TORONTO, May 13, 2020 /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 first
quarter ended March 31, 2020.
Key financial highlights for the three months ended March 31, 2020 ("Q1 2020") include:
- Revenue of $4.5 million, down 23%
over Q1 2019
- Gross margins of 63%, up 13 percentage points over Q1 2019
- Operating expenses of $4.1
million, up 1% over Q1 2019
- Net loss of $1.0 million, as
compared to net loss of $1.3 million
in Q1 2019
- Cash balance of $6.8 million, up
$0.3 million from December 31, 2019
- Borrowings of $0.0, down
$0.7 million from December 31, 2019
- Adjusted EBITDA1 loss of $1.0
million, versus Adjusted EBITDA loss of $0.8 million in Q1 2019
- Bookings1 of $5.9
million, up 3% over Q1 2019
- Order Backlog1 of $9.9
million, up 16% from December 31,
2019
Financial and Business Review
Revenue for the first quarter ended March
31, 2020 was $4.5 million,
down 23% over Q1 2019, mainly the result of product shipments which
could not be delivered to a small number of customers due to
temporary border closures in South
America and the Middle East
and other logistics challenges associated with COVID-19.
Order Bookings for Q1 2020 were $5.9
million, up 3% over Q1 2019. The increase was primarily
driven by an increase in orders from customers in the Company's
core industrial vertical markets, including from oil & gas
customers.
"The COVID-19 pandemic continues to be a significant concern and
has impacted our product shipments and revenue. Nevertheless, we
are proud of how we've been able to win new business with increased
year over year bookings, generate positive cashflow, eliminate our
borrowing, grow our margins, support our customers operations, and
ensure the safety of our staff," stated Stephen Sorocky, Redline CEO. "We will continue
to closely monitor the ongoing impacts of the COVID-19 pandemic and
the recent decline in oil prices on our business and continue to
take measures to mitigate negative effects upon our business
including aggressively reviewing, monitoring and controlling
expenses. We are encouraged by the new customers we continue
to bring onboard, most notably a key win in Saudi Arabia that was announced on
April 20 and the market potential of
our product development, including the RDL6000 for the USA CBRS market released last week."
Gross margin for Q1 2020 was 63%, up 13 percentage points over
Q1 2019. The improvement was a result of a number of factors, most
notably a shift in revenue mix to sales of higher margin industrial
products to our core verticals and continued quarter-over-quarter
growth in revenue from maintenance and support contracts.
Overall operating expenses for Q1 2020 were $4.1 million, up 1% over Q1 2019, primarily a
result of increased research and development costs to support
new product development, offset by a decrease in severance
costs.
Net loss for Q1 2020 was $1.0
million, or ($0.06) per share,
an improvement of $0.3 million over
the net loss of $1.3 million, or
($0.07) per share, for Q1 2019.
"We continue to focus on proactive programs to better manage
working capital. The company has made significant progress in
the areas of billing and collections, resulting in positive
cashflow from operations of $1.3
million in the quarter and continues to explore new
processes and initiative to reduce our level of inventory," stated
Philip Jones, Redline CFO.
Adjusted EBITDA loss for Q1 2020 was $1.0
million, as compared to Adjusted EBITDA loss of $0.8 million for Q1 2019.
Annual General Meeting
The Company also announces that after careful consideration and
amid COVID-19 concerns, it has decided to schedule its 2020 Annual
Shareholders Meeting, normally held in June, on August 17, 2020. This was not a
decision taken lightly but one which will allow the Company to
continue to focus its limited resources on operating activities and
other matters during these extraordinary times. Further
announcements related to the annual meeting, including shareholder
record dates, form of the meeting (virtual platform or in-person)
will be made in the following weeks.
Conference Call and Webcast – May 14,
2020 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been
scheduled for Thursday, May 14, 2020
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 4186136. A
recording of the call will be available through May 21, 2020 on Redline's website or by dialing
1-416-849-0833 and entering the same passcode.
