Radiant Communications Announces First Quarter 2011 Results

VANCOUVER, June 23, 2011 /CNW/ - Radiant Communications Corp. ("Radiant") (TSX-V:RCN), Canada's leading supplier of Broadband Solutions for Business™, today announced its financial results for the first quarter ended March 31, 2011.

HIGHLIGHTS:

  • Revenue of $7.9 million for the quarter ended March 31, 2011, an increase of 1.6% compared with $7.8 million for the prior year quarter ended March 31, 2010.
  • Gross margin was 40.1% for the quarter.
  • EBITDA for the quarter ended March 31, 2011was $325,513. (see EBITDA section for the reconciliation of EBITDA to Net Income).
  • The Net Loss for the quarter was $62,470 or $0.00 per share.
  • The Company ended the quarter with cash and short-term investments of $4.8 million and generated $682,307 of cash from operating activities during the quarter.

"We have established a strategy of breaking through the wall of medium and small enterprises by providing highly secure and reliable data connectivity to our hosted cloud services and applications," said David Buffett, Radiant's President and CEO. "In the first quarter we continued to build a solid foundation for this strategy by investing in new cloud infrastructure, converting new and existing customers to virtual applications and preparing for the increasing trend of small business to move to cloud applications. By remaining EBITDA positive and growing our cash position we are well prepared for the forecast growth in this sector."

Financial Review

Revenues for the quarter ended March 31, 2011 increased 1.6% to $7.9 million compared to $7.8 million in the First Quarter of 2010.  The increase is primarily the result of sales and installations of new AlwaysThere™ solutions and Surelink™ connections. 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.  One time hardware revenues can fluctuate from quarter to quarter depending on the requirements of customer rollouts that occur each quarter.

The new Ethernet First Mile, (EFM), product which has been branded as Surelink™, was launched commercially in the second quarter of 2010 with sales driven primarily through a newly established inside sales team. The service is available out of 31 central offices in the Toronto and Vancouver metropolitan regions with specific reach dictated by proximity to the local central office. At the end of the first quarter Radiant had over $80,000 in monthly Surelink revenue under contract.

Traditional connectivity revenue was flat during the quarter as price reductions for ongoing services and churn were offset by new revenue from new customers as well as new higher value services being purchased by existing customers.

Revenue in the first quarter of 2011 decreased slightly by 0.03% compared to the preceding fourth quarter of 2010.

For the quarter ended March 31, 2011, the Company's gross profit was $3.2 million or the same as gross margin in the first quarter of 2010.  Gross profit as a percent of revenue was 40.1% for the quarter ended March 31, 2011 compared to 40.5% for the same period in 2010 and 39.7% in the immediately preceding quarter. During the first quarter the installation and activation of new higher margin services increased gross margin percentage compared to the immediately preceding quarter.

Expenses

Operating expenses, including sales and marketing, general and administrative, and amortization costs of $3.2 million in the first quarter of 2011 increased by 7.7% compared to $3.0 million in the first quarter of 2010 and were flat compared to the immediately preceding fourth quarter of 2010. 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 has invested in the Surelink product and sees an immediate opportunity to capture market share from existing more expensive and lower performance solutions offered by competitors.

Sales and marketing expenses include compensation expenses, agent and channel distribution, and marketing costs.  For the quarter ended March 31, 2011, sales and marketing expense increased 19.9% to $591,286 compared to $493,517 in the first quarter of 2010. As previously mentioned this increase is primarily attributable to the investment in the Surelink product and a focused web based marking campaign.  Sales and marketing expenses in the first quarter of 2011 decreased by 1.5% compared to sales and marketing costs in the fourth quarter of 2010 related to commission expenses and the timing of ongoing marketing programs.

General and administrative expenses, which include customer care, technical, network, executive and administrative staff, systems development, hardware, software, premises, office and general expenses, and amortization increased by 8.7% to $2.7 million for the quarter ended March 31, 2011 compared to $2.5 million in the first quarter of 2010.  General and administrative expenses in the first quarter of 2011 were 22.7% higher compared to the fourth quarter of 2010. Amortization of the investment in Surelink rights of access is the primary reason for the increase in general and administrative expenses. For the quarter ended March 31, 2011 amortization expenses of $349,212 were up 33.6% compared to amortization expenses in the first quarter of 2010 of $261,362. Other expenses include restructuring recoveries or costs and other miscellaneous income or expenses from operation.  For the quarter ended March 31, 2011, other income increased fivefold to $104,073 compared to $17,753 in the first quarter of 2010.  The increase is mainly attributable of a recovery from restructuring costs recorded in the fourth quarter of 2009.   Other income increased by threefold in the first quarter of 2011 compared to other income in the fourth quarter of 2010.

The Company had a net loss of $62,470 or $0.00 per share for the quarter ended March 31, 2011 compared to net income of $159,674 or $0.01 per share in the first quarter of 2010. The weighted average number of shares outstanding for the first quarter of 2011 was 15.1 million and for the first quarter of 2010 was 10.9 million.

