Stamps.com Announces Fourth Quarter Non-GAAP Earnings per Share of $0.47

Wed Feb 13, 2013 4:30pm EST

* Reuters is not responsible for the content in this press release.

  EL SEGUNDO, CA, Feb 13 (Marketwire) -- 
Stamps.com(R) (NASDAQ: STMP), the leading provider of postage online and
shipping software solutions, today announced results for the fourth
quarter and fiscal year ended December 31, 2012.

    Highlights for the fourth quarter:


--  Core PC Postage revenue was $27.4 million, up 12% from the fourth
    quarter of 2011.
    
    
--  Total revenue was $30.1 million, up 10% compared to the fourth quarter
    of 2011.
    
    
--  Non-GAAP operating margin was 25.4% compared to 19.8% in the fourth
    quarter of 2011.
    
    
--  GAAP net income was $9.3 million or $0.58 per fully diluted share,
    including $0.8 million in stock-based compensation expense and a
    non-cash income tax benefit of $2.5 million.
    
    
--  On a non-GAAP basis, excluding the stock-based compensation expense
    and non-cash income tax benefit, income from operations was $7.6
    million, net income was $7.6 million and net income per fully diluted
    share was $0.47, up 42%, 33% and 36%, respectively, versus the fourth
    quarter of 2011.
    
    
--  During the fourth quarter of 2012, the Company repurchased a total of
    499 thousand shares at a total cost of $11.9 million.
    


    

"We are pleased with our strong earnings this quarter," said Ken
McBride, Stamps.com Chairman and CEO. "Despite a tough economic
environment, we continue to see strength across our business lines. In
addition, during the fourth quarter we hit our highest level ever for
total paid customers, we saw our largest number of new customers
acquired, and we set a new record for total postage printed. As we enter
2013, we feel that we are well positioned in each of our core business
lines." 

    Fourth Quarter 2012 Detailed Results

    Core PC Postage revenue -- including our small business, enterprise and
high volume shipping customer segments, and excluding enhanced promotion
and PhotoStamps revenue -- was $27.4 million, up 12% versus the fourth
quarter of 2011. Non-core PC Postage revenue from the enhanced promotion
channel which includes online programs where additional promotions are
provided directly by marketing partners, was $0.8 million and PhotoStamps
revenue was $1.9 million, both down 1% versus the fourth quarter of 2011
as the Company continues to minimize its investment in both areas. PC
Postage gross margin was 78.6%, PhotoStamps gross margin was 28.7% and
total gross margin was 75.5%. 

    Fourth quarter GAAP net income was $9.3 million. On a per share basis,
total fourth quarter 2012 GAAP net income was $0.58 based on 16.1 million
fully diluted shares outstanding. Fourth quarter 2012 GAAP net income was
reduced by $0.8 million of stock-based compensation expense and increased
by a non-cash income tax benefit of $2.5 million resulting from the
reversal of a portion of the Company's net deferred tax asset valuation
allowance. Non-GAAP and GAAP amounts are reconciled in the following
table:



Fourth Quarter Fiscal 2012
All amounts in millions except  Non-GAAP  Stock-Based   Income Tax   GAAP
per share or margin data:        Amounts   Comp. Exp.     Benefit   Amounts 

Cost of Sales                   $   7.30  $      0.06   $        - $   7.36 
Research & Development              2.24         0.17            -     2.41 
Sales & Marketing                   9.78         0.18            -     9.96 
General & Administrative            3.11         0.41            -     3.52 
                                --------  -----------   ---------- -------- 

Total Expenses                     22.43         0.82                 23.24 

Gross Margin                        75.7%        (0.2%)          -     75.5%

Income (Loss) from Operations       7.64        (0.82)           -     6.83 

Operating Margin                    25.4%        (2.7%)          -     22.7%

Interest and Other Income           0.13            -            -     0.13 
                                --------  -----------   ---------- -------- 

Pre-Tax Income (Loss)               7.77        (0.82)           -     6.96 

Provision for Income Taxes         (0.17)           -         2.51     2.34 

                                --------  -----------   ---------- -------- 
Net Income                          7.60        (0.82)        2.51     9.30 
                                ========  ===========   ========== ======== 

                                --------  -----------   ---------- -------- 
On a diluted per share basis    $   0.47  $     (0.05)  $     0.16 $   0.58 
                                ========  ===========   ========== ======== 

