RDM Corporation Reports Fiscal 2017 First Quarter Financial Results

Payment Processing Revenue increases to 76% of Total Revenue
Dividend increased 25%

WATERLOO, ON, Jan. 26, 2017 /CNW/ - RDM Corporation ("RDM" or the "Company") (TSX: RC), a leading provider of specialized software and hardware products for electronic payment processing, today reported its financial results for the first quarter of the year ending September 30, 2017. All financial results are reported in thousands of U.S. dollars unless otherwise stated.

"The payment processing portion of our business continues to build with an increase this quarter to 76% of total revenue," said Randy Fowlie, President and CEO of RDM Corporation. "The strength of our partnerships continues to drive organic growth with end user seats up 11% over the prior year. In addition, we won a couple non-bank opportunities during the quarter. Cash generation continues to be strong and the Board of Directors declared a quarterly dividend of $0.025, which is a 25% increase over the current dividend."

Q1 Fiscal 2017 Highlights (Unless otherwise noted, comparisons are made between Q1 fiscal 2017 and Q1 fiscal 2016)

• Total revenue was $5,346 compared to $5,429
• Recurring Payment Processing revenue was $3,884, up 4% from $3,740
• Total Payment Processing revenue was $4,037, an increase of 5% from $3,840
• Digital Imaging revenue was $1,309 in Q1 2017 compared to $1,589
• Gross margin increased to 69% compared to 67%
• Adjusted EBITDA was $1,771 compared to $1,761, an increase of 1%.
• The Company added 1,578 end user seats and ended the quarter with 50,284 end user seats, an increase of 11%
• The Company generated $786 in cash from operations and ended the quarter with $31,252 in cash and cash equivalents
• The Board of Directors declared a quarterly cash dividend of CDN $0.025 per common share, a 25% increase over the quarterly dividend last year

Dividend

A quarterly dividend of CDN $0.025 per share will be paid on March 15, 2017 to shareholders of record on February 28, 2017. This represents a $0.005, or 25%, increase over the $0.02 dividend the Company previously paid per quarter. The dividends to be paid on March 15, 2017 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 2017 first quarter and results on Thursday, January 26, 2017 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) 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 30 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)
		December 31, 2016		September 30, 2016
Assets:
Current assets:
	Cash and cash equivalents	$	31,252	$	31,047
	Accounts receivable	3,046		2,698
	Inventories	2,449		2,370
	Investment tax credits receivable	142		35
	Prepaid and other assets	573		600
Total current assets		37,462		36,750
Investment tax credits		1,534		1,720
Property and equipment		1,822		1,908
Intangible assets		729		664
Total assets		$	41,547	$	41,042
Liabilities and shareholders' equity:
Current liabilities:
	Accounts payable and accrued liabilities	$	3,247	$	2,841
	Income taxes payable	271		646
	Deferred revenue	324		332
	Derivative liability	7		-
Total current liabilities		3,849		3,819
Deferred income taxes		367		483
Shareholders' equity:
	Share capital	21,998		21,998
	Contributed surplus	2,677		2,636
	Accumulated other comprehensive income	(7)		-
	Retained earnings	12,663		12,106
Total shareholders' equity		37,331		36,740
Total liabilities and shareholders' equity		$	41,547	$	41,042

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 December 31		2016		2015
Revenue:
	Payment Processing Services	$	4,037	$	3,840
	Digital Imaging Products	1,309		1,589
		5,346		5,429
Cost of revenue		1,671		1,767
Gross profit		3,675		3,662
Operating expenses:
	Sales and marketing	751		671
	Research and development	943		960
	General and administration	656		581
		2,350		2,212
Operating income		1,325		1,450
Other items:
	Foreign exchange gain (loss)	15		(7)
	Interest income	59		23
	Other expense	(164)		-
		(90)		16
Income before income taxes		1,235		1,466
Income tax expense
	Current	455		417
	Deferred	(116)		23
		339		440
Net income		$	896	$	1,026
Earnings per share – basic and diluted		$	0.04	$	0.04
Weighted average common shares
	outstanding during the period	22,603,726		22,287,476

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 December 31			2016		2015
Net income			$	896	$	1,026
Other comprehensive income:
	Effective portion of changes in fair value of
		cash flow hedges	(7)		(41)
Comprehensive income			$	889	$	985

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, 2015			$	21,106	$	2,697	$	-	$	9,520	$	33,323
	Total comprehensive income
	for the period:
		Net income	-		-		-		1,026		1,026
		Effective portion of changes in
		fair value of cash flow hedges	-		-		(41)		-		(41)
	Issuance of share capital		796		(280)		-		-		516
	Dividends paid		-		-		-		(255)		(255)
			21,902		2,417		(41)		10,291		34,569
	Stock-based compensation		-		85		-		-		85
Balance as at December 31, 2015			$	21,902	$	2,502	$	(41)	$	10,291	$	34,654
Balance as at September 30, 2016			$	21,998	$	2,636	$	-	$	12,106	$	36,740
	Total comprehensive income
	for the period:
		Net income	-		-		-		896		896
		Effective portion of changes in
		fair value of cash flow hedges	-		-		(7)		-		(7)
	Issuance of share capital		-		-		-		-		-
	Dividends paid		-		-		-		(339)		(339)
			21,998		2,636		(7)		12,663		37,290
	Stock–based compensation		-		41		-		-		41
Balance as at December 31, 2016			$	21,998	$	2,677	$	(7)	$	12,663	$	37,331

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)
Three months ended December 31			2016		2015
Cash provided by (used in):
Operations:
Net income			$	896	$	1,026
	Items not involving cash:
		Income tax expense	339		440
		Depreciation of property and equipment	142		133
		Amortization of intangible assets	121		94
		Stock-based compensation	41		85
		Interest earned	(59)		(24)
Income tax paid				(526)		-
Change in non-cash operating working capital				(194)		(351)
Cash provided by operations				760		1,403
Interest received				26		12
Net cash provided by operating activities				786		1,415
Financing:
	Dividends paid		(339)		(255)
	Issuance of share capital		-		516
Cash (used in) provided by financing activities				(339)		261
Investing:
	Purchase of property and equipment		(56)		(195)
	Additions to intangible assets		(186)		(3)
Cash used in investing activities				(242)		(198)
Increase in cash and cash equivalents				205		1,478
Cash and cash equivalents, beginning of period				31,047		26,405
Cash and cash equivalents, end of period			$	31,252	$	27,883

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 December 31	2016		2015
Net income	$	896	$	1,026
Income tax expense	339		440
Interest income	(59)		(24)
Depreciation and amortization	263		227
Foreign exchange gain	(15)		7
Stock-based compensation	183		85
Other expense (income)	164		-
Adjusted EBITDA	$	1,771	$	1,761

SOURCE RDM Corporation

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