RDM Corporation Reports Fiscal 2016 Third Quarter Financial Results

- Recurring revenue increases 7% -

WATERLOO, ON, July 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 nine months ended June 30, 2016. All financial results are reported in thousands of U.S. dollars unless otherwise stated.

"During the quarter, Recurring Payment Processing revenue increased 7% over the prior year," said Randy Fowlie, President and CEO of RDM Corporation. "The increase is despite the delay in the deployment of a significant number of new seats by a large financial institution to our fourth quarter. In addition, we continued to make progress in recovering from the loss of a key distributor in our Digital Imaging business, including establishing a new distribution partner. With the increase in Payment Processing revenue, we continue to generate strong profitability and we look forward to a strong finish to our fiscal 2016 year. Our sales pipeline is expanding and we believe we have a strong market opportunity going forward."

Q3 Fiscal 2016 Highlights (Unless otherwise noted, comparisons are made between Q3 fiscal 2016 and Q3 fiscal 2015) 

• Total revenue was $5,239 compared to $5,811
• Recurring Payment Processing revenue was $3,816, up 7% from $3,569
• Total Payment Processing revenue was $3,989, a 8% increase from $3,698
• Digital Imaging revenue was $1,250 compared to $2,113
• Gross margin was 68%, up from 62%
• Adjusted EBITDA was $1,391 compared to $1,516
• Net income was $602 compared to $1,351
• Generated $881 in cash from operations and ended the quarter with $29,490 in cash and cash equivalents
• End user seats were 47,469 seats, up 8% and 2% over Q3 fiscal 2015 and Q2 fiscal 2016, respectively
• The Board declared a quarterly cash dividend of $0.02 per common share

Year-to-date Fiscal 2016 Highlights (Unless otherwise noted, comparisons are made between year-to-date fiscal 2016 and fiscal 2015)

• Total revenue was $15,807 compared to $17,415
• Recurring Payment Processing revenue was $11,402, up 12% from $10,168
• Total Payment Processing revenue was $11,792, a 11% increase from $10,639
• Digital Imaging revenue was $4,015 compared to $6,776
• Gross margin was 68% up from 60%
• Operating income was $3,229 compared to $3,230
• Adjusted EBITDA was $4,533, up 5% from $4,323
• Net income was $2,297 compared to $3,263
• Generated $4,256 in cash from operations, up 37% compared to $3,107

Dividend

A quarterly dividend of $0.02 per share will be paid on September 7, 2016 to shareholders of record on August 19, 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 third quarter results on Thursday, July 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/299upu3 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
Condensed Consolidated Interim Balance Sheets
(Amounts in thousands of U.S. Dollars)

