Monster Worldwide Reports Second Quarter 2006 Results; Total Revenue Increases 36% to $296 Million
Monster Worldwide, Inc. (NASDAQ: MNST):
-- Monster Revenue Grows 39% to $275 Million
-- Diluted Earnings per Share from Continuing Operations of $0.31
on $41 Million of Income from Continuing Operations
-- Net Cash Increases to $449 Million, an Improvement of $87
Million from the Prior Quarter
Monster Worldwide, Inc. (NASDAQ: MNST) today reported financial
results for the second quarter and six months ended June 30, 2006.
"We are very pleased to report outstanding second quarter
financial results and an improved outlook for the full year. Monster's
significant revenue growth, strong earnings and healthy cash flow
clearly reflect the successful execution of Monster Worldwide's key
strategic priorities," said Andrew J. McKelvey, Chairman and Chief
Executive Officer of Monster Worldwide. "All of our business units
made solid contributions to the quarter's strength. Monster Careers
North America continued to serve as the cornerstone of our growth,
delivering a 29% increase in revenue again this quarter, while our
International operations and Internet Advertising and Fees business
were truly standout performers with year over year revenue growth of
62% and 46%, respectively. The sale of the TMP Advertising &
Communications business in Europe during the quarter enabled us to
further tighten our focus on profitably expanding the Monster business
globally. Our operating efficiency and the scale of our business
supported continued margin expansion even as we prudently invested in
sales, product and marketing initiatives to drive sustained long-term
growth." Mr. McKelvey added, "In the US, we are particularly excited
about the opportunities created by our new partnership with
Philadelphia Media Holdings, owners of the hometown newspapers and
leading local online site serving Philadelphia, the nation's fourth
largest metropolitan market. This initiative reflects Monster's broad
commitment to expanding the online recruitment market by partnering
with recognized market leaders. The Philadelphia partnership combines
a strong and very local media presence with the industry's most
recognized and effective online recruitment products and services,
allowing us together to serve more employers and job seekers more
effectively."
Second Quarter 2006 Results
Total revenue grew 36% to $295.8 million in the 2006 second
quarter from $217.0 million in the second quarter of 2005. Results
exclude the TMP Worldwide Advertising & Communications businesses in
Europe, which were sold in the second quarter. Monster revenue
increased 39% to $275.2 million compared to $198.1 million in last
year's comparable quarter. Organic revenue growth for the Company and
Monster was 33% and 35% respectively, in the second quarter year to
year.
Monster Careers revenue increased 38% to $237.2 million compared
to $172.0 million in the second quarter of 2005. Internet Advertising
& Fees revenue grew 46% to $38.0 million versus the $26.1 million
reported in last year's comparable quarter. Advertising &
Communications revenue, which now includes only results from North
America, grew to $20.6 million, a 9% increase over the second quarter
of 2005.
Monster's deferred revenue balance at June 30, 2006 was $349.0
million, representing a 43% gain over the $244.6 million balance at
the end of the 2005 second quarter.
Income from continuing operations was $40.9 million while diluted
earnings per share from continuing operations were $0.31 in the second
quarter of 2006. Net income for the second quarter of 2006 was $39.6
million, with diluted earnings per share of $0.30.
At June 30, 2006, the Company's net cash position was $449.2
million compared with $273.3 million at December 31, 2005. In the
second quarter of 2006, Monster Worldwide repurchased 114,584 shares
of common stock for $5.9 million. An additional 500,000 shares of
common stock were repurchased during the quarter upon settlement of
the previously disclosed structured stock repurchase transaction.
Six Months 2006 Results
Monster Worldwide reported total revenue of $572.8 million for the
six months ended June 30, 2006 compared to $426.3 million last year, a
34% increase. Monster grew revenue 37% to $532.2 million compared with
$387.6 million in the 2005 period. Monster Worldwide reported income
from continuing operations of $77.4 million, or $0.59 per diluted
share. Net income for the first six months of 2006 was $81.9 million
and diluted earnings per share, including the results of discontinued
operations, were $0.62.
Important Disclosure Related to Historical Stock Option Grant
Review
As previously disclosed on June 12, 2006, a committee of
independent members of the Board of Directors, with assistance of
outside legal counsel, has been conducting an internal review and
analysis of all stock options previously issued by Monster Worldwide.
In further press releases dated June 12, 2006 and June 14, 2006, the
Company announced that the U.S. Attorney's Office and the SEC,
respectively, were conducting informal investigations of the Company's
past stock option grants. In a Form 8-K filed on July 12, 2006, the
Company discussed three pending shareholder derivative suits filed
against the Company.
