8-K
Bed Bath & Beyond, Inc. (BBBY)
View as plain text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 23, 2022
Date of Report (date of earliest event reported)
Overstock.com, Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 000-49799 | 87-0634302 |
|---|---|---|
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
| incorporation or organization) | Identification Number) |
799 W. Coliseum Way
Midvale, Utah 84047
(Address of principal executive offices, including zip code)
(801) 947-3100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
|---|---|
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.0001 par value per share | OSTK | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On February 23, 2022, Overstock.com, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the three and twelve months ended December 31, 2021. A copy of the press release is furnished herewith as Exhibit 99.1.
The information in this Current Report on Form 8-K and in the exhibit that is furnished herewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as may expressly be set forth in any such filing by specific reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit Number | Exhibit Description |
|---|---|
| 99.1 | Press Release issued February 23, 2022 |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101) |
This press release and the February 23, 2022 conference call and webcast to discuss our financial results may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends, market conditions, and other factors that will impact our results of operations. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We undertake no obligation to update any forward-looking statements as a result of any new information, future developments, or otherwise. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including but not limited to, difficulties we may have with our fulfillment partners, supply chain, access to products, shipping costs, competition, macroeconomic changes, attraction/retention of employees, search engine optimization results, and/or payment processors. Other risks and uncertainties include, among others, the duration of the COVID-19 pandemic and its ultimate impact on our business and results of operations, problems with our infrastructure, including cyber-attacks or data breaches affecting us, adverse tax, regulatory or legal developments, and whether our partnership with Pelion Venture Partners will be able to achieve its objectives. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2020, our Form 10-Q for the quarter ended March 31, 2021, our Form 10-Q for the quarter ended June 30, 2021, and our Form 10-Q for the quarter ended September 30, 2021, which were filed with the Securities and Exchange Commission on February 26, 2021, May 6, 2021, August 5, 2021, and November 4, 2021, respectively, and in our subsequent filings with the Securities and Exchange Commission. The Form 10-K, Form 10-Q's, and our subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OVERSTOCK.COM, INC. | |
|---|---|
| By: | /s/ ADRIANNE B. LEE |
| Adrianne B. Lee | |
| Chief Financial Officer | |
| Date: | February 23, 2022 |
3
Document
Overstock Announces Fourth Quarter and Full Year 2021 Financial Results
Fourth quarter net revenue of $613 million, including record "Cyber 5" execution
Full year net revenue of $2.8 billion, nearly double pre-pandemic run-rate
SALT LAKE CITY - February 23, 2022 - Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter and full year ended December 31, 2021.
Fourth Quarter 2021 Financial Highlights, from continuing operations
| • | Total net revenue was $613 million, a decrease of 9% year over year |
|---|---|
| • | Gross profit was $139 million or 22.7% of total net revenue |
| • | Income from continuing operations was $33 million |
| • | Diluted earnings per share was $0.68 |
| • | Adjusted EBITDA (non-GAAP) was $27 million, which represents 4.5% of net revenue |
| • | At the end of the fourth quarter, cash and cash equivalents totaled $503 million |
Full Year 2021 Financial Highlights, from continuing operations
| • | Total net revenue was $2.8 billion, an increase of 11% year over year |
|---|---|
| • | Gross profit was $624 million or 22.6% of total net revenue |
| • | Income from continuing operations was $172 million |
| • | Diluted earnings per share was $3.57 |
| • | Adjusted EBITDA (non-GAAP) was $142 million, which represents 5.1% of net revenue |
| • | Full year net cash provided by operating activities was $98 million |
"This is our second consecutive year of profitability and market share growth," said Overstock CEO Jonathan Johnson. "For the full year 2021, net revenue increased 11% against record 2020 growth. The foundational operational improvements we have made over the past two years have stabilized the business and positioned us well to navigate through economic- and industry-specific cycles over the long term. We are proving we can adjust to, execute through, and take advantage of both positive and negative jolts in the market. It's encouraging that nearly one third of the overall home furniture and furnishings market continues to be transacted online. I believe increasing our brand association with home positions us favorably for 2022 and beyond. We remain committed to our value to 'do good' and recently launched a dedicated site outlining our ESG efforts (http://www.overstock.com/esg)."
