Q3'08 Revenue Increases 76.6% to $40.3 Million
Q3'08 Operating Income Grew 85.4% to $11.7 Million
Q3'08 EPS of $0.13 On Net Income Growth of 110.9% to $5.9 Million
BUENOS AIRES, Argentina, Nov. 11, 2008 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), host of the largest online commerce platform in Latin America, today reported financial results for its fiscal quarter ended September 30, 2008.
"During the third quarter, we continued to focus on our key strategic initiatives and on meeting the demands of our community of buyers and sellers. We are very pleased with the progress made in executing these initiatives, including launching a new version of our real estate classifieds portal, strengthening our management team, and acquiring and integrating the operations of DeRemate.com," said Marcos Galperin, MercadoLibre CEO. "We believe that the Latin American online market continues to offer solid opportunities for growth, and that MercadoLibre is in a unique position to capture those opportunities over the next several years. Our solid business model, strong balance sheet, disciplined approach to investments and expenses, and sustained focus on our users should enable us to create long term value for our stockholders."
Financial Results
Third Quarter Results
MercadoLibre reported consolidated net revenue for the three months ended September 30, 2008 of $40.3 million, a quarterly year over year revenue growth rate of 76.6%. Third quarter marketplace revenue grew 75.0% to $31.7 million from $18.1 million for the prior year third quarter. Payments revenues grew to $8.5 million for the third quarter, up 82.9% from $4.7 million for the same period during 2007.
Revenue growth was primarily driven by 49.4% and 87.0% growth over the same period during the prior year in gross merchandise volume and total payment volume respectively. Strong results in the classifieds and ad sales businesses as well as take-rate improvements during the quarter also contributed to revenue growth for the quarter.
Gross profit grew 79.2% to $32.1 million from $17.9 million in the prior year third quarter. Gross profit margin improved to 79.7% from 78.6% in the third quarter of 2007.
Income from operations grew 85.4% to $11.7 million from $6.3 million for the same period during 2007. Excluding certain long-term retention plan costs, income from operations would have grown 88.9% to $11.9 million.
Net income for the three-month period ended September 30, 2008 was $5.9 million, compared to $2.8 million during the same period of 2007, an increase of 110.9%. Excluding certain long-term retention plan costs net income for the period would have grown 117.7% to $6.1 million from $2.8 million for the same period during the previous year.
Earnings per share for the third quarter of 2008, both basic and diluted, were $0.13 earnings per share. Excluding certain long-term retention plan costs, earnings per share, both basic and diluted would have been $0.14 per share.
Nine-Month Results
Revenue for the nine months ended September 30, 2008 increased 77.9% to $103.6 million compared with $58.2 million for the prior year period.
Gross profit increased 79.9% to $82.5 million from $45.9 million from the prior year period, representing a gross profit margin of 79.7% for fiscal 2008 year to date, compared to 78.8% in 2007.
Income from operations increased 86.9% to $26.4 million from $14.1 million in the previous year. Income from operations includes $1.9 million of compensation costs related to the Classifieds Media Group (CMG) acquisition and $0.2 million of certain costs related to the company's long-term compensation plan. Excluding these charges, income from operations for the first nine months of 2008 would have grown 102.1% to $28.5 million.
Net income for the nine months ended September 30, 2008 was $10.9 million, compared to $4.4 million for the prior year period, an increase of 149.2%. Net income for the period excluding acquisition related compensation and certain long-term retention plan costs would have grown 197.4% to $13.0 million.
Earnings per share for the first nine months of 2008, both basic and diluted, were $0.25 earnings per share. Earnings per share for the same period, excluding acquisition related compensation and certain long-term retention plans costs would have been $0.29 earnings per share.
Key Performance Metrics
Following are highlights on certain key performance metrics for the third quarter ended September 30, 2008.
Registered Users -- New confirmed registered users, including the cumulative stock of users acquired through the purchase of DeRemate, for the three month period ended September 30, 2008 were 3.9 million, generating a cumulative confirmed registered user base of 32.0 million users as of September 30, 2008, an increase of 37.6% over the 23.3 million users registered as of September 30, 2007.
Transaction volume -- Gross merchandise volume was $590.1 million for the third quarter of 2008, a 49.4% growth from gross merchandise volume of $394.9 for the same period during 2007. MercadoLibre totaled 5.6 million successful items during the third quarter of 2008, 21.7% more than the 4.6 million successful items sold during the same period of 2007. Total payment volume was $81.5 million during the three-month period ending September 30, 2008, a growth of 87.0% over total payment volume of $43.6 million for the same period of 2007.
