TheStreet, Inc.
THESTREET, INC. (Form: 8-K, Received: 03/10/2017 08:07:21)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  March 10, 2017

 

THESTREET, INC.

 

(Exact name of registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction of incorporation)

 

0-25779

(Commission File Number)

06-1515824

(IRS Employer Identification No.)

 

14 WALL STREET, 15 TH FLOOR

NEW YORK, NEW YORK 10005

 

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code:  (212) 321-5000

 

NA

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c ))

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 10, 2017, TheStreet, Inc. (the "Company") issued a press release announcing financial results for its fourth quarter and year ended December 31, 2016. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated herein by reference in this Item 2.02.

 

The information in this Current Report on Form 8-K and the Exhibit attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 7.01 Regulation FD Disclosure.

 

The information set forth under Item 2.02, “Results of Operations and Financial Condition”, is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Shell company transactions: None
(d) Exhibits: Press release, dated March 10, 2017, issued by TheStreet, Inc.

 

Exhibit No.   Exhibit Description
     
99.1**   Press Release dated March 10, 2017

 

** Furnished herewith.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  THESTREET, INC.
     
Date: March 10, 2017 By: /s/ Eric Lundberg
    Name: Eric Lundberg
    Title: Chief Financial Officer

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
     
99.1   Press Release dated March 10, 2017

 

 

Exhibit 99.1

 

 

TheStreet Reports Fourth Quarter and Full Year 2016 Results

 

· Total Revenue of $63.5 million for the full year 2016, down 6% year-over-year.
· Business-to-Business Revenue of $29.3 million, up 1% year-over-year. Revenue was $30.3 million, up 5% year-over-year, adjusted for exchange rate losses.
· Business-to-Consumer Revenue of $34.2 million, down 12% year-over-year.
· GAAP net loss attributable to common stockholders of $17.5 million, or ($0.50) per share, versus a net loss attributable to common stockholders of $1.9 million, or $0.06 per share in the prior year period.
· The 2016 net loss includes an extraordinary non-cash goodwill impairment charge of $11.6 million and a cumulative depreciation adjustment of $1.5 million, as well as restructuring and other one-time charges, partially offset by the reversal of a contingent liability of $1.8 million.
· Adjusted EBITDA for Full Year 2016 of $2.8 million declined from $5.0 million for Full Year 2015.
· Cash, cash equivalents, restricted cash and marketable securities of $23.4 million, a decrease of $7.3 million as compared to December 31, 2015 and $2.5 million since Sept. 30, 2016.

NEW YORK March 10 , 2017 -- TheStreet, Inc. (Nasdaq: TST) a leading financial news and information company, today reported financial results for the fourth quarter and full year ended December 31 , 2016.

 

For the fourth quarter of 2016, the Company reported revenue of $15.9 million, net loss attributable to common stockholders of $11.6 million, or ($0.33) per basic and diluted share, and an Adjusted EBITDA (1) of $1.2 million. For the full year 2016, the Company reported revenue of $63.5 million, net loss attributable to common stockholders of $17.5 million, or ($0.50) per basic and diluted share, and Adjusted EBITDA of $2.8 million. Drivers of the fourth quarter and full year net loss are a non-cash goodwill impairment in the amount of $11.6 million, an additional non-cash depreciation charge of $1.5 million, restructuring charges related to severance as well as lower premium subscription revenue, all partially offset by a $1.8 million non-cash contingent consideration reduction from the purchase of Management Diagnostics Limited (“MDL”).

 

“This was an investment year and the seeds of our turnaround efforts began to take hold in the fourth quarter on both our institutional side and our consumer businesses,” said David Callaway, President and CEO. “The rally in financial markets since November helped us begin to put Brexit and the declines in our premium subscription business behind us. We still maintain a strong cash position, have aggressively been cutting costs, and have started offering new products and revenue strategies to our B2B clients and B2C readers and customers alike.” Callaway continued, “As mentioned earlier in the year, our goal is to allow greater transparency and insight to our investors with the breakout of the business to business and business to consumer products we offer.”

 

 

 

 

Fourth Quarter Results

 

Revenue for the fourth quarter of 2016 was $15.9 million, a decrease of $1.0 million, or 6%, from $17.0 million in the prior year.

