SOURCE: Vertro, Inc

Vertro, Inc

March 25, 2010 16:01 ET

Vertro, Inc. Announces Fourth Quarter and Full Year 2009 Results

Company Delivers on Q4 Profit Forecast With $0.8 Million in GAAP Net Income From Continued Operations

NEW YORK, NY--(Marketwire - March 25, 2010) - Vertro, Inc. (NASDAQ: VTRO), today reported financial results for the fourth quarter and full year ended December 31, 2009.

Summary of Fourth Quarter 2009 Results from Continuing Operations:

-- Revenue of $8.0 million in Q4 2009, compared to revenue of $7.4 million
   in Q3 2009;

-- Gross margins of 95% in Q4 2009, comparable to the 94% gross margins
   in Q3 2009;

-- EBITDA of $0.4 million in Q4 2009, compared to an EBITDA loss of $1.6
   million in Q3 2009. Q4 2009 EBITDA included $0.2 million non-cash
   compensation expense and a $0.4 million gain from the sale of a patent.
   Q3 2009 EBITDA included $0.2 million non-cash compensation expense;

-- Adjusted EBITDA of $0.3 million in Q4 2009, compared to an Adjusted
   EBITDA loss of $1.4 million in Q3 2009. Q4 2009 Adjusted EBITDA
   excluded $0.2 million non-cash compensation expense and a $0.4 million
   gain from the sale of a patent. Q3 2009 EBITDA excluded $0.2 million
   non-cash compensation expense; and

-- GAAP net income from continuing operations of $0.8 million or $0.02 per
   basic share in Q4 2009, compared to GAAP net loss from continuing
   operations of $1.8 million or $(0.05) per basic share in Q3 2009.

"2009 was a transformational year in which we completed the sale of MIVA Media and focused on driving growth and returning the continuing business to profitability," commented Peter Corrao, Vertro's President and Chief Executive Officer.

"We believe our financial results since the sale of MIVA Media on March 12 speak for themselves. We turned $6.0 million in revenue and a $3.4 million EBITDA loss in Q2 2009, into $8.0 million in revenue and a $0.4 million EBITDA profit in Q4 2009. We believe that our focus on product innovation and vertical and international expansion will enable us to achieve EBITDA profitability throughout 2010."

Fourth Quarter 2009 Results from Continuing Operations

Revenue was $8.0 million in Q4 2009, compared to Q3 2009 revenue of $7.4 million.

Gross margins were 95% in Q4 2009, compared to 94% in Q3 2009. Gross margin excludes advertising spend of $4.9 million in Q4 2009 and $6.0 million in Q3 2009, which is included in consolidated operating expenses within the marketing, sales and service category.

Operating expenses were $7.5 million in Q4 2009, compared to $8.6 million in Q3 2009. The operating expenses in Q3 and Q4 2009 included $0.2 million of non-cash compensation expense.

EBITDA was $0.4 million in Q4 2009, compared to an EBITDA loss of $1.6 million in Q3 2009. Q4 2009 EBITDA included $0.2 million non-cash compensation expense and a $0.4 million gain from the sale of a patent. Q3 2009 EBITDA included $0.2 million non-cash compensation expense.

Adjusted EBITDA was $0.3 million in Q4 2009 compared to an Adjusted EBITDA loss of $1.4 million in Q3 2009. Q4 2009 Adjusted EBITDA excluded $0.2 million non-cash compensation expense and a $0.4 million gain from the sale of a patent. Q3 2009 Adjusted EBITDA excluded $0.2 million non-cash compensation expense.

GAAP net income was $0.8 million or $0.02 per basic share in Q4 2009, compared to GAAP net loss of $1.8 million or $(0.05) per basic share in Q3 2009. Q4 2009 GAAP net income included a $0.4 million gain from the sale of a patent.

Adjusted net income was $0.7 million or $0.02 per diluted share in Q4 2009, compared to Adjusted net loss of $1.5 million or $(0.04) per diluted share in Q3 2009. Q4 2009 Adjusted net income excluded $0.2 million in non-cash compensation expense and a $0.4 million gain from the sale of a patent. Q3 2009 Adjusted net loss excluded $0.2 million in non-cash compensation.

Cash and cash equivalents were $4.8 million at December 31, 2009, a decrease of $1.5 million from September 30, 2009 cash of $6.3 million. The decrease was primarily a result of certain anticipated one-time expenses.

