Intersections Inc. Reports Second Quarter 2018 Results and Announces Refinancing Plan
CHANTILLY, Va.--(BUSINESS WIRE)--Aug 20, 2018--Intersections Inc. (NASDAQ: INTX) today announced financial results for the quarter ended June 30, 2018 which are consistent with preliminary results announced on August 16, 2018:
“Second quarter and year-to-date 2018 consolidated income from continuing operations and adjusted EBITDA continue to show significant improvement compared to the prior year results,” said Michael R. Stanfield, Executive Chairman and President. “We are especially pleased to have reached agreement on the material terms of a proposed financing transaction, the proceeds of which we expect to use to repay our existing secured debt and support our continuing growth plans.”
Liquidity and Refinancing Update:
The Company reached agreement with an institutional investor to the material terms of a proposed preferred equity investment, which would provide us $29.0 million to $35.0 million of liquidity, including the conversion of the Bridge Notes the Company entered into during the second quarter (the “Transaction”). As of June 30, 2018, the outstanding balance of the Company’s secured debt was $17.5 million, the outstanding balances of the Bridge Notes totaled $3.0 million, and its cash on hand was approximately $7.7 million. The Company expects to use the proceeds of the Transaction to fully satisfy the secured debt, prepayment penalties and transaction costs and also provide liquidity to continue to execute its business plan.
The consummation and actual terms of the Transaction (or any other alternative refinancing transaction) are subject to a number of factors, including without limitation market conditions, negotiation and execution of definitive agreements, receipt of additional funding commitments and satisfaction of customary closing conditions, including any required shareholder approval. There can be no assurance that the Company will be able to consummate the Transaction (or any other alternative refinancing transaction) on the terms described above or at all. If the Transaction (or any other alternative refinancing transaction) is not funded in amounts sufficient to meet the repayment obligations of Amendment No. 4 to the Company’s Credit Agreement through December 31, 2018, it will not be able to meet all of the repayment obligations of the secured debt.
Consolidated Second Quarter and Year-to-Date Results:
Consolidated revenue for the quarter ended June 30, 2018 was $38.6 million, compared to $39.9 million for the quarter ended June 30, 2017. Loss from continuing operations before income taxes for the quarter ended June 30, 2018 was $(597) thousand, compared to $(7.8) million for the quarter ended June 30, 2017. Adjusted EBITDA (loss) for the quarter ended June 30, 2018 was $2.9 million, compared to $(736) thousand for the quarter ended June 30, 2017. Basic and diluted loss from continuing operations per share for the quarter ended June 30, 2018 was $(0.02), compared to $(0.33) for the quarter ended June 30, 2017.
Consolidated revenue for the six months ended June 30, 2018 was $77.7 million, compared to $80.4 million for the six months ended June 30, 2017. Income (loss) from continuing operations before income taxes for the six months ended June 30, 2018 was $674 thousand, compared to $(12.0) million for the six months ended June 30, 2017. Adjusted EBITDA (loss) for the six months ended June 30, 2018 was $6.2 million, compared to $(1.7) million for the six months ended June 30, 2017. Basic and diluted income (loss) from continuing operations per share for the six months ended June 30, 2018 was $0.05, compared to $(0.50) for the six months ended June 30, 2017.
Consolidated Second Quarter Highlights:
Second Quarter 2018 Business Update Conference Call:
The Company will hold a conference call to provide a second quarter 2018 business update on Tuesday, August 21, 2018 at 4:30 p.m. Eastern Time.
Interested parties can access the live webcast on the Investor’s page at Intersections Inc.’s website www.intersections.com. The live call can be accessed by dialing the toll-free numbers below. Those who wish to participate in the Q&A session must dial in.
The replay of the webcast will be available August 21, 2018 at 7:00 p.m. (Eastern Time) through August 28, 2018 at 11:59 PM (Eastern Time). The dial-in for the replay is 888-843-7419 or 630-652-3042 with the replay access code of 6821828#.
Non-GAAP Financial Measures:
“Adjusted EBITDA (loss)” represents consolidated income (loss) from continuing operations before income taxes plus (minus): share related compensation; non-cash impairment of goodwill, intangibles and other assets; (gain) loss on sale of Captira Analytical and Habits at Work; loss on extinguishment of debt; (benefit) from change in vacation policy; depreciation and amortization; and interest expense.
“Adjusted G&A Expense” represents consolidated general and administrative expenses (plus) minus: share related compensation; and benefit from change in vacation policy.
Intersections’ Consolidated Financial Statements, “Other Data” and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes can be found in the accompanying tables and footnotes to this release and in the “GAAP and Non-GAAP Measures” link under the “Investor & Media” page on our website at www.intersections.com.
Statements in this release relating to future plans, results, performance, expectations, achievements and the like are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Those forward-looking statements involve known and unknown risks and uncertainties and are subject to change based on various factors and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including our ability to consummate a refinancing transaction; our ability to maintain sufficient liquidity and produce sufficient cash flow to pay our debt service obligations and fund our business and growth strategy; our needs for additional capital to grow our business, including our ability to maintain compliance with the covenants under our term loan or seek additional sources of debt and/or equity financing; the success of our strategic objectives; our ability to meet the targets disclosed by management with respect to costs and revenue, and that these targets do not represent historical performance, projected results or guidance; our ability to generate revenue from our partner sales strategy and business development pipeline with our distribution partners; the timing and success of new product launches and other growth initiatives, including our Identity Guard ® with Watson ™ service; the continuing impact of the regulatory environment on our business; the continued dependence on a small number of financial institutions for a majority of our revenue and to service our U.S. financial institution customer base; our ability to execute our strategy and previously announced transformation plan; our incurring additional restructuring charges; our incurring additional charges for non-income business taxes or otherwise, or impairment costs or charges on goodwill and/or other assets; our ability to control costs; and our failure to protect private data due to a security breach or other unauthorized access. Factors and uncertainties that may cause actual results to differ include but are not limited to the risks disclosed under “Forward-Looking Statements,” “Item 1. Business—Government Regulation” and “Item 1A. Risk Factors” in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and in its recent other filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to revise or update any forward-looking statements unless required by applicable law.
Intersections Inc. (Nasdaq: INTX) provides innovative software solutions to help consumers and businesses manage the potential risks associated with the proliferation of their data in the virtual world. Under its IDENTITY GUARD ® brand, the company utilizes advanced data-enabled technologies, including artificial intelligence, to help monitor, manage and protect sensitive information. Headquartered in Chantilly, Virginia, the company was founded in 1996. To learn more, visit www.intersections.com.
The information in the following tables is presented giving effect to the disposal of Voyce, with its historical financial results reflected as discontinued operations. Additionally, the results in the following tables have been updated to reflect an adjustment to our share based compensation expense, which is recorded in general and administrative expenses on our condensed consolidated statements of operations. For additional information, please see ”— Basis of Presentation and Consolidation ” as well as “ —Revision to Previously Issued Financial Statements ” in Note 2 of our most recent Form 10-Q.
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