Radiant Communications Announces First Quarter 2010 Results
VANCOUVER, May 25 /CNW/ - Radiant Communications Corp. ("Radiant") (TSX-V:RCN), Canada's leading supplier of Broadband Solutions for Business(TM), today announced its financial results for its first quarter ended March 31, 2010.
HIGHLIGHTS: - Revenue of $7.8 million for the quarter ended March 31, 2010 increased by 7.5% compared to revenue of $7.3 million for the quarter ended March 31, 2009; - Gross margin was 40.6% in the quarter; - EBITDA in the first quarter was $468,364 compared to $560,291 in the first quarter of 2009; - Net Income in the first quarter of $122,418 amounted to $0.01 per share; - The Company ended the quarter with cash and short-term investments of $3.3 million and generated cash from operations of $148,681 during the period; - In January Radiant announced a National Broadband Network Investment Agreement with MTS Allstream Inc. that will allow both companies to provide reliable, next generation, high capacity broadband services to Canadian businesses. The new Ethernet First Mile or EFM service has been branded as Surelink; - Subsequent to the end of the quarter Radiant announced and completed two non-brokered private placements. A total of 4.2 million shares were issued at $1.00 for net proceeds of $4.17 million. Proceeds will be used to accelerate the launch and roll out of the new services using the MTS Allstream Inc. facilities.
"Radiant is now very well positioned move ahead with our strategic vision," said David Buffett, President and CEO of Radiant. "We finished 2009 with a nation-wide business quality MPLS network, a robust stable of large successful customers and a high opportunity product suite of hosted virtual applications. In Q1 we signed a National Broadband Network Investment Agreement with MTS Allstream Inc, and this in turn was the catalyst to raise additional capital in April which provides us with the ability to accelerate our time to market and new customer acquisition. With a very competitively priced, highly reliable, high capacity service available to medium and small business we have a service offering that will meet the needs of today's small and medium business well into the future".
Financial Review
Total revenues increased 7.5% to $7.8 million for the quarter ended March 31, 2010, compared to $7.3 million in the first quarter of 2009. The increase is a result of ongoing installation and activation of new services directed at retailers and larger national businesses as well as the addition of new locations and services to existing customers. Radiant's revenues are primarily recurring in nature and due to extended two and three year customer contracts quarterly revenue growth is relatively predictable and consistent over time. Radiant continues to have a strong funnel of opportunities.
Gross profit increased to $3.2 million for the quarter ended March 31, 2010, compared to $3.2 million in the first quarter of 2009. Gross profit as a percent of revenue was 40.6% for the quarter ended March 31, 2010 compared to 43.6% for the same period in 2009 and 40.1% in the immediately preceding quarter. Approximately 90% of all the Company's access and bandwidth costs are directly variable with revenue, and accordingly, margin percentages are relatively predictable. During periods of very high growth margins may also be negatively impacted due to the various upfront costs and activities required to activate and install complex and time sensitive networks.
Operating expenses, including sales and marketing, general and administrative, and amortization costs were $3.1 million in the first quarter of 2010 an increased of 4.0% compared to $3.0 million in the first quarter of 2009, but were down by 3.0% compared to the fourth quarter of 2009. Historically Radiant has held headcount flat and is committed to managing expenses in a conservative manner while the economic environment begins to stabilize. At the same time the Company is investing in the Surelink product and sees an immediate opportunity to capture market share. During 2010 Radiant plans to establish an inside sales organization and focused marketing campaign targeted directly at the Surelink market. The strategy is in place and Radiant expects that headcount and associated expenses will increase over the next three quarters.
Sales and marketing expense decreased 8.3% to $493,140 for the quarter ended March 31, 2010, compared to $537,800 in the first quarter of 2009. Sales and marketing expenses include compensation expenses, agent and channel distribution, and marketing costs. Radiant has focused its existing sales resources on growing the higher value virtual products customer base and we have altered the compensation structure and sales channel effort to promote these products to produce a more cost effective sell through process. Sales and marketing expenses in the first quarter of 2010 decreased by 13.2% compared to sales and marketing costs in the fourth quarter of 2009. Sales and marketing expenses are traditionally higher in the fourth quarter of the financial year.
