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8-K - 8-K - Endurance International Group Holdings, Inc.d387686d8k.htm

Exhibit 99.1

 

LOGO

Endurance International Group Reports 2017 First Quarter Results

 

    GAAP revenue of $295.1 million

 

    Net loss of $31.6 million

 

    Adjusted EBITDA of $80.1 million

 

    Cash flow from operations of $33.7 million

 

    Free cash flow of $22.4 million

 

    Total subscribers on platform were approximately 5.304 million at March 31, 2017

BURLINGTON, MA (May 2, 2017) — Endurance International Group Holdings, Inc. (NASDAQ: EIGI), a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online, today reported financial results for its first quarter ended March 31, 2017.

“We are pleased with our first quarter results, which we believe have positioned us well to meet our fiscal 2017 goals,” commented Hari Ravichandran, chief executive officer and founder of Endurance International Group. “Our key hosting brands performed in-line with expectations, while Constant Contact continued its steady contribution. We believe that we are moving in the right direction in laying the foundation for profitable growth and strong cash flows for future years. We are proud of our teams and their dedication to the business while remaining focused on our financial and operational objectives.”

First Quarter 2017 Financial Highlights

 

  Revenue for the first quarter of 2017 was $295.1 million, an increase of 24 percent compared to $237.1 million for the first quarter 2016. Revenue for the first quarter 2017 includes a contribution of $97.8 million from Constant Contact, as compared to a contribution of $39.1 million for the first quarter 2016.

 

  Net loss for the first quarter of 2017 was $31.6 million compared to net income of $14.1 million for the first quarter 2016.

 

  Net loss attributable to Endurance International Group Holdings, Inc. for the first quarter of 2017 was $35.4 million, or $(0.26) per diluted share, compared to net income of $21.8 million, or $0.16 per diluted share, for the first quarter 2016.


  Adjusted EBITDA for the first quarter of 2017 was $80.1 million, an increase of 104 percent compared to $39.3 million for the first quarter 2016.

 

  Cash flow from operations for the first quarter of 2017 was $33.7 million, an increase of 186 percent compared to $11.8 million for the first quarter 2016.

 

  Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the first quarter of 2017 was $22.4 million compared to $0.2 million for the first quarter 2016.

First Quarter Operating Highlights

 

  Total subscribers on platform at March 31, 2017 were approximately 5.304 million, compared to approximately 5.446 million subscribers at March 31, 2016 and 5.371 million subscribers at December 31, 2016. See “Total Subscribers” below.

 

  Average revenue per subscriber, or ARPS, for the first quarter of 2017 was $18.43, compared to $15.41 for the first quarter 2016 and $18.02 for the fourth quarter 2016. Excluding the impact of Constant Contact, ARPS for the first quarter of 2017 was $13.71, compared to $13.72 for the first quarter 2016 and $13.37 for the fourth quarter 2016. See “Average Revenue Per Subscriber” below.

Fiscal 2017 Guidance

The company’s prior guidance, announced on February 16, 2017, remains unchanged. As of the date of this release, May 2, 2017, for the full year ending December 31, 2017, the company expects:

 

     2016 Actual
As reported
     Guidance
(as of May 2, 2017)*
 

GAAP revenue

   $ 1.111 billion        4 – 5% increase  

Adjusted EBITDA

   $ 288 million        12 – 14% increase  

Free cash flow

   $ 112 million        ~35% increase  

Adjusted EBITDA and free cash flow are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to their most comparable measure calculated in accordance with GAAP is provided in the financial statement tables included at the end of this press release.

 

* Percentage increases shown in the “Guidance” column represent percentage increases over 2016 figures shown in the adjacent column.

 

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Conference Call and Webcast Information

Endurance International Group’s first quarter 2017 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Tuesday, May 2, 2017. To participate on the live call, analysts and investors should dial (888) 734-0328 at least ten minutes prior to the call. Endurance International Group will also offer a live and archived webcast of the conference call, accessible from the Investor Relations section of the company’s website at http://ir.endurance.com.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we use adjusted EBITDA and free cash flow, which are non-GAAP financial measures, to evaluate the operating and financial performance of our business, identify trends affecting our business, develop projections and make strategic business decisions. A non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flow that includes or excludes amounts that are included or excluded from the most directly comparable measure calculated and presented in accordance with GAAP.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. For example, adjusted EBITDA excludes interest expense, which has been and will continue to be for the foreseeable future a significant recurring expense in our business. The presentation of non-GAAP financial information is not meant to be considered in isolation from, or as a substitute for, the most directly comparable financial measures prepared in accordance with GAAP. We urge you to review the additional information about adjusted EBITDA and free cash flow shown below, including the reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net (loss) income, excluding the impact of interest expense (net), income tax expense (benefit), depreciation, amortization of other intangible assets, stock-based compensation, restructuring expenses, transaction expenses and charges, (gain) loss of unconsolidated entities, and impairment of other long-lived assets. We view adjusted EBITDA as a performance measure and believe it helps investors evaluate and compare our core operating performance from period to period.

