Attached files
| file | filename |
|---|---|
| EX-99.1 CHARTER - EXHIBIT 99.1 PRESS RELEASE RE EARNINGS - AutoWeb, Inc. | exhibit_99-1.htm |
| 8-K - FORM 8-K 3RD QTR EARNINGS RELEASE - AutoWeb, Inc. | form_8k.htm |
Exhibit 99.2
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 1
PRIME
NEWS WIRE
Moderator: Lawrence
Brogan
October
22, 2009
4:00
p.m. CT
|
Operator:
|
Good
morning. My name is (Christie) and I will be your conference
operator today. At this time, I would like to welcome everyone
to the Autobytel Third Quarter 2009 Financial Results. All
lines have been placed on mute to prevent any background
noise. After the speaker’s remarks, there will be a
question-and-answer session. If you would to ask a question
during this time simply press star then the number one on your telephone
keypad. If you would like to withdraw your question, press the
pound key.
|
Thank
you. Mr. Lawrence Brogan, Senior Vice President of Strategic and
Financial Planning, you may now begin.
|
Lawrence
Brogan:
|
Thank
you. Good afternoon and welcome to Autobytel’s 2009 Third
Quarter Conference Call. With me on the line today are Jeff
Coats, President and Chief Executive Officer and Curt DeWalt, Chief
Financial Officer.
|
Before we
begin, I need to remind you that during today’s call, including the Q&A
session, any projections and forward-looking statements made regarding future
events and the future financial performance of the company are covered by the
safe harbor statement contained in today’s press release and in the company’s
public filings with the Securities and Exchange Commission.
Please
note that actual events or results may differ materially from these
forward-looking statements. Specifically, please refer to our Form
10-K for the year ended December 31, 2008, our Form 10-Q for the quarter ended
June 30, 2009 and our Form 10-Q for the quarter ended September 30, 2009, which
we expect to file shortly.
These
filings identify the principal factors that could cause results to differ
materially from those forward-looking statements. Slides are included
with today’s presentation to help illustrate some of the points being made and
discussed during this call. You can access the slides in the investor
relations section of our Web site, www.Autobytel.com.
Now, I’ll
turn the call over to Jeff.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 2
|
Jeff
Coats:
|
Thank
you, Larry. Good afternoon everyone. While the
Autobytel story the past few quarters was primarily one of cost reduction
and containment, our focus has also been on implementing a carefully
thought out reinvestment in our properties and products to enhance our
gross margins and drive revenue.
|
We’ve
improved our gross margin by approximately eight percent from the second quarter
of 2009 while at the same time reducing total operating expenses by a further
seven percent sequentially. But the last few quarters have also
included an extensive ground laying effort to upgrade, re-platform and
reconfigure our Web sites and integrate the data and content acquired from the
patent settlements completed in the second quarter of this year.
This
effort has improved page views to our Web site and increased the level of our
direct-to-site or “organic leads,” which carry better margins and are generally
of higher quality than leads acquired from third party sites. If you
will recall back in January we rehired two former Autobytel executives to take
charge of our Web site operations and search engine marketing. That
investment has already paid substantial dividends, and we are excited about our
current momentum in improving user experience, traffic acquisition and
monetization.
By most
measures the general economy seems to be stabilizing and there has been some
recent positive news coming out of the automotive industry. General
Motors and Chrysler have emerged from bankruptcy and the government’s
“Cash-for-Clunkers” program, albeit a one time event, stimulated the purchase of
nearly $700,000 cars through a rebate which returned close to $3 billion to
consumers.
Although
“Cash-for-Clunkers” was a real boon to auto manufacturers and dealers, it was
somewhat of a mixed blessing for Autobytel. Although we experienced
increased leads delivered per dealer as a result of the program during the third
quarter, overall dealer demand for our lead programs decrease, reflected in
fewer new dealer sign ups, as certain dealers felt they had sufficient volume of
customers through increased online and show room traffic. Our OEM and
advertising businesses benefited from heightened consumer demand in the short
term but we are now dealing with the after effects of dealer inventory sell outs
and a softening of consumer interest which typically means fewer requests for
auto lead referrals. We are hopeful that dealers buoyed by recent
increased sales related to “Cash-for-Clunkers” will increase their marketing
budgets over the coming months related to new products introduced for the 2010
model year.
While
working towards bolstering our top line and improving profitability we have
maintained a strong cash position, $25.2 million at the end of
September. Autobytel remains debt free and we are highly committed to
upholding and building our financial flexibility to take advantage of the
strategic opportunities that are available to us.
I’ll now
turn things over to Curt who will provide a review of our third quarter
results. Curt.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 3
|
Curt
DeWalt:
|
Thank
you, Jeff. To keep things to the point, I’ll highlight a few
key metrics from the third quarter. You’ll find more detail in
the press release we just issued and our 10-Q for the quarter ended
September 30, 2009, which we expect to file
shortly.
|
As Larry
mentioned, you can also follow along with the slide presentation we posted
earlier today on our Web site.
