PEER 1 Networks Reports Fourth Quarter and Year-End Results for Fiscal 2009
Selected Financial Highlights comparing fiscal 2009 to 2008:
- Revenue increased 3.3% to $92.3 million from $89.35 million;
- Gross profit decreased 1.9% to $39.75 million from $40.51 million;
- Operating income decreased 16% to $12.33 million from $14.69 million;
- Normalized EBITDA decreased 1% to $27.85 million from $28.1 million;
- Net income decreased to $5.7 million from $7.1 million.
Corporate highlights for fiscal 2009:
- Added 5,478 square feet of additional data center space at 151 Front
Street in Toronto;
- Entered into a long term lease on a site in the Greater Toronto Area
with a 41,000 square foot building that will be transformed into an
energy efficient data center accommodating all of our core service
offerings;
- Launched European expansion by opening an office and commissioning a
data center in the United Kingdom;
- Hired industry veteran Dominic Monkhouse to lead European operations;
- Secured a credit agreement with National Bank Financial Group for a
term and revolving credit facility of US$40 million in aggregate; and
- Expanded Herndon, Virginia data center by leasing 8,614 square feet
of contiguous space that will increase capacity by approximately
2,880 servers.
"Despite a very challenging economic environment for both PEER 1 and its customers this past year, we were able to execute on several initiatives designed to expand our service offerings and geographic reach," said Fabio M. Banducci, President and Chief Executive Officer of PEER 1. "As economic conditions improve, PEER 1 will be well positioned to better service our existing customers, grow in our traditional markets and expand into new geographic regions."
Fourth Quarter and Annual Financial Review
Revenues decreased to
Hosting revenues decreased to
For the three months ended
Bandwidth revenues decreased to
Cost of sales as a percentage of revenue increased to 58.9% for the three months ended
For the three months ended
Normalized EBITDA for the quarter ended
Net income for the three months ended
As at
The Company had working capital of
Subsequent Events
On
On
Completion of the SAS 70 Type I audit indicates the successful examination of PEER 1's processes, controls at the
EBITDA Reconciliation
EBITDA Reconciliation
(unaudited - prepared
by management)
(in $ thousands) Three Months Ended Twelve Months Ended
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30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08
Net Profit 577 1,734 5,722 7,064
Income tax expense 1,046 1,451 4,661 5,237
Interest expense 928 570 2,194 2,267
Amortization -
licences, fixed
assets and
deferred network
costs 3,498 3,028 13,243 11,048
Stock based
compensation 456 273 2,282 1,453
Loss (gain) on
disposal of assets (26) 2 (47) (12)
Amortization of
deferred gain (19) (20) (79) (79)
Foreign exchange
loss (gain) 2 126 (130) 367
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EBITDA 6,462 7,164 27,846 27,345
Provision for
sales / use tax - 624 - 624
Integration costs - - - 93
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Normalized EBITDA 6,462 7,788 27,846 28,062
Conference Call
PEER 1 will be holding a conference call today,
To access the conference call by telephone, dial (416) 644-3426 or 1-800-731-5319. 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=2809620
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
PEER 1 believes in the limitless opportunity of the Internet, and the business growth potential it provides for its more than 10,000 customers. As a leading online IT infrastructure provider, PEER 1 offers a reliable high performance Internet network, supporting scalable managed hosting, dedicated hosting through the ServerBeach brand, and co-location solutions. Backed by its 100 percent uptime guarantee and 24x7x365 FirstCall Support(TM), PEER 1 ensures customers' online presence is always fast, always available. Since 1999, PEER 1 has grown to include 16 data centers located in 13 cities across
PEER 1 NETWORK ENTERPRISES, INC.
Consolidated Balance Sheet
June 30, 2009
(in thousands of United States dollars)
2009 2008
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Assets
Current:
Cash and cash equivalents $ 15,744 $ 11,026
Accounts receivable 3,449 4,051
Future income tax asset 237 104
Prepaid expenses 1,130 801
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20,560 15,982
Other assets 2,692 3,075
Future income tax asset 1,042 1,841
Property and equipment 36,856 33,818
Equipment under capital lease 1,013 1,267
Goodwill 1,715 1,715
Intangible assets 2,552 2,500
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$ 66,430 $ 60,198
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Liabilities
Current:
Accounts payable and accrued liabilities $ 7,936 $ 8,810
Deferred revenue 2,886 3,553
Current portion of deferred gain 79 79
Current portion of deferred lease
inducements 138 134
Current portion of derivative liabilities 89 -
Current portion of notes payable 2,250 3,286
Current portion of obligations under
capital lease 211 226
Income taxes payable 2,200 1,435
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15,789 17,523
Deferred gain 493 571
Deferred lease inducements 664 739
Derivative liabilities 179 -
Notes payable 12,303 12,008
Obligation under capital lease 363 655
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29,791 31,496
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Shareholders' equity 36,639 28,702
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$ 66,430 $ 60,198
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PEER 1 NETWORK ENTERPRISES, INC.
