Key 2008 fourth quarter highlights include: * Generates fourth quarter 2008 revenue of $1.9 million, up 18 percent from $1.6 million in 2007 * Implements total workforce reductions of 40 percent and reduces other expenses to align costs with sales and committed projects * Incurs one-time impairment charges totaling $3.0 million * Excluding one-time adjustments, expenses decline by $1.0 million during the quarter
MINNEAPOLIS, Feb. 17, 2009 (GLOBE NEWSWIRE) -- Wireless Ronin Technologies, Inc. (Nasdaq:RNIN), a leader in digital signage solutions, today announced its financial results for the 2008 fourth quarter and full year.
Fourth Quarter Results
The company reported revenue of $1.9 million for the fourth quarter of 2008, an 18 percent increase from $1.6 million in the fourth quarter of 2007. The company also reported a fourth quarter 2008 net loss of $6.9 million compared to a net loss of $3.7 million in the year-ago quarterly period, and a basic and diluted loss per share of $0.47 compared to a basic and diluted loss per share of $0.25 last year. The year-over-year increase in the net loss for the 2008 fourth quarter was primarily the result of the impairment of the network equipment held for sale asset of $1.8 million, an impairment charge on intangible assets of $1.3 million and severance cost of $274,000 related to the fourth quarter 2008 workforce reductions. Fourth quarter 2008 results also included costs of approximately $411,000, or $0.03 per basic and diluted share, of non-cash stock compensation expense related to FAS123R compared to approximately $286,000, or $0.02 per basic and diluted share, in 2007.
Adjusted operating loss was $2.8 million or $0.19 per basic and diluted share in the fourth quarter of 2008 compared to an adjusted operating loss of $3.3 million or $0.23 per basic and diluted share in the fourth quarter of 2007. Adjusted operating loss is defined as the GAAP operating loss with the add-back of certain items. Reconciliation to the GAAP operating loss on a quarterly and full year basis is contained in a table following the financial statements accompanying this release.
For the fourth quarter of 2008, gross margin averaged 12 percent, compared to a gross margin of 25 percent in the fourth quarter of 2007. The 2008 gross margin was impacted by a one-time lower of cost or market inventory adjustment of approximately $65,000 and a continued net loss from the company's Network Operations Center, or NOC. Excluding these costs, adjusted gross margin would have been 25 percent for the fourth quarter of 2008.
The company previously included depreciation and amortization in general and administrative expense. It now shows depreciation and amortization as a separate line on the statement of operations to better reflect the infrastructure investments made to date.
"Our fourth quarter revenue was in line with our expectations, but it's clear that many companies including Wireless Ronin face challenges with regard to the economy. Many businesses are extremely cautious in making capital expenditures, and this has created significant headwinds for us," said Jim Granger, Wireless Ronin Technologies' president and CEO. "However, we remain confident in our ability to take advantage of the eventual shift to the digital signage marketplace. Wireless Ronin is a recognized leader in this industry, and we continue to demonstrate significant value to our current and prospective clients. To better align our internal resources with sales levels and project commitments, we took additional steps to reduce costs. One step in this process was to further reduce our headcount. This action has decreased our expense rate and, in the long-term, makes Wireless Ronin a more efficient organization."
Full Year Results
For the full year 2008, the company reported revenue of $7.4 million, a 23 percent increase from $6.0 million in 2007. The company also reported a full year net loss of $20.7 million compared to a net loss of $10.1 million in 2007, and a basic and diluted loss per share of $1.41 compared to a basic and diluted loss per share of $0.82 last year. The increase in net loss for 2008 was primarily attributable to higher operating expenses to support anticipated growth opportunities, investments in the company's Network Operations Center for customer testing and program pilots, the impairment of the network equipment held for sale and the impairment charge on intangible assets. The 2008 results also included costs of approximately $1,313,000, or $0.09 per basic and diluted share, of non-cash stock compensation expense related to FAS123R compared to approximately $1,167,000, or $0.09 per basic and diluted share, in 2007.
Adjusted operating loss was $14.6 million, or $1.00 per basic and diluted share, for the full year 2008 compared to an adjusted operating loss of $8.6 million, or $0.70 per basic and diluted share, for the full year 2007.
For the full year 2008, gross margin averaged 10.7 percent, compared to a gross margin of 35 percent for 2007. The 2008 gross margin was negatively impacted by the lower of cost or market inventory adjustment and the investments in the company's NOC. Excluding the lower of cost or market inventory adjustment and the impact of the NOC, adjusted gross margin would have been 21.8 percent for the year.
