RDM Corporation Reports Fiscal 2016 Second Quarter Financial Results

- Recurring revenue grows 15% and strong cash flow from operations -

WATERLOO, ON, April 28, 2016 /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 and six months ended March 31, 2016. All financial results are reported in thousands of U.S. dollars unless otherwise stated.

"We executed on the continued growth opportunities within our Payment Processing business, this quarter," said Randy Fowlie, President and CEO of RDM Corporation. "The 15 percent increase in high margin recurring revenue, largely offset weakness in our Digital Imaging business that was due to a restructuring at one of our resellers. As such, we achieved overall gross margin improvements, strong cash from operations and healthy bottom line results. We remain confident in our ability to deliver further growth in our Payment Processing business through new deployments and expansion within our existing customers, and expect revenue from Digital Imaging to be stronger in the second half of the year."

Q2 Fiscal 2016 Highlights (Unless otherwise noted, comparisons are made between Q2 fiscal 2016 and Q2 fiscal 2015)

  • Total revenue was $5,139 compared to $5,758
  • Recurring Payment Processing revenue was $3,846, up 15% from $3,356
  • Total Payment Processing revenue was $3,963, a 12% increase from $3,544
  • Digital Imaging revenue was $1,176 compared to $2,214
  • Gross margin was 69%, up from 60%
  • Operating income was $925 compared to $1,059
  • Adjusted EBITDA was $1,368 compared to $1,431
  • Net income was $669 compared to $789
  • Generated $1,960 in cash from operations, up 216% compared to $621, and ended the quarter with $29,088 in cash and cash equivalents
  • End user seats were 46,736 seats, up 17% and 3% over Q2 fiscal 2015 and Q1 fiscal 2016, respectively
  • The Board declared a quarterly cash dividend of $0.02 per common share
  • Released new single-feed network check scanner

Year-to-date Fiscal 2016 Highlights (Unless otherwise noted, comparisons are made between year-to-date fiscal 2016 and fiscal 2015)

  • Total revenue was $10,568 compared to $11,604
  • Recurring Payment Processing revenue was $7,586 up 15% from $6,599
  • Total Payment Processing revenue was $7,803, a 12% increase from $6,941
  • Digital Imaging revenue was $2,765 compared to $4,663
  • Gross margin was 68% up from 59%
  • Operating income was $2,375 compared to $2,076
  • Adjusted EBITDA was $3,129, up 11% from $2,807
  • Net income was $1,695 compared to $1,912
  • Generated $3,375 in cash from operations, up 129% compared to $1,473

Dividend

A quarterly dividend of $0.02 per share will be paid on June 6, 2016 to shareholders of record on May 23, 2016. The dividends 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 fiscal 2016 second quarter results on Thursday, April 28, 2016 at 9:00 a.m. EDT. Dial-in numbers are 647-427-7450 or 1-888-231-8191. The call will be webcast live www.rdmcorp.com and http://bit.ly/1Nixd5v. It will also be 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) and operating income do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.  Adjusted EBITDA is provided to assist management and investors in determining the Company's approximate operating cash flow before interest, income taxes, and depreciation and amortization, foreign exchange, stock-based compensation and one-time charges. Management believes that RDM shareholders and potential investors in RDM use non-IFRS financial measures such as adjusted EBITDA and operating income in making investment decisions about the Company and measuring the operational results.

About RDM Corporation

RDM Corporation provides large financial institutions with Remote Deposit Capture (RDC) solutions designed to help their clients simplify the way they do business. RDM processes over $600 billion in payments annually and helps financial institutions increase revenue, expand market share and improve customer service for over 80,000 end users.

Four of the top ten financial institutions in the United States use RDM's payment processing solutions. RDM serves 31 percent of the top 100 Fortune 500 companies including brokerage firms, big-box retailers, healthcare and insurance providers, and government entities. Working with clients for over 25 years, RDM provides both software and hardware solutions including web-based and mobile RDC, and manufactures a wide range of digital imaging scanners. For more information, visit www.rdmcorp.com.

