RDM Corporation Reports Fiscal 2014 Fourth Quarter and Year-End Financial Results

Adjusted EBITDA grows 20% in 2014

WATERLOO, ON, Nov. 20, 2014 /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 fourth quarter and fiscal year ended September 30, 2014. All figures are reported in U.S. dollars unless otherwise stated.

Fiscal 2014 Highlights (Unless otherwise noted comparisons are made between fiscal 2014 and fiscal 2013 results)

• Total revenue improved to $22.7 million, compared to $21.9 million in fiscal 2013, with Payment Processing Services ("PPS") accounting for 63% of revenue compared to 60% in fiscal 2013.
• Total PPS revenue grew 8.8% to $14.2 million.
• Gross profit from PPS grew 18.2% to $9.7 million, with gross margins improving to 68.2% from 62.8%.
• Total gross margin expanded to 55.6% from 53.2%.
• Added 4,959 end user seats in fiscal 2014, growing total ends users on the ITMS network 16% to 36,980.
• Operating income grew by 46% to $2.9 million, driven by solid growth in PPS revenue and stable operating expenses.
• Net income increased to $2.8 million, compared to a net loss of $519,000 in fiscal 2013.
• Adjusted EBITDA increased 20% to $4.3 million, compared to $3.6 million in 2013.
• The Company generated record cash from operations of $4.3 million.

Q4 Fiscal 2014 Highlights

• Total revenue was $6.2 million, compared to $5.6 million in Q4 of 2013.
• PPS revenue increased by 5% to $3.5 million, compared to in Q4 2013, driven primarily by growth in ITMS end-user seats.
• Digital Imaging revenue grew 17% to $2.7 million, as compared to $2.3 million in Q4 2013.
• Adjusted EBITDA increased by 5% to $1.2 million and operating income was up 41% to $0.9 million.
• The Company generated $3.0 million in cash from operations during the quarter and ended the period with a cash balance of $22.4 million.

"Our results continue to demonstrate the underlying stability of our business and our success in shifting the Company toward higher-margin, recurring revenue streams," said Randy Fowlie, President and CEO of RDM Corporation. "We generated a record $4.3 million in cash from operations, grew operating income 46% to $2.9 million and instituted a dividend program this year. The strength of our product offering is being recognized in the market as we continue to win new customers. Through commercializing our new products and engaging with the opportunities in our pipeline, we will continue to grow our customer base while building our recurring revenue stream. "

Dividend

The Board of Directors declared a dividend today of $0.01 per share that is payable on December 18, 2014, to shareholders of record as of December 4, 2014. Pursuant to the rules of the TSX, the Ex-Dividend date will be December 16, 2014.

The dividends to be paid on December 18, 2014 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 fourth quarter and fiscal 2014 results on November 20, 2014 at 9:00 a.m. EDT. Dial-in numbers are 647-427-7450 or 1-888-231-8191. The call will be webcast live and 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) is provided to assist management and investors in determining the Company's approximate operating cash flows before interest, income taxes, and depreciation and amortization. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management believes that RDM shareholders and potential investors in RDM use non-IFRS financial measures such as Adjusted EBITDA in making investment decisions about the Company and measuring the operational results. A reconciliation of Adjusted EBITDA to net income determined in accordance with IFRS is provided in the Company's MD&A and in the accompanying schedule.

About RDM Corporation

RDM Corporation (www.rdmcorp.com), is a leading provider of remote deposit capture (RDC) and complex desktop remittance processing solutions designed to help clients simplify the way they do business. Four of the top ten financial institutions in the United States use RDM's payment processing solutions. RDM processes over $600 billion in payments annually and helps corporations and financial institutions increase revenue, expand market share and improve customer service for over 30,000 end-users. RDM serves 32 percent of the top 100 Fortune 500 companies including brokerage firms, big box retailers, healthcare and insurance providers, and government entities.

For over 25 years, RDM has worked with clients to provide both software and hardware solutions including web-based and mobile RDC for large corporate clients and small businesses, transactional data management, and manufactures a wide range of digital imaging scanners. RDM was recently named to the Branham300 list, which highlights the top Canadian and multinational companies servicing the Information and Communication Technology (ICT) marketplace.

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
Consolidated Balance Sheets
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
		September 30, 2014		September 30, 2013
Assets:
Current assets:
	Cash and cash equivalents	$	22,422	$	20,126
	Accounts receivable		3,292		2,673
	Unbilled revenue		124		42
	Inventories		2,132		2,755
	Investment tax credit receivable		188		177
	Prepaid and other assets		807		760
	Derivative assets		-		29
Total current assets			28,965		26,562
Investment tax credits			270		366
Property and equipment			2,504		1,986
Intangible assets			771		582
Total assets		$	32,510	$	29,496
Liabilities and shareholders' equity:
Current liabilities:
	Accounts payable and accrued liabilities	$	3,989	$	3,663
	Deferred revenue		303		337
Total current liabilities			4,292		4,000
Shareholders' equity:
	Share capital		20,512		20,100
	Contributed surplus		2,535		2,445
	Accumulated other comprehensive income		-		29
	Retained earnings		5,171		2,922
Total shareholders' equity			28,218		25,496
Total liabilities and shareholders' equity		$	32,510	$	29,496

