Propel Media Inc (PROM)

[db7]

Propel Media Delivers A Profitable Second Quarter

- Revenues of $19.5 million and adjusted EBITDA of $4.2 million
- Successful integration of Future Ads with legacy Kitara Media business
- Successful launch of Propel Media corporate branding
- Investments in key initiatives position Propel Media for growth


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PR Newswire
Propel Media, Inc.
42 minutes ago








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JERSEY CITY, N.J., Aug. 17, 2015 /PRNewswire/ -- Propel Media, Inc. (PROM), a performance focused digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers, announced that it achieved revenue of $19.5 million and adjusted EBITDA of $4.2 million in its 2015 second quarter. Adjusted EBITDA was negatively impacted by a $701,000 tax benefit for the quarter as part of the approximately $35 million deferred tax asset from the Kitara-Future Ads merger in January 2015.

The Propel Media team delivered strong profitability and operational execution in our first full quarter following the merger with Future Ads despite strong ad tech industry headwinds," said Bob Regular, Propel Media's Chief Executive Officer. "We are pleased to have achieved several key initiatives in video, native and mobile in this quarter to fuel future growth opportunities," said Mr. Regular. "With the consummation in Q1 of our merger with Future Ads, we have set the company on a positive course with positive EBITDA returns, as compared to the legacy performance of the public company prior to the merger," Mr. Regular added.

Second Quarter Business Highlights:
•Product Expansion - Launched contextual native advertising solutions and enhanced our mobile video products and services.
•Technology Expansion – Launched advanced analytics and optimization tools for increased advertiser performance and retention.
•Market Expansion – Increased sales resources to open up new international markets.

"We enhanced our video platform which improves our video-on-mobile capabilities and we launched our new native ad product. Plus, we have advanced our analytics and optimization tools to substantially increase advertising performance and ad viewability," said Marv Tseu, Propel Media President. We also invested in products and technology to further align ourselves with the current market requirements to improve advertiser performance furthering our efforts to build and sustain long-term profitable growth," said Mr. Tseu.

Further details concerning the results of operations for the three months ended June 30, 2015 are contained in the Quarterly Report on Form 10-Q that Propel Media filed with the Securities and Exchange Commission on August 13, 2015.

About Propel Media

Propel Media is a performance driven digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers. Our mission is to provide exceptional performance for our partners.

Propel Media delivers the right strategy, content and technology in front of the right audience at the right time to produce the best results. Our team brings the "how" through the advancement of multi-platform offerings, investment in proprietary advanced optimization, targeting technologies, on-going commitment to product research and development and a deep focus on ROI for all clients.

Led by industry veterans, our team of engineers, analysts, ad operations, business development and sales staff are comprised of capable, driven and determined individuals whose commitment to client services is outstanding.

The company has offices in Irvine, CA and Jersey City, NJ. For more information visit: http://www.propelmedia.com

Forward-Looking Statements:

Certain information and statements contained in this press release, including those regarding Propel Media's capital structure, ability to execute its operating plan, anticipated financial flexibility and other statements that are not statements of historical fact, are forward-looking statements within the meaning of federal securities laws. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipates", "expects," "will" or comparable terms or the negative thereof. Such statements are based on management's current estimates, assumptions that management believes to be reasonable, and currently available competitive, financial, and economic data as of the date hereof and we undertake no obligation to update any such statements to reflect subsequent changes in events or circumstances. Forward-looking statements are inherently uncertain and subject to a variety of events, factors and conditions, many of which are beyond the control of Propel Media and not all of which are known to Propel Media, including, without limitation those risk factors described from time to time in Propel Media's reports filed with the SEC. Among the factors that could cause actual results to differ materially are Propel Media's: loss of key advertising customers; inability to acquire new advertising customers; inability to expand its video content library; inability to protect its intellectual property; inability to comply with the covenants in its credit facility; inability to obtain necessary financing or enter into equity arrangements with existing or new institutional shareholders; inability to execute its acquisition strategy; inability to effectively manage its growth; failure to effectively integrate the operations of acquired businesses; competition; loss of key personnel; increases in costs of operations; continued compliance with government regulations; and general economic conditions.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), Propel Media reports Adjusted EBITDA, which is non-GAAP financial measure. Propel Media calculates Adjusted EBITDA by taking net income and adding back depreciation and amortization, income tax benefit, interest expense and stock-based compensation. Propel Media uses this non-GAAP financial measure for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Propel Media believes that these measures provide useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statement attached to this press release.





