Thursday, May 14, 2020

KLDiscovery Inc. Achieves First Quarter Revenue of $78.3 Million, Up 4.3% Year-over-Year

• Net Loss Improves 7.5% Year-over-Year
• EBITDA Increases 11.4% Year-over-Year

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MCLEAN, Va. -- (BUSINESS WIRE)-- KLDiscovery Inc. (“KLDiscovery” or the “Company”), a leading global provider of electronic discovery, information governance and data recovery services, announced today that revenue for the first quarter ended March 31, 2020 was $78.3 million, an increase of 4.3% over revenue of $75.0 million for first quarter of 2019.

Net loss for the first quarter ended March 31, 2020 was $12.5 million compared to net loss of $13.5 million for the first quarter of 2019. EBITDA for the first quarter of 2020 was $12.5 million, an increase of 11.4% compared to EBITDA of $11.2 million for the first quarter of 2019.

Adjusted EBITDA (which excludes management fees and stock-based compensation, acquisition financing and transaction costs and other items as described below) for the first quarter of 2020, was $15.0 million compared to adjusted EBITDA of $15.1 million for the first quarter of 2019. Reconciliations of EBITDA and Adjusted EBITDA to their GAAP basis results are shown in detail below, along with definitions for those terms.

As of March 31, 2020, the Company had approximately $50.6 million in cash and cash equivalents.

“I am extremely proud of achieving a very good first quarter of 2020 while operating under the challenging circumstances resulting from the COVID-19 global pandemic,” said Christopher Weiler, CEO of KLDiscovery Inc. “Business activity is strong as we continue to add clients and expand existing contracts including: facilitating a large second request, supporting a major international company that is facing a variety of COVID-19 related actions, and other significant wins with new clients in the legal, financial and retail industries. In the first quarter of 2020, our revenue was up 4.3% year-over-year and EBITDA increased 11.4% year-over year. As COVID-19 restrictions are eased, and global businesses work towards resuming normal operations, we believe we will experience an increase in new business opportunities. In addition to pent-up demand, there will likely be a material amount of litigation and investigations which occur as a result of the COVID-19 crisis.”

Weiler continued, “We have proactively taken steps to ensure continuity of operations during this crisis. Virtually all full-time employees are working from home and we have taken precautions to protect the safety of a small number of employees who do come into the Company’s offices. The KLDiscovery culture is stronger than ever as our outstanding global team of professionals has been extremely flexible and has maintained an inspiring level of positivity and productivity.”

2020 Outlook

As previously announced, KLDiscovery is currently limited in its ability to accurately predict what the financial impact will be from the COVID-19 outbreak. KLDiscovery is not providing full-year 2020 guidance until it gains additional data points about the total operational impact of this global pandemic.

While KLDiscovery cannot predict how long the pandemic will last, it has taken actions to improve its cash position that will provide the Company with the capacity and flexibility to sustain prolonged disruption and create long -term value for stakeholders through disciplined capital allocation. This includes implementing discretionary cost saving measures and deferring certain capital expenditures when possible.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding KLDiscovery’s financial condition and results of operations, please refer to the Company’s latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to KLDiscovery before interest and other income (expense), loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs and settlements and impairments incurred outside KLDiscovery’s normal course of business.

Earnings Conference Call

Management will conduct a conference call at 10:00 AM EDT on Friday, May 15, 2020 to discuss results for the first quarter of 2020 and KLDiscovery’s outlook. The audio portion of the conference call will be broadcast live over the Internet in the Investors section of KLDiscovery's website https://investors.kldiscovery.com. To join the conference call by telephone, please dial (833) 579-0923 from the United States and Canada or (778) 560-2806 from all other countries and refer to conference code 3257688. An audio recording of the conference call will be available for replay shortly after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 585-8367 (from the U.S. and Canada) or (416) 621-4642 (from all other countries) using access code 3257688. The webcast replay will also be available in the Investors section of KLDiscovery’s website for a period of time following the call at https://investors.kldiscovery.com.

Note:

• Acquisition, financing and transaction costs include earnout payments, rating agency, letter of credit and revolving facility fees, and transaction costs from the business combination with Pivotal Acquisition Corp in December 2019
• Strategic initiatives include the amortization of one-time expenses related to the hiring of a team of industry leading sales personnel.
• Management fees, stock compensation & other includes consulting fees, expenses related to the Company’s stock compensation plan, business insurance and other expenses.
• Restructuring costs include severance payments, recruiting fees, and retention charges
• Systems establishment costs include expenses related to IT infrastructure build-out, system automation and ERP implementation

Forward Looking Statements

This press release includes “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding KLDiscovery’s future financial and business performance, attractiveness of KLDiscovery’s product offerings and platform and the value proposition of KLDiscovery’s products, are forward-looking statements. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside KLDiscovery’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: the impact of COVID-19, the inability to recognize the anticipated benefits of the business combination with Pivotal Acquisition Corp. (“Pivotal”) which occurred in December 2019 (the “business combination”), which may be affected by, among other things, costs related to the business combination; KLDiscovery’s ability to execute on its plans to develop and market new products and the timing of these development programs; KLDiscovery’s estimates of the size of the markets for its solutions; the rate and degree of market acceptance of KLDiscovery’s solutions; the success of other competing technologies that may become available; KLDiscovery’s ability to identify and integrate acquisitions; the performance and security of KLDiscovery’s services; potential litigation involving Pivotal or KLDiscovery; and general economic and market conditions impacting demand for KLDiscovery’s services. Other factors include risks and uncertainties set forth in the “Risk Factors” section of KLDiscovery’s annual report on Form 10-K filed with the SEC on March 26, 2020 and any subsequent reports that KLDiscovery files with the SEC. KLDiscovery does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.