As shown
on slide three, total revenues for the third quarter of $13.4 million were flat
with the second quarter of this year and down by approximately 23 percent
year-over-year. This is primarily due to the decline in the number of
participating dealers in our leads programs and the corresponding leads to those
dealers.
As the
automotive market has struggled, many of our dealers have gone out of business
or pulled back significantly in their marketing spend. While the
“Cash-for-Clunkers” program provided a short term boost for dealers it did not
boost demand for our lead programs as dealers were flooded with customers both
online and in their show rooms.
Finance
leads were off two percent from the second quarter of this year and declined 51
percent from the prior year third quarter due to the decline in the number of
participating dealers, which is primarily related to continued tightness in the
sub prime consumer credit environment, making it difficult for dealers to get
credit challenged customers financed.
Wholesale
OEM lead delivery improved throughout the quarter, showing continued stability,
and was up slightly from the second quarter. But this business is
still down year-over-year. We continue to see OEM leads as an area of
growth for Autobytel as more OEMs become active in the lead
marketplace.
Slide
five shows our quarterly revenue by product over the last two
years. In the third quarter of 2009, we delivered approximately
675,000 auto leads compared with 690,000 in the prior quarter and 772,000 in
last year’s third quarter reflecting a declining dealer base partially offset by
an increase in the number of leads delivered per dealer. Increasing
the leads delivered per dealer directly impacts our revenue per
dealer.
We
delivered 87,000 finance leads in 2009 third quarter, roughly equal to the
second quarter of 2009 and 145,000 in the third quarter of a year
ago. Again, declines primarily reflect the declining dealer base,
impacted by the lack of available sub prime consumer credit.
Our
dealer network continued to be impacted by challenges facing the automotive
industry. At the end of the third quarter 2009 we were serving 2021
new car franchises versus 2263 in the second quarter of 2009 and 3215 in the
prior year period. Our used car dealer franchises totaled 923 at the
end of the 2009 third quarter compared with 1,016 at the end of the second
quarter 2009 and down from 1,321 in the year ago quarter.
Finance
dealer franchises totaled 186 at the end of 2009 third quarter compared with 201
at the end of the second quarter and 298 in the 2008 third quarter.
It is
encouraging to note that we are currently seeing signs of a reversal in dealer
cancellations and loss.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 4
Third
quarter advertising revenue was about equal to this year’s second quarter as
well as last year’s third quarter. Although “Cash-for-Clunkers”
resulted in higher traffic to our Web site properties during the quarter,
advertisers’ budgets did not increase significantly from prior
periods.
There
were approximately 48 million total Web page views across our Internet
properties in 2009 third quarter, up about 30 percent from the 37 million page
views in the second quarter. We had approximately 50 million in the
year ago period. The “Cash-for-Clunkers” program presented us with an
opportunity to spend SEM dollars effectively in July and August to generate
leads and page views. Our in-house SEM spending was approximately
three times higher in Q3 versus Q2 of 2009. This allowed us to
displace leads and traffic purchased from third party sources, leading to an
improvement in gross margin from Q2 to Q3. As Jeff mentioned at the
beginning of the call, carefully thought out reinvestment in programs and
properties has become a major focus for the Autobytel story.
Gross
margins were 35.5 percent in the 2009 third quarter, up from 32.9 percent in the
second quarter of this year as we worked to refine the retail auto
lead promotions which were initiated in response to the sliding
economy. In addition, the results of our decisions to carefully
reinvest in our properties and programs to enhance our gross margins is becoming
evident as we approach last year’s third quarter margins of 35.7
percent.
Both
slides three and six illustrate the reduce operating expenses by approximately
50 percent to $6.2 million and $12.2 million in the same period last year, which
included $1.8 million in severance costs. Without considering the
severance cost, year-over-year decline in operating expenses was 40
percent. On a sequential basis, expenses were lower by approximately
seven percent. Also on slide six you will see significant
improvements we’ve made in expense management over the last seven
quarters. Rest assured we are continually looking for increased
efficiency and decreased costs in line with our current and anticipated revenue
levels.
Non-cash
share based compensation in third quarter 2009 decreased to $266,000 down from
$561,000 in last year’s third quarter.
Net loss
for 2009 third quarter was $799,000 or two cents per share, which included
approximately $642,000 of other income and discontinued operations primarily
related to the release of funds from the escrow account which was established
when we sold our AVV business in January 2008, along with certain tax
adjustments.
These
results are a significant decline from the net loss of $5.6 million or 13 cents
a share in the 2008 third quarter. The company’s reported loss from
continuing operations was $1.4 million for 2009 third quarter. And in
2009 second quarter the loss from continuing operations was $1.5 million and in
the third quarter of last year the operating loss from continuing operations was
$5.8 million.
With
respect to the $1.9 million of AVV escrow, we expect to have this account fully
reconciled by the end of the year and that we will have captured approximately
95 percent of the funds escrowed at closing. The remaining amount
will be paid to the acquirer of the AVV business to obtain certain software
licenses per the original purchase agreement.
