Wireless Ronin Technologies' CEO Discusses Q4 2011 Results - Conference Call Transcript

Wireless Ronin Technologies, Inc. ( RNIN)

Q4 2011 Earnings Call

March 8, 2012 4:30 p.m. ET

Executives

Brenda Seiler – Marketing Communications

Scott Koller - President and Chief Executive Officer

Darin McAreavey - Senior Vice President and Chief Financial Officer

Analysts

Nick Mara - Sidoti & Company

Ty Lilga - Feltl & Company

Don McKiernan - Landolt Securities

Tom Pierce - Feltl & Company

Presentation

Operator

Good afternoon. Welcome to Wireless Ronin Technologies’ Fiscal 2011 Year End Earnings Call. My name is Craig and I will be your conference this afternoon. Before we begin today’s call, I would like to remind everyone that this call will be available for replay through April 8, 2012 starting later this evening. A webcast replay of this will also be available via the link provided in today’s press release as well as available on the Company’s website at www.wirelessronin.com.

I would now like to turn the call over to Brenda Seiler, Wireless Ronin’s Marketing Communications. Brenda?

Brenda Seiler

Thank you and welcome, everyone, to Wireless Ronin’s Fiscal 2011 Year End Earnings Call. With me today are Scott Koller, President and CEO, and Darin McAreavey, Senior Vice President and CFO.

Following Scott’s opening remarks Darin will review our financial performance for the year and turn the call back over to Scott for operational update, then we will open up the call to your questions. To access today’s webcast, please go to the Investors section of our corporate website at www.wirelessronin.com.

Please note that the information presented and discussed today includes forward-looking statements made under the Safe Harbor provision of The Private Securities Litigation Reform Act of 1995. Our actual results in future periods may differ materially and you should not attribute undue certainties to our forward-looking statements. Risk and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements, including those set forth in the Risk Factors section of the annual report of Form 10-K we filed on March 22, 2011.

In addition, our comments may contain certain non-GAAP financial measures including non-GAAP operating loss per share. For additional information, including reconciliation from GAAP results to non-GAAP measures, how the non-GAAP measures provides useful information and why we use non-GAAP measures, please see the Reconciliation section of our press release, which appears on our website at www.wirelessronin.com.

Now, I’ll turn the call over to our President and CEO, Scott Koller. Scott?

Scott Koller

Thank you, Brenda. Good afternoon, everyone, and thank you for joining us on today’s call to discuss our fiscal 2011 results. 2011 was an exciting year for Wireless Ronin and marked our third consecutive year of revenue growth. It also marked a year of transformation for Wireless Ronin. With a stronger more diversified technology offering and a stronger executive team and board of directors, I believe we have laid the foundation for a successful 2012.

But before I comment further, I’d like to turn the call over to our CFO, Darin McAreavey, who will walk you through the financial results. Afterward, I will talk about operational highlights and business outlook.

Darin?

Darin McAvearey

Thanks, Scott, and good afternoon, everyone. Revenue for 2011 increased 8% to a record $9.3 million from 2010. The increase was primarily attributable to Chrysler’s deployments of our iShowroom-branded tower application into Chrysler and Fiat dealerships. Since the inception of the program, we have now received orders for 578 dealerships. We believe that Chrysler will continue to roll out additional interactive kiosks between the iShowroom application with further dealership adoption of 2012.

Total revenue generated at 2011 from Chrysler and Fiat dealerships was up 28% to $5.1 million from 2010. Revenue in 2011 was also driven by orders from ARAMARK, which were up 48% to $1.7 million from 2010. We continue to expand the number of grow-work installations with several new colleges and universities. Upon the completion, the installation for orders received through December 31, 2011, the total number of ARAMARK locations being managed through our network increased more than 175% to approximately 250 sites compared to 90 sites at the end of 2010.

Recurring revenue for 2011 increased 23% to a record $1.6 million or 17% of total revenue as compared to $1.3 million or 15% of total revenue in 2010. At the end of the fourth quarter we had a total of $1.3 million of purchase orders for which revenue will be recognized in future quarters. Gross margin of 2011 was 44% as compared to 47% in the prior year. The decrease was primarily due to hardware and software sales mix. We believe our gross margin percentage will increase as our recurring revenue continues to grow.

Our 2011 net loss totaled $6.7 million or $0.34 per basic and diluted share, an improvement from a net loss $7.9 million or $0.44 per basic and diluted share in 2010. During 2011 net loss included $740,000 of non-cash stock compensation expense compared to $868,000 in 2010.

For 2011 non-GAAP, operating loss totaled $5.5 million or $0.28 per basic and diluted share, an improvement from a loss of $6.3 million or $0.35 per basic and diluted share in 2010. It is also important to note fiscal 2011 marked our lowest level of cash burn in the Company's history since our IPO in 2006.

Now, turning to the balance sheet; our networking capital position was $5 million at the end of the fourth quarter compared to $3.3 million in the prior quarter. The increase was due to the $3.3 million financing we closed on December 12, 2011. This completes my financial summary.

For a more detailed and complete analysis of our financial results, I would like to direct everyone to our Form 10-K, which we expect to file on March 31, 2012 and will be available at www.sec.gov as well as our website and I'm also happy to answer any questions you have during the Q&A session of today's presentation.

Now, for an overview of our operational activity and developments, I'd like to turn the call back over to Scott. Scott?

Scott Koller

Thank you for the financial overview, Darin. 2011 was a transformative year for Wireless Ronin. From an operation perspective we achieved year-over-year revenue growth. Launched a new strategic plan with our marketing technologies portfolio products, enhanced our executive team and board of directors, developed strategic industry relationships and further penetrated our key verticals.

In 2011 we transitioned from a digital signage company to a marketing technologies company by taking a comprehensive approach, bringing together digital signage, interact kiosks, mobile, social media and web to provide our clients with solutions that drive customer experience while delivering the business intelligence and data analytics required to measure success.

These measurements drive affective business decisions that impact both top line results and bottom line margins. Our focus is to maximize the profitability of in-person interactions and to extend the customers' relationship with our clients in order to increase the number and profitability of these interactions. We received strong validation for our approach in 2011 giving us confidence that the strategic direction we have taken will differentiate Wireless Ronin and align our solutions with our clients' marketing technology needs. With this new strategic direction is beginning to generate success.

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