Free Cash Flow, or FCF, is a non-GAAP financial measure that we calculate as cash flow from operations less capital expenditures and capital lease obligations. We believe that FCF provides investors with an indicator of our ability to generate positive cash flows after meeting our obligations with regard to capital expenditures (including capital lease obligations).

 

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Key Operating Metrics

Total Subscribers - We define total subscribers as the approximate number of subscribers that, as of the end of a period, are identified as subscribing directly to our products on a paid basis, excluding accounts that access our solutions via resellers or that purchase only domain names from us. Subscribers of more than one brand, and subscribers with more than one distinct billing relationship or subscription with us, are counted as separate subscribers. Total subscribers for a period reflects adjustments to add or subtract subscribers as we integrate acquisitions and/or are otherwise able to identify subscribers that meet, or do not meet, this definition of total subscribers. In the first quarter of 2017, these adjustments had a net positive impact of approximately 3,788 subscribers on our total subscriber count.

Average Revenue Per Subscriber (ARPS) - We calculate ARPS as the amount of revenue we recognize in a period, including marketing development funds and other revenue not received from subscribers, divided by the average of the number of total subscribers at the beginning of the period and at the end of the period, which we refer to as average subscribers for the period, divided by the number of months in the period. See definition of “Total Subscribers” above. We believe ARPS is an indicator of our ability to optimize our mix of products and services and pricing and sell products and services to new and existing subscribers. ARPS does not represent an exact measure of the average amount a subscriber spends with us each month, since our calculation of ARPS is impacted by revenues generated by non-subscribers.

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our financial guidance for fiscal year 2017, our belief that our first quarter results have positioned us well to meet our fiscal 2017 goals, our belief that we are laying a foundation for profitable growth and strong cash flows in future years, and our expected financial and operational performance in general. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and statements identified by words such as “expects,” “believes,” “estimates,” “will,” “may,” “continue,” “confident,” and variations of such words or words of similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: that we will be unable to successfully enhance the customer product and service experience and improve customer satisfaction and retention through operational and infrastructure improvements; that we will encounter

 

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difficulties or delays in our efforts to build brand awareness of our key brands; that we will be unable to drive revenue growth by increasing ARPS through cross-selling and other product-related initiatives; that we will continue to experience decreases in our subscriber base; an adverse impact on our business from litigation or regulatory proceedings; an adverse impact on our business from our substantial indebtedness and the cost of servicing our debt; an adverse impact on our business from recently announced executive transitions (including the transition of our chief executive officer); the rate of growth of the Small and Medium Business (“SMB”) market for our solutions; our inability to increase sales to our existing subscribers, or retain our existing subscribers; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2016 filed with the SEC on February 24, 2017 and other reports we file with the SEC.

We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

About Endurance International Group

Endurance International Group Holdings, Inc. (NASDAQ: EIGI) (em)Powers millions of small businesses worldwide with products and technology to vitalize their online web presence, email marketing, mobile business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, iPage, Domain.com, BigRock, SiteBuilder and SinglePlatform, among others. Headquartered in Burlington, Massachusetts, Endurance employs more than 4,000 people across the United States, Brazil, India and the Netherlands. For more information, visit: www.endurance.com.

Endurance International Group and the compass logo are trademarks of The Endurance International Group, Inc. Constant Contact, the Constant Contact logo and other brand names of Endurance International Group are trademarks of The Endurance International Group, Inc. or its subsidiaries.

Investor Contact:

Angela White

Endurance International Group

(781) 852-3450

ir@endurance.com

Press Contact:

Lark-Marie Antón

Endurance International Group

(646) 887-7272

press@endurance.com

 

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Endurance International Group Holdings, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

 

     December 31, 2016     March 31, 2017  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 53,596     $ 68,970  

Restricted cash

     3,302       3,645  

Accounts receivable

     13,088       10,717  

Prepaid domain name registry fees

     55,444       56,833  

Prepaid expenses and other current assets

     28,678       33,348  
  

 

 

   

 

 

 

