TORONTO, Nov. 2, 2016 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
mission-critical wireless networks, today announced unaudited
operating results¹ for the three months ended September 30, 2016 (Q3 2016).
Q3 2016 Financial Highlights
- $5.2M Total Revenue, up 4%
quarter over quarter
- 56% Gross Margin
- $0.9M Adjusted EBITDA² loss
- $1.2M Net Loss
- $10.6M Cash
- $4.2M new Order Bookings²
- $9.2M Order Backlog²
Total revenue for Q3 2016 was $5.2
million, up 4% over Q2 2016 and down 18% over the same
period last year as the Company continued to focus on
diversification of its market strategy given the ongoing softness
in the energy sector, historically the Company's largest
market.
Overall gross margin for Q3 2016 was 56%, up 7 percentage points
quarter over quarter, and up 9 percentage points over the same
period last year. The improvement in gross margin in Q3 2016 can be
largely attributed to reduced manufacturing costs and a favorable
shift in product mix in the quarter.
Overall operating expenses were $4.1
million for Q3 2016, down 18% quarter over quarter and down
10% over the same period last year. As part of the Company's
commitment to profitable operations, the Company has undertaken a
comprehensive right-sizing designed to reduce operating costs by
approximately $3.6 million annually
after a one-time charge of approximately $0.3 million to be taken in the fourth quarter of
2016. While the majority of this right-sizing program has been
implemented, the remaining cost reductions are expected to be
completed by the end of the year.
Slightly higher revenues, improved gross margins and lower
operating expenses in Q3 2016 led to a $1.3
million improvement in Adjusted EBITDA loss over Q2 2016.
The Adjusted EBITDA loss of $0.9
million in Q3 2016 was also an improvement of $0.4 million over the Adjusted EBITDA loss of
$1.3 million reported in the same
period last year.
"Redline continues to execute on its strategy of market
diversification supported by the ongoing development and marketing
of our LTE product line, introduced in August 2016," said Robert
Williams, Redline CEO. "We are encouraged by early
feedback on both elements of our strategy and particularly
from initial public safety pilots with LTE. When
combined with the positive cash flow we expect from our
right-sizing program, we believe that we are well positioned for
profitable growth."
Net loss for Q3 2016 was $1.2
million or ($0.07) per share,
an improvement of $1.3 million over
the net loss of $2.5 million or
($0.15) per share in Q2 2016, and an
improvement of $0.5 million over the
$1.7 million loss ($0.10) in the same period in 2015.
As of September 30, 2016 the
Company had a cash balance of $10.6
million, a decrease of approximately $0.5 million over the cash balance as at
June 30, 2016.
The Company had 17,215,469 common shares outstanding as of
September 30, 2016.
Conference Call – November 3rd,
2016 at 10:00 a.m. ET
A conference call to discuss the Company's financial results has
been scheduled for November
3rd, 2016 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 5651867. A recording of the call will be
available through November 11, 2016.
To listen to the rebroadcast please dial 1-416-849-0833 and enter
passcode 5651867.
A transcript of the call will be available via Redline's
website.
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,
public safety organizations to coordinate responses across
agencies, 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.
NOTES:
|
1
|
All amounts reported
in this press release are in US dollars unless otherwise
stated.
|
2
|
To better assess the
health and growth of the Redline's business, the Company reports on
several key metrics, including "Orders or Bookings", "Backlog",
"EBITDA", "Adjusted EBITDA", "EPS excluding the non-cash expense
relating to the fair market adjustment on financial instruments",
and "Amortized Deferred Revenue". Further information
including definitions of these categories can be found in the
Company's Management Discussion and Analysis for the three months
ended September 30, 2016 ("Q3 2016 MD&A"), copies of which are
available on SEDAR at www.sedar.com. Further details on the three
month results ended September 30, 2016 can be found in the
condensed consolidated interim statement of financial position,
condensed consolidated interim statement of comprehensive loss,
condensed consolidated interim statement of changes in equity and
condensed consolidated interim 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
Interim Financial Statements of the Company for the three months
ended September 30, 2016 and the Q3 2016 MD&A.
|
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.rdlcom.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.