Slide
nine you can see how cash has trended since the beginning of the
year. At September 30, 2009 our cash balance was $25.2 million or 56
cents per share compared with $27.4 million or 61 cents per share at December
31, 2008 and $26.8 million or 59 cents per share at June 30, 2009. As
Jeff mentioned, our balance sheet remains debt free.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 5
Some of
you had questions regarding the exposure to Chrysler and GM bankruptcy, both of
which emerged earlier this last quarter. We’ve received payment for
all outstanding pre-bankruptcy receivables and at this time our lead delivery
program with Chrysler is not active. We are continuing to provide
leads and advertising to General Motors, and Ford continues to be an important
and growing OEM customer.
Our
current ratio continues to improve and stood at 4.7 to one at the end of
September, compared with 4.4 to one at the end of June and 3.3 to one at the end
of December 2008.
As many
of you know from our recent Form 8-K filing with the SEC we received a
notification from NASDAQ on September 15 informing us that Autobytel was not in
compliance with NASDAQ’s $1 minimum closing price requirement for continued
listing of our stock on the NASDAQ global market. NASDAQ had
previously suspended the minimum bid requirement but lifted the suspension on
August 3. Per the terms of the notification, Autobytel has six months
from September 15 to regain compliance with the minimum bid requirement or face
de-listing. We are currently evaluating our options with respect to
this compliance deficiency and we’ll be communicating accordingly.
With that
I’ll now turn the call back to Jeff.
|
Jeff
Coats:
|
Thank
you, Curt. We are pleased with the progress we are making
although we remain constrained by a challenging external environments even
as our industry made some short term progress during the third
quarter. Throughout this period we’ve been working hard to
blend together efficiencies, decrease expenses and most importantly, we
are seeking new and better ways to provide increasing value to our
customer base.
|
Particularly
encouraging has been the significant progress we’ve made on our owned and
operated suite of Web sites, including Autobytel.com, AutoWeb, Autosite,
Car.com., CarSmart, CarTV and Myride.com.
In the
first quarter of this year we assembled a new leadership team to help us rebuild
our Web presence. We then focused on making improvements in site
reporting and infrastructure to lay the groundwork for this effort.
In the
second quarter, we relaunched Myride.com, improving the site speed, stability,
customer interaction and lead conversion. In the third quarter, we
began integrating the data, content, and tools we received as part of several
intellectual property settlements in the second quarter including those with
Edmund’s and Internet Brands. These assets include editorial content,
core vehicle data, car photos and other research tools. We are hoping
to achieve similar arrangements with other parties that would allow us to
further strengthen our Web site content.
PRIME NEWS
WIRE
Moderator:
Lawrence Brogan
10-22-09/4:00
p.m. CT
Confirmation #
35120681
Page 6
In the
fourth quarter, we expect to complete the remainder of the third party content
integration into our Web sites and relaunch Autobytel.com. As we do
this work we are already seeing improved results in customer acquisition and
conversion due to improvements in content, tools, and user
experience.
In the
first quarter of 2010 we expect to continue this work across our Web platform,
including relaunching Car.com, AutoWeb and Autosite. By continuing to
improve our Web sites we believe we can continue to decrease customer
acquisition costs, improve margins and raise product quality in both the leads
and the advertising businesses.
Slide
eight highlights our progress and provides a roadmap to further product
development. This progress has allowed us to bring our search engine
marketing or SEM activities in house at a positive and increasing
ROI. We’ve eliminated all negative SEM related ROI that previously
was outsourced. As seen on slide seven, further conversion of site
visits in the leads has increased by over 300 percent from the first quarter of
2009 and we expect to see this momentum continue. As we’ve mentioned
previously the creation of more organic leads is an important cornerstone of our
strategy going forward.
Our cash
position and prudent balance sheet management have allowed us the time to not
only weather the current storm but to position Autobytel for future growth by
providing our manufacturer and dealer customers with value added services that
allow them to maximize vehicle sales.
For
example as we discussed last quarter, we entered into an agreement with Kelley
Blue Book to extend our reach into the large used car market. This
will improve both the quality and quantity of leads from our used car
program. In July we launched a new lead verification technology
platform to increase the quality of and closing ratios on new and used car leads
for our dealer customers. We are very pleased thus far with the
results, especially in this type of environment, which has been one of the most
challenging times in our industry’s history. We must be sensitive and
responsive to our customer’s needs and help them quickly adapt to rapidly
changing business conditions.
Most
recently, we relaunched our e-mail manager program to help dealers better
respond to what has become a highly prolonged consumer purchase
cycle. In fact, today’s consumers spend about nine months from the
time they begin to research a car until they finalize a
purchase. This time frame is now about twice what it was in
2001. We completely revamped and enhanced the program’s capabilities
to provide dealers with a better method for keeping in front of potential
customers. Our e-mail campaigns result in earlier and more frequent
communications with consumers without taxing existing dealer
resources.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 7
In our
continued efforts to provide innovation in September we began the roll out of a
new lead product program designed to better meet the needs of our large dealer
customers. It is services like these, coupled with our leading
automotive Web properties, that give dealers and manufacturers the tools they
need to effectively compete in a shrinking target market. We are
confident that, as well as these programs work in today’s environment, they will
become even more valuable as the economy continues to stabilize and returns to a
pattern of growth.
