Points International Reports Fourth Quarter and 2009 Financial Results
- Record Full Year Revenue of $79.8 Million
- 2009 EBITDA(1) of $607,000; Third Consecutive Year of Positive EBITDA
While Aggressively Investing to Drive Growth
- Announces Upcoming New Service Rollouts for Partners Globally
- Reiterates 2010 Guidance for Revenue of $75 Million to $85 Million,
Net Income Profitability and 3% to 5% EBITDA Margins
TORONTO, March 10 /PRNewswire-FirstCall/ - Points International Ltd. (TSX: PTS; OTCBB: PTSEF), the owner and operator of Points.com, the world's leading reward program management Web site, where users can manage their reward point programs - today announced results for the fourth quarter and full year ended December 31, 2009. All financial results are in US Dollars.
"2009 was a pivotal year for Points as we added important new loyalty partners to our industry leading platform including AirFrance-KLM, Mexicana Airlines and Chase while renewing or expanding our relationships with a number of major partners including American Airlines, BMI, Hawaiian Airlines, JetBlue, Lufthansa Airlines, Virgin Atlantic, Intercontinental Hotels Group and Starwood Hotels. We delivered record revenue despite undergoing a significant recasting of our business with Delta, and began to execute across the core elements of our strategic growth plan, underpinned by the design and development of our project ePoch technology platform," said CEO Rob MacLean. "Looking ahead, we see tremendous opportunity for Points as we will expand our current partnerships with new product implementations and increase usage penetration among their membership bases, while aggressively closing and implementing new partnerships worldwide. Business metrics for the first two months of 2010 are up sharply, and we expect to announce a number of new partners, programs and implementations, along with the launch of our new consumer destination at www.points.com in the coming months. All of our efforts will be focused on driving increased leverage through an improving gross margin(2) profile, which combined with continued expense control should result in increased profitability over time."
Fourth Quarter 2009 Financial Results
The following results reflect the Company's restructured relationship with Delta Air Lines, which was effective October 1, 2009, and which for the fourth quarter of 2009 resulted in a decrease in principal revenue and receipt of a series of one-time payments with no associated direct costs recorded within other partner revenue.
Total revenue was $16.6 million for the fourth quarter of 2009. Revenue was down 24% over the $21.7 million reported in the fourth quarter of 2008, and down 20% over the $20.7 million reported in the third quarter of 2009. Principal revenue totaled $12.9 million, a decrease of 35% over $19.7 million in the same period last year, and down from $18.9 million in the third quarter of 2009. Other partner revenue was $3.7 million, up from $1.8 million reported in the same period of last year and $1.8 million in the third quarter of 2009.
Points reported net income for the fourth quarter of 2009 of $1.9 million, or $0.01 per share. This compares to a net loss in the fourth quarter of 2008 of $3.0 million, or ($0.02) per share, which included non-cash, non-recurring charges of $1.3 million related to the impairment of long-lived assets, and to a net loss in the third quarter of 2009 of $265,000, or $(0.00) per share, which included restructuring charges of $332,000.
During the fourth quarter of 2009, Points reported positive EBITDA of $1.7 million compared to positive EBITDA of $41,000 in the same period of 2008 and $72,000 in the third quarter of 2009.
Fourth Quarter 2009 Business Metrics
Q4/09 Q4/09
vs. vs.
