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Kitara Media Reports Fourth Quarter And Full Fiscal Year 2013 Results

Companies mentioned in this article: Kitara Media Corp.

JERSEY CITY, N.J., March 31, 2014 /PRNewswire/ -- Kitara Media Corp. (OTCBB: KITM) ("Kitara Media"), a leading digital media and technology company providing video solutions to advertisers, digital publishers and video content providers, today reported financial results for the fourth quarter and fiscal year ended December 31, 2013.

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"Kitara Media solidified strong growth in 2013 with increased online video advertising revenues, expanded operations with the acquisition of Health Guru Media, the operator of Healthguru.com, an online health video resource site, and the introduction of our proprietary PROPEL+ video advertising technology platform," said Bob Regular, CEO of Kitara Media. "Our continued focus on video is advancing how we deliver online advertising performance and support digital publishers with enhanced monetization. Our video advertising growth of 45% in 2013 aligns with high growth industry benchmarks as eMarketer forecasted 46% video ad spend growth from 2012 to 2013. We believe Kitara Media is poised for even further growth in the year ahead."

Financial Summary for Fiscal Year Ended December 31, 2013 compared to December 31, 2012

Kitara Media reported the following results for the fiscal year ended December 31, 2013. These results include one month of operating results from Health Guru Media, which was acquired on December 3, 2013.

Revenue of approximately $25.4 million increased 8% compared to approximately $23.6 million for the year ended December 31, 2012.

Gross Profit of approximately $8.2 million increased 66% compared to approximately $5 million for the year ended December 31, 2012 representing a Gross Margin improvement to 32% from 21%.

Net loss was approximately $186,000 compared to a net loss of approximately $2.8 million for the year ended December 31, 2012.

Adjusted EBITDA increased to approximately $1.2 million compared to an Adjusted EBITDA loss of approximately $2.1 million for the year ended December 31, 2012.

The growth in gross margin and Adjusted EBITDA was due to an increase in video revenue in 2013 as compared to banner revenue in 2012. For the year ended December 31, 2013, total video ad revenue doubled to 68% of total revenue as compared to the year ended December 31, 2012 of only 35% of total revenue.

In addition, Kitara Media expanded beyond owned and operated sites with its proprietary PROPEL+ video unit reaching broader audiences and increasing available impressions through added media partnerships and placements.

"Our business performance showcases improved margins and a strong commitment to operational efficiencies across the organization," said Lisa Van Patten, CFO of Kitara Media. "The industry sector continues to rapidly evolve and we believe our business is in a strong position to remain agile and open to market opportunities. We believe we are poised for continued growth in 2014."

Pro Forma Fourth Quarter 2013 compared to Fourth Quarter 2012 Financial Highlights

Kitara Media recorded actual Fourth Quarter 2013 sales of $8.4 million and Adjusted EBITDA of approximately $182,000. This includes one month of operating results and integration costs from the Health Guru Media acquisition, which was consummated on December 3, 2013.

Excluding the one month of Health Guru results, Kitara Media on a stand-alone basis recorded 2013 Fourth Quarter sales of approximately $7.6 million and Adjusted EBITDA of approximately $447,000 compared to sales of approximately $7.7 million and Adjusted EBITDA of $227,000 in the fourth quarter of 2012. Fourth Quarter year over year revenues were essentially flat as the company transitioned from a majority of banner advertising sales in 2012 to a majority of video advertising sales in 2013.

The foregoing financial results have been reported in Kitara Media's Annual Report on Form 10-K which has been filed with the Securities and Exchange Commission and is available at the SEC's website at www.sec.gov.

Outlook for Fiscal Year ending December 31, 2014

Kitara Media is providing the following financial outlook guidance for the fiscal year ending December 31, 2014:

Revenue in the range of $40 million to $44 million.

Adjusted EBITDA in the range of $2 million to $3 million.

In order for financial analysts to compare revenues on an "apples to apples" basis, the 2013 pro forma, unaudited, consolidated revenues for Kitara Media, as if it had acquired Health Guru Media on January 1, 2013, and assuming no inter-company eliminations, would have been approximately $34.8 million. Pro forma, Adjusted EBITDA comparisons for the two periods are not readily available given the ongoing integration of the two operations and the difficulty of calculating all the adjustments necessary to provide a comparable adjusted pro forma EBITDA as if the two companies had operated in exactly the same manner throughout 2013 as it did in December 2013 and/or as it expects to in 2014.