Consolidated Statements of Shareholders' Equity
For the Year Ended June 30, 2009
(in thousands of United States dollars except number of shares)
2009 2008
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Number Amount Number Amount
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SHARE CAPITAL
Common shares
Balance at
beginning of
year 118,504,368 $ 26,539 115,994,291 $ 25,254
Stock options
exercised 131,670 70 572,577 296
Warrants
exercised 678,285 341 1,937,500 989
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Balance at end
of year 119,314,323 26,950 118,504,368 26,539
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Warrants
Balance at
beginning of
year 3,139,904 678 5,077,404 917
Warrants
expired/exercised (678,285) (185) (1,937,500) (239)
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Balance at end
of year 2,461,619 493 3,139,904 678
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Total - share capital 27,443 27,217
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CONTRIBUTED SURPLUS
Balance at
beginning of
year 2,509 1,092
Stock-based
compensation 2,282 1,453
Options
exercised and
shares distributed
under the stock
option plan (25) (36)
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Balance at end of year 4,766 2,509
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RETAINED EARNINGS
Balance at
beginning of year (1,013) (8,077)
Net income 5,722 7,064
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Balance at end of year 4,709 (1,013)
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ACCUMULATED OTHER
COMPREHENSIVE INCOME
Balance at
beginning of year (11) (11)
Other
comprehensive
income (268) -
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Balance at end of year (279) (11)
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Total - shareholders' equity $ 36,639 $ 28,702
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PEER 1 NETWORK ENTERPRISES, INC.
Consolidated Statement of Operations
For the Year Ended June 30, 2009
(in thousands of United States dollars, except per share amounts)
2009 2008
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Revenue
Co-location Services $ 25,080 $ 27,397
Hosting Services 67,229 61,950
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92,309 89,347
Cost of revenue 52,560 48,835
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Gross profit 39,749 40,512
Operating expenses 27,419 25,824
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Operating income before other items 12,330 14,688
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Other items:
Interest income (70) (328)
Integration costs - 93
Gain on disposal of property and equipment (47) (12)
Foreign exchange loss (gain) (130) 367
Interest expense - long term 2,194 2,267
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1,947 2,387
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Income before income taxes 10,383 12,301
Income tax expense 4,661 5,237
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Net income $ 5,722 $ 7,064
Other comprehensive income:
Change in unrealized fair value of
derivatives designated as cash flow hedges (268) -
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Comprehensive income $ 5,454 $ 7,064
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Net income attributable to:
Common shares $ 5,722 $ 7,064
Comprehensive income attributable to:
Common shares $ 5,454 $ 7,064
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Basic and diluted earnings per share $ 0.05 $ 0.06
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PEER 1 NETWORK ENTERPRISES, INC.
Consolidated Statement of Cash Flows
For the Year Ended June 30, 2009
(in thousands of United States dollars)
2009 2008
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Operating Activities:
Net income $ 5,722 $ 7,064
Adjustments for non-cash items:
Amortization of property and equipment 11,880 9,458
Amortization of intangible assets 1,363 1,590
Increase in accrued interest and accretion
of convertible debt 82 18
Bad debt expense 650 494
Gain on disposal of property and equipment (47) (12)
Amortization of deferred gain (79) (79)
Amortization of deferred loan origination
fees 774 648
Future income tax expense 655 2,040
Stock-based compensation included in income
for the year 2,282 1,453
Decrease in deferred lease inducements (71) (236)
Changes in non-cash working capital:
Change in accounts receivable (47) (122)
Increase in prepaid expenses (329) (112)
Increase (decrease) in accounts payable
and accrued liabilities (992) 341
Increase in income taxes payable 765 959
Decrease in deferred revenue (667) (683)
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Cash flows from operating activities 21,941 22,821
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Investing Activities:
Investment in other assets (56) 78
Acquisition of property and equipment (14,451) (17,017)
Acquisition of intangible assets (1,511) (975)
Proceeds on disposition of equipment 47 46
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Cash flows used in investing activities (15,971) (17,868)
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Financing Activities:
Proceeds from notes payable 15,000 -
Repayments of notes payable (16,158) (3,554)
Payment of capital lease obligations (199) (91)
Issuance of capital stock 201 1,011
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Cash flows used in financing activities (1,156) (2,634)
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Foreign exchange gain (loss) on cash and
cash equivalents (96) (47)
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Increase in cash and cash equivalents 4,814 2,319
Cash and cash equivalents, beginning 11,026 8,754
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Cash and cash equivalents, ending $ 15,744 $ 11,026
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For further information: For investor enquiries please contact David Feick, Equicom Group, (403) 538-4787, [email protected]; For media inquiries please contact Marcela Peake, PEER 1, (604) 909-6428, [email protected]
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