GlobeNewswire Inc | May 5, 2021 06:30AM EDT

May 05, 2021

DALLAS, May 05, 2021 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the first quarter ended March31, 2021.

First Quarter Highlights and Recent Developments

-- Increased total revenue for the quarter to $278.4 million, or 6% year-over-year -- GAAP Net Income of $27.6 million, or $0.56 per diluted share -- Non-GAAP Net Income of $51.0 million, or $1.04 per diluted share -- Total client assets ended the quarter up 39% year over year to $84.8 billion, with $36.8 billion, or 43.4% in advisory assets -- Advisory assets increased 56% year-over-year, including the addition of approximately $5.0 billion in Avantax Planning Partners (APP) assets -- Free cash flow of $45.1 million in Q1 2021 vs. $39.1 million during Q1 2020, or a 15% increase -- Strong cash position, ending the quarter with $191.8 million in cash and cash equivalents compared to $150.1 million at December 31, 2020, while reducing net debt levels since December 31, 2020 with a 3.5x net leverage ratio as of March 31, 2021 -- Announced appointment of Tina Perry, President of OWN, to our Board of Directors

As we continue to serve our financial professionals and assist in the growth of their businesses, our wealth management segment reported strong results with the first quarter coming in at the high end of our expectations, commented Chris Walters, Blucoras President and Chief Executive Officer. We continue to see growth in total client assets as well as advisory assets, which sets the Company up for a strong year.

Tax Season Update

Our progress leading up to the conclusion of the extended Tax Year 2020 continues to be on track. We are realizing the benefits of continued strong NPS scores, retention rates, improved marketing effectiveness and ARPU strength driven by our broad set of customer offerings for consumers. Walters continued.

Summary Financial Performance: Q1 2021 ($ in millions except per share amounts)

Q1 2021 Q1 2020 ChangeRevenue: Wealth Management $ 154.5 $ 145.0 7 %Tax Software $ 123.9 $ 118.3 5 %Total Revenue $ 278.4 $ 263.3 6 %Segment Operating Income Wealth Management $ 19.4 $ 22.6 (14 ) %Tax Software $ 50.9 $ 37.8 35 %Total Segment Operating Income $ 70.3 $ 60.4 16 %Unallocated Corporate-Level General and $ (5.7 ) $ (7.0 ) 19 %Administrative ExpensesGAAP: Operating Income (Loss) $ 37.2 $ (241.8 ) 115 %Net Income (Loss) $ 27.6 $ (315.5 ) 109 %Diluted Net Income (Loss) Per Share $ 0.56 $ (6.60 ) 108 %Non-GAAP: ^(1) Adjusted EBITDA $ 64.6 $ 53.3 21 %Net Income $ 51.0 $ 43.6 17 %Diluted Net Income per Share $ 1.04 $ 0.90 16 %

(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Second Quarter and Full Year 2021 Outlook

($ in millions except per share amounts) 2Q 2021 Full Year 2021Wealth Management Revenue $155.5 - $631.5 - $161.5 $649.5TaxAct Revenue $82.5 - $212.5 - $87.5 $218.0Total Revenue $238.0 - $844.0 - $249.0 $867.5Wealth Management Segment Operating Income $17.5 - $79.0 - $19.5 $83.5TaxAct Segment Operating Income $53.0 - $72.0 - $58.0 $76.5Unallocated Corporate-Level General and $7.5 - $7.0 $28.5 -Administrative Expenses $27.5GAAP: Net Income $22.5 - ($12.5) - $31.5 $2.0Net Income per share $0.45 - ($0.25) - $0.63 $0.04Non-GAAP: Adjusted EBITDA (1) $63.0 - $122.5 - $70.5 $132.5Non-GAAP Net Income (1) $47.0 - $67.5 - $55.5 $80.0Non-GAAP Net Income per share (1) $0.94 - $1.34 - $1.11 $1.60

(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss first quarter results, its outlook for full year 2021, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been furnished with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empowers people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $85 billion in total client assets as of March31, 2021 and (ii) tax software, through its TaxAct business, a market leader in tax software with approximately 3 million consumer and 23,000 professional users in 2020. With integrated tax-focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Investor RelationsDee Littrell (972) 870-6463IR@Blucora.com