Conference Call and Webcast
MercadoLibre will host a conference call to discuss results for the quarter ending September 30, 2008 today at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing 719-325-4748. A live webcast of the conference call can be accessed at the company's investor relations website at http://investor.mercadolibre.com/. An archive will be available for one week following the conclusion of the conference call.
Definition of Selected Operational Metrics
New confirmed registered users -- Measure of the number of new users who have registered on the MercadoLibre marketplace and confirmed their registration.
Total confirmed registered users -- Measure of the cumulative number of users who have registered on the MercadoLibre marketplace and confirmed their registration.
Gross merchandise volume -- Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.
Successful items -- Measure of the number of items that were sold/purchased through the MercadoLibre marketplace.
Total payment volume -- Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.
Operating income margin -- Income from operations as a percentage of net revenues.
Gross profit margin -- Gross profit as a percentage of net revenues.
About MercadoLibre
MercadoLibre is the largest online commerce platform in Latin America. We are market leaders in e-commerce in each of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela, based on unique visitors and page views during the third quarter of 2008. Additionally, we have recently launched online trading platforms in Costa Rica, the Dominican Republic and Panama. With a population of over 550 million people and a region with one of the world's fastest-growing Internet penetration rates, we provide buyers and sellers a robust online trading environment that fosters the development of a large and growing e-commerce community. We offer a technological and commercial solution that addresses the distinctive cultural and geographic challenges of operating an online trading platform in Latin America.
The MercadoLibre, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4193
Non-GAAP Financial Measures
This press release includes financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission (SEC). See "Non GAAP Measures of Financial Performance" for more information about these measures.
Forward-Looking Statements
Any statements contained in this press release that are not statements of historical fact, including statements about the company's beliefs and expectations, are forward-looking statements and should be evaluated as such. Such forward-looking statements reflect, among other things, the company's current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting the company's business, all of which are subject to known or unknown risk and uncertainties that may cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements, including general market conditions, the failure of customary closing conditions, adverse changes in the company's markets and other risks disclosed in the company's filings with the Securities and Exchange Commission. Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
Financial Tables:
September 30 December 31
2008 2007
------------ ------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 10,403,585 $ 15,677,407
Short-term investments 20,489,006 52,300,007
Accounts receivable 5,714,806 3,211,252
Funds receivable from customers 34,893,877 29,162,763
Prepaid expenses 793,683 283,477
Deferred tax assets 3,784,991 3,445,101
Other assets 3,035,568 894,163
------------- -------------
Total current assets 79,115,516 104,974,170
Non-current assets:
Long-term investments 3,057,065 1,323,789
Property and equipment, net 5,874,868 4,143,204
Goodwill and intangible assets, net 80,592,075 23,428,646
Deferred tax assets -- 269,596
Other assets 485,237 353,395
------------- -------------
Total non-current assets 90,009,245 29,518,630
Total assets $ 169,124,761 $ 134,492,800
============= =============
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable and
accrued expenses $ 18,067,876 $ 9,278,138
Funds payable to customers 18,983,336 16,418,177
Social security payable 5,227,666 3,778,236
Taxes payable 4,748,841 2,493,749
Loans payable 18,497,771 9,713,227
Provisions 1,012,021 69,979
------------- -------------
Total current liabilities 66,537,511 41,751,506
Non-current liabilities:
Deferred tax liabilities 2,587,639 --
Other liabilities 1,129,760 1,068,155
------------- -------------
Total non-current liabilities 3,717,399 1,068,155
Total liabilities $ 70,254,910 $ 42,819,661