As of December 31, 2009, the Company had an active base of 42 full time employees, down from approximately 50 on September 30, 2009.

Full Year 2009 Results from Continuing Operations:

Revenue was $27.6 million in FY 2009, compared to revenue of $41.3 million in FY 2008. The decrease in revenue was due primarily to reductions in advertising spend in the second half of 2008 that resulted in a decline in the Company's live user base.

Gross margins were 94% in FY 2009, compared to 94% in FY 2008.

Operating expenses were $33.7 million in FY 2009, compared to $58.4 million in FY 2008. In 2008 total operating expenses included $1.9 million in litigation settlements, $7.9 million in non-cash goodwill and tangible and intangible asset impairment charges, and $0.6 million in restructuring charges.

EBITDA was a loss of $7.2 million in FY 2009, compared to an EBITDA loss of $17.7 million in FY 2008. 2009 EBITDA included $1.2 million in non-cash compensation expense and a $0.4 million gain from the sale of a patent. 2008 EBITDA included $2.3 million in non-cash compensation expense, $1.9 million in a litigation settlement, $7.9 million in non-cash goodwill and tangible and intangible asset impairment charges, and $0.6 million in restructuring charges.

Adjusted EBITDA was a loss of $6.4 million in FY 2009, compared to an Adjusted EBITDA loss of $4.9 million in FY 2008. FY 2009 adjustments were $1.2 million non-cash compensation expense, a $0.4 gain from the sale of a patent, and ($0.02) from the reversal of a restructuring charge. FY 2008 adjustments were $2.3 million non-cash compensation expense, $7.9 million in non-cash goodwill and tangible and intangible asset impairment charges, and $0.6 million in restructuring charges.

GAAP net loss was $7.7 million, or $(0.23) per diluted share in FY 2009, compared to GAAP net loss of $19.6 million, or $(0.60) per diluted share in FY 2008. 2009 GAAP net loss included a $0.4 million gain from the sale of a patent.

Adjusted net loss was $6.8 million or $(0.20) per diluted share in FY 2009, compared to an Adjusted net loss of $5.5 million or $(0.17) per diluted share in FY 2008. FY 2009 adjustments were $1.2 million non-cash compensation expense, a $0.4 million gain from the sale of a patent, ($0.02) from the reversal of a restructuring charge, and $0.1 million in amortization. FY 2008 adjustments were $2.3 million non-cash compensation expense, $7.9 million in non-cash goodwill and tangible and intangible asset impairment charges, $0.6 million in restructuring charges, and $1.4 million in amortization.

Selected metrics from continuing operations for FY 2009 are available on Vertro's investor relations website at: http://ir.vertro.com/results.cfm

Management Conference Call

Management will participate in a conference call to discuss the full results for the Company on Thursday, March 25, 2010, at approximately 4:30 p.m. ET. Details of the call for interested parties are as follows:

Date: Thursday, March 25, 2010
Time: 4:30 p.m. ET
Dial-in numbers: (877) 353-0044 / (970) 315-0525 (Intl.)
Live webcast: http://ir.vertro.com/events.cfm
Conference call replay: http://ir.vertro.com/events.cfm

Vertro believes that "EBITDA," "Adjusted EBITDA," "Adjusted net income/loss" and "Adjusted net income/loss per share" provide meaningful measures for comparison of the Company's current and projected operating performance with its historical results due to the significant changes in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off. Vertro defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. Vertro uses EBITDA and Adjusted EBITDA as internal measures of its business and believes they are utilized as important measures of performance by the investment community. Vertro sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. Vertro defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. Vertro believes the use of these measures does not lessen the importance of GAAP measures.

About Vertro, Inc.

Vertro, Inc. (NASDAQ: VTRO) is an Internet company that owns and operates the ALOT product portfolio. ALOT's products are designed to 'Make the Internet Easy' by enhancing the way consumers engage with content online. Through ALOT, Internet users can discover best-of-the-web content and display that content through customizable toolbar, homepage and desktop products. ALOT has millions of live users across its product portfolio. Together these users conduct high-volumes of type-in search queries, which are monetized through third-party search and content agreements.

Source: VTRO-E

Forward-looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate," "plan," "will," "intend," "believe" or "expect" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including (1) our ability to successfully execute upon our corporate strategies, (2) our ability to distribute and monetize our international products at rates sufficient to meet our expectations, (3) our ability to develop and successfully market new products and services, and (4) the potential acceptance of new products in the market. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K for fiscal 2009.

