PEER 1 Hosting Reports Fiscal 2010 Second Quarter Results
Selected Financial Highlights Comparing the Second Quarters Ended December 31, 2009 and 2008 - Revenue increased 1.1% to $23.9 million from $23.6 million; - Gross profit decreased 9.1% to $9.8 million from $10.8 million; - Operating income decreased 39% to $2.26 million from $3.7 million; - EBITDA decreased to $6.3 million from $7.6 million; - Net income decreased to $0.9 million from $2.0 million. Selected Operational Highlights - Selected EMC(R) Atmos TM as the foundation of its new cloud storage service. PEER 1 will be offering its customers in the Atlanta and San Antonio data centers this network accessible data storage service in the first half of calendar year 2010. - Partnered with InMon, the leading traffic network solution for high- speed networks, to provide precise bandwidth measurement and analysis capability. Managed Hosting customers would be able to access this real time analysis through the online customer portal. - Partnered with Alert Logic, Inc., to provide integrated IT-compliant intrusion detection and log management services for its e-commerce customers using Alert Logic's cloud-based IT compliance and security solutions. By partnering with Alert Logic, PEER 1 can ensure IT compliance for Managed Hosting customers who subscribe to the service, without the customer having to invest in security infrastructure or monitoring resources. - Changed operating brand to PEER 1 Hosting with the tag line "Ping and People" to better communicate both the strength of the Company's infrastructure and its highly customer focused approach. - Subsequent to quarter end, PEER 1 announced the launch of its US$40 million flagship data center in Toronto Ontario. This data center is more than 40,000 square feet and equipped to offer all three hosting solutions - collocation, dedicated hosting and managed hosting - under one roof. The building is separated into 4 sections called Performance Optimized Data Centre (POD) - with each POD having the capacity of approximately 270 cabinets, equivalent to approximately 7,500 servers. The first POD was built with an estimated capital cost of US$10 million and includes 7,500 square feet of data center space and 8,000 square feet of office space, and inventory, network and storage areas to support the data center. Customers can start purchasing space on February 1, 2010 and start moving in their equipment in March 2010. The remaining three PODs (22,500 square feet) will be dedicated to additional data center space and infrastructure to be built out in future phases based upon customer demand.
"During the quarter we took steps to broaden our service offering to clients, most notably with the expansion of our cloud computing platform to include high-capacity storage," said Fabio Banducci, President and CEO of PEER 1. "Subsequent to quarter end, we took a major step forward with our strategy to support long term growth by announcing the launch of our new
Review of the Three and Six Months Ended
Revenue for the three and six months ended
Hosting Services revenues for the three and six months ended
Colocation revenue for the three and six months ended
Bandwidth revenues for the three and six months ended
PEER 1's Canadian operations revenue for the three months ended
Cost of sales for the three months ended
Operating expenses for the three months ended
EBITDA for the three months ended
Net income for the three months ended
As at
The Company had a working capital deficit of
PEER 1 had 121,260,741 common shares outstanding as at
EBITDA Reconciliation (unaudited - prepared by management) (in $ thousands) Three Months Ended -------------------------- 31-Dec-09 31-Dec-08 Net Profit 886 2,005 Income tax expense 959 1,388 Interest expense 336 437 Amortization - licences, fixed assets and deferred network costs 3,508 3,328 Stock based compensation 502 587 Loss (gain) on disposal of assets (30) (18) Amortization of deferred gain (20) (20) Foreign exchange loss (gain) 109 (91) ------------------------------------------------------------------------- EBITDA 6,250 7,616 Normalized EBITDA 6,250 7,616
Conference Call
PEER 1 will hold a conference call today,
To access the conference call by telephone, dial (647) 427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call. The conference call will be archived for replay until
A live audio webcast of the conference call will be available at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2960320
Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.
Non-GAAP Measures
PEER 1 reports EBITDA because it is a key measure used by management to evaluate the Company's performance. PEER 1 believes that EBITDA is useful supplemental information, as it provides an indication of the results generated by PEER 1's main business activities prior to taking into consideration how those activities are financed and expensed. EBITDA is not a recognized measure under Canadian GAAP, and accordingly investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP as an indicator of financial performance of PEER 1, or as a measure of the company's liquidity and cash flows. PEER 1's method of calculating EBITDA may differ from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers. The schedule above sets out PEER 1's EBITDA calculations.
About PEER 1 Hosting
PEER 1 Hosting believes in the limitless opportunity of the Internet, and the business growth potential it provides for its more than 10,000 customers. As a global online IT hosting provider, PEER 1 Hosting offers a reliable high performance Internet network supporting scalable managed hosting, dedicated hosting through the ServerBeach brand, and colocation solutions. Backed by its 100 percent uptime guarantee and 24x7x365 FirstCall Support(TM), PEER 1 Hosting ensures customers' online presence is always fast, always available. Since 1999, PEER 1 Hosting has grown to include 17 state-of-the-art data centres and points-of-presence throughout
Forward Looking Statements
Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in PEER 1 Hosting's public filings with securities regulatory authorities.