============= =============
Commitments and contingencies
Shareholders' equity:
Common stock, $0.001 par value,
110,000,000 shares authorized,
44,296,621 and 44,226,563 shares
issued and outstanding at September
30, 2008 and December 31, 2007,
respectively 44,297 44,227
Additional paid-in capital 122,172,907 121,890,138
Accumulated deficit (23,473,353) (34,363,917)
Accumulated other
comprehensive income 126,000 4,102,691
------------- -------------
Total shareholders'
equity 98,869,851 91,673,139
------------- -------------
Total liabilities
and shareholders' equity $ 169,124,761 $ 134,492,800
============= =============
Nine Months Ended Three Months Ended
September 30 September 30
------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net revenues $103,572,881 $ 58,232,755 $ 40,260,643 $ 22,800,130
Cost of net
revenues (21,075,044) (12,369,310) (8,153,862) (4,882,048)
------------ ------------ ------------ ------------
Gross profit 82,497,837 45,863,445 32,106,781 17,918,082
Operating
expenses:
Product and
technology
development (5,218,502) (3,157,033) (1,744,608) (1,154,317)
Sales and
marketing (30,905,222) (19,629,001) (11,425,168) (6,982,476)
General and
administra-
tive (18,088,234) (8,970,232) (7,261,068) (3,483,918)
Compensation
Cost related
to acquisi-
tions (1,919,870) -- -- --
------------ ------------ ------------ ------------
Total
operating
expenses (56,131,828) (31,756,266) (20,430,844) (11,620,711)
------------ ------------ ------------ ------------
Income from
operations 26,366,009 14,107,179 11,675,937 6,297,371
------------ ------------ ------------ ------------
Other income
(expenses):
Interest
income 1,350,068 872,207 330,139 352,968
Interest ex-
pense and
other financ-
ial charges (3,453,671) (1,688,275) (1,132,524) (700,631)
Foreign curre-
ncy loss (5,689,938) (1,806,520) (2,648,584) (802,348)
Other
expenses, net 41,874 (3,006,416) 39,587 (960,358)
------------ ------------ ------------ ------------
Net income before
income / asset
tax expense 18,614,342 8,478,175 8,264,555 4,187,002
------------ ------------ ------------ ------------
Income / asset
tax expense (7,723,778) (4,107,628) (2,388,763) (1,401,528)
------------ ------------ ------------ ------------
Net income $ 10,890,564 $ 4,370,547 $ 5,875,792 $ 2,785,474
============ ============ ============ ============
Accretion of pre-
ferred stock -- (309,299) -- (61,860)
------------ ------------ ------------ ------------
Net income avai-
lable to common
shareholders $ 10,890,564 $ 4,061,248 $ 5,875,792 $ 2,723,614
============ ============ ============ ============
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------- -------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Basic EPS
Basic net
income per
share $ 0.25 $ 0.10 $ 0.13 $ 0.07
============ ============ ============ ============
Weighted ave-
rage shares 44,255,985 18,214,978 44,290,540 27,538,652
============ ============ ============ ============
Diluted EPS
Diluted net
income per
common share $ 0.25 $ 0.10 $ 0.13 $ 0.07
============ ============ ============ ============
Weighted ave-
rage shares 44,374,124 18,608,181 44,379,682 27,685,028
============ ============ ============ ============
Nine Months Ended September 30
------------------------------
2008 2007
---------- ----------
(Unaudited)
Cash flows from operations:
Net income $ 10,890,564 $ 4,370,547
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,475,850 1,667,918
Interest expense (58,484) --
Realized gains on investments (1,257,949) (362,891)
Unrealized losses (gains)
on investments 246,050 (244,676)
Stock-based compensation
expense - stock options 3,684 20,434
Stock-based compensation
expense - restricted shares 81,875 1,977
Stock-based compensation
Long Term Retention Plan 352,271 --
Change in fair value of
warrants -- 3,045,992
Deferred income taxes (168,148) 739,893
Changes in assets and
liabilities, excluding
the effect of
acquisitions:
Accounts receivable 4,782,430 (182,658)
Funds receivable from
customers (8,984,163) (4,987,925)
Prepaid expenses (513,844) (256,525)
Other assets (1,358,459) (571,221)
Accounts payable and
accrued expenses 7,790,459 2,517,021
Funds payable to customers 4,026,062 2,059,840
Provisions (540,629) (295,029)
Other liabilities (1,696,567) 581,469
------------ ------------
Net cash provided by
operating activities 16,071,002 8,104,166
------------ ------------
Cash flows from investing activities:
Purchase of investments (59,614,525) (49,916,141)
Proceeds from sale and maturity
of investments 90,593,742 7,610,991
Payment for businesses acquired,