While
continually improving our consumer manufacturer and dealer experiences we are
also highly cognizant of our ongoing need to streamline our business and make
sure our costs are proportional to our current and expected revenue
levels. We remain focused on the further development of robust tools
that will assist our customers in selling cars in the most cost effective manner
possible. In parallel we remain committed to fine tuning our own
operations for maximum efficiency.
The
recovery in the general economy appears to be underway, and Detroit’s three
major automakers, as well as JD Power, seem to be painting better scenarios for
2010. We certainly hope they are right, but we are focused on
increasing productivity enhancement and further cost rationalization
regardless.
At
Autobytel I am confident that we are doing the right things to strengthen our
position in the marketplace while using our financial flexibility to the
utmost. Even in this economy, and perhaps because of it, strategic
opportunities abound. As I mentioned in prior calls the automotive
industry and its diverse segments are ripe for change and consolidation and
Autobytel is positioned very well to benefit from this.
We’ve
made considerable progress. We have the right team and strategy in
place to further strengthen and grow our company. We are strongly
positioned to benefit from a recovering economy and automotive
markets. I look forward to reporting back to you as we continue to
find new ways to not only survive but to thrive. Operator, we’ll now
take questions.
|
Operator:
|
Yes,
sir. If you’d like to ask a question at this time, simply press
star then the number one on your telephone keypad. We will
pause for just a moment to compile the Q&A roster. And your
first question comes from the line of (William
Martin).
|
|
(William
Martin):
|
Hey,
Jeff. How are you?
|
|
Jeff
Coats:
|
Good,
(Bill). How are you?
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 8
|
(William
Martin):
|
Very
good. Did I hear you correctly that you said that you’re seeing
a reversal in dealer losses this
quarter?
|
|
Jeff
Coats:
|
Things
are strengthening. They’re looking pretty good so far this
quarter.
|
|
(William
Martin):
|
Great. And
kind of along the same lines you know we’ve heard a number of major auto
retailers talking about significantly reallocating dollars on
line. I was curious just if you could talk about how you’re
attacking and going after that
opportunity.
|
|
Jeff
Coats:
|
Well,
as I mentioned we launched in late September and earlier this month a
couple of new products, one particularly focused on the large dealer
groups. We don’t really want to talk about it too much publicly
at this point for competitive reasons but we are very confident that it’s
going to pull more of those dollars in our direction. It’s
exactly what the big dealers have been asking for. The initial
feedback that we’re getting as we meet with them has really been
astounding. So we’re confident we’re going to see some big pick
ups from that.
|
|
(William
Martin):
|
Great. And
I – you obviously noted you continue to evaluate ways to strengthen your
market position from a strategic perspective. I was wondering
are you seeing, in this difficult auto environment, are you seeing smaller
competitors go out of business or come up for
sale?
|
|
Jeff
Coats:
|
I
haven’t really seen a lot of smaller competitors go out of business thus
far. Some of the smaller guys do seem to have, you know,
liquidity issues but you know it only takes two guys, and a dog in a
garage to start a search business and there are a lot of guys like that
out there. They can generate some amount of revenue, a million,
a couple million whatever. I think it’s hard for them to scale
much beyond that but you know there’s always people like that out
there.
|
We’re
looking for some interesting acquisition candidates. We’re talking to
quite a few. So you know we’re definitely – we’ve got our ear to the
ground and trying to see what we can do.
|
(William
Martin):
|
Great. And
just one more question. You know Autobytel obviously owns a
valuable patent portfolio, I was curious if you’re comfortable
articulating this publicly just how are you thinking about that asset
today?
|
|
Jeff
Coats:
|
We
are currently reviewing what our opportunities may be to pursue additional
licensing for our patient portfolio. And are, in fact, in some
discussions currently.
|
|
(William
Martin):
|
Great. Well,
thank you so much for your hard work. I really appreciate
it.
|
|
Jeff
Coats:
|
Thanks.
|
|
Operator:
|
And
your next question comes from the line of (Seth Setrakian) with First New
York.
|
|
(Seth
Setrakian):
|
Hi,
guys. How are you?
