E-centives Announces Fourth Quarter and Full Year Financial Results for 2002
Company Achieves 43% Annual Revenue Growth
BETHESDA, MD -- 03/27/2003 -- E-centives, Inc. (SWX: ECEN), a leading provider of online direct marketing technologies and services for global marketers, today announced financial results for the fourth quarter and full year ended December 31, 2002, with these positive upward trends for the company:
- Generated quarter-over-quarter (Q4 ‘02 vs. Q4 ‘01) and year-over-year (CY ‘02 vs. CY ‘01) incremental revenue increases of 18% and 43%, respectively.
- Completed major business restructuring initiatives resulting in a leaner, more efficient cost structure, and significantly improved net loss and adjusted EBITDA loss performance against prior year periods.
- Secured additional contract revenue opportunities from both new and existing customers.
BUSINESS HIGHLIGHTS (CY 2002 and First Quarter 2003)
- Generated quarter-over-quarter (Q4 ‘02 vs. Q4 ‘01) and year-over-year (CY ‘02 vs. CY ‘01) incremental revenue increases of 18% and 43%, respectively, through continued contract performance, expanded service offerings, and new contract awards with clients including America Online, ANC Rental Corporation (the holding company of National and Alamo Car Rental), Nestle, Reckitt Benckiser, and Trilegiant.
- Generated significant quarter-over-quarter (Q4 ’02 vs. Q4 ’01) and year-over-year (CY ’02 vs. CY ’01) net loss and adjusted EBITDA loss improvements: $15.7M quarter-over-quarter net loss improvement, $27.9M year-over-year net loss improvement, $4.9M quarter-over-quarter adjusted EBITDA loss improvement, and $18.3M year-over-year adjusted EBITDA loss improvement, as a result of business restructuring and cost control initiatives, among other things, as referenced below. The company achieved positive EBITDA of approximately $200K for the third quarter of 2002 as disclosed in its October 30 press release discussing third quarter’s financial results, which was primarily attributable to a combination of the recognition of prior quarter’s performance- based revenue during the quarter, and a reversal of costs associated with the favorable settlement of prior period operating costs. The company’s net loss and adjusted EBITDA loss for the second half of calendar year 2002 are $3.5M and $1.9M, respectively, on revenues of $4.0M.
Major business restructuring and cost savings initiatives included the closure of the company’s Commerce Engine, Commerce Network and PerformOne Network businesses, and the restructuring of various long-term lease obligations for office space and hosting facilities in California, Maryland, Virginia, and the United Kingdom.
- Completed an acquisition of substantially all of the assets of ConsumerREVIEW.com, one of the leading and most trusted sources for consumer product reviews on the Web, during December, 2002. Subsequent to the close of the acquisition, ConsumerREVIEW.com entered into a two-year search agreement with Overture Services, Inc., which enables Overture`s base of 80,000 advertisers to bid for placement in Overture`s search results across consumerREVIEW.com`s network of product community Web sites. Under the terms of the new contract, Overture pays ConsumerREVIEW.com a share of revenues earned from advertisers featured in the search results.
The ConsumerREVIEW.com site averages in excess of 30M page visits per month, and is expected to contribute incremental annualized revenues of $2.5 to $3.0M operating as an independent business unit of the company. ConsumerReview.com contributed approximately $200K of revenue to E-centives, Inc. during CY 2002. See E-centives’ current report on Form 8-K filed with the SEC on December 13, 2002, for more information regarding this acquisition.
- Executed an agreement with Reckitt Benckiser to add several new product brands to our current portfolio of 13 brand offerings, including LYSOL® Brand Products, AIR WICK® by WIZARD® Air Freshener and ELECTRASOL® Automatic Dishwasher Detergent. This additional contract commitment comes on the heels of the company’s third quarter announcement that it renewed a major IDBM (Interactive Database Marketing) contract with Reckitt Benckiser,one of the world’s largest household cleaning products companies, with such leading global brands as LYSOL® Disinfectant Spray and WOOLITE® Fabric Care. This renewal marks the continuation of the licensing of our CPG specialized interactive database marketing technology platform and a market- demand range of professional services in the areas of strategic consulting and analytics from E-centives for Reckitt Benckiser in the United States, the United Kingdom and Germany for a second year. The one-year contract renewal commenced during the fourth quarter of 2002.