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as believes, estimates, should, could, would, plans, expects, intends, anticipates, may, forecasts, future, will, projects, predicts, potential, continues, target, outlook and similar expressions and variations. Actual results may differ significantly from managements expectations due to various risks and uncertainties including, but not limited to: the impact of the coronavirus pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines and other related relief; our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; our ability to close, finance, and realize all of the anticipated benefits of acquisitions, as well as our ability to integrate the operations of recently acquired businesses, and the potential impact of such acquisitions on our existing indebtedness and leverage; our future capital requirements and the availability of financing, if necessary; our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants; downgrade of the Companys credit ratings; our ability to generate strong performance for our clients and the impact of the financial markets on our clients portfolios; the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof; risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives; risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; political and economic conditions and events that directly or indirectly impact the wealth management and tax software industries; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. A more detailed description of these and certain other factors that could affect actual results is included in the Companys filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.

Blucora, Inc.Condensed Consolidated Statements of Operations(Unaudited) (Amounts in thousands, except per share data)

Three months ended March 31, 2021 2020Revenues: Wealth management services revenue $ 154,491 $ 144,989 Tax software services revenue 123,892 118,331 Total revenue 278,383 263,320 Operating expenses: Cost of revenue: Wealth management services cost of revenue 108,623 102,342 Tax software services cost of revenue 5,578 4,013 Total cost of revenue 114,201 106,355 Engineering and technology 7,128 8,515 Sales and marketing 77,562 79,710 General and administrative 24,685 24,728 Acquisition and integration 8,103 5,682 Depreciation 2,300 1,796 Amortization of other acquired intangible assets 7,175 7,748 Impairment of goodwill ? 270,625 Total operating expenses 241,154 505,159 Operating income (loss) 37,229 (241,839 )Other loss, net ^(1) (7,883 ) (6,135 )Income (loss) before income taxes 29,346 (247,974 )Income tax expense (1,700 ) (67,520 )Net income (loss) $ 27,646 $ (315,494 )Net income (loss) per share: Basic $ 0.57 $ (6.60 )Diluted $ 0.56 $ (6.60 )Weighted average shares outstanding: Basic 48,261 47,827 Diluted 49,097 47,827

(1) Other loss, net consisted of the following (in thousands):

Three months ended March 31, 2021 2020Interest expense $ 7,183 $ 5,316 Amortization of debt issuance costs 363 313 Accretion of debt discounts 277 68 Total interest expense 7,823 5,697 Interest income (2 ) (14 )Other 62 452 Other loss, net $ 7,883 $ 6,135

Blucora, Inc.Condensed Consolidated Balance Sheets(Unaudited) (Amounts in thousands)

March 31, December 31, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 191,803 $ 150,125 Cash segregated under federal or other 2,241 637 regulationsAccounts receivable, net of allowance 24,348 12,736 Commissions and advisory fees receivable 26,021 26,132 Other receivables 186 717 Prepaid expenses and other current assets, net 12,015 10,321 Total current assets 256,614 200,668 Long-term assets: Property and equipment, net 64,160 58,500 Right-of-use assets, net 22,886 23,455 Goodwill, net 454,821 454,821 Other intangible assets, net 315,294 322,179 Other long-term assets 5,342 4,569 Total long-term assets 862,503 863,524 Total assets $ 1,119,117 $ 1,064,192 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 22,019 $ 9,290 Commissions and advisory fees payable 18,762 19,021 Accrued expenses and other current liabilities 72,735 56,419 Deferred revenue?current 5,280 12,298 Lease liabilities?current 3,327 2,304 Current portion of long-term debt, net 1,786 1,784 Total current liabilities 123,909 101,116 Long-term liabilities: Long-term debt, net 552,684 552,553 Deferred tax liability, net 30,394 30,663 Deferred revenue?long-term 6,015 6,247 Lease liabilities?long-term 35,723 36,404 Other long-term liabilities 25,738 24,919 Total long-term liabilities 650,554 650,786 Total liabilities 774,463 751,902 Stockholders? equity: Common stock, par $0.0001?900,000 authorizedshares; 49,615 shares issued and 48,309 sharesoutstanding at March31, 2021; 49,483 shares 5 5 issued and 48,177 shares outstanding atDecember31, 2020Additional paid-in capital 1,602,948 1,598,230 Accumulated deficit (1,229,900 ) (1,257,546 )Treasury stock, at cost?1,306 shares at March31, (28,399 ) (28,399 )2021 and December31, 2020Total stockholders? equity 344,654 312,290 Total liabilities and stockholders? equity $ 1,119,117 $ 1,064,192

