Conference Call Scheduled for Friday, May 16, 2008 at 10:00 A.M.
(EDT)
NEW YORK--(Business Wire)--
Reis, Inc. (NASDAQ:REIS) ("Reis" or the "Company") announced its
results for the quarter ended March 31, 2008. On May 30, 2007, Reis,
Inc., a privately held real estate information company ("Private
Reis"), merged (the "Merger") with a wholly owned subsidiary of
Wellsford Real Properties, Inc. ("Wellsford"). The combined entity has
adopted the corporate name of "Reis, Inc." to reflect the fact that
the post-merger business is predominantly commercial real estate
market information and analytics.
Results and Performance
Reis presents financial information for its two operating
segments: the information business, which we refer to as Reis
Services, and Residential Development Activities, the primary business
previously conducted by Wellsford. The Company believes that the
utilization of segment reporting will assist investors in analyzing
the two separate businesses. For comparison purposes, the Company has
included pro forma financial information for the three months ended
March 31, 2007, which is presented as if the Merger had been
consummated, the proceeds from Merger related financing had been
received and the plan of liquidation had been terminated as of January
1, 2006.
Consolidated Financial Results
For the three months ended March 31, 2008, the Company's
consolidated net income was $447,882, as compared to a consolidated
pro forma net loss of ($2,276,023) for the three months ended March
31, 2007. Total revenues for the three months ended March 31, 2008 and
2007 were $14,794,929 (actual) and $13,569,424 (pro forma),
respectively. During the 2008 period, revenue was comprised of
subscription revenue of $6,411,104 and revenue from sales of
residential units of $8,383,825. During the 2007 pro forma period,
revenue was comprised of subscription revenue of $5,437,899 and
revenue from sales of residential units of $8,131,525. These amounts
represent a 17.9% increase in subscription revenue and a 3.1% increase
in revenue from sales of residential units from the 2007 pro forma
period to the 2008 period.
Reis Services EBITDA
Management uses EBITDA to monitor and assess Reis Services's
performance and believes it is helpful to investors in understanding
Reis Services's business (see Reconciliation of Net Income to EBITDA
below). For the three months ended March 31, 2008, EBITDA for the Reis
Services segment was approximately $2,692,000, representing a 42.0%
EBITDA margin and 55.0% EBITDA growth rate over pro forma EBITDA of
approximately $1,737,000 for the corresponding pro forma period in
2007.
Consolidated Balance Sheet Information
At March 31, 2008, Reis had consolidated assets of $137,714,595,
including $25,601,320 of cash and cash equivalents, $57,156,150 of
consolidated liabilities, and consolidated stockholders' equity of
$80,558,445 or $7.33 per common share based upon 10,984,517 shares
outstanding. Officers and directors of Reis beneficially own
approximately 24.8% of the common shares outstanding.
Wellsford's primary operating activities immediately prior to the
merger were the development, construction and sale of three
residential projects and its approximate 23% ownership interest in
Private Reis. At March 31, 2008, the Company's equity in its remaining
real estate assets was approximately $12,494,000 (or 15.5% of
consolidated stockholders' equity).
Basis of Accounting
The previously announced plan of liquidation of the Company was
terminated as a result of the Merger and the Company returned to the
going concern basis of accounting from the liquidation basis of
accounting. For accounting purposes, the Merger was deemed to have
occurred at the close of business on May 31, 2007 and the statements
of operations include the operations of Reis Services effective
June 1, 2007.
Reconciliation of Net Income to EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation
and amortization. Although EBITDA is not a measure of performance
calculated in accordance with GAAP, senior management uses EBITDA to
measure operational and management performance. Management believes
that EBITDA is an appropriate metric that may be used by investors as
a supplemental financial measure to be considered in addition to the
reported GAAP basis financial information to assist investors in
evaluating and understanding the Company's business from year to year
or period to period, as applicable. Further, EBITDA provides the
reader with the ability to understand our operational performance
while isolating non-cash charges, such as depreciation and
amortization expenses and stock based compensation, as well as other
non-operating items, such as interest income, interest expense and
income taxes. Management also believes that disclosing EBITDA will
provide better comparability to other companies in Reis Services's
type of business. However, investors should not consider this measure
in isolation or as a substitute for net income, operating income, or
any other measure for determining operating performance that is
calculated in accordance with GAAP. In addition, because EBITDA is not
calculated in accordance with GAAP, it may not necessarily be
comparable to similarly titled measures employed by other companies.
