TheStreet.com Reports First-Quarter Financial Results

Reminder: Conference Call Today at 4:30 p.m. ET

NEW YORK--(BUSINESS WIRE)--May. 5, 2009-- TheStreet.com, Inc. (Nasdaq: TSCM; http://www.thestreet.com), a leading online financial media company, reported financial results for its first quarter ended March 31, 2009.

First-Quarter 2009 Results

For the first quarter of 2009, total revenue was $14.0 million, a decrease of 26% as compared to revenue of $18.9 million reported for the first quarter of 2008.

TheStreet.com reported a pro forma net loss in the first quarter of 2009 of $3.1 million, or $0.10 per fully diluted share, excluding the impact of a non-cash impairment charge of $24.1 million, one-time costs associated with restructuring activities and severance payments within the quarter totaling $2.4 million, and a valuation allowance for a deferred tax asset of $16.1 million. This compares to net income of $2.4 million, or $0.07 per fully diluted share, in the first quarter of 2008. Inclusive of the above-mentioned charges, net loss in the first quarter of 2009 totaled $45.7 million, or $1.50 per fully diluted share.

Net loss attributable to common stockholders for the first quarter of 2009, after deducting preferred stock dividends of $0.1 million, was $45.8 million, or $1.50 per fully diluted share.

Earnings before interest, taxes, depreciation and amortization, excluding a non-cash impairment charge totaling $24.1 million, one-time costs associated with restructuring activities and severance payments within the quarter totaling $2.4 million, and stock compensation of $1.2 million (“Adjusted EBITDA”), was negative $0.6 million for the quarter, as compared to Adjusted EBITDA of $3.9 million for the first quarter of 2008.

“This is clearly a time of great change within the Company,” said Daryl Otte, the Company’s Interim Chief Executive Officer. “In what was a very challenging quarter for the Company, we successfully managed our cost structure and delivered $4.7 million in free cash flow. We will continue to manage the relationship between revenues and costs, and invest in initiatives that will build shareholder value.”

First-Quarter Financial Overview

  • Paid services revenue, which is comprised of subscription, syndication, licensing and information services revenue, totaled $9.5 million for the first quarter of 2009, a decrease of 12% over paid services revenue of $10.8 million for the first quarter of 2008.
    • First-quarter subscription revenue was $6.8 million, a decrease of 16% from $8.0 million in the prior-year quarter.
    • Syndication, licensing and information services revenue totaled $2.7 million for the recent quarter, an increase of 1% over syndication, licensing and information services revenue of $2.7 million in the first quarter of last year.
  • Marketing services revenue, which is comprised of advertising and interactive marketing services revenue, totaled $4.5 million for the first quarter of 2009, a decrease of 45% from marketing services revenue of $8.2 million for the first quarter of 2008.
    • Advertising revenue totaled $3.2 million for the current quarter, a decrease of 47% from advertising revenue of $6.0 million in the first quarter of last year.
    • Interactive marketing services revenue, derived from Promotions.com, totaled $1.4 million, a 39% decrease from interactive marketing services revenue of $2.2 million in the first quarter of 2008.
  • Paid services and marketing services revenue in the first quarter of 2009 accounted for 68% and 32% of total revenue, respectively. This compares to a revenue mix of 57% for paid services and 43% for marketing services in the first quarter of 2008.
  • The Company recorded a non-cash impairment charge of $24.1 million in the first quarter. Of the impairment charge, $22.6 million was related to goodwill and intangible assets, and $1.5 million was related to the write-down of a long-term investment.
  • In March 2009, the Company’s Board of Directors approved a reorganization plan to align the Company’s resources with its strategic business objectives, eliminating 21 positions – approximately six percent of the Company’s workforce – spread across various functions and locations. As a result, the Company incurred a restructuring charge from continuing operations approximating $1.0 million during the three months ended March 31, 2009. Included in this charge were severance and other payroll related expenses totaling approximately $0.8 million. The remaining $0.2 million of restructuring related costs consists of the write off of certain assets.
  • Effective March 13, 2009, the Company’s then CEO tendered his resignation. In connection with his resignation, the Company agreed to make severance payments to him, consistent with the amount that would have been payable to him had his employment been terminated without cause. The Company recorded a charge approximating $1.3 million in March of 2009, inclusive of approximately $0.6 million related to the accelerated vesting of certain restricted stock units, representing amounts payable to him through the upcoming twelve-month period.
  • As of March 31, 2009, cash, cash equivalents, marketable securities and restricted cash stood at $80.1 million. The company has no bank debt. During the quarter, the Company generated free cash flow of $4.7 million.
  • The board of directors declared the Company's quarterly cash dividend, payable to all shareholders of record at the close of business on March 17, 2009. The cash dividend of $0.025 per share was paid on March 31, 2009.
  • On March 13, 2009, Daryl Otte, a long-time board member, assumed the role of Interim CEO. Mr. Otte is leading the CEO search on the Board’s behalf and has engaged Jim Citrin of Spencer Stuart to assist in this effort.