 

Business-to-business (“B2B”) revenue including The Deal, BoardEx and RateWatch totaled $7.4 million, up $27,000 as compared to the fourth quarter of 2015. Adjusting for the exchange rate losses, B2B revenue was up 6% compared to the fourth quarter of 2015. Business-to-consumer (“B2C”) revenue was $8.5 million, down 11%, compared to the fourth quarter of 2015.

 

Operating expenses for the fourth quarter of 2016 were $28.2 million, which include an $11.6 million non-cash goodwill impairment, a cumulative adjustment of a non-cash depreciation charge of $1.5 million and a non-cash reduction of a contingent consideration of $1.8 million from the purchase of MDL in 2014 (collectively “Charges”), severance of $1.4 million, partially offset by the reversal of $0.7 million recorded in Q1 as a one-time sales tax provision. The Company recorded a goodwill impairment charge related to a series of acquisitions made in 2012 and 2014 that have since produced results that were lower than expected at the time of the acquisitions. In addition, the company took measures to reduce costs and incurred a $1.4 million severance related charge. Excluding these Charges, severance and reversal of the one-time sales tax provision, operating expenses for the fourth quarter decreased $0.3 million as compared to the fourth quarter of 2015. Net loss attributable to common stockholders for the fourth quarter of 2016 was $11.6 million compared to net loss attributable to common stockholders of $0.3 million in the prior year period. The Company reported a basic and diluted net loss per share attributable to common stockholders of ($0.33) for the fourth quarter of 2016, compared to net loss per share attributable to common stockholders of ($0.01) for the prior year period. Adjusted EBITDA for the fourth quarter of 2016 was $1.2 million compared to $2.0 million from the prior year period. The decline in Adjusted EBITDA primarily resulted from the decline in B2C subscription revenue offset by lower operating expenses from cost controls instituted during this year.

 

 

Business-to-Business Revenue

 

B2B revenue for the fourth quarter of 2016 was $7.4 million, an increase of $27 thousand compared to the fourth quarter of 2015. The increase was the result of increased event revenue generated at The Deal and subscription revenue growth in BoardEx, completely offset by FX losses at BoardEx. Total B2B revenue was $7.8 million, up $0.4 million adjusted for the FX impact.

 

 

 

 

 

Business-to-Consumer Revenue

 

B2C revenue for the fourth quarter of 2016 was $8.5 million, a decrease of $1.1 million, or 11%, from $9.6 million in the fourth quarter of 2015. B2C subscription revenue for the fourth quarter of 2016 was $5.3 million, a decrease of $1.1 million, or 16%, from $6.4 million in the fourth quarter of 2015. This decrease primarily related to a 17% decline in the weighted-average number of subscriptions offset by a 1% increase in the average revenue recognized per subscription. Average monthly churn (2) improved 10% from the fourth quarter of 2015. B2C media revenue for the fourth quarter of 2016 was $3.1 million, flat compared to the prior year period.

 

Full Year Results

 

Revenue for the full year 2016 was $63.5 million, a decrease of $4.2 million, or 6%, from $67.7 million in the prior year.

 

B2B revenue including The Deal, BoardEx and RateWatch totaled $29.3 million up $0.3 million or 1% from the prior year. Exchange rate declines related to the depreciation of the Pound sterling, negatively impacted BoardEx revenue by $1.0 million. Adjusted for the negative impact of FX, total B2B revenue increased 5%. B2C revenue was $34.2 million, down 12%, compared to the prior year. Substantially all the revenue decline occurred in premium newsletters which declined $4.2 million year over year primarily from a 14% decline in the number of subscriptions and a 2% decline in average rate per subscriber. B2C advertising revenue of $10.1 million remained flat as compared to full year 2015.

 

Operating expenses for the full year 2016 were $80.7 million, an increase of $12.8 million, or 19%, from $67.9 million in the prior year. Excluding the Charges mentioned in the Fourth Quarter Results above, severance of $1.6 million, restructuring charges of $1.0 million and a one-time sales tax expense of $0.7 million, operating expenses for full year 2016 decreased by $2.2 million, or 3%, as compared to the same period of the prior year. Net loss attributable to common stockholders for the full year 2016 was $17.5 million compared to a net loss attributable to common stockholders of $1.9 million in the prior year. The Company reported basic and diluted net loss per share attributable to common stockholders of ($0.50) for the full year 2016 compared to a net loss per share attributable to common stockholders of ($0.06) for the prior year. Adjusted EBITDA for the full year 2016 was $2.8 million compared to $5.0 million for the prior year.