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 9
|
Jeff
Coats:
|
Hey,
(Seth).
|
|
(Seth
Setrakian):
|
I
guess I have a couple of questions, one regarding the balance
sheet. Is there one more payment that’s due from the settlement
a couple of years ago?
|
|
Jeff
Coats:
|
Yes. There’s
the payment of $2.67 million due in the middle of March
2010.
|
|
(Seth
Setrakian):
|
Got
it. So …
|
|
Jeff
Coats:
|
And
it’s not on the balance sheet,
(Seth).
|
|
(Seth
Setrakian):
|
Yes,
yes, no. It’s not on the balance sheet. I’m just
trying to think incremental like pro forma where assuming that burn isn’t
that dramatic for the fourth quarter, where we will be in the beginning of
next year. So essentially we’re still trading approximately net
cash.
|
It seems
like you guys have done a phenomenal job considering the state of where we were
operationally a year ago in the state of really automotive industry over the
past 12 to 18 months. And I guess from a fundamental point of view,
we’re doing very well in terms of the hand we were dealt with. I
guess now my question is considering we’re still only trading at net cash per
share and I’m looking at all of your peers if we can call them peers, all of the
dealers, all of the manufacturers, advertising companies, everyone that kind of
fell off the cliff from a business point of view a lot of their stocks have come
back to the spring 2008 levels. We’re clearly not even near
that. We were at $2 a share back then.
And you
know from a fundamental point of view all of these companies that I’m alluding
to probably had business drop off between 30 and 50 percent probably comparable
to us. But their stocks have come back, ours has not. Our
business is being valued at zero. So I guess going forward, I really
am curious to hear your thoughts on how we’re going to enhance shareholder value
in light of the fact that you’re not going to get any credit for the
business. But even more so I mean we do have this NASDAQ listing
issue also. And I mean from where I sit I see no reason why we’re not
above $1 a share. And I just kind of want to – I guess I want to hear
your thoughts on all of that.
|
Jeff
Coats:
|
Let’s
see. Those were a lot of points to
address.
|
|
(Seth
Setrakian):
|
I
know. Sorry.
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 10
|
Jeff
Coats:
|
No,
no. I think probably one of the reasons that our stock hasn’t
come back the way others has is because we had damaged our credibility
historically with our results. Our results had trended poorly
for a while even before the bottom fellow out of the economy in the
automotive market.
|
So I
think we are a little bit in a situation of show me. I think the
market is waiting to see us not just prove that we can cut costs, which we
definitely have done. But that we can actually rebuild a business and
improve the top line. We are absolutely in the process of
demonstrating that we can rebuild the business. Our margins are
improving. And you know and all of the things that we talked about
with regards to our lead conversion and our page views being up and the work
we’ve done on the sites this year all of that will set up very nicely as we move
forward into the fourth quarter and into 2010.
So as the
economy recovers, as the automotive economy recovers we really are very well
positioned to be able to improve the top line. I also think and you
know we haven’t really talked about this a whole lot on these calls but
historically the leads business was not getting a lot of investment capital
during the prior two or three years as other business efforts were being
pursued. And so you know we’ve spent this year rebuilding the leads
business. I think we’ve come a long way. I think we will
be able to demonstrate that we can and are rebuilding the business and will be
able to drive the top line.
I agree
with you with regards to stock price, but then of course, I would. We
certainly are reviewing all of our options with regards to the situation with
the NASDAQ and there certainly are various options available to us but the best
option is to, you know, put results – demonstrate results which result in
greater investor confidence and an improved stock price. We think
we’ve begun to do that. We think as we continue to move forward we’ll
be able to further demonstrate that our margins are strengthening
again.
You know
we’re not even close to historic margin levels. The benefits that
we’ve seen in, you know, lead conversion and page views have been pretty good so
far this year under almost anybody’s metrics. And yet, for the most
part it was done with the sites that had yet to be overhauled, with sites that
we had not yet integrated any of the new content or tools or photos or reviews
that we received as part of the litigation settlements.
So you
know I think there’s some – the best is yet to come as they say as we complete
the integration of all of these assets into the Web sites. And we can
really continue to turn up the flame under our search activities both SEM and
SEO and see the benefits from those.
|
(Seth
Setrakian):
|
You
know in addition you alluded to investor confidence, just one other point
to make. I think investor awareness is going to matter
also. I just feel we are below the radar screen. It
seems like there’s been a core list of holders that have been owning the
stock over the last couple of years and there are some new significant
shareholders also. However, I think in terms of getting the
story out and letting people know on how much improvement there’s been and
the value that’s here there’s probably a better effort we can make on
investor awareness.
|
And just
one thing I want to highlight even on the press release it’s only Webcast and I
know there’s a dial in number and that’s not even on the press
release. If that’s just something that we could do. I know
this is probably not the time to talk about stuff like this but it’s just too
good of a story out there. It’s tremendously undervalued and I think
little small things like that can increase our profile with a larger
audience. That can help us accomplish what we all want to do and
that’s you know see the stock be higher.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 11
|
Jeff
Coats:
|
Sure. Well
you know we’re always – always want to get feedback and good ideas from
people. We certainly are working towards the goals that you’re
talking about. You know and I’ll be candid with you I have not
devoted much time to some of the activities thus far that you’re talking
about because you know I …
|
|
(Seth
Setrakian):
|
Your
plate’s been full. I mean there’s been a lot that you’ve had to
reverse.
|
|
Jeff
Coats:
|
No,
no, it’s not just that. It’s I decided that it didn’t make
sense for me to go out and say to the market this is what we’re going to
do because a lot of companies say that. This company has said
that historically and then didn’t deliver. So I decided to wait
until we had delivered some results and then go out and start saying OK
this is what we’ve now done. So we’ve got a little bit of
credibility. This is what we’re going to do and start telling
the story that way.