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Financial Position
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
10,553,579
|
|
$
|
14,548,954
|
|
Trade
receivables
|
|
|
7,967,509
|
|
8,187,806
|
|
Other
receivables
|
|
|
604,773
|
|
466,668
|
|
Inventories
|
|
|
7,078,357
|
|
7,100,207
|
|
Prepaid expenses and
other deposits
|
|
|
320,161
|
|
266,578
|
|
|
|
|
26,524,379
|
|
30,570,213
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
1,235,166
|
|
1,389,727
|
|
Intangible
assets
|
|
|
1,625,430
|
|
1,974,672
|
|
Other
assets
|
|
|
80,486
|
|
64,755
|
|
|
|
|
2,941,082
|
|
3,429,154
|
Total
Assets
|
|
|
$
|
29,465,461
|
|
$
|
33,999,367
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
5,122,552
|
|
$
|
4,475,662
|
|
Income tax
payable
|
|
|
94,063
|
|
94,063
|
|
Deferred
revenue
|
|
|
819,727
|
|
1,534,731
|
|
Convertible debenture
(principal and interest)
|
|
|
-
|
|
224,595
|
|
Fair market value
adjustment on convertible debenture
|
|
|
-
|
|
11,817
|
|
Borrowings
|
|
|
798,739
|
|
2,833,752
|
|
|
|
|
6,835,081
|
|
9,174,620
|
Non-current
liabilities:
|
|
|
|
|
|
|
Borrowings
|
|
|
2,057,757
|
|
-
|
|
Other
payables
|
|
|
275,509
|
|
322,116
|
|
|
|
|
2,333,266
|
|
322,116
|
Total
Liabilities
|
|
|
9,168,347
|
|
9,496,736
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,662,177
|
Warrant
|
|
|
-
|
|
310,000
|
Contributed
surplus
|
|
|
8,950,735
|
|
8,457,415
|
Deficit
|
|
|
(161,582,962)
|
|
(156,926,961)
|
|
|
|
|
20,297,114
|
|
24,502,631
|
Total liabilities
and equity
|
|
|
$
|
29,465,461
|
|
$
|
33,999,367
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
5,209,736
|
|
$
|
6,368,540
|
|
$
|
16,431,949
|
|
$
|
24,994,234
|
Cost of
revenue
|
|
|
|
2,309,535
|
|
3,378,249
|
|
7,395,306
|
|
10,915,898
|
Gross
profit
|
|
|
|
2,900,201
|
|
2,990,291
|
|
9,036,643
|
|
14,078,336
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
703,902
|
|
938,985
|
|
2,275,254
|
|
2,329,310
|
|
Administration and
finance
|
|
|
|
1,228,582
|
|
1,249,466
|
|
4,683,001
|
|
4,384,587
|
|
Sales and
marketing
|
|
|
|
1,894,061
|
|
2,028,462
|
|
5,923,678
|
|
6,655,008
|
|
Operations and
customer support
|
|
|
|
267,126
|
|
344,978
|
|
836,502
|
|
975,035
|
|
|
|
|
|
4,093,671
|
|
4,561,891
|
|
13,718,435
|
|
14,343,940
|
Loss before
undernoted items
|
|
|
|
(1,193,470)
|
|
(1,571,600)
|
|
(4,681,792)
|
|
(265,604)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
|
22,887
|
|
28,652
|
|
(178,846)
|
|
83,583
|
|
Restructuring
costs
|
|
|
|
-
|
|
235,155
|
|
-
|
|
235,155
|
|
(Gain) loss on fair
market value of financial instruments
|
|
|
|
-
|
|
(40,008)
|
|
16,314
|
|
(37,532)
|
|
Foreign exchange
(gain) loss
|
|
|
|
(34,585)
|
|
(162,549)
|
|
108,313
|
|
(272,032)
|
|
|
|
|
|
(11,698)
|
|
61,250
|
|
(54,219)
|
|
9,174
|
Loss before income
taxes
|
|
|
|
(1,181,772)
|
|
(1,632,850)
|
|
(4,627,573)
|
|
(274,778)
|
Income tax
expense
|
|
|
|
653
|
|
43,834
|
|
28,428
|
|
47,362
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(1,182,425)
|
|
$
|
(1,676,684)
|
|
$
|
(4,656,001)
|
|
$
|
(322,140)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
$
|
(0.07)
|
|
$
|
(0.10)
|
|
$
|
(0.27)
|
|
$
|
(0.02)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Condensed