"Navigating the operating environment in our industry during the fourth quarter was challenging," continued Johnson. "Despite challenges, we were committed to delivering on our profitability targets—and we did just that, driven in part by our largest Thanksgiving through Cyber Monday—or Cyber Five—period in the company's history. I look forward to providing additional updates on our fourth quarter and full year 2021 performance and sharing insights into our 2022 plans during our earnings call."
Fourth Quarter 2021 Operational Highlights*
| • | Active customers were 8.1 million, a decrease of 12% year over year |
|---|---|
| • | Last Twelve Months (LTM) net revenue per active customer was $341, an increase of 26% year over year |
| • | Orders delivered were 3.0 million, a decrease of 25% year over year |
| • | Average order value was $206, an increase of 23% year over year |
| • | Orders per active customer, measured as LTM orders divided by active customers, was 1.67, an increase of 2% year over year |
| • | Orders placed on a mobile device were 50.7% of gross merchandise sales |
*Certain terms (active customers, LTM net revenue per active customer, orders delivered, average order value, and orders per active customer) are defined under "Supplemental Operational Data" below.
Earnings Webcast Information
Overstock will hold a conference call and webcast to discuss its fourth quarter and full year 2021 financial results on Wednesday, February 23, 2022, at 8:30 a.m. ET. To access the live webcast and presentation slides, go to http://investors.overstock.com. To listen to the conference call via telephone, dial (877) 673-5346 and enter conference ID 3659278 when prompted. Participants outside the U.S. or Canada who do not have Internet access should dial +1 (724) 498-4326, then enter the conference ID provided above.
A replay of the conference call will be available at http://investors.overstock.com, starting two hours after the live call has ended. An audio replay of the webcast will be available via telephone starting at 11:30 a.m. ET on Wednesday, February 23, 2022, through 11:30 a.m. ET on Wednesday, March 2, 2022. To listen to the recorded webcast by phone, dial (855) 859-2056, then enter the conference ID provided above. Outside the U.S. or Canada, dial +1 (404) 537-3406 and enter the conference ID provided above.
Questions may be emailed in advance of the call to ir@overstock.com.
About Overstock.com
Overstock.com, Inc. (Common Stock (NASDAQ:OSTK) / Series A-1 Preferred Stock (tZERO ATS:OSTKO) / Series B Preferred Stock (OTCQX:OSTBP)) is an online retailer and technology company based in Salt Lake City, Utah. Its leading e-commerce website sells a broad range of new home products at low prices, including furniture, décor, area rugs, bedding and bath, home improvement, outdoor, kitchen and dining items, and more. The online shopping site, which is visited by tens of millions of customers a month, also features a marketplace providing customers access to millions of products. In 2014, Overstock became the first major retailer to accept cryptocurrency as a form of payment and continues to do so. Overstock regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Overstock.com.
O, Overstock.com, O.com, and Club O are registered trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.
Cautionary Note Regarding Forward-Looking Statements
This press release and the February 23, 2022 conference call and webcast to discuss our financial results may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends, market conditions, and other factors that will impact our results of operations. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We undertake no obligation to update any forward-looking statements as a result of any new information, future developments, or otherwise. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including but not limited to, difficulties we may have with our fulfillment partners, supply chain, access to products, shipping costs, competition, macroeconomic changes, attraction/retention of employees, search engine optimization results, and/or payment processors. Other risks and uncertainties include, among others, the duration of the COVID-19 pandemic and its ultimate impact on our business and results of operations, problems with our infrastructure, including cyber-attacks or data breaches affecting us, adverse tax, regulatory or legal developments, and whether our partnership with Pelion Venture Partners will be able to achieve its objectives. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2020, our Form 10-Q for the quarter ended March 31, 2021, our Form 10-Q for the quarter ended June 30, 2021, and our Form 10-Q for the quarter ended September 30, 2021, which were filed with the Securities and Exchange Commission on February 26, 2021, May 6, 2021, August 5, 2021, and November 4, 2021, respectively, and in our subsequent filings with the Securities and Exchange Commission. The Form 10-K, Form 10-Q's, and our subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.
