PNI Digital Media Inc.
TSX VENTURE : PN
OTC Bulletin Board : PNDMF

PNI Digital Media Inc.

December 14, 2009 16:55 ET

PNI Digital Media Announces Fiscal 2009 Year-End and Fourth Quarter Financial Results

Record Revenue, Record Cash Flow Generation for FY 2009; Profitable Fourth Quarter

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 14, 2009) - PNI Digital Media (TSX VENTURE:PN)(OTCBB:PNDMF), ("PNI" or the "Company"), the leading innovator in digital media solutions for retailers announced revenue for the full year Fiscal 2009 was $24.4 million, representing an increase of 43% over the same period last year. Non-GAAP adjusted EBITDA1 for the year was $6.2 million, compared to a non-GAAP adjusted EBITDA loss of $2.2 million during Fiscal Year 2008. Furthermore, PNI Digital Media transacted a record 14.6M orders for the year, an increase of 94% compared to Fiscal Year 2008.

Fourth Quarter revenue was also a record for a non-holiday quarter with the quarter coming in at $6.8 million and generating non-GAAP adjusted EBITDA of $2.2 million or $0.06 per share. The Company posted a GAAP profit of $0.6 million for the Quarter and Earnings Per Share of $0.02.

PNI Digital Media will host a conference call today, Monday, December 14th at 4:30pm ET (1:30pm PT) to discuss the company's Fiscal 2009 year-end and fourth quarter financial results. Investors and interested parties should dial 1 (888)-300-8196 (US/Canada) or 1 (647)-427-3426 (International) and quote conference ID no. 39626339. Please call 10 minutes prior to the scheduled start time. PNI Digital Media will also provide a live webcast, available at the company's website http://www.pnimedia.com/webcast.

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.

"In addition to strong revenue results and the near doubling of transactions processed this past year, PNI had its highest EBITDA generating, non-holiday quarter in company history," said Kyle Hall, Chief Executive Officer of PNI Digital Media. "We generated positive cash flow in each quarter of Fiscal 2009 while reducing cash expenses by 1% year over year. We remain committed to increasing positive cash flow going forward."

Financial Highlights:

FY 2009

  • Record revenues of $24.4 million in Fiscal 2009 compared to $17 million in Fiscal 2008
  • Transactional revenue of $18.1 million, an increase of 56% year-on-year
  • Transaction fees representing 74% of total revenue vs. 68% during Fiscal 2008
  • Non-GAAP adjusted EBITDA of $6.2 million in Fiscal 2009, compared to a non-GAAP adjusted EBITDA loss of ($2.2) million during Fiscal 2008
  • Non-GAAP adjusted EBITDA per share of $0.18 compared to a non-GAAP adjusted EBITDA loss per share of ($0.07) in fiscal 2008

Fourth Quarter 2009

  • Record revenue for Q4 2009 of $6.8 million compared to $5.3 million in Q4 of Fiscal 2008
  • Record non-GAAP adjusted EBITDA of $2.2 million for Q4 2009 compared to an adjusted EBITDA loss of ($0.2) million in Q4 of fiscal 2008
  • Profit of $0.6 million for Q4 2009 compared to a loss of ($2.7) million for Q4 2008
  • Earnings per share on a GAAP basis for Q4 2009 of $0.02 compared to a loss of ($0.08) in Q4 2008
  • Non-GAAP adjusted EBITDA per Share for Q4 2009 of $0.06 compared to a loss of ($0.01) in Q4 2008

Notes:

1 – Adjusted EBITDA is a non-GAAP financial measure which the Company defines as net loss plus amortization, interest expense, tax expense, share-based compensation expense and un-realized foreign exchange loss (gain). A full reconciliation of the Company's results between these non-GAAP figures and the results in accordance with GAAP is included on page 16 of our MD&A.

PNI Digital Media Inc.
Consolidated Balance Sheets

    September 30, 2009   September 30, 2008
         
Assets        
         
Current assets        
  Cash and cash equivalents                  $ 4,237,284                 $  2,670,988
  Accounts receivable   4,855,114   4,019,286
  Prepaid expenses and other current assets   312,687   430,616
         
    9,405,085   7,120,890
         
Property and equipment   6,174,920   6,786,650
         
Deferred expenses   -   52,882
         
Intangible assets   3,892,211   5,164,492
         
Goodwill   1,664,759   1,498,539


       
                $ 21,136,975   $ 20,623,453
         
Liabilities        
         
Current liabilities        
  Accounts payable and accrued liabilities   $ 7,785,812   $ 7,480,801
  Purchase consideration payable   869,803   -
  Current portion of deferred revenue   410,088   658,045
  Current portion of capital lease obligations   490,072   490,072
  Loan payable   937,548   969,886
  Asset retirement obligation   41,503   -
         
    10,534,826   9,598,804
         
Deferred revenue   195,059   363,108
Long-term portion of capital lease obligations   38,500   375,875
Restructuring liability   176,056   -
Asset retirement obligations   -   22,009
    10,944,441   10,359,796
         
Shareholders' Equity        
         
Share capital   $ 66,017,456   $ 65,614,347
Warrants   -   4,961,826
Contributed surplus   18,521,086   11,611,165
    84,538,542   82,187,338
         
Deficit   (72,536,814)   (70,767,148)
         
Accumulated other comprehensive loss   (1,809,194)   (1,156,533)
         
    (74,346,008)   (71,923,681)
         
