TORONTO, March 6, 2017 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), the creator of powerful
wide-area wireless networks for mission-critical applications in
challenging locations, today announced operating results (in US
dollars unless otherwise noted) for the fourth quarter and the
fiscal year ended December 31,
2016.
Financial highlights for the fourth quarter ended December 31, 2016 include:
- Revenues of $6.3 million, up 23%
over Q4 2015
- Bookings1 of $4.4
million, down 39% over Q4 2015
- Gross margins of 56%, up 2 percentage points over Q4 2015
- Operating expenses of $3.6
million, down 15% over Q4 2015
- Adjusted EBITDA of $0.3 million,
an improvement of $1.4 million over
Q4 2015
- Net loss of $0.1 million, an
improvement of $1.3 million over Q4
2015
- Order Backlog of $5.7 million,
down 39% over Q3 2016
- Cash of $11.1 million, or Cdn.
$ 0.87/share, up $0.5 million over Q3 2016
Financial highlights for the fiscal year ended December 31, 2016 include:
- Revenues of $22.8 million, down
24% over 2015
- Bookings of $21.6 million, down
32% over 2015
- Gross margins of 55%, down 1 percentage point over 2015
- Operating expenses of $17.3
million, down 7% over 2015
- Adjusted EBITDA loss of $3.4
million, as compared to $0.5
million loss in 2015
- Net loss of $4.8 million, as
compared to a net loss of $1.8
million in 2015
- Order Backlog of $5.7 million,
down 68% over 2015
- Cash of $11.1 million as of
December 31, 2016, down $3.4 million over 2015
Financial Review
Total revenue for the fourth quarter and year ended December 31, 2016 was $6.3
million and $22.8 million,
respectively, with fourth quarter revenue up 23% over the same
period in 2015 and annual revenue down 24% year over year.
Revenue in the fourth quarter was up 21% over the prior
quarter.
Adjusted EBITDA for the fourth quarter was $0.3 million, up $1.4
million over the Adjusted EBITDA loss of $1.1 million for the same period in 2015. The
increase in the Adjusted EBITDA was a result of higher revenues and
lower operating expenses compared to the same period in 2015.
The adjusted EBITDA loss for the year ended December 31, 2016 was $3.4
million, an increased loss of $2.9
million over the same period in 2015, attributed to lower
revenues.
"Redline ended 2016 on a stronger note with revenue growth
quarter over quarter and over Q4 last year that included a
resurgence of revenue from the energy sector," stated Robert Williams, Redline CEO. "This revenue
growth combined with steady gross margins and reduced operating
expenses has resulted in a positive EBITDA for the fourth
quarter."
Order Bookings for the fourth quarter and year ended
December 31, 2016 were $4.4 million and $21.6
million respectively, down 39% and 32% over the same periods
in 2015. The decrease in Order Bookings year over year can be
largely attributed to reduced spending from energy sector clients
in the first three quarters of 2016 as a result of lower oil
prices.
"We are seeing signs of renewal in our energy sector customer
base and in the fourth quarter several existing and new customers
placed orders for new networks," added Williams. "Market trials of
our new LTE product are being well received and our cost reduction
program continues as planned. We believe that our strategy of
revenue diversification and ongoing cost management will continue
to produce improved results going forward."
Overall gross margin for the fourth quarter and year ended
December 31, 2016 was 56% and 55%
respectively, up two percentage points and down one percentage
point over the same periods in 2015.
Overall operating expenses for the fourth quarter and year ended
December 31, 2016 were $3.6 million and $17.3
million, an improvement of 15% and 7% respectively over the
same periods in 2015. The decrease in operating expenses in
the fourth quarter was the result of the cost reduction initiative
implemented during the quarter to reduce compensation costs and
contractual costs. The decrease in operating expenses in 2016 was
primarily a result of reduced compensation costs, offset in part by
an increase in bad debt expenses and an increase in spending for
trial deployments of the Company's new LTE product line.
Net Loss for the fourth quarter of 2016 was $0.1 million, or ($0.01) per share as compared to a Net Loss of
$1.4 million, or ($0.08) per share in the fourth quarter of 2015.
For the full year 2016, Redline reported a Net Loss of $4.8 million, or ($0.28) per share, as compared to a Net Loss of
$1.8 million, or ($0.10) per share in 2015.
At December 31st, 2016,
Redline held cash of $11.1 million,
up $0.5 million from September 30, 2016, and down $3.4 million from the cash of approximately
$14.4 million at December 31, 2015.
Conference Call and Webcast – March
7th, 2017 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Tuesday March 7, 2017
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 73966035. A
recording of the call will be available through March 17, 2017 on Redline's website or by dialing
1-416-849-0833 and entering passcode 73966035.
