RDM Corporation Reports Fiscal 2014 First Quarter Financial Results and Announces Quarterly Dividend Program

Strong Payment Processing and Digital Imaging Growth Drive Earnings

WATERLOO, ON, Jan. 30, 2014 /CNW/ - RDM Corporation (TSX:RC), a leading provider of specialized software and hardware products for electronic payment processing, today reported its financial results for the three-month period ended December 31, 2013. All figures are reported in U.S. dollars unless otherwise stated.

Q1 2014 Highlights (Comparisons are made between fiscal Q1 2014 and fiscal Q1 2013 results)

  • Total revenue increased 21% to $5.8 million
  • Cloud based Payment Processing Services revenue increased 13% to $3.5 million
  • Digital Imaging Products revenue increased 34% to $2.2 million
  • Operating income increased 138% to $0.7 million
  • Gross margin increased by $338,000 or 12% to $3.1 million
  • Gross margin percentage decreased to 54% from 58%, primarily as a result of a change in product mix
  • Adjusted EBITDA increased 73% to $1.1 million
  • The Company added 983 new end-user seats to bring the ITMS network to 33,004 seats, an increase of 11% from one year earlier and 3% from the prior quarter
  • The Company ended the quarter with $19.3 million in cash and cash equivalents

"Continued strong end-user adoption of our Payment Processing Services and strengthened sales of our Digital Imaging Products produced solid financial and operating results in the quarter," said Randy Fowlie, President and CEO of RDM Corporation. "Looking ahead, our focus will be to maintain our sales growth momentum. At the same time we will have an eye on employing our available liquidity for acquisitions in order to accelerate growth. We are committed to delivering value to our shareholder base and are pleased to announce that effective Q2 2014, RDM will introduce a dividend. The Board of Directors has determined that now is an appropriate time to declare a dividend."

Dividend Program Highlights

The Company announced today that it has adopted a policy to pay non-cumulative quarterly dividends to holders of its common shares.  The Board of Directors has determined that the Company will pay a $0.04 annual dividend to be paid quarterly.  The Board of Directors declared today an initial dividend of $0.01 per share is payable on March 6, 2014, to shareholders of record on February 20, 2014. Pursuant to the rules of the TSX, the Ex-Dividend date will be February 18, 2014.

The dividends to be paid on March 6, 2014 are designated as "eligible dividends" for the purpose of section 89 of the Income Tax Act (Canada).

Conference Call

RDM will be hosting a conference call to discuss the Company's first quarter results on January 30, 2014 at 9:00 a.m. EDT. Dial-in numbers are 647-427-7450 or 1-888-232-8191. The call will be webcast live and archived at www.rdmcorp.com. Detailed financial results and Management's Discussion and Analysis ("MD&A") will be filed on www.sedar.com.

Non-IFRS Measures

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for foreign exchange gains and losses, stock-based compensation and one time charges) is provided to assist management and investors in determining the Company's approximate operating cash flows before interest, income taxes, and depreciation and amortization. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management believes that RDM shareholders and potential investors in RDM use non-IFRS financial measures such as Adjusted EBITDA in making investment decisions about the Company and measuring the operational results. A reconciliation of Adjusted EBITDA to net income determined in accordance with IFRS is provided in the Company's MD&A and in the accompanying schedule.

About RDM Corporation

RDM Corporation (www.rdmcorp.com), is a leading provider of remote deposit capture (RDC) and complex desktop remittance processing solutions designed to help clients simplify the way they do business. Four of the top ten financial institutions in the United States use RDM's payment processing solutions. RDM processes over $600 billion in payments annually and helps corporations and financial institutions increase revenue, expand market share and improve customer service for over 30,000 end-users. RDM serves 32 percent of the top 100 Fortune 500 companies including brokerage firms, big box retailers, healthcare and insurance providers, and government entities.

For over 25 years, RDM has worked with clients to provide both software and hardware solutions including web-based and mobile RDC for large corporate clients and small businesses, transactional data management, and manufactures a wide range of digital imaging scanners. RDM was recently named to the Branham300 list, which highlights the top Canadian and multinational companies servicing the Information and Communication Technology (ICT) marketplace.

Forward-looking statements

This news release contains forward-looking statements. Forward-looking statements are based on estimates and assumptions made by RDM in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that RDM believes are appropriate in the circumstances. Many factors could cause RDM's actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements. Risk factors relating to RDM are discussed in the Risks and Uncertainties section of RDM's Annual Information Form and year-end Management's Discussion and Analysis. These factors should be considered carefully, and readers should not place undue reliance on RDM's forward-looking statements. RDM has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RDM CORPORATION
Condensed Consolidated Interim Balance Sheets
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
    December 31, 2013     September 30,2013
Assets:          
           
Current assets:          
  Cash and cash equivalents $  19,347    $ 20,126
  Accounts receivable   4,209     2,715
  Inventories   3,055     2,755
  Investment tax credit receivable   158     177
  Prepaid and other assets   765     760
  Derivative assets   -     29
Total current assets   27,534     26,562
           
Investment tax credits   342     366
Property and equipment   2,426     1,986
Intangible assets   743     582
Total assets $ 31,045   $ 29,496
           