Blucora, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited) (Amounts in thousands)

Three months ended March 31, 2021 2020Operating activities: Net income (loss) $ 27,646 $ (315,494 )Adjustments to reconcile net income (loss) to net cash from operating activities:Stock-based compensation 5,610 (1,201 )Depreciation and amortization of acquired intangible 10,418 10,168 assetsImpairment of goodwill ? 270,625 Reduction of right-of-use lease assets 569 1,625 Deferred income taxes (269 ) 57,898 Amortization of debt issuance costs 363 313 Accretion of debt discounts 277 68 Change in fair value of acquisition-related 6,300 ? contingent considerationAccretion of lease liability 514 424 Other (78 ) 495 Cash provided (used) by changes in operating assets and liabilities:Accounts receivable (11,541 ) (9,066 )Commissions and advisory fees receivable 111 3,457 Other receivables 531 (3,239 )Prepaid expenses and other current assets (1,694 ) (1,715 )Other long-term assets (828 ) 2,560 Accounts payable 12,729 17,744 Commissions and advisory fees payable (259 ) (1,965 )Lease liabilities (172 ) (1,289 )Deferred revenue (7,250 ) (7,820 )Accrued expenses and other current and long-term 10,745 23,276 liabilitiesNet cash provided by operating activities 53,722 46,864 Investing activities: Purchases of property and equipment (8,598 ) (7,715 )Asset acquisitions (587 ) ? Net cash used by investing activities (9,185 ) (7,715 )Financing activities: Proceeds from credit facilities ? 55,000 Payments on credit facilities (453 ) (10,313 )Proceeds from stock option exercises 63 ? Tax payments from shares withheld for equity awards (865 ) (918 )Net cash provided (used) by financing activities (1,255 ) 43,769 Net increase in cash, cash equivalents, and 43,282 82,918 restricted cashCash, cash equivalents, and restricted cash, 150,762 86,450 beginning of periodCash, cash equivalents, and restricted cash, end of $ 194,044 $ 169,368 period

Blucora, Inc.Segment Information(Unaudited) (Amounts in thousands)

Three months ended March 31, 2021 2020Revenue: Wealth Management ^(1) $ 154,491 $ 144,989 Tax Software^ (1) 123,892 118,331 Total revenue 278,383 263,320 Operating income (loss): Wealth Management 19,396 22,598 Tax Software 50,888 37,753 Corporate-level activity ^(2) (33,055 ) (302,190 )Total operating income (loss) 37,229 (241,839 )Other loss, net (7,883 ) (6,135 )Income (loss) before income taxes 29,346 (247,974 )Income tax expense (1,700 ) (67,520 )Net income (loss) $ 27,646 $ (315,494 )

(1) Revenues by major category within each segment are presented below (in thousands):

Three months ended March 31, 2021 2020Wealth Management: Advisory $ 91,119 $ 78,757Commission 52,534 50,580Asset-based 5,329 10,579Transaction and fee 5,509 5,073Total Wealth Management revenue $ 154,491 $ 144,989Tax Software: Consumer $ 110,567 $ 103,821Professional 13,325 14,510Total Tax Software revenue $ 123,892 $ 118,331

(2) Corporate-level activity included the following (in thousands):

Three months ended March 31, 2021 2020Unallocated corporate-level general and administrative $ 5,694 $ 7,016 expensesStock-based compensation 5,610 (1,201 )Acquisition and integration costs 8,103 5,682 Depreciation 3,243 2,420 Amortization of acquired intangible assets 7,175 7,748 Impairment of goodwill ? 270,625 Executive transition costs ? 9,184 Headquarters relocation costs ? 716 Contested proxy and other legal and consulting costs 3,230 ? Total corporate-level activity $ 33,055 $ 302,190