net of cash acquired (39,178,449) --
Purchase of intangible assets (58,238) (47,461)
Purchases of property and
equipment (3,869,309) (2,061,477)
------------ ------------
Net cash used in
investing activities (12,126,779) (44,414,088)
------------ ------------
Cash flows from financing activities:
Increase in short term debt 12,104 2,801,050
Decrease in short term debt (9,619,856) --
Loans paid -- (9,000,000)
Stock options exercised 64,859 38,579
Exercise of warrants -- 749,991
Issuance of common stock -- 49,573,239
------------ ------------
Net cash (used in) provided by
financing activities (9,542,893) 44,162,859
------------ ------------
Effect of exchange rate changes
on cash and cash equivalents 324,848 (459,984)
------------ ------------
Net (decrease) increase in cash
and cash equivalents (5,273,822) 7,392,953
Cash and cash equivalents,
beginning of the year 15,677,407 7,143,027
------------ ------------
Cash and cash equivalents,
end of the period $ 10,403,585 $ 14,535,980
============ ============
Nine Months Ended September 30
------------------------------
2008 2007
---------- ----------
(Unaudited)
Supplemental cash flow information:
Cash paid for interest $ 315,039 $ 470,706
Cash paid for income taxes 6,945,183 3,463,724
Non-cash financing activities:
Accretion of preferred stock $ -- $ 309,299
Conversion of mandatorily
redeemable convertible preferred
stock into common stock -- 64,385,844
Reclassifications of warrants -- 4,636,456
Acquisition of DeRemate and
Classified Media Group:
Cash and cash equivalents $ 691,632 $ --
Funds receivable from customers 117,473 --
Accounts receivable 6,755,668 --
Tax Credits 604,419 --
Other current assets 928,523 --
Non current assets 496,911 --
------------ ------------
Total assets acquired 9,594,626 --
------------ ------------
Accounts payable and accrued
expenses 4,676,259 --
Funds payable to customers 123,089 --
Taxes payable 1,181,607 --
Social security payable 395,112 --
Other liabilities 1,602,269 --
Non current liabilities 14,000 --
Provisions 1,506,447 --
------------ ------------
Total liabilities assumed 9,498,783 --
------------ ------------
Net assets acquired 95,843 --
------------ ------------
Goodwill 52,949,111 --
Trademarks 5,622,188 --
Customer lists 1,227,600 --
Non compete agreement 573,484 --
Deferred income tax on intangible
assets (2,598,145) --
------------ ------------
Total purchase price 57,870,081 --
------------ ------------
Cash and cash equivalents acquired (691,632) --
------------ ------------
Payment for businesses acquired,
net of cash acquired $ 39,178,449 $ --
============ ============
Seller financing for DeRemate
business acquisition $ 18,000,000 $ --
============ ============
Three Months Ended September 30, 2008
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $14,922,939 $ 5,369,344 $ 3,560,840 $ 7,889,132 $31,742,255
Direct
costs (10,316,048) (2,340,884) (2,023,418) (4,501,162)(19,181,512)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 4,606,891 3,028,460 1,537,422 3,387,970 12,560,743
Payments Consolidated
----------- -----------
Net revenues $ 8,518,388 $40,260,643
Direct costs (5,020,589) (24,202,101)
----------- -----------
Direct contribution 3,497,799 16,058,542
Operating expenses and
indirect costs of
net revenues (4,382,605)
-----------
Income from operations 11,675,937
-----------
Other income (expenses):
Interest income 330,139
Interest expense and other
financial results (1,132,524)
Foreign exchange (2,648,584)
Other expenses, net 39,587
-----------
Net income before income / asset
tax expense $ 8,264,555
===========
Three Months Ended September 30, 2007
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $ 9,735,433 $3,117,546 $2,480,155 $ 2,809,492 $18,142,626
Direct
costs (6,275,225) (1,488,304) (1,699,950) (1,438,725)(10,902,204)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 3,460,208 1,629,242 780,205 1,370,767 7,240,422
Payments Consolidated
----------- -----------
Net revenues $ 4,657,504 $22,800,130
Direct costs (2,886,354) (13,788,558)
Direct contribution 1,771,150 9,011,572
Operating expenses and
indirect costs of
net revenues (2,714,201)
-----------
Income from operations 6,297,371
-----------
Other income (expenses):
Interest income 352,968
Interest expense and other
financial results (700,631)
Foreign exchange (802,348)
Other expenses, net (960,358)
-----------
Net income before income / asset
tax expense $ 4,187,002
===========
Nine Months Ended September 30, 2008
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $40,447,913 $13,147,737 $9,609,505 $20,328,181 $83,533,336
