RDM Corporation Reports Second Quarter Financial Results
Toronto Stock Exchange Symbol: RC
WATERLOO, ON, April 30 /PRNewswire-FirstCall/ - RDM Corporation (TSX: RC), a leading developer of specialized software and hardware products for electronic payment processing, today reported its financial results for the three month period ended March 31, 2010.
"In the second quarter we made progress on all of our key metrics - including scanner sales, ITMS end user locations, and number of channel partners - but our overall financial results were suppressed by the impact of shifting exchange rates," said Douglas Newman, President and CEO of RDM Corporation. "We are focused on achieving the right balance between managing short-term costs and ensuring we are well positioned to capitalize on what I continue to believe is a significant long-term opportunity in the remote deposit capture space."
Q2 2010 Highlights
- Total revenues were $5.2 million in the second quarter of fiscal
2010, compared to $5.8 million in the second quarter of 2009.
- Payment Processing Services segment revenues, which are recurring in
nature, were $2.3 million in Q2 2010, compared to $2.6 million a year
earlier.
- Transaction volumes for RDM's Image & Transaction Management System
(ITMS(R)) averaged 3.6 million items per week during the second
quarter, comparable to the Q2 2009 volumes, and up from 3.5 million
items per week in the first quarter of 2010.
- ITMS end user locations increased from 18,100 to 18,500 during the
second quarter.
- RDM added four additional bank distributors and three new independent
sales organizations (ISOs) during the quarter.
- The Company shipped 7,500 proprietary scanners in the second quarter,
compared to 4,200 a year earlier.
- Gross profit was $1.9 million or 37% of revenues, compared to $2.6
million or 45% of revenues in the second quarter of 2009.
- Net loss was $0.9 million or $0.04 per share in Q2 2010, consistent
with the second quarter of last year. The Q2 2010 net loss included a
$0.4 million restructuring charge.
- Cash and equivalents were $16.1 million at March 31, 2010, compared
to $16.2 million at December 31, 2009.
- In April, the company announced a new generation of document
scanners. RDM Connect(TM) offers, in an affordable compact check
scanner, all of the features and sophistication of an expensive large
batch check scanner.
Financial Review
Operating Results by Segment
For the Three Months Ended March 31, 2010
(In thousands Payment Digital Electronic
of Canadian Processing Imaging Payment Quality
dollars) Services Products Solutions Assurance Total
-----------------------------------------------------------
Revenue $2,319 $2,583 $87 $258 $5,247
Gross profit $952 $753 $21 $187 $1,913
Gross profit
percentage 41% 29% 24% 72% 37%
Operating Results by Segment
For the Three Months Ended March 31, 2009
(In thousands Payment Digital Electronic
of Canadian Processing Imaging Payment Quality
dollars) Services Products Solutions Assurance Total
-----------------------------------------------------------
Revenue $2,596 $2,435 $522 $229 $5,782
Gross profit $1,233 $926 $262 $152 $2,573
Gross profit
percentage 48% 38% 50% 66% 45%
RDM generated total revenues of $5.2 million in the three months ended March 31, 2010, a decrease of $0.5 million from the second quarter of the previous year. The majority of the decrease was attributable to a $1.0 million impact from a shift in currency exchange rates over the past year, partially offset by an increase in scanner sales.
Payment Processing Services segment revenues of $2.3 million represented a decrease of $277,000 from a year earlier, as the positive impact of growth in ITMS end user locations was offset by the effect of exchange rates. Revenues in the Digital Imaging Products segment increased $148,000 to $2.6 million, driven by an increase in scanner sales, and in particular by sales of the EC7500(R) scanner. The Electronic Payments Solutions segment and the Quality Assurance segment, which represented a combined 7% of total revenues for the quarter, generated revenues of $87,000 and $258,000, respectively, compared to $522,000 and $229,000, respectively, in Q2 2009.
Gross profit of $1.9 million in Q2 2010 was down from $2.6 million in the second quarter of the previous year. Expressed as a percentage of revenues, the overall gross margin was 37%, compared to 45% a year earlier. Decreased margins were due to the impact of exchange rates.
Sales and marketing expense was $0.9 million in Q2 2010, a decrease of $0.3 million or 24% from the previous year when the Company made a significant investment in signing new channel partners and launching Simply Deposit(TM). Research and development expenses increased 10% to $1.2 million as the Company continued to invest in new product development including the RDM Connect(TM) scanner and new ITMS functionality such as accounts receivable integration. General and administration expenses increased 6% to $456,000.
Net loss was $0.9 million in the second quarter of 2010, or $0.04 per share, compared to a net loss of $0.9 million or $0.04 per share a year earlier. The Q2 2010 results include a $0.4 million restructuring charge incurred due to staffing reductions made during the quarter. Foreign exchange represented a gain of $288,000 in the second quarter of 2010 compared to a loss of $563,000 in Q2 2009.
RDM repurchased 17,000 shares during the second quarter under its Normal Course Issuer Bid. At March 31, 2010, the Company had 20.75 million common shares outstanding.
Conference Call
RDM will be hosting a conference call to discuss the Company's second quarter results on April 30, 2010 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 will be filed on www.sedar.com.
