RDL Redline Communications Group Inc

TORONTO, May 6, 2015 /CNW/ - Redline Communications (www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of mission-critical networks, today announced unaudited operating results¹ for the three months ended March 31, 2015 (Q1 2015).

Q1 2015 Financial Highlights

• $9.6M Revenue, up 36%
• 61% Gross Margin
• $1.3M Adjusted EBITDA²
• $1.1M Net Profit
• $15.3M Cash
• $6.1M new Order Bookings²
• $13.3M Order Backlog²

Total revenue for Q1 2015 was $9.6 million, up 36% over the same period in 2014 driven by an increase in the number of large oil and gas network deployments that occurred in the quarter.

Overall operating expenses were $4.8 million for Q1 2015, up 13% over the $4.3 million for the same period last year. The increase is primarily the result of higher compensation costs associated with an increase of staff associated with our LTE development.  The increase was offset by a $0.3 million decrease in overall costs associated with the year over year improvement of the U.S. dollar as compared with the Canadian dollar. Overall gross margin for Q1 2015 was 61%, consistent with the 61% reported in the same period in 2014.

Adjusted EBITDA for Q1 2015 was $1.3 million or 14% of revenue, an increase of $1.1 million over the Adjusted EBITDA of $0.2 million or 2.8% of revenue reported in the same period in 2014. The difference can be largely attributed to increased revenue.

"Redline delivered strong year-over-year revenue growth this quarter", said George Kypreos, Redline CFO.  "That revenue growth, our ongoing operating expense management, and our strong gross margins have also combined to produce a much improved EBITDA."

Net profit for Q1 2015 was $1.1 million or $0.06 per share, a $0.5 million improvement over the net profit of $0.6 million, or ($0.04) per share reported in the same period in 2014.  As of March 31, 2015 the Company ended the quarter with $15.3 million of cash, a decrease of $1.1 million over the $16.4 million as at December 31, 2014. The decrease was largely attributable to working capital requirements.

Order Bookings for the three months ended March 31, 2015 were $6.1 million, down 31% over the same period in 2014.  The Order Backlog at March 21, 2015 was a healthy $13.3 million.

"In Q1 we received orders from customers in all markets including expansion orders from several of our energy sector clients in South America and the Middle East, and more recently our first order for our new LTE product" said Robert Williams, Redline CEO. "Interest in Redline systems continues to be strong across the globe and across all markets but ongoing turmoil in the US energy sector has delayed decision-making for new networks in several customer organizations. While this has affected our US bookings in the quarter, we currently don't anticipate any long-term impact from this shift."

In addition to Order Bookings, Redline tracks pilot projects in the Energy sector as a leading indicator of future Order Bookings for this sector. The Company added 4 new pilot projects in Q1 2015 bringing the total of ongoing oil and gas pilot programs to 27, up from 15 at this time in 2014. These projects vary in size and scope and give prospective customers the opportunity to evaluate Redline's solutions in a real field setting.

The Company had 17,035,460 common shares outstanding as of March 31, 2015.

Conference Call and Webcast – May 7th, 2015 at 10:00 a.m. ET

A conference call and webcast to discuss the Company's financial results have been scheduled for May 7, 2015 at 10:00 a.m. Eastern Time. To participate in the call, please dial 1-647-427-7450 approximately 10 minutes before the conference call, and provide passcode 37760454. A recorded webcast of the call will be available on Redline's website at http://www.rdlcom.com/en/about/investors/webcasts through July 31, 2015.

About Redline Communications

Redline Communications (www.rdlcom.com) is the creator of powerful wide-area wireless networks for the most challenging applications and locations. Used by oil and gas companies to manage their assets, militaries for secure battlefield communications, municipalities to remotely monitor highways, utilities and other infrastructures, and telecom service providers to deliver premium services, Redline's powerful and versatile networks reliably and securely deliver voice, data, M2M and video communications for mission-critical applications.

For more information visit www.rdlcom.com.

Forward Looking Statements
Certain statements in this release may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws.  In some cases, forward-looking statements can be identified by terms such as "could", "expect", "may", "will", "anticipate", "believe", "intend", "estimate", "plan", "potential", "project" or other expressions concerning matters that are not historical facts.  Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements, by their nature, are based on certain assumptions regarding expected growth, management's current plans, estimates, projections, beliefs, opinions and business prospects and opportunities (collectively, the "Assumptions").  While the Company considers these Assumptions to be reasonable, based on the information currently available, they may prove to be incorrect.

Many risks, uncertainties and other factors could cause the actual results of Redline to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include but are not limited to the following: significant competition, competitive pricing practices, cautious capital spending by customers, industry consolidations, rapidly changing technologies, evolving industry standards, frequent new product introductions, short product life cycles and other trends and industry characteristics affecting the telecommunications industry; any material, adverse affects on Redline's performance if its expectations regarding market demand for particular products prove to be wrong; any negative developments associated with Redline's suppliers and contract manufacturing agreements including the Company's reliance on certain suppliers for key components; potential penalties, damages or cancelled customer contracts from failure to meet delivery and installation deadlines and any defects or errors in Redline's current or planned products; fluctuations in foreign currency exchange rates; potential higher operational and financial risks associated with Redline's efforts to expand internationally; a failure to protect Redline's intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the wireless industry or other aspects of the industry; any failure to successfully operate or integrate strategic acquisitions, or failure to consummate or succeed with strategic alliances; and Redline's potential inability to attract or retain the personnel necessary to achieve its business objectives or to maintain an effective risk management strategy (collectively, the "Risks").

For additional information on these Risks, see Redline's most recently filed Annual Information Form ("AIF") and Annual MD&A, which are available on SEDAR at www.sedar.com and on the Company's website at www.redlinecommunications.com. Redline assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law. All forward looking statements contained in this release are expressly qualified in their entirety by this cautionary statement.

SOURCE Redline Communications Group Inc.