RMG Networks’ Q4 And Year End 2015 Results
Gail Chiasson, North American Editor
Dallas-based RMG Networks Holding Corporation (RMG Networks) reported the first positive quarterly EBITDA in over two years as part of it Q4 and full year 2015 financial results released today, March 10/16.
Highlights of the report included:
- EBITDA of $0.5M, first positive quarterly EBITDA since 2013;
- Total revenues of $11.8 million increased 15% sequentially;
- Product revenues increased 42% sequentially;
- Operating expenses decreased 17% sequentially;
- Awarded Top 20 Promising Supply Chain Solution Provider by CIOReview;
- Awarded second phase of new in-store digital signage deployment for one of RMG Networks’ largest retail development projects.
“During the fourth quarter, we reached a significant milestone for the company, delivering positive EBITDA for the first quarter since 2013,” said Robert Michelson, CEO. “This positive achievement provides the strongest evidence yet that our strategic plan is working. 2015 was a very productive year, we enhanced our leadership team, strengthened our balance sheet, innovated our product portfolio, refined our solution area focus, divested our Media business and improved effectiveness and productivity throughout the organization. In parallel, we substantially reduced our operating expenses, resulting in a cost structure that we believe can support profitable growth in the future.
“As a result of solid execution against the first full year of our strategic plan, we enter 2016 with a more sustainable model and well-positioned for growth and profitability. We are encouraged by our strong sales pipeline, as a result of a broader suite of innovative solutions and an increasingly efficient/effective sales organization. We look forward to leveraging the operational and strategic progress we made in 2015, as we continue to progress toward delivering long-term growth and sustainable profitability.”
Financial results from RMG Networks’ Airline Media Networks business have been excluded from continuing operations and are reported as discontinued operations in the Consolidated Statement of Comprehensive Loss, due to the completion of the sale of this business on July 1, 2015. Prior year results have also been adjusted to report this business as discontinued operations. As a result, the financial results below reflect the Enterprise business at RMG Networks, reported as continuing operations.
Total revenues in Q4, 2015, were $11.8 million, up 15.3% from Q3, 2015. Product sales revenue of $6.3 million increased 41.7% from $4.4 million in the third quarter of 2015, driven by improved sales eexecution during the quarter.
Total revenues of $11.8 million represented a decrease of 9.5% from $13.0 million of adjusted revenues in the fourth quarter of 2014, resulting primarily from a large sale that occurred in the fourth quarter of 2014. Maintenance revenue was also lower, resulting from the decision in 2014 to proactively “end-of-life” maintenance services on certain products.
Gross margin of 51.8% was up from an adjusted gross margin of 45.3% in the fourth quarter of 2014, due primarily to a $1 million write-off of obsolete inventory in the fourth quarter of 2014.
Operating expenses, excluding depreciation, amortization and stock-based compensation expenses, declined to $5.6 million in the fourth quarter of 2015 from adjusted operating expenses6 of $7.7 million in the fourth quarter of 2014, resulting from continued efforts to reduce the company’s overall cost structure.
EBITDA of $0.5 million improved from an adjusted EBITDA loss of $1.8 million in the fourth quarter of 2014.
Total reported revenue for Q4, 2015, was $11.8 million compared to total reported revenue of $12.8 million for the same quarter last year.
Looking at the full 2015 year ended December 31, 2015, total reported revenue for the year ended December 31, 2015, was $40.6 million compared to total reported revenue of $40.0 million for the prior year. Operating loss for the year ended December 31, 2015 was $9.8 million compared to $48.1 million for the prior year.
“While the financial results for the fourth quarter demonstrate significant progress toward reaching our long-term goals, our business will continue to be impacted by typical seasonal patterns, which traditionally results in lower revenue levels during the first quarter of the year,” said Michelson. “We expect to continue demonstrating operational and financial progress in 2016 and with a focused sales strategy, productive sales organization, innovative new solutions and aligned cost structure, we believe we are on-track to delivering long-term revenue growth and sustainable positive EBITDA.”
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