TheStreet.com will conduct a conference call today May 5, 2009, at 4:30 p.m. EST to discuss these results. To participate in the call, dial (866) 804 6923 (domestic) or (857) 350 1669 (international). The passcode for the call is 38975094.

To access the Web cast of the call please visit:

http://www.thestreet.com/investor-relations/index.html?detailInclude=IROL-IRhome

(Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

About TheStreet.com, Inc.

TheStreet.com is a leading financial media company. It engages audiences on video and digital platforms through some of the Web's best known sites: TheStreet.com, RealMoney.com, Stockpickr.com, BankingMyWay.com, MainStreet.com, Rate-Watch.com and Promotions.com. Through this network, the company produces and distributes content in all areas where life and money intersect to inform, engage and activate one of the most affluent, influential audiences on the Web today. For more information and to get stock quotes and business news, visit http://www.thestreet.com.

 
THESTREET.COM, INC.
CONSOLIDATED BALANCE SHEETS
         
ASSETS   March 31, 2009   December 31, 2008
Current Assets:        
Cash and cash equivalents   $ 64,523,771     $ 72,441,294  
Restricted cash     516,951       516,951  
Accounts receivable, net of allowance for doubtful        
accounts of $403,343 at March 31, 2009 and $531,092 at        
December 31, 2008     7,182,328       11,179,564  
Other receivables     535,221       647,596  
Deferred taxes     -       2,546,743  
Prepaid expenses and other current assets     1,953,114       1,990,717  
Total current assets     74,711,385       89,322,865  
         
Property and equipment, net of accumulated depreciation        
and amortization of $12,055,343 at March 31, 2009        
and $11,250,569 at December 31, 2008     9,589,182       10,047,779  
Marketable securities    

13,249,652

     

1,658,178

 
Long term investment     555,000       2,042,970  
Other assets     133,118       122,197  
Goodwill     20,181,000       40,024,076  
Other intangibles, net     10,213,454       13,630,900  
Deferred taxes     -       13,570,047  
Restricted cash     1,762,079       1,762,079  
Total assets   $ 130,394,870     $ 172,181,091  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current Liabilities:        
Accounts payable   $ 1,041,118     $ 390,610  
Accrued expenses     4,718,313       2,784,902  
Deferred revenue     15,747,507       15,331,949  
Other current liabilities     431,800       205,838  
Current liabilities of discontinued operations     222,424       225,925  
Total current liabilities     22,161,162       18,939,224  
Other liabilities     265,939       79,896  
Total liabilities     22,427,101       19,019,120  
         
Stockholders' Equity:        
Preferred stock; $0.01 par value; 10,000,000 shares        
authorized; 5,500 shares issued and 5,500 shares        
outstanding at March 31, 2009 and December 31, 2008;        
the aggregate liquidation preference totals $55,000,000 as of        
March 31, 2009 and December 31, 2008     55       55  
Common stock; $0.01 par value; 100,000,000 shares        
authorized; 36,595,091 shares issued and 30,617,572        
shares outstanding at March 31, 2009, and 36,262,546        
shares issued and 30,378,894 shares outstanding at        
December 31, 2008     365,951       362,625  
Additional paid-in capital     271,879,822       271,271,574  
Accumulated other comprehensive income     (190,140 )     (290,000 )
Treasury stock at cost; 5,977,519 shares at March 31, 2009        
and 5,883,652 shares at December 31, 2008     (10,130,571 )     (9,900,284 )
Accumulated deficit     (153,957,348 )     (108,281,999 )
Total stockholders' equity     107,967,769       153,161,971  
         
Total liabilities and stockholders' equity   $ 130,394,870     $ 172,181,091  
         

Note: The Company has pledged cash as a security deposit for operating leases. Accordingly, this cash is
classified as restricted cash, and our cash and investments are classified in several places on the above balance
sheet.