|
So I
think you know I agree with you. I think we’re pretty well positioned
at this point to start telling our story more broadly, more widely and you know
also this has been a difficult year in the automotive market and you know who
knew where the market was going to be and even if for sure we’re at the bottom
even though you know the conventional wisdom certainly hopes that we
are. Some of us were at the JD Power conference last week and there
certainly seems to be a positive outlook, not enthusiastic so it’s not over the
top, but a positive outlook as we roll into 2010, so you know.
|
(Seth
Setrakian):
|
Well,
look I just want to commend you guys. You guys are working
really hard. You’re doing a great job, and I think eventually
the market is going to notice. Keep it
up.
|
|
Jeff
Coats:
|
Thank
you very much. We appreciate your
support.
|
|
(Seth
Setrakian):
|
Thanks. Bye.
|
|
Operator:
|
And
your next question comes from the line of (Brian Horey) with
(Aurelian).
|
|
(Brian
Horey):
|
Hi. I
had two questions. I guess the first was in terms of the post
cash–for-clunkers period you know how does it all net out? I
understand you said that dealers were maybe more interested now in lead
generations since they don’t have so much showroom traffic. But
consumers on the other hand are you know are less
interested. So how does that net out for the business as we
enter Q4, I think?
|
And the
second question was I’m just kind of curious as to you know your sense of how
much of the organic traffic yield or potential we have realized with these
search engine optimization efforts that we’ve done to date and kind of how much
more opportunity is there to improve that going forward.
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 12
|
Jeff
Coats:
|
OK. With
regards to your first question I’d say it’s a mixed bag. You
know kind of what we’ve seen and you know there were some concerns during
“Cash-for-Clunkers” that what it would do would be – would pull forward a
lot of demand into July and August for people that would normally have
gone in and bought cars later in the year. And certainly there
seems to have been – there seems to be a significant element of
that.
|
But even
worse than that is the fact that a lot of dealerships don’t have any inventory
or haven’t had any inventory until this month because – for a variety of
reasons. You know cash–for-clunkers really sucked out a lot of
inventory out of the system. But even before then many dealers had
prudently and judiciously you know curtailed their inventory purchases earlier
in the year as you know they were seeing things not look great. So
there wasn’t a lot of, as they say in Detroit, metal on the lot before
cash–for-clunkers. “Cash-for-Clunkers” really siphoned off a lot of
what was left.
And so
we’ll see what happens as the 2010 products are delivered to
dealers. It will be interesting. You know we are hoping to
see some pick up in marketing dollars spent. So it remains to be
seen.
I’ve gone
blank on your second question.
|
Curt
DeWalt:
|
SEO
SEM.
|
|
Jeff
Coats:
|
Oh,
SEO SEM. The – it’s a good answer I’m happy to tell you in that
we’ve barely scratched the surface. We’ve made some good
inroads thus far, but again, what we’ve been able to do so far is even
with many of our sites still in need of overhaul without the new content,
the new tools, the new pictures, the new reviews that were coming into the
sites. We’re working on some other data acquisition
opportunities to even further enhance the quality of our Web
sites.
|
So you
know it never had made sense to bring a lot of people to our sites through paid
search if we couldn’t hold them on our sites. Now, that we’re
improving our sites and continuing to improve our sites and really you know even
if you go to the Autobytel.com today that site has not yet been
overhauled. You know Myride of all of the sites has gotten most of
the integration into. As we integrate the new tools, the new pictures
and everything is going into Myride first. And so that’s the place to
look. But as we complete the relaunch of Autobytel in November and
the other sites and integrate all of these wonderful things into them we will
really be able to see and expect to see some good benefits from our search
activities.
|
(Brian
Horey):
|
OK. And
is – at this point is there any way to kind of translate that potential
into you know let’s say a long term goal for gross margin you know just to
give us a sense as to what – a quantification of how big an opportunity
there is in front of us as far as all of that
goes?
|
|
Jeff
Coats:
|
We’re
working on that. You know it’s – because we’ve only scratched
the surface so far and because it’s a different world these days we’re not
prepared to say anything about that publicly. But you know stay
tuned for the earnings call that we’ll have in 2010 and perhaps we’ll be
able to talk a little bit more about that at that point with some more
results behind us.
