Radiant Communications Announces Fiscal 2009 Results

Continued market success generates 20% revenue growth and record EBITDA of $2 million

VANCOUVER, April 6 /CNW/ - Radiant Communications Corp. (TSX-V: RCN), Canada's leading supplier of Broadband Solutions for Business(TM), today announced its financial results for the fourth quarter and year ended December 31, 2009.


    -   Revenue of $30.0 million for the year ended December 31, 2009
        increased by 20.6% compared to revenue of $24.9 million for the year
        ended December 31, 2008;

    -   Revenue in Q4 of 2009 was a record $7.7 million and a 10.5% increase
        over $7 million in Q4 of 2008;

    -   Gross margin was 41.8% for the year and 40.3% in the fourth quarter;

    -   EBITDA for the year was $2.0 million and $276,005 in the fourth
        quarter of 2009;

    -   Net Income in 2009 of $73,584 amounted to $0.01 per share;

    -   Radiant re-structured the sales organization in December of 2009
        concurrent with the retirement of senior sales vice-president. A
        charge of $500,000 was recorded in the fourth quarter of 2009 related
        to severance costs associated with the re-structuring;

    -   The Company ended the current year with cash and short-term
        investments (unrestricted and restricted) of $3.8 million and
        generated cash from operations of $2.8 million during 2009;

    -   Radiant provisioned more than over 2,500 locations for a large
        Canadian-based quick service food vendor as part of the five year
        agreement announced in 2008;

    -   Radiant continues to advance the AlwaysThere product suite and in
        June of 2009 the company was certified as a Microsoft Gold Partner
        with a competency in hosting;

    -   During 2009, Radiant re-signed several significant customers to new
        multi-year agreements including Payless ShoeSource, and 7- Eleven,
        and signed several new accounts including Nygard International and
        Town Shoes;

    -   Subsequent to the end of 2009, 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.

"Despite a challenging economy in 2009 we drove measurable improvements in our revenue, customer service metrics, and achieved a company record for EBITDA," said David Buffett, President and CEO of Radiant. "Our improving financial strength and our attractive product suite have enabled us to form new partnerships and take the next step in opening up reliable high capacity broadband service to Canadian business for 2010."

Financial Review

Revenues for the year ended December 31, 2009 increased 20.6% to $30.0 million compared to $24.9 million in the comparable period of 2008. The increase is a result of ongoing sales of new services directed at retailers and larger national businesses as well as the significant addition of new locations and services to existing customers. The Company's revenues are primarily recurring in nature and due to long-term customer contracts, revenue growth is relatively predictable and consistent over time.

For the year ended December 31, 2009, the Company's gross profit increased to $12.5 million compared to $11.1 million in the year ended December 31, 2008. Gross profit as a percentage of revenue was 41.8% for the year ended December 31, 2009 compared to 44.4% for the same period in 2008. 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 and installation revenues carry lower margins than the Company's higher value connectivity and managed services. During the year ended December 31, 2009, Radiant provisioned more than 3,000 new managed network locations including more than 2,500 locations for a major customer announced in September of 2008. The installation and provisioning cost associated with managed network connections is higher than a standard DSL connection. This higher up-front cost is offset by higher margin monthly recurring revenue.

Operating expenses, including sales and marketing, general and administrative, and amortization increased by 1.2% to $11.8 million in the year ended December 31, 2009 compared to $11.7 million in 2008.

Sales and marketing expenses include compensation expenses, agent and channel distribution costs, and marketing costs. For the year ended December 31, 2009, sales and marketing expense decreased 17.0% to $2.0 million compared to $2.4 million in the same period of 2008. The Company has modified its sales channel strategy as well as the variable incentive portion of the direct sales force to create an increased focus on more profitable virtual software as a service (SaaS) products. During the transition the variable component of selling expense decreased from the prior year. The Company expects selling costs to increase in the future based on additional resource allocation to sales channels as well as new marketing initiatives for the AlwaysThere product line and the recently announced broadband investment agreement.

