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8-K - FORM 8-K - CREATIVE REALITIES, INC. | c20855e8vk.htm |
Exhibit 99
Wireless Ronin Reports Record Second Quarter 2011 Results with
Revenue Up 59% to $3.1 Million
Revenue Up 59% to $3.1 Million
MINNEAPOLIS August 3, 2011 Wireless Ronin Technologies, Inc. (NASDAQ: RNIN), a leading
marketing technologies provider, reported financial results for the second quarter ended June 30,
2011.
Q2 2011 Operational Highlights
| Received $1.8 million purchase order for installations at 200 auto dealerships |
| Exceeded 150 orders for RoninCast® for automotive iShowroom from FIAT dealerships |
| Elected Michael Howe and Ozarslan Tangun to board of directors |
| Launched new website showcasing Wireless Ronins new marketing technologies strategy |
| Received 2011 Digital Screenmedia Association Industry Excellence Award, honoring the best digital signage deployments across all vertical market segments |
Q2 2011 Financial Results
Revenue in the second quarter of 2011 increased 27% sequentially to a record $3.1 million from $2.4
million in the prior quarter, and increased 59% from $1.9 million in the same year-ago period. The
increase was primarily attributable to a $1.8 million order received from an existing automotive
customer of which $1.4 million was recognized in the second quarter. Recurring revenue in the
second quarter of 2011 from the companys hosting and support services was approximately $400,000
or 13% of total revenue. As of June 30, 2011, the company had received purchase orders totaling
approximately $1.6 million for which it had not recognized revenue.
Revenue for the six months ended June 30, 2011, increased 82% to a record $5.5 million from $3.0
million in the same period a year ago.
Gross margin was 46% for both the second and first quarter of 2011, as compared to 48% in the
second quarter of 2010. The decrease was primarily due to a higher percentage of hardware sales
during the second quarter of 2011 compared to the same year-ago period.
Net loss totaled $1.4 million or $(0.07) per basic and diluted share, an improvement from a net
loss of $2.3 million or $(0.12) per basic and diluted share in the previous quarter, and a net loss
of $2.1 million or $(0.12) per basic and diluted share in the same year-ago period. The improvement
was driven primarily by approximately $500,000 of additional gross margin dollars when compared to
both the previous and year-ago quarter. Net loss for the second quarter of 2011 included $178,000
of non-cash stock compensation expense.
Non-GAAP operating loss totaled $1.1 million or $(0.06) per basic and diluted share, an improvement
from a loss of $1.8 million or $(0.09) per basic and diluted share in the previous quarter, and a
loss $1.7 million or $(0.10) per basic and diluted share in the second quarter of 2010. The company
defines non-GAAP operating loss as GAAP operating loss with the add-back of certain items.
Reconciliation to GAAP operating loss on a quarterly basis is contained in a table following the
unaudited financial information accompanying this release.
At June 30, 2011, the companys net working capital position was $4.6 million, as compared to $5.6
million at March 31, 2011.
Management Commentary
Q2 2011 marked our fifth consecutive quarter of year-over-year revenue growth as we continue our
march toward profitability, said Scott W. Koller, president and CEO of Wireless Ronin. Our
improving top line and bottom line performance demonstrates the strong demand for our
industry-leading digital signage and marketing technologies. It also reflects our strategic shift
from hardware-centric offerings to a higher margin hosted software and services business model. In
fact, software revenue increased 184% over the same year-ago quarter to $623,000.
We had several key wins during the quarter, including the $1.8 million purchase order from an
existing automotive customer. We are encouraged by the automotive industrys continued adoption and
the role our automotive solution plays in this marketplace, and we expect to further penetrate this
important vertical.
The digital signage and related marketing technologies growth, coupled with increasing demand to
reach consumers and deliver a measurable return on investment, bodes well for our business outlook.
As this momentum builds, we believe Wireless Ronin is strategically positioned with industry
leading technologies to capture market share and drive recurring revenue.