On July 11, 2006, Monster Worldwide stated that while the review
is in its early stages, the Company believes it may need to restate
its financial statements for the year ended December 31, 2005 and
prior years to record non-cash charges for compensation expense
relating to various stock option grants. The Company has not
determined which historical financial statements may be restated, the
magnitude of the restatement, or the tax impact that may result from
the matter. However, the Company believes a potential restatement
would not have a material impact on 2006 earnings. On July 26, 2006,
the Company filed a Form 8-K stating that investors should exercise
caution in relying on the historical financial statements. Due to the
ongoing independent review and the potential impact of stock based
compensation expense and related tax matters in prior periods, the
Company is not providing full comparative GAAP financial results for
the three and six months ended June 30, 2005, and is providing only
selected cash flow and balance sheet data for 2006. In addition, it is
likely that the Company will not be in a position to file its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 on a
timely basis pending the completion of the independent review.
Recent Developments
-- Monster and Philadelphia Media Holdings, LLC Announce
Strategic Alliance
Monster Worldwide and the new owner of the Philadelphia Inquirer,
Philadelphia Daily News and philly.com announced a strategic alliance
to deliver online and offline recruitment services to employers and
job seekers in the nation's fourth largest metropolitan market. The
new co-branded web site will provide Delaware Valley area employers
access to a broader set of online recruitment tools to more
efficiently find and retain talent as well as a full spectrum of
hiring solutions. Local market job seekers will benefit from a more
compelling job search experience, enhanced career assistance resources
and a larger array of job opportunities.
-- Monster Worldwide Names Additional Independent Director to
Board
On July 11, Monster Worldwide's Board of Directors elected Sal
Iannuzzi, President and Chief Executive Officer of Symbol
Technologies, Inc. as a member of the board. Mr. Iannuzzi is
recognized for providing operational best practices in his tenure in
leadership positions in finance and corporate administration with
several Wall Street firms. He possesses significant corporate
governance expertise and has experience working with federal and state
regulators and government agencies. With the appointment of Mr.
Iannuzzi, six of the Company's eight board members are independent.
-- Company Sells TMP Worldwide Advertising & Communications
Businesses in Europe
As part of the ongoing assessment of its operations, during the
second quarter the Company sold its TMP Advertising & Communications
businesses located in the UK, Ireland and Spain. These transactions,
have allowed Monster Worldwide to focus its resources on the expansion
and growth of Monster across local and international markets. The
impact of the sales and the operating results of these businesses have
been recorded as discontinued operations in the second quarter of
2006, and prior years results have been similarly reclassified.
Selected historical unaudited non-GAAP results of the disposed
businesses are available on Monster Worldwide's investor relations
website at www.monsterworldwide.com/ir.
-- Monster Expands Internet Advertising & Fees Business with
Acquisition of PWP, LLC
In May, Monster expanded its presence in the online advertising
and education markets with the acquisition of PWP, LLC, a leading
publisher of directory websites in the education field, currently the
largest advertising category for this segment. Monster intends to
leverage its advertising sales operations, ad serving platform and
existing client relationships to further develop PWP's directory
businesses which connect prospective students with schools and
colleges. This business has been integrated into Monster Worldwide's
Internet Advertising & Fees segment alongside FastWeb, Monsterlearning
and other online media and education related properties.
Business Outlook
The following forward-looking statements reflect Monster
Worldwide's expectations as of July 26, 2006. These expectations do
not include the effect of any future acquisitions or dispositions, the
outcome of the ongoing investigations or litigations relating to past
stock options grants, or factors outside of our control, which may
have an impact on future financial results and are subject to the
Special Note regarding forward-looking statements elsewhere in this
release.
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$'s in millions, except per share Third
amounts Quarter 2006 Full Year 2006
----------------------------------------------------- ----------------
Total revenue $300- $306 $1,175 - $1,200
Monster revenue $280- $285 $1,095- $1,115
Diluted EPS from continuing operations $0.32 - $0.33 $1.26 - $1.30
----------------------------------------------------------------------
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Supplemental Financial Information
The Company has made available certain supplemental financial
information, in a separate document that can be accessed directly at
http://www.monsterworldwide.com/Q206.pdf or through the Company's
Investor Relations website at http://ir.monsterworldwide.com.
