Youbet.com Reports Fourth Quarter Results
biz.yahoo.com
Thursday February 16, 4:00 pm ET
Generates Total Fourth Quarter Handle of $112.6 Million
WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Feb. 16, 2006--Youbet.com, Inc. (NASDAQ: UBET - News) today reported net income of $1.5 million, or $0.04 per diluted share, inclusive of a non-cash income tax benefit of $1.9 million, or $0.05 per diluted share, as a result of the Company releasing a portion of its reserve against net deferred tax assets on its balance sheet, for the fourth quarter ended December 31, 2005. For the fourth quarter of 2004, Youbet reported net income of $0.5 million, or $0.02 per diluted share.
Summary of Fourth Quarter Results
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For the three months ended
December 31,
(in thousands,
except per share
and percentage figures)
----------------------------------------------------------------------
2005 2004 % change
----------------------------------------------------------------------
Total wagers (handle) $ 112,623(1) $ 76,675 46.9%
----------------------------------------------------------------------
Total revenue (commissions
from handle plus other
revenue) $ 20,760 $ 16,223 28.0%
----------------------------------------------------------------------
Net revenue (revenues from
commissions less track and
licensing fees) $ 6,552 $ 5,344 22.6%
----------------------------------------------------------------------
Yield(2) 5.8% 7.0%
----------------------------------------------------------------------
Adjusted EBITDA(3) $ (67) $ 649
----------------------------------------------------------------------
Net income $ 1,477 $ 535 175%
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Diluted EPS $ 0.04 $ 0.02 150%
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Summary of Fiscal Year Results
----------------------------------------------------------------------
For the fiscal year ended
December 31,
(in thousands,
except per share
and percentage figures)
----------------------------------------------------------------------
2005 2004 % change
----------------------------------------------------------------------
Total wagers (handle) $472,437(1) $ 315,221 49.9%
----------------------------------------------------------------------
Total revenue (commissions from
handle plus other revenue) $ 88,837 $ 65,249 36.2%
----------------------------------------------------------------------
Net revenue (revenues from
commissions less track and
licensing fees) $ 27,977 $ 22,167 26.2%
----------------------------------------------------------------------
Yield(2) 5.9% 7.0%
----------------------------------------------------------------------
Adjusted EBITDA(3) $ 4,676 $ 3,522 32.8%
----------------------------------------------------------------------
Net income(4) $ 5,691 $ 4,631 22.9%
----------------------------------------------------------------------
Diluted EPS(4) $ 0.16 $ 0.14(4) 14.3%
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(1) Of total handle for the three months ended December 31, 2005,
$90.1 million was attributable to Youbet and $22.5 million was
attributable to International Racing Group ("IRG"). Of the total
handle for the twelve months ended December 31, 2005, $395.2
million was attributable to Youbet and $77.2 million was
attributable to IRG.
(2) Yield is defined as net revenue (commission revenue less track and
licensing fees, each as calculated in accordance with Generally
Accepted Accounting Principles ("GAAP") and presented in the
Consolidated Statements of Operations Information attached to this
release) as a percentage of handle. The decline in yield for the
three-month period ended December 31, 2005 compared to the prior
year period is primarily due to a change in track mix and the
acquisition of IRG, whose operations carry a lower overall yield,
as well as weather-related and other closures of tracks that
typically generate a yield above the Company's average. Youbet's
management believes that yield provides useful data to evaluate
the Company's operating results and profitability. Yield should
not be considered an alternative to operating income or net income
as indicators of Youbet's financial performance, and may not be
comparable to similarly titled measures used by other companies.
(3) EBITDA is defined as earnings before interest, taxes, depreciation
and amortization as adjusted for any income tax benefit associated
with the release of a portion of Youbet's deferred tax asset. A
reconciliation of EBITDA to net income, the most comparable GAAP
financial measure, can be found attached to this release.
(4) Net income and Diluted EPS for the three and twelve-month periods
ended December 31, 2005, include a non-cash income tax benefit of
$1.8 million, or $0.05 per diluted share, as a result of the
Company releasing a portion of its reserve against net deferred
tax assets on its balance sheet. Net income and Diluted EPS for
the twelve-month period ended December 31, 2004, include a $3.3
million, or $0.09 per diluted share, income tax benefit.