Non-GAAP Financial Measures

This press release includes discussion of additional financial measures "EBITDA," "Adjusted EBITDA," "Adjusted Net Loss," "Adjusted Net Income," "Adjusted Net Loss Per Share" and "Adjusted Net Income Per Share," which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Vertro provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to net income/loss and net income/loss per share for the three months and year ended December 31, 2009 are included in this press release is set forth below.

                               Vertro, Inc.
                  Consolidated Statements of Operations
                  (in thousands, except per share data)

                                  Three      Three     Twelve     Twelve
                                 Months     Months     Months     Months
                                  Ended      Ended      Ended      Ended
                                December   December   December   December
                                31, 2009   31, 2008   31, 2009   31, 2008
                                ---------  ---------  ---------  ---------
                               (unaudited)(unaudited)(unaudited)(unaudited)
 Revenues                       $   8,008  $   8,550  $  27,633  $  41,291
 Cost of services                     387        426      1,767      2,352
                                ---------  ---------  ---------  ---------
 Gross profit                       7,621      8,124     25,866     38,939
 Operating expenses
     Marketing, sales, and
      service                       5,351      5,616     22,597     28,269
     General and administrative     1,641      3,083      8,521     14,808
     Product development              525        859      2,452      3,562
     Amortization                       -          -        146      1,364
     Litigation Settlement              -      1,875          -      1,875
     Impairment                         -      7,927          -      7,927
     Restructuring Charges              -        (27)       (15)       634
                                ---------  ---------  ---------  ---------
 Total operating expenses           7,517     19,333     33,701     58,439
                                ---------  ---------  ---------  ---------
 Income (Loss) from operations        104    (11,209)    (7,835)   (19,500)
 Other Income                   $     360  $       -  $     360  $       -
 Interest (expense), net                -        (29)       (75)       153
 Exchange rate gain (loss)             11          -       (476)         -
                                ---------  ---------  ---------  ---------
 Income (Loss) before provision
  for income taxes                    475    (11,237)    (8,026)   (19,347)
 Income tax expense (benefit)        (313)       149       (285)       216
                                ---------  ---------  ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $ (11,386) $  (7,741) $ (19,563)
 Loss from discontinued
  operations                    $     (30) $ (11,948) $  (3,513) $ (25,890)
 Gain on sale of discontinued
  operations                            -          -      7,139          -
                                ---------  ---------  ---------  ---------
 Net Income (loss)              $     758  $ (23,334) $  (4,115) $ (45,453)
                                =========  =========  =========  =========
 Basic earnings (loss) per
  share                                 `
        Continuing operations   $    0.02  $   (0.35) $   (0.23) $   (0.60)
                                =========  =========  =========  =========
        Discontinued operations $   (0.00) $   (0.37) $    0.11  $   (0.79)
                                =========  =========  =========  =========
 Diluted earnings (loss) per
  share
        Continuing operations   $    0.02  $   (0.35) $   (0.23) $   (0.60)
                                =========  =========  =========  =========
        Discontinued operations $   (0.00) $   (0.37) $    0.11  $   (0.79)
                                =========  =========  =========  =========
 Weighted-average number of
  common shares outstanding
        Basic                      33,869     32,621     33,648     32,621
                                =========  =========  =========  =========
        Diluted                    33,869     32,621     33,648     32,621
                                =========  =========  =========  =========




                               Vertro, Inc.
                  Consolidated Statements of Operations
                  (in thousands, except per share data)

