RDM Corporation Reports Fiscal 2014 Second Quarter Financial Results

Strong Growth in Payment Processing Revenue

WATERLOO, ON, May 1, 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 March 31, 2014. All figures are reported in U.S. dollars unless otherwise stated.

Q2 2014 Highlights (Comparisons are made between fiscal Q2 2014 and fiscal Q2 2013 results)

  • Cloud-based Payment Processing Services revenue increased 16% to $3.6 million
  • Digital Imaging revenue was $1.6 million compared to $2.3 million, as a result total revenue decreased 4% to $5.2 million
  • Operating income increased 82% to $628,000
  • Gross margin increased by 11% to $3.1 million
  • Gross margin percentage increased to 60% from 51%
  • Adjusted EBITDA increased 37% to $1.0 million
  • Net income increased 241% to $652,000
  • The Company added 1,628 new end-user seats to bring the ITMS network to 34,632 seats, an increase of 13% from one year earlier and 5% from the prior quarter
  • The Company ended the quarter with $20.1 million in cash and cash equivalents

Year-to-Date Highlights

  • Total revenue increased 8% to $10.9 million, compared to the six months ended March 31, 2013
  • Gross margin percentage increased to 56% from 54% in the first six months of 2013
  • Adjusted EBITDA increased 54% over the prior year to $2.0 million
  • Net income increased 273% to $1.4 million

"With another quarter of solid growth in our cloud-based Payment Processing offering, we continued to increase margins and adjusted EBITDA and shift our revenue mix toward subscription-based recurring revenues," said Randy Fowlie, President and CEO of RDM Corporation. "We were pleased with the continued growth in Payment Processing revenue and overall improved profitability. We are looking forward to the introduction of the EC9000i product line."

Dividend Program Highlights

The Board of Directors declared today a dividend of $0.01 per share is payable on June 5, 2014, to shareholders of record on May 22, 2014. Pursuant to the rules of the TSX, the Ex-Dividend date will be May 20, 2014.

The dividends to be paid on June 5, 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 second quarter results on May 1, 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 Statements of Income
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
      March 31, 2014     September 30, 2013
Assets:            
             
Current assets:            
       Cash and cash equivalents   $        20,127   $        20,126
       Accounts receivable                 2,704                 2,672
       Unbilled revenue                 196                 43
       Inventories                 3,295                 2,755
       Investment tax credit receivable                 188                 177
       Prepaid and other assets                 812                 760
       Derivative assets                 -                 29
Total current assets                 27,322                 26,562
             
Investment tax credits                               318                             366 
Property and equipment               2,320               1,986
Intangible assets               845               582
Total assets   $        30,805   $        29,496
             
Liabilities and shareholders' equity:            
             
Current liabilities:            
    Accounts payable and accrued liabilities   $        3,548   $        3,663
  Deferred revenue                               290                               337
Total current liabilities              3,838              4,000
             
Shareholders' equity:                                      
       Share capital               20,366               20,100
       Contributed surplus                2,442                2,445
       Accumulated other comprehensive income                   -                 29
  Retained earnings                4,159                2,922
Total shareholders' equity               26,967               25,496
Total liabilities and shareholders' equity   $        30,805    $        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
            March 31
                Six months ended
                 March 31
                  2014                 2013                 2014                 2013
                         
Revenue:                        
  Payment Processing Services   $        3,615   $        3,109   $        7,140   $   6,218
  Digital Imaging Products                 1,570                 2,293                 3,796                 3,951
                  5,185                 5,402                 10,936                 10,169
Cost of revenue                 2,096                 2,622                 4,760                 4,640
Gross profit                 3,089                 2,780                 6,176                 5,529
                         
Operating expenses:                        
       Sales and marketing                 722                 766                 1,488                 1,607
       Research and development                 1,176                 1,147                 2,232                 2,242
             General and administration                 563                 522                 1,087                 1,024
                  2,461                 2,435                 4,807                 4,873
                         
