RDM Corporation Reports Fiscal 2014 Third Quarter Financial Results

WATERLOO, ON, July 24, 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 three-month period ended June 30, 2014. All figures are reported in U.S. dollars unless otherwise stated.

Q3 2014 Highlights (Unless otherwise noted comparisons are made between fiscal Q3 2014 and fiscal Q3 2013 results)

• Total revenue was $5.6 million in Q3 2014 compared to $5.2 million in Q2 2014 and $6.1 million in Q3 2013
• Total Payment Processing Services revenue was $3.6 million compared to $3.5 million
• Recurring Payment Processing revenue was $3.2 million, an increase of 6% over Q3 2013 and 5% over the prior quarter
• Gross margin percentage increased to 56% from 53%
• Operating income was $717,000 compared to $744,000
• Adjusted EBITDA was $1.1 million, compared to $952,000 in Q2 and $1.1 million in Q3 2013
• Net income improved to $535,000 compared with a loss of $1.5 million in Q3 2013
• Added 2,790 new end-user seats to bring the ITMS network to 37,422 seats, an increase of 21% from one year earlier and 8% from the prior quarter

Year-to-Date Highlights

• Cloud-based Payment Processing Services revenue increased 10% to $10.7 million
• Despite an 11% decrease in Digital Imaging Hardware revenue, total revenue increased 1% to $16.5 million, compared to the nine months ended June 30, 2013
• Payment Processing revenue represented 65% of total revenue compared to 60% in the prior year
• Gross margin percentage increased to 56% from 54% in the first nine months of 2013
• Adjusted EBITDA increased 27% over the prior year to $3.1 million

"The third quarter was highlighted by steady growth in recurring revenue and continued strong increase in new end-user seats, which will help fuel future growth in our Payment Processing business," said Randy Fowlie, President and CEO of RDM Corporation. "For the first nine months of the year Payment Processing revenue increased to 65% of our total revenue compared to 60% in the prior year which continues to drive profitability."

Dividend

The Board of Directors declared today a dividend of $0.01 per share is payable on September 5, 2014, to shareholders of record on August 22, 2014. Pursuant to the rules of the TSX, the Ex-Dividend date will be August 20, 2014. The dividends to be paid on September 5, 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 third quarter results on July 24, 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 Condensed Consolidated Interim Balance Sheets (Amounts in thousands of U.S. Dollars)
(Not audited or reviewed by the Company's external auditor)
	June 30, 2014		September 30, 2013
Assets:
Current assets:
Cash and cash equivalents	$	19,532	$	20,126
Accounts receivable	4,303		2,715
Inventories	2,991		2,755
Investment tax credit receivable	102		177
Prepaid and other assets	874		760
Derivative assets	-		29
Total current assets	27,802		26,562
Investment tax credits	294		366
Property and equipment	2,690		1,986
Intangible assets	767		582
Total assets	$	31,553	$	29,496
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable and accrued liabilities	$	3,804	$	3,663
Deferred revenue	323		337
Total current liabilities	4,127		4,000
Shareholders' equity:
Share capital	20,483		20,100
Contributed surplus	2,449		2,445
Accumulated other comprehensive income	-		29
Retained earnings	4,494		2,922
Total shareholders' equity	27,426		25,496
Total liabilities and shareholders' equity	$	31,553	$	29,496

 

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                June 30				Nine months ended                June 30
	2014		2013		2014		2013
Revenue:
Payment Processing Services	$	3,578	$	3,526	$	10,718	$	9,744
Digital Imaging Products	1,990		2,559		5,786		6,510
	5,568		6,085		16,504		16,254
Cost of revenue	2,436		2,847		7,196		7,487
Gross profit	3,132		3,238		9,308		8,767
Operating expenses:
Sales and marketing	807		858		2,295		2,465
Research and development	1,146		1,072		3,378		3,314
General and administration	462		564		1,549		1,588
	2,415		2,494		7,222		7,367
Income from operations	717		744		2,086		1,400
Other items:
Foreign exchange gain (loss)	(17)		(13)		76		(84)
Interest income	12		9		30		29
Other expense	(153)		(2,243)		(153)		(2,389)
	(158)		(2,247)		(47)		(2,444)
Income before income taxes	559		(1,503)		2,039		(1,044)
Current income tax expense	24		37		72		112
Income for the period	$	535	$	(1,540)	$	1,967	$	(1,156)
Income per share - basic and  diluted	$	0.03	$	(0.07)	$	0.09	$	(0.05)