Other Items
On November 3rd and December 17th, 2008, Wireless Ronin implemented two separate workforce reductions to better match its infrastructure and expenses with sales levels and current client projects. As a result, the company reduced its employee and contractor count by 63, or approximately 40 percent, with reductions spread across the organization. The combined severance charge from the two workforce reductions totaled approximately $274,000, or $0.02 per basic and diluted share, in the fourth quarter of 2008. As a result of the two headcount reductions and lower non-employee operating costs, operating expenses, excluding one-time adjustments, declined by approximately $1.0 million in the fourth quarter of 2008 compared to the third quarter of 2008. The company anticipates that quarterly expenses will decline by an additional $1.0 million commencing in the first quarter of 2009 for a total reduction of approximately $2.0 million, as it relates to these actions, or $0.13 per basic and diluted share.
Cash and marketable securities at December 31, 2008 totaled approximately $14.0 million compared to $29.6 million at December 31, 2007. Both totals include $450,000 of restricted cash. The decline in cash and marketable securities reflects the funding of the company's net loss. "We believe that cash balances in combination with the actions we have taken to reduce our cash requirements have created a platform that is sufficient to fund our business into 2010," said Brian Anderson, Wireless Ronin Technologies' vice president, interim chief financial officer and controller.
In the third quarter of 2008, the company re-classified a receivable balance of $1.9 million to network equipment held for sale when NewSight Corporation defaulted on its note payable obligation and Wireless Ronin took ownership of collateral, including in-box inventory and an installed digital signage network in 102 Meijer stores. At the time of re-classification, Meijer was seeking a new network owner, and the company intended to sell the network to the new owner. Meijer has since abandoned plans to maintain the network. As a result, Wireless Ronin has moved approximately $171,000 of equipment from the in-box collateral base into inventory and taken an impairment loss on the remaining approximately $1.8 million of network equipment held for sale.
During the fourth quarter, Wireless Ronin also took a charge for the impairment of assets related to the 2007 acquisition of McGill Digital Solutions. The company reviews the carrying value of all long-lived assets, including intangible assets with finite lives, for impairment in accordance with Statement of Financial Accounting Standards No. 144 (FAS 144). Under FAS 144, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The company tested the intangible assets acquired in the 2007 acquisition for impairment in the fourth quarter of 2008 and determined that the underlying assumptions and economic conditions surrounding the initial valuation of these assets had significantly changed, and an impairment loss was recorded for approximately $1.3 million of net book value of these intangible assets.
"It is difficult to predict what impact the current economic slowdown will have on customer demand and project implementations, but we are encouraged by our ongoing relationship with our many clients. KFC remains committed to Wireless Ronin, and the menu board initiative and our relationship with Thomson Reuters continues to grow as well," continued Granger. "With our ability to provide a hosted solution while simultaneously giving the customer control of desired features and functions, we believe we will ultimately be successful. Our goal moving forward will be to fulfill our vision by maintaining our position as a recognized leader in the digital signage industry. We strive to continue a steady growth rate year over year, be a great place to work for our employees, and deliver returns to our shareholders by driving more efficient performance, cash flow, and return on invested capital," concluded Granger.
A conference call to review fourth-quarter and full year results is scheduled for today at 3:30 p.m. (CST). A live webcast of Wireless Ronin's earnings conference call can be accessed on the Investor section of its corporate website at www.wirelessronin.com. Alternatively, a live broadcast of the call may be heard by dialing (888) 633-9563 inside the United States or Canada, or by calling (706) 679-6372 from international locations. An operator will direct you to the Wireless Ronin conference call. A webcast replay of the call will be archived on Wireless Ronin's corporate Web site. An archive of the call is also accessible via telephone by dialing (800) 642-1687 domestically and (706) 645-9291 internationally with pass code 81431110. The conference call archive will be available through March 17, 2009.
About Wireless Ronin Technologies, Inc.
Wireless Ronin Technologies (www.wirelessronin.com) is the developer of RoninCast(r), a complete software solution designed to address the evolving digital signage marketplace. RoninCast(r) software provides clients with the ability to manage a digital signage network from one central location and is the only complete, turnkey solution in the digital signage marketplace. The software suite allows for customized distribution with network management, playlist creation and scheduling, and database integration. Wireless Ronin offers an array of services to support RoninCast(r) software, including consulting, creative development, project management, installation, and training. The company's common stock trades on the NASDAQ Global Market under the symbol "RNIN".