Direct
costs (26,239,812) (6,213,127) (6,230,842)(11,256,163)(49,939,944)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 14,208,101 6,934,610 3,378,663 9,072,018 33,593,392
Payments Consolidated
----------- -----------
Net revenues $20,039,545 $103,572,881
Direct costs (12,814,364) (62,754,308)
Direct contribution 7,225,181 40,818,573
Operating expenses and
indirect costs of
net revenues (14,452,564)
-----------
Income from operations 26,366,009
-----------
Other income (expenses):
Interest income 1,350,068
Interest expense and other
financial results (3,453,671)
Foreign exchange (5,689,938)
Other expenses, net 41,874
-----------
Net income before income / asset
tax expense $18,614,342
===========
Nine Months Ended September 30, 2007
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $26,306,517 $ 7,859,816 $ 6,917,780 $ 7,339,954 $48,424,067
Direct
costs (16,638,220) (3,987,398) (4,498,440) (4,341,008)(29,465,066)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 9,668,297 3,872,418 2,419,340 2,998,946 18,959,001
Payments Consolidated
----------- -----------
Net revenues $ 9,808,688 $58,232,755
Direct costs (7,502,044) (36,967,110)
Direct contribution 2,306,644 21,265,645
Operating expenses and
indirect costs of
net revenues (7,158,466)
-----------
Income from operations 14,107,179
-----------
Other income (expenses):
Interest income 872,207
Interest expense and other
financial results (1,688,275)
Foreign exchange (1,806,520)
Other expenses, net (3,006,416)
-----------
Net income before income / asset
tax expense $ 8,478,175
===========
Non-GAAP Measures of Financial Performance
This press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) Rules to supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP.
These measures are not in accordance with, or an alternative for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with MercadoLibre's results of operations in conjunction with the corresponding GAAP measures.
Reconciliation to the nearest GAAP measure of all non-GAAP financial measures included in this press release can be found in the tables included at the end of this press release.
These non-GAAP measures are provided to enhance investors overall understanding of the company's current financial performance. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain non-recurring compensation expenses that may not be indicative of its core operating results, thereby enhancing an investor's ability to make period over period comparisons of the company's results. The company believes the inclusion of non-GAAP measures provides consistency in the company's financial reporting and uses these measures in internal budgets and models and in determining executive compensation benchmarks.
In this press release MercadoLibre includes each of income from operations, net income and earnings per basic and diluted share for the nine month ended September 30, 2008 after excluding (or adding back) the following charge required by GAAP:
Compensation Costs Related to Acquisitions: This amount relates to the purchase price of the shares of CMG and its subsidiaries. Under EITF 95-8 "Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination", we have recognized a contingent consideration paid to former shareholders as compensation for services. Total compensation paid in cash amounts to $1,919,870, for the nine month period ended September 30, 2008. This compensation was paid out in the second quarter of 2008. The following tables show a reconciliation of this exclusion from the GAAP measures to the non GAAP measures.
Long term retention plan compensation: On August 8, 2008, the Board of Directors approved an employee retention program that will be payable 50% in cash and 50% in shares, in addition to the annual salary and bonus of certain executives. Payments will be made, in equal parts stock and cash, during the first quarter on annual basis according to the following vesting schedule: year 1 (2008): 17%, year 2 (2009): 22%, year 3 (2010): 27%, year 4 (2011): 34%.
As described above, these costs will be a recurring expense to the company over the life of the retention plan.
The U.S. GAAP compensation cost is recognized in accordance with the graded-vesting attribution method and is accrued up to each payment day. The non-GAAP measures for the third quarter of 2008 were calculated based on the simple vesting schedule described above, in which 17% of the cost of the plan vests during the first year. The following tables show a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures.