Q4/09 Q3/09 Q3/09 Q4/08 Q4/08
TOTAL ALL CHANNELS(1)
Points/Miles
Transacted
(in 000s) 3,146,513 2,395,492 31% 2,268,481 39%
# of Points/Miles
Transactions 277,261 255,233 9% 234,965 18%
PRIVATE BRANDED
CHANNELS(1)
Points/Miles
Transacted
(in 000s) 2,733,109 2,113,388 29% 1,855,080 47%
#of Points/Miles
Transactions 252,418 231,221 9% 206,791 22%
POINTS.COM CHANNELS
Points/Miles
Transacted
(in 000s) 413,405 282,104 47% 413,401 0%
# of Points/Miles
Transactions 24,843 24,012 3% 28,174 -12%
Cumulative
Registered
Users 2,404,108 2,324,611 3% 2,131,878 13%
Notes:
(1) For comparative purposes, Buy, Gift and Transfer activity for Delta
have been excluded from the metrics presented
Full Year 2009 Results
For the twelve months ended December 31, 2009, Points generated total revenue of $79.8 million, up 6% versus the twelve months ended December 31, 2008. Principal revenue totaled $70.8 million, an increase of 8% compared to the twelve months ended December 31, 2008. Other partner revenue totaled $8.9 million, down 3% compared to the twelve months ended December 31, 2008.
Net income for the twelve months ended December 31, 2009 was $64,000, or $0.00 per share, which included a third quarter $332,000 restructuring charge, compared to a net loss of $3.6 million, or ($0.03) per share in 2008, which included a fourth quarter $1.3 million impairment charge of long-lived assets.
Points reported positive EBITDA of $607,000 for the twelve months ended December 31, 2009 compared to positive EBITDA of $556,000 for fiscal 2008.
As of December 31, 2009, Points' total cash, comprised of cash and cash equivalents together with security deposits, short-term investments and amounts with payment processors, totaled $35.5 million, up from $33.5 million at the end of the third quarter of 2009. The Company remains debt-free, and Points believes that its strong balance sheet and proven ability to generate positive free cash flow on an ongoing basis establishes a very strong operating position going forward.
Business Outlook
"We look forward to solid growth and full-year gross margin improvements as we continue to grow our business. In March and April, we expect to launch a number of new programs including the rollout of Transfer functionality for British Airways representing our first Transfer product with a major carrier in Europe, multi-language support for Mexicana Airlines, and third-party mileage programs for Delta Air Lines on points.com. Additionally, we expect to launch multiple new partners and products in the second quarter which are currently in development. Momentum across our business, including positive trends in our metrics and the recent expansion of our partnership with US Airways, provides further comfort in the upwardly revised guidance issued on January 28, 2010. By the end of 2010 we expect to have completely replaced the former revenue from Delta, with EBITDA margins at levels accretive to our historical trends. In short, by driving new revenue growth and continuing to aggressively manage costs, we can deliver and maintain annual gross margins in the 20 to 30 percent range moving forward, resulting in EBITDA expansion well beyond the three to five percent levels expected in 2010," concluded MacLean.
Investor Conference Call
Points' quarterly conference call with Rob MacLean, CEO, Christopher Barnard, President and Anthony Lam, CFO, will be held today at 5:00 pm. Eastern Time. To participate in the conference call, investors from the US and Canada should dial 877-941-1427 ten minutes prior to the scheduled start time. International callers should dial 480-629-9664. Points International will also offer a live and archived webcast, accessible from the "Investor Relations" section of the company's Web site at www.pointsinternational.com.
About Points International Ltd
Points International Ltd. is the owner and operator of Points.com, the world's leading reward program management Web site which was recently named one of the 28 Best Travel Sites by Kiplinger's. At Points.com consumers can Swap, Earn, Buy, Gift, Share and Redeem miles and points from more than 25 of the world's leading reward programs. Participating programs include American Airlines AAdvantage(R) program, Aeroplan(R), AsiaMiles(TM), British Airways Executive Club, Wyndham Rewards(R), Delta SkyMiles(R) and InterContinental Hotels Group's Priority Club(R) Rewards. Redemption partners include Amazon.com(R) and Starbucks. For more information, visit http://www.points.com
Caution Regarding Forward-Looking Statements
This press release contains or incorporates forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include our guidance for 2010 with respect to revenue, net income and EBITDA, our gross margin outlook and statements regarding the launch schedule for the redesigned consumer portal at www.points.com. These statements are not historical facts but instead represent only Points' expectations, estimates and projections regarding future events.
Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and may not prove to be correct. In particular, the financial outlooks herein assume we will be able to generate new business from our pipeline at expected margins, our in-market and newly launched products and services will perform in a manner consistent with the Company's past experience, and we will be able to contain costs and realize operational efficiencies from our upgraded technology platform. The launch schedule for the redesigned consumer portal is subject to project implementation risks and delays inherent to technology projects. Other important risk factors that could cause actual results to differ materially include the risk factors discussed in Points' annual information form, Form-20-F, annual and interim management's discussion and analysis, and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov.
The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.
---------------------------
(1) EBITDA (Earnings (loss) before interest, taxes, amortization, foreign
exchange, impairment and restructuring charges) is considered by
management to be a useful measure of performance. EBITDA is not a
recognized measure under generally accepted accounting principles.
(2) Gross margin is comprised of total revenue less direct cost of
principal revenue and processing fees and related charges and is
considered an integral measure of performance. Gross margin is not a
recognized measure under generally accepted accounting standards.
POINTS INTERNATIONAL LTD.
CONSOLIDATED BALANCE SHEETS
Unaudited
(Expressed in thousands of United States dollars)
AS AT DECEMBER 31, 2009 2008
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 23,914 $ 22,854
Funds receivable from payment processors 5,855 5,066
Short-term investments 3,302 792
Security deposits 2,463 2,250
Accounts receivable 1,907 2,448
Future income tax asset 945 601
Current portion of deferred costs 139 247
Prepaid and sundry assets 759 1,548
-------------------------------------------------------------------------
39,284 35,806
-------------------------------------------------------------------------
Property and Equipment 607 809
Intangible Assets 2,014 998
Goodwill 4,205 4,205
Deferred Costs 82 144
Other Assets 951 752
-------------------------------------------------------------------------
7,859 6,908
-------------------------------------------------------------------------
$ 47,143 $ 42,714
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 3,087 $ 3,217
Current portion of deferred revenue 609 1,087
Payable to loyalty program partners 30,215 25,967
-------------------------------------------------------------------------
33,911 30,271
Deferred Revenue 301 259
-------------------------------------------------------------------------
34,212 30,530
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Accumulated Other Comprehensive Loss (2,566) (2,566)
Accumulated Deficit (49,463) (49,527)
-------------------------------------------------------------------------
(52,029) (52,093)
Capital Stock 56,662 56,662
Contributed Surplus 8,298 7,615
-------------------------------------------------------------------------
12,931 12,184
-------------------------------------------------------------------------
$ 47,143 $ 42,714
-------------------------------------------------------------------------
-------------------------------------------------------------------------
POINTS INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
Unaudited
(Expressed in thousands of United States dollars,
except per share amounts)
For the three months For the twelve months
ended ended
-----------------------------------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------------------------------------------------------------------------
REVENUE
Principal $ 12,896 $ 19,712 $ 70,781 $ 65,483
Other partner revenue 3,679 1,774 8,946 9,194
Interest 2 216 52 920
-------------------------------------------------------------------------
16,577 21,702 79,779 75,597
-------------------------------------------------------------------------
GENERAL AND ADMINISTRATION
EXPENSES
Direct cost of principal
revenue 10,153 16,928 60,902 55,786
Processing fees and
related charges 379 617 2,155 2,931
Employment costs 2,641 2,895 10,637 11,175
Marketing and
communications 691 298 1,749 1,259
Technology services 240 198 935 882
Amortization 233 363 783 1,533
Foreign exchange (gain)
loss (3) 1,441 (242) 756
Operating expenses 792 725 2,794 3,008
Restructuring charges - - 332 -
-------------------------------------------------------------------------
15,126 23,465 80,045 77,330
-------------------------------------------------------------------------
OPERATING LOSS - before