Reconciliations of EBITDA to the most comparable GAAP financial
measure, net income, follows for each identified period:
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*T
(amounts in thousands)
Reconciliation of Net Income to Residential
EBITDA Development
for the Three Months Ended Activities
March 31, 2008 Reis Services and Other* Consolidated
------------------------------- ------------- ----------- ------------
Net income $ 448
Income tax 400
------------
Income (loss) before income
taxes $1,249 $(401) 848
Add back:
Depreciation and amortization
expense 1,066 65 1,131
Interest expense (income), net 377 (215) 162
Stock based compensation
benefit, net -- (31) (31)
------------- ----------- ------------
EBITDA $2,692 $(582) $2,110
============= =========== ============
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Reconciliation of Pro Forma Net Residential
Income to Pro Forma EBITDA Development
for the Three Months Ended March Reis Activities
31, 2007 Services and Other* Consolidated
----------------------------------- --------- ----------- ------------
Pro forma net (loss) $(2,276)
Income tax expense 42
------------
Loss before income taxes $ (45) $(2,189) (2,234)
Add back:
Depreciation and amortization
expense 1,165 64 1,229
Interest expense (income), net 617 (276) 341
Stock based compensation benefit,
net -- 185 185
--------- ----------- ------------
Pro Forma EBITDA $1,737 $(2,216) $ (479)
========= =========== ============
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Reconciliation of Net Income to Residential
EBITDA Development
for the Three Months Ended Activities
December 31, 2007 Reis Services and Other* Consolidated
------------------------------- ------------- ----------- ------------
Net (loss) $(2,441)
Income tax (benefit) (1,075)
------------
Income (loss) before income
taxes $1,098 $(4,614) (3,516)
Add back:
Depreciation and amortization
expense 1,024 64 1,088
Impairment loss on real estate
assets under development -- 3,149 3,149
Interest expense (income), net 453 (354) 99
Stock based compensation
benefit, net -- 297 297
------------- ----------- ------------
EBITDA $2,575 $(1,458) $ 1,117
============= =========== ============
_____________
* Includes Gold Peak, East Lyme, the Company's other developments and
corporate level income and expenses.
*T
Reis Services's EBITDA in the first quarter of 2008 grew 4.5% over
the fourth quarter of 2007 and grew 55.0% over the first quarter of
2007.
Revenue was stable from the fourth quarter of 2007 to the first
quarter of 2008. Reis Services is able to grow revenue through new
business as well as price increases in connection with renewals. Reis
Services has historically experienced higher revenue during the second
half of any calendar year because a greater number of our contracts
have renewed, coupled with price increases, in the second half of each
year. This results from several historical operating facts:
-- First, Reis SE was launched in June 2001 and, as a result, our
initial contracts were bunched in the end of that year.
-- Second, historically, Private Reis's fiscal year ended on
October 31 of each year, and many contracts were executed
and/or renewed shortly before the end of that fiscal year.
-- Third, many of our customers prefer to sign contracts in the
fourth calendar quarter in conjunction with spending remaining
funds for the current year's budget or determining allocations
with respect to future budgets.
-- Fourth, we are a subscription-based business, where the
majority of our contracts are for an annual or multi-year
period. We recognize subscription revenue on a straight line
basis over the life of the relevant contract. Therefore, any
increase in revenue related to a contract renewal would only
occur in the period in which the renewal occurs. Following
that quarterly period, there would be no consecutive
quarter-over-quarter revenue growth until the period in which
the next renewal, coupled with a price increase, occurs.
Accordingly, meaningful revenue growth occurs in heavy renewal
periods in conjunction with any price increases. Also, other factors
may impact consecutive quarter-over-quarter growth, including the
introduction of new products and non-recurring consulting or valuation
work. These items, however, did not have a material impact in
evaluating revenues for the fourth quarter of 2007 and the first
quarter of 2008.