General and administrative expenses, which include customer care, technical, network, executive and administrative staff, systems development, hardware, software, premises, office and general expenses, grew 6.1% to $8.9 million for the year ended December 31, 2009 compared to $8.4 million in the year ended December 31, 2008. This increase in expense is primarily attributable to additional resources required to manage the increase in managed services connections, as well as development costs related to improvements and enhancements to the provisioning and billing systems to accommodate the current growth rate in new business.

For the year ended December 31, 2009, amortization expenses of $1.0 million were 3.1% higher than amortization expenses in the same period of 2008 of $980,623. The increase is attributable to the capital expenditures made in 2008 on a redundant AlwaysThere virtual grid and the roll-out of a national MPLS network.

Interest on the Company's outstanding equipment financing decreased to $40,518 for the year ended December 31, 2009 from $92,412 for the same period of 2008. The decrease is the result of the reduction in balance of outstanding capital lease obligations. Other expense of $593,985 includes foreign exchange losses of $138,978 related to the strengthening of the US dollar against the Canadian dollar during 2009 and a one-time termination charge of $500,000 related to severance accrued as part of the sales and distribution changes announced at the end of 2009.

The Company had a net income of $73,584 or $0.01 per share for the year ended December 31, 2009 compared to a net loss of $531,433 or $(0.05) per share in the same period of 2008. The weighted average number of shares outstanding for the year ended December 31, 2009 and the year ended December 31, 2008 was 10.9 million.

At December 31, 2009 Radiant had cash and short term investments (restricted and unrestricted) of $3.9 million compared to $2.3 million at December 31, 2008. Of this amount, $109,000 was restricted as it had been pledged as collateral for letters of credit which guarantee the Company's capital lease financing and the primary operating facility operating lease. This restriction was lifted in January of 2010 as the letters of credit were cancelled. 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. 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 fiscal year 2009 results, including the audited 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 December 31, 2009 on April 7, at 11:00 a.m. PDT (2:00 p.m. EDT). Access to the call may be obtained by calling the operator at 1-888-240-9352 (Toll Free North America), or 1-913-312-1487 (International) 10 minutes prior to the scheduled start time and for 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 315611. 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.

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

    ($000s)                                         Year ended    Year ended
                                                   December 31,  December 31,
                                                          2009          2008
    Operating Income (loss)                       $        708  $       (639)
    Amortization                                         1,010           981
    Stock-based compensation expense                       287           250
    EBITDA                                        $      2,005  $        592

    ($000s)                                          Q4 2009       Q4 2008
    Operating Loss                                $        (30) $       (171)
    Amortization                                           231           266
    Stock-based compensation expense                        75            68
    EBITDA                                        $        276  $        163


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. Headquartered in Vancouver, Canada, Radiant Communications (www.radiant.net) provides businesses across Canada with the most 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. Over 40% 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

    (Expressed in Canadian dollars)

                                                  December 31,  December 31,
                                                      2009          2008

    Current assets
      Cash and cash equivalents                   $  3,412,781  $  1,810,478
      Short-term investment                            424,376       424,000
      Restricted short-term investment                 109,000       109,000
      Trade accounts receivable                      2,512,832     2,534,797
      Inventories                                      358,136       674,717
      Prepaid expenses and deposits                    295,052       275,913
      Deferred costs                                 1,473,487     1,254,309
                                                     8,585,664     7,083,214

    Property and equipment                           1,568,829     1,648,465
    Goodwill                                         1,574,228     1,574,228

                                                  $ 11,728,721  $ 10,305,907

    Liabilities and Shareholders' Equity
    Current liabilities
      Accounts payable and accrued liabilities    $  3,244,082  $  2,333,222
      Customer deposits                                122,115       162,086
      Deferred revenue                               4,679,804     4,329,351
      Current portion of deferred lease inducements     16,050        16,050
      Current portion of obligations under capital
       leases                                           49,700       176,218
                                                     8,111,751     7,016,927

    Deferred lease inducements                          75,192        64,509
    Obligations under capital leases                    44,040        87,203
                                                     8,230,983     7,168,639

    Shareholders' equity
      Share capital                                  3,601,872     3,601,872
      Contributed surplus                            4,433,931     4,147,045
      Deficit                                       (4,538,065)   (4,611,649)
                                                     3,497,738     3,137,268

