Propel Media Delivers Improved Third Quarter Profitability

- Revenues of $19.1 million and adjusted EBITDA of $6.0 million

- Profitability driven by strong growth in Company's owned and operated user audience

- Investments in key video and native advertising initiatives positions Propel Media for growth

News provided by

Nov 13, 2015, 08:00 ET

JERSEY CITY, N.J., Nov. 12, 2015 /PRNewswire/ -- Propel Media, Inc. (OTCBB: PROM), a performance focused digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers, announced that it achieved revenue of $19.1 million and adjusted EBITDA of $6.0 million in its 2015 third quarter.

"Propel Media's profitability was up significantly over Q2 2015 due to our ability to improve advertiser performance metrics," said Bob Regular, Propel Media's Chief Executive Officer. "We also are pleased that our margins improved dramatically over Q2 as a result of contributions from new native ad products introduced last quarter and from improved performance from our expanded owned and operated audience network," Mr. Regular added.

Third Quarter Business Highlights:

United States owned and operated ("O&O") audience base expansion – Media buying activities to expand the Company's O&O audience base was key to profit expansion
Enhanced data optimization and audience targeting attributed to improved advertiser performance metrics.
New Product Monetization – Contextual native ad formats introduced in Q2 2015 contributed meaningful revenues and margins in Q3 2015

"We have been pleased to see our advertisers meeting their ROI goals by advertising with Propel Media. We see that satisfying the advertising metrics of our advertisers as essential to driving our long-term success," said Marv Tseu, Propel Media President. "We are very pleased that in Q3 2015 we expanded our owned and operated audience network. This enhanced audience network provides improved performance for our advertisers which, along with enhanced data optimization and audience targeting provided us with gross profit improvements over Q2 of 2015," said Mr. Tseu.

Further details concerning the results of operations for the three and nine months ended September 30, 2015 are contained in the Quarterly Report on Form 10-Q that Propel Media filed with the Securities and Exchange Commission earlier today.

About Propel Media

Propel Media is a performance driven digital media company bringing together online video, display and mobile advertising technology and solutions to advertisers, app developers and publishers. Our mission is to provide exceptional performance for our partners.

Propel Media delivers the right strategy, content and technology in front of the right audience at the right time to produce the best results. Our team brings the "how" through the advancement of multi-platform offerings, investment in proprietary advanced optimization, targeting technologies, on-going commitment to product research and development and a deep focus on ROI for all clients.

Led by industry veterans, our team of engineers, analysts, ad operations, business development and sales staff are comprised of capable, driven and determined individuals whose commitment to client services is outstanding.

The Company has offices in Irvine, CA and Jersey City, NJ. For more information visit: http://www.propelmedia.com

Forward-Looking Statements

Certain information and statements contained in this press release, including those regarding Propel Media's capital structure, ability to execute its operating plan, anticipated financial flexibility and other statements that are not statements of historical fact, are forward-looking statements within the meaning of federal securities laws. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipates", "expects," "will" or comparable terms or the negative thereof. Such statements are based on management's current estimates, assumptions that management believes to be reasonable, and currently available competitive, financial, and economic data as of the date hereof and we undertake no obligation to update any such statements to reflect subsequent changes in events or circumstances. Forward-looking statements are inherently uncertain and subject to a variety of events, factors and conditions, many of which are beyond the control of Propel Media and not all of which are known to Propel Media, including, without limitation those risk factors described from time to time in Propel Media's reports filed with the SEC. Among the factors that could cause actual results to differ materially are Propel Media's: loss of key advertising customers; inability to acquire new advertising customers; inability to expand its video content library; inability to protect its intellectual property; inability to comply with the covenants in its credit facility; inability to obtain necessary financing or enter into equity arrangements with existing or new institutional shareholders; inability to execute its acquisition strategy; inability to effectively manage its growth; failure to effectively integrate the operations of acquired businesses; competition; loss of key personnel; increases in costs of operations; continued compliance with government regulations; and general economic conditions.