 

Net cash used in operating activities for the full year ending December 31, 2016 totaled $2.8 million, down $3.6 million as compared to the same period during the prior year. The change in net cash used in operating activities over the periods included an increased net loss which was partially offset by non-cash charges related to the goodwill impairment, deferred taxes, change in accrued earnout related to the purchase of MDL in 2014, and higher depreciation, all partially offset by the change in the balances of accrued expenses, and other receivables over the period. The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $23.4 million, as compared to $30.7 million at December 31, 2015.

 

 

 

Conference Call Information

TheStreet will discuss its financial results for the fourth quarter and full year ending December 31, 2016 today at 11:00 a.m. EDT.

To participate in the call, please dial 877-591-4951 (domestic) or 719-325-4745 (international). The conference code is 8199940. This call is being webcast and can be accessed on the Investor Relations section of TheStreet website at http://investor-relations.thestreet.com/events.cfm

A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

About TheStreet

TheStreet, Inc. (www.t.st) is a leading financial news and information company providing business and financial news, market data, investing ideas and analysis to personal and institutional investors worldwide. The Company’s collection of digital services provides users, subscribers and advertisers with a variety of content and tools through a range of online, social media, tablet and mobile channels.  The Company's portfolio of business and personal finance brands includes: TheStreet, RealMoney and Action Alerts PLUS. To learn more, visit www.thestreet.com.  The Deal, the Company's institutional business, provides intraday coverage of mergers and acquisitions and all other changes in corporate control, and through its BoardEx product, director and officer profiles. To learn more, visit www.thedeal.com and www.boardex.com. RateWatch provides rate and fee data from banks and credit unions across the U.S. for a wide variety of banking products. To learn more, visit www.rate-watch.com.

Non-GAAP Financial Information

(1) To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company also uses “EBITDA” and “Adjusted EBITDA”, non-GAAP measures of certain components of financial performance. “EBITDA” is adjusted from results based on GAAP to exclude interest, income 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 acquisitions and capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. “Adjusted EBITDA” further eliminates the impact of non-cash stock compensation, impairment charges, restructuring, transaction related costs, severance and other charges affecting comparability. 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. "Free cash flow" means net income/loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures. The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.

 

(2) Average monthly churn is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, and then divided by three.  Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding planned investments in our business, improved premium subscription products and expectations for 2017. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the Securities and Exchange Commission ("SEC") that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might contribute to such differences include, among others, economic downturns and the general state of the economy, including the financial markets and mergers and acquisitions environment; our ability to drive revenue, and increase or retain current subscription revenue, particularly in light of the investments in our expanded news operations; our ability to develop new products; competition and other factors set forth in our filings with the SEC, which are available on the SEC's website at www.sec.gov. All forward-looking statements contained herein are made as of the date of this press release. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results or occurrences. The Company disclaims any obligation to update these forward-looking statements, whether as a result of new information, future developments or otherwise.

 

 

Contacts:

 

Eric Lundberg

Chief Financial Officer

TheStreet, Inc.

ir@thestreet.com

 

John Evans

Investor Relations
PIR Communications
415-309-0230
ir@thestreet.com

 

 

 

