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Filed by Autoweb.com, Inc. (Commission File No. 000-25577)
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: autobytel.com inc.
(Commission File No. 000-22239)
AUTOWEB
MODERATOR: JEFFREY SCHWARTZ
APRIL 25, 2001
3:30 PM CT
Operator: Thank you for joining us today - the Autoweb First Quarter
Earnings 2001 conference call. I will now turn the call over
to Mr. (Lendener) of MWW.
Mr. (Lendener): Thank you. Your hosts today Jeffrey Schwartz, CEO of
Autoweb, Dean DeBiase, Chairman, Michael Schmidt, Autoweb's
Chief Financial Officer.
Today's conference call -- including the question and answer
period, projections or other forward looking statements
regarding future events and future financial performance of
the company -- are covered by Safe Harbor Statement
contained in today's press release.
We refer you to the company's filings with the SEC for
additional information on risk factors that could cause
actual results to differ materially from current
expectations.
I will now turn the call over to Mr. Dean DeBiase.
Dean DeBiase: Thanks, Michael. Welcome to our Q1 call, everybody.
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The first quarter was an exciting time for Autoweb. And
during today's call we'll update you on significant progress
our team made on the Q1 objectives that we outlined on last
quarter's conference call.
We continue to see positive trends in the on line automotive
services business, both in the customer and the business to
business markets
And we've taken very strong steps to strengthen the
company's lead in both of those sectors and deliver long
term results to our shareholders.
We completed our restructuring programs, strengthened our
industry partnership agreements, began to see positive
financial trends related to our ongoing management
initiatives, and recently announced our agreement to merge
with Autobytel.
We think market leadership is a key factor in driving the
next generation of automotive commerce and providing the
best services to the industry.
The combination of Autoweb and Autobytel will leverage and
solidify our market position. And allow us to offer more
value to our partners and customers, providing them wish
access to the industry's leading media, advertising,
content, technology, fulfillment and services platform.
Now I'd like to turn the call over to Jeffrey who will
expand on some of the details of the quarter.
Jeffrey Schwartz: Thank you, Dean.
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During the first quarter, Autoweb continued to strengthen
its leadership position through a series of operational,
marketing and financial improvements.
Last quarter I told you that our drive to profitability
would be fueled by our progress in four key areas, which
include the following - a broad restructuring of the costs
of the business, reinforcing Autoweb's position as a strong
consumer brand in the on line automotive buying service and
content areas, strengthening our AIC division, and building
out future business models.
I would now like to discuss the progress we continue to make
in each of these areas.
First, Autoweb has completed its restructuring program,
which included staff reductions as well as the
re-negotiation of certain marketing agreements.
Through these efforts, our future expense run rate will be
significantly lower.
As of March 31, 2001 our future obligations under certain
marketing agreements were reduced by approximately $40
million. This reduction in obligation translates into year
over year expense savings of approximately $15 million for
the second through fourth quarter of 2001.
We achieved this transition while maintaining all of our
relationships.
As previously discussed, the staff reduction plan
implemented in late 2000 is projected to save approximately
$10 million in 2001.
Second, we have strengthened our leadership position in the
consumer referral and automotive marketing category.
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Our sites received 9.8 million visits during the first
quarter compared to 8.7 million visits in the last quarter
of 2000, expanding our ranking as one of the leading
automotive destinations on the Internet.
Page use per visit remained high with an average of 9.2 per
visit, which is comparable to 9.7 pages per visit in the
fourth quarter of 2000.
These numbers are up generally significantly year over year,
reflecting our focus on leveraging AIC content.
Average session time also increased. And we're confident
that consumer satisfaction remains high.
Our content and its usability remain unrivaled, we believe.
In addition, we strengthened Autoweb's position as a
preferred media in advertising platform for nearly all of
the automobile manufacturers.
We enhanced our OEM partnerships during the first quarter,
renewing with key manufacturers such as General Motors and
Ford.
On the advertising front over 23 of the top 28 OEMs
advertised on our site during the quarter, with revenues
from these manufactures accounting for over 80% of Autoweb's
total advertising revenue.
These large players clearly recognize the reach of our sites
and their ability to target qualified automotive consumers.