         
         
         
    March 31, 2009   December 31, 2008
Cash and cash equivalents   $ 64,523,771     $ 72,441,294  
Current and noncurrent restricted cash     2,279,030       2,279,030  

Marketable securities

   

13,249,652

     

1,658,178

 

Total cash and cash equivalents, current and noncurrent
restricted cash and marketable securities

  $ 80,052,453     $ 76,378,502  
                 
THESTREET.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
         
   

For the Three Months Ended

March 31,

         
    2009   2008
Revenue:        
Paid services   $ 9,507,441     $ 10,759,469  
Marketing services     4,519,423       8,188,516  
Total revenue     14,026,864       18,947,985  
         
Operating expense:        
Cost of services     8,251,217       7,656,127  
Sales and marketing     2,976,907       3,763,595  
General and administrative     4,663,678       4,355,545  
Depreciation and amortization     1,470,737       1,263,604  
Impairment charges     24,137,069       -  
Restructuring and other charge     2,360,267       -  
Total operating expense     43,859,875       17,038,871  
Operating (loss) income     (29,833,011 )     1,909,114  
Net interest income     230,137       686,194  
Other income     153,677       -  
(Loss) income from continuing operations before        
income taxes     (29,449,197 )     2,595,308  
Provision for income taxes     (16,227,077 )     (145,928 )
(Loss) income from continuing operations     (45,676,274 )     2,449,380  
Discontinued operations:        
Income (loss) on disposal of discontinued operations     925       (2,731 )
Income (loss) from discontinued operations     925       (2,731 )
Net (loss) income     (45,675,349 )     2,446,649  
Preferred stock cash dividends     96,424       96,424  
Net (loss) income attributable to common stockholders   $ (45,771,773 )   $ 2,350,225  
         
Basic net (loss) income per share:        
(Loss) income from continuing operations   $ (1.50 )   $ 0.08  

Income (loss) on disposal of discontinued operations

    0.00       (0.00 )
Net (loss) income     (1.50 )     0.08  
Preferred stock cash dividends     (0.00 )     (0.00 )
Net (loss) income attributable to common stockholders   $ (1.50 )   $ 0.08  
         
Diluted net (loss) income per share:        
(Loss) income from continuing operations   $ (1.50 )   $ 0.07  

Income (loss) on disposal of discontinued operations

    0.00       (0.00 )
Net (loss) income     (1.50 )     0.07  
Preferred stock cash dividends     (0.00 )     -  
Net (loss) income attributable to common stockholders   $ (1.50 )   $ 0.07  
         
Weighted average basic shares outstanding     30,495,300       30,392,980  
Weighted average diluted shares outstanding     30,495,300       34,615,221  

To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), TheStreet.com uses non-GAAP measures of certain components of financial performance, including "EBITDA", “Adjusted EBITDA” and "free cash flow". EBITDA is adjusted from results based on GAAP to exclude interest, taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company’s business and provide an indication of the Company’s ability to service debt and fund capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of noncash stock compensation and impairment expenses, as well as other non-standard one-time charges. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the nearest GAAP measure.

 

 

For the Three Months Ended

March 31,

 

 

    2009   2008
Adjusted EBITDA   ($620,400 )   $3,871,084  
Less non-cash stock compensation   (1,243,613 )   (701,097 )
Less impairment charges   (24,137,069 )   -  
Less restructuring and other charge   (2,360,267 )   -  
Add legal settlement   153,677     -  
EBITDA   (28,207,672 )   3,169,987  
Add net interest income   230,137     686,194  
Less taxes   (16,227,077 )   (145,928 )
Less depreciation and amortization   (1,470,737 )   (1,263,604 )
Net (loss) income   ($45,675,349 )   $2,446,649  

“Free cash flow” means net (loss) income plus non-cash expenses less changes in working capital and capital expenditures. TheStreet.com believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a clear view of the Company's ability to generate cash. The presentation of this non-GAAP financial measure should be considered in addition to TheStreet.com's GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

 

For the Three Months Ended

March 31,

 
  2009   2008
Free cash flow

$4,722,272

   

$3,476,627

 
Non-cash expenses (44,197,993 )   (2,045,814 )
Changes in working capital (6,847,576 )   (374,505 )
Capital expenditures 647,948     1,390,341  

Net (loss) income

($45,675,349

)  

$2,446,649

 

Statements contained in this news release not related to historical facts may be deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties (described in the Company's SEC filings) that could cause actual results to differ.

 

 

Source: TheStreet.com, Inc.

TheStreet.com, Inc.
Rebecca Updegraph, Investor Relations
Phone: 212-321-5008
Email: IR@TheStreet.com

TheStreet, Inc.: (TST)   $0.91

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