KLDiscovery Inc. Announces Fourth Quarter and Full-Year 2023 Financial Results
Annual Year-over-Year: Revenue Increases 9%, Net Loss Improves 19%,
EBITDA Increases 41%, Adjusted EBITDA Increases 27% and
Nebula Revenue Increases 62%
EBITDA1 for the fourth quarter of 2023 was
“2023 was our best year ever at KLD despite macroeconomic headwinds. We delivered outstanding financial results for the full year of 2023, setting all-time Company records with our highest revenue of
2022-2023 Quarterly Results | ||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||
2022 (unaudited) | 2023 (unaudited) | |||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||
Revenue |
|
81.9 |
|
|
75.2 |
|
|
74.5 |
|
|
85.8 |
|
|
90.7 |
|
|
90.0 |
|
|
79.3 |
|
|
85.8 |
|
||||||||
Net loss |
|
(9.6 |
) |
|
(11.2 |
) |
|
(17.4 |
) |
|
(5.0 |
) |
|
(4.5 |
) |
|
(4.7 |
) |
|
(11.4 |
) |
|
(14.3 |
) |
||||||||
Net loss per share (basic and diluted) |
$ |
(0.22 |
) |
$ |
(0.26 |
) |
$ |
(0.41 |
) |
$ |
(0.12 |
) |
$ |
(0.11 |
) |
$ |
(0.11 |
) |
$ |
(0.26 |
) |
$ |
(0.33 |
) |
||||||||
Weighted average outstanding shares (basic and diluted) |
|
42.7 |
|
|
42.7 |
|
|
42.8 |
|
|
42.9 |
|
|
42.9 |
|
|
43.0 |
|
|
43.1 |
|
|
43.1 |
|
||||||||
EBITDA (Non-GAAP) |
|
11.3 |
|
|
9.7 |
|
|
5.1 |
|
|
18.3 |
|
|
18.2 |
|
|
18.5 |
|
|
13.9 |
|
|
12.0 |
|
||||||||
Adjusted EBITDA (Non-GAAP) |
|
14.1 |
|
|
12.4 |
|
|
11.3 |
|
|
20.4 |
|
|
20.9 |
|
|
20.1 |
|
|
15.9 |
|
|
17.2 |
|
1 Non-GAAP measure. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below for additional information and a reconciliation to the most directly comparable GAAP measure. |
The Company is reviewing potential alternatives regarding the pending maturity of its debt in
Earnings Conference Call
Management will conduct a conference call at
To join the conference call by telephone, please register via the following link: https://KLDiscovery Q42023 Financial Results
Once registered, you will receive an email with Direct Entry and Registrant ID along with dial-in details. An audio recording of the conference call will be available for replay shortly after the call's completion and will remain available for two weeks following the call. To access the recorded conference call, please dial (800) 770-2030 (from the
|
||||||||||||||||
Consolidated Statements of Comprehensive Loss | ||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||
Three Months Ended |
|
Year Ended |
||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenues |
$ |
85,797 |
|
$ |
85,799 |
|
$ |
345,799 |
|
$ |
317,432 |
|
||||
Cost of revenues |
|
43,687 |
|
|
41,726 |
|
|
171,912 |
|
|
165,454 |
|
||||
Gross profit |
|
42,110 |
|
|
44,073 |
|
|
173,887 |
|
|
151,978 |
|
||||
Operating expenses | ||||||||||||||||
General and administrative |
|
18,327 |
|
|
14,591 |
|
|
65,159 |
|
|
63,294 |
|
||||
Research and development |
|
3,382 |
|
|
3,183 |
|
|
13,133 |
|
|
13,486 |
|
||||
Sales and marketing |
|
10,400 |
|
|
11,084 |
|
|
41,165 |
|
|
43,570 |
|
||||
Depreciation and amortization |
|
5,326 |
|
|
4,844 |
|
|
20,133 |
|
|
19,593 |
|
||||
Total operating expenses |
|
37,435 |
|
|
33,702 |
|
|
139,590 |
|
|
139,943 |
|
||||
Income from operations |
|
4,675 |
|
|
10,371 |
|
|
34,297 |
|
|
12,035 |
|
||||
Other (income) expense | ||||||||||||||||
Other (income) expense |
|
(12 |
) |
|
61 |
|
|
(20 |
) |
|
54 |
|
||||
Change in fair value of Private Warrants |
|
(13 |
) |
|
(381 |
) |
|
(572 |
) |
|
(1,207 |
) |
||||
Interest expense |
|