Our two new board members, Michael Howe and Oz Tangun, have played important roles in establishing
this strategic position as prior independent consultants to the company. We expect their industry
expertise and proactive approach to board service will continue to be a positive influence on the
company. Michaels invaluable experience as CEO of Arbys and Minute Clinic helped him shape and
will now oversee implementation of our marketing technologies strategy. Ozs long history with
Wireless Ronin and his extensive Wall Street experience will guide us in matters of capital
structure and investor communications as we continue to build long-term shareholder value.
Conference Call
The company will hold a conference call later today, Wednesday, August 3, 2011, to discuss these
financial results and to provide an update regarding customers in its key vertical markets. The
companys president and CEO, Scott W. Koller, and SVP and CFO, Darin P. McAreavey, will host the
call starting at 4:30 p.m. Eastern time. A question and answer session will follow managements
presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to the start time, ask
for the Wireless Ronin conference call and provide the conference ID:
Dial-In Number: 877-368-6111
International: 631-291-4139
Conference ID: 84654752
International: 631-291-4139
Conference ID: 84654752
The presentation will be webcast live and available for replay via the Investors section of the
companys website at www.wirelessronin.com. Please go to the website at least 15 minutes early to
register, download, and install any necessary audio software. If you have any difficulty connecting
with the conference call or webcast, please contact Liolios Group at 949-574-3860.
A replay of the call will be available after two hours following the end of the call until
September 2, 2011:
Toll-free replay number: 855-859-2056
International replay number: 404-537-3406
Replay pin number: 84654752
International replay number: 404-537-3406
Replay pin number: 84654752
About Wireless Ronin Technologies, Inc.
Wireless Ronin Technologies (NASDAQ: RNIN) is a marketing technologies company with leading
expertise in current and emerging digital media solutions, including signage, interactive kiosks,
mobile, social media and web, that enable clients to transform how they engage with their
customers. RNINs marketing technology solutions and services help increase revenue and/or improve
operating efficiencies in the execution of marketing initiatives. RNIN offers an array of services
to support marketing technology needs, including consulting, creative development, project
management, installation, training, and support and hosting. Follow the company on
http://twitter.com/#!/wirelessronin,like us on Facebook under Wireless Ronin Technologies, Inc.,
or visit www.wirelessronin.com.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with Generally Accepted
Accounting Principles (GAAP), this press release and the accompanying tables contain the following
non-GAAP financial measures: non-GAAP operating loss and non-GAAP operating loss per common share.
The presentation of this financial information is not intended to be considered in isolation or as
a substitute for, or superior to, the financial information prepared and presented in accordance
with GAAP.
Non-GAAP operating loss and non-GAAP operating loss per share. We define non-GAAP operating loss as
the GAAP operating loss less stock-based compensation expense, depreciation and amortization,
severance expense and other one-time charges. We define non-GAAP operating loss per share as
non-GAAP operating loss divided by the weighted average basic and diluted shares outstanding. Our
management utilizes a number of different financial measures, both GAAP and non-GAAP, in making
operating decisions, in forecasting and planning, and in analyzing and assessing our companys
overall performance. Our annual financial plan is prepared and reviewed both on a GAAP and non-GAAP
basis. We budget and forecast for revenue and expenses on GAAP and non-GAAP bases, and assess
actual results on GAAP and non-GAAP bases against our annual financial plan. Our board of directors
and management utilize these financial measures (both GAAP and non-GAAP) to determine our
allocation of resources. In addition, and as a consequence of the importance of these non-GAAP
financial measures in managing our business, we use non-GAAP financial measures in the evaluation
process to establish management compensation. For example, senior managements 2011 bonus program
is partially based upon the achievement of non-GAAP operating income (loss). Our management
believes that these non-GAAP financial measures provide meaningful supplemental information
regarding our performance by excluding the items mentioned above. We consider the use of non-GAAP
operating loss per share helpful in assessing the ongoing performance of the continuing operations
of our business, as it excludes recurring non-cash items and non-recurring one-time charges. Our
rationale for the items we omit from our non-GAAP measures is as follows:
Stock-based compensation. We exclude non-cash stock-based compensation expense because of varying
available valuation methodologies, subjective assumptions and the variety of award types that
companies can use under FASB ASC 718-10. Stock-based compensation expense is a recurring expense
for our company and is expected to be in the future as we have a history of granting stock options
and other equity instruments as a means of incentivizing and rewarding our employees.
