Propel Media Launches with Profitable First Quarter Earnings

May 18, 2015

2 men and 2 women, all in business attire sitting together at small table.

Propel Media Launches with Profitable First Quarter Earnings

  • Revenues of $21.5 million and Adjusted EBITDA of $5.2 million
  • Net Income of $33.6 million, reflecting one-time tax benefit
  • Merger integration savings achieved ahead of schedule

Propel Media, Inc. (OTCBB: PROM), formed by the January merger of Kitara Media Corp. and Future Ads LLC, announced that it achieved revenue of $21.5 million and adjusted EBITDA of $5.2 million in its first quarter as a combined public company bringing together online video, display and mobile advertising technology solutions for advertisers, app developers and publishers.

“We are pleased that the merger of these leading ad tech companies has gone smoothly and that we were able to initiate cost savings initiatives and new business development strategies that we believe will provide operating benefits later this year,” said Bob Regular, CEO of Propel Media. “We are excited that our proprietary Trafficvance and PROPEL+ technology platforms are launching dynamic video ad and content optimization capabilities to position Propel Media to take advantage of growth opportunities in an ever changing market environment,” said Mr. Regular.

Our merger was accounted for as a reverse merger, with Future Ads as the accounting acquirer. The historical financial statements are those of Future Ads and Future Ads was deemed to have acquired Kitara on the date of the reverse merger. Upon the closing of the merger, Future Ads became subject to income taxes, and as such, we recorded a deferred income tax benefit of approximately $31 million.

Complete information on the Company’s financial performance for the first quarter ended March 31, 2015 is set forth in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2015.

About Propel Media

Propel Media is a performance focused digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers. Our mission is to provide exceptional performance for our partners.

The Company has offices in Irvine, CA and Jersey City, NJ. For more information visit: www.propelmedia.com

Forward-Looking Statements

Certain information and statements contained in this press release, including those regarding Propel 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 Propel Media and not all of which are known to Propel Media, including, without limitation those risk factors described from time to time in Propel Media’s reports filed with the SEC. Among the factors that could cause actual results to differ materially are Propel Media’s: loss of key advertising customers; inability to acquire new advertising customers; inability to expand its video content library; 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.

Use of Non-GAAP Financial Information

In addition to the unaudited results presented in accordance with generally accepted accounting principles, or GAAP, in this press release, the Company presents adjusted EBITDA which is a non-GAAP measure. The adjusted EBITDA is determined by taking net income and adding back depreciation and amortization, income tax benefit, interest expense and stock-based compensation. The Company believes that this non-GAAP measure, viewed in addition to and not in lieu of the Company’s reported GAAP results, provides useful information to investors by providing a more focused measure of operating results. This metric is an integral part of the Company’s internal reporting to evaluate its operations and the performance of senior management. A reconciliation table to the comparable GAAP measure is available in the accompanying financial tables below. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies.

Propel Media, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

 As of 

Assets

March 31, 2015

December 31, 2014

(unaudited)

Current assets

Cash

$          6,346,000

$            3,675,000

Accounts receivable, net

11,242,000

8,054,000

Prepaid expenses

602,000

343,000

Deferred tax assets, current

12,000

Other current assets

232,000

Total current assets

18,434,000

12,072,000

Property and equipment, net

3,050,000

2,034,000

Restricted cash

513,000

Intangible assets

586,000

Goodwill

2,467,000

Deferred tax assets, non-current

34,610,000

Other assets

698,000

56,000

Total assets

$        60,358,000

$          14,162,000

Liabilities and Stockholders’ (Deficit) Equity

Current liabilities

Accounts payable

$          7,622,000

$            3,540,000

Accrued expenses

3,311,000

4,184,000

Advertiser deposits

2,627,000

2,610,000

Obligations to transferors

650,000

Short-term portion of long-term debt

6,189,000

Revolving credit facility

5,751,000

Total current liabilities

25,500,000

10,984,000

Long-term debt

71,442,000

Obligations to transferors

16,387,000

Other non-current liabilities

428,000

464,000

Note payable stockholder, non-current, net

100,000

Total liabilities

113,857,000

11,448,000

Commitments and contingencies

Stockholders’ (Deficit) Equity

Preferred Stock, $0.0001 par value, authorized 1,000,000 shares,

no shares issued or outstanding

Common Stock, $0.0001 par value, authorized 500,000,000 shares,

25,000

15,000

issued and outstanding 250,010,162 and 154,125,921,

at March 31, 2015 and December 31, 2014, respectively

Additional paid-in capital

139,000

Accumulated (deficit) earnings

(53,663,000)

2,699,000

Total stockholders’ (deficit) equity

(53,499,000)

2,714,000

Total liabilities and stockholders’ (deficit) equity

$        60,358,000

$          14,162,000

Propel Media, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(unaudited)

For the Three Months Ended March 31,

2015

2014

Revenues

$           21,491,000

$           24,669,000

Cost of revenues

10,172,000

11,295,000

Gross profit

11,319,000

13,374,000

Operating expenses:

Salaries, commissions, benefits and related expenses

3,669,000

3,541,000

Technology development and maintenance

889,000

618,000

Marketing and promotional

25,000

102,000

General and administrative

959,000

319,000

Professional services

737,000

173,000

Depreciation and amortization

385,000

320,000

Operating expenses

6,664,000

5,073,000

Operating income

4,655,000

8,301,000

Interest expense

(2,407,000)

Income before income tax benefit

2,248,000

8,301,000

Income tax benefit

31,324,000

Net income

$           33,572,000

$             8,301,000

Net income per common share, basic and diluted

$                      0.15

$                      0.05

Weighted average number of common shares outstanding – basic and diluted

221,244,890

154,125,921

Pro-forma computation related to conversion to a C corporation upon

completion of the reverse merger with Kitara Media Corp.

Historical pre-tax net income before income taxes

$             2,248,000

8,301,000

Pro-forma income tax expense

897,000

3,312,000

Pro-forma net income

$             1,351,000

$             4,989,000

Unaudited pro-forma net income per common share, basic and diluted

$                      0.01

$                      0.03

Weighted average number of shares outstanding – basic and diluted

221,244,890

154,125,921

Propel Media, Inc. and Subsidiaries

Reconciliation of Non-GAAP Information

(Unaudited)

For the Three Months Ended March 31,

2015

2014

Net loss (GAAP)

$           33,572,000

$                   8,301,000

Add (subtract) the following items:

    Depreciation and amortization

385,000

320,000

    Income tax benefit

(31,324,000)

    Interest expense

2,407,000

    Stock-based compensation

139,000

Adjusted EBITDA (non-GAAP)

$             5,179,000

$                   8,621,000