17,546 |
|
|
15,123 |
|
|
66,743 |
|
|
54,650 |
|
||||
Loss before income taxes |
|
(12,846 |
) |
|
(4,432 |
) |
|
(31,854 |
) |
|
(41,462 |
) |
||||
Income tax provision |
$ |
1,421 |
|
$ |
551 |
|
$ |
2,959 |
|
$ |
1,712 |
|
||||
Net loss |
|
(14,267 |
) |
|
(4,983 |
) |
|
(34,813 |
) |
|
(43,174 |
) |
||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation |
|
3,460 |
|
|
5,601 |
|
|
1,705 |
|
|
(6,937 |
) |
||||
Total other comprehensive income (loss), net of tax |
$ |
3,460 |
|
$ |
5,601 |
|
$ |
1,705 |
|
$ |
(6,937 |
) |
||||
Comprehensive (loss) gain |
$ |
(10,807.00 |
) |
$ |
618.00 |
|
$ |
(33,108.00 |
) |
$ |
(50,111.00 |
) |
||||
Net loss per share - basic and diluted |
|
(0.33 |
) |
|
(0.12 |
) |
|
(0.81 |
) |
|
(1.01 |
) |
||||
Weighted average shares outstanding - basic and diluted |
|
43,086,267 |
|
|
42,874,009 |
|
|
43,013,825 |
|
|
42,709,706 |
|
|
||||||||
Consolidated Balance Sheets | ||||||||
(in thousands, except share and per share data) | ||||||||
|
|
|||||||
(unaudited) | ||||||||
Current assets | ||||||||
Cash and cash equivalents |
$ |
15,351 |
|
$ |
32,629 |
|
||
Accounts receivable, net of allowance | ||||||||
for doubtful accounts of |
|
101,257 |
|
|
95,727 |
|
||
Prepaid expenses |
|
15,787 |
|
|
10,726 |
|
||
Other current assets |
|
1,585 |
|
|
1,175 |
|
||
Total current assets |
|
133,980 |
|
|
140,257 |
|
||
Property and equipment | ||||||||
Computer software and hardware |
|
61,731 |
|
|
71,720 |
|
||
Leasehold improvements |
|
26,313 |
|
|
25,869 |
|
||
Furniture, fixtures and other equipment |
|
2,262 |
|
|
2,209 |
|
||
Accumulated depreciation |
|
(73,045 |
) |
|
(79,958 |
) |
||
Property and equipment, net |
|
17,261 |
|
|
19,840 |
|
||
Operating lease right of use assets, net |
|
10,078 |
|
|
12,412 |
|
||
Intangible assets, net |
|
39,729 |
|
|
46,862 |
|
||
|
|
396,283 |
|
|
391,114 |
|
||
Other assets |
|
8,262 |
|
|
8,957 |
|
||
Total assets |
$ |
605,593 |
|
$ |
619,442 |
|
||
Current liabilities | ||||||||
Current portion of long-term debt, net |
$ |
546,845 |
|
$ |
3,000 |
|
||
Accounts payable and accrued expense |
|
25,957 |
|
|
25,009 |
|
||
Operating lease liabilities |
|
5,906 |
|
|
7,850 |
|
||
Current portion of contingent consideration |
|
650 |
|
|
— |
|
||
Deferred revenue |
|
3,181 |
|
|
4,536 |
|
||
Total current liabilities |
|
582,539 |
|
|
40,395 |
|
||
Long-term debt, net |
|
— |
|
|
524,529 |
|
||
Deferred tax liabilities |
|
8,941 |
|
|
7,793 |
|
||
Long term operating lease liabilities |
|
7,870 |
|
|
10,340 |
|
||
Other liabilities |
|
2,176 |
|
|
2,694 |
|
||
Total liabilities |
|
601,526 |
|
|
585,751 |
|
||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Common stock | ||||||||
42,920,136 issued and outstanding as of |
|
4 |
|
|
4 |
|
||
Preferred Stock | ||||||||
zero issued and outstanding as of |
|
— |
|
|
— |
|
||
Additional paid-in capital |
|
395,461 |
|
|
391,977 |
|
||
Accumulated deficit |
|
(393,954 |
) |
|
(359,141 |
) |
||
Accumulated other comprehensive income |
|
2,556 |
|
|
851 |
|
||
Total stockholders' equity |
|
4,067 |
|
|
33,691 |
|
||
Total liabilities and stockholders' equity |
$ |
605,593 |
|
$ |
619,442 |
|
Set forth below is a reconciliation of EBITDA and Adjusted EBITDA, which are non-GAAP measures, to net (loss), the most directly comparable GAAP measure. See “Non-GAAP Financial Measures” below for additional information on these measures, including why we believe they are useful to investors and certain limitations thereof.