RDM CORPORATION
Consolidated 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  September 30				Years ended September 30
			2014		2013		2014		2013
Revenue:
	Payment Processing Services	$	3,518	$	3,338	$	14,236	$	13,082
	Digital Imaging Products		2,667		2,278		8,453		8,788
			6,185		5,616		22,689		21,870
Cost of revenue			2,878		2,751		10,074		10,238
Gross profit			3,307		2,865		12,615		11,632
Operating expenses:
	Sales and marketing		843		788		3,138		3,253
	Research and development		1,062		956		4,440		4,270
	General and administration		542		509		2,091		2,097
			2,447		2,253		9,669		9,620
Income from operations			860		612		2,946		2,012
Other items:
	Foreign exchange gain (loss)		31		(101)		107		(185)
	Interest income		11		9		41		38
	Other income (expense)		-		91		(153)		(2,298)
			42		(1)		(5)		(2,445)
Income (loss) before income taxes			902		611		2,941		(433)
Current income tax expense (recovery)			24		(26)		96		86
Income (loss) for the period			878	$	637	$	2,845	$	(519)
Income (loss) per share – basic and diluted		$	0.04	$	0.03	$	0.13	$	(0.02)

RDM CORPORATION
Consolidated Statements of Comprehensive Income
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
		Three months ended September 30				Years ended September 30
			2014		2013		2014		2013
Income (loss) for the period		$	878	$	637	$	2,845	$	(519)
Other comprehensive income (loss):
	Effective portion of changes in fair value of cash flow hedges		-		73		(29)		(87)
Comprehensive income (loss)		$	878	$	710	$	2,816	$	(606)

RDM CORPORATION
Consolidated 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 October 1, 2012				$	19,960	$	2,323	$	116	$	3,441	$		25,840
		Total comprehensive income for the year:
			Loss for the year		-		-		-		(519)			(519)
			Effective portion of changes in fair value of cash flow hedges		-		-		(87)		-			(87)
		Issuance of share capital			140		(20)		-		-			120
					20,100		2,303		29		2,922			25,354
		Stock-based compensation			-		142		-		-			142
Balance as at September 30, 2013				$	20,100	$	2,445	$	29	$	2,922	$		25,496
Balance as at September 30, 2013				$	20,100	$	2,445	$	29	$	2,922	$		25,496
		Total comprehensive income for the year:
			Income for the year		-		-		-		2,845			2,845
			Effective portion of changes in fair value of cash flow hedges		-		-		(29)		-			(29)
		Issuance of share capital			412		(108)		-		-			304
		Dividends paid			-		-		-		(596)			(596)
					20,512		2,337		-		5,171			28,020
		Stock–based compensation			-		198		-		-			198
Balance as at September 30, 2014				$	20,512	$	2,535	$	-	$	5,171	$		28,218

 

 

RDM CORPORATION
Consolidated Statements of Cash Flows
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
			Three months ended September 30				Years ended September 30
				2014		2013		2014		2013
Cash provided by (used in):
Operations:
Income (loss) for the period			$	878	$	637	$	2,845	$	(519)
	Items not involving cash:
		Current income tax expense (recovery)		24		(26)		96		86
		Depreciation of furniture and equipment		221		337		772		895
		Amortization of intangible assets		2		136		355		516
		Stock-based compensation		96		27		198		142
		Interest earned		(11)		(9)		(41)		(38)
		Exchange (gain) loss on cash held in foreign currency		(71)		116		(73)		(102)
Change in non-cash operating working capital				1,892		(226)		156		1,210
Cash provided by operations				3,031		992		4,308		2,190
Interest received				9		10		35		43
Net cash provided by operating activities				3,040		1,002		4,343		2,233
Financing:
	Issuance of share capital			19		34		304		120
	Dividends paid			(201)		-		(596)		-
Cash provided by (used in) financing activities				(182)		34		(292)		120
Investing:
	Purchase of furniture and equipment			(35)		119		(1,290)		(930)
	Additions to intangible assets			(6)		(213)		(544)		(238)
Cash used in investing activities				(41)		(94)		(1,834)		(1,168)
Exchange gain (loss) on cash held in foreign currency				73		(10)		79		44
Increase in cash and cash equivalents				2,890		932		2,296		1,229
Cash and cash equivalents, beginning of period				19,532		19,194		20,126		18,897
Cash and cash equivalents, end of period				22,422	$	20,126	$	22,422	$	20,126

 

SCHEDULE

RDM CORPORATION
Reconciliation of Adjusted EBITDA to Income (loss) for the period
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
	Three months ended September 30				Years ended September 30
		2014		2013		2014		2013
Net Income (loss) for the period	$	878	$	637	$	2,845	$	(519)
Income tax expense		24		(26)		96		86
Interest Income		(11)		(9)		(41)		(38)
Depreciation and amortization		208		473		1,127		1,411
Foreign exchange (gain) loss		(30)		101		(107)		185
Stock-based compensation		96		27		198		142
Other (income) expense		-		(91)		153		2,298
Adjusted EBITDA for the period	$	1,165	$	1,112	$	4,271	$	3,565

 

SOURCE: RDM Corporation

Randy Fowlie, President & CEO, RDM Corporation, [phone] x340,[email protected]; Rui Malhinha, Chief Financial Officer, RDM Corporation, [phone] x284, [email protected]