undernoted 1,451 (1,763) (266) (1,733)
-------------------------------------------------------------------------
OTHER EXPENSES
Interest on preferred
shares - - - 517
Interest and other charges 19 8 14 49
Impairment of long-lived
assets - 1,256 - 1,256
-------------------------------------------------------------------------
19 1,264 14 1,822
-------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES 1,432 (3,027) (280) (3,555)
-------------------------------------------------------------------------
Recovery of future income
taxes (466) - (344) -
-------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,898 $ (3,027) $ 64 $ (3,555)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE
Basic $ 0.01 $ (0.02) $ 0.00 $ (0.03)
Diluted $ 0.01 $ (0.02) $ 0.00 $ (0.03)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
AND ACCUMULATED OTHER COMPREHENSIVE LOSS
(Expressed in thousands of United States dollars)
For the three months For the twelve months
ended ended
-----------------------------------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS) $ 1,898 $ (3,027) $ 64 $ (3,555)
-------------------------------------------------------------------------
Comprehensive income (loss) $ 1,898 $ (3,027) $ 64 $ (3,555)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ACCUMULATED OTHER
COMPREHENSIVE LOSS
Balance - Beginning of
period $ (2,566) $ (2,566) $ (2,566) $ (2,566)
-------------------------------------------------------------------------
Balance - End of period $ (2,566) $ (2,566) $ (2,566) $ (2,566)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
POINTS INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(Expressed in thousands of United States dollars)
For the three months For the twelve months
ended ended
-----------------------------------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------------------------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ 1,898 $ (3,027) $ 64 $ (3,555)
Items not affecting cash
Amortization of property
and equipment 179 177 446 582
Amortization of deferred
costs - 8 2 331
Amortization of intangible
assets 54 178 335 620
Future income tax recovery (466) - (344) -
Unrealized foreign exchange
(gain) loss 125 1,795 (368) 987
Employee stock option
expense 183 154 683 648
Interest on Series Two and
Four preferred Shares - - - 517
Impairment of long-lived
assets - 1,256 - 1,256
Changes in non-cash balances
related to operations (1,901) (7,647) 3,981 (5,939)
-------------------------------------------------------------------------
CASH FLOWS PROVIDED BY
(USED IN) OPERATING
ACTIVITIES 72 (7,106) 4,799 (4,553)
-------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property and
equipment (21) (48) (244) (487)
Additions to intangible
assets (731) (71) (1,351) (350)
Sale of short-term
investments - 119 - 11,589
Purchase of short-term
investments (2,510) - (2,510) (4,975)
-------------------------------------------------------------------------
CASH FLOWS (USED IN)
PROVIDED BY INVESTING
ACTIVITIES (3,262) - (4,105) 5,777
-------------------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Loan repayments - - - (6)
Share issuance on capital
transaction - (4) - 1,688
Issuance of capital stock
on exercise of stock options
and warrants - - - 270
-------------------------------------------------------------------------
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES - (4) - 1,952
EFFECT OF EXCHANGE RATE
CHANGES ON CASH HELD IN
FOREIGN CURRENCY (40) (1,829) 366 (1,858)
-------------------------------------------------------------------------
INCREASE IN CASH AND CASH
EQUIVALENTS (3,230) (8,939) 1,060 1,318
CASH AND CASH EQUIVALENTS -
Beginning of period 27,144 31,793 22,854 21,536
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS -
End of period $ 23,914 $ 22,854 $ 23,914 $ 22,854
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental Information
------------------------
Interest Received $ 3 $ 245 $ 68 $ 947
Interest Paid $ 7 $ - $ 15 $ 2
POINTS INTERNATIONAL LTD.
RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
Unaudited
(Expressed in thousands of United States dollars)
For the three months For the twelve months
ended ended
-----------------------------------------------
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------------------------------------------------------------------------
Operating income (loss) $ 1,451 $ (1,763) $ (266) $ (1,733)
Amortization 233 363 783 1,533
Foreign exchange (gain)/loss (3) 1,441 (242) 756
Restructuring charges - - 332 -
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EBITDA $ 1,681 $ 41 $ 607 $ 556
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SOURCE Points International Ltd.
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