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.
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