                                  Three      Three      Three      Three
                                 Months     Months     Months     Months
                                  Ended      Ended      Ended      Ended
                                December   September   June 30,  March 31,
                                31, 2009   30, 2009     2009       2009
                                ---------  ---------  ---------  ---------
                               (unaudited)(unaudited)(unaudited)(unaudited)
 Revenues                       $   8,008  $   7,389  $   6,002  $   6,234
 Cost of services                     387        479        445        456
                                ---------  ---------  ---------  ---------
 Gross profit                       7,621      6,910      5,557      5,778
 Operating expenses
     Marketing, sales, and
      service                       5,351      6,350      6,143      4,753
     General and administrative     1,641      1,595      2,193      3,092
     Product development              525        596        633        698
     Amortization                       -        106         40          -
     Restructuring Charges              -          -          -        (15)
                                =========  =========  =========  =========
 Total operating expenses           7,517      8,647      9,009      8,528
                                ---------  ---------  ---------  ---------
 Income (Loss) from operations        104     (1,737)    (3,452)    (2,750)
 Other Income                         360          -          -          -
 Interest income, net                   -         (2)         9        (82)
 Exchange rate gain (loss)             11        (89)      (398)         -
                                ---------  ---------  ---------  ---------
 Income (Loss) before provision
  for income taxes                    475     (1,828)    (3,841)    (2,832)
 Income tax expense                  (313)         -         14         14
                                ---------  ---------  ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $  (1,828) $  (3,855) $  (2,846)
 Income/(loss) from
  discontinued operations       $     (30) $   1,184  $     491  $  (5,158)
 Gain on sale of discontinued
  operations                            -          -  $     213  $   6,926
                                =========  =========  ---------  ---------
 Net Income (loss)              $     758  $    (644) $  (3,151) $  (1,078)
                                =========  =========  =========  =========
 Basic earnings (loss) per
  share
        Continuing operations   $    0.02  $   (0.05) $   (0.11) $   (0.08)
                                =========  =========  =========  =========
        Discontinued operations $   (0.00) $    0.04  $    0.02  $    0.05
                                =========  =========  =========  =========
 Diluted earnings (loss) per
  share
        Continuing operations   $    0.02  $   (0.05) $   (0.11) $   (0.08)
                                =========  =========  =========  =========
        Discontinued operations $   (0.00) $    0.04  $    0.02  $    0.05
                                =========  =========  =========  =========
 Weighted-average number of
  common shares outstanding
        Basic                      33,869     33,784     33,707     33,197
                                =========  =========  =========  =========
        Diluted                    33,869     33,784     33,707     33,197
                                ---------  ---------  ---------  ---------





                               Vertro, Inc.
         Reconciliations to Consolidated Statements of Operations
                  (in thousands, except per share data)
                                (unaudited)


                                  Three      Three     Twelve     Twelve
                                 Months     Months     Months     Months
 Additional information:          Ended      Ended      Ended      Ended
                                December   December   December   December
                                31, 2009   31, 2008   31, 2009   31, 2008
                                ---------  ---------  ---------  ---------
 Adjusted EBITDA                $     321  $    (994) $  (6,416) $  (4,945)
                                =========  =========  =========  =========
 Adjusted net income (loss)     $     662  $  (1,178) $  (6,818) $  (5,453)
                                =========  =========  =========  =========
 Adjusted net income (loss) per
  share                         $    0.02  $   (0.04) $   (0.20) $   (0.17)
                                =========  =========  =========  =========


                                  Three      Three
                                 Months     Months
 Additional information:          Ended      Ended
                                December   September
                                31, 2009    30, 2009
                                ---------  ---------
 Adjusted EBITDA                $     321  $  (1,365)
                                =========  =========
 Adjusted net income (loss)     $     662  $  (1,486)
                                =========  =========
 Adjusted net income (loss) per
  share                         $    0.02  $   (0.04)
                                =========  =========


                                  Three      Three     Twelve     Twelve
                                 Months     Months     Months     Months
 Reconciliation of Net Income     Ended      Ended      Ended      Ended
  (Loss) to Adjusted EBITDA     December   December   December   December
                                31, 2009   31, 2008   31, 2009   31, 2008
                                ---------  ---------  ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $ (11,386) $  (7,741) $ (19,563)
 Interest income (expense), net
  and exchange rate loss              (11)        29        551       (153)
 Income tax expense (benefit)        (313)       149       (285)       216
 Depreciation                         (17)         6        136        445
 Amortization                           -          -        146      1,364
                                ---------  ---------  ---------  ---------
 EBITDA                               447    (11,203)    (7,193)   (17,691)
 Other Income                        (360)         -       (360)         -
 Non-Cash Compensation                234        434      1,152      2,310
 Litigation                             -      1,875          -      1,875
 Restructuring                          -        (27)       (15)       634
 Impairment                             -      7,927          -      7,927
                                ---------  ---------  ---------  ---------
 Adjusted EBITDA                $     321  $    (994) $  (6,416) $  (4,945)
                                =========  =========  =========  =========