General and administrative expenses, which include customer care, technical, network, executive and administrative staff, systems development, hardware, software, premises, office and general expenses, increased 7.7% to $2.3 million for the quarter ended March 31, 2010 compared to $2.1 million in the first quarter of 2009. The increase is primarily due to the ongoing product development activities mentioned previously as well as investments in our provisioning and billing systems to accommodate our recent high growth rate. In the first quarter, the company expended significant time and effort developing its high bandwidth/high reliability product strategy in concert with MTS Allstream as announced in January. General and administrative expenses in the first quarter of 2010 were 2.0% lower compared to the fourth quarter of 2009.
For the quarter ended March 31, 2010 amortization expenses of $261,362 were flat compared to amortization expenses in the first quarter of 2009 of $262,216 and 12.9% higher compared to amortization expense in the fourth quarter of 2009. Radiant anticipates that amortization expense will increase over the next two years given the investments anticipated as part of the recently announced Surelink product strategy.
Interest on the Company's outstanding equipment loans decreased to $6,765 for the quarter ended March 31, 2010 from $16,699 for the first quarter of 2009. The decrease is the result of a decrease in the balance of capital lease obligations. Other income in the first quarter of 2010 was $8,508 compared to other income of $38,196 in the first quarter of 2009.
Net income was $122,418 or $0.01 per share for the quarter ended March 31, 2010 compared to a net income of $254,174 or $0.02 per share in the first quarter of 2009. The weighted average number of shares outstanding was 10.9 million for the first quarter of 2010, and 10.9 million for the first quarter of 2009.
EBITDA
Earnings before Interest, Taxes, Depreciation and Amortization is calculated as follows:
------------------------------------------------------------------------- ($000s) Q1 2010 Q1 2009 ------------------------------------------------------------------------- Operating Income $ 121 $ 233 Amortization 261 262 Stock-based compensation expense 86 66 ------------------------------------------------------------------------- EBITDA $ 468 $ 561 ------------------------------------------------------------------------- -------------------------------------------------------------------------
In the first quarter of 2010, Radiant achieved EBITDA of $468,364 compared to EBITDA of $560,291 in the first quarter of 2009.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2010 Radiant had cash and short term investments of $3.3 million compared to $3.9 million at December 31, 2009. Radiant has established a consistent record of positive cash flows from operating activities that are sufficient to fund all expected capital acquisitions and non-cash working capital requirements in 2010 on the existing business. Subsequent to the quarter end Radiant completed two non-brokered private placements for net proceeds of $4.1 million. The use of proceeds is specifically targeted at rolling out the Surelink product and accelerating the time to market of the new product. The Company believes it has sufficient funds to ensure ongoing operations and will not require additional funding from capital markets or other sources in 2010.
Additional details on the first quarter results, including the unaudited Financial Statements and Management Discussion and Analysis, will be made available at www.sedar.com under Radiant Communications Corp.
Radiant will hold a conference call to discuss its results for the quarter ended March 31, 2010 on May 26, at 11:00p.m. PDT (2:00p.m. EDT). Access to the call may be obtained by calling the operator at 1.888.231.8191 (Toll Free North America), or 1.647.427.7450 (International) 10 minutes prior to the scheduled start time. 7 days after the call at 1.800.642.1687 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 77594230. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.
Non-GAAP Measures
The Company reports EBITDA because it is a key measure used by management to evaluate the Company's performance. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and other non-cash expenses. EBITDA is not a recognized measure under Canadian GAAP, and accordingly investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA differs from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers. Please see the schedule below that sets out the Company's EBITDA calculations.
ABOUT RADIANT COMMUNICATIONS
Headquartered in Vancouver, Canada, Radiant Communications (www.radiant.net) provides businesses with a comprehensive range of IP-based data communications services including the largest on-net DSL footprint across Canada & the US, T1 and E10/E100 fibre broadband, coupled with MPLS, IPSec, and SSL private networking. From its data centres in Toronto and Vancouver, Radiant also delivers cloud computing services connected directly into customers' private networks. The cloud computing services include hosting mission-critical applications, disaster recovery/business continuity, and fully managed Microsoft Exchange.
In operation since 1996, the company currently serves over 18,000 business locations in Canada and the United States from its offices in Vancouver, Toronto, Montreal, Calgary, and Edmonton.
Broadband Solutions for Business and AlwaysThere are registered trademarks of Radiant Communications Corp. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.