The Wireless Ronin Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3208
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 management's expectations 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 company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, on May 9, 2008.
WIRELESS RONIN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2008 2007
------------ ------------
(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,293,681 $ 14,542,280
Marketable securities --
available-for-sale 8,300,961 14,657,635
Accounts receivable, net of allowance
of $91,758 and $84,685 1,822,627 4,135,402
Income tax receivable 12,275 231,328
Inventories 461,568 539,140
Prepaid expenses and other
current assets 265,854 817,511
------------ ------------
Total current assets 16,156,966 34,923,296
Property and equipment, net 1,917,832 1,780,390
Intangible assets, net -- 3,174,804
Restricted cash 450,000 450,000
Other assets 34,901 40,217
------------ ------------
TOTAL ASSETS $ 18,559,699 $ 40,368,707
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of capital lease
obligations $ 70,960 $ 100,023
Accounts payable 1,068,090 1,387,327
Deferred revenue 180,621 1,252,485
Accrued purchase price consideration -- 999,974
Accrued liabilities 1,067,260 869,759
------------ ------------
Total current liabilities 2,386,931 4,609,568
Capital lease obligations, less current
maturities -- 70,960
------------ ------------
TOTAL LIABILITIES 2,386,931 4,680,528
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Capital stock, $0.01 par value,
66,666,666 shares authorized
Preferred stock, 16,666,666 shares
authorized, no shares issued and
outstanding -- --
Common stock, 50,000,000 shares
authorized; 14,849,860 and
14,537,705 shares issued and
outstanding at December 31, 2008
and December 31, 2007, respectively 148,499 145,377
Additional paid-in capital 80,649,804 78,742,311
Accumulated deficit (64,212,458) (43,520,098)
Accumulated other comprehensive
income (loss) (413,077) 320,589
------------ ------------
Total shareholders' equity 16,172,768 35,688,179
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 18,559,699 $ 40,368,707
============ ============
WIRELESS RONIN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
(unaudited) (audited) (unaudited) (audited)
Sales
Hardware $ 481,390 $ 348,262 $ 2,478,936 $ 3,298,078
Software 141,871 125,905 876,529 597,923
Services and
other 1,278,872 1,135,514 4,025,937 2,088,912
------------ ------------ ------------ ------------
Total sales 1,902,133 1,609,681 7,381,402 5,984,913
Cost of sales
Hardware 441,184 287,026 2,192,837 2,286,695
Software 29,246 -- 247,075 1,007
Services and
other 1,137,777 846,271 4,084,689 1,531,647
Inventory
lower of
cost or
market
adjustment 64,688 73,018 64,688 73,018
------------ ------------ ------------ ------------
Total cost
of sales
(exclusive
of depreci-
ation and
amortiza-
tion shown
separately
below) 1,672,895 1,206,315 6,589,289 3,892,367
------------ ------------ ------------ ------------
Gross profit 229,238 403,366 792,113 2,092,546
Operating
expenses:
Sales and
marketing
expenses 741,861 812,331 3,998,744 2,805,522
Research and
development
expenses 704,526 370,677 2,541,267 1,197,911
General and
administra-
tive expenses 2,340,308 2,827,761 11,257,801 8,048,583
Depreciation
and amortiz-
ation expense 342,180 385,940 1,225,827 651,557
Impairment of
network
equipment
held for sale 1,766,072 -- 1,766,072 --
Impairment of
intangible
assets 1,264,870 -- 1,264,870 --
Termination of
partnership
agreement 50,000 50,000 50,000 703,995
------------ ------------ ------------ ------------
Total
operating
expenses 7,209,817 4,446,709 22,104,581 13,407,568
------------ ------------ ------------ ------------
Operating
loss (6,980,579) (4,043,343) (21,312,468) (11,315,022)
Other income
(expenses):
Interest
expense (3,592) (7,974) (22,484) (40,247)
Interest
income 83,851 377,732 647,066 1,277,456
Other (73) -- (4,475) (8,572)
------------ ------------ ------------ ------------
Total other
income 80,186 369,758 620,107 1,228,637
------------ ------------ ------------ ------------
Net loss $ (6,900,393) $ (3,673,585) $(20,692,361) $(10,086,385)
============ ============ ============ ============
Basic and
diluted loss
per common
share $ (0.47) $ (0.25) $ (1.41) $ (0.82)
============ ============ ============ ============
Basic and
diluted
weighted
average shares
outstanding 14,768,468 14,534,335 14,664,144 12,314,178
============ ============ ============ ============
WIRELESS RONIN TECHNOLOGIES, INC.