Total current assets

     154,108       173,513  

Property and equipment—net

     95,272       93,463  

Goodwill

     1,859,909       1,860,291  

Other intangible assets—net

     612,057       578,023  

Deferred financing costs

     4,932       4,518  

Investments

     15,857       15,857  

Prepaid domain name registry fees, net of current portion

     10,429       10,746  

Other assets

     3,710       2,856  
  

 

 

   

 

 

 

Total assets

   $ 2,756,274     $ 2,739,267  
  

 

 

   

 

 

 

Liabilities, redeemable non-controlling interest and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 16,074     $ 15,817  

Accrued expenses

     67,722       67,195  

Accrued interest

     27,246       17,429  

Deferred revenue

     355,190       369,240  

Current portion of notes payable

     35,700       35,700  

Current portion of capital lease obligations

     6,690       5,165  

Deferred consideration—short term

     5,273       4,525  

Other current liabilities

     2,890       3,149  
  

 

 

   

 

 

 

Total current liabilities

     516,785       518,220  
  

 

 

   

 

 

 

Long-term deferred revenue

     89,200       91,239  

Notes payable—long term, net of original issue discounts of $25,853 and $25,006 and deferred financing costs of $43,342 and $42,012 respectively

     1,951,280       1,944,532  

Capital lease obligations—long term

     512       —    

Deferred tax liability

     39,943       43,344  

Deferred consideration—long term

     7,444       7,564  

Other liabilities

     8,974       9,741  
  

 

 

   

 

 

 

Total liabilities

     2,614,138       2,614,640  
  

 

 

   

 

 

 

Redeemable non-controlling interest

     17,753       21,337  

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred Stock—par value $0.0001; 5,000,000 shares authorized; no shares issued or outstanding

     —         —    

Common Stock—par value $0.0001; 500,000,000 shares authorized; 134,793,857 and 135,789,327 shares issued at December 31, 2016 and March 31, 2017, respectively; 134,793,857 and 135,789,327 outstanding at December 31, 2016 and March 31, 2017, respectively

     14       14  

Additional paid-in capital

     868,228       882,052  

Accumulated other comprehensive loss

     (3,666     (3,196

Accumulated deficit

     (740,193     (775,580
  

 

 

   

 

 

 

Total stockholders’ equity

     124,383       103,290  
  

 

 

   

 

 

 

Total liabilities, redeemable non-controlling interest and stockholders’ equity

   $ 2,756,274     $ 2,739,267  
  

 

 

   

 

 

 

 

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Endurance International Group Holdings, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited)

(in thousands, except share and per share amounts)

 

     Three Months Ended March 31,  
     2016     2017  

Revenue

   $ 237,113     $ 295,137  

Cost of revenue

     136,476       148,749  
  

 

 

   

 

 

 

Gross profit

     100,637       146,388  
  

 

 

   

 

 

 

Operating expense:

    

Sales and marketing

     79,294       72,772  

Engineering and development

     16,255       20,362  

General and administrative

     40,279       39,080  

Transactions expenses

     31,120       580  
  

 

 

   

 

 

 

Total operating expense

     166,948       132,794  
  

 

 

   

 

 

 

Income (loss) from operations

     (66,311     13,594  
  

 

 

   

 

 

 

Other income (expense):

    

Other income

     11,410       —    

Interest income

     134       118  

Interest expense

     (30,371     (39,516
  

 

 

   

 

 

 

Total other expense—net

     (18,827     (39,398
  

 

 

   

 

 

 

Loss before income taxes and equity earnings of unconsolidated entities

     (85,138     (25,804

Income tax expense (benefit)

     (99,902     5,774  
  

 

 

   

 

 

 

Income (loss) before equity earnings of unconsolidated entities

     14,764       (31,578

Equity loss of unconsolidated entities, net of tax

     683       —    
  

 

 

   

 

 

 

Net income (loss)

   $ 14,081     $ (31,578
  

 

 

   

 

 

 

Net (loss) income attributable to non-controlling interest

     (7,730     226  

Excess accretion of non-controlling interest

     —         3,584  
  

 

 

   

 

 

 

Total net (loss) income attributable to non-controlling interest

     (7,730     3,810  
  

 

 

   

 

 

 

Net income (loss) attributable to Endurance International Group Holdings, Inc.

   $ 21,811     $ (35,388
  

 

 

   

 

 

 

Comprehensive income (loss):

    

Foreign currency translation adjustments

     342       686  

Unrealized loss on cash flow hedge, net of taxes of $606 and $38, for the three months ended March 31, 2016 and 2017, respectively

     (1,511     (216
  

 

 

   

 

 

 

Total comprehensive income (loss)

   $ 20,642     $ (34,918
  

 

 

   

 

 

 

Basic net income (loss) per share attributable to Endurance International Group Holdings Inc.

