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

PNI Digital Media Inc.

December 14, 2011 16:00 ET

PNI Digital Media Announces Fiscal 2011 Year-End and Fourth Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 14, 2011) - PNI Digital Media (TSX:PN)(OTCBB:PNDMF) ("PNI" or the "Company"), the leading innovator in digital media solutions for retailers, announced financial results for the fiscal year ending September 30th, 2011.

Fiscal 2011 Full Year Financial and Operational Highlights:

  • Processed a record 18.4M transactions over the PNI Digital Media Platform, up 8% from fiscal 2010
  • Revenue for fiscal 2011 of $23.7 million compared to $25.4 million for fiscal 2010. Revenue on a constant currency basis would have been $24.6 million, a 3% decrease from the same period last year
  • Transactional revenue was $18.1 million for the period, or 76% of overall revenue
  • Continued investment in the PNI Digital Media Platform including new initiatives with total expenditure on software development of $11 million compared to $8 million during the same period last year
  • GAAP profit after taxes for the year of $1.1 million compared to $6.9 million in fiscal 2010
  • Non-GAAP adjusted EBITDA1 of $3.6 million vs. $7.4 million in fiscal 2010
  • Successfully renewed agreements with Costco USA, Costco Canada, CVS/pharmacy and Hallmark UK
  • Announced a new multi-year agreement for Social Stationery with Walgreens
  • Strong, clean balance sheet with $3.9 million in cash and no debt

Subsequent Events

  • The Company successfully moved from the TSX-Venture Exchange to the Toronto Stock Exchange
  • Announced a new multi-year agreement and launched a new photo site for Rite Aid Corporation
  • Announced a new multi-year agreement and launched Business Printing with Costco Canada

"In fiscal 2011, the Company made a substantial strategic investment in our future," said Kyle Hall, Chief Executive Officer of PNI Digital Media. "We are focused on where we are taking the Company and look forward to reaping the benefits in 2012."

Fiscal 2011 Fourth Quarter Financial and Operational Highlights:

  • 4.1 million transactions processed over the PNI Digital Media Platform, the highest fourth quarter total to date
  • Revenue for the quarter of $5.6 million, compared to $6.6 million in the same period last year. On a constant currency basis, revenue for the quarter would have been $5.8 million
  • Transaction fees represented 77% of total revenue
  • Overall expenses for the quarter increased 6% to $5.7 million, reflective of the Company's investment in its new initiatives, as well as continued investment supporting existing customers
  • Non-GAAP adjusted EBITDA for the quarter of $793,000 vs. $2.1 million in the fourth quarter of fiscal 2010

Conference Call

The Company will host a conference call on Wednesday, December 14th, 2011 at 4:30pm ET (1:30pm PT) to discuss the Company's fiscal 2011 year-end and fourth quarter financial results. Mr. Kyle Hall, Chief Executive 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. 26335045. 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
September 30, 2011 September 30, 2010
Assets
Current assets
Cash and cash equivalents $ 3,936,176 $ 4,690,355
Accounts receivable 4,535,912 5,302,865
Prepaid expenses and other current assets 460,140 541,026
Current portion of future income tax asset 108,933 1,026,651
9,041,161 11,560,897
Property and equipment 5,140,150 5,230,829
Future income tax asset 7,013,431 4,953,934
Intangible assets 680,437 1,115,794
Goodwill 576,840 658,904
$ 22,452,019 $ 23,520,358
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 3,284,311 $ 5,471,878
Current portion of deferred revenue 250,323 613,081
Current portion of capital lease obligations - 107,964
Future income tax liability 56,507 119,081
3,591,141 6,312,004
Deferred revenue 33,898 78,876
3,625,039 6,390,880
Shareholders' Equity
Share capital $ 66,419,784 $ 66,200,215
Contributed surplus 19,336,768 18,933,619
85,756,552 85,133,834
Deficit (64,583,644) (65,684,820)
Accumulated other comprehensive loss (2,345,928) (2,319,536)
(66,929,572) (68,004,356)
18,826,980 17,129,478
$ 22,452,019 $ 23,520,358
Consolidated Statements of Earnings (Loss) and Comprehensive Gain (Loss)
2011 2010 2009
Revenue $ 23,686,351 $ 25,356,570 $ 24,446,569
Expenses
Network delivery 4,313,913 5,376,920 6,672,583
Software development 11,218,227 8,162,595 7,566,227
General and administration 4,096,764 4,021,971 4,893,640
Sales and marketing 927,860 896,791 1,202,699
Amortization of intangible assets 858,354 2,550,452 3,243,359
Amortization of property and equipment 2,036,953 2,368,539 2,770,357
23,452,071 23,377,268 26,348,865
Earnings (loss) from operations before the undernoted 234,280 1,979,302 (1,902,296)
Realized foreign exchange (loss) gain (53,218) (119,561) 115,526
Unrealized foreign exchange (loss) gain (71,930) 304,331 435,467
Interest income - 642 8,759
Interest expense - capital lease (5,536) (75,850) (120,696)
Interest expense - other (63) (1,839) (99,255)
Loss on disposal of property and equipment (117,306) (40,085) (56,171)
Loss on settlement of asset retirement obligation - (4,810) -
(248,053) 62,828 283,630
(Loss) earnings before income taxes (13,773) 2,042,130 (1,618,666)
Current income tax (expense) - (11,892) -
Future income tax benefit (expense) 1,114,949 4,821,756 (151,000)
Net earnings (loss) 1,101,176 6,851,994 (1,769,666)
Other comprehensive loss:
Unrealized foreign exchange loss on translation of self-sustaining foreign operations (26,392) (510,342) (652,661)
Comprehensive gain (loss) $ 1,074,784 $ 6,341,652 $ (2,422,327)
Earnings (loss) per share
Basic $ 0.03 $ 0.20 $ (0.05)
Fully diluted $ 0.03 $ 0.20 $ (0.05)
Non-GAAP Financial Measures
Three Months Ended
September 30, 2011 September 30, 2010
Net (loss) profit in accordance with GAAP $ 946,355 $ 5,808,317
Amortization 762,526 823,120
Interest expense 78 11,036
Income taxes (1,192,370) (4,911,022)
Stock based compensation expense 155,164 154,692
Unrealized foreign exchange loss (gain) 122,089 192,232
Adjusted EBITDA $ 793,842 $ 2,078,375
Twelve Months Ended
September 30, 2011 September 30, 2010
Net (loss) profit in accordance with GAAP $ 1,101,176 $ 6,851,994
Amortization 2,895,307 4,918,991
Interest expense 5,599 77,689
Income taxes (1,114,949) (4,809,864)
Stock based compensation expense 662,592 690,020
Unrealized foreign exchange loss (gain) 71,930 (304,331)
Adjusted EBITDA $ 3,621,655 $ 7,424,499

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. 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 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.

Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • PNI Digital Media - For Financial Information, Contact:
    Simon Bodymore
    CFO
    (604) 893-8955 ext.229

    PNI Digital Media - For Investor Relations and Press, Contac
    Simon Cairns
    (866) 544-4881
    ir@pnimedia.com
    www.pnimedia.com or Twitter: @pni_media