PEER 1 Network Enterprises, Inc.
TSX VENTURE : PIX

PEER 1 Network Enterprises, Inc.

November 29, 2006 08:31 ET

PEER 1 Network Announces First Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 29, 2006) - 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 2007 for the three months ended September 30, 2006.

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

- PEER 1's revenue increased 80.7% to $17.49 million for the quarter ended September 30, 2006, compared to $9.68 million for the quarter ended September 30, 2005.

- Gross profit was $6.22 million for the quarter ended September 30, 2006, an increase of 67.2% from $3.72 million for the quarter ended September 30, 2005.

- Operating income was $1.77 million for the quarter ended September 30, 2006, an increase of 61.8% from operating income of $1.10 million for the quarter ended September 30, 2005.

- Net profit was $0.25 million for the quarter ended September 30, 2006, compared to a net loss of $1.02 million for the quarter ended September 30, 2005.

- Cash flow from operating activities for the quarter ended September 30, 2006 was $1.1 million, compared to $2.03 million for the quarter ended September 30, 2005

- Normalized EBITDA for the quarter ended September 30, 2006 was $4.43 million, an increase of 73.0% compared to $2.56 million for the quarter ended September 30, 2005 (see reconciliation table below).

The previously announced acquisition of the dedicated hosting assets from Interland, Inc. was completed on September 2, 2005. Accordingly, for comparative purposes, please note that results for the quarter ending September 30, 2005 include only one month of contribution from the former Interland assets whereas the quarter ending September 30, 2006 includes a full three months of contribution.

"Achieving profitability for the first time in company history reflects well on our team's efforts to make our operations more efficient and to realize savings from the integration of the assets we acquired from Interland," said Fabio M. Banducci, PEER 1's president. "Our team remains focused on positioning PEER 1 for further growth and continued margin improvement."

Some key developments during the quarter include:

- On August 9, 2006, the company exercised its option to purchase its leased data center property located at 2300 NW Place, Miami, Florida. On September 26, 2006, PEER 1 subsequently entered into a sale and leaseback arrangement. After adjustments, PEER 1 recorded a deferred gain of $0.79 million on this transaction.

- On September 7, 2006, PEER 1 opened a new facility at 8500 Vicar Drive in San Antonio, Texas. The space includes 12,000 square feet of raised floor data center space and 6,500 square feet of adjoining office space.

- PEER 1 committed to a lease for a 3,500-square-foot expansion of its Vancouver co-location facilities.

- On September 6, 2006 PEER 1 announced that its Board of Directors had approved the adoption of a 2006 Combined Incentive and Nonqualified Stock Option Plan to replace the company's 2002 Incentive Stock Option Plan.

For complete details on any of the above, please refer to the Financial Statements and Management Discussion & Analysis available at http://www.sedar.com within 24 hours.



EBITDA Reconcilation
(unaudited - prepared by management)
(in $ thousands) Quarter Ended
------------------------
30-Sep-06 30-Sep-05

Net Profit (Loss) 249 (1,018)
Income taxes 97 -
Interest Expense 826 1,027
Interest accretion on notes payable 56 478
Amortization of preferred share discount 357 144
Amortization - licences,
fixed assets and deferred network costs 2,606 1,441
Stock based compensation 55 26
Loss (gain) on disposal of assets (5) -
Peer 1 share of Symmetric Broadband loss - 13
Foreign Exchange loss (gain) (33) 383
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EBITDA 4,208 2,494

Integration costs 225 67
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Normalized EBITDA 4,433 2,561


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 differs 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 16 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
    Chief Financial Officer
    (604) 683-7747
    or
    PEER 1 Network Enterprises, Inc.
    Katie Wilson
    Director of Communications
    (604) 683-7747
    Website: www.peer1.com