   $ 0.17     $ (0.26
  

 

 

   

 

 

 

Diluted net income (loss) per share attributable to Endurance International Group Holdings Inc.

   $ 0.16     $ (0.26

Weighted-average common shares used in computing net income (loss) per share attributable to Endurance International Group Holdings, Inc.:

    
  

 

 

   

 

 

 

Basic

     132,178,693       134,935,153  
  

 

 

   

 

 

 

Diluted

     133,563,884       134,935,153  
  

 

 

   

 

 

 

 

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Endurance International Group Holdings, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

     Three Months Ended March 31,  
     2016     2017  

Cash flows from operating activities:

    

Net income (loss)

   $ 14,081     $ (31,578

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation of property and equipment

     13,172       13,111  

Amortization of other intangible assets

     29,874       34,267  

Impairment of long lived assets

     1,437       —    

Amortization of deferred financing costs

     911       1,744  

Amortization of net present value of deferred consideration

     783       190  

Amortization of original issue discounts

     449       846  

Stock-based compensation

     18,388       12,924  

Deferred tax (benefit) expense

     (103,203     3,440  

Gain on sale of assets

     (1     (225

Gain from unconsolidated entities

     (11,410     —    

Loss of unconsolidated entities

     683       —    

(Gain) loss from change in deferred consideration

     21       —    

Changes in operating assets and liabilities, net of acquisitions:

    

Accounts receivable

     2,144       2,393  

Prepaid expenses and other current assets

     (15,673     (5,717

Accounts payable and accrued expenses

     16,973       (13,467

Deferred revenue

     43,143       15,747  
  

 

 

   

 

 

 

Net cash provided by operating activities

     11,772       33,675  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Businesses acquired in purchase transactions, net of cash acquired

     (881,709     —    

Cash paid for minority investment

     (600     —    

Purchases of property and equipment

     (10,140     (9,258

Proceeds from sale of assets

     —         251  

Purchases of intangible assets

     —         (33

Withdrawals of principal balances in restricted cash accounts

     (737     (344
  

 

 

   

 

 

 

Net cash used in investing activities

     (893,186     (9,384
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of term loan and notes, net of original issue discounts

     1,056,178       —    

Repayments of term loans

     (8,925     (8,925

Proceeds from borrowing of revolver

     16,000       —    

Repayment of revolver

     (83,000     —    

Payment of financing costs

     (51,605     (92

Payment of deferred consideration

     (707     (818

Principal payments on capital lease obligations

     (1,439     (2,037

Capital investment from minority partner

     —         —    

Proceeds from exercise of stock options

     593       628  
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     927,095       (11,244
  

 

 

   

 

 

 

Net effect of exchange rate on cash and cash equivalents

     566       2,327  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     46,247       15,374  
  

 

 

   

 

 

 

Cash and cash equivalents:

    

Beginning of period

     33,030       53,596  
  

 

 

   

 

 

 

End of period

   $ 79,277     $ 68,970  
  

 

 

   

 

 

 

Supplemental cash flow information:

    

Interest paid

   $ 16,659     $ 46,546  

Income taxes paid

   $ 968     $ 952  

 

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GAAP to Non-GAAP reconciliation - Adjusted EBITDA

The following table presents a reconciliation of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

 

     Three Months Ended
March 31,
 
     2016      2017  
     (in thousands)  

Net income (loss)

   $ 14,081      $ (31,578

Interest expense, net (1)

     30,237        39,398  

Income tax expense (benefit)

     (99,902      5,774  

Depreciation

     13,172        13,111  

Amortization of other intangible assets

     29,874        34,267  

Stock-based compensation

     18,388        12,924  

Restructuring expenses

     11,602        5,627  

Transaction expenses and charges

     31,120        580  

Gain of unconsolidated entities (2)

     (10,727      —    

Impairment of other long-lived assets

     1,437        —    
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 39,282      $ 80,103  
  

 

 

    

 

 

 

 

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.
(2) The gain of unconsolidated entities is reported on a net basis for the three months ended March 31, 2016. The three months ended March 31, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd. This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value. This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $0.7 million.

GAAP to Non-GAAP reconciliation – Free Cash Flow

The following table reflects the reconciliation of cash flow from operations to free cash flow (“FCF”) (all data in thousands):

 

     Three Months Ended
March 31,
 
     2016      2017  

Cash flow from operations

   $ 11,772      $ 33,675  

Less:

     

Capital expenditures and capital lease obligations (1)

     (11,579      (11,295
  

 

 

    

 

 

 

Free cash flow

   $ 193      $ 22,380  
  

 

 

    

 

 

 

 

(1) Capital expenditures during the three months ended March 31, 2016 and 2017 includes $1.4 million and $2.0 million of principal payments under a three year capital lease for software. The remaining balance on the capital lease is $5.2 million as of March 31, 2017.