Depreciation and amortization expense. Depreciation and amortization are non-cash charges that are
impacted by our accounting methods and book value of assets. By excluding these non-cash charges,
our management, together with our investors, are provided with supplemental metrics to evaluate
cash earnings, distinguishing performances impact on earnings from performances impact on cash.
Management believes that the review of these supplemental metrics in conjunction with other GAAP
metrics, such as capital expenditures, is useful for management and investors in understanding our
business. Depreciation is a recurring expense for our company and is expected to continue to be in
the future as we continue to make further investments in our infrastructure through the acquisition
of property, plant and equipment. Due to the exclusion of these non-cash items, investors should
not use this metric as a measure of evaluating our liquidity. Instead, to evaluate our liquidity,
investors should refer to the Consolidated Statements of Cash Flow and the Liquidity and Capital
Resources section contained within Managements Discussion and Analysis in our most recently filed
periodic reports.
Severance and other one-time charges. We exclude severance and other one-time charges that are the
result of other, unplanned events as one means of measuring operating performance. Included in
these expenses are items such as severance costs associated with the termination of employees as
part of an unplanned restructuring, a non-acquisition-related restructuring and other charges.
These events are unplanned and arise outside the ordinary course of continuing operations. For
example, we implemented significant workforce reductions and other changes to our management team
during 2008 and 2009. We do not expect restructuring-related charges to regularly recur in the
future. The other one-time charges relate to unplanned costs, and therefore, by providing this
information, we believe our management and our investors may more fully understand the financial
results of what we consider to be organic continuing operations.
There are a number of limitations related to the use of non-GAAP operating loss and non-GAAP
operating loss per share versus operating income and loss per share calculated in accordance with
GAAP. First, these non-GAAP financial measures exclude stock-based compensation and depreciation
expenses that are recurring. Both stock-based expenses and depreciation have been, and will
continue to be for the foreseeable future, a significant recurring expense with an impact upon our
company notwithstanding the lack of immediate impact upon cash. Second, stock-based awards are an
important part of our employees compensation and impact their performance. Third, there is no
assurance we will avoid further personnel changes and, therefore, may recognize additional
severance and other one-time charges associated with a future restructuring. Fourth, there is no
assurance the components of the costs that we exclude in our calculation of non-GAAP operating loss
do not differ from the components that our peer companies exclude when they report their results of
operations. Our management compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these
non-GAAP financial measures together with their most directly comparable financial measures
calculated in accordance with GAAP. The accompanying tables have more details on these non-GAAP
financial measures, including reconciliations between these financial measures and their most
directly comparable GAAP equivalents.
WIRELESS RONIN TECHNOLOGIES, INC.
