EX-99.1 2 a09-32915_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

News Announcement

For Immediate Release

 

For more information contact:

Omar Choucair

Chief Financial Officer

DG FastChannel, Inc.

972/581-2000

 

DG FASTCHANNEL® REPORTS RECORD THIRD QUARTER 2009 RESULTS

 

- Third Quarter Revenues Increase 17% to $48.3 Million –

- Third Quarter Adjusted EBITDA Rises 28% to $21.0 Million –

- Third Quarter Diluted Earnings Increases 83% to $0.22 per share –

 

Dallas, TX — November 5, 2009 — DG FastChannel®, Inc. (NASDAQ: DGIT), a leading provider of digital media services to the advertising, entertainment and broadcast industries, today reported record third quarter financial results. Consolidated revenue for the third quarter 2009 increased 17% to $48.3 million compared to $41.4 million in the same period of 2008. Third quarter 2009 revenue from the delivery of high definition (HD) advertising content increased 68% to $15.6 million compared to $9.3 million in the same period of 2008.

 

Scott K. Ginsburg, Chairman and CEO of DG FastChannel commented, “The Company’s impressive third quarter performance highlights early success from the adoption of our HD distribution platform. During the third quarter, over 44% of DG FastChannel’s HD business was delivered electronically, and that percentage should increase during the next few periods as more advertisers and media outlets adopt HD and file-based workflows. As a result, the Company’s HD revenues are expected to improve.”

 

“DG FastChannel’s expansion into rich media has provided important access to the online media business, advertising’s fastest growing segment. The Company’s Unicast division is actively leveraging its core competencies to more fully penetrate both the publisher and agency sides of the business. This reinforces the Company’s overriding goal of building a bridge between its traditional media business and the online media business.  As Unicast further aligns its product mix with the Company’s video advertising division, potential growth synergies look very encouraging.”

 


 

Adjusted EBITDA was $21.0 million compared to $16.5 million in the comparable period of 2008, a gain of 28%. Third quarter 2009 net income was $5.4 million, or $0.22 per diluted share, compared with net income of $2.3 million, or $0.12 per diluted share in 2008. Third quarter 2009 normalized net income was $14.6 million, or $0.60 per diluted normalized net income per share, compared to normalized net income of $7.1 million, or $0.38 per diluted normalized net income per share in 2008. As of September 30, 2009, DG FastChannel had $26.8 million in cash and $107.8 million of debt, or net debt of $81.0 million. The terms “adjusted EBITDA” and “normalized net income” are defined below.

 

“DG FastChannel reported its highest ever adjusted EBITDA margin of 44% during the third quarter, and the Company’s goals of improving revenues, operating margins, profitability and cash flow remain key objectives. The Company’s financial condition and capital structure have been strengthened by reducing outstanding debt,” concluded Mr. Ginsburg.

 

Third Quarter 2009 Financial Results Webcast

The Company’s third quarter conference call will be broadcast live on the Internet at      11:00 a.m. ET on Thursday, November 5, 2009.  The webcast is open to the general public and all interested parties may access the live webcast on the Internet at the Company’s Web site at www.dgfastchannel.com.  Please allow 15 minutes to register and download or install any necessary software.

 

Non-GAAP Reconciliation, Adjusted EBITDA, Normalized Net Income and Diluted Shares Used in Normalized Net Income Per Share Calculation Definitions

Adjusted EBITDA is defined as earnings before interest, taxes, unrealized investment gains and losses, stock-based compensation, and depreciation and amortization.  Although adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (GAAP), the Company believes this Non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity.  However, investors should not consider this measure in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining the Company’s operating performance or liquidity that is calculated in accordance with GAAP.  In addition, because adjusted EBITDA is not calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies.  A reconciliation of the adjusted EBITDA figures to GAAP net income is included herein.

 

Normalized net income is defined as net income before amortization of intangible assets, stock-based compensation expense, unrealized investment gains and losses, and deferred tax expense (mostly related to the utilization of tax net operating loss carryforwards/credits), and release of the deferred tax asset valuation allowance.  DG FastChannel considers normalized net income to be another important indicator of the

 

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overall performance of the Company because it eliminates the effects of events that are either not part of the Company’s core operations or are non-cash.

 

Diluted shares used in normalized net income per share calculations is defined as diluted common shares outstanding used in GAAP net income per share calculations, excluding the effect of Accounting for Stock-Based Compensation under the treasury stock method.  DG FastChannel considers normalized net income and diluted normalized net income per share to be additional important indicators of the overall performance of the Company because they eliminate the effect of non-cash items.

 

Adjusted EBITDA and normalized net income should be considered in addition to, not as a substitute for, the Company’s operating income and net income, as well as other measures of financial performance reported in accordance with GAAP.

 

Reconciliation of Non-GAAP Financial Measures

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial measures to the comparable GAAP measures.

 

Recent Acquisitions

During 2008, the Company completed the acquisitions of the Vyvx advertising services business and Enliven Marketing Technologies Corporation as of June 5, 2008 and October 2, 2008, respectively.  Accordingly, the results of operations for each acquired entity have been included in DG FastChannel’s results since the respective acquisition dates.

 

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About DG FastChannel

DG FastChannel provides innovative, technology-based solutions to help advertisers and agencies work faster, smarter and more competitively.  DG FastChannel delivers the standard in digital media services to the advertising, broadcast and publishing industries.  Through its Unicast and Springbox operating units, DG FastChannel is a leading Internet marketing technology company offering online marketing and advertising solutions through a powerful combination of proprietary visualization technology, and a premium rich media advertising platform for the creation, delivery and reporting of premium rich media.

