TORONTO, May 7, 2018 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 first quarter ended
March 31, 2018.
Financial highlights for the first quarter ended March 31, 2018 include:
- Revenues of $5.7 million, up 32%
over Q1 2017
- Gross margins of 52%, down 5 percentage points over Q1
2017
- Operating expenses of $3.4
million, up 8% over Q1 2017
- Net loss of $0.4 million, an
improvement of $0.3 million over Q1
2017
- Adjusted EBITDA loss of $0.2
million, an improvement of $0.1
million over Q1 2017
- Cash of $11.1 million, down
$0.8 million from Q4 2017
- Bookings of $7.3 million, up 39%
over Q1 2017
- Order Backlog of $7.9 million, up
30% from Q4 2017
Financial Review
"Our Order Bookings for the first quarter of 2018 were
$7.3 million up 39% over the same
period in 2017 and has contributed to a 30% growth in backlog,
"stated Robert Williams, Redline
CEO. "The increase in Order Bookings reflects a welcome mix of
sales to new and existing customers in all geographies served by
Redline and includes continued momentum from the O&G sector.
We're also pleased that we received several meaningful orders from
the mining sector for our new iLTETM product line, the result of a
concentrated sales and marketing campaign."
Total revenue for the quarter ended March
31, 2018 was $5.7 million, up
32% over the same period in 2017, largely driven by increased
revenue from energy and telecom customers.
Overall gross margin for the first quarter of 2018 was 52%, down
five percentage point over the same period in 2017 as a result of
an expected shift in product sales to include more sales of lower
margin commercial products to customers in the telecom service
provider market.
Overall operating expenses for the first quarter of 2018 were
$3.4 million, up 8% over the same
period in 2017. The increase in operating expenses was mainly
a result of increased personnel costs, including recruitment,
salary increases and severance.
Adjusted EBITDA loss for the first quarter of 2018 was
$0.2 million, an improvement of
$0.1 million over the same period in
2017. Net loss for the first quarter of 2018 was $0.4 million, or ($0.02) per share, an improvement of $0.3 million over the net loss of $0.7 million, or ($0.04) per share reported in the first quarter
of 2017.
At March 31st, 2018, Redline held
cash of $11.1 million, down
$0.8 million from December 31, 2017. The decrease is largely
attributed to a scheduled Cdn. $1.0
million payment against the Company's Ontario Loan, reducing
the amount of the loan outstanding to $1.4
million.
Conference Call and Webcast – May 8th,
2018 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been
scheduled for Tuesday, May 8, 2018 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 7679416. A
recording of the call will be available through May 18, 2018 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
non-IFRS metrics, including "Orders or Bookings", "Shipped or
Shipments", "Backlog", "EBITDA", and "Adjusted EDITDA". 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 months ended March 31, 2018 ("Q1 2018 MD&A"), copies
of which are available on SEDAR at www.sedar.com. Further details
on the three month results ended March 31, 2018 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 months
ended March 31, 2018 and the Q1 2018 MD&A.
|
Adjusted EBITDA
Loss
|
|
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
|
The table below
reconciles Adjusted EBITDA loss to Net loss:
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2018
|
2017
|
Revenue
|
$
|
5,702
|
$
|
4,333
|
Net loss
|
(405)
|
(739)
|
Add back:
|
|
|
|
Share based
payments
|
46
|
114
|
|
Depreciation and
amortization
|
154
|
204
|
|
Finance (income)
expense
|
(7)
|
10
|
|
Foreign exchange
(gain) loss
|
(30)
|
34
|
|
Income tax
expense
|
5
|
7
|
|
Total
|
168
|
369
|
|
|
|
|
Adjusted EBITDA
loss
|
$
|
(237)
|
$
|
(370)
|
|
|
|
|
Adjusted EBITDA
margin
|
-4%
|
-9%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
|
11,120,553
|
|
$
|
11,960,062
|
|
Trade
receivables
|
6,795,232
|
|
8,160,646
|
|
Other
receivables
|
353,533
|
|
304,526
|
|
Inventories
|
5,223,006
|
|
5,438,530
|
|
Prepaid expenses and
other deposits
|
449,427
|
|
211,511
|
|
|
23,941,751
|
|
26,075,275
|
Non-current
assets:
|
|
|
|
|