|
||||||||||||||||
Reconciliation of Non-GAAP Financial Matters | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
|
Year Ended |
||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
Net loss |
$ |
(14,267 |
) |
$ |
(4,982 |
) |
$ |
(34,813 |
) |
$ |
(43,174 |
) |
||||
Interest expense |
|
17,546 |
|
|
15,123 |
|
|
66,743 |
|
|
54,650 |
|
||||
Income tax provision |
|
1,421 |
|
|
551 |
|
|
2,959 |
|
|
1,712 |
|
||||
Depreciation and amortization expense |
|
7,347 |
|
|
7,652 |
|
|
27,719 |
|
|
31,237 |
|
||||
EBITDA |
$ |
12,047 |
|
$ |
18,344 |
|
$ |
62,608 |
|
$ |
44,425 |
|
||||
Acquisition, financing and transaction costs |
|
3,935 |
|
|
190 |
|
|
6,643 |
|
|
5,751 |
|
||||
Stock compensation and other |
|
815 |
|
|
1,518 |
|
|
3,365 |
|
|
5,341 |
|
||||
Change in fair value of Private Warrants |
|
(13 |
) |
|
(381 |
) |
|
(572 |
) |
|
(1,207 |
) |
||||
Restructuring costs |
|
246 |
|
|
513 |
|
|
1,403 |
|
|
2,777 |
|
||||
Systems establishment |
|
127 |
|
|
184 |
|
|
597 |
|
|
1,023 |
|
||||
Adjusted EBITDA |
$ |
17,158 |
|
$ |
20,368 |
|
$ |
74,044 |
|
$ |
58,110 |
|
Note:
- Acquisition, financing and transaction costs generally represent earn-out payments, rating agency fees and letter of credit and revolving facility fees, as well as professional service fees and direct expenses related to acquisitions and public offerings as well as cost associated with reviewing potential alternative sources for cash or financing related to our debt maturities.
- Stock compensation and other primarily represents portions of compensation paid to our employees and executives through stock-based instruments.
-
Change in fair value of Private Warrants relates to changes in the fair market value of the Private Warrants issued in conjunction with the
December 2019 business combination. - Restructuring costs generally represent non-ordinary course costs incurred in connection with a change in a contract or a change in the makeup of our personnel often related to an acquisition, such as severance payments, recruiting fees and retention charges.
- Systems establishment costs relate to non-ordinary course expenses incurred to develop our IT infrastructure, including system automation and enterprise resource planning system implementation.
