CoolSavings Reports Fourth Quarter and 2002 Year-End Financial Results
CHICAGO, Feb 5, 2003 -- CoolSavings, Inc. (OTCBB:CSAV):
Highlights: -- Significant growth in revenue year over year and quarter over quarter; -- Progress toward net income and cash-flow breakeven; -- Record membership and consumer activity; -- Results demonstrate significant growth in client adoption of core business services and new products
CoolSavings, Inc. (OTC:BB CSAV), an online direct marketing and media company that provides smarter solutions to connect marketers to their target consumers, today reported results for the fourth quarter and year-ended December 31, 2002. CoolSavings` loss from operations decreased $2.2 million from $2.3 million for the fourth quarter of 2001 to $0.1 million for the fourth quarter of 2002. For the second consecutive quarter, CoolSavings` fourth quarter of 2002 was EBITDA positive, excluding charges for lease exit, continuing the Company`s progress toward achieving its goal of net income and positive cash flow. The Company`s robust holiday sales season saw fourth quarter revenue grow 33% over the same period for the prior year.
Fourth Quarter Financial
Highlights Net revenues in the fourth quarter were $8.3 million compared to $6.3 million in the same period of 2001. Gross profit in the fourth quarter was $7.5 million, or 90% of net revenues, compared to $5.3 million, or 85% of net revenues in the fourth quarter of 2001. The Company`s total operating expenses in the quarter were the same at $7.7 million as compared to the fourth quarter of 2001. For the fourth quarter, the loss applicable to common stockholders was $0.7 million, or a loss of $0.02 per share, compared to the loss of $3.8 million, or $0.10 per share, reported in the same period of 2001. EBITDA was $0.7 million for the fourth quarter compared to an EBITDA loss of $1.1 million in the fourth quarter of 2001.Excluding the charges for lease exit recorded during the fourth quarter of 2002, total operating expenses for the quarter would have been $7.4 million, EBITDA would have been a positive $1.0 million and the loss applicable to common stockholders would have been $0.5 million or $0.01 per share.
Year-end Financial Highlights
Net revenues for 2002 were $26.4 million, compared to $22.2 million reported in 2001, an increase of 19%. Gross profit for 2002 was $22.8 million, or 86% of total revenues, compared to $16.4 million, or 74% of total revenues, reported in 2001. Total operating expenses for the year were $30.3 million compared to $42.1 million in 2001, a reduction in operating expenses of 28%. The loss applicable to common stockholders for the full year of 2002 was $9.6 million, or a loss of $0.25 per share, compared to a loss of $30.7 million, or $0.78 per share in 2001. EBITDA for the year was a loss of $3.1 million compared to an EBITDA loss of $20.6 million in the comparable period of 2001.
Excluding the charges for the lease exit and asset write down recorded during 2002, total operating expenses for the year would have been $27.0 million, EBITDA would have been a positive $0.2 million, and the loss applicable to common stockholders would have been $6.3 million or $0.16 per share.
At December 31, 2002, the Company had cash and cash equivalents of $4.9 million and total assets of $13.7 million compared to $5.1 million and $18.0 million, respectively, at December 31, 2001. Accounts receivable, net of allowances for doubtful accounts, at December 31, 2002 were $4.9 million compared to $3.6 million at the end of 2001. At the end of 2002, CoolSavings` current liabilities totaled $12.1 million, a reduction of $8.1 million compared to the balance of $20.2 million at the end of 2001. Total liabilities were $13.4 million at December 31, 2002 compared to $20.9 million at December 31, 2001. Stockholders` deficit at December 31, 2002 was $24.6 million compared to $15.0 million at December 31, 2001.
Non-GAAP Financial Measures
EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization, and extraordinary gains. The Company has presented EBITDA because it is a common alternative measure of performance and is an indicator of the Company`s ability to generate cash flow from operations. The Company`s definition of EBITDA may not be consistent with that of other companies. EBITDA is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company has also provided, for the quarter and year ended December 31, 2002, total operating expenses, EBITDA and loss applicable to common stockholders excluding certain charges. This information is presented because the Company believes it is meaningful, as a complement to, but not as a substitute for, the operating results presented in accordance with GAAP. The attached schedule reconciles the GAAP operating results to the EBITDA and EBITDA excluding certain charges.
Record Consumer Registration and Activity
In 2002, the Company set its own records for member registrations and activity. Nearly 7.6 million new consumers registered with CoolSavings in 2002--a 26% increase over the previous year--while the Company lowered its average cost per registration by 21% compared to 2001. In addition, the Company`s total household membership at the close of the year was 23.5 million, representing approximately 20% of American households.(a) Importantly, revenue producing actions by CoolSavings members increased by a record 71% over the previous year.
