TORONTO, Aug. 9, 2017 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
wide-area wireless networks for the most challenging applications
and locations, today announced operating results (in US dollars
unless otherwise noted) for the three months ended June 30, 2017 (Q2 2017).
Q2 2017 Financial Highlights:
- Revenues of $4.9 million,
essentially unchanged from Q2 2016
- Gross margins of 52%, up 3 percentage points over Q2 2016
- Operating expenses of $3.2
million, a reduction of 36% over Q2 2016
- Net loss of $0.7 million, an
improvement of $1.9 million over Q2
2016
- Adjusted EBITDA loss of $0.4
million, an improvement of $1.8
million over Q2 2016
- Cash of $11.5 million, or Cdn.
$ 0.87/share, unchanged from Q1
2017
- Order Bookings of $6.1 million,
essentially unchanged from Q2 2016
- Order Backlog of $6.3 million, up
20% over Q1 2017
Financial Review
Total revenue for Q2 2017 was $4.9
million, up 14% over Q1 2017 and essentially unchanged from
the same period in 2016. New Order Bookings for Q2 2017 were
$6.1 million, up 16% over Q1 2017 and
unchanged from the same period in 2016.
"Redline has seen four consecutive quarters of Bookings growth,
fueled by an increase in orders for our recently announced
commercial product portfolio with its cost-reduced Enterprise
radio, and by our first significant order for our new LTE product,"
stated Robert Williams, Redline CEO.
"This growth in orders has translated into
double-digit increases in Revenues and Backlog compared to Q1
2017. We are pleased that our investments in new products
and initiatives to reduce costs are starting to produce
results."
Overall gross margin for Q2 2017 was 52%, up three percentage
points over the same period in 2016 but down five percentage points
over Q1 2017, reflecting a shift in product mix in Q2 2017 to more
revenue from the Company's lower margin commercial product
portfolio.
Overall operating expenses for Q2 2017 were $3.2 million, unchanged from the previous quarter
and an improvement of 36% over the same period in 2016. The
year-over-year decrease in operating costs is attributed to cost
reduction initiatives implemented during the fourth quarter of 2016
to reduce compensation costs and contractual costs.
"Our attention to working capital and cost management has
allowed us to introduce more competitively priced products while
protecting our bottom line," stated Jane
Todd, Redline CFO. "We remain committed to closely managing
our business as we continue to implement our strategic
initiatives."
Net Loss for Q2 2017 was $0.7
million, or ($0.04) per share,
an improvement of 9% over Q1 2017 and an improvement of 73% as
compared to a Net Loss of $2.5
million, or ($0.15) per share
in the same period in 2016.
Adjusted EBITDA loss for Q2 2017 was $0.4
million, essentially unchanged from Q1 2017, and an
improvement of $1.8 million, or 82%
over the same period in 2016.
At June 30, 2017, Redline held
cash of $11.5 million, unchanged from
Q1 2017 and up $0.4 million from
December 31, 2016.
The Redline Board of Directors also announced today
that Jane Todd, Chief Financial and Operating Officer, has
decided to leave the company to pursue another career
opportunity. Jane joined the Company in the capacity as Chief
Financial and Operating Officer in May 2016. The Board has
appointed Joan Ritchie, VP Finance
and Organizational Development, as Interim Chief Financial
Officer. Jane has agreed to stay with Redline for a period of
time to support an orderly transition.
Conference Call and Webcast – August
10th, 2017 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday August 10,
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 56370080. A recording of the call will be available
through August 18, 2017 on Redline's
website or by dialing 1-416-849-0833 and entering the same
passcode.