THESTREET, INC.
CONSOLIDATED BALANCE SHEETS
         
    December 31,
ASSETS   2016   2015
         
Current Assets:                
Cash and cash equivalents   $ 21,371,122     $ 28,445,416  
Accounts receivable, net of allowance for doubtful                
   accounts of $316,204 at December 31, 2016 and $357,417 at                
   December 31, 2015     5,119,959       5,102,464  
Other receivables     358,266       790,148  
Prepaid expenses and other current assets     1,416,956       1,205,708  
Restricted cash     —         161,250  
      Total current assets     28,266,303       35,704,986  
Noncurrent Assets:                
Property and equipment, net of accumulated depreciation and                
   amortization of $5,682,286 at December 31, 2016 and                
   $4,804,411 at December 31, 2015     3,550,007       2,773,737  
Marketable securities     1,550,000       1,590,000  
Other assets     285,843       329,885  
Goodwill     29,183,141       43,318,670  
Other intangibles, net of accumulated amortization of $20,134,178                
   at December 31, 2016 and $15,674,328 at December 31, 2015     15,127,818       18,674,376  
Restricted cash     500,000       500,000  
      Total assets   $ 78,463,112     $ 102,891,654  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current Liabilities:                
Accounts payable   $ 2,526,034     $ 2,494,341  
Accrued expenses     5,115,558       5,161,981  
Deferred revenue     22,476,962       24,738,780  
Other current liabilities     983,799       1,235,551  
      Total current liabilities     31,102,353       33,630,653  
Noncurrent Liabilities:                
Deferred tax liability     2,036,487       1,906,295  
Other liabilities     3,274,816       5,360,467  
      Total liabilities     36,413,656       40,897,415  
                 
Stockholders' Equity:                
Preferred stock; $0.01 par value; 10,000,000 shares                
   authorized; 5,500 shares issued and 5,500 shares                
   outstanding at December 31, 2016 and December 31, 2015;                
   the aggregate liquidation preference totals $55,000,000 as of                
   December 31, 2016 and December 31, 2015     55       55  
Common stock; $0.01 par value; 100,000,000 shares                
   authorized; 42,936,906 shares issued and 35,421,217                
   shares outstanding at December 31, 2016, and 42,458,779                
   shares issued and 35,123,132 shares outstanding at                
   December 31, 2015     429,369       424,588  
Additional paid-in capital     271,143,445       269,524,415  
Accumulated other comprehensive loss     (5,898,305 )     (1,999,026 )
Treasury stock at cost; 7,515,689 shares at December 31, 2016                
   and 7,335,647 shares at December 31, 2015     (13,211,141 )     (13,056,541 )
Accumulated deficit     (210,413,967 )     (192,899,252 )
      Total stockholders' equity     42,049,456       61,994,239  
                 
      Total liabilities and stockholders' equity   $ 78,463,112     $ 102,891,654  

 

 

 

THESTREET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                 
    For the Three Months Ended   For the Year Ended
    December 31,   December 31,
    2016   2015   2016   2015
Net revenue:   unaudited        
Business to business   $ 7,443,532     $ 7,416,463     $ 29,323,401     $ 28,992,120  
business to consumer     8,480,186       9,550,825       34,176,130       38,663,780  
   Total net revenue     15,923,718       16,967,288       63,499,531       67,655,900  
                                 
Operating expense:                                
Cost of services     8,484,313       7,998,845       32,440,598       33,615,867  
Sales and marketing     4,062,663       3,862,520       15,697,065       16,190,749  
General and administrative     3,226,628       3,755,159       16,157,151       15,000,439  
Depreciation and amortization     2,685,442       1,124,255       5,681,563       4,309,094  
Impairment of goodwill     11,583,000       —         11,583,000       —    
Change in fair value of contingent consideration     (1,807,945 )     —         (1,807,945 )     —    
Restructuring and other charges     (805 )     —         959,686       (1,221,224 )
     Total operating expense     28,233,296       16,740,779       80,711,118       67,894,925  
     Operating (loss) income     (12,309,578 )     226,509       (17,211,587 )     (239,025 )
Net interest expense     (9,848 )     (25,341 )     (34,121 )     (122,637 )
Net (loss) income before income taxes     (12,319,426 )     201,168       (17,245,708 )     (361,662 )
(Recovery) provision for income taxes     (680,650 )     450,425       269,007       1,181,341  
Net loss     (11,638,776 )     (249,257 )     (17,514,715 )     (1,543,003 )
Preferred stock cash dividends     —         96,424       —         385,696  
Net loss attributable to common stockholders   $ (11,638,776 )   $ (345,681 )   $ (17,514,715 )   $ (1,928,699 )
                                 
Basic and diluted net loss per share:                                
     Net loss attributable to common stockholders   $ (0.33 )   $ (0.01 )   $ (0.50 )   $ (0.06 )
                                 
Cash dividends declared and paid per common share   $ —       $ 0.025     $ —       $ 0.100  
                                 
