Rimage: Fiscal 4Q11 Financial Results

Rimage Corporation reported its financial results for the fourth quarter and full year ended December 31, 2011.

Fourth quarter 2011 revenues totaled $21.7 million, in line with the updated guidance provided on January 23, 2012. Revenues were $24.7 million in the fourth quarter of 2010. The decrease in revenues from last year reflected lower sales of retail equipment partially offset by the contribution of Qumu revenue.

Revenues for disc publishing were $19.9 million in the recent fourth quarter. Revenues from Qumu, acquired October 10, 2011, totaled $1.8 million.

Gross margin for the fourth quarter was 51%, the same as the gross margin in the fourth quarter of 2010. Fourth quarter 2011 operating expenses were $12.8 million, including $1.3 million in transaction costs.

Amortization of intangibles associated with the Qumu purchase accounting totaled $0.4 million in the fourth quarter, with $0.2 million reported in cost of sales and $0.2 million reported in operating expenses.

The net loss for the fourth quarter of 2011 was as expected at $1.4 million, or $(0.13) per share, on a GAAP basis. Excluding the transaction costs and amortization expense, the non-GAAP earnings per diluted share was $0.00. In the fourth quarter of 2010, the company reported net income of $2.6 million, or $0.27 per diluted share.

For the full year 2011, revenues totaled $83.6 million compared with $88.7 million in 2010. Disc publishing revenues were $81.9 million in 2011. Excluding the one-time $9.3 million retail transaction in 2010, overall company revenues grew approximately 5% in 2011.

Net income for 2011 was $2.8 million, or $0.29 per diluted share, compared with net income of $7.7 million, or $0.80 per diluted share, in 2010. Excluding the transaction costs and amortization expense, non-GAAP diluted earnings per share were $0.47 for 2011.

The company ended 2011 with $70 million in cash. During the fourth quarter, the company paid $39 million in cash and issued one million shares of Rimage stock for the acquisition of Qumu. During the fourth quarter, the company also paid out $1.8 million in cash for dividends and $1.9 million for the repurchase of shares.

For the full year 2011, the company returned $10.6 million to its shareholders through dividend payments and stock repurchases.

Sherman L. Black, president and CEO, said: "In 2010 we started a transformation effort that focused on two primary objectives – stabilizing our core disc publishing business as the market transitions away from disc to online publishing and introducing new product lines to address customers’ changing needs. As of a result of this focus, our disc publishing products performed well in 2011. Excluding a one-time $9.3 million retail transaction in 2010, Disc Publishing revenues grew 3% in 2011. Recurring revenues increased 7% year over year, driven by higher consumables sales and strong growth in maintenance fees. We saw good traction from our efforts to generate new sources of disc publishing revenue utilizing our surveillance and evidence management solutions that generated more than $4 million in revenue from several government agencies and other customers during the year. In 2012, we will continue our sales efforts on replacement of retiring systems, expanding our business in China and growing our evidence management product revenue."

"During 2011, we were also focused on new product lines beyond disc publishing that would be better aligned to market dynamics and enable future growth for Rimage. Our acquisition of Qumu and our internal development efforts allow us to enter 2012 with the building blocks that we believe will position us well to respond to our customers’ emerging requirements related to content security, administrative control, mobility and further penetration of video in the enterprise. Through the combination of Rimage disc publishing, Qumu enterprise video communications products and our internally developed online publishing solution, we are able to offer a unique product set that will allow customers to capture, organize and securely publish content to disc, PCs, tablets and smart phones. During 2012, we will be working to integrate these products to offer a collaborative, multimedia content management and delivery solution that works with most IT infrastructures. To drive momentum, we plan to expand our software sales force, both in the U.S. and international markets, to drive sales of these unique solutions. Customer reception to our new product offerings continues to be very positive and we are excited about the potential for growth," Black concluded.

On February 21, 2012, the company’s Board of Directors approved a $0.17 per share quarterly cash dividend, payable on March 20, 2012, to shareholders of record on March 5, 2012. Based on the current stock price, this dividend represents a 6% yield. For the full year 2011, the company paid out $4.6 million in dividends.

During the fourth quarter, the company repurchased 166,000 shares. For the full year 2011, share repurchases totaled 459,000. There are 347,000 shares remaining under the current share repurchase authorization. The company paid out $1.9 million in the fourth quarter and $6.0 million for full year 2011 for share repurchases.

Financial Guidance
For the first quarter 2012, the company expects revenues of between $19 and $21 million and the net loss per share is expected to be between $(0.17) and $(0.19). Excluding amortization of Qumu intangibles, non-GAAP net loss per share is expected to be between $(0.14) and $(0.16). For the full year 2012, the company expects low double digit revenue growth overall. Disc publishing revenues are expected to decline in the low single digits, and Qumu revenues and contracted commitments are expected to grow significantly from 2011. The company defines contracted commitments as the dollar value of signed customer purchase commitments. In addition the company expects to generate cash flow from operations at approximately the same level as 2011.

The company also expects to continue to return cash to shareholders in 2012. The company anticipates 2012 dividend payments of approximately $7 million. In addition, the company has more than 347,000 shares still available to be repurchased under its existing authorization.