PEER 1 Reports Fiscal 2010 First Quarter Results
Selected financial highlights for the quarter ended September 30, 2009:
- Revenue decreased .55 % to $23.4 million from $23.5 million in the prior year period. On a sequential basis adjusted for changes in the exchange rate during the sequential quarter, total revenue increased 2.6% from the fourth quarter of fiscal 2009; - Gross profit decreased 7.7% to $9.7 million from $10.5 million in the prior year period; - Operating income decreased 29.2% to $2.5 million from $3.5 million in the prior year period; - Normalized EBITDA for the quarter was $6.5 million, down from $7.4 million in the prior year period but flat on a sequential basis when compared with the fourth quarter of fiscal 2009; - Income before income taxes decreased 29.3% to $2.2 million from $3.11 million in the prior year period; and - Net income decreased to $1.3 million from $1.7 million in the prior year period. Operational highlights for the first quarter: - Launched an image backup and bare metal recovery (BMR) service for its managed hosting customers. The BMR functionality will be provided by software from Cristie Software and will be fully managed by PEER 1 along with standard managed backup plans. - Welcomed Ken Rotman and Mitch Green to the board of directors in connection with Clairvest completing the purchase of 20,538,470 shares of PEER 1 from Celerity Partners on August 28, 2009
"Our relatively stable results on a year over year basis reflect the strength of our existing business even as we operate through a period of reduced economic activity," said Fabio Banducci, President and CEO of PEER 1. "Modest growth on a sequential basis, coupled with an ongoing investment in our future growth, suggests PEER 1 is well positioned to benefit as overall economic conditions continue to improve in the quarters ahead."
First Quarter Review
Revenues decreased to
Hosting Services revenues decreased to
Co-location revenues increased to
Bandwidth revenues decreased to
Cost of sales increased
Cost of sales as a percentage of revenue increased to 58.66% for the three months ended
Total operating expenses increased
Normalized EBITDA for the three months ended
Net income for the three months ended
On
The Company had working capital of
The Company has 121,219,911 common shares issued and outstanding on
Subsequent Events
Subsequent events to September 30, 2009:
On
EBITDA Reconciliation (Calendar) EBITDA Reconcilation (unaudited - prepared by management) (in $ thousands) Three Months Ended ---------------------- 30-Sep-09 30-Sep-08 Net Profit 1,267 1,726 Income tax expense 927 1,385 Interest expense 313 424 Amortization - licences, fixed assets and deferred network costs 3,474 3,044 Stock based compensation 562 805 Loss (gain) on disposal of assets (12) (3) Amortization of deferred gain (19) (20) Foreign exchange loss 80 7 ------------------------------------------------------------------------- EBITDA 6,592 7,368 Gain - insurance recovery (93) - ------------------------------------------------------------------------- Normalized EBITDA 6,499 7,368
Conference Call
PEER 1 will hold a conference call today,
To access the conference call by telephone, dial 416-644-3431 or 800-733-7560. 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=2883100
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 datacenters located in 13 cities across
PEER 1 NETWORK ENTERPRISES, INC. Consolidated Balance Sheet September 30, 2009 (in thousands of United States dollars) September 30, June 30, 2009 2009 ------------------------------------------------------------------------- Assets Current: Cash and cash equivalents $ 11,754 $ 15,744 Accounts receivable 3,891 3,449 Future income tax asset 234 237 Prepaid expenses 1,217 1,130 Income taxes receivable 223 - ------------------------------------------------------------------------- 17,319 20,560 Other assets 2,782 2,692 Future income tax asset 1,338 1,042 Property and equipment 41,409 36,856 Equipment under capital lease 963 1,013 Goodwill 1,715 1,715 Intangible assets 2,552 2,552 ------------------------------------------------------------------------- $ 68,078 $ 66,430 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current: Accounts payable and accrued liabilities $ 9,474 $ 7,936 Deferred revenue 2,969 2,886 Current portion of deferred gain 79 79 Current portion of deferred lease inducements 134 138 Current portion of derivative liabilities 127 89 Current portion of notes payable 3,000 2,250 Current portion of obligations under capital lease 233 211 Income taxes payable - 2,200 ------------------------------------------------------------------------- 16,016 15,789 Deferred gain 473 493 Deferred lease inducements 632 664 Derivative liabilities 223 179 Notes payable 11,601 12,303 Obligation under capital lease 335 363 ------------------------------------------------------------------------- 29,280 29,791 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Shareholders' equity 38,798 36,639 ------------------------------------------------------------------------- $ 68,078 $ 66,430 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statements of Shareholders' Equity For the Three Months Ended September 30, 2009 (in thousands of United States dollars except number of shares) Three Months Ended --------------------------------------------------- September 30, 2009 September 30, 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 113,375 59 70,004 31 Warrants exercised 1,628,286 781 678,285 341 ------------------------------------------------------------------------- Balance at end of period 121,055,984 27,790 119,252,657 26,911 ------------------------------------------------------------------------- Warrants Balance at beginning of period 2,461,619 493 3,139,904 678 Warrants expired/ exercised (1,628,286) (407) (678,285) (185) ------------------------------------------------------------------------- Balance at end of period 833,333 86 2,461,619 493 ------------------------------------------------------------------------- Total - share capital 121,889,317 27,876 121,714,276 27,404 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONTRIBUTED SURPLUS Balance at beginning of period 4,766 2,509 Stock-based compensation 563 805 Options exercised and shares distributed under the stock option plan (22) (11) ------------------------------------------------------------------------- Balance at end of period 5,307 3,303 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RETAINED EARNINGS Balance at beginning of period 4,709 (1,013) Net income 1,267 1,726 ------------------------------------------------------------------------- Balance at end of period 5,976 713 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance at beginning of period (279) (11) Other comprehensive income (82) - ------------------------------------------------------------------------- Balance at end of period (361) (11) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total - shareholders' equity $ 38,798 $ 31,409 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Operations For the Three Months Ended September 30, 2009 (in thousands of United States dollars, except per share amounts) Three Months Ended --------------------------- September 30, September 30, 2009 2008 ------------------------------------------------------------------------- Revenue Colocation Services $ 6,628 $ 6,715 Hosting Services 16,746 16,789 ------------- ------------- 23,374 23,504 Cost of revenue 13,711 13,036 ------------------------------------------------------------------------- Gross profit 9,663 10,468 Operating expenses 7,185 6,967 ------------------------------------------------------------------------- Operating income before other items 2,478 3,501 ------------------------------------------------------------------------- Other items: Interest income (4) (38) Gain on insurance recovery (93) - Gain on disposal of property and equipment (12) (3) Foreign exchange loss 80 7 Interest expense - long term 313 424 ------------------------------------------------------------------------- 284 390 ------------------------------------------------------------------------- Income before income taxes 2,194 3,111 ------------------------------------------------------------------------- Future income tax expense (recovery) (297) 289 Current income tax expense 1,224 1,096 ------------------------------------------------------------------------- Income tax expense 927 1,385 ------------------------------------------------------------------------- Net income $ 1,267 $ 1,726 Other comprehensive income: Change in unrealized fair value of derivatives designated as cash flow hedges (82) - ------------------------------------------------------------------------- Comprehensive income $ 1,185 $ 1,726 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income attributable to: Common shares $ 1,267 $ 1,726 Comprehensive income attributable to: Common shares $ 1,185 $ - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted earnings per share $ 0.01 $ 0.01 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding: Basic 119,508,564 118,703,525 Diluted 123,296,839 123,344,996 PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Cash Flows For the Three Months Ended September 30, 2009 (in thousands of United States dollars) Three Months Ended --------------------------- September 30, September 30, 2009 2008 ------------------------------------------------------------------------- Operating Activities: Net income $ 1,267 $ 1,726 Adjustments for non-cash items: Amortization of property and equipment 3,151 2,654 Amortization of intangible assets 323 390 Increase in accrued interest and accretion of convertible debt - 18 Bad debt expense 158 136 Gain on disposal of property and equipment (12) (3) Amortization of deferred gain (19) (20) Gain on insurance (93) - Amortization of deferred loan origination fees 49 123 Future income tax expense (297) 289 Stock-based compensation included in income for the period 562 805 Decrease in deferred lease inducements (36) (36) Changes in non-cash working capital: Increase accounts receivable (507) (1,521) Increase in prepaid expenses (87) (100) Decrease in accounts payable and accrued liabilities (158) (1,509) Decrease in income taxes payable (2,423) (821) Increase in deferred revenue 84 19 ------------------------------------------------------------------------- Cash flows from operating activities 1,962 2,150 ------------------------------------------------------------------------- Investing Activities: Investment in other assets (91) 22 Acquisition of property and equipment (5,958) (3,997) Acquisition of intangible assets (324) (399) Proceeds on disposition of equipment 12 3 ------------------------------------------------------------------------- Cash flows used in investing activities (6,361) (4,371) ------------------------------------------------------------------------- Financing Activities: Repayments of notes payable - (800) Payment of capital lease obligations (55) (54) Issuance of capital stock 411 176 ------------------------------------------------------------------------- Cash flows from (used in) financing activities 356 (678) ------------------------------------------------------------------------- Foreign exchange gain on cash and cash equivalents 53 40 ------------------------------------------------------------------------- Increase in cash and cash equivalents (3,990) (2,859) Cash and cash equivalents, beginning 15,744 11,026 ------------------------------------------------------------------------- Cash and cash equivalents, ending $ 11,754 $ 8,167 ------------------------------------------------------------------------- -------------------------------------------------------------------------
For further information: For further information: David Feick, The Equicom Group, (403) 218-2839, [email protected]; For media inquiries please contact: Marcela Peake, PEER 1, (604) 909-6428, [email protected]
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