 | ||||||||||||
Operating income | 9,742 | 10,760 | 39,199 | 30,041 | ||||||||||||
Net income | 3,632 | 5,045 | 15,212 | 13,130 | ||||||||||||
Diluted earnings per share | 7 cents | 10 cents | 30 cents | 25 cents | ||||||||||||
Total debt | 153,387 | 220,599 | 153,387 | 220,599 | ||||||||||||
Capital expenditures (see table on income statement) | 2,531 | 2,092 | 5,400 | 5,615 | ||||||||||||
Cash Flow from Operations | 10,175 | 19,575 | 37,544 | 45,791 | ||||||||||||
Accounts receivable (DSO) (1) | 43 | 47 | 42 | 46 |
(1) Excludes accounts receivable and sales of OneSource and brokerage portion of Walter Karl.
RESULTS OF OPERATIONS
Vin Gupta, Chairman and CEO,infoUSA, said, “During the third quarter of 2004, we achieved record revenues of $90.2 million, up 17% versus last year. We were able to grow our revenues through strong organic results as well as successful integration of our recent acquisitions. Our third quarter reported revenues were negatively impacted by approximately $10 million of adjustments related to acquisition accounting of OneSource and conversion of a portion of ourinfoUSA Group business to subscription format. Our third quarter EBITDA was $18.5 million or 21% of revenues. EBITDA for the third quarter was negatively impacted by aforementioned accounting adjustments of approximately $10 million. We have generated $40.2 million of free cash flow (calculated as cash flow from operations less capital expenditures) for the nine months year to date. Our GAAP earnings per share for the quarter were approximately 10 cents, a growth of 43% versus last year. Our results for the quarter exceeded consensus Wall Street estimates. These results have positioned us well to meet or exceed our previous revenue and EPS guidance for fiscal 2004 and fiscal 2005.”
Gupta continued, “We were very satisfied with our third quarter performance. We have fully integrated our three acquired companies, i.e., OneSource, Edith Roman and Triplex. Their contribution to our cash flow has been better than expected.”
“Our recently launched ‘Unlimited Sales Leads and Mailing List’ service called Sales Genie™ has been a real hit with small businesses. Now they have access to unlimited sales leads for only $250 per month. They also get free and integrated contact management software and mapping capability. Our strategy of migrating our small business customers from one-time purchasers of sales leads to a subscription based service will be a key growth driver ofinfoUSA.”
“Our Donnelley Group consists of Donnelley Marketing, OneSource, Walter Karl, Edith Roman, Yesmail, CatalogVision and Triplex. Their third quarter revenue grew organically by 3%, better than we had hoped for. With the integration of recent acquisitions completed faster than anticipated, Ray Butkus is preparing for better than 5% organic revenue growth in 2005.”
“Due to our cost cuts, we have been able to achieve our historical EBITDA margin levels again. We feel confident that we can deliver expected internal growth and EBITDA margins to our shareholders going forward.”
Gupta concluded, “We have built a strong management team whose dedication and commitment will enable us to provide solid growth to our shareholders. We have the highest quality database of consumers and businesses in the U.S. and Canada. The database has many different applications for small businesses, non-profit organizations, and governmental entities and Fortune 1000 companies. We also control our distribution channel with our sales force of over 1,000 sales executives. We feel confident that our recent initiatives around subscription products will lead us to the next level of growth.”
Highlights of Third Quarter:
Net sales for the third quarter were $90.2 million compared to $77.4 million for the third quarter of 2003. EBITDA for the third quarter was $18.5 million, or 21% of net sales, compared to $14.9 million, or 19% of net sales, for the third quarter of last year. EBITDA for the third quarter was impacted negatively by following two accounting adjustments: (i) non-recognizable deferred revenue from OneSource acquisition of $4.4 million and (ii) deferral of approximately $5.2 million of revenues from accounting for our subscription product revenue. The increase in EBITDA margin for the third quarter is attributable to: (i) margin expansion in our core business through strict cost cutting initiatives and (ii) successful integration of our recent acquisitions.
Third quarter GAAP earnings per share were 10 cents versus earnings per share of 7 cents for the third quarter of 2003. The aforementioned factors contributed to the growth of earnings per share. Free cash flow (cash flow from operations less capital expenditures) for fiscal third quarter was $17.5 million, or 19% of net sales, compared to $7.6 million, or 10% of net sales, for the prior year period. Free cash flow for nine months year to date was $40.2 million, or 16% of net sales, compared to $32.1, or 14% of net sales, for the prior year period.
