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Propel Media Reports Fourth Quarter and Full Year 2016 Financial Results

IRVINE, Calif., March 30, 2017 (GLOBE NEWSWIRE) -- Propel Media, Inc. (OTCPink:PROM), a performance focused digital media and advertising company, today announced its financial results for the fourth quarter and full year ended December 31, 2016.

Propel Media | Do Digital Differently


A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/16e74ec7-13f0-4f80-95d9-c47eed6cfe2d

Performance highlights for the fourth quarter 2016:

  • Revenue of $16.6 million, as compared to $18.7 million for the fourth quarter of 2015
  • Adjusted EBITDA of $7.0 million, as compared to $6.8 million for the fourth quarter of 2015
  • Gross margin of 68%, as compared to 65% for the fourth quarter 2015
  • 8th consecutive Adjusted EBITDA positive quarter since becoming a publicly-traded company
  • 82% of revenues generated from the Company’s more profitable owned and operated network, as compared to 46% for the fourth quarter of 2015

Performance highlights for the full year 2016:

  • Revenue of $61.2 million, as compared to $78.8 million for 2015
  • Adjusted EBITDA of $21.9 million, as compared to $24.0 million for 2015
  • Operating expenses of $22.8 million, as compared to $26.0 million in 2015
  • Shifted Company revenue mix towards more profitable owned and operated network
  • $7.0 million of scheduled principal repayments reduced balance of term loan
  • $1.8 million paid to bring revolver balance down to $0 at the end of 2016

The Company generated a combined $23.3 million in cash flows from operating activities in 2016 and 2015. The Company expects to comply with all loan covenants in 2017 and to continue to pay down the principal amount of the term loan as scheduled.

“We closed out 2016 on a very strong note. The fourth quarter was the 3rd consecutive quarter of Adjusted EBITDA growth, bringing our full year Adjusted EBITDA to $21.9 million,” said Marv Tseu, Chief Executive Officer. “This robust performance has continued into the first quarter of 2017. I’m very pleased to see all of our teams working efficiently together to drive strong operating performance,” said Mr. Tseu.

Propel Media’s 2016 financial results, including the quarter-over-quarter Adjusted EBITDA growth, are a direct reflection of the Company working at high levels of efficiency to refocus its efforts towards media buying to grow its owned and operated properties. The Company has worked through the downward pressure of the revenue decline from third party partners, which it believes has bottomed out and stabilized in the fourth quarter of 2016. The Company is committed to continuing to focus on its owned and operated user audience, providing a platform for continued positive performance into 2017.

“In the fourth quarter of 2016, our media buying efforts contributed 82% of overall revenue, as compared to 32% in the first quarter of 2015. This new direction has been a driving force behind our stability and success,” said Mr. Tseu. “The fourth quarter was our best quarter in 2016, and we believe that this achievement has positioned Propel Media for continued strong performance in 2017,” added Mr. Tseu.

Further details concerning the results of operations for the fourth quarter and year ended December 31, 2016 are contained in the Annual Report on Form 10-K that Propel Media filed today with the Securities and Exchange Commission.

About Propel Media
Propel Media connects digital marketers with unique audiences through intent-based technology that delivers superior performance with measurable results. We ‘Do Digital Differently™’ with a distinctive approach to digital powered by proprietary contextualization technology and a unique supply of ad inventory. Headquartered in Irvine, California, Propel Media is distinguished by its ability to deliver consistent results and its commitment to providing the highest level of client services to its partners.

For more information, visit: www.propelmedia.com

Forward-Looking Statements:
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those statements regarding Propel Media’s capital structure, ability to execute its operating plan, anticipated financial flexibility and future financial performance and any other statements that are not statements of historical fact. 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. 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 Propel Media’s actual results to differ materially are: loss of key advertising customers; inability to acquire new advertising customers; limitations on its ability to acquire new users profitably or at all; 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. Further, investors should keep in mind that Propel Media’s financial results in any particular period may not be indicative of future results. Propel Media is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise, except as required by law.

Use of Non-GAAP Financial Information
In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, we present Adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA, which is based upon the adjusted EBITDA which we report to our lenders, is a key measurement monitored by management, and is determined by taking net (loss) income (the nearest GAAP measure) and adding interest, taxes, depreciation, amortization, impairment charges, stock based compensation, bank fees, losses from extraordinary, unusual or nonrecurring items, noncash items, merger and other onetime expenses and severance. We believe that this non-GAAP measure, viewed in addition to and not in lieu of our reported GAAP results, provides useful information to investors by providing a more focused measure of operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. Adjusted EBITDA has been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.