About RDM Corporation
RDM Corporation is headquartered in Waterloo, Ontario and trades on the Toronto Stock Exchange under the symbol RC. RDM is a leading provider of specialized software and hardware products for electronic payment processing. RDM has pioneered electronic check conversion systems and web based image and transaction management services for banks, retailers, payment processors and government agencies as well as print quality control and image quality systems for a variety of global customers. For more information, visit RDM's website at www.RDMCorp.com
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 Canadian Dollars, In Thousands)
-------------------------------------------------------------------------
March 31, September 30,
2010 2009
Unaudited Audited
-------------------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents $ 16,047 $ 15,718
Accounts receivable 4,315 4,123
Inventories 3,066 3,409
Investment tax credit receivable 1,402 1,770
Other 2,019 2,039
-------------------------------------------------------------------------
Total current assets 26,849 27,059
Furniture and equipment 3,521 3,275
Intangible assets 351 288
-------------------------------------------------------------------------
Total assets $ 30,721 $ 30,622
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Liabilities and shareholders' equity:
Current liabilities:
Accounts payable and accrued liabilities $ 4,526 $ 3,062
Deferred revenue 440 498
-------------------------------------------------------------------------
Total current liabilities 4,966 3,560
-------------------------------------------------------------------------
Future income tax liability 201 201
Shareholders' equity:
Share capital 27,596 27,639
Contributed surplus 2,019 1,886
Retained earnings (deficit) (4,061) (2,664)
-------------------------------------------------------------------------
Total shareholders' equity 25,554 26,861
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 30,721 $ 30,622
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-------------------------------------------------------------------------
RDM CORPORATION
Consolidated Statements of Operations
(Amounts in Canadian Dollars, In Thousands, Except Per Share Amounts)
Three months ended Six months ended
March March
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Revenue $ 5,247 $ 5,782 $ 10,950 $ 12,870
Cost of revenue 3,334 3,209 6,780 7,341
-------------------------------------------------------------------------
Gross Profit 1,913 2,573 4,170 5,529
Operating expenses
(income):
Sales and marketing 928 1,221 1,997 2,646
Research and development 1,208 1,094 2,390 2,165
General and administration 456 430 1,010 916
Depreciation and
amortization 49 62 96 122
Stock-based compensation 58 113 133 257
Foreign exchange loss
(gain) (288) 563 (460) 2,011
Interest Income (9) (45) (18) (104)
Restructuring 419 - 419 -
-------------------------------------------------------------------------
2,821 3,446 5,567 8,013
-------------------------------------------------------------------------
Loss before income taxes (908) (865) (1,397) (2,484)
Income Tax expense - - - -
-------------------------------------------------------------------------
Net loss and
comprehensive loss (908) (865) (1,397) (2,484)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss per share
- basic and diluted $ (0.04) $ (0.04) $ (0.07) $ (0.12)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
RDM CORPORATION
Statement of Shareholder's Equity
(Amounts in Canadian Dollars, In Thousands)
-------------------------------------------------------------------------
Retained
Share Contributed earnings
capital surplus (deficit) Total
-------------------------------------------------------------------------
Balance as at
September 30, 2008 $ 28,338 $ 1,162 $ (641) $ 28,859
Net loss and
comprehensive loss - - (2,484) (2,484)
Repurchase of share
capital - 257 - 257
Stock-based compensation - - - -
-------------------------------------------------------------------------
Balance as at
March 31, 2009 $ 28,005 $ 1,419 $ (3,125) $ 26,299
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
September 30, 2009 $ 27,639 $ 1,886 $ (2,664) $ 26,861
Net loss and
comprehensive loss - - (1,397) (1,397)
Repurchase of share
capital (43) - - (43)
Stock-based compensation - 133 - 133
-------------------------------------------------------------------------
Balance as at
March 31, 2010 $ 27,596 $ 2,019 $ (4,061) $ 25,554
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-------------------------------------------------------------------------
RDM CORPORATION
Consolidated Statements of Cash Flows
(Amounts in Canadian Dollars, In Thousands)
Three months ended Six months ended
March March
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net loss
Items not involving cash: $ (908) $ (865) $ (1,397) $ (2,484)
Amortization of
furniture and
equipment 259 237 538 449
Amortization of
intangible assets 9 11 17 23
Stock-based compensation 58 113 133 257
Future income taxes - - - (74)
Change in non-cash
operating working capital 673 756 1,945 2,397
-------------------------------------------------------------------------
Cash provided by
operations 91 252 1,236 568
Investing:
Repurchase of share
capital (15) (173) (43) (333)
Purchase of furniture
and equipment (140) (458) (784) (732)
Additions to intangible
assets (40) (21) (80) (60)
-------------------------------------------------------------------------
Cash used in investing
activities (195) (652) (907) (1,125)
Increase (decrease)
in cash and cash
equivalents (104) (400) 329 (557)
Cash and cash
equivalents,
beginning of period 16,151 17,264 15,718 17,421
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 16,047 $ 16,864 $ 16,047 $ 16,864
-------------------------------------------------------------------------
Supplementary cash
flow information:
Non-cash furniture
and equipment additions
included in accounts
payable $ 587 $ - $ - $ -
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SOURCE RDM Corporation
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