PNI Digital Media (TSX VENTURE: PN)(OTCBB: PNDMF) ("PNI" or the
"Company"), the leading innovator in digital media solutions for
retailers, announced financial results for the third quarter of
Fiscal Year 2011. Revenue for the quarter was $5.3 million. If
foreign currency exchange rates had remained constant, revenue for
the quarter would have been approximately $5.5 million.
Fiscal 2011 Third Quarter Financial and Operational Highlights:
-- Transacted 4.2 million orders over the PNI Digital Media Platform, a 3%
increase compared to the third quarter of Fiscal 2010.
-- Revenue of $5.3 million, compared to $5.7 million in third quarter of
Fiscal 2010.
-- Transactional revenue of $4.0 million, compared to $4.4 million during
the third quarter of Fiscal 2010 Transaction fees represented 75% of
total revenue for the quarter, consistent with the same period last
year.
-- Non-GAAP adjusted EBITDA(1) of $0.6 million, compared to $1.6 million
during the same period last year.
-- GAAP net loss after income taxes of $76,000 for the quarter.
-- The Company extended its agreement with Costco US and Costco Canada for
an additional five year term through 2016.
-- The Company renewed its agreement with CVS/pharmacy for online photo
services.
-- Continued investment into new vertical markets, with total expenditures
on software development totaling $2.7 million compared to $2 million in
the third quarter of 2010.
-- The Company announced it has entered into an agreement with a leading
national retailer to launch its flagship social stationery product.
"We continue to execute on our plan of launching new product
offerings to our existing and new retail partners," said Kyle Hall,
Chief Executive Officer of PNI Digital Media. "The core business is
being readied for the holiday season with many new features to
enhance our customers' market penetration."
Conference Call
The Company will host a conference call on Tuesday, August 16th,
2011 at 4:30pm ET (1:30pm PT) to discuss the Company's Fiscal 2011
third quarter financial results. Mr. Kyle Hall, Chief Executive
Officer, Mr. Aaron Rallo, President and Chief Operating Officer and
Mr. Simon Bodymore, Chief Financial Officer will host the call.
To join the call, please dial (888) 241-0394 (US/Canada) or
(647) 427-3413 (International) and quote conference ID no.
84855932. Please call 10 minutes prior to the scheduled start
time.
Consolidated Balance Sheets
June 30, September
2011 30, 2010
--------------------------
Assets
Current assets
Cash and cash equivalents $ 3,020,411 $ 4,690,355
Accounts receivable 4,471,718 5,302,865
Prepaid expenses and other current assets 471,225 541,026
Current portion of future income tax asset 706,340 1,026,651
--------------------------
8,669,694 11,560,897
Property and equipment 5,415,294 5,230,829
Future income tax asset 5,189,370 4,953,934
Intangible assets 679,429 1,115,794
Goodwill 559,187 658,904
--------------------------
$ 20,512,974 $ 23,520,358
--------------------------
--------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 2,710,935 $ 5,471,878
Current portion of deferred revenue 261,601 613,081
Current portion of capital lease obligations - 107,964
Future income tax liability 68,474 119,081
--------------------------
3,041,010 6,312,004
Deferred revenue 36,158 78,876
--------------------------
3,077,168 6,390,880
--------------------------
Shareholders' Equity
Share capital $ 66,525,300 $ 66,200,215
Contributed surplus 19,129,244 18,933,619
--------------------------
85,654,544 85,133,834
--------------------------
Deficit (65,529,999) (65,684,820)
Accumulated other comprehensive loss (2,688,739) (2,319,536)
--------------------------
(68,218,738) (68,004,356)
--------------------------
17,435,806 17,129,478
--------------------------
$ 20,512,974 $ 23,520,358
--------------------------
--------------------------
Consolidated Statements of (Loss) Earnings and Comprehensive (Loss) Gain
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
------------------------------------------------------
Revenue $ 5,316,242 $ 5,681,221 $ 18,081,310 $ 18,699,156
Expenses
Network delivery 915,156 1,092,965 3,397,609 4,278,918
Software
development 2,710,147 2,011,188 8,317,564 5,858,576
General and
administration 995,071 957,569 3,074,899 3,047,616
Sales and
marketing 208,980 191,706 770,009 647,236
Amortization 750,549 1,400,145 2,132,781 4,095,871
------------------------------------------------------
5,579,903 5,653,573 17,692,862 17,928,217
------------------------------------------------------
(Loss) earnings
from operations
before the
undernoted (263,661) 27,648 388,448 770,939
Realized foreign
exchange (loss)
gain (1,435) 8,691 (84,433) (51,884)
Unrealized foreign
exchange (loss)
gain (40,749) (130,245) 50,159 496,563
Interest income 446 - 494 679
Interest expense -
capital lease - (15,817) (5,536) (65,055)
Interest expense -
other (464) (37) (479) (1,597)
Loss on disposal of
property and
equipment (25,698) - (116,411) -
Loss on settlement
of asset
retirement
obligation - - - (4,810)
------------------------------------------------------
(67,900) (137,408) (156,206) 373,896
------------------------------------------------------
(Loss) earnings
before income
taxes (331,561) (109,760) 232,242 1,144,835
Current income tax
benefit (expense) - - - -
Future income tax
benefit (expense) 255,340 - (77,421) (101,158)
------------------------------------------------------
Net (loss) earnings (76,221) (109,760) 154,821 1,043,677
Other comprehensive
gain (loss):