Chairman, President and Chief Executive Officer, Charles F. Champion, commented, "Our 2005 fourth quarter financial results were adversely impacted by the previously disclosed weather-related track closures and the cancellation of races at a number of other tracks that led to approximately 300 fewer races available to our customers compared to the prior year period. Despite this level of lost content, Youbet's quarterly handle grew approximately 17% year-over-year, demonstrating our continued ability to offer the industry's premier wagering service and success in expanding our customer base. We believe that the strong growth in our fiscal 2005 full year financial results underscores the attractiveness of our Advanced Deposit Wagering platforms among a growing base of customers, many of whom we believe are experiencing the excitement and entertainment of pari-mutuel wagering on horse racing for the first time.
"Over the last twelve months, Youbet has made significant progress in our previously stated goal to complete strategic and accretive acquisitions. Last week Youbet completed its acquisition of United Tote Company, a transaction that expands Youbet's product offerings, diversifies our revenue mix, and advances our efforts to be the pari-mutuel industry's highest quality end-to-end technology provider. United Tote has strong and growing market share and several new product offerings that we believe will be of great interest to many consumers. We expect United Tote to generate significantly higher revenue and EBITDA in 2006, reflecting the benefit of its successes in 2005 in expanding its market share.
"In addition, our acquisition of International Racing Group last June grew our customer base and profile and expanded our operations into a new channel. As the only pari-mutuel wagering rebate provider to be licensed by a US racing regulatory jurisdiction, we believe that IRG will help us to further grow this important wagering channel which will also benefit those tracks that understand and appreciate this key source of handle."
Mr. Champion concluded, "Our continued organic growth and recent acquisitions have transformed Youbet into a company with more wagering, product, geographic and revenue scale, with excellent prospects for significant top and bottom line growth. Our plans call for growth to be generated by new products, further enhancements to our core offerings and IRG and United Tote products, as well as through our targeted marketing programs. At the same time we are carefully managing our operating expenses with the ongoing goal of achieving long-term profitability as we continue to pursue other acquisitions that can further diversify our sources of revenue and product offerings. Reflecting these factors, we believe Youbet is on track to continue to generate significant year-over-year gains in net income and diluted earnings per share."
Operating expenses (excluding track, licensing fees and depreciation and amortization) increased approximately $2.0 million, or 37.9%, to $7.4 million for the quarter ended December 31, 2005, from $5.4 million in the quarter ended December 31, 2004. IRG operating expenses accounted for $0.9 million, or 45.0%, of this increase. In addition, approximately $0.2 million of the fourth quarter year-over-year increase can be attributed to one-time expenditures such as severance, consulting and legal fees, as well as the write-off of costs associated with potential transactions that are no longer being pursued. In addition, the 2005 fourth quarter period includes a charge of approximately $0.2 million, or $0.01 per diluted share, related to public equity financing efforts for the acquisition of United Tote that the Company ultimately did not pursue. Also, approximately $0.2 million of the year-over-year increase is attributable to increased variable expenses resulting from the year-over-year increase in wagering volume. Operating expenses as a percent of total revenue in the 2005 fourth quarter rose to 35.6% compared to 33.1% in the year ago period.
Network operations expenses for the 2005 fourth quarter increased $0.4 million to $1.3 million from $0.9 million in the 2004 fourth quarter. The year-over-year increase is primarily attributable to IRG tote fees, data center and other network operations expenses the Company did not have last year.
Research and development expenses for the December 2005 fourth quarter were $0.4 million compared to $0.2 million for the 2004 fourth quarter. The 2005 fourth quarter research and development expenses were in line with historical quarterly levels.
Sales and marketing costs of $1.6 million for the 2005 fourth quarter were unchanged from the 2005 third quarter and $0.7 million higher compared to the 2004 fourth quarter. The year-over-year increase was due primarily to higher business development expenses related to the Company's initiatives to diversify its revenue sources.
General and administrative expenses for the 2005 fourth quarter were $4.0 million, inclusive of $0.1 million in IRG related expenses, compared to $3.3 million in the year ago period, which had no IRG related expenses. Aggregate 2005 fourth quarter sales and marketing and general and administrative expenses were 27.2% of total revenue, compared to 26.3% in the prior year period.
As of December 31, 2005, Youbet had cash and cash equivalents of $16.7 million, total current assets of $29.8 million and working capital of $12.0 million, including $4.1 million in current deferred tax assets.
Youbet.com, Inc. is hosting a conference call and webcast at 5:00 p.m. EST today, Thursday, February 16, 2006. The conference call number is 706/634-1150. To access the live call on the Internet, log on to www.youbet.com (select "About Youbet.com"). Following completion of the call, a replay can be accessed for thirty days on the Internet at the above link. |
