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Radiant Announces Third Quarter 2010 Results
Thursday, November 25, 2010
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Vancouver, BC, November 25, 2010--(T-Net)--Radiant Communications Corp. (TSX-V:RCN), a leading supplier of Broadband Solutions for Business, today announced its financial results for its third quarter and the nine months ended September 30, 2010.
HIGHLIGHTS:
- Revenue of $7.8 million for the quarter ended September 30, 2010
increased by 1.9% compared to revenue of $7.7 million for the quarter
ended September 30, 2009;
- Gross margin was 40.3% in the quarter;
- EBITDA in the third quarter was $422,152 compared to $498,395 in the
third quarter of 2009;
- Net income in the third quarter of $25,432 amounted to a gain of $0.00
per share;
- The Company ended the quarter with cash and short-term investments of
$6.3 million and generated cash from operations of $1.3 million during
the period;
- During the third quarter Radiant expanded the geographic footprint of
the Surelink service and increased the inside sales force to 11 people.
Radiant has signed up more than 70 new customers since the product
launch;
- In the third quarter Radiant built out a second cloud datacenter in
Toronto in order to offer geographically redundant, fully Canadian based
cloud services to new and existing customers;
"During the third quarter we continued to invest in our new Surelink and
AlwaysThere products," said David Buffett, President and CEO of Radiant. "We
have established an eleven person inside sales force dedicated to rapidly
growing our Surelink customer base. Since the product launch this new sales
channel has sold over 70 Surelink contracts and we have rolled out the service
to more than 30 Central Offices which reach more than 200,000 potential
customers. On the AlwaysThere product we built out our new Toronto cloud data
centre in the third quarter which recently went 'live' offering geographically
redundant services housed and managed in Canada. We have invested significant
capital and effort in these ventures but continue to ensure that we remain
cash positive from operations as we grow our recurring revenue base."
Financial Review
Revenues for the quarter ended September 30, 2010 increased 1.9% to $7.8
million compared to $7.7 million in the third quarter of 2009. The increase
is a result of sales and installations of new AlwaysThere solutions and
Surelink connections. Radiant's revenues are primarily recurring in nature and
due to extended two and three year customer contracts quarterly revenue growth
is relatively predictable and consistent over time. One time hardware
revenues can fluctuate from quarter to quarter depending on the requirements
of customer rollouts that occur each quarter.
The new Ethernet First Mile, (EFM), product which has been branded as
Surelink, was launched in trial format in the second quarter and in the third
quarter the dedicated inside sales team was increased to 11 people. The
service is available in certain locations in Toronto and Vancouver dictated by
proximity to the local central office. Our initial offering of the Surelink
product in a limited regional basis was very successful with annual revenue of
over $445,000 under contract at the end of September. We are continuing to
aggressively expand our product footprint and marketing and promotion efforts.
Revenue in the third quarter of 2010 increased by 0.8% compared to the
preceding second quarter of 2010. This increase is attributable to growth in
both the AlwaysThere Hosted Exchange(TM) product as well as our new Surelink
offering.
For the quarter ended September 30, 2010, the Company's gross profit was
$3.2 million compared to $3.0 million in the third quarter of 2009. Gross
profit as a percent of revenue was 40.2% for the quarter ended September 30,
2010 compared to 39.0% for the same period in 2009 and 38.9% in the
immediately preceding quarter. In the first three quarters of 2010 Radiant has
invested in additional monthly backhaul expenses for the new Surelink Central
Office locations and we have also re-signed several of our core long term
customers to new multi-year contracts with lower monthly revenue. In the same
period sales of our higher margin products have helped off-set these increased
costs and resulted in higher margins in the third quarter.
Operating expenses, including sales and marketing, general and
administrative, and amortization costs of $3.1 million in the third quarter of
2010 increased by 9.4% compared to $2.8 million in the third quarter of 2009
and decreased by 4.1% compared to the immediately preceding second quarter of
2010. Historically Radiant has held headcount flat and is committed to
managing expenses in a conservative manner while the economic environment
begins to stabilize. At the same time the Company is investing in the Surelink
product and sees an immediate opportunity to capture market share. In the
second and third quarters of 2010 Radiant established an inside sales
organization and launched a focused marketing campaign targeted directly at
the Surelink market. As a result of these investments headcount increased by 8
and marketing and related costs increased by over $300,000 compared to the
prior year.