This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of Radiant, which involve risks and uncertainties. These risks and uncertainties may cause Radiant's actual results to differ materially from those contemplated by the forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, the growth rate of the Internet and telecommunications concerns, constantly changing technology and market acceptance of Radiant's products and services. Investors are also directed to consider the other risks and uncertainties discussed in Radiant's required financial statements and filings. All other companies and products listed herein may be trademarks or registered trademarks of their respective holders.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
RADIANT COMMUNICATIONS CORP. BALANCE SHEET (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- March 31, December 31, 2010 2009 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 2,774,832 $ 3,412,781 Short-term investments 533,376 424,376 Restricted short-term investment - 109,000 Trade accounts receivable 3,163,368 2,512,832 Inventories 309,778 358,136 Prepaid expenses and deposits 417,972 295,052 Deferred costs 1,260,769 1,473,487 ------------------------------------------------------------------------- 8,460,095 8,585,664 Property and equipment 1,903,385 1,568,829 Right of Access 168,766 - Goodwill 1,574,228 1,574,228 ------------------------------------------------------------------------- $ 12,106,474 $ 11,728,721 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities $ 3,582,206 $ 3,244,082 Customer deposits 122,115 122,115 Deferred revenue 4,523,845 4,679,804 Current portion of deferred lease inducements 33,872 16,050 Current portion of obligations under capital leases 50,539 49,700 ------------------------------------------------------------------------- 8,312,577 8,111,751 Deferred lease inducements 56,328 75,192 Obligations under capital leases 31,086 44,040 ------------------------------------------------------------------------- 8,399,991 8,230,983 ------------------------------------------------------------------------- Shareholders' equity Share capital 3,601,872 3,601,872 Contributed surplus 4,520,258 4,433,931 Deficit (4,415,647) (4,538,065) ------------------------------------------------------------------------- 3,706,483 3,497,738 ------------------------------------------------------------------------- $ 12,106,474 $ 11,728,721 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RADIANT COMMUNICATIONS CORP. STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND DEFICIT (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three months ended March 31, 2010 2009 ------------------------------------------------------------------------- Revenue $ 7,810,769 $ 7,266,188 Cost of sales 4,639,989 4,101,465 ------------------------------------------------------------------------- Gross profit 3,170,780 3,164,723 ------------------------------------------------------------------------- Expenses Sales and marketing 493,140 537,800 General and administrative 2,295,603 2,131,730 Amortization 261,362 262,216 ------------------------------------------------------------------------- 3,050,105 2,931,746 ------------------------------------------------------------------------- Income before undernoted 120,675 232,977 Interest expense 6,765 16,999 Other (income) expense (8,508) (38,196) ------------------------------------------------------------------------- Net earnings and comprehensive income for the period 122,418 254,174 Deficit, beginning of period (4,538,065) (4,611,649) ------------------------------------------------------------------------- Deficit, end of period $ (4,415,647) $ (4,357,475) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings per share $ 0.01 $ 0.02 Weighted average common shares, used in computing basic earnings per share 10,925,664 10,925,664 Diluted earnings per share $ 0.01 $ - Weighted average common shares, used in computing diluted earnings per share 10,927,684 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- RADIANT COMMUNICATIONS CORP. STATEMENTS OF CASH FLOWS (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three months ended March 31, 2010 2009 ------------------------------------------------------------------------- Cash flows from operating activities: Income for the period $ 122,418 $ 254,174 Items not involving cash: Amortization of property and equipment 258,128 262,216 Amortization of right of access 3,234 - Stock-based compensation 86,327 65,098 Amortization of deferred lease inducement (1,042) 2,671 Foreign exchange (gain) loss 9,831 (20,790) ------------------------------------------------------------------------- 478,896 563,369 Change in non-cash working capital: Trade accounts receivable (650,536) (337,786) Inventories 48,358 239,458 Prepaid expenses and deposits (122,920) (117,555) Deferred costs 212,718 (38,184) Accounts payable and accrued liabilities 338,124 137,900 Customer deposits - (601) Deferred revenue (155,959) 54,435 ------------------------------------------------------------------------- 148,681 501,036 Cash flows from investing activities: Purchase of property and equipment (592,684) (162,860) Payments for right of access (172,000) - ------------------------------------------------------------------------- (764,684) (162,860) Cash flows from financing activities: Payments under capital leases (12,115) (60,449) Foreign exchange gain (loss) on cash held in foreign currency (9,831) 20,790 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (637,949) 298,517 Cash and cash equivalents, beginning of period 3,412,781 1,810,478 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 2,774,832 $ 2,108,995 ------------------------------------------------------------------------- -------------------------------------------------------------------------
For further information: Investors and Media: Chuck Leighton, CFO, (604) 692-4531, [email protected]; or David Feick, Investor Relations, The Equicom Group, (403) 218-2839, [email protected]
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