Consolidated Interim Statements of Changes in Equity
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Warrant
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2015
|
|
$
|
172,617,023
|
$
|
310,000
|
$
|
8,167,450
|
$
|
(155,176,462)
|
$
|
25,918,011
|
|
Net loss
|
|
-
|
-
|
-
|
(322,140)
|
(322,140)
|
|
Exercise of
options
|
|
45,154
|
-
|
(24,791)
|
-
|
20,363
|
|
Share-based
payments
|
|
-
|
-
|
274,408
|
-
|
274,408
|
Balance at
September 30, 2015
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,417,067
|
$
|
(155,498,602)
|
$
|
25,890,642
|
Balance at
January 1, 2016
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
-
|
-
|
-
|
(4,656,001)
|
(4,656,001)
|
|
Conversion of
debenture
|
|
267,164
|
-
|
-
|
-
|
267,164
|
|
Expiry of
warrants
|
|
-
|
(310,000)
|
310,000
|
-
|
-
|
|
Share-based
payments
|
|
-
|
-
|
183,320
|
-
|
183,320
|
Balance at
September 30, 2016
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,950,735
|
$
|
(161,582,962)
|
$
|
20,297,114
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2016
|
2015
|
|
2016
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,182,425)
|
$
|
(1,676,684)
|
|
$
|
(4,656,001)
|
$
|
(322,140)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
22,887
|
28,652
|
|
(178,846)
|
83,583
|
|
|
Depreciation and
amortization of non-current assets
|
|
255,677
|
215,475
|
|
771,969
|
640,150
|
|
|
Gain on disposal of
assets
|
|
(10,213)
|
-
|
|
(10,213)
|
(9,950)
|
|
|
Recognition of share
based payments
|
|
79,558
|
63,081
|
|
183,320
|
274,408
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
19,644
|
151,560
|
|
(89,797)
|
510,594
|
|
|
Foreign exchange
(gain) loss on borrowings
|
|
(43,830)
|
(280,871)
|
|
172,584
|
(613,274)
|
|
|
(Gain) loss on fair
market value of financial instruments
|
|
-
|
(40,008)
|
|
16,314
|
(37,532)
|
|
|
|
|
(858,702)
|
(1,538,795)
|
|
(3,790,670)
|
525,839
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase)
in deferred revenue
|
|
(100,520)
|
210,928
|
|
(715,004)
|
(143,790)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
529,348
|
(1,574,261)
|
|
635,011
|
(2,925,216)
|
Cash used in
operating activities
|
|
(429,874)
|
(2,902,128)
|
|
(3,870,663)
|
(2,543,167)
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(53,573)
|
(69,773)
|
|
(196,816)
|
(168,889)
|
|
Proceeds on sale of
property, plant and equipment
|
|
20,300
|
-
|
|
20,300
|
9,950
|
|
Acquisition of
intangible assets
|
|
-
|
(28,011)
|
|
(81,437)
|
(229,355)
|
Cash used in
investing activities
|
|
(33,273)
|
(97,784)
|
|
(257,953)
|
(388,294)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Finance
income
|
|
5,858
|
7,476
|
|
43,444
|
27,810
|
|
Proceeds from
exercise of options
|
|
-
|
20,363
|
|
-
|
20,363
|
|
Repayment of
borrowings
|
|
-
|
(103,312)
|
|
-
|
(103,312)
|
Cash from (used in)
financing activities
|
|
5,858
|
(75,473)
|
|
43,444
|
(55,139)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(19,644)
|
(151,560)
|
|
89,797
|
(510,594)
|
Decrease in
cash
|
|
(476,933)
|
(3,226,945)
|
|
(3,995,375)
|
(3,497,194)
|
Cash, beginning of
the period
|
|
11,030,512
|
16,093,828
|
|
14,548,954
|
16,364,077
|
Cash, end of the
period
|
|
$
|
10,553,579
|
$
|
12,866,883
|
|
$
|
10,553,579
|
$
|
12,866,883
|
SOURCE Redline Communications Group Inc.