Radiant Communications Announces Second Quarter 2009 Results



    
    Company records 23% revenue growth with positive net income and cash
    flows
    

    VANCOUVER, Aug. 20 /CNW/ - Radiant Communications Corp. (TSX-V: RCN),
Canada's leading supplier of Broadband Solutions for Business(TM), today
announced its financial results for its 2009 second quarter ended June 30,
2009.

    
    HIGHLIGHTS:

    -   Revenue of $7.4 million for the quarter increased by 23.3% compared
        to revenue of $6.0 million for the second quarter of 2008 with year
        to date revenue up 25.7% over 2008.
    -   Gross margin was $3.3 million or 44.3% for the quarter.
    -   The Company recorded EBITDA of $670,854 in the quarter and
        $1.2 million in the first half.
    -   Net income for the quarter was $224,076 or $0.02 per share.
    -   The Company ended the quarter with cash and short-term investments of
        $3.6 million.
    -   During the quarter Radiant provisioned more than 1,000 new North
        American locations for new and existing customers across a wide range
        of industries, incuding quick service hospitality, specialty retail,
        engineering, finance, and professional services.
    -   Radiant's AlwaysThere(TM) Cloud Computing and hosted Exchange
        services attained Microsoft Gold Partner status for Hosted Solutions.
    -   In the second quarter Radiant signed renewals, extensions and
        expansions with many existing significant customers including the
        Forzani Group, 7-Eleven, West 49th, Payless Shoes and CBS Outdoor.
    

    "Our second quarter showed further improvement across all areas of our
operation as we continued to demonstrate strong revenue growth, improved
margins and delivered positive earnings," said David Buffett, President and
CEO of Radiant. "The Company continues to strengthen its backlog and broaden
its service offering as we execute on our 2009 strategy. In the first half we
grew by adding new customers as well as increasing our traction with existing
customers in a period where many companies are reducing their footprint and
closely monitoring their spending."

    Financial Review

    Revenues for the quarter ended June 30, 2009 increased 23.3% to $7.4
million compared to $6.0 million in the second quarter of 2008. 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.
One time hardware revenues can fluctuate from quarter to quarter depending on
the requirements of customer rollouts that occur each quarter.
    Revenue in the second quarter of 2009 increased by 1.6% compared the
preceding first quarter of 2009 with the increase attributable to the addition
of over 600 new locations for a major customer. The AlwaysThere hosted
Exchange(TM) product continued to achieve market success with over 3,200 seats
active and being billed by the end of Q2 representing more than $800,000 of
annualized revenue. Sales of new connectivity services and virtual grid
services were somewhat slower in the first half as customers continue to make
investment decisions cautiously. Radiant continues to have a strong funnel of
opportunities and a backlog of orders.
    For the quarter ended June 30, 2009, the Company's gross profit increased
to $3.3 million compared to $2.8 million in the second quarter of 2008. Gross
profit as a percent of revenue was 44.2% for the quarter ended June 30, 2009
compared to 46.2% for the same period in 2008 and 43.6% 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. Overall margin percentage can vary with revenue
mix, as hardware revenues carry lower margins than the Company's higher value
connectivity and managed services. During periods of very high growth margins
may also be negatively impacted due to the various up front costs and
activities required to activate and install complex and time sensitive
networks. Although many of these costs are amortized over the contract life
the current high growth rate of Radiant's business has required additional
effort in certain implementation activities.
    Operating expenses, including sales and marketing, general and
administrative, and amortization costs of $2.9 million in the second quarter
of 2009 were essentially flat compared to $2.9 million in the second quarter
of 2008 and $2.9 million in the immediately preceding first quarter of 2009.
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 new operating and billing systems to
accommodate the high growth rate and thus far has been able to make these
investments without increasing overall operating expense.
    Sales and marketing expenses include compensation expenses, agent and
channel distribution, and marketing costs. For the quarter ended June 30,
2009, sales and marketing expense decreased 23.7% to $482,995 compared to
$632,835 in the second quarter of 2008. 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 which has resulted in a more cost effective sell through
process. Sales and marketing expenses in the second quarter of 2009 were 10%
or $53,576 lower than the expenses recorded in the first quarter of 2009 as
the transition to the revised sales structure was fully implemented. The
Company expects sales and marketing expenses to increase slightly during the
second half of the year as the indirect reseller channels for hosted
applications continue to expand and we see a possible growth in new sales with
delayed customer spending emerging.
    General and administrative expenses, which include customer care,
technical, network, executive and administrative staff, systems development,
hardware, software, premises, office and general expenses, were 6.6% or
$134,580 higher at $2.2 million for the quarter ended June 30, 2009 compared
to the second quarter of 2008. The increase is primarily due to the ongoing
product development activities mentioned previously as well as significant
costs related to managing the installation and service connections associated
with the customer roll-out previously referred to as well as investments in
our provisioning and billing systems to accommodate our recent high growth
rate. General and administrative expenses in the second quarter of 2009 were
higher by $54,010 compared to the first quarter of 2009.
    The Company had net income of $224,076 or $0.02 per share for the quarter
ended June 30, 2009 compared to a net loss of $146,964 or $0.01 per share in
the second quarter of 2008. The weighted average number of shares outstanding
for the second quarter of 2009 was 10.9 million and for the second quarter of
2008 was also 10.9 million.