2011 SUPPLEMENTARY QUARTERLY FINANCIAL DATA
(In thousands, except percentages and per share amounts)
(Unaudited)
2011 SUPPLEMENTARY QUARTERLY FINANCIAL DATA
(In thousands, except percentages and per share amounts)
(Unaudited)
Supplementary Data
2010 | 2011 | |||||||||||||||||||||||||||||||
Statement of Operations | Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Total | ||||||||||||||||||||||||
Sales |
$ | 1,075 | $ | 1,916 | $ | 2,672 | $ | 2,904 | $ | 8,567 | $ | 2,397 | $ | 3,054 | $ | 5,451 | ||||||||||||||||
Cost of sales |
651 | 1,002 | 1,348 | 1,581 | 4,582 | 1,304 | 1,662 | 2,966 | ||||||||||||||||||||||||
Operating expenses |
3,185 | 2,970 | 2,711 | 2,974 | 11,840 | 3,350 | 2,824 | 6,174 | ||||||||||||||||||||||||
Interest expense |
2 | 16 | 21 | 19 | 58 | 11 | 7 | 18 | ||||||||||||||||||||||||
Other income, net |
(10 | ) | (8 | ) | (6 | ) | (6 | ) | (30 | ) | (2 | ) | (1 | ) | (3 | ) | ||||||||||||||||
Net loss |
$ | (2,753 | ) | $ | (2,064 | ) | $ | (1,402 | ) | $ | (1,664 | ) | $ | (7,883 | ) | $ | (2,266 | ) | $ | (1,438 | ) | $ | (3,704 | ) | ||||||||
Share based payment expense
(included in operating expenses & interest expense) |
153 | 178 | 218 | 369 | 918 | 353 | 180 | 533 | ||||||||||||||||||||||||
Weighted average shares |
17,653 | 17,675 | 17,734 | 18,669 | 17,901 | 19,275 | 19,393 | 19,335 | ||||||||||||||||||||||||
Reconciliation Between GAAP and Non-GAAP Operating Loss |
||||||||||||||||||||||||||||||||
GAAP operating loss |
$ | (2,761 | ) | $ | (2,056 | ) | $ | (1,387 | ) | $ | (1,651 | ) | $ | (7,855 | ) | $ | (2,257 | ) | $ | (1,432 | ) | $ | (3,689 | ) | ||||||||
Adjustments: |
||||||||||||||||||||||||||||||||
Depreciation and amortization |
176 | 171 | 172 | 165 | 684 | 144 | 122 | 266 | ||||||||||||||||||||||||
Stock-based compensation expense |
151 | 162 | 202 | 353 | 868 | 345 | 178 | 523 | ||||||||||||||||||||||||
Total operating expense adjustment |
327 | 333 | 374 | 518 | 1,552 | 489 | 300 | 789 | ||||||||||||||||||||||||
Non-GAAP operating loss |
$ | (2,434 | ) | $ | (1,723 | ) | $ | (1,013 | ) | $ | (1,133 | ) | $ | (6,303 | ) | $ | (1,768 | ) | $ | (1,132 | ) | $ | (2,900 | ) | ||||||||
Non-GAAP operating loss per common share |
$ | (0.14 | ) | $ | (0.10 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.35 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | (0.15 | ) |
Forward-Looking Statements
This release contains certain forward-looking statements of expected future developments, as
defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements
reflect managements expectations regarding continued operating improvement and other matters and
are based on currently available data; however, actual results are subject to future risks and
uncertainties, which could materially affect actual performance. Risks and uncertainties that could
affect such performance include, but are not limited to, the following: estimates of future
expenses, revenue and profitability; the pace at which the company completes installations and
recognizes revenue; trends affecting financial condition and results of operations; ability to
convert proposals into customer orders; the ability of customers to pay for products and services;
the revenue recognition impact of changing customer requirements; customer cancellations; the
availability and terms of additional capital; ability to develop new products; dependence on key
suppliers, manufacturers and strategic partners; industry trends and the competitive environment;
and the impact of losing one or more senior executives or failing to attract additional key
personnel. These and other risk factors are discussed in detail in the risk factors section of the
companys Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22,
2011.
Company Contact:
Darin P. McAreavey
Senior Vice President and Chief Financial Officer
dmcareavey@wirelessronin.com
952-564-3525
Darin P. McAreavey
Senior Vice President and Chief Financial Officer
dmcareavey@wirelessronin.com
952-564-3525
Investor Relations Contact:
Scott Liolios or Matt Glover
Liolios Group, Inc.
info@liolios.com
949-574-3860
Scott Liolios or Matt Glover
Liolios Group, Inc.
