DG FastChannel Reports Second Quarter 2009 Results

DALLAS–(BUSINESS WIRE)– DG FastChannel®, Inc. (NASDAQ: DGIT), a leading provider of digital media services to the advertising, entertainment and broadcast industries, today reported record second quarter financial results. Consolidated revenue for the second quarter 2009 was $43.7 million compared to $34.5 million in the same period of 2008, a 27% increase. Second quarter 2009 revenue from the delivery of high definition (HD) advertising content was $12.0 million compared to $6.7 million in the same period of 2008.
Scott K. Ginsburg, Chairman and CEO of DG FastChannel commented, “The Company is pleased to report strong financial and operating results for the second quarter including meaningful progress towards our most important strategic and financial objectives. HD content distribution remains a strong driver of DG FastChannel’s growth, and the number of advertisers creating HD campaigns that are managed and delivered through our proprietary network continues to expand. In addition, the points of destination capable of receiving HD-enabled advertising content have increased to approximately 600 in the second quarter, and the Company estimates this total will approach 1,000 by the end of the year. This activity supports our projections that HD revenue will continue to accelerate during 2009.”
“DG FastChannel’s workflow tools and HD digital advertising platform, relationships with major content providers, and commitment to next generation standards provide a natural entrée for expanding into the rich media marketplace. The Company’s unique expertise and the Company’s recently acquired Unicast division offer participation in advertising’s fastest growing market. Unicast features best-in-class technology infrastructure, exemplary customer service, and strong relationships among publishers. These strong relationships afford the Company a foundation to more fully penetrate the agency side of the business. The Company has championed this initiative by building out executive, sales and operations teams, enhancing our marketing program, and aligning product offerings with customer needs. As part of this effort, the Company is building out a self service creative authoring model that complements our existing full service package for creating, managing and measuring new media advertising campaigns. These initiatives are progressing as planned, and position the Company for additional growth.”
Adjusted EBITDA was $16.8 million compared to $13.0 million in the comparable period of 2008, a gain of 29%. Second quarter 2009 net income was $3.6 million, or $0.16 per diluted share, compared with net income of $4.1 million, or $0.23 per diluted share in 2008. Second quarter 2009 normalized net income was $10.0 million, or $0.45 per diluted normalized net income per share, compared to normalized net income of $8.0 million, or $0.43 per diluted normalized net income per share in 2008. As of June 30, 2009, DG FastChannel had $21.5 million in cash and $113.2 million of debt, or net debt of $91.7 million. The terms “adjusted EBITDA” and “normalized net income” are defined on the following page.
“The financial condition of the Company has never been stronger. As we position our business for long-term growth, the Company does so from a solid financial foundation, enhanced by recent developments during the quarter. DG FastChannel successfully completed an equity offering of 2.9 million common shares resulting in approximately $52 million of net proceeds to the Company. All proceeds were applied to reduce outstanding bank borrowings resulting in $91.7 million of net debt outstanding as of June 30, 2009. In addition, the Company’s adjusted EBITDA margin increased to an impressive 39% and continues to benefit from the $3.5 million in annual cost action savings implemented during the second quarter with expectation of full benefit in the second half of this year. DG FastChannel expects to continue making sustained progress toward its goals of improving operating margins, profitability and cash flow,” concluded Mr. Ginsburg.