Leaf Group Ltd. (NYSE: LEAF), a diversified consumer internet
company, today announced that its Board of Directors has concluded
its previously announced review of strategic alternatives to
maximize shareholder value. The Board of Directors assessed
an exhaustive range of alternatives over the course of the last
year, during which time the Company’s business and operating
environment have also improved. As a result of the
comprehensive review, the Board of Directors unanimously determined
that the Company’s current business strategy as an independent
company is the best path forward to create the greatest value for
Leaf Group’s shareholders.
Sean Moriarty, Chief Executive Officer of Leaf Group said, “Over
the past several years, we have been focused on executing a
successful turnaround of the Company. As part of that effort,
we have made significant changes across the organization,
streamlining our business, strengthening our team, optimizing our
operations and driving much-improved financial performance.
Our brands have not only proven themselves to be quite resilient in
these uncertain times, but our consistent focus on the home, art
& design, and fitness & wellness sectors well positions us
to address the needs of our consumers as the pandemic accelerates
digital growth.”
The strategic review was conducted by a Special Committee of the
Board of Directors consisting of independent directors, with the
support of outside financial and legal advisors. Over the
course of the comprehensive review, the Special Committee of the
Board of Directors and its advisors considered a full range of
alternatives to maximize shareholder value, including a sale of the
Company, divestitures of certain assets and various financing
alternatives. Leaf Group and its advisors contacted over 160
potential acquirers regarding a possible sale of the Company or
certain assets, and entered into non-disclosure agreements with 45
of those parties to facilitate discussions. Additionally,
Leaf Group and its advisors contacted over 48 companies to discuss
financing options.
The Company engaged in negotiations with parties concerning
potential asset sales; however, this process did not yield any
transaction offers that the Board of Directors and its advisors
determined would provide more value to Leaf Group’s shareholders
than the value that can be created by the Company’s continued
ownership and operation of those assets. While multiple parties
expressed interest in potential transactions related to certain of
the Company’s assets, no party submitted an offer to acquire the
entire company.
“We have come away from this process more confident than ever
that Leaf Group’s significant organic growth potential — as
demonstrated by our recent strong performance — can deliver
substantially more value to our shareholders than any other
alternative currently available to the Company,” said James Quandt,
Chair of Leaf Group’s Board of Directors and a member of the
Special Committee. “Our comprehensive review helped reaffirm
that the best path forward for all of Leaf Group’s stakeholders is
for us to remain focused on executing on our strategy — with a
continued emphasis on building digital first brands in high-passion
categories.”
Early Trends Positive for Second Quarter
The positive trends for the second quarter of 2020, which the
Company previewed in its Q1 2020 shareholder letter, are continuing
with particularly strong performance by Society6, the Company’s
biggest operating unit. While the Company has not typically
provided guidance and will not generally be providing guidance,
given the unique circumstances of the pandemic, the Company
announced that the April business trends identified in its Q1 2020
shareholder letter have continued through the date of this
release.
Leaf Group will report actual financial results for the second
quarter 2020 on its regular earnings schedule.
Departure of Chief Financial Officer and Appointment of
Interim Chief Financial Officer
Additionally, Leaf Group today announced that Chief Financial
Officer Jantoon Reigersman stepped down to pursue other
opportunities, effective May 19, 2020. Brian Gephart, Chief
Accounting Officer, has been appointed interim CFO and will serve
in that role until a permanent successor for Mr. Reigersman has
been named. Mr. Gephart joined Leaf Group in 2019 following
positions at JH Capital Group and PricewaterhouseCoopers, and has
extensive expertise in capital markets, technical accounting and
financial reporting.
“On behalf of the Board of Directors and the management team, I
want to thank Jantoon for his leadership and the great
contributions he has made to Leaf Group over the years,” said Mr.
Moriarty. “We wish him the best in his future endeavors.”
About Leaf Group Leaf Group Ltd. (NYSE:
LEAF) is a diversified consumer internet company that builds
enduring, digital-first brands that reach passionate audiences in
large and growing lifestyle categories, including fitness and
wellness (Well+Good, Livestrong.com and MyPlate App), and
art and design (Saatchi Art, Society6 and Hunker). For more
information about Leaf Group, visit www.leafgroup.com.