    LIQUIDITY AND CAPITAL RE

SOURCES At June 30, 2009 Radiant had cash and short term investments of $3.6 million compared to $2.3 million at December 31, 2008. Of this amount $109,000 is restricted as it has been pledged as collateral for letters of credit which guarantee the Company's capital lease financing and the primary operating facility operating lease. 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 2009. The Company believes it has sufficient funds to ensure ongoing operations and will not require additional funding from capital markets or other sources in 2009. 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 June 30, 2009 on August 21, at 9:00 a.m. PDT (12:00 p.m. EDT). Access to the call may be obtained by calling the operator at 1-866-233-4566 (Toll Free North America), or 1-416-640-5940 (International) 10 minutes prior to the scheduled start time. 7 days after the call at 1-866-245-6755 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 810489. 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. EBITDA Earnings before Interest, Taxes, Depreciation and Amortization is calculated as follows: ------------------------------------------------------------------------- ($000s) Q2 2009 Q2 2008 ------------------------------------------------------------------------- Operating Income (Loss) $ 339 $ (151) Amortization 260 230 Stock-based compensation expense 72 63 ------------------------------------------------------------------------- EBITDA $ 671 $ 142 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- ($000s) Six months Six months ended ended June 30, June 30, 2009 2008 ------------------------------------------------------------------------- Operating Income (loss) $ 571 $ (311) Amortization 523 471 Stock-based compensation expense 137 106 ------------------------------------------------------------------------- EBITDA $ 1,231 $ 266 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 20,000 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) ------------------------------------------------------------------------- June 30, December 31, 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 3,022,080 $ 1,810,478 Short-term investments 424,000 424,000 Restricted short-term investment 109,000 109,000 Trade accounts receivable 2,136,136 2,534,797 Inventories 534,463 674,717 Prepaid expenses and deposits 553,641 275,913 Deferred costs 1,500,123 1,254,309 ------------------------------------------------------------------------- 8,279,433 7,083,214 Property and equipment 1,437,817 1,648,465 Goodwill 1,574,228 1,574,228 ------------------------------------------------------------------------- $ 11,291,488 $ 10,305,907 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities $ 2,601,481 $ 2,333,222 Customer deposits 160,735 162,086 Deferred revenue 4,529,662 4,329,351 Current portion of deferred lease inducements 16,050 16,050 Current portion of obligations under capital leases 91,581 176,218 ------------------------------------------------------------------------- 7,399,509 7,016,927 Deferred lease inducements 69,851 64,509 Obligations under capital leases 69,306 87,203 ------------------------------------------------------------------------- 7,538,666 7,168,639 ------------------------------------------------------------------------- Shareholders' equity Share capital 3,601,872 3,601,872 Contributed surplus 4,284,349 4,147,045 Deficit (4,133,399) (4,611,649) ------------------------------------------------------------------------- 3,752,822 3,137,268 ------------------------------------------------------------------------- Contingent liabilities $ 11,291,488 $ 10,305,907 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RADIANT COMMUNICATIONS CORP. STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME (LOSS) AND DEFICIT (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenue $ 7,374,185 $ 5,981,516 $ 14,640,373 $ 11,651,349 