info@liolios.com
949-574-3860
Media Contact:
Erin E. Haugerud
Manager of Communications and Investor Relations
ehaugerud@wirelessronin.com
952-564-3535
Erin E. Haugerud
Manager of Communications and Investor Relations
ehaugerud@wirelessronin.com
952-564-3535
WIRELESS RONIN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share information)
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share information)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | (audited) | |||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 3,866 | $ | 7,064 | ||||
Accounts receivable, net of allowance of $50 and $35 |
3,283 | 2,522 | ||||||
Inventories |
329 | 272 | ||||||
Prepaid expenses and other current assets |
244 | 275 | ||||||
Total current assets |
7,722 | 10,133 | ||||||
Property and equipment, net |
846 | 1,019 | ||||||
Restricted cash |
50 | 50 | ||||||
Other assets |
58 | 40 | ||||||
TOTAL ASSETS |
$ | 8,676 | $ | 11,242 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Current maturities of capital lease obligations |
$ | 39 | $ | 37 | ||||
Line of credit bank |
500 | | ||||||
Accounts payable |
1,210 | 1,563 | ||||||
Deferred revenue |
680 | 488 | ||||||
Accrued liabilities |
714 | 571 | ||||||
Total current liabilities |
3,143 | 2,659 | ||||||
Capital lease obligations, less current maturities |
21 | 40 | ||||||
TOTAL LIABILITIES |
3,164 | 2,699 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS EQUITY |
||||||||
Capital stock, $0.01 par value, 66,667 shares authorized
outstanding |
| | ||||||
issued and outstanding at June 30, 2011 and December 31, 2010,
respectively |
194 | 192 | ||||||
Additional paid-in capital |
91,810 | 91,138 | ||||||
Accumulated deficit |
(85,982 | ) | (82,278 | ) | ||||
Accumulated other comprehensive loss |
(510 | ) | (509 | ) | ||||
Total shareholders equity |
5,512 | 8,543 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 8,676 | $ | 11,242 | ||||
WIRELESS RONIN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Sales |
||||||||||||||||
Hardware |
$ | 1,492 | $ | 644 | $ | 2,545 | $ | 847 | ||||||||
Software |
623 | 338 | 878 | 408 | ||||||||||||
Services and other |
939 | 934 | 2,028 | 1,736 | ||||||||||||
Total sales |
3,054 | 1,916 | 5,451 | 2,991 | ||||||||||||
Cost of sales |
||||||||||||||||
Hardware |
1,060 | 429 | 1,789 | 564 | ||||||||||||
Software |
66 | 41 | 95 | 49 | ||||||||||||
Services and other |
536 | 532 | 1,082 | 1,040 | ||||||||||||
Total cost of sales (exclusive of depreciation and
amortization shown separately below ) |
1,662 | 1,002 | 2,966 | 1,653 | ||||||||||||
Gross profit |
1,392 | 914 | 2,485 | 1,338 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing expenses |
514 | 532 | 1,277 | 1,263 | ||||||||||||
Research and development expenses |
620 | 746 | 1,193 | 1,541 | ||||||||||||
General and administrative expenses |
1,568 | 1,521 | 3,438 | 3,004 | ||||||||||||
Depreciation and amortization expense |
122 | 171 | 266 | 347 | ||||||||||||
Total operating expenses |
2,824 | 2,970 | 6,174 | 6,155 | ||||||||||||
Operating loss |
(1,432 | ) | (2,056 | ) | (3,689 | ) | (4,817 | ) | ||||||||
Other income (expenses): |
||||||||||||||||
Interest expense |
(7 | ) | (16 | ) | (18 | ) | (18 | ) | ||||||||
Interest income |
1 | 8 | 3 | 18 | ||||||||||||
Total other income |
(6 | ) | (8 | ) | (15 | ) | | |||||||||
Net loss |
$ | (1,438 | ) | $ | (2,064 | ) | $ | (3,704 | ) | $ | (4,817 | ) | ||||
Basic and diluted loss per common share |
$ | (0.07 | ) | $ | (0.12 | ) | $ | (0.19 | ) | $ | (0.27 | ) | ||||
Basic and diluted weighted average shares outstanding |
19,393 | 17,675 | 19,335 | 17,664 | ||||||||||||