Shares used in per share
 calculation                       16.13        16.13        16.13    16.13 


    
Excluding the stock-based compensation expense and income tax
benefit, fourth quarter 2012 non-GAAP operating income was $7.6 million
and non-GAAP net income was $7.6 million or $0.47 per share based on 16.1
million fully diluted shares outstanding. This compares to fourth quarter
2011 non-GAAP operating income of $5.4 million and non-GAAP net income of
$5.7 million or $0.35 per share based on fully diluted shares outstanding
of 16.6 million. Thus, fourth quarter non-GAAP operating income, non-GAAP
net income and non-GAAP fully diluted earnings per share increased by
42%, 33% and 36% year-over-year, respectively. 

    Stamps.com has approximately $210 million in Federal NOLs and $100
million in State NOLs. The Company estimates its ownership shift was
approximately 22% as of December 31, 2012, which is below the 50% level
that could trigger impairment of its NOL asset under Internal Revenue
Code Section 382 rules. As part of its ongoing program to preserve future
use of its NOL asset, the Company requests that any shareholder
contemplating becoming a 5% shareholder contact the Company before doing
so.

    2012 Detailed Results 

    Total 2012 revenue was $115.7 million, an increase of 14% versus revenue
of $101.6 million in 2011. Total 2012 PC Postage revenue, including
service revenue, store revenue and insurance revenue, was $110.0 million,
up 18% versus PC Postage revenue of $93.3 million in 2011. Excluding the
enhanced promotion channel, core PC Postage revenue in 2012 was $107.0
million, up 19% versus $90.2 million in 2011. Total 2012 PhotoStamps
revenue was $5.7 million, down 32% versus PhotoStamps revenue of $8.3
million in 2011. 

    Total 2012 GAAP net income was $38.6 million, including approximately
$4.0 million of stock-based compensation expense, $0.4 million for a
one-time corporate headquarters relocation expense, and $14.4 million in
non-cash tax benefit resulting from a reversal of a portion of the
Company's net deferred tax asset valuation allowance. On a per share
basis, total 2012 GAAP net income was $2.30 based on fully diluted shares
outstanding for the year of 16.8 million. Non-GAAP and GAAP amounts are
reconciled in the following table:



Fiscal Year 2012
 All amounts in
 millions except
 per share or      Non-GAAP  Stock-Based   Relocation   Income Tax   GAAP
 margin data:       Amounts   Comp. Exp.     Expense      Benefit   Amounts 

Cost of Sales      $  27.43  $      0.33   $        -   $        - $  27.76 
Research &
 Development           9.35         0.89            -            -    10.24 
Sales & Marketing     37.88         0.87            -            -    38.75 
General &
 Administrative       12.44         1.90         0.41            -    14.75 
                   --------  -----------   ----------   ---------- -------- 

Total Expenses        87.11         3.99         0.41            -    91.50 

Gross Margin           76.3%        (0.3%)          -            -     76.0%

Income (Loss) from
 Operations           28.56        (3.99)       (0.41)           -    24.16 

Operating Margin       24.7%        (3.5%)       (0.4%)          -     20.9%

Interest and Other
 Income                0.54            -            -            -     0.54 
                   --------  -----------   ----------   ---------- -------- 

Pre-Tax Income
 (Loss)               29.10        (3.99)       (0.41)           -    24.70 

Provision for
 Income Taxes         (0.57)           -            -        14.42    13.86 

                   --------  -----------   ----------   ---------- -------- 
Net Income            28.53        (3.99)       (0.41)       14.42    38.56 
                   ========  ===========   ==========   ========== ======== 

                   --------  -----------   ----------   ---------- -------- 
On a diluted per
 share basis       $   1.70  $     (0.24)  $    (0.02)  $     0.86 $   2.30 
                   ========  ===========   ==========   ========== ======== 

Shares used in per
 share calculation    16.79        16.79        16.79        16.79    16.79 


    
Excluding the stock-based compensation expense, relocation expense,
and non-cash income tax benefit, 2012 non-GAAP operating income was $28.6
million and non-GAAP net income was $28.5 million or $1.70 per share
based on fully diluted shares outstanding of 16.8 million. This compares
to 2011 non-GAAP operating income of $20.6 million, non-GAAP net income
of $21.2 million and non-GAAP net income per fully diluted share of
$1.40. Thus, 2012 non-GAAP operating income, non-GAAP net income and
non-GAAP fully diluted earnings per share increased by 38%, 35% and 22%
year-over-year, respectively. 