Conference Call Information
Second quarter 2006 results will be discussed on Monster
Worldwide's quarterly conference call taking place on July 26, 2006 at
10:00 AM EDT. To join the conference call, please dial in on (888)
551-5973 at 9:50 AM EDT and referencing conference ID#: 2261700. For
those outside the United States, please call in on 706-643-3467 using
referencing conference ID#: 2261700. The call will begin promptly at
10:00 AM EDT. Individuals can also access Monster Worldwide's
quarterly conference call online through the Investor Relations
section of the Company's website at www.monsterworldwide.com. For a
replay of the call, please dial (800) 642-1687 or for outside the US
dial (706) 645-9291 and use reference ID # 2261700. This number is
valid until midnight on August 2, 2006.
About Monster Worldwide
Founded in 1967, Monster Worldwide, Inc. is the parent company of
Monster(R), the leading global online careers and recruitment
resource. The company also owns TMP Worldwide, one of the largest
Recruitment Advertising agencies in North America. Headquartered in
New York with approximately 4,800 employees in 24 countries, Monster
Worldwide (NASDAQ: MNST) is a member of the S&P 500 Index and the
NASDAQ 100. More information about Monster Worldwide is available at
www.monsterworldwide.com.
Note on Discontinued Operations
On May 10, 2006 the Company sold its TMP Worldwide Advertising and
Communications businesses in the United Kingdom and Ireland. In a
separate transaction, the Company sold its recruitment advertising
agency in Spain. Accordingly, all of the operating results of such
businesses have been reclassified to discontinued operations for all
periods presented.
Notes Regarding the Use of Non-GAAP Financial Measures
Monster Worldwide, Inc. (the "Company") has provided certain
non-GAAP financial information as additional information for its
operating results. These measures are not in accordance with, or an
alternative for, generally accepted accounting principles ("GAAP") and
may be different from non-GAAP measures reported by other companies.
The Company believes that its presentation of non-GAAP measures, such
as operating income before depreciation and amortization and net cash
provides useful information to management and investors regarding
certain financial and business trends relating to its financial
condition and results of operations. In addition, the Company's
management uses these measures for reviewing the financial results of
the Company and for budgeting and planning purposes.
Operating income before depreciation and amortization is defined
as income from operations before depreciation, amortization of
intangible assets and amortization of stock based compensation. The
Company considers operating income before depreciation and
amortization to be an important indicator of its operational strength.
This measure eliminates the effects of depreciation, amortization of
intangible assets and amortization of stock based compensation from
period to period, which the Company believes is useful to management
and investors in evaluating its operating performance. Operating
income before depreciation and amortization is a non-GAAP measure and
may not be comparable to similarly titled measures reported by other
companies.
Net cash is defined as cash and cash equivalents plus marketable
securities, less total debt. The Company considers net cash to be an
important measure of liquidity and an indicator of its ability to meet
its ongoing obligations. The Company also uses net cash, among other
measures, in evaluating its options for capital deployment. Net cash
presented herein is a non-GAAP measure and may not be comparable to
similarly titled measures used by other companies.
Special Note: Except for historical information contained herein,
the statements made in this release constitute 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. Such
forward-looking statements involve certain risks and uncertainties,
including statements regarding the Company's strategic direction,
prospects and future results. Certain factors, including factors
outside of our control, may cause actual results to differ materially
from those contained in the forward-looking statements, including
economic and other conditions in the markets in which we operate,
risks associated with acquisitions, competition, seasonality and the
other risks discussed in our Form 10-K and our other filings made with
the Securities and Exchange Commission, which discussions are
incorporated in this release by reference.
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MONSTER WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Six
Months Months
Ended Ended
June 30, June 30,
--------- ---------
2006 2006
--------- ---------
Revenue $295,800 $572,753
------------------------------------------------- --------- ---------
Salaries and related 111,925 216,003
Office and general 47,969 98,925
Marketing and promotion 73,404 139,375
------------------------------------------------- --------- ---------
Total operating expenses 233,298 454,303
------------------------------------------------- --------- ---------
Operating income 62,502 118,450
Interest and other, net 4,144 7,524
------------------------------------------------- --------- ---------
Income from continuing operations before income
taxes and equity interest 66,646 125,974
Income taxes 23,418 45,100
Losses in equity interest (2,284) (3,525)
------------------------------------------------- --------- ---------
Income from continuing operations 40,944 77,349
Income (loss) from discontinued operations, net
of tax (1,327) 4,530
------------------------------------------------- --------- ---------
Net income $ 39,617 $ 81,879
================================================= ========= =========
Basic earnings per share:
Earnings per share from continuing operations $ 0.32 $ 0.61
Income (loss) per share from discontinued
operations, net of tax (0.01) 0.04
------------------------------------------------- --------- ---------
Basic earnings per share* $ 0.31 $ 0.64
================================================= ========= =========
Diluted earnings per share:
Earnings per share from continuing operations $ 0.31 $ 0.59
Income (loss) per share from discontinued
operations, net of tax (0.01) 0.03
------------------------------------------------- --------- ---------
Diluted earnings per share $ 0.30 $ 0.62
================================================= ========= =========
Weighted average shares outstanding:
Basic 128,551 127,662
================================================= ========= =========
Diluted 132,009 131,390
================================================= ========= =========
Operating income before depreciation and
amortization:
Operating income $ 62,502 $118,450
Depreciation and amortization of intangibles 11,886 22,232
Amortization of stock based compensation 3,538 5,606
------------------------------------------------- --------- ---------
Operating income before depreciation and
amortization $ 77,926 $146,288
================================================= ========= =========
* - Earnings per share for the six months ended June 30, 2006 does
not add due to rounding.
