April 6, 2010 (Vancouver, BC) Radiant Communications Corp. (TSX-V: RCN), Canada's leading supplier of Broadband Solutions for Business, today announced its financial results for the fourth quarter and year ended December 31, 2009.
"Despite a challenging economy in 2009 we drove measurable improvements in our revenue, customer service metrics, and achieved a company record for EBITDA", said David Buffett, President and CEO of Radiant. "Our improving financial strength and our attractive product suite have enabled us to form new partnerships and take the next step in opening up reliable high capacity broadband service to Canadian business for 2010."
Revenues for the year ended December 31, 2009 increased 20.6% to $30.0 million compared to $24.9 million in the comparable period of 2008. The increase is a result of ongoing sales of new services directed at retailers and larger national businesses as well as the significant addition of new locations and services to existing customers. The Company's revenues are primarily recurring in nature and due to long-term customer contracts, revenue growth is relatively predictable and consistent over time.
For the year ended December 31, 2009, the Company's gross profit increased to $12.5 million compared to $11.1 million in the year ended December 31, 2008. Gross profit as a percentage of revenue was 41.8% for the year ended December 31, 2009 compared to 44.4% for the same period in 2008. Approximately 90% of all the Company's access and bandwidth costs are directly variable with revenue, and accordingly, margin percentages are relatively predictable. Overall margin percentage can vary with revenue mix, as hardware and installation revenues carry lower margins than the Company's higher value connectivity and managed services. During the year ended December 31, 2009, Radiant provisioned more than 3,000 new managed network locations including more than 2,500 locations for a major customer announced in September of 2008. The installation and provisioning cost associated with managed network connections is higher than a standard DSL connection. This higher up-front cost is offset by higher margin monthly recurring revenue.
Operating expenses, including sales and marketing, general and administrative, and amortization increased by 1.2% to $11.8 million in the year ended December 31, 2009 compared to $11.7 million in 2008.
Sales and marketing expenses include compensation expenses, agent and channel distribution costs, and marketing costs. For the year ended December 31, 2009, sales and marketing expense decreased 17.0% to $2.0 million compared to $2.4 million in the same period of 2008. The Company has modified its sales channel strategy as well as the variable incentive portion of the direct sales force to create an increased focus on more profitable virtual software as a service (SaaS) products. During the transition the variable component of selling expense decreased from the prior year. The Company expects selling costs to increase in the future based on additional resource allocation to sales channels as well as new marketing initiatives for the AlwaysThere product line and the recently announced broadband investment agreement.
General and administrative expenses, which include customer care, technical, network, executive and administrative staff, systems development, hardware, software, premises, office and general expenses, grew 6.1% to $8.9 million for the year ended December 31, 2009 compared to $8.4 million in the year ended December 31, 2008. This increase in expense is primarily attributable to additional resources required to manage the increase in managed services connections, as well as development costs related to improvements and enhancements to the provisioning and billing systems to accommodate the current growth rate in new business.
For the year ended December 31, 2009, amortization expenses of $1.0 million were 3.1% higher than amortization expenses in the same period of 2008 of $980,623. The increase is attributable to the capital expenditures made in 2008 on a redundant AlwaysThere virtual grid and the rollout of a national MPLS network.
Interest on the Company's outstanding equipment financing decreased to $40,518 for the year ended December 31, 2009 from $92,412 for the same period of 2008. The decrease is the result of the reduction in balance of outstanding capital lease obligations. Other expense of $593,985 includes foreign exchange losses of $138,978 related to the strengthening of the U.S. dollar against the Canadian dollar during 2009 and a one-time termination charge of $500,000 related to severance accrued as part of the sales and distribution changes announced at the end of 2009.
The Company had a net income of $73,584 or $0.01 per share for the year ended December 31, 2009 compared to a net loss of $531,433 or $(0.05) per share in the same period of 2008. The weighted average number of shares outstanding for the year ended December 31, 2009 and the year ended December 31, 2008 was 10.9 million.
At December 31, 2009 Radiant had cash and short-term investments (restricted and unrestricted) of $3.9 million compared to $2.3 million at December 31, 2008. Of this amount, $109,000 was restricted as it had been pledged as collateral for letters of credit which guarantee the Company's capital lease financing and the primary operating facility operating lease. This restriction was lifted in January of 2010 as the letters of credit were cancelled. 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. 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.
Additional details on the fiscal year 2009 results, including the audited 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 December 31, 2009 on April 7, at 11:00 a.m. PDT (2:00 p.m. EDT). Access to the call may be obtained by calling the operator at 1-888-240-9352 (Toll Free North America), or 1-913-312-1487 (International) 10 minutes prior to the scheduled start time and for 7 days after the call at 1-866-245-6755 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 315611. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.