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
|
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", and "EPS excluding non-cash
gain (loss) on fair market value of financial instruments". 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, 2016 ("Q4 and 2016
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, 2016 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, 2016 and the Q4
and 2016 Year 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 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.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.
|
|
|
|
|
|
|
Consolidated
Statements of Financial Position
|
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
11,147,235
|
|
$
|
14,548,954
|
|
Trade
receivables
|
|
|
7,837,145
|
|
|
8,187,806
|
|
Other
receivables
|
|
|
231,398
|
|
|
466,668
|
|
Inventories
|
|
|
5,513,985
|
|
|
7,100,207
|
|
Prepaid expenses and
other deposits
|
|
|
151,880
|
|
|
266,578
|
|
|
|
|
24,881,643
|
|
|
30,570,213
|
Non-current
assets:
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
1,119,690
|
|
|
1,389,727
|
|
Intangible
assets
|
|
|
1,494,603
|
|
|
1,974,672
|
|
Other
assets
|
|
|
78,908
|
|
|
64,755
|
|
|
|
|
2,693,201
|
|
|
3,429,154
|
Total
Assets
|
|
$
|
27,574,844
|
|
$
|
33,999,367
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Trade and other
payables
|
|
$
|
3,322,059
|
|
$
|
4,475,662
|
|
Income tax
payable
|
|
|
10,741
|
|
|
94,063
|
|
Deferred
revenue
|
|
|
960,475
|
|
|
1,534,731
|
|
Convertible debenture
(principal and interest)
|
|
|
-
|
|
|
224,595
|
|
Fair market value
adjustment on convertible debenture
|
|
|
-
|
|
|
11,817
|
|
Borrowings
|
|
|
1,478,418
|
|
|
2,833,752
|
|
|
|
|
5,771,693
|
|
|
9,174,620
|
Non-current
liabilities:
|
|
|
|
|
|
|
|
Borrowings
|
|
|
1,340,165
|
|
|
-
|
|
Other
payables
|
|
|
247,799
|
|
|
322,116
|
|
|
|
|
1,587,964
|
|
|
322,116
|
Total
Liabilities
|
|
|
7,359,657
|
|
|
9,496,736
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
|
172,662,177
|
Warrant
|
|
|
-
|
|
|
310,000
|
Contributed
surplus
|
|
|
8,998,245
|
|
|
8,457,415
|
Deficit
|
|
|
(161,712,399)
|
|
|
(156,926,961)
|
|
|
|
|
20,215,187
|
|
|
24,502,631
|
Total liabilities
and equity
|
|
$
|
27,574,844
|
|
$
|
33,999,367
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Comprehensive Loss
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
$
|
6,320,376
|
$
|
5,135,419
|
$
|
22,752,325
|
$
|
30,129,653
|
Cost of
revenue
|
|
|
2,768,040
|
|
2,352,593
|
|
10,163,346
|
|
13,268,491
|
Gross
profit
|
|
|
3,552,336
|
|
2,782,826
|
|
12,588,979
|
|
16,861,162
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
669,305
|
|
969,027
|
|
2,944,559
|
|
3,298,337
|
|
Administration and
finance
|
|
|
1,090,756
|
|
1,106,671
|
|
5,773,757
|
|
5,491,258
|
|
Sales and
marketing
|
|
|
1,587,059
|
|
1,833,648
|
|
7,510,737
|
|
8,488,656
|
|
Operations and
customer support
|
|
|
227,138
|
|
293,495
|
|
1,063,640
|
|
1,268,530
|
|
|
|
|
3,574,258
|
|
4,202,841
|
|
17,292,693
|
|
18,546,781
|
Loss before
undernoted items
|
|
|
(21,922)
|
|
(1,420,015)
|
|
(4,703,714)
|
|
(1,685,619)
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
22,962
|
|
53,979
|
|
(155,884)
|
|
137,562
|
|
Restructuring
costs
|
|
|
242,632
|
|
-
|
|
242,632
|
|
235,155
|
|
(Gain) loss on fair
market value of
financial instruments
|
|
|
-
|
|
(28,207)
|
|
16,314
|
|
(65,739)
|
|
Foreign exchange
(gain) loss
|
|
|
(55,074)
|
|
(65,479)
|
|
53,239
|
|
(337,511)
|
|
|
|
|
210,520
|
|
(39,707)
|
|
156,301
|
|
(30,533)
|