Sales and marketing expenses include compensation expenses, agent and
channel distribution, and marketing costs. For the quarter ended September
30, 2010, sales and marketing expense increased 72.4% to $618,708 compared to
$359,213 in the third quarter of 2009. As previously mentioned this increase
is primarily attributable to the investment in the Surelink product. Sales
and marketing expenses in the third quarter of 2010 decreased by 4.6% compared
to sales and marketing costs in the second quarter of 2010.
General and administrative expenses, which include customer care,
technical, network, executive and administrative staff, systems development,
hardware, software, premises, office and general expenses, decreased by 2.5%
to $2.2 2.3 million for the quarter ended September 30, 2010 compared to $2.2
million in the third quarter of 2009. General and administrative expenses in
the third quarter of 2010 were 3.7% lower compared to the second quarter of
2010.
For the quarter ended September 30, 2010 amortization expenses of
$318,026 were up 24.0% compared to amortization expenses in the third quarter
of 2009 of $256,451 and 17.3% higher compared to amortization expense in the
second quarter of 2010. Radiant anticipates that amortization expense will
increase over the next two years given the investments anticipated as part of
the Surelink product strategy.
The Company had a net income of $25,431 or $0.00 per share for the
quarter ended September 30, 2010 compared to a net income of $115,178 or $0.01
per share in the third quarter of 2009. The weighted average number of shares
outstanding for the third quarter of 2010 was 15.1 million and for the third
quarter of 2009 was 10.9 million.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2010 Radiant had cash and short term investments of $6.3
million compared to $3.8 million at December 31, 2009. Radiant has established
a consistent record of positive cash flows from operating activities that are
sufficient to fund all expected capital acquisitions and non-cash working
capital requirements in 2010 on the existing business. During the second
quarter of 2010 Radiant completed two non-brokered private placements for net
proceeds of $4.0 million. The use of proceeds is specifically targeted at
rolling out the Surelink product and accelerating the time to market of the
new product. The Company believes it has sufficient funds to ensure ongoing
operations and will not require additional funding from capital markets or
other sources in 2010.
EBITDA
Earnings before Interest, Taxes, Depreciation and Amortization is
calculated as follows:
($000s) Q3 2010 Q3 2009
Operating Income (loss) $ 58 $ 167
Amortization 318 256
Stock-based compensation expense 46 75
EBITDA $ 422 $ 498
>>
In the third quarter of 2010, Radiant achieved EBITDA of $422,152
compared to EBITDA of $498,394 in the third quarter of 2009.
<<
($000s) Nine months ended September Nine months ended
30, 2010 September 30, 2009
Operating Income (loss) $ (29) $ 739
Amortization 850 779
Stock-based compensation 192 212
expense
EBITDA $ 1,013 $ 1,730
In the nine months ended September 30, 2010 Radiant achieved positive
EBITDA of $1.0 million compared to positive EBITDA of $1.7 million in the
comparable period of 2009.
Additional details on the quarter results, including the unaudited
Financial Statements and Management Discussion and Analysis, will be made
available at www.sedar.com under Radiant Communications Corp.
Radiant will hold a conference call to discuss its results for the
quarter ended September 30, 2010 on November 25, at 11:00 a.m. PST (2:00 p.m.
EST). Access to the call may be obtained by calling the operator at
1.888.231.8191 (Toll Free North America), or 1.647.427.7450 (International) 10
minutes prior to the scheduled start time. 7 days after the call at
1.800.642.1687 (Toll Free North America) or 416-849-0833 (International). The
passcode for the playback is 27526094. The audio web cast will be archived for
replay on Radiant's web site at www.radiant.net
Non-GAAP Measures
The Company reports EBITDA because it is a key measure used by management
to evaluate the Company's performance. The Company believes that EBITDA is
useful supplemental information as it provides an indication of the results
generated by the Company's main business activities prior to taking into
consideration how those activities are financed and taxed and also prior to
taking into consideration asset depreciation and other non-cash expenses.