    10,192,534   10,263,657
         
    $ 21,136,975   $ 20,623,453
         

PNI Digital Media Inc.
Consolidated Statements of Loss and Comprehensive Loss

  2009   2008       2007
           
Revenue $ 24,446,569   $ 17,049,587   $ 7,511,328
           
Expenses          
  Network delivery  6,672,583     7,409,525     2,523,174
  Software development 7,566,227   6,914,291   4,178,111
  General and administration 4,893,640     4,480,258     3,199,727
  Sales and marketing 1,202,699     1,140,028     1,134,350
  Amortization of intangible assets 3,243,359     3,214,908     574,184
  Amortization of property and equipment 2,770,357     2,044,145     649,270
  26,348,865     25,203,155     12,258,816
           
           
Loss from operations before the undernoted   (1,902,296)     (8,153,568)     (4,747,488)
           
Realized foreign exchange gain (loss)   115,526   53,818   (365,474)
Unrealized foreign exchange gain (loss)   435,467   407,223   (1,349,690)
           
Interest income   8,759   134,848   393,416
Interest expense   (219,951)   (123,192)   -
           
Loss on disposal of property, plant & equipment (56,171)   (35,698)   -
Gain on settlement of asset retirement obligation -   86,120   -
Goodwill impairment (note 8) -   (1,086,577)   -
           
           
           
    283,630     (563,458)     (1,324,748)
           
Loss before income taxes   (1,618,666)     (8,717,026)     (6,072,236)
           
Income tax expense   (151,000)     -     -
           
Net loss   (1,769,666)     (8,717,026)     (6,072,236)
           
Other comprehensive loss:          
           
Unrealized foreign exchange loss on translation of self- sustaining foreign operations   (652,661)     (346,964)     (809,569)
       
Comprehensive loss $ (2,422,327)   $ (9,063,990)   $ (6,881,805)
           
           
Basic and fully diluted net loss per share   $ (0.05)     $ (0.26)     $ (0.20)
           
Weighted average number of common shares outstanding   33,610,843     33,383,866     29,877,739

PNI Digital Media Inc.
Non-GAAP Adjusted EBITDA Reconciliation

The following table provides a reconciliation of the Company's profit or (loss) reported in accordance with GAAP to non-GAAP Adjusted EBITDA.

  Three Months Ended
  September 30, 2009 September 30, 2008
     
Net profit (loss) in accordance with GAAP $           642,806 $        (2,714,584)
Amortization 1,473,805 2,289,068
Interest expense 52,799 108,010
Income tax expense 151,000 -
Stock based compensation expense 449,691 445,584
Unrealized foreign exchange (gain) (632,708) (334,674)
     
Adjusted EBITDA $       2,137,393 $          (206,596)
     
     
  Twelve Months Ended
  September 30, 2009 September 30, 2008
     
Net (loss) in accordance with GAAP  $   (1,769,666) $       (8,717,026)
Amortization 6,013,716 5,259,053
Interest expense 219,951 123,192
Income tax expense 151,000  
Stock based compensation expense 2,016,015 1,511,504
Unrealized foreign exchange (gain) (435,467) (407,223)
     
Adjusted EBITDA $      6,195,549 $       (2,230,500)
     

Non-GAAP MeasuresThe 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 before interest expense, taxes, depreciation, amortization, unrealized foreign currency gains and losses and stock-based compensation.

To supplement the Company's consolidated 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 income (loss) or net income (loss) per share determined in accordance with GAAP.

PNI Digital Media Inc.
Consolidated Statement of Profit (Loss) by Quarter

 
  Q1 2009 Q2 2009 Q3 2009 Q4 2009 Total
           
           
Revenue $7,176,333 $5,015,041 $5,443,760 $6,811,436 $24,446,569
           
Expenses          
Software development 1,810,956 1,843,612 1,866,661 2,044,998 7,566,227
General and administration 988,226 1,141,451 1,211,004 1,552,960 4,893,640
Network delivery 2,371,794 1,641,783 1,302,234 1,356,772 6,672,583
Sales and marketing 322,864 346,240 297,921 235,674 1,202,699
Amortization 1,399,028 1,521,834 1,619,049 1,473,804 6,013,716
           
  6,892,868 6,494,921 6,296,868 6,664,208 26,348,865
           
Profit (Loss) before the undernoted 283,465 (1,479,880) (853,109) 147,228 (1,902,296)
           
Realized foreign exchange (loss) gain 149,826 124,723 (280,411) 121,388 115,526
Unrealized foreign exchange (loss) gain 564,460 (66,691) (695,010) 632,707 435,467
Interest income 6,998 671 363 728 8,759
Interest expense (63,380) (53,947) (49,825) (52,799) (219,951)
Loss on disposal of property and equipment (725) 0 - (55,447) (56,171)
           
  657,179 4,756 (1,024,883) 646,577 283,630
           
Profit (Loss) before income taxes 940,644 (1,475,124) (1,877,992) 793,805 (1,618,666)
Future income tax recovery - - - (151,000) (151,000)
           
Net Profit (Loss) $940,644 $(1,475,124) $(1,877,992) $642,805 $(1,769,666)
           
Non-GAAP Adjusted EBITDA $2,291,975 $663,916 $1,102,265 $2,137,393 $6,195,549
           
Non-GAAP Adjusted EBITDA per share $0.07 $0.02 $0.03 $0.06 $0.18
           
 

About PNI Digital Media - The world's top retailers partner with PNI Digital Media to offer personalized products such as photo prints, photo books and gifts, personalized stationery and business cards for pick-up in as little as one hour. PNI Digital Media successfully generates millions of transactions each year for retailers and their thousands of locations worldwide.

For more information please visit 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 for 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.

PNI Digital Media relies upon litigation protection for "forward-looking" statements.

The TSX Venture Exchange has neither approved nor disapproved the information contained in this release. 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.

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