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 (Loss)", 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 six months ended June 30,
2017 ("Q2 2017 MD&A"), copies of which are available on SEDAR
at www.sedar.com. Further details on the three and six months ended
June 30, 2017 can be found in the condensed consolidated interim
statement of financial position, condensed consolidated interim
statement of comprehensive income, 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 and six months ended June
30, 2017 and the Q2 2017 MD&A.
|
Adjusted EBITDA
Loss
|
|
|
|
|
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
|
|
|
The table below
reconciles Adjusted EBITDA loss to the most directly comparable
IFRS measure:
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Revenue
|
$
|
4,930
|
$
|
5,005
|
|
$
|
9,263
|
$
|
11,222
|
Net loss
|
(675)
|
(2,545)
|
|
(1,413)
|
(3,473)
|
Add back:
|
|
|
|
|
|
|
Share based
payments
|
44
|
90
|
|
158
|
174
|
|
Depreciation and
amortization
|
190
|
255
|
|
394
|
516
|
|
Finance (income)
expense
|
4
|
(5)
|
|
15
|
(202)
|
|
Loss on fair market
value of financial instruments
|
-
|
-
|
|
-
|
16
|
|
Foreign exchange
loss
|
37
|
12
|
|
70
|
143
|
|
Income tax
expense
|
5
|
27
|
|
12
|
28
|
|
Total
|
280
|
379
|
|
649
|
675
|
|
|
|
|
|
|
|
Adjusted EBITDA
loss
|
$
|
(395)
|
$
|
(2,166)
|
|
$
|
(764)
|
$
|
(2,798)
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-8%
|
-43%
|
|
-8%
|
-25%
|
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.
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Financial Position
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
11,520,557
|
|
$
|
11,147,235
|
|
Trade
receivables
|
|
|
6,453,503
|
|
7,837,145
|
|
Other
receivables
|
|
|
348,086
|
|
231,398
|
|
Inventories
|
|
|
5,331,336
|
|
5,513,985
|
|
Prepaid expenses and
other deposits
|
|
|
357,175
|
|
151,880
|
|
|
|
|
24,010,657
|
|
24,881,643
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
960,132
|
|
1,119,690
|
|
Intangible
assets
|
|
|
1,308,520
|
|
1,494,603
|
|
Other
assets
|
|
|
81,222
|
|
78,908
|
|
|
|
|
2,349,874
|
|
2,693,201
|
Total
Assets
|
|
|
$
|
26,360,531
|
|
$
|
27,574,844
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
4,261,274
|
|
$
|
3,322,059
|
|
Income tax
payable
|
|
|
10,741
|
|
10,741
|
|
Deferred
revenue
|
|
|
861,772
|
|
960,475
|
|
Borrowings
|
|
|
722,170
|
|
1,478,418
|
|
|
|
|
5,855,957
|
|
5,771,693
|
Non-current
liabilities:
|
|
|
|
|
|
|
Borrowings
|
|
|
1,386,638
|
|
1,340,165
|
|
Other
payables
|
|
|
211,585
|
|
247,799
|
|
|
|
|
1,598,223
|
|
1,587,964
|
Total
Liabilities
|
|
|
7,454,180
|
|
7,359,657
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,102,765
|
|
8,998,245
|
Deficit
|
|
|
(163,125,755)
|
|
(161,712,399)
|
|
|
|
|
18,906,351
|
|
20,215,187
|
Total liabilities
and equity
|
|
|
$
|
26,360,531
|
|
$
|
27,574,844
|
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$
|
4,929,502
|
$
|
5,005,605
|
$
|
9,262,901
|
$
|
11,222,213
|
Cost of
revenue
|
2,365,557
|
2,536,680
|
4,240,389
|
5,085,771
|
Gross
profit
|
2,563,945
|
2,468,925
|
5,022,512
|
6,136,442
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Research and
development
|
512,307
|
715,793
|
1,091,370
|
1,571,352
|
|
Administration and
finance
|
1,097,816
|
2,010,261
|
2,167,612
|
3,454,419
|
|
Sales and
marketing
|
1,389,487
|
1,956,086
|
2,727,409
|
4,029,617
|
|
Operations and
customer support
|
193,237
|
297,663
|
352,340
|
569,376
|
|
|
3,192,847
|
4,979,803
|
6,338,731
|
9,624,764
|
Loss before
undernoted items
|
(628,902)
|
(2,510,878)
|