                                                  $ 11,728,721  $ 10,305,907

    (Expressed in Canadian dollars)

                          Three months ended              Year ended
                             December 31,                December 31,
                          2009          2008          2009          2008
                       (Unaudited)   (Unaudited)

    Revenue           $  7,715,284  $  6,981,267  $ 30,031,215  $ 24,900,158
    Cost of sales        4,603,913     4,120,549    17,492,839    13,847,038

    Gross profit         3,111,371     2,860,718    12,538,376    11,053,120

      Sales and marketing  567,861       583,057     1,958,762     2,358,755
      General and
       administrative    2,342,496     2,182,904     8,860,954     8,353,194
      Amortization         231,584       265,315     1,010,573       980,623

                         3,141,941     3,031,276    11,830,289    11,692,572

    Income (loss) before
     undernoted            (30,570)     (170,558)      708,087      (639,452)

    Interest expense         8,514        13,558        40,518        92,412
    Other (income)
     expenses              480,760       (80,789)      593,985      (200,431)

    Income and
     comprehensive income
     (loss) for the year  (519,844)     (103,327)       73,584      (531,433)

    Deficit, beginning
     of period          (4,018,221)   (4,508,322)   (4,611,649)   (4,080,216)

    Deficit, end of
     period           $ (4,538,065) $ (4,611,649) $ (4,538,065) $ (4,611,649)

    Basic and diluted
     earnings (loss)
     per share        $      (0.05) $      (0.01) $       0.01  $      (0.05)

    Weighted average
     common shares, used
     in computing basic
     and diluted
     earnings (loss) per
     share              10,925,664    10,925,658    10,925,664    10,925,658

    (Expressed in Canadian dollars)

                          Three months ended              Year ended
                             December 31,                December 31,
                          2009          2008          2009          2008
                       (Unaudited)   (Unaudited)
    Cash flows from
      Income (loss)
       for the period $  (519,844)  $   (103,327) $     73,584  $   (531,433)
      Items not
       involving cash:
        Amortization       231,584       265,315     1,010,573       980,623
         compensation       74,991        68,127       286,886       250,427
        Amortization of
         deferred lease
         inducements         2,671        (3,827)       10,683        (3,425)
        Foreign exchange
         (gain) loss         8,560       (49,371)      124,700       (99,807)
                          (202,038)      176,917     1,506,426       596,385
      Change in non-cash
       working capital:
        Trade accounts
         receivable        228,563      (155,179)       21,965      (192,332)
        Inventories         65,200       114,206       316,581      (261,745)
        Prepaid expenses
         and deposits      161,927       146,346       (19,139)      (13,172)
        Deferred costs     (16,671)     (201,010)     (219,178)     (719,007)
        Accounts payable
         and accrued
         liabilities       899,656      (276,363)      910,860       143,474
        Customer deposits  (38,000)          (17)      (39,971)       (2,810)
        Deferred revenue   (12,021)      396,568       350,453       910,614
        Tenant improvement
         reimbursement           -        55,695             -        55,695
                         1,086,616       257,163     2,827,997       517,102
    Cash flows from
     investing activities:
      Purchase of property
       and equipment      (427,593)     (142,586)     (930,937)   (1,090,898)
       investments               -       391,000          (376)      391,000
       investment                -      (391,000)            -      (391,000)
                          (427,593)     (142,586)     (931,313)   (1,090,898)

    Cash flows from
     financing activities:
      Payments under
       capital leases      (21,901)      (42,372)     (169,681)     (249,804)

    Foreign exchange gain
     (loss) on cash held
     in foreign currency    (8,560)       49,371      (124,700)       99,807

    Increase (decrease) in
     cash and cash
     equivalents           628,562       121,576     1,602,303      (723,793)

    Cash and cash
     beginning of
     period              2,784,219     1,688,902     1,810,478     2,534,271

    Cash and cash
     equivalents, end
     of period        $  3,412,781  $  1,810,478  $  3,412,781  $  1,810,478

SOURCE Radiant Communications Corp.

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) 218-2839, dfeick@equicomgroup.com

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