Propel Media, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31,
Assets 2016 2015
Current assets
Cash$2,823,000 $1,629,000
Accounts receivable, net 6,595,000 7,559,000
Prepaid expenses and other current assets 564,000 614,000
Total current assets 9,982,000 9,802,000
Property and equipment, net 1,594,000 2,525,000
Restricted cash - 94,000
Intangible assets 20,000 188,000
Goodwill 2,869,000 2,869,000
Deferred tax assets, net 31,691,000 34,074,000
Other assets 89,000 56,000
Total assets$46,245,000 $49,608,000
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable$1,861,000 $4,288,000
Accrued expenses 3,914,000 2,485,000
Advertiser deposits 1,832,000 2,146,000
Current portion of long-term debt 6,089,000 5,997,000
Revolving credit facility - 1,762,000
Total current liabilities 13,696,000 16,678,000
Long-term debt, less current portion, net 65,999,000 68,858,000
Obligations to transferors, net 14,569,000 13,923,000
Note payable stockholder, non-current, net - 106,000
Other non-current liabilities 142,000 425,000
Total liabilities 94,406,000 99,990,000
Stockholders' Deficit
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,
issued and outstanding 250,010,162 at December 31, 2016 and 2015 25,000 25,000
Additional paid-in capital 2,757,000 1,117,000
Accumulated deficit (50,943,000) (51,524,000)
Total stockholders’ deficit (48,161,000) (50,382,000)
Total liabilities and stockholders' deficit$46,245,000 $49,608,000

Propel Media, Inc. and Subsidiaries
Consolidated Statements of Income
For the Three Months Ended December 31, For the Years Ended December 31,
2016 2015 2016 2015
Revenues $16,637,000 $18,728,000 $61,226,000 $78,780,000
Cost of revenues 5,280,000 6,633,000 21,710,000 34,123,000
Gross profit 11,357,000 12,095,000 39,516,000 44,657,000
Operating expenses:
Salaries, commissions, benefits and related expenses 3,622,000 3,725,000 14,123,000 14,883,000
Technology, development and maintenance 402,000 1,137,000 3,488,000 3,992,000
Sales and marketing 49,000 47,000 118,000 102,000
General and administrative 408,000 449,000 1,641,000 3,070,000
Professional services 158,000 229,000 1,154,000 1,760,000
Depreciation and amortization 419,000 616,000 2,142,000 1,937,000
Impairment of software and intangible assets - 301,000 183,000 301,000
Operating expenses 5,058,000 6,504,000 22,849,000 26,045,000
Operating income 6,299,000 5,591,000 16,667,000 18,612,000
Other income (expense):
Interest expense, net (3,027,000) (3,502,000) (12,311,000) (13,491,000)
Gain from extinguishment of debt - 106,000 -
Other income (2,000) 16,000 -
Total other expense (3,029,000) (3,502,000) (12,189,000) (13,491,000)
Income before income tax (expense) benefit 3,270,000 2,089,000 4,478,000 5,121,000
Income tax (expense) benefit (2,010,000) (463,000) (3,897,000) 30,590,000
Net income $1,260,000 $1,626,000 $581,000 $35,711,000
Net income per common share, basic and diluted $0.01 $0.01 $0.00 $0.15
Weighted average number of common shares outstanding, basic and diluted 250,010,162 250,010,162 250,010,162 242,917,355
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 $- $2,089,000 $- $5,121,000
Pro-forma income tax expense - (783,000) - (1,993,000)
Pro-forma net income $- $1,306,000 $- $3,128,000
Unaudited pro-forma net income per common share - basic and diluted $- $0.01 $- $0.01
Weighted average number of shares outstanding - basic and diluted 250,010,162 250,010,162 250,010,162 242,917,355

Propel Media, Inc. and Subsidiaries
Reconciliation of Adjusted EBITDA
For the Three Months Ended December 31, For the Years Ended December 31,
2016 2015 2016 2015
Net Income (GAAP)$1,260,000 $1,626,000 $581,000 $35,711,000
Add (subtract) the following items:
Depreciation and amortization$419,000 $616,000 $2,142,000 $1,937,000
Impairment charges - 301,000 183,000 301,000
Interest expense 3,027,000 3,502,000 12,311,000 13,491,000
Stock-based compensation 229,000 165,000 1,640,000 1,117,000
Tax expense (benefit) 2,010,000 463,000 3,906,000 (30,590,000)
Bank fees 27,000 37,000 24,000 310,000
Merger and other one-time expenses (3,000) 45,000 224,000 1,114,000
Severance 8,000 48,000 921,000 559,000
Adjusted EBITDA (a non-GAAP measure)$ 6,977,000 $ 6,803,000 $ 21,932,000 $ 23,950,000

Press Contact: David Shapiro Propel Media press@propelmedia.com

Source:Propel Media