RDM Corporation Reports Fiscal 2016 Fourth Quarter and Year-End Financial Results

–  Recurring revenue increases 10%, driving year-over-year growth in Adjusted EBITDA and cash from operations  –

WATERLOO, ON, Nov. 17, 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 fourth quarter and fiscal year ended September 30, 2016. All financial results are reported in thousands of U.S. dollars unless otherwise stated.

"This year, we continued the momentum in our recurring revenue with an increase of 10%," said Randy Fowlie, President and CEO of RDM. "Recurring revenue now represents 71% of our total revenue. In addition, we continued the improvements in our Digital Imaging business, with an increase of 20% over last quarter. This drove increases in both Adjusted EBITDA and cash from operations. We continue to expand our presence in the market and have a robust pipeline of new Payment Processing opportunities throughout calendar 2017."

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

• Recurring Payment Processing revenue was $15,189, up 10% from $13,759
• Total Payment Processing revenue was $15,774, an increase of 10% from $14,295
• Digital Imaging revenue was $5,547 compared with $9,235
• Total revenue was $21,321, a decrease of 9% compared with $23,530
• Gross margin was 67%, up from 61%
• Operating income was $4,608 compared with $4,560
• Adjusted EBITDA was $6,318, up 5% from $6,002
• Net income was $3,870, compared with $5,326
• Generated $6,326 in cash from operations compared with $5,271, and ended the year with $31,047 in cash and cash equivalents
• The Company added 4,085 end user seats during the year and exited fiscal 2016 with a total of 48,706 seats, an increase of 9%

Q4 Fiscal Highlights (Unless otherwise noted, comparisons are made between Q4 fiscal 2016 and Q4 2015)

• Recurring Payment Processing revenue was $3,787, up 5% from $3,591
• Total Payment Processing revenue was $3,982, an increase of 9% from $3,656
• Digital Imaging revenue was $1,532 compared with $2,459
• Total revenue was $5,514 compared with $6,115
• Gross margin was 66%, up from 62%
• Operating income was $1,379 compared with $1,330
• Adjusted EBITDA was $1,785, up 2% from $1,679
• Net income was $1,573 compared with $2,063
• Generated $2,003 in cash from operations compared with $2,164
• Total end user seats of 48,706 seats were up 3% over Q3 fiscal 2016
• The Board declared a quarterly cash dividend of $0.02 per common share

Dividend

A quarterly dividend of $0.02 per share will be paid on December 16, 2016 to shareholders of record on December 2, 2016. The dividends to be paid on December 16, 2016 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 fourth quarter and year-end results on Thursday, November 17, 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 at www.rdmcorp.com and http://bit.ly/2f4WUvj. 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 40 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
Consolidated Balance Sheets
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
As at September 30		2016		2015
Assets:
Current assets:
	Cash and cash equivalents	$	31,047	$	26,405
	Accounts receivable	2,698		3,598
	Inventories	2,370		1,821
	Investment tax credits receivable	35		130
	Prepaid and other assets	600		884
Total current assets		36,750		32,838
Investment tax credits		1,720		1,586
Property and equipment		1,908		1,910
Intangible assets		664		701
Total assets		$	41,042	$	37,035
Liabilities and shareholders' equity:
Current liabilities:
	Accounts payable and accrued liabilities	$	3,487	$	2,869
	Deferred revenue	332		282
Total current liabilities		3,819		3,151
Deferred income taxes		483		561
Shareholders' equity:
	Share capital	21,998		21,106
	Contributed surplus	2,636		2,697
	Retained earnings	12,106		9,520
Total shareholders' equity		36,740		33,323
Total liabilities and shareholders' equity		$	41,042	$	37,035

