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8-K - FORM 8-K - CREATIVE REALITIES, INC.d490391d8k.htm

Exhibit 99

 

LOGO

 

5929 Baker Road, Suite 475

Minneapolis, MN 55345

 

Phone: 952.564.3500

Fax: 952.974.7887

Wireless Ronin Reports Fourth Quarter and Full Year 2012 Results

MINNEAPOLIS – February 26, 2013 – Wireless Ronin Technologies, Inc. (NASDAQ: RNIN), a leading digital marketing technologies solutions provider, reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

2012 Financial Highlights

 

 

Revenue was $6.7 million, with the recurring revenue portion increasing 22% to a record $2.0 million

 

 

Record gross margin at 55% of total revenue

 

 

Achieved lowest level of operating expenses since becoming a public company

2012 Operational Highlights

 

 

Deployed digital marketing solutions for Buffalo Wild Wings, Boston University, Villanova University, Burgerville and ECOtality

 

 

Received additional order for content development from company’s largest automotive customer

 

 

Released RoninCast® software upgrade which extends multi-channel capabilities

 

 

Rolled-out iPad-supported interactive sales system for national retailer

Q4 2012 Financial Results

Revenue in the fourth quarter of 2012 increased 5% to $1.6 million from $1.5 million in the same year-ago period.

Recurring revenue in the fourth quarter of 2012 from the company’s hosting and support services was $491,000 or 31% of total revenue compared to $422,000 or 28% of total revenue in the same year-ago quarter. The increase was driven by a continued expansion of support services through the company’s network operations center.

Gross margin in the fourth quarter of 2012 was $885,000 or 55% of total revenue compared to $446,000 or 29% of total revenue in the same year-ago quarter. The gross margin percentage improvement was due to a higher proportion of marketing technology solutions and services versus hardware sales.

Net loss in the fourth quarter of 2012 totaled $1.2 million or $(0.24) per basic and diluted share, an improvement from a net loss of $1.7 million or $(0.41) per basic and diluted share in Q4 2011. Net loss for the fourth quarter of 2012 included $80,000 of non-cash stock compensation expense versus $48,000 in the fourth quarter of 2011.

Non-GAAP operating loss in the fourth quarter of 2012 totaled $1.0 million or $(0.21) per basic and diluted share, an improvement from a non-GAAP operating loss of $1.5 million or $(0.37) per basic and diluted share in Q4 2011. The company defines non-GAAP operating loss as GAAP operating loss less stock-based compensation expense, depreciation and amortization, and severance expense (see further discussion of this non-GAAP term as well as a reconciliation to GAAP operating loss, below).

Full Year 2012 Financial Results

Revenue in 2012 was $6.7 million compared to $9.3 million in 2011. The decrease was primarily attributable to fewer hardware orders offset by an increase in sales of the company’s marketing technology solutions and services.


Recurring revenue in 2012 increased 22% to a record $2.0 million or 30% of total revenue as compared to $1.6 million or 17% of total revenue in 2011. The increase was driven by a continued expansion of support services through the company’s network operations center.

Gross margin in 2012 was $3.7 million or 55% of total revenue compared to $4.1 million or 44% of total revenue in 2011. The gross margin percentage improvement was due to a higher proportion of marketing technology solutions and services versus hardware sales.

Net loss in 2012 totaled $5.4 million or $(1.14) per basic and diluted share, an improvement from a net loss of $6.7 million or $(1.72) per basic and diluted share in 2011. Net loss for the full year of 2012 included $484,000 of non-cash stock compensation expense compared to $740,000 in 2011.

Non-GAAP operating loss in 2012 totaled $4.5 million or $(0.95) per basic and diluted share, an improvement from a non-GAAP operating loss of $5.5 million or $(1.40) per basic and diluted share in 2011.

Management Commentary

“In 2012, we made significant progress advancing our RoninCast software platform and diversifying our sales pipeline, while effectively managing costs and improving operational efficiencies,” said Scott Koller, president and CEO of Wireless Ronin. “This was evident from the several milestones we achieved for the year, including record recurring revenue, our highest gross margin and our lowest operating expense level as a public company.