EBITDA is not a recognized measure under Canadian GAAP, and accordingly
investors are cautioned that EBITDA should not be construed as an alternative
to net earnings or loss determined in accordance with Canadian GAAP as an
indicator of the financial performance of the Company or as a measure of the
Company's liquidity and cash flows. The Company's method of calculating EBITDA
differs from other issuers and, accordingly, EBITDA may not be comparable to
similar measures presented by other issuers. Please see the schedule below
that sets out the Company's EBITDA calculations.
About Radiant
In operation since 1996, Radiant currently serves over 20,000 business
locations in Canada and the United States from its offices in Vancouver,
Toronto and Montreal.
Headquartered in Vancouver, Canada, Radiant Communications
(www.radiant.net) provides businesses across Canada with a comprehensive and
innovative suite of data communications and cloud computing services: the
largest on-net DSL footprint across Canada & the US, T1 and E10/E100 fibre
broadband, MPLS private networking, and AlwaysThere Cloud Computing services.
Many of Canada's largest retail chains and thousands of other small to
mid-sized businesses depend on Radiant solutions for their mission-critical
data networks and enterprise-level applications.
Broadband Solutions for Business and AlwaysThere are registered
trademarks of Radiant Communications Corp. All other trademarks, service
marks, registered trademarks, or registered service marks are the property of
their respective owners.
This press release may contain forward-looking statements, including
statements regarding the business and anticipated financial performance of
Radiant, which involve risks and uncertainties. These risks and uncertainties
may cause Radiant's actual results to differ materially from those
contemplated by the forward-looking statements. Factors that might cause or
contribute to such differences include, among others, competitive pressures,
the growth rate of the Internet and telecommunications concerns, constantly
changing technology and market acceptance of Radiant's products and services.
Investors are also directed to consider the other risks and uncertainties
discussed in Radiant's required financial statements and filings. All other
companies and products listed herein may be trademarks or registered
trademarks of their respective holders.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
RADIANT COMMUNICATIONS CORP. BALANCE SHEET (Expressed in Canadian
dollars) (Unaudited)
September 30, 2010 December 31, 2009
Assets
Current assets
Cash and cash equivalents $ 5,751,437 $ 3,412,781
Short-term investments 533,376 424,376
Restricted short-term investment - 109,000
Trade accounts receivable 2,913,255 2,512,832
Inventories 267,107 358,136
Prepaid expenses and deposits 443,940 295,052
Deferred costs 912,143 1,473,487
10,821,258 8,585,664
Property and equipment 2,410,244 1,568,829
Right of Access 1,776,009 -
Goodwill 1,574,228 1,574,228
$ 16,581,739 $ 11,728,721
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued $ 4,355,796 $ 3,244,082
liabilities
Customer deposits 122,115 122,115
Deferred revenue 4,335,081 4,679,804
Current portion of deferred lease 32,235 16,050
inducements
Current portion of obligations 48,698 49,700
under capital leases
8,893,925 8,111,751
Deferred lease inducements 41,029 75,192
Obligations under capital leases 4,218 44,040
8,939,172 8,230,983
Shareholders' equity
Share capital 7,511,130 3,601,872
Contributed surplus 4,719,744 4,433,931
Deficit (4,588,307) (4,538,065)
7,642,567 3,497,738
$ 16,581,739 $ 11,728,721
>>
RADIANT COMMUNICATIONS CORP. STATEMENTS OF OPERATIONS, COMPREHENSIVE
