New director appointed to the board and
shareholder rights plan adopted
TORONTO, March 7, 2016 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL) ("Redline" or the
"Company"), the creator of powerful wide-area wireless networks for
mission-critical applications in challenging locations, today
announced operating results¹ for the three months (fourth quarter)
and the fiscal year ended December 31,
2015.
Financial highlights for the fiscal year ended December 31, 2015 include:
- Cash of $14.5 million as of
December 31, 2015, down $1.8 million over 2014
- Order Bookings² were $31.8
million, down 22% over 2014
- Revenues were $30.1 million, down
17% over 2014
- $17.8 million Order Backlog² at
December 31, 2015, up 2% over
2014
- 56% overall gross margin, unchanged from 2014
- Operating expenses were $18.5
million, up 1% over 2014
- Adjusted EBITDA loss² of $0.5
million, a decrease of $3.5
million over 2014
- EPS of ($0.10) compared to EPS of
$0.15 in 2014
Financial Review
Order Bookings for the fourth quarter and year ended
December 31, 2015 were $7.3 million and $31.8
million respectively, down 39% and 22% over the same periods
in 2014. Total recognized revenue for the fourth quarter and year
ended December 31, 2015 was
$5.1 million and $30.1 million, down 56% and 17% over the same
periods in 2014. The decreases in Order Bookings and total
recognized revenue can be largely attributed to reduced spending
from energy sector clients as a result of lower oil prices.
"Redline is continuing to develop business from non-energy
sector clients. With the recent hiring of an experienced vice
president of sales and marketing, the repositioning of our products
to be more attractive to the telecom service provider market and
the upcoming introduction of a new LTE-based product line, we are
confident that our revenues should grow," stated Rob Williams, Redline CEO. "We are already
seeing a shift in market mix with approximately 62% of 2015 order
bookings coming from the non-energy sector compared with 50% in
2014."
Overall gross margin for the fourth quarter and year ended
December 31, 2015 was 54% and 56%
respectively, up one percentage point and unchanged over the same
periods in 2014.
Overall operating expenses for the fourth quarter and year ended
December 31, 2015, were $4.2 million and $18.5
million, an improvement of 15% and an increase of 1%
respectively over the same periods in 2014.
Adjusted EBITDA loss for the fourth quarter and year ended
December 31, 2015 was $1.1 million and $0.5
million respectively, a decrease of $2.5 million and $3.5
million over the corresponding periods in 2014, directly
tied to lower revenues.
Net Loss for the fourth quarter of 2015 was $1.4 million, or ($0.08) per share as compared to a Net Profit of
$1.4 million, or $0.08 per share in the fourth quarter of 2014.
For the full year 2015, Redline reported a Net Loss of $1.8 million, or ($0.10) per share, as compared to a Net Profit of
$2.5 million, $0.15 per share in 2014.
At December 31st, 2015,
Redline held cash of $14.5 million,
down $1.8 million from the cash of
approximately $16.4 million at
December 31, 2014.
Changes in Directors
Redline announced today that Mr. Philippe deGaspé Beaubien III,
a founder and current chairman of the Company, will not be
seeking re-election at the upcoming annual general and special
meeting of the Company, which is expected to be held in
June 2016 (the "2016 AGM").
In light of Mr. deGaspé Beaubien's departure, Redline announced
that Mr. David J. Roberts was
appointed today to its board of directors. In addition, the Company
reached an agreement with a group of shareholders holding
approximately 46% of Redline's outstanding common shares, pursuant
to which Mr. Roberts will also be nominated at the 2016 AGM,
together with the current directors, other than Mr. deGaspé
Beaubien.
Mr. Roberts is currently Chief Investment Officer of Pender
Financial Group Corporation and has over 30 years of senior
operational and investment experience in the venture capital,
information technology, communications and life sciences sectors.
He has held various directorships in public and private companies
since 1983. He is currently Chairman of ActiveState Software Inc.
and a director of RDM Corporation (TSX: RC). Previously, Mr.
Roberts also served as Chairman, President and CEO of BasicGov
Systems, Inc., President & CEO and director of Santa Rosa
Resources Corp., a director of Pender Growth Fund (VCC) Inc.,
Chairman of Icron Technologies Corporation, Inc., and President
& CEO of PenderFund Capital Management Ltd. Mr. Roberts is a
graduate of University College London (B.Sc.).
"The demands of my other business interests require me to step
aside at this point in time. As one of the founders and largest
shareholder, I am confident in the remaining board members' ability
to direct the company and capitalize on the significant
opportunities that lie ahead for Redline", said Mr. Philippe
deGaspé Beaubien III.