Liabilities and shareholders' equity:          
           
Current liabilities:          
  Accounts payable and accrued liabilities $ 4,341   $ 3,663
  Deferred revenue   327     337
  Derivative liabilities   35     -
Total current liabilities   4,703     4,000
           
Shareholders' equity:          
  Share capital   20,203     20,100
  Contributed surplus   2,472     2,445
  Accumulated other comprehensive income     (35)     29
  Retained earnings   3,702     2,922
Total shareholders' equity   26,342     25,496
Total liabilities and shareholders' equity $  31,045   $ 29,496


RDM CORPORATION
Condensed Consolidated Interim Statements of Income
(Amounts in thousands of U.S. Dollars, except per share data)

(Not audited or reviewed by the Company's external auditor)
Three months ended December 31     2013     2012
             
Revenue:            
  Payment Processing Services   3,525   $  3,108
  Digital Imaging Products     2,226     1,659
      5,751     4,767
Cost of revenue     2,664     2,018
Gross profit     3,087     2,749
             
Operating expenses:            
  Sales and marketing     766     841
  Research and development     1,056     1,095
  General and administration     524     502
      2,346     2,438
             
Income from operations     741     311
             
Other items:            
  Foreign exchange gain (loss)     54     (40)
  Interest     9     12
  Other income (expense)     -     (53)
      63     (81)
             
Income before income taxes     804     230
Current income tax expense     24     38
Income for the period   780   $ 192
             
Income per share - basic and diluted   $ 0.04   $ 0.01


RDM CORPORATION
Condensed Consolidated Interim Statements of Comprehensive Income
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)            
Three months ended December 31     2013        2012
             
Income for the period   $ 780   $  192
             
Other comprehensive income:            
  Effective portion of changes in fair value of cash flow hedges     (64)     (69)
Comprehensive income   $ 716   $ 123


RDM CORPORATION
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)                              
      Share
capital
    Contributed
surplus
    Accumulated
other
comprehensive
income
    Retained
earnings
    Total
Balance as at October 1, 2012   $ 19,960   $ 2,323   $ 116   $  3,441   $ 25,840
  Total comprehensive income for the period:                              
    Income for the period     -     -     -     192     192
    Issuance of share capital     19     (4)     -     -     15
    Effective portion of changes in fair value of cash flow hedges     -     -     (69)     -     (69)
      19,979     2,319     47     3,633     25,978
  Stock-based compensation     -     46     -     -     46
Balance as at December 31, 2012   $ 19,979   $  2,365   $ 47   $ 3,633   $ 26,024
                               
Balance as at September 30, 2013   $  20,100   $ 2,445   $ 29   $ 2,922   $ 25,496
  Total comprehensive income for the period:                              
    Income for the period     -     -     -     780     780
    Issuance of share capital       103     2     -     -     105
    Effective portion of changes in fair value of cash flow hedges     -     -     (64)     -     (64)
      20,203     2,447     (64)     780     26,317
  Stock-based compensation     -     25     -     -     25
Balance as at December 31, 2013   $ 20,203   $ 2,472   $ (35)   $ 3,702   $ 26,342


RDM CORPORATION
Condensed Consolidated Interim Statements of Cash Flows
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)            
Three months ended December 31     2013     2012
             
Cash provided by (used in):            
             
Operations:            
Income for the period   $ 780   $ 192
  Items not involving cash:            
    Current income tax expense     24     38
    Depreciation of furniture and equipment     150     137
    Amortization of intangible assets     145     118
    Stock-based compensation     25
    46
    Interest earned     (9)     (12)
    Exchange loss on cash held in foreign currency     (15)     (78)
Change in non-cash operating working capital     (1,112)     186
Cash provided by operations     (12)     627
Interest received     9     15
Net cash provided by operation activities     (3)     642
             
Financing:            
  Issuance of share capital     105     15
Cash provided by financing activities     105     15
             
Investing:            
  Purchase of furniture and equipment     (590)     (216)
  Additions to intangible assets     (306)     -
Cash used in investing activities     (896)     (216)
             
Exchange gains on cash held in foreign currency     15     28
Increase (decrease) in cash and cash equivalents     (779)     469
Cash and cash equivalents, beginning of period     20,126     18,897
Cash and cash equivalents, end of period   $ 19,347   $ 19,366


SCHEDULE

RDM CORPORATION
Reconciliation of Adjusted EBITDA to Income (loss) for the period
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)            
Three months ended December 31     2013     2012
             
Net Income (loss) for the period   $ 780   $ 192
Income tax expense (recovery)     24     38
Interest Income     (9)     (12)
Depreciation and amortization     295     255
Foreign exchange loss (gain)     (54)     40
Stock-based compensation     25     46
Other expense     -     53
Adjusted EBITDA for the period   $  1,061   $ 612
             
             
             

 

 

SOURCE RDM Corporation

For further information:

Contacts

Randy Fowlie
President & CEO
RDM Corporation
(519) 746-8483 x340
rfowlie@rdmcorp.com 

Rui Malhinha
Chief Financial Officer
RDM Corporation
(519) 746-8483 x284
rmalhinha@rdmcorp.com