At March 31, 2011 Radiant had cash and short term investments of $4.8 million compared to $4.3 million at December 31, 2010. 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 for the existing business. Existing future commitments are primarily for premises and equipment leases and amount to $1.0 million for 2011 and $1.2 million for the remaining four years to 2015.  The Company believes it has sufficient funds to ensure ongoing operations and will not require additional funding from capital markets or other sources in 2011.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization is calculated as follows:

     
($000s) Q1 2011 Q1 2010
Operating Income (loss) $ (44) $ 176
Depreciation and amortization    349    261
Share-based compensation expense      20      49
EBITDA $ 325 $ 486

In the first quarter of 2011, Radiant achieved EBITDA of $325,513 compared to EBITDA of $486,117 in the first quarter of 2010.

Additional details on the 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, 2011, on June 24, 2011, at 10:00 a.m. PDT (1:00 p.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 or 7 days after the call at 1.800.642.1687 (Toll Free North America) or 416-849-0833 (International). The passcode for the playback and the call is 77421657. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.

Non-GAAP Non-IFRS 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 or IFRS, 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 or IFRS 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  

In operation since 1996, Radiant currently serves over 20,000 business locations in Canada and the United States from its offices in Vancouver, Toronto and Montreal.

Headquartered in Vancouver, Canada, Radiant Communications (www.radiant.net) provides businesses across Canada with a comprehensive and innovative suite of data communications and cloud computing services: the largest on-net DSL footprint across Canada & the US, T1 and E10/E100 fibre broadband, MPLS private networking, and AlwaysThere Cloud Computing services. Many of Canada's largest retail chains and thousands of other small to mid-sized businesses depend on Radiant solutions for their mission-critical data networks and enterprise-level applications.

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 SHEETS
(Expressed in Canadian dollars)
(Unaudited)

               
      March 31,
2011
  December 31,
2010
  January 1,
2010
Assets              
Current assets              
  Cash and cash equivalents   $ 4,241,638 $ 3,748,225 $ 3,412,781
  Short-term investments     533,376   533,376   424,376
  Restricted short-term investment     -   -   109,000
  Trade and other receivables     3,172,244   3,057,969   2,538,666
  Inventories     279,925   296,888   358,136
  Prepaid expenses     345,998   272,330   269,218
      8,573,181   7,908,788   7,112,177
               
Other non-current assets     674,748   811,520   1,473,487
Property and equipment     2,169,713   2,276,688   1,568,829
Right of access     2,031,607   2,097,065   -
Goodwill     1,574,228   1,574,228   1,574,228
               
    $ 15,023,477 $ 14,668,289 $ 11,728,721
               
Liabilities and Shareholders' Equity              
Current liabilities              
  Trade and other payables   $ 2,960,712 $ 2,282,750 $ 2,744,082
  Advance billings and customer deposits     3,402,475   3,402,461   3,415,903
  Provisions and other current liabilities     157,676   329,189   565,750
      6,520,863   6,014,400   6,725,735
               
Unearned revenue     865,273   967,081   1,386,016
Provisions and other non-current liabilities     26,548   33,788   119,232
      7,412,684   7,015,269   8,230,983
               
Shareholder's equity              
  Issued capital     7,511,130   7,511,130   3,601,872
  Contributed surplus     4,675,473   4,655,230   4,432,886
  Deficit     (4,575,810)   (4,513,340)   (4,537,020)
      7,610,793   7,653,020   3,497,738
               
    $ 15,023,477 $ 14,668,289 $ 11,728,721
               

RADIANT COMMUNICATIONS CORP.
STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(Expressed in Canadian dollars)
(Unaudited)

           
      Three months ended March 31,
      2011   2010
           
Revenue   $ 7,933,470 $ 7,810,769
Cost of sales     (4,750,476)   (4,639,989)
Gross profit     3,182,994   3,170,780
           
Expenses          
  Sales and marketing     (591,286)   (493,517)
  General and administrative     (2,739,183)   (2,519,332)
  Other income/expenses     104,073   17,753
      (3,226,936)   (2,995,096)
           
Operating (loss) income     (43,942)   175,684
           
Interest income     155   51
Finance recovery (costs)     3,450   (6,765)
Foreign exchange loss     (22,133)   (9,296)
           
Net (loss) income and comprehensive (loss) income for the period   $ (62,470) $ 159,674
           
Attributable to          
  Equity shareholders of the Company   $ (62,470) $ 159,674
           
Basic and diluted (loss) earnings per share   $ (0.00) $ 0.01
           
Weighted average common shares, used in computing
basic earnings per share
    15,125,664   10,925,664
           
Weighted average common shares, used in computing
diluted earnings (loss) per share
    15,125,664   10,927,684
           

 

 

SOURCE Radiant Communications Inc.

For further information:

Investors: 

Media:  
Chuck Leighton, CFO, 604.692.4531, mail to: cleighton@radiant.net, or
David Feick, The Equicom Group, 403.218.2839, dfeick@equicomgroup.com
Maria LoScerbo, Epic PR, 604.732.6221, mail to: maria@epicpr.ca

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