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 13
|
(Brian
Horey):
|
OK. Thank
you.
|
|
Operator:
|
As
a reminder, if you’d like to ask a question, please press star then the
number one on your telephone keypad. Your next question comes
from the line of (Robert Setrakian) with
Helios.
|
|
(Robert
Setrakian):
|
Hi,
guys.
|
|
Jeff
Coats:
|
Hi,
(Robert). How are you?
|
|
(Robert
Setrakian):
|
Good. As
the couple of previous callers mentioned operationally investors should be
happy with what you have accomplished here in a difficult
environment. You know from a stock perspective we’re still
selling at net cash.
|
You know
if I remember correctly in the past two years a couple of times you know we had
hired bankers and we had gone through processes for strategic
alternatives. And I’m wondering whether you know with the environment
improving a little bit and you know having heard at that time from you know
industry sources, market players talking to some of your competitors before you
know there was a bit of interest do you guys as management and board you know
feel vulnerable at all with the stock trading at net cash? And you
know you have plans obviously for the next couple of years to take this to the
next level. And you know you feel it’s very undervalued but at net
cash environment improving, marketing on the Internet you know being interesting
area for people automotive industry improving. Don’t you feel a
little vulnerable?
|
Jeff
Coats:
|
Certainly,
(Robert), we’d like to see the stock price higher which would, of course,
moderate some of what you’re talking about. I don’t know that I
would say yes we do feel vulnerable. And I certainly would not
say that no we don’t feel
vulnerable.
|
I kind of
view us – I think we kind of view as – in a very interesting
position. We have the opportunity to be a catalyst for a lot of the
consolidation opportunities in this marketplace in a variety of
ways.
|
(Robert
Setrakian):
|
Yes.
|
|
Jeff
Coats:
|
So
you know we certainly are not putting our head in the
sand. We’re doing everything we can do to improve our
operations so that they are reflected in the company’s financial
results. You know I would remind you that we also have a pill
in place. That if anyone purchases in excess of 15 percent of
our stock it triggers the pill. And that you know generally is
a big negative if that were to
happen.
|
|
(Robert
Setrakian):
|
Yes.
|
|
Jeff
Coats:
|
So
that provides us with some amount of comfort but you know really we’re
pushing forward to both improve the company and as I’ve mentioned several
times position ourselves to take advantage of market consolidation
opportunities.
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 14
|
(Robert
Setrakian):
|
Yes. I
mean you know I do the math from where some of these comps are trading in
terms of three, four time sales. We’re trading at net
cash. Here we are talking about you know $1 stock price which
would probably value at us like 0.25 times sales. For a lot of
these guys you know simple math in terms of what they can do you know to
their own earnings or to their own sales. You know, I find it
incredible that you know they’re not – some of the people who were
interested at that time if they are still interested in the area are not
you know approaching you know for an interesting
deal.
|
On the
other hand, I wanted to ask at what point in time do you feel comfortable with,
you know, the business you know being stable – stabilized enough for you with
the incredibly strong balance sheet that you have relative to the size of the
business to put in a buyback for your stock to get to a certain level to show
confidence to the marketand then you know perhaps when people’s attention are on
your stock and you know we get the stock to a certain level be able to take
advantage of some of these opportunities in the market place you know with your
stock where you guys are happy, your investors are happy, you have a currency
now to be able to do you know things. You have a lot more
flexibility? And you know that’s something that is always on my mind
having been in this investment for a couple of years now. I think on
every single conference call I’ve mentioned the same thing like a broken
record.
|
Jeff
Coats:
|
As
I know very well from my numerous conversations with you, you definitely
are keen to see us do a buy back. I’d almost think from your
earlier comments you were trying to put us in play with regards to
pointing out that we might or might not be
vulnerable.
|
|
(Robert
Setrakian):
|
Yes
at you know two – if somebody comes in at $2 I don’t think we would be
unhappy at this point in time. At these prices you know like
you know the investor who tried to take advantage a few months back and
then you know went away.
|
|
Jeff
Coats:
|
Right.
|
|
(Robert
Setrakian):
|
Not
that kind of vulnerability.
|
|
Jeff
Coats:
|
No. No. Well
you know I guess as we sit today we still are in an uncertain
environment. I can’t see us doing anything to spend our cash on
something that doesn’t improve our operations at the
moment.
|
|
(Robert
Setrakian):
|
At
the moment.
|
|
Jeff
Coats:
|
But
you know as things evolve who knows. I’m sure that you and I
will have many more conversations about this. And you know
we’ll just have to see how things evolve. There really are some
very interesting opportunities out there for us. I agree with
you that you know a big plus for us would have – would be a strengthened
stock to use as a currency. I’m – you know perhaps I just kind
of look at it a slightly different way to get there for the time
being.
|
PRIME NEWS WIRE
Moderator: Lawrence
Brogan
10-22-09/4:00 p.m. CT
Confirmation # 35120681
Page 15
|
(Robert
Setrakian):
|
Yes. Well
congratulations on the quarter and look forward to you know many more
improving quarters.
|
|
Jeff
Coats:
|
Thank
you. Thank you very
much.
|
|
Operator:
|
And
there are no further questions at this time. I will now turn
the call back over to Mr. Coats.
|
|
Jeff
Coats:
|
Thanks
everybody. We appreciate you taking the time to speak with us
today. As I’ve said before stay tuned. I think we
have an ever improving story and I truly believe that we are about as well
positioned to benefit from the recovery in the automotive economy as we
could be. We look forward to talking to you in the
future. Thank you.
|
|
Operator:
|
And
this concludes today’s conference call. You may now
disconnect.