About Redline Communications
Redline Communications (TSX:RDL) designs and manufactures
powerful wide-area wireless networks for mission-critical
applications in challenging locations. Redline networks are used by
oil & gas companies onshore and offshore, mining companies on
surface and underground operations, by municipalities to remotely
monitor infrastructure, and by specialized 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 IoT, 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 "Bookings", "Order Backlog" 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, 2020 ("Q1 2020
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three months ended March 31,
2020 can be found in the condensed consolidated interim statement
of financial position, statement of comprehensive income (loss),
statement of changes in equity and 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, 2020 and the Q1 2020 MD&A.
|
Adjusted EBITDA
(Loss)
|
|
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
|
The table below
reconciles Adjusted EBITDA (loss) to net profit (loss):
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2020
|
2019
|
Revenue
|
|
$
|
4,475
|
$
|
5,834
|
Net profit
(loss)
|
|
(1,044)
|
(1,257)
|
Add back:
|
|
|
|
|
Share based
payments
|
|
51
|
114
|
|
Depreciation and
amortization
|
|
269
|
220
|
|
Finance (income)
expense
|
|
1
|
(17)
|
|
(Gain) loss on fair
market value
of financial instruments
|
|
(118)
|
88
|
|
Foreign exchange
(gain) loss
|
|
(133)
|
65
|
|
Income tax
expense
|
|
18
|
6
|
|
Total
|
|
88
|
476
|
|
|
|
|
Adjusted EBITDA
(loss)
|
|
$
|
(956)
|
$
|
(781)
|
|
|
|
|
Adjusted EBITDA
margin
|
|
-21%
|
-13%
|
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,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
6,838,831
|
|
$
|
6,507,606
|
|
Trade
receivables
|
|
|
4,210,852
|
|
7,089,043
|
|
Other
receivables
|
|
|
109,910
|
|
260,216
|
|
Inventories
|
|
|
7,876,803
|
|
7,707,578
|
|
Deferred cost of
revenue
|
|
|
3,817
|
|
6,910
|
|
Prepaid expenses and
other deposits
|
|
|
336,436
|
|
285,519
|
|
|
|
|
19,376,649
|
|
21,856,872
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
999,961
|
|
999,435
|
|
Intangible
assets
|
|
|
1,345,163
|
|
1,373,526
|
|
Right of use
assets
|
|
|
730,904
|
|
798,080
|
|
Other
assets
|
|
|
70,866
|
|
76,284
|
|
|
|
|
3,146,894
|
|
3,247,325
|
Total
Assets
|
|
|
$
|
22,523,543
|
|
$
|
25,104,197
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
5,113,330
|
|
$
|
6,035,496
|
|
Income tax
payable
|
|
|
12,398
|
|
12,398
|
|
Deferred
revenue
|
|
|
2,285,866
|
|
1,966,282
|
|
Lease
liabilities
|
|
|
240,600
|
|
277,945
|
|
Borrowings
|
|
|
-
|
|
716,832
|
|
|
|
|
7,652,194
|
|
9,008,953
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
337,169
|
|
429,414
|
|
Lease
liabilities
|
|
|
654,108
|
|
788,572
|
|
|
|
|
991,277
|
|
1,217,986
|
Total
Liabilities
|
|
|
8,643,471
|
|
10,226,939
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,572,632
|
|
9,525,694
|
Deficit
|
|
|
(168,621,901)
|
|
(167,577,777)
|
|
|
|
|
13,880,072
|
|
14,877,258
|
Total Liabilities
and Equity
|
|
|
$
|
22,523,543
|
|
$
|
25,104,197
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Three months ended
March 31,
|
|
|
2020
|
|
2019
|
Revenue
|
|
|
$
|
4,474,589
|
|
$
|
5,833,514
|
Cost of
revenue
|
|