- Initiated a patent infringement lawsuit against Coupons, Inc. that was filed in Federal Court in Maryland based on two patents relating to online coupons, U.S. Patent No. 6,336,099 and U.S. Patent No. 6,321,208. E-centives has taken this action to protect its intellectual property and significant investment in building this industry. E-centives has built one of the largest and earliest dated collection of patent rights in the online coupons area, including five (5) issued patents and one (1) additional U.S. Patent Application that has been allowed and we expect will issue soon. In addition, E-centives has dozens of other U.S. Applications and Foreign Applications that remain pending, with the ability to file many more foreign patents still available.
- Executed a credit facility in the principal amount of $6M from existing investors as a result of the company’s significantly improved financial performance, contract award successes and strong issued and pending patent portfolio, among other things. Pertinent details of this transaction will be found in the company’s upcoming 10-K filing with the SEC.
- Subsequent to the end of the fourth quarter and the 2002 calendar year, the company terminated an additional eleven associates as a result of process enhancement initiatives resulting in first quarter 2003 severance costs of $122K.
Revenues for Q4 2002 were $1.3M compared to $1.1M in Q4 2001. The company realized a net loss in Q4 2002 of $2.8M or $.08 per diluted share compared to a net loss of $18.5M or $1.07 per diluted share in Q4 2001. The company reported a Q4 EBITDA loss of $2.1M compared to an EBITDA loss of $7.0M in Q4 2001.
Revenues for the calendar year 2002 were $7.2M compared to $5.1M for the calendar year 2001. The company realized a net loss of $17.1M or $.46 per diluted share for the calendar year 2002 compared to a net loss of $45.0M or $2.68 per diluted share for the calendar year 2001.
Shares used to compute diluted net loss per common share are based on the weighted average number of common shares outstanding at the end of the referenced periods, including the fourth quarter and calendar year 2002, which periods include 20M additional common shares associated with the company’s fourth quarter 2001 rights offering.
“2002 was a pivotal year for our business, as we repositioned our core business, introduced new platforms and product offerings, and exited unprofitable businesses which no longer fit with the strategic growth direction of the company,” commented Kamran Amjadi, E-centives, Inc.’s Chairman and Chief Executive Officer. “We continue to focus on delivering best-in-class products and solutions to the market with strong patent protection on key elements of our technologies and with a clear focus on generating positive ROI for our customers.”
“The successful completion of our aggressive restructuring initiatives, in conjunction with the integration of two acquired businesses, and significantly improved EBIT and adjusted EBITDA loss results, signifies the successes of our business restructuring initiatives which began during the second quarter of 2001. We all feel very positive about the future direction of the company, and our ability to execute with a leaner, more cost effective overhead structure,” added David Samuels, E-centives, Inc.’s Chief Financial Officer.
The Company will hold a live telephone conference call and audio Webcast at 6:00PM Zurich Time (12:00PM Eastern Time) today to review earnings results. The Webcast can be accessed by visiting www.e-centives.com/ir.html. As an alternative, participants can dial 1.630.395.0037 (International callers) or toll free 1.800.857.6553 (US callers) to hear the live audio portion of the presentation. After dialing in, please wait for the conference coordinator and reference the password “E-centives.” The telephone conference will be available for replay until April 4, 2003, by dialing 1-888-568-0861 (US callers) or 1-402-998-0246 (International callers).
About E-centives, Inc.
E-centives, Inc. is a leading provider of online direct marketing technologies and services that enable companies to acquire and retain customers and promote more profitable relationships with them. Clients include global businesses from the consumer packaged goods, retail and media industries. Headquartered in Bethesda, MD, just outside Washington, D.C., and with west coast offices in the San Francisco Bay Area, E-centives, Inc. is traded on the SWX Swiss Exchange under the symbol “ECEN.”
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, E-centives cautions investors that any forward-looking statements or projections made by the company, including those that may be made in this press release, are based on management`s expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Specifically, E-centives forecasts of revenue growth, customer growth and EBITDA are forward looking in nature, and could differ materially from current expectations. E-centives` future results may be impacted by factors such as technological changes, market acceptance of the company`s services, E-centives ability to grow its customer base, and competitive market pressures, among other things. E-centives` future results also may be impacted by other risk factors detailed from time to time in the company’s registration statements and Forms 10-K and 10-Q filed with the Securities and Exchange Commission. By making these forward-looking statements, E-centives undertakes no obligation or intention to update these statements after the date of this release.
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