Reis Services
As of March 31, 2008, Reis had over 730 companies under signed
contracts. Generally, each company has multiple users entitled to
access Reis SE, the flagship product of Reis Services. These numbers
do not include users who pay for individual reports by credit card.
Lloyd Lynford, President and CEO of Reis, stated that "Reis
Services's strong first quarter financial results demonstrate the
"must-have" nature of the commercial real estate market information
and analytics that Reis provides to its subscribers. In a marketplace
characterized by uncertainty of values and difficulty in obtaining
financing, real estate investors and lenders are highly motivated to
assess individual property and portfolio performance. Reis's
comprehensive geographic and property-type coverage and its analytical
tools empower investors to update asset cash flows, refine valuations
and conduct the fundamental market research that will guide investment
strategies in the coming months."
Residential Development Activities
At March 31, 2008, the Company's residential development
activities and other investments were comprised primarily of the
following:
-- The 259 unit Gold Peak condominium development in Highlands
Ranch, Colorado ("Gold Peak"). Sales commenced in January 2006 and 205
Gold Peak units were sold as of March 31, 2008, with an additional 13
units under contract with nominal down payments.
-- The Orchards, a single family home development in East Lyme,
Connecticut, upon which the Company could build 161 single family
homes on 224 acres ("East Lyme"). Sales commenced in June 2006 and 21
homes were sold as of March 31, 2008, with an additional three homes
under contract for which deposits of 10% of the contract sales price
are provided by the buyers.
-- The Stewardship, a single-family home development in Claverack,
New York ("Claverack"), which is subdivided into 48 developable
single-family home lots on 235 acres.
The following table presents Gold Peak and East Lyme sales
information for the respective periods:
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For the
Three Months Ended Project Total
March 31, Through March 31,
----------------------- -------------------
2008 2007 2008
----------- ----------- -------------------
Gold Peak:
Number of units sold 20 21 205
Gross sales proceeds $6,832,000 $6,547,000 $ 62,800,000
East Lyme:
Number of homes sold 2 2 21
Gross sales proceeds $1,552,000 $1,384,000 $ 14,939,000
*T
In December 2004, the Company obtained development and
construction financing for East Lyme in the aggregate amount of
approximately $21,177,000 (the "East Lyme Construction Loan"). The
East Lyme Construction Loan was extended with term modifications on
April 28, 2008. The interest rate for the East Lyme Construction Loan
increased from LIBOR + 2.15% to LIBOR + 2.50% over the extension
period which matures in June 2009. The extension terms also require
minimum principal repayments if repayments from sales proceeds are not
sufficient to meet required repayment amounts. The minimum liquidity
requirement was also reduced from $10,000,000 to $7,500,000 with
further decreases as the balance of the development portion of the
loan is permanently reduced. The balance of the East Lyme Construction
Loan was approximately $6,977,000 and $6,966,000 at March 31, 2008 and
December 31, 2007, respectively.
Regarding the other residential development projects, the balance
of the Gold Peak Construction Loan was approximately $3,264,000 and
$6,417,000 at March 31, 2008 and December 31, 2007, respectively, and
the Claverack project is unencumbered at each balance sheet date.
Investor Conference Call
The Company will host a conference call on Friday, May 16, 2008,
at 10:00 AM (EDT). This call is for the benefit of existing and
prospective stockholders, stock analysts, and other interested parties
to discuss the first quarter 2008 operating results and other matters.
The Company has a policy of not providing quarterly or annual
guidance.
The U.S. dial-in number for this teleconference is (800) 860-2442.
The international dial-in number is (412) 858-4600. A replay of the
conference call will be available from shortly after the conference
call through 5:00 PM (EDT) on May 23, 2008 by using U.S. dial-in
number (877) 344-7529 and entering the following passcode: 419360#
(international callers may use dial-in number (412) 317-0088 and use
the same passcode). An audio webcast of the conference call will be
available on Reis's website at www.reis.com/events and will remain on
the website for a period of time following the call.