|
1,650,163
|
|
2,900,333
|
Gross
profit
|
|
|
2,824,426
|
|
2,933,181
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Research and
development
|
|
|
1,124,986
|
|
491,246
|
|
General and
administrative
|
|
|
1,279,764
|
|
1,452,760
|
|
Sales and
marketing
|
|
|
1,457,650
|
|
1,868,954
|
|
Operations and
customer support
|
|
|
238,572
|
|
234,494
|
|
|
|
|
4,100,972
|
|
4,047,454
|
Loss before
undernoted items
|
|
|
(1,276,546)
|
|
(1,114,273)
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
1,027
|
|
(16,991)
|
|
(Gain) loss on fair
market value of financial instruments
|
|
|
(118,561)
|
|
88,379
|
|
Foreign exchange
(gain) loss
|
|
|
(132,788)
|
|
65,487
|
|
|
|
|
(250,322)
|
|
136,875
|
Loss before income
taxes
|
|
|
(1,026,224)
|
|
(1,251,148)
|
Income tax
expense
|
|
|
17,900
|
|
6,260
|
Net loss and total
comprehensive loss
|
|
|
$
|
(1,044,124)
|
|
$
|
(1,257,408)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
$
|
(0.06)
|
|
$
|
(0.07)
|
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, 2019
|
|
$
|
172,929,341
|
$
|
9,292,321
|
$
|
(163,832,939)
|
$
|
18,388,723
|
|
Net loss
|
|
-
|
-
|
(1,257,408)
|
(1,257,408)
|
|
Stock option
expense
|
|
-
|
93,445
|
-
|
93,445
|
Balance at
March 31, 2019
|
|
$
|
172,929,341
|
$
|
9,385,766
|
$
|
(165,090,347)
|
$
|
17,224,760
|
Balance at
January 1, 2020
|
|
$
|
172,929,341
|
$
|
9,525,694
|
$
|
(167,577,777)
|
$
|
14,877,258
|
|
Net loss
|
|
-
|
-
|
(1,044,124)
|
(1,044,124)
|
|
Stock option
expense
|
|
-
|
46,938
|
-
|
46,938
|
Balance at
March 31, 2020
|
|
$
|
172,929,341
|
$
|
9,572,632
|
$
|
(168,621,901)
|
$
|
13,880,072
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
Note
|
2020
|
2019
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(1,044,124)
|
$
|
(1,257,408)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
Finance (income)
expense
|
|
1,027
|
(16,991)
|
|
|
Depreciation and
amortization of non-current assets
|
|
269,200
|
219,700
|
|
|
Stock option
expense
|
|
46,938
|
93,445
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
55,395
|
(29,178)
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
(102,900)
|
60,277
|
|
|
|
|
(774,464)
|
(930,155)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
(Increase) decrease
in deferred cost of revenue
|
|
3,093
|
(1,812)
|
|
|
Increase in deferred
revenue
|
|
227,339
|
136,918
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
1,891,607
|
1,241,894
|
Cash from operating
activities
|
|
1,347,575
|
446,845
|
Cash flows used in
investing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(92,187)
|
(40,269)
|
|
Acquisition of
intangible assets
|
|
(82,000)
|
(14,100)
|
Cash used in
investing activities
|
|
(174,187)
|
(54,369)
|
Cash flows used in
financing activities:
|
|
|
|
|
Interest
income
|
|
16,307
|
42,988
|
|
Interest
expense
|
|
(12,648)
|
(14,448)
|
|
Repayment of
borrowings
|
|
(701,491)
|
(735,505)
|
|
Repayment of lease
liabilities
|
|
(88,936)
|
(86,129)
|
Cash used in
financing activities
|
|
(786,768)
|
(793,094)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(55,395)
|
29,178
|
Increase (decrease)
in cash
|
|
331,225
|
(371,440)
|
Cash, beginning of
the period
|
|
6,507,606
|
9,625,845
|
Cash, end of the
period
|
|
$
|
6,838,831
|
$
|
9,254,405
|
SOURCE Redline Communications Group Inc.