| Contacts<br><br><br><br>Investor Relations:<br><br>Lavesh Hemnani<br><br>ir@overstock.com | Media Relations:<br>Sarah Factor<br>pr@overstock.com | ||
|---|---|---|---|
| Overstock.com, Inc.Consolidated Balance Sheets (Unaudited)(in thousands, except share data) | |||
| --- | --- | --- | --- |
| December 31,<br>2020 | |||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | 503,341 | $ | 495,425 |
| Restricted cash | 1,197 | ||
| Accounts receivable, net | 22,867 | ||
| Inventories | 6,243 | ||
| Prepaids and other current assets | 22,879 | ||
| Current assets of discontinued operations | 34,129 | ||
| Total current assets | 582,740 | ||
| Property and equipment, net | 113,767 | ||
| Deferred tax assets, net | 37 | ||
| Goodwill | 6,160 | ||
| Equity securities | 1,412 | ||
| Operating lease right-of-use assets | 17,297 | ||
| Other long-term assets, net | 2,646 | ||
| Long-term assets of discontinued operations | 106,155 | ||
| Total assets | 1,065,966 | $ | 830,214 |
| Liabilities and Stockholders' Equity | |||
| Current liabilities: | |||
| Accounts payable | 102,293 | $ | 109,759 |
| Accrued liabilities | 123,646 | ||
| Unearned revenue | 72,165 | ||
| Operating lease liabilities, current | 5,152 | ||
| Other current liabilities | 2,935 | ||
| Current liabilities of discontinued operations | 13,924 | ||
| Total current liabilities | 327,581 | ||
| Long-term debt, net | 41,334 | ||
| Operating lease liabilities, non-current | 13,206 | ||
| Other long-term liabilities | 4,082 | ||
| Long-term liabilities of discontinued operations | 7,685 | ||
| Total liabilities | 393,888 | ||
| Stockholders' equity: | |||
| Preferred stock, 0.0001 par value, authorized shares - 5,000 | |||
| Series A-1, issued and outstanding - 4,204 and 4,204 | — | ||
| Series B, issued and outstanding - 357 and 357 | — | ||
| Common stock, 0.0001 par value, authorized shares - 100,000 | |||
| Issued shares - 46,625 and 46,331 | |||
| Outstanding shares - 43,023 and 42,768 | 4 | ||
| Additional paid-in capital | 970,873 | ||
| Accumulated deficit | (525,233) | ||
| Accumulated other comprehensive loss | (553) | ||
| Treasury stock at cost - 3,602 and 3,563 | (71,399) | ||
| Equity attributable to stockholders of Overstock.com, Inc. | 373,692 | ||
| Equity attributable to noncontrolling interests | 62,634 | ||
| Total stockholders' equity | 436,326 | ||
| Total liabilities and stockholders' equity | 1,065,966 | $ | 830,214 |
All values are in US Dollars.