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In March, advertising page views on our properties reached
their highest level ever with over 163 million ads served
during our quarter.
In addition, we've developed a new set of rich media,
performance driven advertising products, which are being
rolled out to clients in the second quarter.
Contrary to some industry trends, we view the media portion
of our business as a high growth segment, as OEMs are coming
on line strong.
During the first quarter, we also made many improvements in
fulfillment, which is another key to our leadership in the
consumer market.
We continue to successfully transition to more profitable,
higher margin dealer relationships. This is evidenced by an
increase in the average number of purchase requests per
franchise received during the first quarter.
Similarly, we are seeing a significantly higher level of
purchase request activity from our newer dealer
relationships.
We believe this migration to higher margin dealer
relationships is being facilitated by many of the quality
initiatives launched during the quarter at Autoweb.
One of these is our consumer referral scrubbing initiative,
which enables us to verify each purchase request against an
independent, third party data base, and utilize a call
center to confirm an interest consumer's contact information
when necessary.
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These initiatives, which are positively impacting our
results from both a revenue and cost perspective, clearly
demonstrate our commitment to running a profitable business.
Moreover, dealer satisfaction with these initiatives remains
very high, which we feel will favorably impact dealer
retention.
Consumers continue to prefer automotive sites that offer the
richest and most accurate automotive content and
information.
In fact, according to (Forrester), automobiles are the
second most researched category in the Internet, just behind
the travel category.
By 2005 an estimated 55% of all automotive sales will be
influenced by Internet research, representing $282 billion
in transaction value.
It is clear that leadership in this category requires the
best and the most accurate automotive content information
and tools.
Autoweb continues to set the bar in each of these areas.
During the first quarter, Autoweb launched an enhanced
version of (Autosite) which includes the auto gallery, well
equipped and popularly equipped vehicles, and key advantage
report comparison tools.
Further content enhancement during the quarter include the
addition of 360 degree interior photos for the most popular
2001 model vehicles, the introduction of Autoweb's top 10
most popular auto feature, and the launch of our multi
lender finance platform.
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Clearly, we remain committed to bringing new exciting
products, content and functionality to our visitors.
As for the third priority I outlined, our Automotive
Information Center business remains a key to our long term
growth in both the consumer and B to B segments.
During the first quarter, AIC had considerable success in
creating new, value added revenue generating relationships
with existing partners, including General Motors, Lexus,
Saab and Toyota.
The AIC also scored several key customer renewals during the
quarter, and launched our (Beach Head) strategy for the
dealer market which we believe will be a high growth area
for AIC in the future.
During the first quarter, AIC also expanded its position in
the consumer market, rolling out its data content and tools
to consumers through partnerships including those with
(People First), (HomeStore) and iWon, which all had launches
during the quarter utilizing AIC content.
Additionally, new partnerships during the quarter will
enable AIC to expand many of these relationships globally.
Last quarter I told you that while it would take several
quarters to see a significant financial impact, we are
pursing initiatives to monetize our considerable information
assets.
During the first quarter, we made progress towards this goal
as we completed the product planning phase and began
speaking with potential partners.
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We remain excited about this initiative, as the potential up
side has not been figured into our financial projections.
Finally, our agreement to merge with Autobytel is moving
ahead as planned.
While we continue to make many strides in positioning
Autoweb as a standalone leader, this merger will create a
single company with a strong market position, revenues in
excess of $100 million, and a very solid cash position.
In addition, our combined companies can achieve cost savings
and efficiencies that will accelerate both growth and
profitability this year.
I hope that it's clear to our shareholders how singly
focused this management team remains on bringing Autoweb to
profitability.
Each of the initiatives we announced as part of our
restructuring have already begun to positively impact our
financials, and there is simply more to come.
I will now turn the call over to Michael Schmidt, Autoweb's
CFO for a detailed discussion of our results and to provide
guidance for the second quarter. Michael?
Michael Schmidt: Thank you, Jeffrey.
Revenues for the first quarter were $10.1 million compared
to $15.8 million for the first quarter of 2000, and $9.8
million for the fourth quarter of 2000.