|
|
|
END
|
Autobytel
Q3 2009 Results
Q3 2009 Results
2
The
statements contained in this presentation that are not historical facts are
forward-
looking statements under the federal securities laws. These forward-looking statements
are not guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and results may differ materially
from what is expressed in, or implied by, such forward-looking statements. Autobytel
undertakes no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise. Among the important factors that
could cause actual results to differ materially from those expressed in, or implied by, the
forward-looking statements are continuing adverse general economic conditions, the
economic impact of terrorist attacks or military actions, increased dealer attrition,
pressure on dealer fees, increased or unexpected competition, the failure to successfully
launch new products and services, failure to retain key employees or attract and integrate
new employees, that actual costs and expenses exceed the charges taken by Autobytel,
changes in laws and regulations, costs of defending lawsuits and undertaking
investigations and related matters and other matters disclosed in Autobytel's filings with
the Securities and Exchange Commission. Investors are strongly encouraged to review
our annual report on Form 10-K for the year ended December 31, 2008, and other filings
with the Securities and Exchange Commission for a discussion of risks and uncertainties
that could affect operating results and the market price of the company’s stock.
looking statements under the federal securities laws. These forward-looking statements
are not guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and results may differ materially
from what is expressed in, or implied by, such forward-looking statements. Autobytel
undertakes no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise. Among the important factors that
could cause actual results to differ materially from those expressed in, or implied by, the
forward-looking statements are continuing adverse general economic conditions, the
economic impact of terrorist attacks or military actions, increased dealer attrition,
pressure on dealer fees, increased or unexpected competition, the failure to successfully
launch new products and services, failure to retain key employees or attract and integrate
new employees, that actual costs and expenses exceed the charges taken by Autobytel,
changes in laws and regulations, costs of defending lawsuits and undertaking
investigations and related matters and other matters disclosed in Autobytel's filings with
the Securities and Exchange Commission. Investors are strongly encouraged to review
our annual report on Form 10-K for the year ended December 31, 2008, and other filings
with the Securities and Exchange Commission for a discussion of risks and uncertainties
that could affect operating results and the market price of the company’s stock.
Safe Harbor
Statement
3
1
-
Excludes
MyRide.com impairment charges of $4.3M and severance of $300k in Q4
2008
2 - See
slide #6 in this set for GAAP to Adjusted OPEX reconciliation
3 - See
slide #11 for GAAP to Adjusted Loss from Continuing Ops
reconciliation
Financial
Overview
$ Millions, except gross margin
$ Millions, except gross margin
4
Comments
•
July / August vehicle sales boosted by “Cash for Clunkers”
•
Significant drop in September (Sales “pulled forward” / lack of dealer
inventory)
•
In September 2009, JD Power forecast 2009 and 2010 US light vehicle sales of
10.3M and
11.5M, respectively
11.5M, respectively
Source:
Automotive News, JD Power & Associates
Auto
Industry Sales
5
Comments
•
OEM revenue stable
•
Advertising revenue stable
Revenue
Results
Source:
Automotive News
6
GAAP
Reconciliation
Cost
Reductions
7
8
|
Q1
2009
|
Q2
2009
|
Q3
2009
|
Q4
2009
|
Q1
2010
|
|
•Rebuilt
website
leadership team to upgrade web presence •Improved
infrastructure and reporting |
•Moved MyRide
onto
Core platform (performance improvements, cost savings) •Brought paid
search
in-house (eliminate negative ROI Search spend) |
•Placed used
car
inventory on kbb.com (more used car leads) •Added more
ways to
search used car section (more used car leads) •Improved new
car
lead form (better conversion) •Leading
Cash-for-
Clunkers section (more leads & page views); highlighted on NBC News, USA Today, and CNN •News &
Articles
section (more content, better user experience) |
•Autodata
data
conversion (more comprehensive data set: car photos, car colorizations, regional incentives, etc.) •Re-launch
Autobytel.com (better user experience, better lead conversion, more page views, etc.) •Edmunds
content
integration (more content and page views) |
•Re-launch
Car.com,
Autosite.com, and Autoweb.com (site differentiations, better user experience) •New Car
Inventory
(improve volume and quantity of leads) •Certified
Pre-Owned
(CPO) section with inventory (more leads and advertising opportunities) •Launch
consumer
retention programs (email, etc.) |
Actual
Expected
Website
Roadmap
9
Comments Cash
Per Share
•
Cash balance at September 30, 2009 equaled $25.2M ......................................... $0.56
•
Additional sources of cash not carried on balance sheet
•Final
Dealix patent settlement payment of $2.7M due in Q1 2010 ……….. $0.06
$0.62
$25.2M
Cash
10
Q3
Summary
• Margin
improvement
• Increase page views
and lead
conversion
conversion
• Continued operating
expense
reductions
reductions
• Reinvesting and
positioned for
economic recovery
economic recovery
11
Appendix
Reconciliation of GAAP Loss from Continuing Operations
to Adjusted Loss from Continuing Operations
Reconciliation of GAAP Loss from Continuing Operations
to Adjusted Loss from Continuing Operations