| Overstock.com, Inc.<br><br>Consolidated Statements of Income (Unaudited)<br><br>(in thousands, except per share data) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three months ended<br>December 31, | Year ended<br>December 31, | |||||||
| 2021 | 2020 | 2021 | 2020 | |||||
| Net revenue | $ | 612,659 | $ | 669,666 | $ | 2,756,446 | $ | 2,493,915 |
| Cost of goods sold | 473,815 | 519,141 | 2,132,544 | 1,922,559 | ||||
| Gross profit | 138,844 | 150,525 | 623,902 | 571,356 | ||||
| Operating expenses | ||||||||
| Sales and marketing | 67,970 | 73,862 | 302,430 | 260,714 | ||||
| Technology | 30,917 | 29,970 | 123,001 | 116,248 | ||||
| General and administrative | 20,837 | 24,332 | 87,399 | 97,679 | ||||
| Total operating expenses | 119,724 | 128,164 | 512,830 | 474,641 | ||||
| Operating income | 19,120 | 22,361 | 111,072 | 96,715 | ||||
| Interest expense, net | (132) | (199) | (556) | (838) | ||||
| Other income, net | 12,507 | 595 | 12,500 | 613 | ||||
| Income before income taxes from continuing operations | 31,495 | 22,757 | 123,016 | 96,490 | ||||
| Provision (benefit) for income taxes | (1,447) | (393) | (48,775) | 1,363 | ||||
| Income from continuing operations | 32,942 | 23,150 | 171,791 | 95,127 | ||||
| Income (loss) from discontinued operations, net of income taxes | — | (13,021) | 217,246 | (48,956) | ||||
| Consolidated net income | 32,942 | 10,129 | 389,037 | 46,171 | ||||
| Less: Net loss attributable to noncontrolling interests—discontinued operations | — | (2,458) | (335) | (9,830) | ||||
| Net income attributable to stockholders of Overstock.com, Inc. | $ | 32,942 | $ | 12,587 | $ | 389,372 | $ | 56,001 |
| Consolidated net income per share of common stock: | ||||||||
| Net income (loss) attributable to common shares—basic | ||||||||
| Continuing operations | $ | 0.69 | $ | 0.48 | $ | 3.60 | $ | 2.13 |
| Discontinued operations | — | (0.22) | 4.58 | (0.88) | ||||
| Total | $ | 0.69 | $ | 0.26 | $ | 8.18 | $ | 1.25 |
| Net income (loss) attributable to common shares—diluted | ||||||||
| Continuing operations | $ | 0.68 | $ | 0.48 | $ | 3.57 | $ | 2.12 |
| Discontinued operations | — | (0.22) | 4.54 | (0.88) | ||||
| Total | $ | 0.68 | $ | 0.26 | $ | 8.11 | $ | 1.24 |
| Weighted average shares of common stock outstanding: | ||||||||
| Basic | 43,016 | 42,765 | 42,981 | 41,217 | ||||
| Diluted | 43,370 | 43,326 | 43,332 | 41,607 | ||||
| Overstock.com, Inc.<br><br>Consolidated Statements of Cash Flows (Unaudited)<br><br>(in thousands) | ||||||||
| --- | --- | --- | --- | --- | ||||
| Year ended<br>December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Consolidated net income | $ | 389,037 | $ | 46,171 | ||||
| (Income) loss from discontinued operations, net of income taxes | (217,246) | 48,956 | ||||||
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 18,564 | 21,776 | ||||||
| Non-cash operating lease cost | 5,021 | 4,971 | ||||||
| Stock-based compensation to employees and directors | 11,133 | 7,841 | ||||||
| (Increase)/decrease in deferred income taxes, net | (53,829) | 35 | ||||||
| Income from equity method securities | (12,585) | — | ||||||
| Other non-cash adjustments | 1,537 | (542) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 1,677 | (6,715) | ||||||
| Inventories | 1,106 | (403) | ||||||
| Prepaids and other current assets | 2,958 | (5,358) | ||||||
| Other long-term assets, net | (1,755) | (264) | ||||||
| Accounts payable | (7,787) | 34,428 | ||||||
| Accrued liabilities | (21,595) | 48,907 | ||||||
| Unearned revenue | (12,778) | 31,049 | ||||||
| Operating lease liabilities | (5,261) | (5,995) | ||||||
| Other long-term liabilities | (150) | 1,769 | ||||||
| Net cash provided by continuing operating activities | 98,047 | 226,626 | ||||||
| Net cash used in discontinued operating activities | (17,128) | (30,152) | ||||||
| Net cash provided by operating activities | 80,919 | 196,474 | ||||||
| Cash flows from investing activities: | ||||||||
| Contributions for capital calls | (41,122) | — | ||||||
| Expenditures for property and equipment | (13,617) | (14,874) | ||||||
| Other investing activities, net | (1,694) | (397) | ||||||
| Net cash used in continuing investing activities | (56,433) | (15,271) | ||||||
| Net cash used in discontinued investing activities | (29,703) | (8,284) | ||||||
| Net cash used in investing activities | (86,136) | (23,555) | ||||||
| Cash flows from financing activities: | ||||||||
| Payments on long-term debt | (3,030) | (2,635) | ||||||
| Proceeds from long-term debt | — | 47,500 | ||||||
| Proceeds from sale of common stock, net of offering costs | — | 195,540 | ||||||
| Payments of taxes withheld upon vesting of restricted stock | (8,279) | (2,592) | ||||||
| Other financing activities, net | (1,374) | (6,449) | ||||||
| Net cash provided by (used in) continuing financing activities | (12,683) | 231,364 | ||||||
| Net cash provided by discontinued financing activities | 2,085 | — | ||||||