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MONSTER WORLDWIDE, INC.
SELECTED CASH FLOW AND BALANCE SHEET DATA
(unaudited, in thousands)
Three Three Six
Months Months Months
Ended Ended Ended
June 30, March 31, June 30,
--------- --------- ---------
2006 2006 2006
--------- --------- ---------
Selected Cash Flow Data: provided by
(used for)
Depreciation and amortization of
intangible assets $11,886 $10,346 $22,232
Capital expenditures (16,127) (10,148) (26,275)
Changes in marketable securities, net (202,236) (96,989) (299,225)
Payments for acquisitions and intangible
assets, net of cash acquired (24,312) (23,655) (47,967)
Cash funded to equity investee (4,800) - (4,800)
Net proceeds from sale of businesses 32,950 - 32,950
Investment in unconsolidated affiliate - (19,936) (19,936)
Proceeds from employee stock options 31,571 59,594 91,165
Repurchase of common stock (5,879) (8,537) (14,416)
Structured stock repurchase, net - (22,758) (22,758)
June 30, March 31, December
2006 2006 31, 2005
--------- --------- ---------
Selected Balance Sheet Data:
Cash and cash equivalents $47,059 $166,035 $196,597
Marketable securities 422,972 221,019 123,747
Deferred revenue 350,671 345,040 328,902
Debt 20,820 24,882 47,056
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MONSTER WORLDWIDE, INC.
UNAUDITED OPERATING SEGMENT INFORMATION
(in thousands)
MONSTER
---------------------------------------------
Careers - Internet
Three Months Ended June North Careers - Advertising
30, 2006 America International & Fees Total
------------------------ ---------------------------------------------
Revenue $162,816 $74,374 $37,979 $275,169
Operating income 56,039 2,191 12,637 70,867
OIBDA 61,534 7,121 14,263 82,918
Operating margin 34.4% 2.9% 33.3% 25.8%
OIBDA margin 37.8% 9.6% 37.6% 30.1%
Advertising & Corporate
Three Months Ended June 30, 2006 Communications Expenses Total
----------------------------------- ----------------------------------
Revenue $20,631 $295,800
Operating income 2,486 $(10,851) 62,502
OIBDA 3,765 (8,757) 77,926
Operating margin 12.0% 21.1%
OIBDA margin 18.2% 26.3%
MONSTER
---------------------------------------------
Careers - Internet
Six Months Ended North Careers - Advertising
June 30, 2006 America International & Fees Total
------------------------ ---------------------------------------------
Revenue $322,814 $138,965 $70,426 $532,205
Operating income 111,239 3,301 22,245 136,785
OIBDA 120,592 12,065 25,948 158,605
Operating margin 34.5% 2.4% 31.6% 25.7%
OIBDA margin 37.4% 8.7% 36.8% 29.8%
Historical Revenue:
Three Months Ended
June 30, 2005 $126,152 $ 45,880 $26,059 $198,091
Six Months Ended
June 30, 2005 $249,708 $ 87,097 $50,820 $387,625
Advertising & Corporate
Six Months Ended June 30, 2006 Communications Expenses Total
----------------------------------- ----------------------------------
Revenue $40,548 $572,753
Operating income 4,184 $(22,519) 118,450
OIBDA 6,494 (18,811) 146,288
Operating margin 10.3% 20.7%
OIBDA margin 16.0% 25.5%
Historical Revenue:
Three Months Ended June 30, 2005 $18,932 $ - $217,023
Six Months Ended June 30, 2005 $38,694 $ - $426,319
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