                                  Three      Three
 Reconciliation of Net Income    Months     Months
  (Loss) to Adjusted EBITDA       Ended      Ended
                                December   September
                                31, 2009    30, 2009
                                ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $  (1,828)
 Interest income (expense), net
  and exchange rate loss              (11)        91
 Income tax expense                  (313)         -
 Depreciation                         (17)        30
 Amortization                           -        106
                                ---------  ---------
 EBITDA                               447     (1,601)
 Other Income                        (360)         -
 Non-Cash Compensation                234        236
                                ---------  ---------
 Adjusted EBITDA                $     321  $  (1,365)
                                =========  =========


                                  Three      Three     Twelve     Twelve
 Reconciliation of Net Income    Months     Months     Months     Months
  (Loss) to Adjusted Net Loss     Ended      Ended      Ended      Ended
                                December   December   December   December
                                31, 2009   31, 2008   31, 2009   31, 2008
                                ---------  ---------  ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $ (11,386) $  (7,741) $ (19,563)
 Other Income                        (360)         -       (360)         -
 Equity                               234        434      1,152      2,310
 Non-Cash Compensation                  -      1,875          -      1,875
 Litigation                             -        (27)       (15)       634
 Impairment                             -      7,927          -      7,927
 Amortization                           -          -        146      1,364
                                ---------  ---------  ---------  ---------
 Adjusted net Income (loss)     $     662  $  (1,178) $  (6,818) $  (5,453)
                                =========  =========  =========  =========
 Adjusted net Income (loss) per
  share                              0.02      (0.04)     (0.20)     (0.17)
 Shares used in per share
  calculation - basic / diluted    33,869     32,621     33,648     32,621


                                  Three      Three
 Reconciliation of Net Income    Months     Months
  (Loss) to Adjusted Net Loss     Ended      Ended
                                December   September
                                31, 2009    30, 2009
                                ---------  ---------
 Income (Loss) from continuing
  operations                    $     788  $  (1,828)
 Other Income                        (360)         -
 Non-Cash Compensation                234        236
 Amortization                           -        106
                                ---------  ---------
 Adjusted net loss              $     662  $  (1,486)
                                =========  =========
 Adjusted net Income (loss) per
  share                         $    0.02  $   (0.04)
 Shares used in per share
  calculation - basic              33,869     33,784




                               Vertro, Inc.
                        CONSOLIDATED BALANCE SHEETS
                    (in thousands, except par values)


                                                December 31,  December 31,
                     ASSETS                         2009          2008
                                                ------------  ------------

 CURRENT ASSETS
   Cash and cash equivalents                    $      4,837  $      6,699
   Accounts receivable, less allowances of $679
    and $1,242 at December 31, 2009 and 2008.          3,041        11,204
   Deferred tax assets                                     -           167
   Income tax receivable                                 695           247
   Prepaid expenses and other current assets             651         1,584
                                                ------------  ------------
     TOTAL CURRENT ASSETS                              9,224        19,901
 Property and equipment, net                              71         4,975
 Restricted cash                                         200         2,000
 Other assets                                            517           703
                                                ------------  ------------

     TOTAL ASSETS                               $     10,012  $     27,579
                                                ============  ============
      LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
   Accounts payable                             $      4,706  $      6,609
   Accrued expenses                                    2,778         9,620
   Current portion of long-term debt                       -           783
   Income Tax Payable                                    299             -
   Deferred revenue                                       25         1,914
                                                ------------  ------------
     TOTAL CURRENT LIABILITIES                         7,808        18,926
   Deferred tax liabilities long-term                      -           167
   Long-term debt                                          -         4,595
   Other long-term liabilities                         1,365         1,305
                                                ------------  ------------

   TOTAL LIABILITIES                                   9,173        24,993
                                                ------------  ------------
 COMMITMENTS AND CONTINGENCIES                             -             -
 STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value;
    authorized, 500 shares; none issued and
    outstanding                                            -             -
   Common stock, $.001 par value; authorized,
    200,000 shares; issued 35,642 and 34,480
    respectively; outstanding 33,852 and
    32,731, respectively                                  35            34
   Additional paid-in capital                        270,690       268,841
   Treasury stock; 1,790 and 1,749 shares at
    cost, respectively                                (6,722)       (6,719)
   Accumulated other comprehensive income             12,914        12,393
   Accumulated Deficit                              (276,078)     (271,963)
                                                ------------  ------------ 
     TOTAL STOCKHOLDERS' EQUITY                          839         2,586
                                                ------------  ------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $     10,012  $     27,579
                                                ------------  ------------

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