Growth of New Initiatives
The Company`s new product introductions experienced significant growth in 2002. For example, CoolSavings` unique Select Response service gained considerable momentum throughout the year in terms of client popularity and performance. Providing clients with the ability to deliver highly targeted e-mail or direct mail to pre-qualified consumers who answer customized survey questions, Select Response typical response rates range from 10-25% depending on the communication vehicle. Revenue from Select Response increased 110% from the first quarter to the fourth quarter of 2002. Clients utilizing the product include Wal-Mart, JCPenney, Nestle Purina Petcare Company and Disney.
CoolSavings` new direct mail business showed traction in 2002 as well. More than 56 companies, including Earthlink, America Online, Scholastic and Citibank utilized the Company`s Direct Mail list rental service and co-operative mail program during 2002. CoolSavings` Direct Mail service maintains a postal list of more than 12 million consumers and provides advertisers a wide array of targetable demographic and geographic criteria, and the ability to implement high-impact, cross-channel electronic and postal campaigns.
The Company`s Coupon Technology licensing service revenues increased significantly in 2002 following a late 2001 introduction. Using CoolSavings` proprietary ASP technology, advertisers deliver secure, printable coupons to consumers from their own Web sites, e-mail and online banner ads. Wyeth, Sargento, Home Depot, L`Oreal, Gorton`s and GlaxoSmithKline all have employed Coupon Technology.
The CoolSavings Marketing Network (CSMN), an Internet distribution network for coupons and samples from consumer packaged good manufacturers, retailers and restaurants, debuted in the fall of 2002.With more than 30 top Web properties including Knight Ridder newspaper sites, The Weather Channel`s weather.com, and popular lifestyle sites such as allrecipes.com, CSMN partnerships provide broad monthly access to more than 22 million consumers across the Internet. CSMN advertisers include Kellogg`s, General Mills, Hormel Foods, JCPenney Portrait, GlaxoSmithKline, Unilever, Dannon and 3M.
"Our business really came together this past year," commented Matthew Moog, president and CEO of CoolSavings, Inc. "We generated record numbers for both consumer registrations and consumer actions, and we enjoyed our strongest-ever quality and quantity of advertiser content. At the same time, we continued to strengthen our core products and services, and enjoyed the early success of new initiatives recently introduced. Add to those milestones a solid 85% retention rate among our Top 50 clients, and we believe we have strong momentum going into 2003."
Business Outlook
The following statements are based on current expectations, are forward-looking and actual results may differ materially. See "Cautionary Note Regarding Forward-Looking Statements" below.
Although accurate forecasting of quarterly results is especially difficult in the current period, the Company is targeting EBIT breakeven in 2003. EBIT is defined as earnings before interest expense, taxes, and extraordinary gains. The Company is changing its measure of profitability for 2003 from EBITDA to EBIT as depreciation and amortization are anticipated to a have a smaller impact on the business going forward. The Company`s definition of EBIT may not be consistent with that of other companies. EBIT is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP), and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
In addition, the Company expects 2003 revenue growth to exceed the 19% increase it experienced in 2002. Although there are many factors that are outside of the Company`s control that may negatively impact its ability to achieve these forecasts, the Company believes that the goals it has set are reasonable if the economy remains consistent or improves.
About CoolSavings
CoolSavings is an online direct marketing and media company that provides smarter solutions to help marketers reach their target consumers. Combining a broad distribution network, sophisticated analytics and proprietary technology with superior customer service, CoolSavings enables a wide variety of advertisers to identify and engage their best customers among our more than 24 million registered households. CoolSavings` popular media property, coolsavings.com, is ranked the #1 coupon site on the Internet for 36 consecutive months.(b)
(a) Numbers based on U.S. Census Bureau`s American Housing Survey for the United States: 2001. (b) comScore Media Metrix Jan.2000-Dec.2002
CoolSavings is a registered trademark of CoolSavings, Inc. Other product and company names herein may be trademarks of their respective owners.
Cautionary Note Regarding Forward-Looking Statements
Statements in this press release regarding CoolSavings` business that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements under "Business Outlook" and other statements regarding the Company`s expectations, beliefs, hopes, intentions or strategies. Where possible, such forward-looking statements have been identified by use of words such as "target," "forecast," "budget," "believe," "expects" and similar expressions. Known and unknown risks, uncertainties and other factors, both general and specific to the matters discussed in this press release, may cause CoolSavings` actual results and performance to differ materially from the future results and performance expressed in, or implied by, such forward-looking statements. Among these risks are the Company`s ability to obtain additional debt and/or equity financing, the uncertainties related to CoolSavings` unproven business model in a rapidly evolving marketplace, and CoolSavings` ability to protect its patents, trademarks and propriety rights. These and other important factors, including those mentioned in various Securities and Exchange Commission filings made periodically by CoolSavings, For further discussion of some of the risks, uncertainties and other factors which could cause actual results to differ from those expressed in, or implied by, the forward-looking statements, see "Risk Factors" in CoolSavings` Form 10-K for the year ended December 31, 2001, as filed with the SEC. CoolSavings undertakes no obligation to update or revise any forward-looking statements as a result of new information, future events or developments or changed circumstances.
Back...