Cost of sales 4,105,573 3,217,310 8,207,038 6,269,264 ------------------------------------------------------------------------- Gross profit 3,268,612 2,764,206 6,433,335 5,382,085 ------------------------------------------------------------------------- Expenses Sales and marketing 482,995 632,835 1,019,565 1,158,117 General and administrative 2,186,969 2,052,389 4,319,928 4,064,541 Amortization 260,322 229,769 522,538 470,704 ------------------------------------------------------------------------- 2,930,286 2,914,993 5,862,031 5,693,362 ------------------------------------------------------------------------- Income (loss) before undernoted 338,326 (150,787) 571,304 (311,277) Interest expense 14,439 19,792 31,438 58,455 Other (income) expenses 99,811 (23,615) 61,616 (65,691) ------------------------------------------------------------------------- Net earnings (loss) and comprehensive income (loss) for the period 224,076 (146,964) 478,250 (304,041) Deficit, beginning of period (4,357,475) (4,237,293) (4,611,649) (4,080,216) ------------------------------------------------------------------------- Deficit, end of period $ (4,133,399) $ (4,384,257) $ (4,133,399) $ (4,384,257) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted earnings (loss) per share $ 0.02 $ (0.01) $ 0.04 $ (0.03) Weighted average common shares, used in computing basic and diluted earnings (loss) per share 10,925,658 10,925,658 10,925,658 10,925,658 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RADIANT COMMUNICATIONS CORP. STATEMENTS OF CASH FLOWS (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash flows from operating activities: Income (loss) for the period $ 224,076 $ (146,964) $ 478,250 $ (304,041) Items not involving cash: Amortization 260,322 229,769 522,538 470,704 Stock-based compensation 72,206 62,843 137,304 106,119 Amortization of deferred lease inducements 2,671 7,684 5,342 (5,054) Foreign exchange (gain) loss 98,932 (3,557) 78,142 (19,857) ------------------------------------------------------------------------- 658,207 149,775 1,221,576 247,871 Change in non-cash working capital: Trade accounts receivable 736,447 (132,804) 398,661 (58,139) Inventories (99,204) (47,285) 140,254 (43,070) Prepaid expenses and deposits (160,173) (37,369) (277,728) (64,637) Deferred costs (207,630) (25,345) (245,814) (437,075) Accounts payable and accrued liabilities 130,359 (889,235) 268,259 (148,177) Customer deposits (750) (965) (1,351) (1,830) Deferred revenue 145,876 201,102 200,311 436,219 ------------------------------------------------------------------------- 1,203,132 (782,126) 1,704,168 (68,838) Cash flows from investing activities: Purchase of property and equipment (149,030) (68,372) (311,890) (471,843) ------------------------------------------------------------------------- (149,030) (68,372) (311,890) (471,843) Cash flows from financing activities: Payments under capital leases (42,085) (67,285) (102,534) (138,703) ------------------------------------------------------------------------- (42,085) (67,285) (102,534) (138,703) Foreign exchange gain (loss) on cash held in foreign currency (98,932) 3,557 (78,142) 19,857 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 913,085 (914,226) 1,211,602 (659,527) Cash and cash equivalents, beginning of period 2,108,995 2,788,970 1,810,478 2,534,271 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 3,022,080 $ 1,874,744 $ 3,022,080 $ 1,874,744 ------------------------------------------------------------------------- -------------------------------------------------------------------------

For further information:

For further information: Investors and Media: Chuck Leighton, CFO, (604)
692-4531, cleighton@radiant.net; or David Feick, Investor Relations, The
Equicom Group, (403) 538-4787, dfeick@equicomgroup.com

Organization Profile

Radiant Communications Corp.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890