Kitara Media does not intend to provide specific quarterly revenue and Adjusted EBITDA guidance moving forward. Kitara Media's lowest revenues and largest Adjusted EBITDA losses will be sustained in the first and second quarters per general industry results and as it particularly invests heavily in: (i) completing the integration of the operations of Health Guru Media; (ii) continual process improvement to its PROPEL+ Technology; and (iii) in the build-up of its technology capacity and capability to drive enhanced performance. Kitara Media previously announced that it has hired Chris Magdelinskas as its new Chief Technology Officer and is rapidly increasing its resource allocation in this area to continue its innovative leadership in the video and mobile video advertising technology sectors. Kitara Media's guidance assumes that revenue and Adjusted EBITDA growth accelerates in the second half of fiscal 2014, with its largest EBITDA profits, per industry standards, recorded in the fourth quarter of the fiscal year.

Finally, this financial guidance does not reflect any future acquisitions by Kitara Media and the resulting operating leverage that may result from them.

Ironbound Partners Fund, LLC Loan

On March 26, 2014, Kitara Media received a loan in the principal amount of $1 million from Ironbound Partners Fund, LLC, ("Ironbound"), an affiliate of Kitara Media's Non-Executive Chairman of the Board. The loan bears interest at a rate of LIBOR plus 1% and is due and payable in 30 days (or sooner upon certain events). The loan was made to accommodate the rapid increase in Kitara Media's accounts receivable and the need for Kitara Media's lenders to complete certain due diligence on Kitara Media and its operating subsidiaries, including its recently acquired subsidiary, Health Guru Media. Currently, Wells Fargo Bank, National Association provides financing for the accounts receivable of only certain of Kitara Media's operating subsidiaries and not Health Guru Media, which currently maintains separate lending agreements. As a result, Kitara Media is not able to maximize its borrowing base. It is expected that the loan will be repaid with further borrowing availability from Kitara Media's lenders or from additional lenders who will expand Kitara Media's credit availability.

Further information regarding this loan will be contained in a Current Report on Form 8-K to be filed by Kitara Media with the Securities and Exchange Commission.

About Kitara Media

Kitara Media is a leading digital media and technology company providing video solutions to advertisers, digital marketers and publishers. With nearly 500 million monthly video ad views, Kitara Media delivers strong engagement for advertisers, high revenues for publishers, as well as improved user experience with PROPEL+, an internally developed proprietary video ad technology platform. Kitara Media owns and operates several online media sites including Healthguru.com and Adotas.com. The company is headquartered in Jersey City, NJ. For more information visit http://www.kitaramedia.com.

Forward-Looking Statements:

Certain information and statements contained in this press release, including those regarding Kitara 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 Kitara Media and not all of which are known to Kitara Media, including, without limitation those risk factors described from time to time in Kitara Media's reports filed with the SEC. Among the factors that could cause actual results to differ materially are Kitara Media's: 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"), Kitara Media reports EBITDA and adjusted EBITDA, which are non-GAAP financial measures. Kitara Media calculates EBITDA by taking net income/(loss) and adding back depreciation, amortization and interest expense less interest income, stock-based compensation and taxes. Kitara Media calculates adjusted EBITDA as EBITDA plus merger expenses. Kitara Media uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Kitara 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.

                                                                    December 31,        December 31,

                                                                                   2013                2012
                                                                                   ----                ----


    ASSETS
    ------

    CURRENT ASSETS

    Cash                                                                         $2,478                  $0

    Accounts receivable, net                                                     10,061               7,595

    Prepaid expenses                                                                268                 115

    Other assets                                                                      0                   5
                                                                                    ---                 ---

    TOTAL CURRENT ASSETS                                                         12,807               7,715


    Property and equipment, net                                                     910                 129

    Restricted cash                                                                 183                 124

    Deferred financing costs                                                         74                   0

    Intangible assets                                                             2,126                 386

    Goodwill                                                                     11,816                   0

    TOTAL ASSETS                                                                 27,916               8,354
                                                                                 ======               =====


    LIABILITIES

    CURRENT LIABILITIES

    Cash overdraft                                                                    0                 670