Deferred revenue liability on the balance sheet as of September 30, 2004 was $44.1 million, an important measure of contractually obligated revenue for the company. The company also had an incremental $39.4 million of unbilled contractually obligated revenue at the end of the quarter that is not reflected on the balance sheet. Deferred revenue on the balance sheet combined with the unbilled contractually obligated revenue provides a good measure of the pipeline business for the company over next twelve months.
OPERATING HIGHLIGHTS
The Donnelley Group (Large Business Group)
The Donnelley Group, previously known as the Large Business Group, reported third quarter 2004 revenues of $57.4 million, up 45% from the comparable quarter of 2003. Much of the growth was due to the recent acquisition of Triplex, OneSource, and Edith Roman, which have provided better than expected contributions to our operating margins. Our organic revenue growth in this segment was 3% for the quarter. Under the leadership of Ray Butkus, the Donnelley Group is totally focused on cross-selling our various products and services to customers, and long-term organic revenue growth of over 5%.
TheinfoUSA Group (Small Business Group)
TheinfoUSA Group, formerly known as the Small Business Group, reported 2004 third quarter revenues of $32.8 million, down 13% from the third quarter of last year. The primary reason for the decline was the impact from subscription accounting during the third quarter of approximately $5.2 million. This Group consists of approximately 20 small business units that offer directory products, vertical databases, online sales leads, custom sales leads and products for sales people and SOHO markets. Most of these divisions are being very successful in migrating a significant portion of their business to subscription products. Conversions from one-time sales to this subscription format have caused this Group to experience short-term reductions in reported GAAP revenue due to accounting for subscription products because revenue from subscriptions are recognized over the subscription period instead of at the time of sale. Our recently introduced Sales Genie™, SalesLeadsUSA™, and Credit.Net™ products have been embraced by the small business marketplace. They also provide the critical impetus for our long-term goal of over 10% organic revenue growth forinfoUSA Group.
Conference Call
The company will host its third quarter conference call on October 15th, at 11:00 AM Eastern time. To access the conference call, please dial 719/457-2601, passcode #860900, approximately 10 minutes prior to the start of the call. A replay of the call will be available from 1:00 PM Eastern time, October 15th, through midnight Eastern Time, October 22nd. The replay number is 719/457-0820, passcode # 860900. A live webcast of the conference call will be available at the company’s web site, http://www.infousa.com, by clicking on the “About Us” tab on the bottom ofinfoUSA Home Page, followed by the ‘Third Quarter Conference Call’ button.
AboutinfoUSA
infoUSA (www.infoUSA.com), founded in 1972, is the leading provider of business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Content is the essential ingredient in every marketing program, andinfoUSA has the most comprehensive data in the industry, and is the only company to own a proprietary database of 250 million consumers and 14 million businesses under one roof. TheinfoUSA database powers the directory services of the top Internet traffic-generating sites. Nearly 3 million customers useinfoUSA’s products and services to find new customers, grow their sales, and for other direct marketing, telemarketing, customer analysis and credit reference purposes.infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at (402) 593-4500.
Statements in this announcement other than historical data and information constitute forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, but are not limited to, recent changes in senior management, the successful integration of recent and future acquisitions, fluctuations in operating results, failure to successfully carry out our Internet strategy or to grow our Internet revenue, effects of leverage, changes in technology and increased competition. More information about potential factors that could affect the company’s business and financial results is included in the company’s filings with the Securities and Exchange Commission.
