PEER 1 Network Enterprises, Inc.
TSX VENTURE : PIX

PEER 1 Network Enterprises, Inc.

November 27, 2007 16:02 ET

PEER 1 Network Announces Record First Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 27, 2007) - PEER 1 Network Enterprises, Inc. (TSX VENTURE:PIX), a global provider of high performance Internet infrastructure, released the company's financial results for the first quarter of fiscal year 2008 for the three months ended September 30, 2007.

FIRST QUARTER RESULTS

Financial highlights from the quarter include the following (all figures are reported in US dollars):

- PEER 1's revenue increased 20.11% to $20.96 million for the three months ended September 30, 2007, compared to $17.45 million for the three months ended September 30, 2006.

- Gross profit increased 37.73% to $8.98 million for the three months ended September 30, 2007, compared to $6.52 million for the three months ended September 30, 2006.

- Operating income increased 62.64% to $2.83 million for the three months ended September 30, 2007, compared to $1.74 million for the three months ended September 30, 2006.

- Income before income taxes was $2.15 million for the three months ended September 30, 2007, compared to $0.35 million for the three months ended September 30, 2006.

- Net income was $1.25 million for the three months ended September 30, 2007, compared to $0.25 million for the three months ended September 30, 2006.

- Normalized EBITDA increased 34.13% to $5.97 million for the three months ended September 30, 2007, compared to $4.46 million for the three months ended September 30, 2006.

"PEER 1 had a great first quarter," said Fabio M. Banducci, PEER 1's president and CEO. "We experienced solid growth across all of our core service offerings during the quarter and posted record financial results. Our focus remains on becoming the preferred IT Infrastructure solutions provider to the SMB marketplace."

KEY DEVELOPMENTS

- During the quarter ended September 30, 2007, PEER 1 committed to a $4 million upgrade of the company's IP network. This upgrade will be accomplished through installation of carrier class routers purchased from the leaders in high performance networking, Cisco and Juniper. These two suppliers were chosen as part of the PEER 1 multi-vendor strategy to leverage the capabilities of each supplier to provide a best fit to each area of the PEER 1 backbone. Each router series has 10 gigabit interface capabilities allowing PEER 1 to upgrade existing areas of the backbone, as well as keeping an eye to the future for further capacity expansion. As a result of this purchase the company will have substantially increased bandwidth capacity, IP performance and the ability to accommodate new feature sets such as MPLS.

- On September 4, 2007, PEER 1 and Juniper Networks, Inc. the leader in high-performance networking announced that PEER 1 has expanded its managed firewall service offerings with the addition of Juniper Networks Secure Services Gateways (SSGs). Fully managed by PEER 1 experts, the Juniper Networks SSG platforms will provide best-in-class protection, superior capacity and Gigabit Ethernet interfaces, enabling PEER 1 to offer cost-effective, high-capacity security solutions that scale to meet the demands of the largest enterprises. The expanded managed firewall services ensure a secure and trusted network environment without requiring enterprise customers to dedicate IT resources, enabling customers to reduce operational costs and complexity.

- On September 10, 2007 the company announced several changes of roles for members of the company executive management team.

Lance Tracey, co-founder and chief executive officer, announced that he was stepping down from his role as CEO. Immediately thereafter, Mr. Tracey assumed his new role as executive chairman of PEER 1's board of directors.

Fabio M. Banducci was appointed the company's new CEO in addition to his existing role as president of PEER 1.

Gary Sherlock, PEER 1's chief financial officer, was promoted to the role of executive vice president in addition to his CFO responsibilities.

- On September 25, 2007 PEER 1 announced that it has deployed EMC Storage Area Network (SAN) platforms across all of its managed dedicated hosting data center operations in Atlanta, Miami, and Fremont, California (Silicon Valley). The EMC platform provides state-of-the-art technology to optimize PEER 1's data backup solution, providing managed dedicated hosting customers with faster and more reliable backup and data recovery. PEER 1's backup and data recovery solutions are fully managed by internal PEER 1 data backup experts and support professionals.

For complete details on any of the above, please refer to the Financial Statements and Management's Discussion & Analysis which will be available at www.sedar.com within 24 hours of the time of this release.



EBITDA Reconcilation
(unaudited - prepared by management)
(in $ thousands) Three Months Ended
----------------------
30-Sep-07 30-Sep-06

Net Profit (Loss) 1,246 249
Income tax expense (recovery) 901 97
Interest expense 596 856
Interest accretion on notes payable 22 56
Amortization of preferred share discount - 357
Amortization - licences, fixed assets and
deferred network costs 2,711 2,606
Stock based compensation 352 55
Loss (gain) on disposal of assets (14) (5)
Amortization of deferred gain (20) -
Foreign exchange loss (gain) 99 (33)
----------------------------------------------------------------------
EBITDA 5,893 4,238

Integration costs 93 225
----------------------------------------------------------------------
----------------------------------------------------------------------
Normalized EBITDA 5,986 4,463


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, a leading Internet infrastructure solutions company, provides full services to handle the needs of customers requiring 100% uptime for their online presence including network, co-location, and dedicated hosting services. Since its inception in 1999, the company has grown to include data centers and network points of presence in 17 major cities across North America and Europe, all connected by PEER 1's world class IP (Internet Protocol) network. PEER 1 serves a variety of customers including hosting providers, online gaming companies, Internet phone (VoIP) companies and many small and medium-sized businesses. The company's headquarters are in Vancouver, Canada and the stock is traded on the TSX Venture exchange under the symbol PIX. For more information visit http://www.peer1.com.

Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in PEER 1's public filings with securities regulatory authorities.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • PEER 1 Network Enterprises, Inc.
    Gary Sherlock
    Executive Vice President & CFO
    (604) 683-7747
    or
    PEER 1 Network Enterprises, Inc.
    Katie Wilson
    Communications
    (604) 683-7747
    Website: www.peer1.com