2008 SUPPLEMENTARY QUARTERLY FINANCIAL DATA
(Unaudited)
Supplementary Data
------------------
2007
-------------------------------------
Statement of Operations Q1 Q2 Q3
Sales $ 196,436 $ 3,054,863 $ 1,123,933
Cost of sales 103,263 1,873,024 709,765
Operating expenses 3,284,664 2,430,602 3,245,593
Interest expense 10,881 9,634 11,758
Other (151,807) (278,686) (460,659)
Net loss $(3,050,565) $ (979,711) $(2,382,524)
FAS 123R 596,020 136,339 148,544
(included in operating expenses)
Weighted average shares 9,832,288 10,446,571 14,369,262
2007
-------------------------
Statement of Operations Q4 TOTAL
Sales $ 1,609,681 $ 5,984,913
Cost of sales 1,206,315 3,892,367
Operating expenses 4,446,709 13,407,568
Interest expense 7,974 40,247
Other (377,732) (1,268,884)
Net loss $(3,673,587) $(10,086,387)
FAS 123R (included in operating expenses) 286,268 1,167,171
Weighted average shares 14,534,335 12,314,178
Reconciliation Between GAAP and Adjusted Operating Loss
-------------------------------------------------------
2007
-------------------------------------
Q1 Q2 Q3
GAAP operating loss $(3,191,491) $(1,248,763) $(2,831,425)
Adjustments:
Depreciation and amortization 66,366 74,407 124,844
Old building remaining lease
obligation write-off -- -- 191,207
Termination partnership
agreement 653,995 -- --
Stock-based compensation
expense 596,020 136,339 148,544
Impairment of network equipment
held for sale -- -- --
Impairment of intangible assets -- -- --
Severance -- -- --
----------- ----------- -----------
Total operating expense
adjustment 1,316,381 210,746 464,595
----------- ----------- -----------
Adjusted operating loss $(1,875,110) $(1,038,017) $(2,366,830)
=========== =========== ===========
Adjusted operating loss per
common share $ (0.19) $ (0.10) $ (0.16)
2007
--------------------------
Q4 TOTAL
GAAP operating loss $ (4,043,343) $(11,315,022)
Adjustments:
Depreciation and amortization 385,940 651,557
Old building remaining lease obligation
write-off -- 191,207
Termination partnership agreement 50,000 703,995
Stock-based compensation expense 286,268 1,167,171
Impairment of network equipment held for
sale -- --
Impairment of intangible assets -- --
Severance -- --
------------ ------------
Total operating expense adjustment 722,208 2,713,930
------------ ------------
Adjusted operating loss $ (3,321,135) $ (8,601,092)
============ ============
Adjusted operating loss per common share $ (0.23) $ (0.70)
Reconciliation Between GAAP and Adjusted Gross Profit Margin
------------------------------------------------------------
2007
-------------------------------------
Q1 Q2 Q3
GAAP sales $ 196,436 $ 3,054,863 $ 1,123,933
Deferred customer revenue -- -- 89,775
Network operations center -- -- (6,510)
----------- ----------- -----------
Adjusted sales 196,436 3,054,863 1,207,198
GAAP cost of sales 103,263 1,873,024 709,765
Deferred customer costs -- -- --
Inventory adjustment -- -- --
Network operations center -- (33,375) (74,127)
----------- ----------- -----------
Adjusted cost of sales 103,263 1,839,649 635,638
Adjusted gross profit $ 93,173 $ 1,215,214 $ 571,560
=========== =========== ===========
GAAP gross profit margin 47.4% 38.7% 36.8%
Adjusted gross profit margin 47.4% 39.8% 47.3%
2007
------------------------
Q4 TOTAL
GAAP sales $ 1,609,681 $ 5,984,913
Deferred customer revenue 808,291 898,066
Network operations center (11,630) (18,140)
----------- -----------
Adjusted sales 2,406,342 6,864,839
GAAP cost of sales 1,206,315 3,892,367
Deferred customer costs 476,679 476,679
Inventory adjustment (73,018) (73,018)
Network operations center (98,806) (206,308)
----------- -----------
Adjusted cost of sales 1,511,170 4,089,720
Adjusted gross profit $ 895,172 $ 2,775,119
=========== ===========
GAAP gross profit margin 25.1% 35.0%
Adjusted gross profit margin 37.2% 40.4%
Supplementary Data