PEER 1 NETWORK ENTERPRISES, INC. Consolidated Balance Sheet December 31, 2009 (in thousands of United States dollars) December 31, June 30, 2009 2009 ------------------------------------------------------------------------- Assets Current: Cash and cash equivalents $ 7,622 $ 15,744 Accounts receivable 4,260 3,449 Future income tax asset 96 237 Prepaid expenses 1,706 1,130 ------------------------------------------------------------------------- 13,684 20,560 Other assets 2,828 2,692 Future income tax asset 1,680 1,042 Property and equipment 48,039 36,856 Equipment under capital lease 912 1,013 Goodwill 1,715 1,715 Intangible assets 3,000 2,552 ------------------------------------------------------------------------- $ 71,858 $ 66,430 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current: Accounts payable and accrued liabilities $ 12,637 $ 7,936 Deferred revenue 3,000 2,886 Current portion of deferred gain 79 79 Current portion of deferred lease inducements 130 138 Current portion of derivative liabilities 121 89 Current portion of notes payable 3,000 2,250 Current portion of obligations under capital lease 241 211 Income taxes payable 23 2,200 ------------------------------------------------------------------------- 19,231 15,789 Deferred gain 453 493 Deferred lease inducements 599 664 Derivative liabilities 182 179 Notes payable 10,830 12,303 Obligation under capital lease 279 363 ------------------------------------------------------------------------- 31,574 29,791 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Shareholders' equity 40,284 36,639 ------------------------------------------------------------------------- $ 71,858 $ 66,430 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statements of Shareholders' Equity For the Three and Six Months Ended December 31, 2009 (in thousands of United States dollars except number of shares) Three months ended December 31, 2009 December 31, 2008 --------------------------------------------------- Number Amount Number Amount ------------------------------------------------------------------------- SHARE CAPITAL Common shares Balance at beginning of period 121,055,984 $ 27,790 119,252,657 $ 26,911 Stock options exercised 204,757 152 41,666 29 Warrants exercised - - - - ------------------------------------------------------------------------- Balance at end of period 121,260,741 27,942 119,294,323 26,940 ------------------------------------------------------------------------- Warrants Balance at beginning of period 833,333 86 2,461,619 493 Warrants exercised - - - - ------------------------------------------------------------------------- Balance at end of period 833,333 86 2,461,619 493 ------------------------------------------------------------------------- Total - share capital 122,094,074 28,028 121,755,942 27,433 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONTRIBUTED SURPLUS Balance at beginning of period 5,307 3,303 Stock-based compensation 502 587 Stock options exercised (100) (11) ------------------------------------------------------------------------- Balance at end of period 5,709 3,879 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RETAINED EARNINGS Balance at beginning of period 5,976 713 Net income 886 2,005 ------------------------------------------------------------------------- Balance at end of period 6,862 2,718 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance at beginning of period (361) (11) Other comprehensive income (loss) 46 - ------------------------------------------------------------------------- Balance at end of period (315) (11) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total - shareholders' equity $ 40,284 $ 34,019 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended December 31, 2009 December 31, 2008 --------------------------------------------------- Number Amount Number Amount ------------------------------------------------------------------------- SHARE CAPITAL Common shares Balance at beginning of period 119,314,323 $ 26,950 118,504,368 $ 26,539 Stock options exercised 318,132 211 111,670 60 Warrants exercised 1,628,286 781 678,285 341 ------------------------------------------------------------------------- Balance at end of period 121,260,741 27,942 119,294,323 26,940 ------------------------------------------------------------------------- Warrants Balance at beginning of period 2,461,619 493 3,139,904 678 Warrants exercised (1,628,286) (407) (678,285) (185) ------------------------------------------------------------------------- Balance at end of period 833,333 86 2,461,619 493 ------------------------------------------------------------------------- Total - share capital 122,094,074 28,028 121,755,942 27,433 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONTRIBUTED SURPLUS Balance at beginning of period 4,766 2,509 Stock-based compensation 1,065 1,392 Stock options exercised (122) (22) ------------------------------------------------------------------------- Balance at end of period 5,709 3,879 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RETAINED EARNINGS Balance at beginning of period 4,709 (1,013) Net income 2,153 3,731 ------------------------------------------------------------------------- Balance at end of period 6,862 2,718 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance at beginning of period (279) (11) Other comprehensive income (loss) (36) - ------------------------------------------------------------------------- Balance at end of period (315) (11) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total - shareholders' equity $ 40,284 $ 34,019 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Operations For the Three and Six Months Ended December 31, 2009 (in thousands of United States dollars, except per share amounts) Three months ended Six months ended -------------------------- ------------------------- December 31, December 31, December 31, December 31, 2009 2008 2009 2008 ----------------------------------------------- ------------------------- Revenue Colocation Services $ 6,845 $ 6,124 13,473 $ 12,839 Hosting Services 17,051 17,515 33,797 34,305 -------------------------- ------------------------- 23,896 23,639 47,270 47,144 Cost of revenue 14,107 12,866 27,818 25,902 ----------------------------------------------- ------------------------- Gross profit 9,789 10,773 19,452 21,242 Operating expenses 7,530 7,069 14,715 14,035 ----------------------------------------------- ------------------------- Operating income before other items 2,259 3,704 4,737 7,207 ----------------------------------------------- ------------------------- Other items: Interest income (1) (17) (6) (54) Gain on insurance recovery - - (93) - Gain on disposal of property and equipment (30) (18) (42) (20) Foreign exchange loss 109 (91) 189 (84) Interest expense - long term 336 437 648 861 ----------------------------------------------- ------------------------- 414 311 696 703 ----------------------------------------------- ------------------------- Income before income taxes 1,845 3,393 4,041 6,504 ----------------------------------------------- ------------------------- Future income tax expense (recovery) (204) (52) (500) 237 Current income tax expense 1,163 1,440 2,388 2,536 ----------------------------------------------- ------------------------- Income tax expense 959 1,388 1,888 2,773 ----------------------------------------------- ------------------------- Net income $ 886 $ 2,005 $ 2,153 $ 3,731 Other comprehensive income: Change in unrealized fair value of derivatives designated as cash flow hedges 46 - (36) - ----------------------------------------------- ------------------------- Comprehensive income $ 932 $ 2,005 $ 2,117 $ 3,731 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- Net income attributable to: Common shares $ 886 $ 2,005 $ 2,153 $ 3,731 Comprehensive income attributable to: Common shares $ 932 2,005 $ 2,117 3,731 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- Basic and diluted earnings per share $ 0.01 $ 0.02 $ 0.02 $ 0.03 ----------------------------------------------- ------------------------- ----------------------------------------------- ------------------------- Weighted average number of shares outstanding: Basic 121,197,002 119,268,381 120,350,957 118,983,859 Diluted 124,518,581 124,016,730 124,332,317 124,205,739 PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Cash Flows For the Three and Six Months Ended December 31, 2009 (in thousands of United States dollars) Three months ended Six months ended -------------------------- ------------------------- December 31, December 31, December 31, December 31, 2009 2008 2009 2008 ----------------------------------------------- ------------------------- Operating Activities: Net income $ 886 $ 2,005 $ 2,153 $ 3,731 Adjustments for non-cash items: Amortization of property and equipment 3,344 2,990 6,495 5,644 Amortization of intangible assets 164 338 487 728 Increase in accrued interest and accretion of convertible debt - 37 - 55 Bad debt expense 56 261 214 397 Gain on disposal of property and equipment (30) (18) (42) (20) Amortization of deferred gain (20) (20) (39) (39) Gain on insurance - - (93) - Amortization of deferred loan origination fees 68 117 117 240 Future income tax expense (204) (52) (500) 237 Stock-based compensation included in income for the period 502 587 1,065 1,392 (Decrease) Increase in deferred lease inducements (37) 37 (73) 1 Changes in non-cash working capital: Decrease (Increase) accounts receivable (354) 236 (863) (1,285) Increase in prepaid expenses (489) (114) (576) (213) Increase (Decrease) in accounts payable and accrued liabilities 814 334 657 (1,176) Increase (Decrease) in income taxes payable 247 1,121 (2,177) 299 Increase in deferred revenue 30 41 114 60 ----------------------------------------------- ------------------------- Cash flows from operating activities 4,977 7,900 6,939 10,051 ----------------------------------------------- ------------------------- Investing Activities: Investment in other assets (135) 10 (226) 31 Acquisition of property and equipment (7,645) (5,034) (13,603) (9,030) Acquisition of intangible assets (612) (496) (936) (895) Proceeds on disposition of equipment 30 18 42 20 ----------------------------------------------- ------------------------- Cash flows used in investing activities (8,362) (5,502) (14,723) (9,874) ----------------------------------------------- ------------------------- Financing Activities: Repayments of notes payable (750) (800) (750) (1,600) Payment of capital lease obligations (58) (47) (112) (101) Issuance of capital stock 52 18 462 194 ----------------------------------------------- ------------------------- Cash flows used in financing activities (756) (829) (400) (1,507) ----------------------------------------------- ------------------------- Foreign exchange gain (loss) on cash and cash equivalents 9 (160) 62 (120) ----------------------------------------------- ------------------------- (Decrease) Increase in cash and cash equivalents (4,132) 1,409 (8,122) (1,450) Cash and cash equivalents, beginning 11,754 8,167 15,744 11,026 ----------------------------------------------- ------------------------- Cash and cash equivalents, ending $ 7,622 $ 9,576 $ 7,622 $ 9,576 ----------------------------------------------- ------------------------- ----------------------------------------------- -------------------------
For further information: For investor inquiries please contact: David Feick, The Equicom Group, (403) 218-2839, [email protected]; For media inquiries please contact: Marcela Peake, PEER 1, (604) 909-6428, [email protected]
Share this article