INCOME (LOSS) AND DEFICIT (Expressed in Canadian dollars) (Unaudited)
<<
Three months ended September Nine months ended
30, September 30,
2010 2009 2010 2009
Revenue $ 7,824,010 $ 7,675,557 $ 23,392,996 $ 22,315,930
Cost of sales 4,673,248 4,681,888 14,051,270 12,888,926
Gross profit 3,150,762 2,993,669 9,341,726 9,427,004
Expenses
Sales and 618,708 359,213 1,760,639 1,390,900
marketing
General and 2,156,253 2,210,652 6,758,606 6,518,459
administrative
Amortization 318,026 256,451 850,539 778,989
3,092,988 2,826,316 9,369,784 8,688,348
Income (loss) 57,774 167,353 (28,058) 738,656
before
undernoted
Interest expense 1,752 566 13,569 32,004
Other (income) 30,590 51,609 8,615 113,224
expenses
Net earnings 25,432 115,178 (50,242) 593,428
(loss) and
comprehensive
income (loss)
for the period
Deficit, (4,613,739) (4,133,399) (4,538,065) (4,611,649)
beginning of
period
Deficit, end of $ (4,588,307) $ (4,018,221) $ (4,588,307) $ (4,018,221)
period
Basic and $ 0.00 $ 0.01 $ (0.00) $ 0.05
diluted earnings
(loss) per share
Weighted average 15,125,664 10,925,664 13,510,279 10,925,664
common shares,
used in
computing basic
and diluted
earnings (loss)
per share
>>
RADIANT COMMUNICATIONS CORP. STATEMENTS OF CASH FLOWS (Expressed in
Canadian dollars) (Unaudited)
<<
Three months ended September Nine months ended September
30, 30,
2010 2009 2010 2009
Cash flows from
operating
activities:
Income (loss) $ 25,432 $ 115,178 $ (50,242) $ 593,428
for the period
Items not
involving
cash:
Amortization 287,277 256,451 800,593 778,989
Amortization 30,749 - 49,946 -
of right of
access
Stock-based 46,352 74,591 192,813 211,895
compensation
Change in (8,468) 2,670 (17,978) 8,012
deferred
lease
inducements
Foreign 14,160 37,998 14,533 116,140
exchange
(gain) loss
395,502 486,888 989,665 1,708,464
Change in
non-cash
working
capital:
Trade (44,785) (605,259) (400,423) (206,598)
accounts
receivable
Inventories (26,497) 111,127 91,029 251,381
Prepaid (21,627) 96,662 (148,888) (181,066)
expenses and
deposits
Deferred 147,274 43,307 561,344 (202,507)
costs
Accounts 901,995 (257,055) 1,111,714 11,204
payable and
accrued
liabilities
Customer - (620) - (1,971)
deposits
Deferred (66,298) 162,163 (344,723) 362,474
revenue
1,285,564 37,213 1,859,718 1,741,381
Cash flows from
investing
activities:
Increase in - (376) - (376)
short-term
investment
Purchase of (775,361) (191,454) (1,646,761) (503,344)
property and
equipment
Payments for (966,080) - (1,825,955) -
right of
access
(1,741,441) (191,830) (3,472,716) (503,720)
Cash flows from
financing
activities:
Payments under (11,636) (45,246) (36,071) (147,780)
capital leases
Proceeds from - - 4,002,258 -
issuance of
common shares
(11,636) (45,246) 3,966,187 (147,780)
Foreign exchange (14,160) (37,998) (14,533) (116,140)
gain (loss) on
cash held in
foreign currency
Increase (481,673) (237,861) 2,338,656 973,741
(decrease) in
cash and cash
equivalents
Cash and cash 6,233,110 3,022,080 3,412,781 1,810,478
equivalents,
beginning of
period
Cash and cash $ 5,751,437 $ 2,784,219 $ 5,751,437 $ 2,784,219
equivalents, end
of period
For further information
Investors: Chuck Leighton, CFO, 604-692-4531, mailto:cleighton@radiant.net, or David Feick, The Equicom Group, 403-218-2839,dfeick@equicomgroup.com Media: Maria LoScerbo, Epic PR, 604.732.6221, mailto:maria@epicpr.ca
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Radiant Communications
Vancouver, BC (InfoTech)
60 Employees In BC (90 Total)
Founded: 1996 | Revenues: $30.00 Million
Radiant is a provider of innovative managed IT solutions, ranging from cloud computing, business Internet, MPLS private networking, and managed hosting solutions.
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