Blucora, Inc.Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Adjusted EBITDA Reconciliation (1)(Unaudited) (Amounts in thousands)

Three months ended March 31, 2021 2020Net income (loss) ^(2) $ 27,646 $ (315,494 )Stock-based compensation 5,610 (1,201 )Depreciation and amortization of acquired intangible 10,418 10,168 assetsOther loss, net 7,883 6,135 Acquisition and integration?Excl. Change in fair value 1,803 5,682 of acquisition-related contingent considerationAcquisition and integration?Change in fair value of 6,300 ? acquisition-related contingent considerationImpairment of goodwill ? 270,625 Executive transition costs ? 9,184 Headquarter relocation costs ? 716 Contested proxy and other legal and consulting costs 3,230 ? Income tax expense 1,700 67,520 Adjusted EBITDA ^(1) $ 64,590 $ 53,335

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)(Unaudited) (Amounts in thousands, except per share amounts)

Three months ended March 31, 2021 2020Net income (loss) ^(2) $ 27,646 $ (315,494 )Stock-based compensation 5,610 (1,201 )Amortization of acquired intangible assets 7,175 7,748 Acquisition and integration?Excluding change in fair 1,803 5,682 value of HKFS Contingent ConsiderationAcquisition and integration?Change in fair value of 6,300 ? HKFS Contingent ConsiderationImpairment of goodwill ? 270,625 Executive transition costs ? 9,184 Headquarters relocation costs ? 716 Contested proxy and other legal and consulting costs 3,230 ? Cash tax impact of adjustments to GAAP net income (543 ) (736 )Non-cash income tax (benefit) expense (269 ) 67,037 Non-GAAP net income $ 50,952 $ 43,561 Per diluted share: Net income (loss) ^(2) (3) $ 0.56 $ (6.54 )Stock-based compensation 0.11 (0.02 )Amortization of acquired intangible assets 0.15 0.16 Acquisition and integration?Excluding change in fair 0.04 0.12 value of HKFS Contingent ConsiderationAcquisition and integration?Change in fair value of 0.13 ? HKFS Contingent ConsiderationImpairment of goodwill ? 5.61 Executive transition costs ? 0.19 Headquarters relocation costs ? 0.01 Contested proxy and other legal and consulting costs 0.07 ? Cash tax impact of adjustments to GAAP net income (0.01 ) (0.02 )Non-cash income tax (benefit) expense (0.01 ) 1.39 Non-GAAP net income per share $ 1.04 $ 0.90 Weighted average shares outstanding used in computing 49,097 48,253 per diluted share amounts

Net Leverage Ratio Reconciliation (4) (5)(Amounts in thousands)

March 31, December 31, 2021 2020Debt: Senior secured credit facility $ 562,703 $ 563,156 Cash: Cash and cash equivalents $ 191,803 $ 150,125 Net debt ^(6) $ 370,900 $ 413,031 Trailing twelve months: Wealth Management segment operating income $ 68,993 $ 72,195 Tax Software segment operating income 62,756 49,621 $ 131,749 $ 121,816 Unallocated corporate-level general and (25,367 ) (26,689 ) administrative expensesAdjusted EBITDA ^(1) $ 106,382 $ 95,127 Net leverage ratio ^(4) (5) 3.5 x 4.3 x

Trailing Twelve Month Adjusted EBITDA Reconciliation (1) (4)

(Amounts in thousands)

For the trailing twelve months ended March 31, December 31, 2021 2020Net income (loss)^ (2) $ 385 $ (342,755 )Stock-based compensation 16,877 10,066 Depreciation and amortization of acquired intangible 40,157 39,907 assetsOther loss, net 33,052 31,304 Acquisition and integration?Excluding change in fair 18,906 22,785 value of HKFS Contingent ConsiderationAcquisition and integration?Change in fair value of 14,600 8,300 HKFS Contingent ConsiderationExecutive transition costs 1,517 10,701 Headquarter relocation costs 1,147 1,863 Contested proxy and other legal and consulting costs 3,230 ? Income tax (benefit) expense (23,489 ) 42,331 Impairment of goodwill and an intangible asset ? 270,625 Adjusted EBITDA ^(1) $ 106,382 $ 95,127

