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
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EBITDA 6,592 7,368
Gain - insurance recovery (93) -
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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
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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 -
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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
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$ 68,078 $ 66,430
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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
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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
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29,280 29,791
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Shareholders' equity 38,798 36,639
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$ 68,078 $ 66,430
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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
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September 30, 2009 September 30, 2008
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Number Amount Number Amount
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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
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Balance at end of
period 121,055,984 27,790 119,252,657 26,911
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Warrants
Balance at beginning
of period 2,461,619 493 3,139,904 678
Warrants expired/
exercised (1,628,286) (407) (678,285) (185)
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Balance at end of
period 833,333 86 2,461,619 493
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Total - share
capital 121,889,317 27,876 121,714,276 27,404
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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)
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Balance at end of
period 5,307 3,303
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RETAINED EARNINGS
Balance at
beginning of period 4,709 (1,013)
Net income 1,267 1,726
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Balance at end of
period 5,976 713
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ACCUMULATED OTHER
COMPREHENSIVE INCOME
Balance at beginning
of period (279) (11)
Other comprehensive
income (82) -
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Balance at end of
period (361) (11)
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Total - shareholders'
equity $ 38,798 $ 31,409
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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
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Revenue
Colocation Services $ 6,628 $ 6,715
Hosting Services 16,746 16,789
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23,374 23,504
Cost of revenue 13,711 13,036
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Gross profit 9,663 10,468
Operating expenses 7,185 6,967
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Operating income before other items 2,478 3,501
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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
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284 390
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Income before income taxes 2,194 3,111
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Future income tax expense (recovery) (297) 289
Current income tax expense 1,224 1,096
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Income tax expense 927 1,385
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Net income $ 1,267 $ 1,726
Other comprehensive income:
Change in unrealized fair value of derivatives
designated as cash flow hedges (82) -
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Comprehensive income $ 1,185 $ 1,726
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Net income attributable to:
Common shares $ 1,267 $ 1,726
Comprehensive income attributable to:
Common shares $ 1,185 $ -
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Basic and diluted earnings per share $ 0.01 $ 0.01
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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
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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
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Cash flows from operating activities 1,962 2,150
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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
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Cash flows used in investing activities (6,361) (4,371)
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Financing Activities:
Repayments of notes payable - (800)
Payment of capital lease obligations (55) (54)
Issuance of capital stock 411 176
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Cash flows from (used in) financing activities 356 (678)
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Foreign exchange gain on cash and cash
equivalents 53 40
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Increase in cash and cash equivalents (3,990) (2,859)
Cash and cash equivalents, beginning 15,744 11,026
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Cash and cash equivalents, ending $ 11,754 $ 8,167
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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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