Income from operations                 628                 345                 1,369                 656
                         
Other items:                        
       Foreign exchange gain (loss)                 39                 (32)                 93                 (71)
       Interest                 9                 8                 18                 20
       Other income (expense)                 -                 (93)                 -                 (146)
                         48                 (117)                 111                 (197)
                         
Income before income taxes                 676                 228                 1,480                 459
Current income tax expense                 24                 37                 48                 75
Income for the period   $        652   $        191   $        1,432   $   384
Income per share - basic and  diluted   $                    0.03   $                   0.01   $                    0.07   $             0.02

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
             March 31
           Six months ended
                March 31
                  2014                 2013                 2014                 2013
                         
Income for the period   $        652   $        191   $        1,432   $        384
                         
Other comprehensive income:                        
       Effective portion of changes in    fair value of cash flow hedges                                   64                 (64)                 -                 (133)
Comprehensive income   $        716   $        127   $        1,432   $        251

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                 -                 -                 -                 384                 384
               Issuance of share capital                 47                 (9)                 -                 -                 38
               Effective portion of changes in fair value of cash flow hedges                 -                 -                 (133)                 -                 (133)
                  20,007                 2,314                 (17)                 3,825                 26,129
       Stock-based compensation                 -                 84                 -                 -                 84
Balance as at March 31, 2013   $   20,007   $  2,398   $        (17)   $  3,825   $  26,213
                               
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                 -                 -                 -                 1,432                  1,432
               Issuance of share capital                   266                 (56)                 -                 -                 210
               Dividend and common shares                 -                 -                 -                 (195)                 (195)
               Effective portion of changes in fair value of cash flow hedges                 -                 -                 (29)                 -                 (29)
                  20,366                 2,389                 -                 4,159                 26,914
    Stock-based compensation                 -                 53                 -                 -                 53
Balance as at March 31, 2014   $  20,366   $  2,442   $        -   $     4,159   $  26,967 

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)
          Six months ended
         March 31
                  2014                 2013
             
Cash provided by (used in):            
             
Operations:            
Income for the period   $     1,432   $     384
       Items not involving cash:                         
              Current income tax expense                 48                 75
              Depreciation of furniture and equipment            338            334
              Amortization of intangible assets                 254                 237
               Write-down of property and equipment                 7                 -
              Stock-based compensation                 53                 84
              Interest earned                 (9)                 (20)
               Exchange gain on cash held in foreign currency                 (39)                 (84)
Change in non-cash operating working capital                 (950)                 (202)
Cash provided by operations         1,134         808
Interest received                   9                     24
Net cash provided by operation activities                 1,143                 832
Financing:                                              
       Issuance of share capital                 210                 38
       Dividends paid                 (195)                 -
Cash provided by financing activities                 15                 38
             
Investing:            
       Purchase of furniture and equipment                 (679)                 (971)
       Additions to intangible assets                 (517)                 (16)
Cash used in investing activities                 (1,196)                 (987)
             
Exchange gains on cash held in foreign currency                 39                 41
Increase (decrease) in cash and cash equivalents                        1                 (76)
Cash and cash equivalents, beginning of period                 20,126                 18,897
Cash and cash equivalents, end of period   $      20,127   $      18,821

SCHEDULE

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

(Not audited or reviewed by the Company's external auditor)
  Three months ended
March 31
Six months ended
March 31
                  2014                 2013                 2014                 2013
Net Income for the period   $   652   $   791   $   1,432   $   384
Income tax expense                 24                 37                 48                 75
Interest Income                 (9)                 (8)                 (18)                 (20)
Depreciation and amortization                 296                 312                 592                 567
Foreign exchange loss (gain)                 (39)                 32                 (93)                 71
Stock-based compensation                 28                 38                 53                 84
Other expense                 -                 92                 -                 145
Adjusted EBITDA   $   952   $   694   $   2,014   $   1,306

 

 

SOURCE RDM Corporation

For further information:

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