Rimage: Fiscal 1Q12 Financial Results

Rimage Corporation reported its financial results for the first quarter ended March 31, 2012.

First quarter 2012 revenues totaled $19.5 million, in line with guidance, and down 9% compared with $21.5 million in revenues in the first quarter of 2011. The decrease reflected lower revenues from disc publishing, partially offset by revenues from Qumu, acquired on October 10, 2011.

Qumu revenues totaled $1.4 million in the first quarter. During the quarter, the company took steps to drive sales momentum of Qumu products, focusing on execution and lead generation.

Revenues for disc publishing were $18.1 million in the recent first quarter, a decrease of 16% from the first quarter of 2011. The decline was driven primarily by a decrease in sales of consumables and soft European performance. The decline in consumables was affected by the comparison against a particularly strong quarter last year which reflected stocking by customers concerned with supply disruptions caused by the Japan tsunami and the impact from a large retail hardware order in 2010 that expanded the company’s presence in the market. In addition, retailers have reduced their consumables inventories in 2012 due to lower consumer demand.

Gross margin for the recent first quarter was 49% compared with 50% in the same quarter last year. Operating expenses in the quarter increased to $12.5 million from $8.5 million in the comparable quarter last year, largely attributable to the addition of expenses associated with Qumu.

The net loss for the 2012 first quarter was $1.7 million, or $(0.17) per share. This compares with net income of $1.5 million in the first quarter of 2011, or $0.16 per diluted share. Excluding the amortization of intangibles associated with Qumu, the net loss per share was $(0.14) in the recent first quarter.

Cash and investments totaled $67 million at March 31, 2012 compared with $70 million at December 31, 2011. During the first quarter, the company paid out $1.7 million in dividends.

Sherman L. Black, president and CEO, said: "The quarterly performance met our financial guidance and was characterized by a decline in disc publishing revenues, partially offset by the contribution from Qumu. While lower sales to the retail sector and weakness in Europe were the primary factors in the decrease in disc publishing, we generated growth in other areas, specifically law enforcement applications and our business in AsiaPac.

"Rimage achieved another key milestone in its transformation with the recent introduction of our Signal Online Publishing product, an easy to use platform designed to push secure content to nearly any tablet or computer. With Signal, companies can publish content directly to their employees, partners, suppliers, and customers while applying security and usage policies that effectively manage its distribution, even when it is resident on subscribers’ devices and disconnected from the Internet. The response from our product introduction has been very encouraging, and we expect to begin to generate revenues from Signal during the second half of 2012, with the initial sales focus on helping customers deliver pre-release content for media and entertainment and on securing business content to tablets for corporations."

"While Qumu sales in the quarter were below the expectations we established in October when we acquired the business, we remain confident about its market opportunity, its products and the team. During the first quarter, we revitalized Qumu’s marketing campaigns, increased sales resources to generate and qualify leads, and expanded our presence in Europe. The Qumu product development team continues to focus on industry-leading enhancements, resulting in the recent introduction of Pathfinder, a patent pending technology that guarantees all users of streaming video receive a quality viewing experience regardless of their location or device. With the establishment of our three platforms, Qumu, Signal and Rimage disc publishing, we believe Rimage is uniquely well positioned to offer a comprehensive solution to enterprises worldwide to address their need to manage and distribute content reliably and efficiently across the spectrum of devices, including tablets, smartphones, and PCs," concluded Black.

On April 24, 2012, the company’s Board of Directors approved a $0.17 per share quarterly cash dividend, payable on June 15, 2012, to shareholders of record on May 31, 2012. Based on the current stock price, this dividend represents a 7% yield. During the first quarter, the company paid out $1.7 million in dividends. It made no share repurchases during the first quarter, but has been opportunistically buying shares in the second quarter.

Financial Guidance
For the second quarter 2012, the company expects revenues of between $19 and $21 million and the net loss per share is expected to be between $(0.15) and $(0.17). Excluding amortization of Qumu intangibles, non-GAAP net loss per share is expected to be between $(0.12) and $(0.14). For the full year 2012, the company expects revenue growth overall with disc publishing revenues expected to decline in the low single digits, and Qumu contracted commitments 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 levels slightly below 2011.

The company also expects to continue to return cash to shareholders in 2012. It anticipates 2012 dividend payments of approximately $7 million. In addition, as of March 31, 2012, it had more than 347,000 shares available to be repurchased under its existing authorization.