About Reis
The Company was formed through a May 2007 merger between Private
Reis and Wellsford. Reis carries on the businesses of Private Reis and
Wellsford.
Private Reis was founded in 1980 as a provider of commercial real
estate market information and today is a leader in that field. Reis
maintains a proprietary database containing detailed information on
commercial real properties in neighborhoods and metropolitan markets
throughout the U.S. The database contains information on apartment,
retail, office and industrial properties and is used by real estate
investors, lenders and other professionals to make informed buying,
selling and financing decisions. In addition, Reis data is used by
debt and equity investors to assess and quantify the risks of default
and loss associated with individual mortgages, properties, portfolios
and real estate backed securities. Reis currently provides its
information services to many of the nation's leading lending
institutions, equity investors, brokers and appraisers.
Reis's flagship product is Reis SE, which provides online access
to information and analytical tools designed to facilitate both debt
and equity transactions. In addition to trend and forecast analysis at
neighborhood and metropolitan levels, the product offers detailed
building-specific information such as rents, vacancy rates and lease
terms, property sale information, new construction listings and
property valuation estimates. Reis SE is designed to meet the demand
for timely and accurate information to support the decision-making of
property owners, developers and builders, banks and non-bank lenders,
and equity investors, all of whom require access to information on
both the performance and pricing of assets, including detailed data on
market transactions, supply and absorption. This information is
critical to all aspects of valuing assets and financing their
acquisition, development, and construction.
For more information regarding Reis's products and services, visit
www.reis.com.
Prior to the merger, Wellsford was a public company operating as a
real estate merchant banking firm which acquired, developed, financed
and operated real properties and invested in private and public real
estate companies. The Company's primary operating activities
immediately prior to the merger were the development, construction and
sale of three residential projects and its approximate 23% ownership
interest in Private Reis. The Company continues to develop, construct
and sell these existing residential projects.
Cautionary Statement Regarding Forward-Looking Statements
The Company makes forward-looking statements in this press
release. These forward-looking statements may relate to the Company's
or management's outlook or expectations for earnings, revenues,
expenses, asset quality or other future financial or business
performance, strategies or expectations, or the impact of legal,
regulatory or supervisory matters on the Company's business's
operations or performance. Specifically, forward-looking statements
may include:
-- statements relating to future services and product development
of the Reis Services segment;
-- statements relating to future business prospects, potential
acquisitions, revenue, expenses, income, cash flows, valuation of
assets and liabilities and other business metrics of the Company and
its businesses, including EBITDA; and
-- statements preceded by, followed by or that include the words
"estimate," "plan," "project," "intend," "expect," "anticipate,"
"believe," "seek," "target" or similar expressions.
These statements reflect management's judgment based on currently
available information and involve a number of risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. With respect to these forward-looking
statements, management has made certain assumptions. Future
performance cannot be assured. Actual results may differ materially
from those in the forward-looking statements. Some factors that could
cause actual results to differ include:
-- revenues may be lower than expected;
-- the possibility of litigation arising as a result of
terminating the plan of liquidation;
-- adverse changes in the real estate industry and the markets in
which the Company operates;
-- the inability to retain and increase the Company's customer
base;
-- competition;
-- inability to attract and retain sales and senior management
personnel;
-- difficulties in protecting the security, confidentiality,
integrity and reliability of the Company's data;
-- legal and regulatory issues;
-- changes in accounting policies or practices; and
-- the risk factors listed under "Item 1A. Risk Factors" in the
Company's annual report on Form 10-K for the year ended December 31,
2007, which was filed with the Securities and Exchange Commission on
March 14, 2008.
You are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this
press release. Except as required by law, the Company undertakes no
obligation to publicly update or release any revisions to these
forward-looking statements to reflect any events or circumstances
after the date of this press release or to reflect the occurrence of
unanticipated events.
Financial Information
The following financial information should be read in conjunction
with Reis's unaudited consolidated financial statements and the notes
thereto and Management's Discussion and Analysis of Financial
Condition and Results of Operations, both of which are included in
Reis's quarterly report on Form 10-Q for the three months ended March
31, 2008, which was filed with the Securities and Exchange Commission
on May 12, 2008.