 

The Company utilizes satellite and Internet transmission technologies and has deployed a suite of digital media intelligence and asset management tools designed specifically for the advertising industry, including creative and production resources, and digital asset management. The Company has an online media distribution network used by more than 5,000 advertisers and agencies, and over 21,000 online radio, television, cable, network and print publishing destinations.  For more information visit www.dgfastchannel.com.

 

Forward-Looking Statements

This release contains forward-looking statements relating to the Company, including the expected growth of destinations capable of receiving HD-enabled advertising content and making progress toward our goals of improving revenues, operating margins, profitability and cash flows.  These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected.  These and other risks relating to DG FastChannel’s business are set forth in the Company’s filings with the Securities and Exchange Commission.  DG FastChannel assumes no obligation to publicly update or revise any forward-looking statements.

 

(Financial Tables Follow)

 

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DG FastChannel, Inc.

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Revenues

 

$

48,268

 

$

41,428

 

$

133,403

 

$

105,098

 

Cost of revenues

 

16,913

 

17,190

 

52,975

 

42,998

 

Research and development

 

1,423

 

951

 

3,508

 

2,729

 

Sales and marketing

 

3,174

 

1,853

 

9,022

 

5,609

 

General and administrative

 

5,725

 

4,953

 

15,928

 

13,702

 

Operating expenses, excluding depreciation and amortization and stock-based compensation

 

27,235

 

24,947

 

81,433

 

65,038

 

Adjusted EBITDA

 

21,033

 

16,481

 

51,970

 

40,060

 

Depreciation, amortization and stock-based compensation

 

7,985

 

7,563

 

22,917

 

15,524

 

Operating income

 

13,048

 

8,918

 

29,053

 

24,536

 

Interest expense and other, net

 

2,378

 

4,338

 

9,601

 

6,945

 

Unrealized loss on derivative warrant

 

—

 

781

 

—

 

1,601

 

Income before income taxes

 

10,670

 

3,799

 

19,452

 

15,990

 

Provision for income taxes

 

5,312

 

1,520

 

8,914

 

6,396

 

Net income

 

$

5,358

 

$

2,279

 

$

10,538

 

$

9,594

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.22

 

$

0.13

 

$

0.47

 

$

0.53

 

Diluted earnings per common share

 

$

0.22

 

$

0.12

 

$

0.46

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

23,828

 

17,938

 

22,101

 

17,927

 

Weighted average shares outstanding — diluted

 

24,308

 

18,391

 

22,557

 

18,390

 

 

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DG FastChannel, Inc.

Reconciliation of GAAP Net Income to Normalized Net Income and Adjusted EBITDA

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Net income

 

$

5,358

 

$

2,279

 

$

10,538

 

$

9,594

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangibles

 

2,930

 

2,656

 

8,790

 

5,820

 

Stock-based compensation

 

1,092

 

162

 

3,390

 

423

 

Unrealized loss on derivative warrant

 

—

 

781

 

—

 

1,601

 

Deferred tax expense

 

5,215

 

1,208

 

8,234

 

4,862

 

Normalized net income

 

$

14,595

 

$

7,086

 

$

30,952

 

$

22,300

 

 

 

 

 

 

 

 

 

 

 

Interest expense and other, net

 

2,378

 

4,338

 

9,601

 

6,945

 

Current tax expense

 

97

 

312

 

680

 

1,534

 

Depreciation expense

 

3,963

 

4,745

 

10,737

 

9,281

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

21,033

 

$

16,481

 

$

51,970

 

$

40,060

 

 

 

 

 

 

 

 

 

 

 

Normalized net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.61

 

$

0.40

 

$

1.40

 

$

1.24

 

Diluted

 

$

0.60

 

$

0.38

 

$

1.37

 

$

1.21

 

 

 

 

 

 

 

 

 

 

 

Shares used in normalized net income per share calculations:

 

 

 

 

 

 

 

 

 

Basic

 

23,828

 

17,938

 

22,101

 

17,927

 

Diluted

 

24,336

 

18,475

 

22,588

 

18,466

 

 

Reconciliation of Diluted GAAP Net Income per Share to Diluted Normalized Net Income per Share

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Net income per share - Diluted

 

$

0.22

 

$

0.12

 

$

0.46

 

$

0.52

 

Amortization of intangibles

 

0.12

 

0.14

 

0.39

 

0.32

 

Stock-based compensation

 

0.04

 

0.01

 

0.15

 

0.02

 

Unrealized loss on derivative warrant

 

—

 

0.04

 

—

 

0.09

 

Deferred tax expense

 

0.22

 

0.07

 

0.37

 

0.26

 

Normalized net income per share - Diluted

 

$

0.60

 

$

0.38

 

$

1.37

 

$

1.21

 

 

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DG FastChannel, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

September 30,
2009

 

December 31,
2008

 

 

 

(unaudited)

 

 

 

Cash

 

$

26,803

 

$

17,180

 

Accounts receivable, net

 

41,298

 

42,971

 

Property and equipment, net

 

42,330

 

37,980

 

Goodwill

 

211,724

 

246,734

 

Deferred income taxes

 

35,148

 

7,777

 

Intangibles, net

 

105,345

 

115,035

 

Other

 

7,468

 

6,123

 

TOTAL ASSETS

 

$

470,116

 

$

473,800

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

18,425

 

$

22,398

 

Deferred revenue

 

2,670

 

2,484

 

Debt

 

107,837

 

173,137

 

Other

 

6,174

 

6,263

 

TOTAL LIABILITIES

 

135,106

 

204,282

 

TOTAL STOCKHOLDERS’ EQUITY

 

335,010

 

269,518

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

470,116

 

$

473,800

 

 

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