    Share Repurchase

    During the fourth quarter of 2012, the Company repurchased a total of 499
thousand shares at a total cost of $11.9 million. On February 7, 2013,
the Board of Directors approved a new share repurchase plan that replaces
all prior repurchase plans and authorizes the Company to repurchase up to
1.0 million shares of Stamps.com stock during the next six months. 

    Business Outlook 

    Stamps.com currently expects 2013 revenue to be in a range of $120 to
$130 million and 2013 GAAP net income per share to be in a range of $1.48
to $1.68, including approximately $4.5 million of stock-based
compensation expense. Excluding the stock-based compensation expense,
non-GAAP 2013 net income per fully diluted share is expected to be in a
range of $1.75 to $1.95. 

    Company Customer Metrics 

    A complete set of the quarterly customer metrics for the past seven
fiscal years is available at http://investor.stamps.com (under a tab on
the left side called Company Information, Metrics). 

    Quarterly Conference Call 

    The Stamps.com financial results conference call will be web cast today
at 5:00 p.m. Eastern Time and may be accessed at
http://investor.stamps.com. The Company plans to discuss its business
outlook during the conference call. Following the conclusion of the web
cast, a replay of the call will be available at the same website. 

    About Stamps.com and PhotoStamps

    Stamps.com (NASDAQ: STMP) is a leading provider of Internet-based postage
services. Stamps.com's service enables small businesses, enterprises,
advanced shippers, and consumers to print U.S. Postal Service-approved
postage with just a PC, printer and Internet connection, right from their
home or office. The Company currently has PC Postage partnerships with
Avery Dennison, Microsoft, HP, the U.S. Postal Service and others.

    PhotoStamps is a patented Stamps.com product that couples the technology
of PC Postage with the simplicity of a web-based image upload and order
process. Customers may create full custom PhotoStamps with their own
digital photograph, or they may choose a licensed image from one of many
PhotoStamps collections such as the collegiate collection. Stamps.com
currently has PhotoStamps partnerships with HP/Snapfish and others.

    About Non-GAAP Measures and Share Repurchase Timing

    To supplement the Company's condensed financial statements presented in
accordance with GAAP, Stamps.com uses non-GAAP measures of certain
components of financial performance. These non-GAAP measures include
non-GAAP income from operations, non-GAAP pre-tax income, non-GAAP net
income, non-GAAP earnings per diluted share, and non-GAAP gross margin
and non-GAAP operating margin. Reconciliation to the nearest GAAP
measures of all non-GAAP measures included in this press release can be
found in the financial tables of this earnings release.

    Non-GAAP measures are provided to enhance investors' overall
understanding of the Company's current financial performance, prospects
for the future and as a means to evaluate period-to-period comparisons.
The Company believes that these non-GAAP measures provide meaningful
supplemental information regarding financial performance by excluding
certain expenses and benefits that may not be indicative of recurring
core business operating results. The Company believes the non-GAAP
measures that exclude items such as stock-based compensation, asset
write-offs, dividend-related compensation expense, legal settlements and
reserves, one-time expenses such as those associated with the relocation
of our corporate headquarters and income tax adjustments, when viewed
with GAAP results and the accompanying reconciliation, enhance the
comparability of results against prior periods and allow for greater
transparency of financial results. The Company believes non-GAAP measures
facilitate management's internal comparison of the Company's financial
performance to that of prior periods as well as trend analysis for
budgeting and planning purposes. The presentation of non-GAAP measures
are not intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP.

    The timing of share repurchases, if any, and the number of shares to be
bought at any one time will depend on market conditions and the Company's
assessment of the risk that its net operating loss asset could be
impaired if such repurchases were undertaken. Share repurchases may be
made from time-to-time on the open market or in negotiated transactions
at the Company's discretion in compliance with Rule 10b-18 of the United
States Securities and Exchange Commission. The Company's purchase of any
of its shares may be subject to limitations imposed on such purchases by
applicable securities laws and regulations and the rules of the Nasdaq
Stock Market.