“During 2012, we continued to grow our customer base and marketing technology offerings with major new wins in the QSR and food service verticals, including Buffalo Wild Wings, Boston University, Villanova and Burgerville. Additionally, in the current quarter, we were selected by an international food service provider with more than 2,000 franchised locations to supply the company’s digital menu board and marketing technology systems and services. The food service provider will market and sell the company’s digital menu board and promotional board systems to its existing franchised locations, and plans to require new franchisees to install the company’s digital menu board and promotional board systems. The food service company anticipates approximately 300 new franchised locations will open in 2013. A key driver in securing this major win was our recently released RoninCast 4.0 software platform, which ensures consistent messaging, brand positioning and advertising compliance across a network of nationwide locations. As more locations deploy our interactive media technology, we are highly confident in our ability to enhance their customer experience, increase customer loyalty and drive new business.

“Our expectations for the New Year remain strong as we build on the operational and financial momentum we achieved in 2012 due to our robust pipeline of new opportunities, deployments in progress, and contracts signed.”

Conference Call

The company will hold a conference call today (February 26, 2013) to discuss these results. The company’s president and CEO, Scott Koller, and SVP and CFO, Darin McAreavey, will host the call starting at 4:30 p.m. Eastern time (3:30 p.m. Central time). A question and answer session will follow management’s 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: 1-877-941-2068

International: 1-480-629-9712

Conference ID#: 4592351


 

 

The presentation will be webcast live and available for replay via the Investors section of the company’s 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 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time on the same day and until March 26, 2013.

Toll-Free Replay Number: 1-877-870-5176

International Replay Number: 1-858-384-5517

Replay PIN #: 4592351

About Wireless Ronin Technologies, Inc.

Wireless Ronin Technologies, Inc. (WRT) (www.wirelessronin.com) is a pioneering marketing technologies company. WRT combines interactive digital media — signage, kiosks, mobile, social media and web — to create 360-degree solutions so companies can “communicate at life speed” to deliver the right content at the right place at the right time. WRT’s turnkey approach includes strategic consulting, creative development, installation, hosting, training and support. Since launching its cloud-based RoninCast® content management platform in 2003, WRT has become the leading digital marketing provider for large-scale deployments in retail, automotive, food service and public venues. The company is headquartered in Minneapolis, Minnesota; it’s common stock trades on the NASDAQ as RNIN.

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. 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 company’s 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, our senior management’s 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 the impact of our performance on earnings from the impact of our performance 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 Management’s 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. Because these events are unplanned and arise outside the ordinary course of continuing operations, 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.

2012 SUPPLEMENTARY QUARTERLY FINANCIAL DATA

(In thousands, except percentages and per share amounts)

(Unaudited)

Supplementary Data

 

    2011     2012  
    Q1     Q2     Q3     Q4     TOTAL     Q1     Q2     Q3     Q4     TOTAL  
Statement of Operations                    

Sales

  $ 2,397      $ 3,054      $ 2,301      $ 1,522      $ 9,274      $ 1,773      $ 1,557      $ 1,769      $ 1,605      $ 6,704   

Cost of sales—exclusive of depreciation and amortization

    1,304        1,662        1,166        1,076        5,208        824        612        873        720        3,029   

Operating expenses

    3,350        2,824        2,509        2,095        10,778        2,773        2,151        2,075        2,075        9,074   

Interest expense

    11        7        6        6        30        5        1        1        1        8   

Other income, net

    (2     (1     —          (1     (4     (1     0        0        0        (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (2,266   $ (1,438   $ (1,380   $ (1,654   $ (6,738   $ (1,828   $ (1,207   $ (1,180   $ (1,191   $ (5,406
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share based payment expense
(included in operating expenses & interest expense)

    353        180        173        55        761        349        132        111        84        676   

Weighted average shares

    3,855        3,879        3,899        4,050        3,920        4,603        4,626        4,685        4,992        4,732   

Reconciliation Between GAAP and Non-GAAP Operating Loss

  

GAAP operating loss

  $ (2,257   $ (1,432   $ (1,374   $ (1,649   $ (6,712   $ (1,824   $ (1,206   $ (1,179   $ (1,190   $ (5,399