Weighted average basic and diluted shares outstanding     35,257,706       34,873,511       35,236,113       34,839,233  
                                 
                                 
                                 
Reconciliation of net loss to adjusted EBITDA - see note (1):                                
Net loss   $ (11,638,776 )   $ (249,257 )   $ (17,514,715 )   $ (1,543,003 )
Provision for income taxes     (680,650 )     450,425       269,007       1,181,341  
Net interest expense     9,848       25,341       34,121       122,637  
Depreciation and amortization     2,685,442       1,124,255       5,681,563       4,309,094  
EBITDA     (9,624,136 )     1,350,764       (11,530,024 )     4,070,069  
Impairment of goodwill     11,583,000       —         11,583,000       —    
Change in fair value of contingent consideration     (1,807,945 )     —         (1,807,945 )     —    
Restructuring and other charges     (805 )     —         959,686       (1,221,224 )
Stock based compensation     366,628       440,886       1,518,698       1,570,142  
One-time sales tax provision     (700,000 )     —         665,198       —    
Recovery of previously impaired investment     (40,593 )     (50,197 )     (206,791 )     (197,190 )
Severance     1,425,926       269,912       1,618,308       745,625  
Transaction related costs     —         —         —         25,847  
Adjusted EBITDA   $ 1,202,075     $ 2,011,365     $ 2,800,130     $ 4,993,269  

 

 

 

THESTREET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
         
    For the Year Ended December 31,
    2016   2015
Cash Flows from Operating Activities:                
Net loss   $ (17,514,715 )   $ (1,543,003 )
Adjustments to reconcile net loss to net cash provided by                
   operating activities:                
Stock-based compensation expense     1,518,698       1,570,142  
Provision for doubtful accounts     54,625       280,383  
Depreciation and amortization     5,681,563       4,309,094  
Deferred taxes     130,192       1,177,396  
Impairment of goodwill     11,583,000       —    
Change in fair value of contingent consideration     (1,807,945 )     —    
Restructuring and other charges     105,113       —    
Deferred rent     (678,064 )     (120,400 )
Changes in operating assets and liabilities:                
    Accounts receivable     (226,980 )     (304,156 )
    Other receivables     421,843       (242,563 )
    Prepaid expenses and other current assets     (231,310 )     (223,375 )
    Other assets     26,271       (66,556 )
    Accounts payable     41,541       22,452  
    Accrued expenses     67,540       (1,146,629 )
    Deferred revenue     (1,916,494 )     (1,109,538 )
    Other current liabilities     (138,187 )     (311,049 )
    Other liabilities     125,264       (1,401,639 )
          Net cash (used in) provided by operating activities     (2,758,045 )     890,559  
                 
Cash Flows from Investing Activities:                
Sale and maturity of marketable securities     —         2,005,484  
Adjustment to purchase of Management Diagnostics Limited     —         50,494  
Restricted cash     161,250       639,750  
Capital expenditures     (3,676,051 )     (3,365,509 )
          Net cash used in investing activities     (3,514,801 )     (669,781 )
                 
Cash Flows from Financing Activities:                
Cash dividends paid on common stock     (12,762 )     (3,539,477 )
Cash dividends paid on preferred stock     —         (385,696 )
Proceeds from the exercise of stock options     —         839  
Shares withheld on RSU vesting to pay for withholding taxes     (154,600 )     (147,598 )
          Net cash used in financing activities     (167,362 )     (4,071,932 )
                 
Effect of exchange rate changes on cash and cash equivalents     (634,086 )     (162,439 )
                 
Net decrease in cash and cash equivalents     (7,074,294 )     (4,013,593 )
Cash and cash equivalents, beginning of period     28,445,416       32,459,009  
Cash and cash equivalents, end of period   $ 21,371,122     $ 28,445,416  
                 
                 
Reconciliation of net loss to free cash flow - see note (1):                
Net loss   $ (17,514,715 )   $ (1,543,003 )
Noncash expenditures     16,587,182       7,216,615  
Changes in operating assets and liabilities     (1,830,512 )     (4,783,053 )
Capital expenditures     (3,676,051 )     (3,365,509 )
Free cash flow   $ (6,434,096 )   $ (2,474,950 )