(Not audited or reviewed by the Company's external auditor)
		June 30, 2016		September 30, 2015
Assets:
Current assets:
	Cash and cash equivalents	$	29,490	$	26,405
	Accounts receivable	2,815		3,598
	Unbilled revenue	61		48
	Inventories	2,468		1,821
	Investment tax credits receivable	166		130
	Prepaid and other assets	785		836
Total current assets		35,785		32,838
Investment tax credits		1,068		1,586
Property and equipment		2,016		1,910
Intangible assets		645		701
Total assets		$	39,514	$	37,035
Liabilities and shareholders' equity:
Current liabilities:
	Accounts payable and accrued liabilities	$	3,268	$	2,869
	Deferred revenue	347		282
Total current liabilities		3,615		3,151
Deferred income taxes		465		561
Shareholders' equity:
	Share capital	21,960		21,106
	Contributed surplus	2,594		2,697
	Retained earnings	10,880		9,520
Total shareholders' equity		35,434		33,323
Total liabilities and shareholders' equity		$	39,514	$	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 June 30				Nine months ended June 30
		2016		2015		2016		2015
Revenue:
	Payment Processing Services	$	3,989	$	3,698	$	11,792	$	10,639
	Digital Imaging Products	1,250		2,113		4,015		6,776
		5,239		5,811		15,807		17,415
Cost of revenue		1,662		2,223		5,050		6,958
Gross profit		3,577		3,588		10,757		10,457
Operating expenses:
	Sales and marketing	734		729		2,093		2,216
	Research and development	1,276		1,129		3,527		3,435
	General and administration	713		576		1,908		1,576
		2,723		2,434		7,528		7,227
Operating income		854		1,154		3,229		3,230
Other items:
	Foreign exchange loss	(27)		(7)		(31)		(22)
	Interest income	33		18		83		49
	Other income	-		451		-		571
		6		462		52		598
Income before income taxes		860		1,616		3,281		3,828
Income tax expense
	Current	339		265		1,171		565
	Deferred	(81)		-		(187)		-
		258		265		984		565
Net income		$	602	$	1,351	$	2,297	$	3,263
Earnings per share – basic and  diluted		$	0.03	$	0.06	$	0.10	$	0.15
Weighted average common shares outstanding during the period		22,588,726		22,024,976		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 June 30				Nine months ended June 30
		2016		2015		2016		2015
Net income		$	602	$	1,351	$	2,297	$	3,263
Other comprehensive income:
	Effective portion of changes in fair value of cash flow hedges	-		85		-		-
Comprehensive income		$	602	$	1,436	$	2,297	$	3,263

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	-		-		-		3,263		3,263
		Effective portion of changes in fair value of cash flow hedges	-		-		-		-		-
	Issuance of share capital		594		(241)		-		-		353
	Dividends paid		-		-		-		(724)		(724)
			21,106		2,294		-		7,710		31,110
	Stock-based compensation		-		315		-		-		315
Balance as at June 30, 2015			$	21,106	$	2,609	$	-	$	7,710	$	31,425
Balance as at September 30, 2015			$	21,106	$	2,697	$	-	$	9,520	$	33,323
	Total comprehensive income for the period:
		Net income	-		-		-		2,297		2,297
		Effective portion of changes in fair value of cash flow hedges	-		-		-		-		-
	Issuance of share capital		854		(308)		-		-		546
	Dividends paid		-		-		-		(937)		(937)
			21,960		2,389		-		10,880		35,229
	Stock–based compensation		-		205		-		-		205
Balance as at June 30, 2016			$	21,960	$	2,594	$	-	$	10,880	$	35,434

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			2016		2015
Cash provided by (used in):
Operations:
Net income			$	2,297	$	3,263
	Items not involving cash:
		Current income tax expense	1,171		565
		Deferred income tax expense	(187)		-
		Depreciation of property and equipment	436		514
		Amortization of intangible assets	294		264
		Stock-based compensation	574		315
		Interest earned	(83)		(49)
Change in non-cash operating working capital			(347)		(1,805)
Cash provided by operations			4,155		3,067
Interest received			101		40
Net cash provided by operating activities			4,256		3,107
Financing:
	Issuance of share capital		546		353
	Dividends paid		(937)		(724)
Cash used in by financing activities			(391)		(371)
Investing:
	Purchase of property and equipment		(542)		(240)
	Additions to intangible assets		(238)		(241)
Cash used in investing activities			(780)		(481)
Increase (decrease) in cash and cash equivalents			3,085		2,255
Cash and cash equivalents, beginning of period			26,405		22,422
Cash and cash equivalents, end of period			$	29,490	$	24,677

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

	Three months ended               June 30				Nine months ended                June 30
	2016		2015		2016		2015
Net income	$	602	$	1,351	$	2,297	$	3,263
Income tax expense	258		265		984		565
Interest income	(33)		(18)		(83)		(49)
Depreciation and amortization	242		259		730		778
Foreign exchange loss	27		7		31		22
Stock-based compensation	295		103		574		315
Other expense (income)	-		(451)		-		(571)
Adjusted EBITDA	$	1,391	$	1,516	$	4,533	$	4,323

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]