Reconciliation to Income from Operations and Operating Margin
Nine Months Ended Three Months Ended
September 30 September 30
------------------------- -------------------------
2008 2007 2008 2007
------------------------- -------------------------
Income from
operations $ 26,366,009 $ 14,107,179 $ 11,675,937 $ 6,297,371
Long term reten-
tion plan com-
pensation 220,392 -- 220,392 --
Compensation
costs related to
acquisitions 1,919,870 -- -- --
------------------------- -------------------------
Non-GAAP income
from operations $ 28,506,271 $ 14,107,179 $ 11,896,329 $ 6,297,371
------------------------- -------------------------
Non-GAAP income
from operations
margin 27.5% 24.2% 29.5% 27.6%
------------------------- -------------------------
Depreciation and
Amortization 2,475,850 1,667,918 955,148 566,867
------------------------- -------------------------
Non-GAAP EBITDA $ 30,982,121 $ 15,775,097 $ 12,851,477 $ 6,864,238
------------------------- -------------------------
Non-GAAP EBITDA
operating margin 29.9% 27.1% 31.9% 30.1%
------------ ------------ ------------ ------------
Reconciliation of Net Income to Net Income before compensation cost
------------------------- -------------------------
Nine Months Ended Three Months Ended
September 30 September 30
------------------------- -------------------------
2008 2007 2008 2007
------------------------- -------------------------
Net income $ 10,890,564 $ 4,370,547 $ 5,875,792 $ 2,785,474
Long term reten-
tion plan comp-
ensation net of
tax effect 188,867 -- 188,867 --
Compensation
costs related to
acquisitions 1,919,870 -- -- --
------------------------- -------------------------
Non-GAAP net
income $ 12,999,300 $ 4,370,547 $ 6,064,659 $ 2,785,474
------------------------- -------------------------
Basic net income ------------ ------------ ------------ ------------
per common
share: $ 0.25 $ 0.10 $ 0.13 $ 0.07
------------ ------------ ------------ ------------
Non-GAAP basic
net income per
common share: $ 0.29 $ 0.14
------------ ------------ ------------ ------------
Shares used in
basic net income
per share calcu-
lation: 44,255,985 18,214,978 44,290,540 27,538,652
------------ ------------ ------------ ------------
Diluted net in- ------------ ------------ ------------ ------------
come per common
share $ 0.25 $ 0.10 $ 0.13 $ 0.07
------------ ------------ ------------ ------------
Non-GAAP diluted
net income per
common share: $ 0.29 $ 0.14
------------ ------------ ------------ ------------
Shares used in
diluted net in-
come per share
calculation: 44,374,124 18,608,181 44,379,682 27,685,028
------------ ------------ ------------ ------------
Reconciliation of Blended and Effective tax Rate including and
excluding compensation cost
Nine Months Ended Three Months Ended
September 30 September 30
------------------------- -------------------------
2008 2007 2008 2007
------------------------- -------------------------
Income and asset
tax expense $ 7,723,778 $ 4,107,628 $ 2,388,763 $ 1,401,528
Income taxes re-
lated with long
term retention
plan compensa-
tion 31,526 -- 31,526 --
------------ ------------ ------------ ------------
Non-GAAP income
and asset tax
expense $ 7,755,304 $ 4,107,628 $ 2,420,289 $ 1,401,528
------------ ------------ ------------ ------------
Income before
income taxes $ 18,614,342 $ 8,478,175 $ 8,264,555 $ 4,187,002
Long term reten-
tion plan comp-
ensation 220,392 -- 220,392 --
Compensation
costs related to
acquisitions 1,919,870 -- -- --
------------------------- -------------------------
Non-Gaap income
before income
taxes $ 20,754,605 $ 8,478,175 $ 8,484,948 $ 4,187,002
Blended tax rate ------------ ------------ ------------ ------------
(1) 41.5% 48.4% 28.9% 33.5%
------------ ------------ ------------ ------------
Non-GAAP Blended
tax rate (1) 37.4% 48.4% 28.5% 33.5%
------------ ------------ ------------ ------------
Efective tax rate
(2) (3) 38.4% 40.9% 37.1% 38.2%
------------ ------------ ------------ ------------
Non-Gaap Efective
tax rate (2) (3) 34.6% 36.5%
------------ ------------ ------------ ------------
1 - Blended tax rate defined as income and asset tax expense as a
percentage of income before income and asset tax
2 - Effective income tax rate defined as the provision for income taxes
as a percentage of income before income tax
3 - The efective tax rate does not include the effect of the Mexican Tax
call Impuesto Empresarial a Tasa Unica (IETU)
Reconciliation of Net cash provided by operating activities and used
in investing activities after excluding effect of compensation cost
-------------------------
Nine Months Ended
September 30,
-------------------------
2008 2007
-------------------------
Net cash provided by operating activities $ 16,071,003 $ 8,104,166
Compensation costs related to acquisitions 1,919,870 --
-------------------------
Non-GAAP net cash provided by operating
activities $ 17,990,873 $ 8,104,166
-------------------------
Net cash used in investing activities $(12,126,779)$(44,414,088)
Purchase of intangible assets (1,919,870) --
-------------------------
Non-GAAP net cash used in investing
activities $(14,046,649)$(44,414,088)
-------------------------