    Accounts payable and accrued liabilities                                      4,629               2,435

    Accrued compensation                                                          1,180                 214

    Due to related party                                                              0                 343

    Short term debt                                                               3,304                   0
                                                                                  -----                 ---

    TOTAL CURRENT LIABILITIES                                                     9,113               3,662


    COMMITMENTS AND CONTINGENCIES

    Deferred rent                                                                     9                  20

    Deferred tax liability                                                          272                   0

    Other liabilities                                                               224                   0

    Note payable stockholder, non-current                                           302                   0
                                                                                    ---                 ---

    TOTAL LIABILITIES                                                             9,920               3,682


    STOCKHOLDERS' EQUITY

    Common stock, $0.0001 par value, authorized 300,000,000 shares,
     issued and outstanding 83,156,969 and 20,000,000, respectively                   8                   2

    Additional paid-in capital                                                   17,820               4,316

    Retained earnings                                                               168                 354
                                                                                    ---                 ---

    TOTAL STOCKHOLDERS' EQUITY                                                   17,996               4,672

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $27,916              $8,354
                                                                                =======              ======

                                                                             Year Ended

                                                                            December 31,

                                                                            2013           2012
                                                                            ----           ----


    Revenue                                                              $25,377        $23,557

    Cost of revenue                                                       17,148         18,598
                                                                          ------         ------

    Gross Profit                                                           8,229          4,959


    Operating expenses

    Employee expenses                                                      5,097          4,672

    Related party expenses                                                   251            399

    Impairment of property and equipment                                       0            649

    Other operating expenses                                               2,432          1,316

    Depreciation and amortization                                            525            748
                                                                             ---            ---

    Total operating expenses                                               8,305          7,784


    Operating (loss)                                                         (76)        (2,825)


    Other (expense)                                                          (43)            (5)
                                                                             ---            ---


    Loss before income taxes                                                (119)        (2,830)


    Income taxes                                                             (67)             0

    Net (Loss)                                                             ($186)       ($2,830)
    ---------                                                              =====        =======


    Net (Loss) per Common Share - Basic and Diluted                       ($0.00)        ($0.14)

    Weighted-Average Number of shares outstanding - Basic and Diluted 41,897,560     20,000,000

                                            Year Ended

                                           December 31,

                                           2013         2012
                                           ----         ----

    Net (loss)                            $(186)     $(2,830)

    Depreciation and amortization           525          748

    Interest expense, less other income      42            0

    Stock compensation expense               89            0

    Taxes                                    67            0
                                            ---          ---

    EBITDA (a non-GAAP measure)             537       (2,082)


    Total Merger related costs              617            0


    Adjusted EBITDA (a non-GAAP measure) $1,154      $(2,082)
    -----------------------------------  ======      =======



                                                           Three months
                                                              ended

                                                          December 31,

                                                     2013                2012
                                                     ----                ----

    Net (loss)                                      $(481)              $(623)

    Depreciation and amortization               161          201

    Interest expense, less other income          43            0

    Stock compensation                expense    55            0

    Impairment expense                            0          649

    Taxes                                              67                   0
                                                      ---                 ---

    EBITDA (a non-GAAP measure)               (155)          227


    Total Merger related costs                  337            0


    Adjusted EBITDA (a non-GAAP measure)       $182         $227
    -----------------------------------        ====         ====


                                                                                                             Consolidated Three

                                                  Consolidated                                                             months ended

                                                  three months                      Healthguru                          December 31, 2013

                                                     ended                         month ended                           less month ended

                                               December 31, 2013                December 31, 2013                       December 31, 2013

                                                                                                                            Healthguru
                                                                                                                            ----------

    Revenue                                                      $8,364                           $807                                    $7,557


    Net (loss)                                                     (481)                          (562)                                       81

    Depreciation and amortization          161                              15                           146

    Interest expense, less other income     43                              22                            21

    Stock compensation expense              55                               8                            47

    Taxes                                                            67                              2                                        65
                                                                    ---                            ---                                       ---

    EBITDA (a non-GAAP measure)          (155)                            (515)                          360


    Total Merger related costs             337                             250                            87


    Adjusted EBITDA (a non-GAAP measure)  $182                           $(265)                         $447
    -----------------------------------   ====                           =====                          ====

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SOURCE Kitara Media Corp.