 

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Average Revenue Per Subscriber - Calculation and Segment Detail

Starting in the fourth quarter of 2016, we present our financial results in two segments. Our web presence segment is our historical business before the acquisition of Constant Contact, and includes primarily our web hosting products, domains, website builders and related add-on products. Our email marketing segment consists of the Constant Contact business, including email marketing, event management, survey tools and the SinglePlatform digital storefront service.

The following table presents the calculation of ARPS, on a consolidated basis and by segment (all data in thousands, except ARPS data):

 

     For the Three Months Ended
March 31,
 
     2016      2017  

Consolidated revenue

   $ 237,113      $ 295,137  

Consolidated total subscribers

     5,446        5,304  

Consolidated average subscribers for the period

     5,128        5,338  

Consolidated average revenue per subscriber (ARPS)

   $ 15.41      $ 18.43  

Web presence revenue

     198,048        197,348  

Web presence subscribers

     4,883        4,767  

Web presence average subscribers for the period

     4,812        4,797  

Web presence average revenue per subscriber (ARPS)

   $ 13.72      $ 13.71  

Email marketing revenue

     39,065        97,789  

Email marketing subscribers

     563        537  

Email marketing average subscribers for the period

     316        541  

Email marketing average revenue per subscriber (ARPS)

   $ 41.19      $ 60.31  

 

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The following table presents revenue, gross profit, and a reconciliation by segment of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

 

     Three Months Ended
March 31, 2016
    Three Months Ended
March 31, 2017
 
     Web
presence
    Email
marketing
    Total     Web
presence
    Email
marketing
    Total  
     (in thousands)     (in thousands)  

Revenue

   $ 198,048     $ 39,065     $ 237,113     $ 197,348     $ 97,789     $ 295,137  

Gross Profit

     89,885       10,752       100,637       86,616       59,772       146,388  

Net income (loss)

   $ 40,134     $ (26,053   $ 14,081     $ (23,626   $ (7,952   $ (31,578

Interest expense, net (1)

     17,016       13,221       30,237       16,879       22,519       39,398  

Income tax expense (benefit)

     (84,258     (15,644     (99,902     10,551       (4,777     5,774  

Depreciation

     8,977       4,195       13,172       9,238       3,873       13,111  

Amortization of other intangible assets

     19,755       10,119       29,874       15,905       18,362       34,267  

Stock-based compensation

     14,647       3,741       18,388       11,100       1,824       12,924  

Restructuring expenses

     171       11,431       11,602       2,335       3,292       5,627  

Transaction expenses and charges

     30,357       763       31,120       —         580       580  

Gain of unconsolidated entities (2)

     (10,727     —         (10,727     —         —         —    

Impairment of other long-lived assets

     1,437       —         1,437       —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 37,509     $ 1,773     $ 39,282     $ 42,382     $ 37,721     $ 80,103  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.
(2) The gain of unconsolidated entities is reported on a net basis for the three months ended March 31, 2016. The three months ended March 31, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd. This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value. This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $0.7 million.

 

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GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of May 2, 2017) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2017 estimated net loss calculated in accordance with GAAP to fiscal year 2017 guidance for adjusted EBITDA at the midpoint of the guidance range (i.e. assuming a 13% increase over 2016 adjusted EBITDA as reported). All figures shown are approximate.

 

($ in millions)

   Twelve Months Ending
December 31, 2017
 

Estimated net loss

   $ (91   

Estimated interest expense (net)

     148     

Estimated income tax expense (benefit)

     10     

Estimated depreciation

     56     

Estimated amortization of acquired intangible assets

     137     

Estimated stock-based compensation

     57     

Estimated restructuring expenses

     8     

Estimated transaction expenses and charges

     —       

Estimated (gain) loss of unconsolidated entities

     —       

Estimated impairment of other long-lived assets

     —       
  

 

 

    

Adjusted EBITDA guidance

      $ 325  

GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of May 2, 2017) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2017 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2017 guidance for free cash flow. All figures shown are approximate.

 

($ in millions)

   Twelve Months Ending
December 31, 2017
 

Estimated cash flow from operations

   $ 205     

Estimated capital expenditures and capital lease obligations

     (55   
  

 

 

    

Free cash flow guidance

      $ 150  

 

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