|
|||||||
Consolidated Statements of Cash Flows | |||||||
(in thousands) | |||||||
Year ended |
Year ended |
||||||
(unaudited) | |||||||
Operating activities | |||||||
Net loss |
$ |
(34,813 |
) |
$ |
(43,174 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization |
|
27,719 |
|
|
31,237 |
|
|
Paid in kind interest |
|
22,551 |
|
|
19,995 |
|
|
Stock-based compensation |
|
3,365 |
|
|
5,137 |
|
|
Provision for losses on accounts receivable |
|
3,209 |
|
|
3,148 |
|
|
Deferred income taxes |
|
2,057 |
|
|
771 |
|
|
Change in fair value of contingent consideration |
|
(3 |
) |
|
21 |
|
|
Change in fair value of Private Warrants |
|
(572 |
) |
|
(1,207 |
) |
|
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
|
(8,267 |
) |
|
(6,672 |
) |
|
Prepaid expenses and other assets |
|
(5,526 |
) |
|
(3,458 |
) |
|
Accounts payable and accrued expenses |
|
(3,299 |
) |
|
2,320 |
|
|
Deferred revenue |
|
(1,395 |
) |
|
(168 |
) |
|
Net cash provided by operating activities |
|
5,026 |
|
|
7,950 |
|
|
Investing activities | |||||||
Acquisitions, net of cash acquired |
|
(3,029 |
) |
|
— |
|
|
Purchases of property and equipment |
|
(14,314 |
) |
|
(16,189 |
) |
|
Net cash used in investing activities |
|
(17,343 |
) |
|
(16,189 |
) |
|
Financing activities | |||||||
Payments for finance lease obligations |
|
(2,278 |
) |
|
(1,981 |
) |
|
Payment on long-term debt |
|
(3,000 |
) |
|
(3,000 |
) |
|
Net cash used in financing activities |
|
(5,278 |
) |
|
(4,981 |
) |
|
Effect of foreign exchange rates |
|
317 |
|
|
(619 |
) |
|
Net decrease in cash |
|
(17,278 |
) |
|
(13,839 |
) |
|
Cash at beginning of period |
|
32,629 |
|
|
46,468 |
|
|
Cash at end of period |
$ |
15,351 |
|
$ |
32,629 |
|
|
Supplemental disclosure: | |||||||
Cash paid for interest |
$ |
44,639 |
|
$ |
34,869 |
|
|
Net income taxes paid |
$ |
971 |
|
$ |
705 |
|
|
Significant noncash investing and financing activities | |||||||
Contingent consideration related to acquisitions |
$ |
1,300 |
|
$ |
- |
|
|
Purchases of property and equipment in accounts payable and accrued expenses on the consolidated balance sheets |
$ |
54 |
|
$ |
125 |
|
About
This press release includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding the benefits of KLDiscovery’s products and platform for its clients and the Company’s review of alternatives regarding its debt are forward-looking statements. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside KLDiscovery’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: consequences of KLDiscovery’s substantial levels of indebtedness, including the pending maturity and potential acceleration thereof in
These risks and other factors discussed in the “Risk Factors” section of KLDiscovery’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the
Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All statements speak only as of the date made, and unless legally required,
Non-GAAP Financial Measures
We prepare financial statements in accordance with
Our management believes EBITDA and Adjusted EBITDA reflect our ongoing operating performance because the isolation of non-cash charges, such as amortization and depreciation, and other items, such as interest, income taxes, equity compensation, acquisition and transaction costs, restructuring costs, systems establishment and costs associated with strategic initiatives which are incurred outside the ordinary course of our business, provides information about our cost structure and helps us to track our operating progress. We encourage investors and potential investors to carefully review our
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), extinguishment of debt, impairment losses, and depreciation and amortization. We view adjusted EBITDA as an operating performance measure and as such, we believe that the most directly comparable
- Acquisition, financing and transaction costs generally represent earn-out payments, rating agency fees and letter of credit and revolving facility fees, as well as professional service fees and direct expenses related to acquisitions and public offerings, as well as cost associated with reviewing potential alternative sources for cash or financing related to our debt maturities.
- Because we do not acquire businesses or effect financings on a regular or predictable cycle, we do not consider the amount of these costs to be a representative component of the day-to-day operating performance of our business.
- Stock compensation and other primarily represent portions of compensation paid to our employees and executives through stock-based instruments. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may not align with the actual value realized upon the future exercise or termination of the related stock-based awards. Additionally, stock compensation is a non-cash expense. Therefore, we believe it is useful to exclude stock-based compensation to better understand the long-term performance of our core business.
- Change in fair value of Private Warrants relates to changes in the fair market value of the Private Warrants issued in conjunction with the Business Combination. We do not consider the amount to be representative of a component of the day-to-day operating performance of our business.
- Restructuring costs generally represent non-ordinary course costs incurred in connection with a change in a contract or a change in the makeup of our personnel often related to an acquisition, such as severance payments, recruiting fees and retention charges. We do not consider the amount of restructuring costs to be a representative component of the day-to-day operating performance of our business.
- Systems establishment costs relate to non-ordinary course expenses incurred to develop our IT infrastructure, including system automation and enterprise resource planning system implementation. We do not consider the amount to be representative of a component of the day-to-day operating performance of our business.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240327148735/en/
Investor Contact:
571-424-0818
dawn.wilson@kldiscovery.com
Media Contact:
(888) 811-3789
krystina.jones@kldiscovery.com
Source: