WESTON, Mass. /PRNewswire/ --
Monster Worldwide, Inc. (NYSE: MWW) today reported financial results for the first quarter ended March 31, 2015.
"Our first quarter profitability, cash flow and leverage metrics all exceeded our expectations," said Tim Yates, President and Chief Executive Officer. "The bookings momentum we saw in our core North American Careers segment continued from previous quarters with 6% year-over-year growth. While we are pleased with the recent bookings trends, and expect them to continue, revenue growth and sales execution continues to be a primary focus. We welcome the addition of Paul Forte, a veteran sales leader, as our new head of North American sales. Bookings in our International segment increased 2% on a constant currency basis. We are confident that our new strategic products combined with our traditional core products provide a superior competitive solution for our customers. Our EBITDA margins expanded to 14.7% and we are confident we will continue to improve margins going forward, and we remain on track to achieve our 18-22% target exiting this year's fourth quarter."
During the quarter, we had a number of important business highlights including:
These initiatives are beginning to have a positive impact on our traffic metrics, particularly on North American organic traffic.
Tim Yates also commented: "Our actions in the first quarter demonstrate our commitment to our previously articulated capital allocation policies. Net debt decreased and leverage ratios improved, partially as a result of the sale of the majority of our interest in our break-even joint venture in Australia. We will continue to review other non-core assets."
First Quarter 2015 Results
Revenue of $184 million decreased 7% compared to last year's first quarter and 3% on a constant currency basis. Revenue in the first quarter of 2014 was $198 million. Revenue from the Company's Careers -- North Americaoperations decreased 4% year-over-year and revenue from Careers -- International decreased 13% year-over-year and 1% on a constant currency basis. Internet Advertising & Fees revenue and operating results are now being reported within the Careers -- North America segment. Historical quarterly revenue data is available in the Company's supplemental financial information.
Total GAAP operating expenses decreased to $193 million compared to $199 million in the first quarter of 2014. Net income attributable to Monster for the first quarter of 2015 was $8 million, or $0.09 per share, compared to net income attributable to Monster of $2 million, or $0.02 per share in the first quarter of 2014.
Non-GAAP net income attributable to the Company was $7 million, or $0.08 per share, compared to $7 million, or$0.08 per share in the first quarter of 2014. Non-GAAP operating expenses of $168 million decreased 8% year over year. Adjusted EBITDA margin of 15% was led by Careers -- North America with a 27% margin. Pro-forma items are described in the "Notes Regarding the Use of Non-GAAP Financial Measures" and are reconciled to the GAAP measure in the accompanying tables.
Net cash provided by operating activities in the quarter was $27 million and free cash flow was $19 million. Deferred revenue grew sequentially to $304 million or 1% compared to $301 million as of December 31, 2014. The Company ended the quarter with total available liquidity of approximately $170 million.
Reallocate to Accelerate
On February 10, 2015, the Company committed to implement a series of cost savings initiatives to reduce costs globally while continuing to support the Company's new strategy. The initiatives include a global workforce reduction of approximately 300 associates, lease exit costs, impairment of certain assets, and office and general expense controls. Through March 31, 2015, approximately 200 associates in North America and Europe have been impacted, and the Company has incurred $20 million of charges relating to this program. These charges have been excluded from the Company's non-GAAP financial statements for the three months ended March 31, 2015. The Company anticipates additional charges of approximately $3 million to $5 million in the second and third quarters of 2015 in connection with this program.
Segment Change
The Company has combined certain functions to better align resources and drive growth. As a result, the Internet Advertising & Fees segment has been combined with the Careers -- North America segment. More specifically, Military.com will be managed by the Government Solutions business and Fastweb and Monster.com's consumer advertising business will now be included in the Company's core North American results.
Guidance
Second quarter 2015 Non-GAAP EPS from continuing operations is expected to be in the range of $0.07 to $0.11, which excludes $4 million to $5 million of stock-based compensation, $1.2 million of non-cash debt discount amortization related to the convertible debt and restructuring charges related to the Reallocate to Accelerate program.
The Company expects to exit 2015 with a fourth quarter EBITDA margin of between 18-22%.
Historical data on Non-GAAP EPS is available in the Company's supplemental financial information.
Conference Call and Webcast
First quarter 2015 results will be discussed on Monster Worldwide's quarterly conference call on May 7, 2015 at8:30 AM ET. A live webcast of the conference call can be accessed online through the Investor Relations section of the Company's website at http://ir.monster.com. To join the conference call by telephone, please dial (888) 317-6003 or (412) 317-6061 and reference conference ID# 0430146. A presentation of financial slides will be referenced during the conference call and will be viewable through the live webcast. A PDF of the financial presentation can also be accessed directly through the Company's Investor Relations website athttp://ir.monster.com.
The Company has also made available certain supplemental financial information which can be accessed directly through the Company's Investor Relations website at http://ir.monster.com.
For a replay of the conference call, please dial (877) 344-7529 or (412) 317-0088 and reference ID# 10064152. This number is valid until midnight on May 15, 2015.
About Monster Worldwide
Monster Worldwide, Inc. (NYSE: MWW) is a global leader in connecting people to jobs, wherever they are. For more than 20 years, Monster has helped people improve their lives with better jobs, and employers find the best talent. Today, the company offers services in more than 40 countries, providing some of the broadest, most sophisticated job seeking, career management, recruitment and talent management capabilities. Monster continues its pioneering work of transforming the recruiting industry with advanced technology using intelligent digital, social and mobile solutions, including our flagship website monster.com® and a vast array of products and services. For more information visit http://monster.com/about.
Special Note: The statements in this release that are not strictly historical, including, without limitation, statements regarding the Company's strategic direction, prospects and future results, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve certain risks and uncertainties and, therefore, actual results may differ materially from what is expressed or implied herein and no assurance can be given that the Company will achieve, among other things, its outlook with respect to earnings per share for the second quarter 2015 and EBITDA margin for the fourth quarter 2015. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, economic and other conditions in the markets in which we operate, risks associated with acquisitions or dispositions, competition, and the other risks discussed in our Form 10-K and our other filings made with the Securities and Exchange Commission, which discussions are incorporated into this release by reference. Many of the factors that will determine the Company's future results are beyond the ability of management to control or predict. Readers should not place undue reliance on the forward-looking statements in this release as they reflect management's views only as of the date hereof. The Company undertakes no obligation to revise or update any of the forward-looking statements contained in this release or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Notes Regarding the Use of Non-GAAP Financial Measures
The Company has provided certain Non-GAAP financial information as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles ("GAAP") and may be different from non-GAAP measures reported by other companies. The Company believes that its presentation of non-GAAP measures provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations.
Non-GAAP revenue, operating expenses, operating income, operating margin, net income, and diluted earnings per share attributable to Monster Worldwide, Inc. all exclude certain proforma adjustments including: non-cash stock based compensation expense; costs incurred in connection with the Company's restructuring programs; non-cash impairment charges; amortization of the debt discount and deferred financing costs associated with our 3.50% convertible senior notes due 2019; write-off of deferred financing costs relating to our former credit facility, amended in October 2014; income tax benefits associated with the reversal of income tax reserves on uncertain tax positions and a tax benefit related to certain losses arising from the Company's restructuring programs; income tax provisions for increased valuation allowances on deferred tax assets; gain on deconsolidation of subsidiaries and tax provisions thereon; gain on partial sale of an equity method investment and tax provisions thereon; and charges related to exited facilities and acquisition related costs.
In the first quarter of the calendar year 2015, the Company began to utilize a fixed long-term projected non-GAAP tax rate for reporting operating results and for planning, forecasting, and analyzing future periods. This change provides better consistency across the interim reporting periods by eliminating the effects of non-recurring and period-specific items. When projecting this long-term rate, the Company evaluated a five-year financial projection comprising the current and the next four years that exclude the income tax effects of the non-GAAP pre-tax adjustments described above, eliminates the effects of non-recurring and period specific items which can vary in size and frequency, and is reflective of the anticipated future geographic mix of income among tax jurisdictions. The projected rate also assumes no new acquisitions or disposals in the five-year period, eliminates the effect of tax valuation allowances, and takes into account other factors including the Company's current tax structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where the Company operates. The non-GAAP tax rate is 35%. The Company intends to re-evaluate this long-term rate on an annual basis or if any significant events that may materially affect this long-term rate occur. This long-term rate could be subject to change for a variety of reasons, which may include (but are not limited to) for example, significant changes in the geographic earnings mix including future acquisition or disposition activity, having less income than anticipated, or fundamental tax law changes in major jurisdictions where the Company operates.
The Company uses these Non-GAAP measures for reviewing the ongoing results of the Company's core business operations and in certain instances, for measuring performance under certain of the Company's incentive compensation plans. These Non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is defined as operating income or loss before depreciation and amortization, non-cash compensation expense, non-cash impairment charges, and non-cash costs incurred in connection with the Company's restructuring programs. Adjusted EBITDA excludes the impact of the pro-forma adjustments discussed above. The Company considers EBITDA and Adjusted EBITDA to be an important indicator of its operational strength which the Company believes is useful to management and investors in evaluating its operating performance. EBITDA and Adjusted EBITDA are non-GAAP measures and may not be comparable to similarly titled measures reported by other companies.
Free cash flow is defined as cash flow from operating activities less capital expenditures. Free cash flow is considered a liquidity measure and provides useful information about the Company's ability to generate cash after investments in property and equipment. Free cash flow reflected herein is a non-GAAP measure and may not be comparable to similarly titled measures reported by other companies. Free cash flow does not reflect the total change in the Company's cash position for the period and should not be considered a substitute for such a measure.
Net cash and securities are defined as cash and cash equivalents plus short-term and long-term marketable securities, less total debt. Total available liquidity is defined as cash and cash equivalents, plus short-term and long-term marketable securities, plus unused borrowings under our credit facility. The Company considers net cash and securities and total available liquidity to be important measures of liquidity and indicators of its ability to meet its ongoing obligations. The Company also uses net cash and securities and total available liquidity, among other measures, in evaluating its choices for capital deployment. Net cash and securities and total available liquidity are presented herein as non-GAAP measures and may not be comparable to similarly titled measures used by other companies.
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MONSTER WORLDWIDE, INC. |
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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share amounts) |
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Three Months Ended March 31, |
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2015 |
2014 |
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Revenue |
$ 183,693 |
$ 198,149 |
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|
Salaries and related |
93,746 |
101,999 |
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|
Office and general |
46,042 |
55,207 |
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|
Marketing and promotion |
33,161 |
41,413 |
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|
Restructuring and other special charges |
20,222 |
- |
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|
Total operating expenses |
193,171 |
198,619 |
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|
Operating loss |
(9,478) |
(470) |
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|
Gain on partial sale of equity method investment |
8,849 |
- |
|||
|
Gain on deconsolidation of subsidiaries, net |
- |
11,828 |
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|
Interest and other, net |
(3,107) |
(1,323) |
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|
(Loss) income before income taxes and loss in equity interests |
(3,736) |
10,035 |
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|
(Benefit from) provision for income taxes |
(13,145) |
6,663 |
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|
Loss in equity interests, net |
(220) |
(133) |
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|
Net income |
9,189 |
3,239 |
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Net income attributable to noncontrolling interest |
(1,019) |
(1,174) |
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Net income attributable to Monster Worldwide, Inc. |
$ 8,170 |
$ 2,065 |
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Basic earnings per share attributable to Monster Worldwide, Inc. |
$ 0.09 |
$ 0.02 |
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Diluted earnings per share attributable to Monster Worldwide, Inc. |
$ 0.09 |
$ 0.02 |
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Weighted average shares outstanding: |
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Basic |
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