This marks an influction point in our turn around, as it is
the first quarter of positive, sequential revenue growth
since the first quarter of last year.
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Pro forma net loss for the first quarter of 2001 was $5.6
million, or 19 cents per share, compared to $7.2 million, or
28 cents per share for the first quarter of 2000, and $11.3
million or 38 cents per share for the fourth quarter of
2000.
Pro forma EBITDA loss for the first quarter was $3.7
million, compared to pro forma EBITDA losses in the first
and fourth quarters of 2000 of $5.3 million and $9.3 million
respectively.
The pro forma net loss and pro forma EBITDA loss for the
first quarter of 2001 excludes the sales and marketing
settlement charge of $12.6 million related to the favorable
restructuring of the company's partnership agreements, and
merger related costs of $850,000 associated with the
recently announced merger agreement with Autobytel.
Ness loss for the first quarter, which includes the items
noted above, was $19.1 million or 65 cents per share,
compared to $7.2 million or 28 cents per share in the first
quarter of 2000, and $14.4 million or 49 cents per share in
the fourth quarter of 2000.
For the quarter, we received approximately 60% of our
revenue from referral fees to dealers and 40% from partners
and other sources.
The increase in dealer sales reflects the successful
implementation of our pay per performance based marketing
agreements with new and existing marketing partners.
As discussed in last quarter's conference call, we expect
dealer sales to account for approximately 57% to 60% of
revenues in 2001.
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Gross margin for the first quarter was 81% of revenues
compared with a gross margin of 80% for the fourth quarter
of 2000, reflecting the shift to profitable pay per
performance marketing agreements.
Turning to operating expenses, overall pro forma operating
expenses were $14.1 million in the first quarter, $5.4
million or 28% lower than in the fourth quarter of 2000.
This reduction in overall operating expenses is primarily
driven by the re-negotiation of certain marketing agreements
as well as lower salary, and salary related expenses such as
bonuses and commissions.
Turning to specific operating expenses, pro forma sales and
marketing expenditures, which excludes the sales and
marketing settlement charge, totaled $8.4 million in the
first quarter compared with $12.4 million in the fourth
quarter of 2000.
The reduction in sales and marketing expenditures is driven
by the restructuring of certain marketing agreements, and
lower salary and salary related expenses.
Going forward in 2001, we estimate quarterly sales and
marketing expenses will decrease by an additional $2 million
to $3 million from quarter one levels.
Product development costs were $1.6 million in the first
quarter, compared with $2.1 million in the fourth quarter of
2000. These lower costs are driven by lower salary and
salary related expenses.
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General and administrative expenses total $2.1 million in
the first quarter, compared with $2.8 million in the prior
quarter. Again, the decrease is primarily driven by lower
salary and salary related expenses.
First quarter equity compensation expense and the
amortization of intangibles were approximately $1.8 million
and $300,000 respectively - similar to the fourth quarter.
Moving to the balance sheet, cash and short term investments
were $13.2 million, which we are very pleased with.
Especially considering that we have completed the
restructuring of our marketing agreements.
We do not anticipate the need for additional financing
during the remainder of 2001.
Net accounts receivable were $8.5 million at the end of the
first quarter, compared with $8.5 million at the end of the
fourth quarter.
Day Sales Outstanding decreased to 76 days in the quarter
compared with an average of 80 days in the preceding
quarter.
Since my appointment as CFO, one of my priorities is to
continue to reduce the company's DSO. And I would expect the
second quarter DSO to show further improvement.
Prepaid expenses were $5.7 million at the end of the first
quarter, compared with $10.1 million at the end of the
fourth quarter.
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This decrease in prepaid expenses is primarily the result of
our marketing restructure program. And I would expect
prepaid expenses for the remainder of 2001 to remain around
current levels.
We have started to make significant progress in managing the
company's future cash flow. For example, excluding the sales
and marketing settlement charge of approximately $12.6
million in the first quarter, the net cash out flow for the
first quarter was approximately $1.3 million.
This improvement was driven by the company's better
operating performance and strong focus on fiscal controls
and balance sheet ratios.
Now for guidance - which excludes potential future merger
related costs of approximately $1.9 million to $2.4 million,
a significant portion of which are contingent on the closing
of the merger with Autobytel.