The nominees for directors at the 2016 AGM will consist of
Messrs. Eric Demirian, Nizar Jaffer Somji, Robert Williams, John
Wilson and David J.
Roberts.
Adoption of Rights Plan
The Company also announced that its board of directors has
approved the adoption of a shareholder rights plan (the "Rights
Plan"), effective March 7, 2016. The
Rights Plan is subject to TSX acceptance. Although effective as of
today, the Rights Plan is subject to ratification by Redline's
shareholders within six months. Such approval will be sought at the
2016 AGM. If the shareholders do not ratify the Rights Plan at the
2016 AGM, the Rights Plan and all of the rights outstanding at the
time will terminate.
The primary objectives of the Rights Plan are to ensure that, in
the context of a bid for control of the Company through an
acquisition of shares of the Company, all shareholders have an
equal opportunity to participate in the bid and are given adequate
time to assess the bid. The Rights Plan is not intended to prevent
take-over bids that treat shareholders fairly and offer fair value,
and permits bids that meet certain requirements intended to protect
the interests of all shareholders.
Redline is not aware of any specific take-over bid for the
Company that has been made or is contemplated. The Rights Plan is
similar to plans adopted by other Canadian companies, with such
amendments to take into consideration National Instrument 62-104
Take-Over Bids and Issuer Bids, which is expected to come
into force in Ontario in May of
2016.
Under the terms of the Rights Plan, one right (a "Right") will
be issued by the Company in respect of each outstanding share. The
Rights issued under the Rights Plan become exercisable only if a
person acquires 20% or more of the shares of the Company without
complying with the "permitted bid" provisions of the Rights Plan or
without the approval of the Company's board. In this event, Rights
holders (other than the offeror, its affiliates, associates and
joint actors) can purchase shares of the Company at a substantial
discount to the prevailing market price at the time that the Rights
become exercisable.
"Permitted bids" under the Rights Plan must be made to all
holders of the Company's shares and must be open for acceptance for
a minimum of 105 days (which period may be reduced in certain
circumstances). If at the end of 105 days at least 50% of the
outstanding shares (other than those owned by the offeror, its
affiliates, associates and joint actors) have been tendered and not
withdrawn, the offeror may take up and pay for the shares but must
extend the bid for a further 10 days to allow other shareholders to
tender to the bid.
The description of the Rights Plan in this news release is
qualified in its entirety by the full text of the Rights Plan, a
copy of which is available under Redline's profile on SEDAR at
www.sedar.com.
Conference Call and Webcast – March
8th, 2016 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Tuesday March 8, 2016
at 10:00 a.m. Eastern Time. To
participate, please dial 1-647-427-7450 approximately 10 minutes
before the conference call, and provide passcode 50821851. A
recording of the call will be available through April 30, 2016 on Redline's website.
About Redline Communications
Redline Communications
(www.rdlcom.com) is the creator of powerful wide-area wireless
networks for mission-critical applications in challenging
locations. Redline networks are used by oil and gas companies to
manage onshore and offshore assets, by militaries for secure
battlefield communications, by municipalities to remotely monitor
infrastructure, and by telecom service providers to deliver premium
services. Hundreds of businesses worldwide rely on Redline to
engineer, plan and deliver ruggedized, secure and reliable networks
for their M2M, voice, data and video communications needs - in
locations that include the deserts of the Middle East, the rainforests of South America, and the frozen Alaskan slopes.
For more information visit www.rdlcom.com.
NOTES:
1
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All amounts reported
in this press release are in US dollars unless otherwise
stated.
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2
|
To better assess the
health and growth of the Redline's business, the Company reports on
several non-IFRS metrics, including "Orders or Bookings", "Shipped
or Shipments", "Backlog", "EBITDA", "Adjusted EDITDA","EPS
excluding the non-cash expense relating to the fair market
adjustment on the Debenture", and "Amortized Deferred Revenue".
Further information including definitions of these measures and a
reconciliation to their closest IFRS measures, if applicable, can
be found in the Company's Management Discussion and Analysis for
the three and twelve months ended December 31, 2015 ("Q4 and 2015
Year MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and twelve month
results ended December 31, 2015 can be found in the condensed
consolidated annual audited statement of financial position,
condensed consolidated annual audited statement of comprehensive
income, condensed consolidated annual audited statement of changes
in equity and condensed consolidated annual audited statement of
cash flows reproduced at the end of this press release. The
selected financial information included in this release is
qualified in its entirety by, and should be read together with the
Condensed Consolidated Audited Financial Statements of the Company
for the three and twelve months ended December 31, 2015 and the Q4
and 2015 Year MD&A.
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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 effects 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.