Operating Free Cash Flow Reconciliation (7)(Amounts in thousands)

Three months ended March 31, 2021 2020Net cash provided by operating activities ^(8) $ 53,722 $ 46,864 Purchase of property and equipment ^(8) (8,598 ) (7,715 )Operating free cash flow ^(7) $ 45,124 $ 39,149

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)(Amounts in thousands)

Rangesforthethreemonthsending Rangesfortheyearending June 30, 2021 December 31, 2021 Low High Low HighNet income $ 22,500 $ 31,500 $ (12,500 ) $ 2,000(loss)Stock-based 5,500 5,400 21,500 21,200compensationDepreciationandamortization 11,100 10,800 45,000 44,500of acquiredintangibleassetsOther loss, 8,800 8,500 33,500 32,400netAcquisition,integration,andcontestedproxy and 12,900 12,300 32,800 31,000other legalandconsultingcosts ^(9)Income tax 2,200 2,000 2,200 1,400expenseAdjusted $ 63,000 $ 70,500 $ 122,500 $ 132,500EBITDA

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation for Forward-Looking Guidance (1)(Amounts in thousands, except per share amounts)

Rangesforthethreemonthsending Rangesfortheyearending June 30, 2021 December 31, 2021 Low High Low HighNet income $ 22,500 $ 31,500 $ (12,500 ) $ 2,000 (loss)Stock-based 5,500 5,400 21,500 21,200 compensationAmortizationof acquired 7,200 7,100 28,600 28,300 intangibleassetsAcquisition,integration,andcontestedproxy and 12,900 12,300 32,800 31,000 other legalandconsultingcosts ^(9)Cash taximpact of (500 ) (400 ) (2,000 ) (1,700 )adjustmentsto net lossNon-cashincome tax (600 ) (400 ) (900 ) (800 )benefitNon-GAAP net $ 47,000 $ 55,500 $ 67,500 $ 80,000 incomePer diluted share:Net income $ 0.45 $ 0.63 $ (0.25 ) $ 0.04 (loss) ^(3)Stock-based 0.11 0.11 0.43 0.42 compensationAmortizationof acquired 0.14 0.14 0.57 0.57 intangibleassetsAcquisition,integration,andcontestedproxy and 0.26 0.25 0.65 0.62 other legalandconsultingcosts ^(9)Cash taximpact of (0.01 ) (0.01 ) (0.04 ) (0.03 )adjustmentsto net lossNon-cashincome tax (0.01 ) (0.01 ) (0.02 ) (0.02 )benefitNon-GAAP netincome per $ 0.94 $ 1.11 $ 1.34 $ 1.60 shareWeightedaveragesharesoutstandingused in 50,100 50,000 50,300 50,100 computingper dilutedshareamounts

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure

We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, and income tax expense. Other loss, net primarily constitutes our interest expense, net of interest income. Acquisition and integration costs primarily relate to the acquisition of HKFS and the acquisition of 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our Dallas and Irving offices to our new headquarters.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.(1) We define non-GAAP net income as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, non-capitalized debt issuance expense, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income tax expense because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will either be utilized or expire between 2021 and 2024. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income and non-GAAP net income per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and net income (loss) per share. Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share may not be comparable to similarly titled measures of other companies.

As presented in the condensed consolidated statements of operations(2) (unaudited).

Any difference in the ?per diluted share? amounts between this table and the condensed consolidated statements of comprehensive income is due to(3) using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.

Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted(4) EBITDA for the trailing twelve month period is reconciled to the nearest GAAP measure on page 10.

Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA(5) for the trailing twelve months.

We define net debt, a non-GAAP financial measure, as cash and cash equivalents less the outstanding principal of debt. Management believes(6) that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.

We define operating free cash flow, which is a non-GAAP measure, as net cash provided by (used in) operating activities less purchases of property and equipment. We believe operating free cash flow is an important(7) liquidity measure that reflects the cash generated by our businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.

As presented in the condensed consolidated statements of cash flows(8) (unaudited).

(9) The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.