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

PNI Digital Media Inc.

May 26, 2011 16:00 ET

PNI Digital Media Announces Fiscal 2011 Second Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 26, 2011) - 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 second quarter of Fiscal Year 2011. Revenue for the quarter was $5.0 million. If foreign currency exchange rates had remained constant, revenue for the quarter would have been approximately $5.2 million, compared to $5.3 million during the same period last year.

Fiscal 2011 Second Quarter Financial and Operational Highlights:

  • Transacted 3.6 million orders over the PNI Digital Media Platform, a 10% increase compared to the second quarter of Fiscal 2010
  • Revenue of $5.0 million, compared to $5.3 million in second quarter of Fiscal 2010
  • Transactional revenue of $3.5 million, compared to $3.7 million during the second quarter of Fiscal 2010 Transaction fees represented 69% of total revenue for the quarter, consistent with the same period last year
  • Non-GAAP adjusted EBITDA1 of $(0.1 million), compared to $1.0 million during the same period last year
  • GAAP net loss after income taxes of $852,000 for the quarter
  • The Company extended its agreement with Costco for an additional five year term through 2016
  • More than 700 promotions were offered over the PNI Digital Media Platform during the quarter

"Our second quarter is historically our weakest and this year was no exception," said Kyle Hall, Chief Executive Officer of PNI Digital Media. "We were happy to announce our contract extension with Costco through 2016 and look forward to announcing more customer news as we are able."

Conference Call

The Company will host a conference call on Thursday, May 26th, 2011 at 4:30pm ET (1:30pm PT) to discuss the Company's Fiscal 2011 second 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. 67562578. Please call 10 minutes prior to the scheduled start time. PNI Digital Media will also provide a live webcast and slide presentation, available on the Company's website at www.pnimedia.com/webcast. The presentation will be available for download for dial-in callers.

Consolidated Balance Sheets

March 31, 2011September 30, 2010
Assets
Current assets
Cash and cash equivalents$ 4,745,436$ 4,690,355
Accounts receivable3,782,8185,302,865
Prepaid expenses and other current assets590,213541,026
Current portion of future income tax asset1,082,0601,026,651
10,200,52711,560,897
Property and equipment5,617,9625,230,829
Future income tax asset4,531,9074,953,934
Intangible assets691,8211,115,794
Goodwill634,603658,904
$ 21,667,946$ 23,520,358
Liabilities
Current liabilities
Accounts payable and accrued liabilities$ 3,667,556$ 5,471,878
Current portion of deferred revenue423,910613,081
Current portion of capital lease obligations-107,964
Future income tax liability109,772119,081
4,201,2386,312,004
Deferred revenue55,71378,876
4,256,9516,390,880
Shareholders' Equity
Share capital$ 66,633,431$ 66,200,215
Contributed surplus18,944,57318,933,619
85,578,00485,133,834
Deficit(65,453,778)(65,684,820)
Accumulated other comprehensive loss(2,713,231)(2,319,536)
(68,167,009)(68,004,356)
17,410,99517,129,478
$ 21,667,946$ 23,520,358

Consolidated Statements of Earnings and Comprehensive Gain

Three Months EndedSix Months Ended
March 31, 2011March 31, 2010March 31, 2011March 31, 2010
Revenue$ 5,031,263$ 5,261,722$ 12,765,068$ 13,017,935
Expenses
Network delivery992,4981,238,2692,482,4533,185,953
Software development2,879,1281,922,7965,607,4173,847,388
General and administration1,056,0371,009,2892,079,8282,090,047
Sales and marketing257,919215,027561,029455,530
Amortization692,8531,322,9101,382,2322,695,726
5,878,4355,708,29112,112,95912,274,644
(Loss) earnings from operations
before the undernoted
(847,172)(446,569)
652,109

743,291
Realized foreign exchange (loss)(57,549)(40,434)(82,998)(60,575)

Unrealized foreign exchange (loss) gain
(104,980)458,835
90,908

626,808
Interest income-25348679
Interest expense – capital lease-(21,915)(5,536)(49,238)
Interest expense - other(15)-(15)(1,560)
Loss on disposal of property and equipment(71,241)-(90,713)-
Loss on settlement of asset retirement obligation-(4,810)-(4,810)
(233,785)391,929(88,306)511,304
(Loss) earnings before income taxes(1,080,957)(54,640)563,8031,254,595
Current income tax benefit (expense)----
Future income tax benefit (expense)228,478(36,246)(332,761)(101,158)
Net (loss) earnings(852,479)(90,886)231,0421,153,437
Other comprehensive gain (loss):
Unrealized foreign exchange gain (loss) on translation of self sustaining foreign operations62,942(659,784)(393,695)(971,840)
Comprehensive (loss) gain$ (789,537)$ (750,670)$ (162,653)$ 181,597
(Loss) earnings per share
Basic$ (0.03)$ (0.00)$ 0.01$ 0.03
Fully diluted$ (0.03)$ (0.00)$ 0.01$ 0.03

Non-GAAP Financial Measures

Three Months Ended
March 31, 2011March 31, 2010
Net (loss) in accordance with GAAP$ (852,479)$ (90,886)
Amortization692,8531,322,910
Interest expense1521,915
Income tax (benefit) expense(228,478)36,246
Stock based compensation expense160,303181,872
Unrealized foreign exchange loss (gain)104,980(458,835)
Adjusted EBITDA$ (122,806)$ 1,013,222
Six Months Ended
March 31, 2011March 31, 2010
Net earnings (loss) in accordance with GAAP$ 231,042$ 1,153,437
Amortization1,382,2322,695,726
Interest expense5,55150,798
Income tax expense332,761101,158
Stock based compensation expense359,400366,949
Unrealized foreign exchange (gain)(90,908)(626,808)
Adjusted EBITDA$ 2,220,078$ 3,741,260

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.

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.

Contact Information

  • 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
    www.pnimedia.com