(1,316,219)
|
(3,488,322)
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
Finance (income)
expense
|
3,881
|
(4,849)
|
14,427
|
(201,733)
|
|
Loss on fair market
value of financial instruments
|
-
|
-
|
-
|
16,314
|
|
Foreign exchange
loss
|
36,686
|
12,303
|
70,305
|
142,898
|
|
|
40,567
|
7,454
|
84,732
|
(42,521)
|
Loss before income
taxes
|
(669,469)
|
(2,518,332)
|
(1,400,951)
|
(3,445,801)
|
Income tax
expense
|
5,210
|
27,126
|
12,405
|
27,775
|
Net loss and total
comprehensive loss
|
$
|
(674,679)
|
$
|
(2,545,458)
|
$
|
(1,413,356)
|
$
|
(3,473,576)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.04)
|
$
|
(0.15)
|
$
|
(0.08)
|
$
|
(0.20)
|
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, 2016
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
-
|
-
|
-
|
(3,473,576)
|
(3,473,576)
|
|
Conversion of
debenture
|
|
267,164
|
-
|
-
|
-
|
267,164
|
|
Expiry of
warrants
|
|
-
|
(310,000)
|
310,000
|
-
|
-
|
|
Share-based
payments
|
|
-
|
-
|
103,762
|
-
|
103,762
|
Balance at
June 30, 2016
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,871,177
|
$
|
(160,400,537)
|
$
|
21,399,981
|
Balance at
January 1, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
|
-
|
-
|
-
|
(1,413,356)
|
(1,413,356)
|
|
Share-based
payments
|
|
-
|
-
|
104,520
|
-
|
104,520
|
Balance at
June 30, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
9,102,765
|
$
|
(163,125,755)
|
$
|
18,906,351
|
|
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
2016
|
|
2017
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
(674,679)
|
$
(2,545,458)
|
|
$
(1,413,356)
|
$
(3,473,576)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
3,881
|
(4,849)
|
|
14,427
|
(201,733)
|
|
|
Depreciation and
amortization of non-current assets
|
|
190,453
|
255,479
|
|
394,260
|
516,292
|
|
|
Recognition of share
based payments
|
|
49,616
|
57,241
|
|
104,520
|
103,762
|
|
|
Foreign exchange gain
on cash held in foreign currency
|
|
(16,852)
|
(6,478)
|
|
(33,870)
|
(109,441)
|
|
|
Foreign exchange loss
on borrowings
|
|
51,172
|
15,188
|
|
87,922
|
216,414
|
|
|
Loss on fair market
value of financial instruments
|
|
-
|
-
|
|
-
|
16,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(396,409)
|
(2,228,877)
|
|
(846,097)
|
(2,931,968)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease
in deferred cost of revenue
|
|
-
|
33,318
|
|
-
|
-
|
|
|
Increase (decrease)
in deferred revenue
|
|
21,800
|
(278,123)
|
|
(98,703)
|
(614,484)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
371,600
|
537,777
|
|
2,144,995
|
105,663
|
Cash from (used in)
operating activities
|
|
(3,009)
|
(1,935,905)
|
|
1,200,195
|
(3,440,789)
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(23,035)
|
(59,383)
|
|
(40,111)
|
(143,243)
|
|
Acquisition of
intangible assets
|
|
-
|
(1,217)
|
|
(8,508)
|
(81,437)
|
Cash used in
investing activities
|
|
(23,035)
|
(60,600)
|
|
(48,619)
|
(224,680)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Finance
income
|
|
17,006
|
33,811
|
|
32,584
|
37,586
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(844,708)
|
-
|
Cash from (used in)
financing activities
|
|
17,006
|
33,811
|
|
(812,124)
|
37,586
|
Foreign exchange gain
on cash held in foreign currency
|
|
16,852
|
6,478
|
|
33,870
|
109,441
|
Increase (decrease)
in cash
|
|
7,814
|
(1,956,216)
|
|
373,322
|
(3,518,442)
|
Cash, beginning of
the period
|
|
11,512,743
|
12,986,728
|
|
11,147,235
|
14,548,954
|
Cash, end of the
period
|
|
$
11,520,557
|
$
11,030,512
|
|
$
11,520,557
|
$
11,030,512
|
SOURCE Redline Communications Group Inc.