Cautionary Information Regarding Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. The forward-looking
statements set forth in this press release include, among other
things, statements regarding potential synergies achieved from
acquisitions, the impact of strategic operational changes and the
Company’s future financial performance. In addition, statements
containing words such as “guidance,” “may,” “believe,”
“anticipate,” “expect,” “intend,” “plan,” “project,” “projections,”
“business outlook,” and “estimate” or similar expressions
constitute forward-looking statements. Actual results may differ
materially from the results predicted, and reported results should
not be considered an indication of future performance. These
forward-looking statements involve risks and uncertainties
regarding the Company’s future financial performance; could cause
actual results or developments to differ materially from those
indicated due to a number of factors affecting Leaf Group’s
operations, markets, products and services; and are based on
current expectations, estimates and projections about the Company’s
industry, financial condition, operating performance and results of
operations, including certain assumptions related thereto.
Potential risks and uncertainties that could affect the Company’s
operating and financial results are described in Leaf Group’s
annual report on Form 10-K for the fiscal year ending December 31,
2019 filed with the Securities and Exchange Commission
(http://www.sec.gov) on March 16, 2020, as such risks and
uncertainties may be updated from time to time in Leaf Group’s
quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission, including, without limitation, information
under the captions “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations.” These
risks and uncertainties include, among others: risks associated
with political and economic instability domestically and
internationally including those resulting from the COVID-19
pandemic, which have and could lead to fluctuations in the
availability of credit, decreased business and consumer confidence
and increased unemployment; the Company’s ability to execute its
business plan to return to compliance with the continued listing
criteria of the New York Stock Exchange (“NYSE”); the Company’s
ability to continue to comply with applicable listing standards
within the available cure period; changes by the Small Business
Administration or other governmental authorities regarding the
Coronavirus Aid, Relief and Economic Security Act of 2020 (the
“CARES Act”), the Paycheck Protection Program (“PPP”) or related
administrative matters; the Company’s ability to comply with the
terms of the PPP loan and the CARES Act, including to use the
proceeds of the PPP loan; the Company’s ability to successfully
drive and increase traffic to its marketplaces and media
properties; changes in the methodologies of internet search
engines, including ongoing algorithmic changes made by Google, Bing
and Yahoo!; the Company’s ability to attract new and repeat
customers and artists to its marketplaces and successfully grow its
marketplace businesses; the potential impact on advertising-based
revenue from lower ad unit rates, a reduction in online advertising
spending, a loss of advertisers, lower advertising yields,
increased availability of ad blocking software, particularly on
mobile devices and/or ongoing changes in ad unit formats; the
Company’s dependence on various agreements with a specific business
partner for a significant portion of its advertising revenue; the
effects of shifting consumption of media content and online
shopping from desktop to mobile devices and/or social media
platforms; the Company’s history of incurring net operating losses;
the Company’s ability to obtain capital when desired on favorable
terms; potential write downs, reserves against or impairment of
assets including receivables, goodwill, intangibles (including
media content) or other assets; the Company’s ability to
effectively integrate, manage, operate and grow acquired
businesses; the Company’s ability to retain key personnel; the
Company’s ability to prevent any actual or perceived security
breaches; the Company’s ability to expand its business
internationally; the review of strategic alternatives; the
Company’s ability to generate long-term value for its stockholders;
and any future actions that may be taken by activist stockholders.
From time to time, the Company may consider acquisitions or
divestitures that, if consummated, could be material. Any
forward-looking statements regarding financial metrics are based
upon the assumption that no such acquisition or divestiture is
consummated during the relevant periods. If an acquisition or
divestiture were consummated, actual results could differ
materially from any forward-looking statements. Any forward-looking
statement made by the Company in this press release is based only
on information currently available to the Company and speaks only
as of the date on which it is made. The Company undertakes no
obligation to revise or update any forward-looking information,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise, except as required by law, and may not provide this type
of information in the future.
Investor ContactsShawn MilneInvestor
Relations415-264-3419shawn.milne@leafgroup.com
Media ContactsJohn Christiansen/Matt ReidSard
Verbinnen &
Co415-618-8750/310-201-2040LeafGroup-SVC@sardverb.com
Sharna DadukVP,
CommunicationsSharna.daduk@leafgroup.com
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