    "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: This release includes forward-looking statements about our
anticipated results that involve risks and uncertainties. Important
factors, including the Company's ability to complete and ship its
products, maintain desirable economics for its products and obtain or
maintain regulatory approval, which could cause actual results to differ
materially from those in the forward-looking statements, are detailed in
filings with the Securities and Exchange Commission made from time to
time by STAMPS.COM, including its Annual Report on Form 10-K for the year
ended December 31, 2011, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K. STAMPS.COM undertakes no obligation to release
publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

    Stamps.com, the Stamps.com logo and PhotoStamps are trademarks or
registered trademarks of Stamps.com Inc. All other brands and names are
property of their respective owners.

                       STAMPS.COM INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF INCOME
                   (in thousands, except per share data)

                                  Three Months ended    Twelve Months ended 
                                     December 31,          December 31,
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  --------- 
Revenues:
  Service                        $  22,374  $  20,153  $  88,173  $  75,535 
  Product                            3,834      3,697     14,710     13,465 
  Insurance                          1,982      1,462      7,120      4,321 
  PhotoStamps                        1,880      1,907      5,651      8,258 
  Other                                  -          1          7          6 
                                 ---------  ---------  ---------  --------- 
    Total revenues                  30,070     27,220    115,661    101,585 
Cost of revenues:
  Service                            3,932      3,819     15,720     14,720 
  Product                            1,426      1,324      5,435      4,910 
  Insurance                            664        508      2,334      1,506 
  PhotoStamps                        1,340      1,330      4,267      5,076 
                                 ---------  ---------  ---------  --------- 
    Total cost of revenues           7,362      6,981     27,756     26,212 
                                 ---------  ---------  ---------  --------- 
    Gross profit                    22,708     20,239     87,905     75,373 
Operating expenses:
  Sales and marketing                9,958      9,490     38,755     34,569 
  Research and development           2,406      2,379     10,243      9,395 
  General and administrative         3,517      3,787     14,750     14,181 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses        15,881     15,656     63,748     58,145 
                                 ---------  ---------  ---------  --------- 
    Income from operations           6,827      4,583     24,157     17,228 
Interest and other income, net         132        128        541        562 
                                 ---------  ---------  ---------  --------- 
Income before taxes                  6,959      4,711     24,698     17,790 
Income tax benefit                  (2,338)    (8,674)   (13,859)    (8,475)
                                 ---------  ---------  ---------  --------- 
Net income                       $   9,297  $  13,385  $  38,557  $  26,265 
                                 =========  =========  =========  ========= 
Net income per share:
  Basic                          $    0.60  $    0.85  $    2.40  $    1.78 
                                 =========  =========  =========  ========= 
  Diluted                        $    0.58  $    0.81  $    2.30  $    1.73 
                                 =========  =========  =========  ========= 
Weighted average shares
 outstanding:
  Basic                             15,502     15,694     16,079     14,767 
                                 =========  =========  =========  ========= 
  Diluted                           16,129     16,551     16,793     15,168 
                                 =========  =========  =========  ========= 

                   CONDENSED CONSOLIDATED BALANCE SHEETS
                               (in thousands)

                                                December 31,   December 31, 
                                                    2012           2011
                                               -------------  ------------- 

ASSETS
Cash and investments                           $      46,619  $      69,363 
Accounts receivable                                   14,432         10,466 
Other current assets                                   5,602          5,476 
Property and equipment, net                           28,631          2,165 
Intangible assets, net                                 1,262            837 
Deferred tax assets                                   30,549         16,125 
Other assets                                           3,757          3,548 
                                               -------------  ------------- 
    Total assets                               $     130,852  $     107,980 
                                               =============  ============= 

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Accounts payable and accrued expenses        $      16,366  $      12,075 
  Deferred revenue                                     1,532          1,898 
                                               -------------  ------------- 
    Total liabilities                                 17,898         13,973 

Stockholders' equity:
  Common stock                                            50             49 
  Additional paid-in capital                         649,694        637,483 
  Treasury Stock                                    (155,260)      (123,472)
  Accumulated deficit                               (381,781)      (420,338)
  Unrealized gain on investments                         251            285 
                                               -------------  ------------- 
    Total stockholders' equity                       112,954         94,007 
                                               -------------  ------------- 
    Total liabilities and stockholders' equity $     130,852  $     107,980 
                                               =============  ============= 

    


Investor Contact:
Jeff Carberry
Stamps.com Investor Relations
(310) 482-5830
invrel@stamps.com

Press Contact:
Eric Nash
Stamps.com Public Relations
(310) 482-5942
publicrelations@stamps.com 

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