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)




March 31, 2016

September 30, 2015

Assets:






Current assets:




Cash and cash equivalents

$                   29,088

$                   26,405


Accounts receivable

2,636

3,598


Unbilled revenue

62

48


Inventories

2,410

1,821


Investment tax credits receivable

154

130


Prepaid and other assets

740

836

Total current assets

35,090

32,838




Investment tax credits

1,197

1,586

Property and equipment

2,028

1,910

Intangible assets

741

701

Total assets

$                   39,056

$                   37,035




Liabilities and shareholders' equity:






Current liabilities:




Accounts payable and accrued liabilities

$                     3,036

$                     2,869


Deferred revenue

403

282

Total current liabilities

3,439

3,151




Deferred income taxes

501

561




Shareholders' equity:




Share capital

21,960

21,106


 Contributed surplus

2,532

2,697


Retained earnings

10,624

9,520

Total shareholders' equity

35,116

33,323

Total liabilities and shareholders' equity

$                   39,056

$                  37,035




 

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


2016

2015

2016

2015






Revenue:






Payment Processing Services

$           3,963

$           3,544

$           7,803

$           6,941


Digital Imaging Products

1,176

2,214

2,765

4,663


5,139

5,758

10,568

11,604

Cost of revenue

1,605

2,322

3,388

4,735

Gross profit

3,534

3,436

7,180

6,869






Operating expenses:






Sales and marketing

678

737

1,359

1,487


Research and development

1,266

1,143

2,251

2,306


General and administration

665

497

1,195

1,000


2,609

2,377

4,805

4,793






Operating income

925

1,059

2,375

2,076






Other items:






Foreign exchange gain (loss)

3

(31)

(4)

(15)


Interest income

27

16

50

31


Other income

-

-

-

120


30

(15)

46

136






Income before income taxes

955

1,044

2,421

2,212

Income tax expense






Current

415

255

832

300


Deferred

(129)

-

(106)

-


286

255

726

300

Net income

$              669

$               789

$           1,695

$           1,912






Earnings per share – basic and diluted

$             0.03

$             0.04

$             0.07

$             0.09

 

Weighted average common shares

outstanding during the period

22,569,351

21,849,351

 

 

22,306,851

 

 

21,836,851






 

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


2016

2015

2016

2015






Net income

$               669

$               789

$           1,695

$           1,912






Other comprehensive income:






Effective portion of changes in fair

value of cash flow hedges

41

(38)

-

(85)

Comprehensive income

$               710

$               751

$           1,695

$           1,827






 

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 September 30, 2014

$  20,512

$         2,535

$                -

$     5,171

$     28,218


Total comprehensive income for the period:








Net income

-

-

-

1,912

1,912



Effective portion of changes in

fair value of cash flow hedges

-

-

(85)

-

(85)








Issuance of share capital

594

(241)

-

-

353


Dividends paid

-

-

-

(456)

(456)


21,106

2,294

(85)

6,627

29,942


Stock-based compensation

-

212

-

-

212

Balance as at March  31, 2015

$   21,106

$         2,506

$            (85)

$     6,627

$     30,154







Balance as at September 30, 2015

$   21,106

$         2,697

$                -

$     9,520

$     33,323


Total comprehensive income for the period:








Net income

-

-

-

1,695

1,695



Effective portion of changes in

fair value of cash flow hedges

-

-

-

-

-








Issuance of share capital

854

(308)

-

-

546


Dividends paid

-

-

-

(591)

(591)


854

(308)

-

1,104

1,650


Stock–based compensation

-

143

-

-

143

Balance as at March 31, 2016

$  21,960

$         2,532

$                -

$   10,624

$     35,116

See accompanying notes to the condensed consolidated interim financial statements.

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

2016

2015




Cash provided by (used in):






Operations:



Net income

$       1,695

$       1,912


Items not involving cash:





Current income tax expense

832

300



Deferred income tax expense

(106)

-



Depreciation of property and equipment

297

357



Amortization of intangible assets

192

162



Stock-based compensation

279

212



Interest earned

(50)

(31)

Change in non-cash operating working capital

168

(1,470)

Cash provided by operations

3,307

1,442

Interest received

68

31

Net cash provided by operating activities

3,375

1,473

 

Financing:




Issuance of share capital

546

353


Dividends paid

(591)

(456)

Cash used in by financing activities

(45)

(103)




Investing:




Purchase of property and equipment

(415)

(126)


Additions to intangible assets

(232)

(230)

Cash used in investing activities

(647)

(356)




Increase (decrease) in cash and cash equivalents

2,683

1,014

Cash and cash equivalents, beginning of period

26,405

22,422

Cash and cash equivalents, end of period

$     29,088

$     23,436







 

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


2016

2015

2016

2015

Net income

$               669

$               789

$           1,695

$              1,912

Income tax expense

286

255

726

300

Interest income

(27)

(16)

(50)

(31)

Depreciation and amortization

248

267

475

519

Foreign exchange loss (gain)

(3)

31

4

15

Stock-based compensation

195

105

279

212

Other expense (income)

-

-

-

(120)

Adjusted EBITDA

$           1,368

$           1,431

$           3,129

$               2,807






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

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