Adjustments:

                   

Depreciation and amortization

    144        122        111        90        467        80        75        68        63        286   

Stock-based compensation expense

    345        178        169        48        740        161        132        111        80        484   

Severance

    —          —          —          —          —          137        —          —          —          137   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense adjustment

    489        300        280        138        1,207        378        207        179        143        907   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating loss

  $ (1,768   $ (1,132   $ (1,094   $ (1,511   $ (5,505   $ (1,446   $ (999   $ (1,000   $ (1,047   $ (4,492
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating loss per common share

  $ (0.46   $ (0.29   $ (0.28   $ (0.37   $ (1.40   $ (0.31   $ (0.22   $ (0.21   $ (0.21   $ (0.95

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 management’s 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: the adequacy of funds for future operations; 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 cautionary statement set forth in the company’s current report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2013.

Company Contact:

Darin P. McAreavey

Senior Vice President and Chief Financial Officer

dmcareavey@wirelessronin.com

952-564-3525


 

 

Investor Relations Contact:

Matt Glover or Michael Koehler

Liolios Group, Inc.

RNIN@liolios.com

949-574-3860


 

 

WIRELESS RONIN TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

 

     December 31,     December 31,  
     2012     2011  
ASSETS     

CURRENT ASSETS

    

Cash and cash equivalents

   $ 2,252      $ 5,478   

Accounts receivable, net of allowance of $49 and $50

     1,358        1,347   

Inventories

     158        170   

Prepaid expenses and other current assets

     111        193   
  

 

 

   

 

 

 

Total current assets

     3,879        7,188   

Property and equipment, net

     415        651   

Restricted cash

     50        50   

Other assets

     20        40   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 4,364      $ 7,929   
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY     

CURRENT LIABILITIES

    

Current maturities of capital lease obligations

   $ —        $ 41   

Line of credit—bank

     400        —     

Accounts payable

     584        870   

Deferred revenue

     596        687   

Accrued liabilities

     527        569   
  

 

 

   

 

 

 

Total current liabilities

     2,107        2,167   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY

    

Capital stock, $0.01 par value, 26,667 shares authorized

    

Preferred stock, 16,667 shares authorized, no shares issued and outstanding as of December 31, 2012 and December 31, 2011

     —          —     

Common stock, 10,000 shares authorized; 5,004 and 4,594 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively

     50        46   

Additional paid-in capital

     97,128        95,231   

Accumulated deficit

     (94,422     (89,016

Accumulated other comprehensive loss

     (499     (499
  

 

 

   

 

 

 

Total shareholders’ equity

     2,257        5,762   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 4,364      $ 7,929   
  

 

 

   

 

 

 


 

 

WIRELESS RONIN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  
     (unaudited)     (unaudited)     (audited)     (audited)  

Sales

        

Hardware

   $ 394      $ 358      $ 1,540      $ 3,845   

Software

     44        88        339        1,150   

Services and other

     1,167        1,076        4,825        4,279   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total sales

     1,605        1,522        6,704        9,274   

Cost of sales

        

Hardware

     236        340        943        2,704   

Software

     2        17        67        141   

Services and other

     482        719        2,019        2,363   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of sales (exclusive of depreciation and amortization shown separately below)

     720        1,076        3,029        5,208   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit (exclusive of depreciation and amortization shown separately below)

     885        446        3,675        4,066   

Operating expenses:

        

Sales and marketing expenses

     353        382        1,550        2,090   

Research and development expenses

     378        368        1,795        2,116   

General and administrative expenses

     1,281        1,255        5,443        6,105   

Depreciation and amortization expense

     63        90        286        467   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     2,075        2,095        9,074        10,778   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (1,190     (1,649     (5,399     (6,712

Other income (expenses):

        

Interest expense

     (1     (6     (8     (30

Interest income

     —          1        1        4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other loss

     (1     (5     (7     (26
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (1,191   $ (1,654   $ (5,406   $ (6,738
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per common share

   $ (0.24   $ (0.41   $ (1.14   $ (1.72
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted weighted average shares outstanding

     4,992        4,050        4,732        3,920