Route1 earns $199,000 in Q2

2016-08-11 11:16 ET - News Release

Mr. Tony Busseri reports

ROUTE1 REPORTS 2016 SECOND QUARTER FINANCIAL RESULTS

Route1 Inc. is releasing its second quarter and year-to-date (YTD) financial results for the period ended June 30, 2016.

                         REVENUE AND NET INCOME
                   (in thousands of Canadian dollars)

                               Second    First    Fourth    Third    Second
                              quarter  quarter   quarter  quarter   quarter
                              of 2016  of 2016   of 2015  of 2015   of 2015
Revenue                                                                     
Device                        $    51  $    69   $     9  $    42   $    50 
Services                        1,760    1,648     1,616    1,572     1,569 
Other                               1        1         0        0         1 
                              -------- --------  -------- --------  --------
Total revenue                   1,812    1,718     1,625    1,614     1,620 
Cost of revenue                   341      348       284      320       294 
                              -------- --------  -------- --------  --------
Gross profit                    1,471    1,370     1,341    1,294     1,326 
Operating expenses              1,299    1,332     1,189    1,170     1,198 
                              -------- --------  -------- --------  --------
Operating profit (1)              172       38       152      124       128 
Total other expenses               27     (304)      225      (22)     (472)
                              -------- --------  -------- --------  --------
Comprehensive net income      $   199     (266)  $   377  $   102   $  (344)
                              ======== ========  ======== ========  ========

(1) Operating profit is before stock-based compensation.

During the second quarter of 2016, Route1 realized growth in revenue from MobiKEY application software subscribers (recurring revenue). Revenue from services includes MobiKEY application software, the MobiNET (Defimnet) platform, and other appliance licensing or yearly maintenance. The net increase in MobiKEY application software subscribers primarily came from agencies and components within the U.S. Department of Defense and the U.S. Navy.

                         SERVICE REVENUE
        (in Canadian dollars, except number of subscribers)

                               Second    First    Fourth    Third    Second
                              quarter  quarter   quarter  quarter   quarter
                              of 2016  of 2016   of 2015  of 2015   of 2015
Closing number of                                                           
subscribers                    16,800   16,490    16,286   15,989    15,410
Revenue per                                                                 
subscriber                    $   383  $   367   $   361  $   362   $   353
                              -------  -------   -------  -------   -------
Subscriber revenue                                                          
(in thousands)                $ 1,591  $ 1,496   $ 1,467  $ 1,424   $ 1,346
Other services                                                              
revenue (in thousands)            169      152       149      148       223
                              -------  -------   -------  -------   -------
Total services                                                              
revenue (in thousands)        $ 1,760  $ 1,648   $ 1,616  $ 1,572   $ 1,569
                              =======  =======   =======  =======   =======

Earnings before interest, tax, depreciation and amortization (adjusted EBITDA) during the 2016 second quarter amounted to approximately $278,000, compared with $227,000 in the second quarter of 2015.

                    GROSS PROFIT AND ADJUSTED EBITDA
                 (in thousands of Canadian dollars)

                               Second    First    Fourth    Third    Second
                              quarter  quarter   quarter  quarter   quarter
                              of 2016  of 2016   of 2015  of 2015   of 2015

Gross profit                  $ 1,471  $ 1,370   $ 1,341  $ 1,294   $ 1,326
Adjusted EBITDA                   278      172       279      242       227
Amortization                      106      134       127      118        99
Operating profit before 
stock-based compensation          172       38       152      124       128

Route1 generated cash from operating activities of approximately $3.7-million during the second quarter of 2016, compared with cash generated of $2.6-million in the second quarter of 2015. As at June 30, 2016, the company had no bank debt and a cash balance of $3.7-million.

Route1's cash position is at its highest level during the second quarter of the fiscal year, as a direct result of the timing of annual enterprise user subscription renewal payments.

Share repurchase program

On Sept. 22, 2015, the company announced, with approval from the TSX Venture Exchange, its intention to make a normal course issuer bid (NCIB). The NCIB permits the company to purchase for cancellation up to 5 per cent of the common shares in the public float. The maximum number of shares allowed for repurchase is 18,262,570. Purchases under the NCIB commenced Sept. 27, 2015, and will end Sept. 26, 2016, or the date upon which the maximum number of common shares have been purchased by the company. As of Aug. 1, 2016, the company had purchased a total of 12,144,000 common shares under the NCIB.

Since the first NCIB was announced on Feb. 28, 2012, Route1 has repurchased a total of 35,813,200 of its common shares, representing 9.2 per cent of Route1's common shares outstanding as at Feb. 28, 2012.

As at Aug. 1, 2016, Route1 has 353,107,414 common shares outstanding.

Peter Chodos appointed as chief financial officer

Effective Aug. 29, 2016, Mr. Chodos will become Route1's executive vice-president and CFO. Mr. Chodos has been an independent member of Route1's board of directors since September, 2009, serving most recently as the company's chair of the compensation committee and as a member of the company's audit committee. He has over 35 years of experience in the capital markets, including private and public financings of debt and equity, as well as mergers, acquisitions and divestitures in Canada, the United States and the United Kingdom. Mr. Chodos was one of the founders of Lawrence Asset Management Inc. in late 2001, and left the firm in 2004, to co-found Mt. Auburn Capital Corp., where he engaged in structuring and distributing investment products for retail investors. He received his master of business administration degree from Harvard University and a bachelor of commerce degree from McGill University. Mr. Chodos is a chartered professional accountant and a chartered business valuator.

Concurrent with Mr. Chodos's appointment as Route1's CFO, Louis De Jong will join Route1's audit committee, Mark Boensel will take over the role of chair of the compensation committee and David Fraser will join the compensation committee. Mr. Chodos will continue to be a member of Route1's board of directors but will no longer serve as an independent director.

Tom Lieu has left Route1 to take on the role of CFO with Newzulu. Mr. Lieu performed exceptionally during his tenure with Route1 from April, 2012, to August, 2016, and the company's board of directors and management wish him success with his new career opportunity.

Business and product development highlights

Route1 provided a second quarter 2016 operations update through a news release issued on Aug. 3, 2016, which provided highlights on business and product development activities. The news release is archived on the company's website.

© 2016 Canjex Publishing Ltd. All rights reserved.