Use of Non-GAAP Financial Information

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), Propel Media reports Adjusted EBITDA, which is non-GAAP financial measure. Propel Media calculates Adjusted EBITDA by taking net income and adding back depreciation and amortization, income tax benefit, interest expense and stock-based compensation. Propel Media uses this non-GAAP financial measure for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Propel Media believes that these measures provide useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Propel Media, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
	As of
Assets	September 30, 2015	December 31, 2014
	(unaudited)
Current assets
Cash	$ 2,385,000	$ 3,675,000
Accounts receivable, net	8,690,000	8,054,000
Prepaid expenses	703,000	343,000
Deferred tax assets, current	735,000	-
Other current assets	249,000	-
Total current assets	12,762,000	12,072,000

Property and equipment, net	2,788,000	2,034,000
Restricted cash	90,000	-
Intangible assets	528,000	-
Goodwill	3,815,000	-
Deferred tax assets, non-current	32,918,000	-
Other assets	543,000	56,000
Total assets	$ 53,444,000	$ 14,162,000

Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable	$ 4,417,000	$ 3,540,000
Accrued expenses	2,409,000	4,184,000
Advertiser deposits	2,582,000	2,610,000
Obligations to transferors, current portion	12,624,000	650,000
Current portion of long term debt	6,223,000	-
Revolving credit facility	2,471,000	-
Total current liabilities	30,726,000	10,984,000

Long-term debt	70,015,000	-
Obligations to transferors, less current portion	4,300,000	-
Other non-current liabilities	472,000	464,000
Note payable stockholder, non-current, net	104,000	-
Total liabilities	105,617,000	11,448,000

Commitments and contingencies

Stockholders' (Deficit) Equity
Preferred Stock, $0.0001 par value, authorized 1,000,000 shares,	-	-
no shares issued or outstanding
Common Stock, $0.0001 par value, authorized 500,000,000 shares,
issued and outstanding 250,010,162 and 154,125,921,
at September 30, 2015 and December 31, 2014, respectively	25,000	15,000
Additional paid-in capital	952,000	-
Accumulated (deficit) earnings	(53,150,000)	2,699,000
Total stockholders' (deficit) equity	(52,173,000)	2,714,000
Total liabilities and stockholders' (deficit) equity	$ 53,444,000	$ 14,162,000

Propel Media, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(unaudited)

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2015	2014	2015	2014

Revenues	$ 19,106,000	$ 20,587,000	$ 60,052,000	$ 66,237,000
Cost of revenues	7,304,000	8,683,000	27,490,000	29,390,000
Gross profit	11,802,000	11,904,000	32,562,000	36,847,000

Operating expenses:
Salaries, commissions, benefits and related expenses	3,939,000	3,013,000	11,158,000	9,156,000
Technology development and maintenance	935,000	530,000	2,855,000	1,718,000
Marketing and promotional	23,000	72,000	55,000	240,000
General and administrative	1,149,000	354,000	2,621,000	1,163,000
Professional services	204,000	516,000	1,531,000	947,000
Depreciation and amortization	498,000	334,000	1,321,000	976,000

Operating expenses	6,748,000	4,819,000	19,541,000	14,200,000

Operating income	5,054,000	7,085,000	13,021,000	22,647,000

Interest expense	(3,645,000)	-	(9,989,000)	(1,000)

Income before income tax (expense) benefit	1,409,000	7,085,000	3,032,000	22,646,000
Income tax (expense) benefit	(972,000)	-	31,053,000	-
Net income	$ 437,000	$ 7,085,000	$ 34,085,000	$ 22,646,000

Net income per common share, basic and diluted	$ 0.00	$ 0.05	$ 0.14	$ 0.15

Weighted average number of common shares outstanding, basic and diluted	250,010,162	154,125,921	240,527,105	154,125,921

Pro-forma computation related to conversion to a C corporation upon
completion of the reverse merger with Kitara Media Corp.:
Historical pre-tax net income before income taxes	$ 1,409,000	7,085,000	$ 3,032,000	22,646,000
Pro-forma income tax expense	562,000	2,827,000	1,210,000	9,036,000
Pro-forma net income	$ 847,000	$ 4,258,000	$ 1,822,000	$ 13,610,000

Unaudited pro-forma net income per common share - basic and diluted	$ 0.00	$ 0.03	$ 0.01	$ 0.09

Weighted average number of shares outstanding - basic and diluted	250,010,162	154,125,921	240,527,105	154,125,921

Propel Media, Inc. and Subsidiaries
Reconciliation of Non-GAAP Information
(Unaudited)

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2015	2014	2015	2014


Net income (GAAP)	$ 437,000	$ 7,085,000	$ 34,085,000	$ 22,646,000
Add (subtract) the following items:
Depreciation and amortization	498,000	334,000	1,321,000	976,000
Income tax expense (benefit)	972,000	-	(31,053,000)	-
Interest expense	3,645,000	-	9,989,000	1,000
Stock-based compensation	408,000	-	952,000	-
Adjusted EBITDA (non-GAAP)	$ 5,960,000	$ 7,419,000	$ 15,294,000	$ 23,623,000