Property, plant and
equipment
|
863,321
|
|
829,720
|
|
Intangible
assets
|
1,251,024
|
|
1,169,733
|
|
Other
assets
|
81,669
|
|
83,600
|
|
|
2,196,014
|
|
2,083,053
|
Total
Assets
|
$
|
26,137,765
|
|
$
|
28,158,328
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade and other
payables
|
$
|
5,043,771
|
|
$
|
5,698,664
|
|
Income tax
payable
|
10,741
|
|
10,741
|
|
Deferred
revenue
|
1,238,659
|
|
1,275,875
|
|
Borrowings
|
702,700
|
|
792,051
|
|
|
6,995,871
|
|
7,777,331
|
Non-current
liabilities:
|
|
|
|
|
Borrowings
|
697,782
|
|
1,434,388
|
|
Other
payables
|
193,732
|
|
169,793
|
|
|
891,514
|
|
1,604,181
|
Total
Liabilities
|
7,887,385
|
|
9,381,512
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share
capital
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
9,170,319
|
|
9,155,798
|
Deficit
|
(163,849,280)
|
|
(163,308,323)
|
|
|
18,250,380
|
|
18,776,816
|
Total liabilities
and equity
|
$
|
26,137,765
|
|
$
|
28,158,328
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2018
|
|
2017
|
Revenue
|
$
|
5,701,946
|
|
$
|
4,333,399
|
Cost of
revenue
|
2,740,513
|
|
1,874,832
|
Gross
profit
|
2,961,433
|
|
2,458,567
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Research and
development
|
630,219
|
|
579,063
|
|
Administration and
finance
|
1,067,224
|
|
1,069,796
|
|
Sales and
marketing
|
1,518,192
|
|
1,337,922
|
|
Operations and
customer support
|
182,725
|
|
159,103
|
|
|
3,398,360
|
|
3,145,884
|
Loss before
undernoted items
|
(436,927)
|
|
(687,317)
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
Finance (income)
expense
|
(7,466)
|
|
10,546
|
|
Foreign exchange
(gain) loss
|
(29,948)
|
|
33,619
|
|
|
(37,414)
|
|
44,165
|
Loss before income
taxes
|
(399,513)
|
|
(731,482)
|
Income tax
expense
|
5,444
|
|
7,195
|
Net loss and total
comprehensive loss
|
$
|
(404,957)
|
|
$
|
(738,677)
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
Basic and
diluted
|
$
|
(0.02)
|
|
$
|
(0.04)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
Condensed
Consolidated Interim Statements of Changes in Equity
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2017
|
$
|
172,929,341
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
-
|
-
|
(738,677)
|
(738,677)
|
|
Stock option
expense
|
-
|
54,904
|
-
|
54,904
|
Balance at
March 31, 2017
|
$
|
172,929,341
|
$
|
9,053,149
|
$
|
(162,451,076)
|
$
|
19,531,414
|
Balance at
January 1, 2018
|
$
|
172,929,341
|
$
|
9,155,798
|
$
|
(163,308,323)
|
$
|
18,776,816
|
|
IFRS 15 transition
adjustment
|
-
|
-
|
(136,000)
|
(136,000)
|
|
Net loss
|
-
|
-
|
(404,957)
|
(404,957)
|
|
Stock option
expense
|
-
|
14,521
|
-
|
14,521
|
Balance at
March 31, 2018
|
$
|
172,929,341
|
$
|
9,170,319
|
$
|
(163,849,280)
|
$
|
18,250,380
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2018
|
2017
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(404,957)
|
$
|
(738,677)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
Finance (income)
expense
|
|
(7,466)
|
10,546
|
|
|
Depreciation and
amortization of non-current assets
|
|
153,870
|
203,807
|
|
|
Stock option
expense
|
|
14,521
|
54,904
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
41,288
|
(17,018)
|
|
|
Foreign exchange
(gain) loss on borrowings
|
|
(43,758)
|
36,750
|
|
|
IFRS 15 transition
adjustment
|
|
(136,000)
|
-
|
|
|
|
|
(382,502)
|
(449,688)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
Decrease in deferred
revenue
|
|
(37,216)
|
(120,503)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
664,992
|
1,773,395
|
Cash from operating
activities
|
|
245,274
|
1,203,204
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(102,095)
|
(17,076)
|
|
Acquisition of
intangible assets
|
|
(166,667)
|
(8,508)
|
Cash used in
investing activities
|
|
(268,762)
|
(25,584)
|
|
|
|
|
Cash flows used in
financing activities:
|
|
|
|
|
Finance
income
|
|
26,832
|
15,578
|
|
Repayment of
borrowings
|
|
(801,565)
|
(844,708)
|
Cash used in
financing activities
|
|
(774,733)
|
(829,130)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(41,288)
|
17,018
|
Increase (decrease)
in cash
|
|
(839,509)
|
365,508
|
Cash, beginning of
the period
|
|
11,960,062
|
11,147,235
|
Cash, end of the
period
|
|
$
|
11,120,553
|
$
|
11,512,743
|
SOURCE Redline Communications Group Inc.