 

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                June 30				Nine months ended             June 30
	2014		2013		2014		2013
Income for the period	$	535	$	(1,540)	$	1,967	$	(1,156)
Other comprehensive income:
Effective portion of changes in fair value of cash flow hedges	-		(27)		-		(160)
Comprehensive income	$	535	$	(1,567)	$	1,967	$	(1,316)

 

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 October 1, 2012	$	19,960	$	2,323	$	116	$	3,441	$	25,840
Total comprehensive income for the period:
Income for the period	-		-		-		(1,156)		(1,156)
Issuance of share capital	105		(19)		-		-		86
Effective portion of changes in fair value of cash flow hedges	-		-		(160)		-		(160)
	20,065		2,304		(44)		2,285		24,610
Stock-based compensation	-		115		-		-		115
Balance as at June 30, 2013	$	20,065	$	2,419	$	(44)	$	2,285	$	24,725
Balance as at September 30, 2013	$	20,100	$	2,445	$	29	$	2,922	$	25,496
Total comprehensive income for the period:
Income for the period	-		-		-		1,967		1,967
Issuance of share capital	383		(98)		-		-		285
Dividend and common shares	-		-		-		(395)		(395)
Effective portion of changes in fair value of cash flow hedges	-		-		(29)		-		(29)
	20,483		2,347		-		4,494		27,324
Stock-based compensation	-		102		-		-		102
Balance as at June 30, 2014	$	20,483	$	2,449	$	-	$	4,494	$	27,426

 

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)
	Nine months ended         June 30
	2014		2013
Cash provided by (used in):
Operations:
Income for the period	$	1,967	$	(1,156)
Items not involving cash:
Current income tax expense	72		123
Depreciation of furniture and equipment	567		558
Amortization of intangible assets	352		380
Write-down of property and equipment	7		-
Stock-based compensation	102		115
Interest earned	(12)		(29)
Exchange gain on cash held in foreign currency	(3)		(97)
Change in non-cash operating working capital	(1,736)		1,304
Cash provided by operations	1,316		1,198
Interest received	9		33
Net cash provided by operation activities	1,325		1,231
Financing:
Issuance of share capital	285		86
Dividends paid	(395)		-
Cash provided by financing activities	(110)		86
Investing:
Purchase of furniture and equipment	(1,278)		(1,049)
Additions to intangible assets	(537)		(25)
Cash used in investing activities	(1,815)		(1,074)
Exchange gains on cash held in foreign currency	6		54
Increase (decrease) in cash and cash equivalents	(594)		297
Cash and cash equivalents, beginning of period	20,126		18,897
Cash and cash equivalents, end of period	$	19,532	$	19,194

 

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         June 30				Nine months ended        June 30
	2014		2013		2014		2013
Net income	$	535	$	(1,540)	$	1,967	$	(1,156)
Income tax expense	24		37		72		112
Interest income	(12)		(9)		(30)		(29)
Depreciation and amortization	327		372		919		938
Foreign exchange loss (gain)	17		13		(76)		84
Stock-based compensation	49		31		102		115
Other expense	153		2,243		153		2,389
Adjusted EBITDA	$	1,093	$	1,147	$	3,107	$	2,453

SOURCE: RDM Corporation

Randy Fowlie
President & CEO
RDM Corporation
[phone] x340
[email protected]

Rui Malhinha
Chief Financial Officer
RDM Corporation
[phone] x284
[email protected]