Blucora Announces First Quarter 2016 Adjusted EBITDA up 11 Percent Year Over Year

BELLEVUE, WA--(Marketwired - April 28, 2016) -  Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals, today announced financial results for the first quarter ended March 31, 2016 and provided preliminary tax season update.

First Quarter Highlights and Recent Developments

• Blucora named John S. Clendening as president and chief executive officer
• TaxAct revenue and segment income expected to grow approximately 18 percent and 20 percent respectively for the six months through June 30, 2016 compared to the same period last year
• HD Vest net revenue⁽¹⁾ grew 5 percent and segment income grew 26 percent in the first quarter compared to the same period last year
• Blucora paid down principal of Term B loan by 10 percent ($40M) and repurchased $28.4 million of convertible debt

"Our team continues to drive efforts to strengthen Blucora and execute on our strategic transformation into a technology-enabled financial solutions company," said John Clendening, president and chief executive officer of Blucora. "We began 2016 with good momentum punctuated by our strong financial performance during this year's tax season. Looking ahead, we are committed to our 2016 stated objectives of aggressively paying down debt, divesting our non-core businesses, reducing operating expenses, and delivering on our business performance goals. I am thrilled to lead a newly transformed Blucora, excited for what we can achieve together, and confident in our ability to enhance shareholder value."

Eric Emans, chief financial officer and treasurer of Blucora, noted that the Company has made progress toward its commitment to pay down debt. "We retired more than $65 million of debt in the quarter," he explained, "lowering our net leverage ratio and highlighting the Company's growth, predictable profit generation and strong free cash flow conversion. Debt repayment will remain the top priority for our capital allocation strategy throughout this year and into 2017."

The following presentation includes pro forma financial information and HD Vest. In addition, it excludes the Search and Content and E-Commerce segments which have been classified as discontinued operations for all periods presented. The Company believes that this presentation most accurately reflects the financial performance of the Company on a go-forward basis.

See reconciliations of as reported and pro forma non-GAAP to GAAP measures in tables below.

⁽¹⁾ Net revenue represents Wealth Management segment revenue less Wealth Management services cost of revenue.

Tax season begins on the first day that the IRS begins accepting e-files and ends on tax day +1.

Other

During the first quarter of 2016, the Company repaid $40.0 million on the TaxAct - HD Vest credit facility and repurchased $28.4 million of the Convertible Senior Notes for cash of $20.7 million. As a result, at the end of the first quarter, Blucora's net leverage ratio was lowered by 1.1x.

Second Quarter and Full Year 2016 Outlook

For the second quarter of 2016, the Company expects revenues to be between $120.5 million and $124.5 million, Adjusted EBITDA to be between $33.7 million and $35.9 million, Non-GAAP income from continuing operations to be between $20.0 million and $22.7 million, or $0.48 to $0.54 per diluted share, and GAAP income from continuing operations to be between $4.5 million and $6.3 million, or $0.11 to $0.15 per diluted share.

For the full year 2016, the Company expects revenues to be between $452.0 million and $465.5 million, Adjusted EBITDA to be between $90.0 million and $94.0 million, Non-GAAP income from continuing operations to be between $39.9 million and $44.4 million, or $0.95 to $1.06 per diluted share, and GAAP loss from continuing operations to be between $5.0 million and $1.3 million, or $(0.12) to $(0.03) per diluted share.

Conference Call and Webcast

A conference call and live webcast will be held today at 5:30 a.m. Pacific Time / 8:30 a.m. Eastern Time during which the Company will further discuss first quarter results and its outlook for the second quarter of 2016. We have also provided supplemental financial information to our results that can be accessed in the Investor Relations section of the Blucora corporate website at http://www.blucora.com and filed with the SEC on Form 8-K. A replay of the call and management's prepared remarks will also be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals. Our products and services in tax preparation and wealth management, through TaxAct and HD Vest, help consumers manage their financial lives. TaxAct is an affordable digital tax preparation solution for individuals, business owners and tax professionals. HD Vest Financial Services^® supports an independent network of tax professionals who provide comprehensive financial planning solutions. For more information on Blucora or its businesses, please visit www.blucora.com.

This announcement contains 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. Actual results may differ significantly from management's expectations due to various risks and uncertainties including, but not limited to: general economic, industry, and market sector conditions; the availability of products to sell; the timing and extent of market acceptance of developed products and services and related costs; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; future acquisitions; the successful execution of the Company's strategic initiatives, technology enhancements, operating plans, and marketing strategies; and the condition of our cash investments. A more detailed description of these and certain other factors that could affect actual results is included in Blucora, Inc.'s most recent Quarterly Report on Form 10-Q and subsequent reports filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Blucora, Inc. undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

⁽¹⁾ Stock-based compensation expense was allocated among the following captions (in thousands):

⁽²⁾ Other loss, net was allocated among the following captions (in thousands):

⁽¹⁾ Corporate-level activity included the following (in thousands):

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

⁽¹⁾ We define Adjusted EBITDA differently for this report than we have defined it in the past, due to the impact of noncontrolling interests from the HD Vest acquisition that we began recognizing in the first quarter of 2016 and the discontinued operations treatment of our Search and Content and E-Commerce businesses as determined in the fourth quarter of 2015. We define Adjusted EBITDA as operating income, determined in accordance with GAAP, excluding the effects of depreciation, amortization of acquired intangible assets (including acquired technology), and stock-based compensation.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income. Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income differently for this report than we have defined it in the past, due to the impact of noncontrolling interests from the HD Vest acquisition that we began recognizing in the first quarter of 2016 and the discontinued operations treatment of our Search and Content and E-Commerce businesses as determined in the fourth quarter of 2015. For this report, we define non-GAAP net income as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (included acquired technology), accretion of debt discount and accelerated accretion of debt discount on the Convertible Senior Notes, gain on Convertible Senior Notes repurchased, discontinued operations, the impact of noncontrolling interests, and the related cash tax impact of those adjustments, and non-cash income taxes. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income. Other companies may calculate non-GAAP net income differently, and, therefore, our non-GAAP net income may not be comparable to similarly titled measures of other companies.

⁽²⁾ As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

⁽³⁾ Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, gain/loss on debt extinguishment and modification expense, and gain on third party bankruptcy settlement.