Unrealized foreign
exchange gain
(loss) on
translation of
self sustaining
foreign operations 24,492 230,225 (369,203) (741,615)
------------------------------------------------------
Comprehensive
(loss) gain $ (51,729) $ 120,465 $ (214,382) $ 302,062
------------------------------------------------------
------------------------------------------------------
(Loss) earnings per
share
Basic $ (0.00) $ (0.00) $ 0.00 $ 0.03
Fully diluted $ (0.00) $ (0.00) $ 0.00 $ 0.03
Non-GAAP Financial Measures
Three Months Ended
June 30, June 30,
2011 2010
--------------------------
Net (loss) in accordance with GAAP $ (76,221) $ (109,760)
Amortization 750,549 1,400,145
Interest expense 464 15,854
Income tax (benefit) expense (255,340) -
Stock based compensation expense 148,028 168,379
Unrealized foreign exchange loss (gain) 40,749 130,245
--------------------------
Adjusted EBITDA $ 608,229 $ 1,604,863
--------------------------
--------------------------
Nine Months Ended
June 30, June 30,
2011 2010
--------------------------
Net earnings (loss) in accordance with GAAP $ 154,821 $ 1,043,677
Amortization 2,132,781 4,095,871
Interest expense 6,015 66,652
Income tax expense 77,421 101,158
Stock based compensation expense 507,428 535,328
Unrealized foreign exchange (gain) (50,159) (496,563)
--------------------------
Adjusted EBITDA $ 2,828,307 $ 5,346,123
--------------------------
--------------------------
Notes:
1 - Non-GAAP Measures
The Company continues to provide all information required in
accordance with GAAP, but believes evaluating its ongoing operating
results may not be as useful if an investor is limited to reviewing
only GAAP financial measures. Accordingly, the Company uses
non-GAAP financial information to evaluate its ongoing operations
and for internal planning and forecasting purposes. The primary
non-GAAP financial measures utilized by the Company include
adjusted EBITDA and adjusted EBITDA per share. Adjusted EBITDA is
defined as earnings (loss) before interest expense, taxes,
depreciation, amortization, unrealized foreign currency gains and
losses and stock-based compensation.
To supplement the Company's financial statements presented on a
GAAP basis, we believe that these non-GAAP measures provide useful
information about the Company's core operating results and thus are
appropriate to enhance the overall understanding of the Company's
past financial performance and its prospects for the future. These
adjustments to the Company's GAAP results are made with the intent
of providing both management and investors a more complete
understanding of the Company's underlying operational results and
trends and performance. Management uses these non-GAAP measures to
evaluate the Company's financial results, develop budgets, manage
expenditures, and determine employee compensation. The presentation
of additional information is not meant to be considered in
isolation or as a substitute for or superior to net (loss) earnings
or net (loss) earnings per share determined in accordance with
GAAP.
Currency:
All amounts are expressed in Canadian dollars. This notice is
qualified in its entirety by reference to the Company's financial
statements and accompanying Management Discussion and Analysis,
which are accessible on the SEC'S website at
www.sec.gov/edgar.shtml and on SEDAR at www.sedar.com.
About PNI Digital Media:
Founded in 1995, PNI Digital Media operates the PNI Digital
Media Platform, which provides transaction processing and order
routing services for major retailers. The PNI Digital Media
Platform connects consumer-ordered digital content, whether from
online, in-store kiosks, desktop software or mobile phones, with
retailers that have on-demand manufacturing capabilities for the
production of personalized products such as photos, photo books and
calendars, business cards and stationery. PNI Digital Media
successfully generates millions of transactions each year for
retailers and their thousands of locations worldwide.
Further information on our company can be found at:
www.pnimedia.com
The statements that are not historical facts contained in this
release are forward-looking statements that involve risks and
uncertainties. PNI Digital Media's actual results could differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to, changes in technology,
employee retention, inability to deliver on contracts, failure of
customers to continue marketing the online solution, competition,
general economic conditions, foreign exchange and other risks
detailed in the Company's annual report and other filings.
Additional information related to the Company can be found on SEDAR
at www.sedar.com and on the SEC'S website at
www.sec.gov/edgar.shtml. The information contained herein is
subject to change without notice. PNI Digital Media shall not be
liable for technical or editorial errors or omissions contained
herein.
The TSX Venture Exchange has neither approved nor disapproved
the information contained in this release. PNI Digital Media relies
upon litigation protection for "forward-looking" statements.
PNI Digital Media is a registered trademark of PNI Digital Media
Inc. All other trademarks are property of their respective
owners.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: PNI Digital Media Inc. - Financial Information Simon
Bodymore CFO (604) 893-8955 ext. 229 PNI Digital Media Inc. -
Investor Relations and Press Simon Cairns (866) 544-4881
ir@pnimedia.com Twitter: @pni_media
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