Propel Media, Inc. and Subsidiaries


Condensed Consolidated Balance Sheets



As of


Assets

June 30, 2015


December 31, 2014



(unaudited)




Current assets





Cash

$ 2,218,000


$ 3,675,000


Accounts receivable, net

9,293,000


8,054,000


Prepaid expenses

2,033,000


343,000


Deferred tax assets, current

142,000


-


Other current assets

254,000


-


Total current assets

13,940,000


12,072,000







Property and equipment, net

2,910,000


2,034,000


Restricted cash

513,000


-


Intangible assets

567,000


-


Goodwill

2,467,000


-


Deferred tax assets, non-current

34,584,000


-


Other assets

604,000


56,000


Total assets

$ 55,585,000


$ 14,162,000







Liabilities and Stockholders' (Deficit) Equity





Current liabilities





Accounts payable

$ 6,371,000


$ 3,540,000


Accrued expenses

2,257,000


4,184,000


Advertiser deposits

2,722,000


2,610,000


Obligations to transferors, current portion

12,433,000


650,000


Short-term portion of long-term debt

6,205,000


-


Revolving credit facility

3,196,000


-


Total current liabilities

33,184,000


10,984,000







Long-term debt

70,730,000


-


Obligations to transferors, less current portion

4,194,000


-


Other non-current liabilities

393,000


464,000


Note payable stockholder, non-current, net

102,000


-


Total liabilities

108,603,000


11,448,000







Commitments and contingencies










Stockholders' (Deficit) Equity





Preferred Stock, $0.0001 par value, authorized 1,000,000 shares,

-


-


no shares issued or outstanding





Common Stock, $0.0001 par value, authorized 500,000,000 shares,

25,000


15,000


issued and outstanding 250,010,162 and 154,125,921,





at June 30, 2015 and December 31, 2014, respectively





Additional paid-in capital

544,000


-


Accumulated (deficit) earnings

(53,587,000)


2,699,000


Total stockholders' (deficit) equity

(53,018,000)


2,714,000


Total liabilities and stockholders' (deficit) equity

$ 55,585,000


$ 14,162,000






Propel Media, Inc. and Subsidiaries


Condensed Consolidated Statements of Income


(unaudited)












For the Three Months Ended June 30,


For the Six Months Ended June 30,



2015


2014


2015


2014











Revenues

$ 19,455,000


$ 20,981,000


$ 40,946,000


$ 45,650,000


Cost of revenues

10,014,000


9,412,000


20,186,000


20,707,000


Gross profit

9,441,000


11,569,000


20,760,000


24,943,000











Operating expenses:









Salaries, commissions, benefits and related expenses

3,550,000


2,602,000


7,219,000


6,143,000


Technology development and maintenance

1,031,000


570,000


1,920,000


1,188,000


Marketing and promotional

7,000


66,000


32,000


168,000


General and administrative

513,000


490,000


1,472,000


809,000


Professional services

590,000


258,000


1,327,000


431,000


Depreciation and amortization

438,000


322,000


823,000


642,000











Operating expenses

6,129,000


4,308,000


12,793,000


9,381,000











Operating income

3,312,000


7,261,000


7,967,000


15,562,000











Interest expense

(3,937,000)


(1,000)


(6,344,000)


(1,000)











(Loss) income before income tax benefit

(625,000)


7,260,000


1,623,000


15,561,000


Income tax benefit

701,000


-


32,025,000


-


Net income

$ 76,000


$ 7,260,000


$ 33,648,000


$ 15,561,000











Net income per common share, basic and diluted

$ 0.00


$ 0.05


$ 0.14


$ 0.10











Weighted average number of common shares outstanding, basic and diluted

250,010,162


154,125,921


235,706,988


154,125,921











Pro-forma computation related to conversion to a C corporation upon









completion of the reverse merger with Kitara Media Corp.









Historical pre-tax net income before income taxes

$ (625,000)


7,260,000


$ 1,623,000


15,561,000


Pro-forma income tax expense

(249,000)


2,897,000


648,000


6,209,000


Pro-forma net income

$ (376,000)


$ 4,363,000


$ 975,000


$ 9,352,000











Unaudited pro-forma net income per common share - basic and diluted

$ (0.00)


$ 0.03


$ 0.00


$ 0.06











Weighted average number of shares outstanding - basic and diluted

250,010,162


154,125,921


235,706,988


154,125,921






Propel Media, Inc. and Subsidiaries


Reconciliation of Non-GAAP Information


(Unaudited)














For the Three Months Ended June 30,


For the Six Months Ended June 30,




2015


2014


2015


2014






















Net income (GAAP)

76,000


$ 7,260,000


33,648,000


$ 15,561,000


Add (subtract) the following items:









Depreciation and amortization

438,000


322,000


823,000


642,000


Income tax benefit

(701,000)


-


(32,025,000)


-


Interest expense

3,937,000


1,000


6,344,000


1,000


Stock-based compensation

405,000


-


544,000


-


Adjusted EBITDA (non-GAAP)

$ 4,155,000


$ 7,583,000


$ 9,334,000


$ 16,204,000


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