(INCOME STATEMENT FOLLOWS)
infoUSA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
FOR THE NINE MONTHS | ||||||||||||||||
FOR THE QUARTER ENDED | ENDED | |||||||||||||||
Sept 30, | Sept 30, | Sept 30, | Sept 30, | |||||||||||||
2003 | 2004 | 2003 | 2004 | |||||||||||||
(unaudited) | ||||||||||||||||
Net sales | $ | 77,379 | $ | 90,172 | $ | 232,290 | $ | 254,777 | ||||||||
Costs and expenses: | ||||||||||||||||
Database and production costs | 21,416 | 27,634 | 64,556 | 76,318 | ||||||||||||
Selling, general and administrative | 36,827 | 43,046 | 103,825 | 123,246 | ||||||||||||
Depreciation and amortization of operating assets | 3,696 | 3,523 | 11,254 | 10,397 | ||||||||||||
Amortization of intangible assets | 3,310 | 4,409 | 9,960 | 11,471 | ||||||||||||
Non-cash stock compensation | 76 | (45 | ) | 145 | 595 | |||||||||||
Restructuring costs | 645 | 766 | 1,630 | 2,388 | ||||||||||||
Litigation settlement charge | 1,667 | 0 | 1,667 | 0 | ||||||||||||
Acquisition costs | 0 | 79 | 54 | 321 | ||||||||||||
67,637 | 79,412 | 193,091 | 224,736 | |||||||||||||
Operating income | 9,742 | 10,760 | 39,199 | 30,041 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment income (loss) | 394 | (177 | ) | 1,222 | (219 | ) | ||||||||||
Other charges – Note 1 | (2,240 | ) | 0 | (6,385 | ) | (2,223 | ) | |||||||||
Interest expense | (2,243 | ) | (2,447 | ) | (9,500 | ) | (6,422 | ) | ||||||||
Income before income taxes | 5,653 | 8,136 | 24,536 | 21,177 | ||||||||||||
Income taxes | 2,021 | 3,091 | 9,324 | 8,047 | ||||||||||||
Net income | $ | 3,632 | $ | 5,045 | $ | 15,212 | $ | 13,130 | ||||||||
BASIC & DILUTED EARNINGS PER SHARE: | ||||||||||||||||
Basic earnings per share | $ | 0.07 | $ | 0.10 | $ | 0.30 | $ | 0.25 | ||||||||
Diluted earnings per share | $ | 0.07 | $ | 0.10 | $ | 0.30 | $ | 0.25 | ||||||||
Basic weighted average shares outstanding | 51,676 | 53,005 | 51,351 | 52,630 | ||||||||||||
Diluted weighted average shares outstanding | 52,357 | 53,317 | 51,453 | 53,123 | ||||||||||||
The following provides a reconciliation of net income to EBITDA:
FOR THE QUARTER | FOR THE NINE | |||||||||||||||
ENDED | MONTHS ENDED | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2003 | 2004 | 2003 | 2004 | |||||||||||||
Net income | $ | 3,632 | $ | 5,045 | $ | 15,212 | $ | 13,130 | ||||||||
Interest expense | 2,243 | 2,447 | 9,500 | 6,422 | ||||||||||||
Income taxes | 2,021 | 3,091 | 9,324 | 8,047 | ||||||||||||
Depreciation and amortization of operating assets | 3,696 | 3,523 | 11,254 | 10,397 | ||||||||||||
Amortization of intangible assets | 3,310 | 4,409 | 9,960 | 11,471 | ||||||||||||
EBITDA | $ | 14,902 | $ | 18,515 | $ | 55,250 | $ | 49,467 | ||||||||
The following provides a schedule of Capital Expenditures:
FOR THE QUARTER | FOR THE NINE | |||||||||||||||
ENDED | MONTHS ENDED | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2003 | 2004 | 2003 | 2004 | |||||||||||||
Purchases of Property of Equipment | $ | 2,025 | $ | 1,230 | $ | 4,657 | $ | 3,721 | ||||||||
Software and Database Development Costs | 506 | 862 | 743 | 1,894 | ||||||||||||
Capital Expenditures | $ | 2,531 | $ | 2,092 | $ | 5,400 | $ | 5,615 | ||||||||
The following provides a reconciliation of Cash Flow from Operations to Free Cash Flow:
FOR THE QUARTER | FOR THE NINE | ||||||||||||||||||
ENDED | MONTHS ENDED | ||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
2003 | 2004 | 2003 | 2004 | ||||||||||||||||
Cash Flow from Operations | $ | 10,175 | $ | 19,575 | $ | 37,544 | $ | 45,791 | |||||||||||
Less: | |||||||||||||||||||
Capital Expenditures | (2,531 | ) | (2,092 | ) | (5,400 | ) | (5,615 | ) | |||||||||||
Free Cash Flow | $ | 7,644 | $ | 17,483 | $ | 32,144 | $ | 40,176 | |||||||||||
infoUSA INC. AND SUBSIDIARIES
Selected Balance Sheet Amounts
(In thousands, except per share amounts)
The following table presents selected balance sheet account information as of September 30, 2004, compared to December 31, 2003.
December 31, | September 30, | |||||||
(amounts in thousands) | 2003 | 2004 | ||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 2,686 | $ | 10,101 | ||||
Accounts Receivable | 40,922 | 46,960 | ||||||
Accounts Receivable-List Brokerage | 12,844 | 21,280 | ||||||
Deferred Marketing Costs | 5,457 | 2,621 | ||||||
Property and Equipment, net | 40,984 | 43,452 | ||||||
Intangible Assets, net | 247,609 | 370,161 | ||||||
Liabilities | ||||||||
Accounts Payable | 16,212 | 16,373 | ||||||
Accounts Payable-List Brokerage | 9,516 | 16,914 | ||||||
Accrued Payroll Expenses | 17,793 | 16,812 | ||||||
Accrued Expenses | 824 | 6,964 | ||||||
Deferred Revenue | 19,824 | 44,119 | ||||||
Total Debt | 139,765 | 220,599 |