| Net cash provided by (used in) financing activities | (10,598) | 231,364 | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (15,815) | 404,283 | ||||||
| Cash, cash equivalents, and restricted cash, beginning of year, inclusive of cash balances of discontinued operations | 519,181 | 114,898 | ||||||
| Cash, cash equivalents, and restricted cash, end of year, inclusive of cash balances of discontinued operations | 503,366 | 519,181 | ||||||
| Less: Cash, cash equivalents, and restricted cash of discontinued operations | — | 22,559 | ||||||
| Cash, cash equivalents, and restricted cash, end of year | $ | 503,366 | $ | 496,622 |
Financial Reporting Presentation in Accordance with the Pelion Transaction
Medici Ventures' blockchain businesses, including tZERO, met the criteria to be reported as held for sale and discontinued operations as of March 31, 2021, due to their anticipated deconsolidation. As a result of closing the Pelion transaction during the second quarter of 2021, these businesses' operating results for the periods prior to deconsolidation have been reflected in our consolidated statements of income as discontinued operations. Additionally, the related assets and liabilities of these businesses associated with the prior periods are classified as discontinued operations in our consolidated balance sheets. As a result of closing this transaction, Overstock has reorganized its remaining businesses into a single reportable operating segment, Retail. Corporate-related overhead costs are included in Retail continuing operations.
Supplemental Operational Data
We measure our business using operational metrics, in addition to the financial metrics shown above and the non-GAAP financial measures explained below. We believe these metrics provide investors with additional information regarding our financial results, including indicators of our growth, customer purchasing patterns, and the mix of products purchased by our customers.
Active customers represents the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period.
LTM net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period.
Orders delivered represents the total number of orders delivered in any given period, including orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and in those circumstances we estimate delivery dates based on historical data.
Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period.
Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period.
The following table provides key operating metrics for the Retail business:
(in thousands, except for LTM net revenue per active customer, average order value and orders per active customer)
| Three months ended<br>December 31, | ||
|---|---|---|
| 2021 | 2020 | |
| Active customers | 8,075 | 9,188 |
| LTM net revenue per active customer | 341 | 271 |
| Orders delivered | 2,974 | 3,978 |
| Average order value | 206 | 168 |
| Orders per active customer | 1.67 | 1.64 |
Non-GAAP Financial Measures and Reconciliations
We are providing certain non-GAAP financial measures in this release and related earnings conference call, including adjusted diluted earnings per share from continuing operations, adjusted EBITDA, and free cash flow. We use these non-GAAP measures internally in analyzing our financial results and we believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational
performance in the same manner as our management and board of directors. We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in this earnings release. These non-GAAP financial measures should be used in addition to and in conjunction with the results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.
Adjusted diluted earnings per share for continuing operations is a non-GAAP financial measure that we calculate as net income from continuing operations less the benefit for income taxes associated with our tax valuation allowance release and income recognized from our equity method securities. We believe that this adjustment to our net income before calculating per share amounts for the current period presented provides a useful comparison between our operating results from period to period.
Adjusted EBITDA is a non-GAAP financial measure that is calculated as income from continuing operations before depreciation and amortization, stock-based compensation, interest and other income (expense), provision (benefit) for income taxes, and special items. We believe the exclusion of certain benefits and expenses in calculating adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring.
Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by or used in continuing operating activities reduced by expenditures for property and equipment. We believe free cash flow is a useful measure to evaluate the cash impact of the continuing operations of the business including purchases of property and equipment which are a necessary component of our ongoing operations.
