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

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