------------------
2008
-------------------------------------
Statement of Operations Q1 Q2 Q3
Sales $ 1,933,514 $ 1,596,223 $ 1,949,532
Cost of sales 1,534,796 1,534,341 1,847,257
Operating expenses 4,860,861 5,179,815 4,854,088
Interest expense 7,197 6,560 5,135
Other (272,084) (165,057) (121,672)
Net loss $(4,197,256) $(4,959,436) $(4,635,276)
FAS 123R (included in operating
expenses) 395,219 305,911 200,869
Weighted average shares 14,544,181 14,577,825 14,764,345
2008
-------------------------
Statement of Operations Q4 TOTAL
Sales $ 1,902,133 $ 7,381,402
Cost of sales 1,672,895 6,589,289
Operating expenses 7,209,817 22,104,581
Interest expense 3,592 22,484
Other (83,778) (642,591)
Net loss $(6,900,393) $(20,692,361)
FAS 123R 410,957 1,312,956
(included in operating expenses)
Weighted average shares 14,768,468 14,664,144
Reconciliation Between GAAP and Adjusted Operating Loss
-------------------------------------------------------
2008
-------------------------------------
Q1 Q2 Q3
GAAP operating loss $(4,462,143) $(5,117,933) $(4,751,813)
Adjustments:
Depreciation and amortization 250,946 336,715 295,986
Old building remaining lease
obligation write-off -- -- --
Termination partnership
agreement -- -- --
Stock-based compensation
expense 395,219 305,911 200,869
Impairment of network equipment
held for sale -- -- --
Impairment of intangible assets -- -- --
Severance 120,000 353,000 286,000
----------- ----------- -----------
Total operating expense
adjustment 766,165 995,626 782,855
----------- ----------- -----------
Adjusted operating loss (3,695,978) $(4,122,307) $(3,968,958)
=========== =========== ===========
Adjusted operating loss per
common share $ (0.25) $ (0.28) $ (0.27)
2008
---------------------------
Q4 TOTAL
GAAP operating loss $ (6,980,579) $(21,312,468)
Adjustments:
Depreciation and amortization 342,180 1,225,827
Old building remaining lease
obligation write-off 55,650 55,650
Termination partnership agreement 50,000 50,000
Stock-based compensation expense 410,957 1,312,956
Impairment of network equipment
held for sale 1,766,072 1,766,072
Impairment of intangible assets 1,264,870 1,264,870
Severance 274,000 1,033,000
------------- ------------
Total operating expense adjustment 4,163,729 6,708,375
------------- ------------
Adjusted operating loss $ (2,816,850) $(14,604,093)
============= ============
Adjusted operating loss per
common share $ (0.19) $ (1.00)
Reconciliation Between GAAP and Adjusted Gross Profit Margin
------------------------------------------------------------
2008
-------------------------------------
Q1 Q2 Q3
GAAP sales $ 1,933,514 $ 1,596,223 $ 1,949,532
Deferred customer revenue -- 79,730 --
Network operations center (95,664) (39,036) (99,019)
----------- ----------- -----------
Adjusted sales 1,837,850 1,636,917 1,850,513
GAAP cost of sales 1,534,796 1,534,341 1,847,257
Deferred customer costs 47,826 50,538 --
Inventory adjustment -- -- --
Network operations center (190,955) (281,100) (317,807)
----------- ----------- -----------
Adjusted cost of sales 1,391,667 1,303,779 1,529,450
Adjusted gross profit $ 446,183 $ 333,138 $ 321,063
=========== =========== ===========
GAAP gross profit margin 20.6% 3.9% 5.2%
Adjusted gross profit margin 24.3% 20.4% 17.3%
2008
------------------------
Q4 TOTAL
GAAP sales $ 1,902,133 $ 7,381,402
Deferred customer revenue -- 79,730
Network operations center (100,435) (334,154)
----------- -----------
Adjusted sales 1,801,698 7,126,978
GAAP cost of sales 1,672,895 6,589,289
Deferred customer costs -- 98,364
Inventory adjustment (64,688) (64,688)
Network operations center (257,172) (1,047,034)
----------- -----------
Adjusted cost of sales 1,351,035 5,575,931
Adjusted gross profit $ 450,663 $ 1,551,047
=========== ===========
GAAP gross profit margin 12.1% 10.7%
Adjusted gross profit margin 25.0% 21.8%