The following table reflects the reconciliation of adjusted diluted earnings per share from continuing operations to diluted earnings per share from continuing operations (in thousands, except per share data):
| Three months ended<br>December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | ||||||||
| Diluted EPS | Less: tax valuation allowance release1 | Less: equity method income2 | Adjusted Diluted EPS | |||||
| Numerator: | ||||||||
| Income from continuing operations | $ | 32,942 | $ | 2,341 | $ | 13,310 | $ | 17,291 |
| Less: Preferred stock dividends—accumulated | 182 | — | — | 182 | ||||
| Undistributed income from continuing operations | 32,760 | 2,341 | 13,310 | 17,109 | ||||
| Less: Undistributed income allocated to participating securities | 3,140 | 224 | 1,392 | 1,524 | ||||
| Net income from continuing operations attributable to common stockholders | $ | 29,620 | $ | 2,117 | $ | 11,918 | $ | 15,585 |
| Denominator: | ||||||||
| Weighted average shares of common stock outstanding—diluted | 43,370 | 43,370 | 43,370 | 43,370 | ||||
| Net income from continuing operations per share of common stock: | ||||||||
| Diluted | $ | 0.68 | $ | 0.05 | $ | 0.27 | $ | 0.36 |
1 Inclusive of deferred tax impact from equity method income
2 Inclusive of current tax impact from equity method income
| Year ended<br>December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | ||||||||
| Diluted EPS | Less: tax valuation allowance release1 | Less: equity method income2 | Adjusted Diluted EPS | |||||
| Numerator: | ||||||||
| Income from continuing operations | $ | 171,791 | $ | 53,808 | $ | 12,606 | $ | 105,377 |
| Less: Preferred stock dividends—accumulated | 729 | — | — | 729 | ||||
| Undistributed income from continuing operations | 171,062 | 53,808 | 12,606 | 104,648 | ||||
| Less: Undistributed income allocated to participating securities | 16,409 | 5,161 | 1,324 | 9,924 | ||||
| Net income from continuing operations attributable to common stockholders | $ | 154,653 | $ | 48,647 | $ | 11,282 | $ | 94,724 |
| Denominator: | ||||||||
| Weighted average shares of common stock outstanding—diluted | 43,332 | 43,332 | 43,332 | 43,332 | ||||
| Net income from continuing operations per share of common stock: | ||||||||
| Diluted | $ | 3.57 | $ | 1.12 | $ | 0.26 | $ | 2.19 |
1 Inclusive of deferred tax impact from equity method income
2 Inclusive of current tax impact from equity method income
The following table reflects the reconciliation of adjusted EBITDA to income from continuing operations (in thousands):
| Three months ended<br>December 31, | Year ended<br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Income from continuing operations | $ | 32,942 | $ | 23,150 | $ | 171,791 | $ | 95,127 |
| Depreciation and amortization | 4,232 | 5,488 | 18,564 | 21,776 | ||||
| Stock-based compensation | 3,484 | 1,640 | 11,133 | 7,841 | ||||
| Interest expense, net | 132 | 199 | 556 | 838 | ||||
| Other income, net | (12,507) | (595) | (12,500) | (613) | ||||
| Provision (benefit) for income taxes | (1,447) | (393) | (48,775) | 1,363 | ||||
| Special items (see table below) | 511 | 432 | 872 | (8,038) | ||||
| Adjusted EBITDA | $ | 27,347 | $ | 29,921 | $ | 141,641 | $ | 118,294 |
| Special items: | ||||||||
| Special legal charges | $ | — | $ | 432 | $ | (186) | $ | (9,341) |
| Severance | 502 | — | 755 | 1,303 | ||||
| Transaction costs | 9 | — | 303 | — | ||||
| $ | 511 | $ | 432 | $ | 872 | $ | (8,038) |
The following table reflects the reconciliation of free cash flow to net cash provided by continuing operating activities (in thousands):
| Year ended<br>December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Net cash provided by continuing operating activities | $ | 98,047 | $ | 226,626 |
| Expenditures for property and equipment | (13,617) | (14,874) | ||
| Free cash flow | $ | 84,430 | $ | 211,752 |
10