RDM CORPORATION
Consolidated Statements of Income and Comprehensive 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
		2016		2015		2016		2015
Revenue:
	Payment Processing Services	$	3,982	$	3,656	$	15,774	$	14,295
	Digital Imaging Products	1,532		2,459		5,547		9,235
		5,514		6,115		21,321		23,530
Cost of revenue		1,897		2,326		6,947		9,284
Gross profit		3,617		3,789		14,374		14,246
Operating expenses:
	Sales and marketing	735		658		2,828		2,874
	Research and development	865		1,216		4,392		4,651
	General and administration	638		585		2,546		2,161
		2,238		2,459		9,766		9,686
Operating income		1,379		1,330		4,608		4,560
Other items:
	Foreign exchange gain (loss)	3		56		(28)		34
	Interest income	42		21		126		70
	Other income	557		1,590		557		2,161
		602		1,667		655		2,265
Income before income taxes		1,981		2,997		5,263		6,825
Income tax expense
	Current	300		373		1,471		938
	Deferred	109		561		(78)		561
		409		934		1,393		1,499
Net income and comprehensive income		$	1,573	$	2,063	$	3,870	$	5,326
Earnings per share – basic and diluted		$	0.07	$	0.09	$	0.17	$	0.24
Weighted average common shares outstanding during the year		22,596,226		22,024,976		22,582,789		21,937,164

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, 2014			$	20,512	$	2,535	$	-	$	5,171	$	28,218
	Total comprehensive income for the period:
		Net income	-		-		-		5,326		5,326
	Issuance of share capital		594		(241)		-		-		353
	Dividends paid		-		-		-		(977)		(977)
			21,106		2,294		-		9,520		32,920
	Stock-based compensation		-		403		-		-		403
Balance as at September 30, 2015			$	21,106	$	2,697	$	-	$	9,520	$	33,323
Balance as at September 30, 2015			$	21,106	$	2,697	$	-	$	9,520	$	33,323
	Total comprehensive income for the period:
		Net income	-		-		-		3,870		3,870
	Issuance of share capital		892		(319)		-		-		573
	Dividends paid		-		-		-		(1,284)		(1,284)
			21,998		2,378		-		12,106		36,482
	Stock–based compensation		-		258		-		-		258
Balance as at September 30, 2016			$	21,998	$	2,636	$	-	$	12,106	$	36,740

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

(Not audited or reviewed by the Company's external auditor)
Years ended September 30			2016		2015
Cash provided by (used in):
Operations:
Net income			$	3,870	$	5,326
	Items not involving cash:
		Income tax expense	1,393		1,499
		Depreciation of property and equipment	582		681
		Amortization of intangible assets	430		358
		Loss on disposal of property and equipment	-		289
		Stock-based compensation	698		403
		Interest earned	(126)		(70)
Change in non-cash operating working capital			(632)		(3,278)
Cash provided by operations			6,215		5,208
Interest received			111		63
Net cash provided by operating activities			6,326		5,271
Financing:
	Issuance of share capital		573		353
	Dividends paid		(1,284)		(977)
Cash used in by financing activities			(711)		(624)
Investing:
	Purchase of property and equipment		(580)		(376)
	Additions to intangible assets		(393)		(288)
Cash used in investing activities			(973)		(664)
Increase in cash and cash equivalents			4,642		3,983
Cash and cash equivalents, beginning of year			26,405		22,422
Cash and cash equivalents, end of year			$	31,047	$	26,405

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				Years ended
	September 30				September 30
	2016		2015		2016		2015
Net income	$	1,573	$	2,063	$	3,870	$	5,326
Income tax expense	409		934		1,393		1,499
Interest income	(43)		(21)		(126)		(70)
Depreciation and amortization	282		261		1,012		1,039
Foreign exchange loss	(3)		(56)		28		(34)
Stock-based compensation	124		88		698		403
Other income	(557)		(1,590)		(557)		(2,161)
Adjusted EBITDA	$	1,785	$	1,679	$	6,318	$	6,002
Other (income) expense is comprised of:
	Three months ended				Years ended
	September 30				September 30
	2016		2015		2016		2015
Recognition of investment tax credits	$	(557)	$	(1,879)	$	(557)	$	(2,064)
Change in estimated royalties	-		-		-		(266)
Change in settlement claim	-		-		-		(120)
Loss on disposal	-		289		-		289
Other income	$	(557)	$	(1,590)	$	(557)	$	(2,161)

SOURCE RDM Corporation

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