For the second quarter, we expect revenues of between $10.3
million and $10.7 million.
Again, our focus is weighted toward the profitability of our
revenue streams which will be integral to our ability to
achieve Autoweb's target of profitability in quarter four.
For the second quarter of 2001, we anticipate a net loss
between $2.5 million and $2.9 million, equivalent to an EPS
loss between 8 cents to 10 cents.
EBITDA for the second quarter is anticipated between a loss
of $400,000 to $800,000.
I will now turn the call back over to Jeffrey.
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Jeffrey Schwartz: Thank you, Michael.
We see the first quarter as a success by every measure. We
improved along key financial metrics such as revenue, gross
profit margin, cash flow and balance sheet items, while
enhancing our overall operations.
Although our business is to some degree subject to the
larger economic environment, we are very confident in the
long term strength of this business and look forward to
continued growth within each of our revenue channels.
That concludes our portion. And I guess we'd like to turn it
back to the operator and ask for questions.
Operator: At this time, if you would like to ask a question please
press the number one on your telephone key pad. If you would
like to withdraw your question, press the pound key. Please
hold for your first question.
At this time there are no questions.
Jeffrey Schwartz: Operator, then we'd just like to thank everybody for joining
us today and conclude the call. Thank you very much.
Man: Thank you.
END
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Additional Information and Where to Find It.
Autobytel plans to file a registration statement on Form S-4 in connection with
the proposed transaction and Autobytel and Autoweb expect to mail a joint proxy
statement/prospectus to the stockholders of Autobytel and Autoweb containing
information about the proposed transaction. Investors and securityholders are
advised to read the joint proxy statement/prospectus regarding the potential
transaction referred to above, when it becomes available, because it will
contain important information. The registration statement will be filed with the
Securities and Exchange Commission by Autobytel and the joint proxy
statement/prospectus will be filed with the Securities and Exchange Commission
by both companies. Investors and securityholders may obtain a free copy of the
registration statement and the joint proxy statement/prospectus (when available)
and other reports, documents, proxy statements and other information filed by
Autobytel and Autoweb with the Securities and Exchange Commission at the
Commission's web site at www.sec.gov. The joint proxy statement/prospectus and
these other documents may also be obtained free of charge from Autobytel at 949-
862-1355 or investor@Autobytel.com or from Autoweb at 800-707-9552.
Autobytel will be, and its executive officers and directors may be, soliciting
proxies from Autobytel's stockholders with respect to the transactions
contemplated by the Acquisition Agreement. The following are the directors and
executive officers of Autobytel: Mark W. Lorimer, Michael Fuchs, Amit Kothari,
Jeffrey H. Coats, Mark N. Kaplan, Kenneth J. Orton, Robert S. Grimes, Peter
Titz, Dennis Benner, Andrew Donchak, Ariel Amir, Howard Layson and Richard Post.
In addition, Autoweb will be, and its executive officers and directors may be,
soliciting proxies from the stockholders of Autoweb with respect to the
transactions contemplated by the Acquisition Agreement. The following are the
directors and executive officers of Autoweb: Dean DeBiase, Jay Hoag, Mark Ross,
Lawrence Lepard, Jeffrey Schwartz, Michael Schmidt, Nadyne Edison, Jerry Karr,
William Barrett, Meri E. Glade, Regan Senkarik, Steve Cottrell and Fred Ruffin.
A description of any interests that Autoweb's directors and executive officers
have in the merger will be available in the Proxy Statement/Prospectus.
Contacts:
Media Relations - Autobytel
Melanie Webber, Autobytel, 949.862.3023 (melaniew@Autobytel.com)
Betsy Isroelit, RBI Communications, Inc., 323.960.1360 ext. 17
(betsy@rbicom.com)
Cassandra Cavanah, RBI Communications, Inc., 323.960.1360 ext. 30
(cassandra@rbicom.com)
Media Relations - Autoweb
Jenny Connorton (MWW Group) 212-827-3762
Michelle Beilsmith (MWW Group) 212-827-3748
Richard Schineller (MWW Group) 212-827-3743