Loss before income
taxes
|
|
|
(232,442)
|
|
(1,380,308)
|
|
(4,860,015)
|
|
(1,655,086)
|
Income tax (recovery)
expense
|
|
|
(103,005)
|
|
48,051
|
|
(74,577)
|
|
95,413
|
Net loss and total
comprehensive loss
|
|
$
|
(129,437)
|
$
|
(1,428,359)
|
$
|
(4,785,438)
|
$
|
(1,750,499)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.01)
|
$
|
(0.08)
|
$
|
(0.28)
|
$
|
(0.10)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Changes in Equity
|
(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
|
|
|
-
|
|
-
|
|
-
|
|
(1,750,499)
|
|
(1,750,499)
|
|
Exercise of
options
|
|
|
45,154
|
|
-
|
|
(24,791)
|
|
-
|
|
20,363
|
|
Share-based
payments
|
|
|
-
|
|
-
|
|
314,756
|
|
-
|
|
314,756
|
Balance at
December 31, 2015
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
|
-
|
|
-
|
|
-
|
|
(4,785,438)
|
|
(4,785,438)
|
|
Conversion of
debenture
|
|
|
267,164
|
|
-
|
|
-
|
|
-
|
|
267,164
|
|
Expiry of
warrants
|
|
|
-
|
|
(310,000)
|
|
310,000
|
|
-
|
|
-
|
|
Share-based
payments
|
|
|
-
|
|
-
|
|
230,830
|
|
-
|
|
230,830
|
Balance at
December 31, 2016
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(129,437)
|
$
|
(1,428,359)
|
$
|
(4,785,438)
|
$
|
(1,750,499)
|
|
Adjustments to
reconcile net loss to net
cash from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
22,962
|
|
53,979
|
|
(155,884)
|
|
137,562
|
|
|
Depreciation and
amortization of
non-current assets
|
|
|
246,303
|
|
218,879
|
|
1,018,272
|
|
859,029
|
|
|
Gain on disposal of
assets
|
|
|
-
|
|
-
|
|
(10,213)
|
|
(9,950)
|
|
|
Recognition of share
based payments
|
|
|
47,510
|
|
40,348
|
|
230,830
|
|
314,756
|
|
|
Foreign exchange
(gain) loss on cash
held in foreign currency
|
|
|
26,947
|
|
68,938
|
|
(62,850)
|
|
579,532
|
|
|
Foreign exchange
(gain) loss on
borrowings
|
|
|
(65,960)
|
|
(114,146)
|
|
106,624
|
|
(727,420)
|
|
|
(Gain) loss on fair
market value of
financial instruments
|
|
|
-
|
|
(28,207)
|
|
16,314
|
|
(65,739)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,325
|
|
(1,188,568)
|
|
(3,642,345)
|
|
(662,729)
|
|
Change in non-cash
operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in deferred revenue
|
|
|
140,748
|
|
211,398
|
|
(574,256)
|
|
67,608
|
|
|
Change in other
non-cash operating
assets and liabilities
|
|
|
326,445
|
|
3,886,301
|
|
961,456
|
|
961,085
|
Cash from (used in)
operating activities
|
|
|
615,518
|
|
2,909,131
|
|
(3,255,145)
|
|
365,964
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
|
-
|
|
(28,495)
|
|
(196,816)
|
|
(197,384)
|
|
Proceeds on sale of
property, plant and
equipment
|
|
|
-
|
|
-
|
|
20,300
|
|
9,950
|
|
Acquisition of
intangible assets
|
|
|
-
|
|
(263,000)
|
|
(81,437)
|
|
(492,355)
|
Cash used in
investing activities
|
|
|
-
|
|
(291,495)
|
|
(257,953)
|
|
(679,789)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
5,085
|
|
(25,427)
|
|
48,529
|
|
2,383
|
|
Proceeds from
exercise of options
|
|
|
-
|
|
-
|
|
-
|
|
20,363
|
|
Repayment of
borrowings
|
|
|
-
|
|
(841,200)
|
|
-
|
|
(944,512)
|
Cash from (used in)
financing activities
|
|
|
5,085
|
|
(866,627)
|
|
48,529
|
|
(921,766)
|
Foreign exchange gain
(loss) on cash held in
foreign currency
|
|
|
(26,947)
|
|
(68,938)
|
|
62,850
|
|
(579,532)
|
Increase (decrease)
in cash
|
|
|
593,656
|
|
1,682,071
|
|
(3,401,719)
|
|
(1,815,123)
|
Cash, beginning of
the period
|
|
|
10,553,579
|
|
12,866,883
|
|
14,548,954
|
|
16,364,077
|
Cash, end of the
period
|
|
$
|
11,147,235
|
$
|
14,548,954
|
$
|
11,147,235
|
$
|
14,548,954
|
SOURCE Redline Communications Group Inc.