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CONSOLIDATED BALANCE SHEET
(GOING CONCERN BASIS)
March 31, December 31,
2008 2007
------------- -------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 25,601,320 $ 23,238,490
Restricted cash and investments 3,267,773 3,663,789
Receivables, prepaid and other assets 4,103,054 8,068,675
Real estate assets under development 15,901,013 20,731,762
------------- -------------
Total current assets 48,873,160 55,702,716
Furniture, fixtures and equipment, net 2,104,449 2,257,045
Other real estate assets 6,388,694 6,040,204
Intangible assets, net of accumulated
amortization of $2,900,104 and $1,967,608,
respectively 24,873,785 25,353,030
Goodwill 54,824,648 54,824,648
Other assets 649,859 670,829
------------- -------------
Total assets $137,714,595 $144,848,472
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of loans and other debt $ 178,897 $ 175,610
Current portion of Bank Loan 2,000,000 1,500,000
Construction payables 1,193,002 2,791,896
Construction loans payable 10,241,184 13,382,780
Accrued expenses and other liabilities 6,576,255 8,629,376
Reserve for option liability 99,377 527,034
Deferred revenue 12,566,972 13,262,114
------------- -------------
Total current liabilities 32,855,687 40,268,810
Non-current portion of Bank Loan 21,875,000 22,750,000
Other long-term liabilities 779,883 816,741
Deferred tax liability, net 1,645,580 1,313,580
------------- -------------
Total liabilities 57,156,150 65,149,131
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.02 par value per share,
101,000,000 shares authorized,
10,984,517 shares issued and outstanding 219,690 219,690
Additional paid in capital 99,347,306 98,936,084
Retained earnings (deficit) (19,008,551) (19,456,433)
------------- -------------
Total stockholders' equity 80,558,445 79,699,341
------------- -------------
Total liabilities and stockholders' equity $137,714,595 $144,848,472
============= =============
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(GOING CONCERN BASIS)
(Unaudited)
Pro Forma*
For the For the
Three Three
Months Months
Ended March Ended March
31, 2008 31, 2007
------------ ------------
Revenues:
Subscription revenue $ 6,411,104 $ 5,437,899
Revenue from sales of residential units 8,383,825 8,131,525
------------ ------------
Total revenue 14,794,929 13,569,424
------------ ------------
Cost of sales:
Cost of sales of subscription revenue 1,328,880 1,317,851
Cost of sales of residential units 6,928,041 6,979,947
------------ ------------
Total cost of sales 8,256,921 8,297,798
------------ ------------
Gross profit 6,538,008 5,271,626
------------ ------------
Operating expenses:
Sales and marketing 1,355,273 1,485,886
Product development 525,242 426,730
Property operating expenses 249,599 215,862
General and administrative expenses 3,421,740 5,058,135
------------ ------------
Total operating expenses 5,551,854 7,186,613
------------ ------------
Total other income (expenses) (138,272) (319,036)
------------ ------------
Income (loss) before income taxes 847,882 (2,234,023)
Income tax expense 400,000 42,000
------------ ------------
Net income (loss) $ 447,882 $(2,276,023)
============ ============
Net income (loss) per common share:
Basic $ 0.04 $ (0.21)
============ ============
Diluted $ 0.01 $ (0.21)
============ ============
Weighted average number of common shares
outstanding:
Basic 10,984,517 10,732,939
============ ============
Diluted 11,179,377 10,732,939
============ ============
---------------------------------------------
* The pro forma combined statements of operations are presented as if
the merger had been consummated, the proceeds from financing had been
received and the plan of liquidation had been terminated as of
January 1, 2006. The pro forma combined statements of operations are
unaudited and are not necessarily indicative of what the actual
financial results would have been had the merger been consummated,
the proceeds from financing been received and the plan of liquidation
been terminated as of January 1, 2006, nor does it purport to
represent the future results of operations.
*T
Reis, Inc.
Mark P. Cantaluppi
Vice President, Chief Financial Officer
212-921-1122
Copyright Business Wire 2008
