TORONTO, Nov. 11, 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 third quarter ended
September 30, 2020.
Revenue for the third quarter ended September 30, 2020 ("Q3 2020") was $5.2 million, up 27% over Q2 2020 and down 26%
over Q3 2019, primarily as a result of various business impacts
associated with COVID-19 such as, but not limited to, access to
customer sites, delays in customer purchasing decisions and longer
supplier lead times.
"We are pleased to report quarter over quarter improvements in
cash, revenues, bookings, backlog, EBITDA and net profit," stated
Stephen Sorocky, Redline CEO. "While
the COVID-19 pandemic continues to be a significant concern, we
have adjusted to the ongoing uncertainty and we continue to closely
monitor the ongoing impacts of the COVID-19 pandemic and will
continue to adapt as necessary."
Order Bookings for Q3 2020 were $6.6
million, up 44% over Q2 2020 and up 15% over Q3 2019. The
quarter over quarter increase was mainly due to growth
in order bookings from customers in the oil & gas sector.
Key financial highlights for the three months ended
September 30, 2020 ("Q3 2020")
include:
|
Q3
2020
|
Q3
2019
|
Increase
(decrease)
|
%
Change
|
Revenue
|
$5.2 M
|
$7.1 M
|
($1.9 M)
|
(26%)
|
Gross profit margin
%
|
52%
|
54%
|
(2%)
|
|
Operating
expenses
|
$3.5 M
|
$4.1 M
|
($0.6 M)
|
(16%)
|
Net loss
|
$0.3 M
|
$0.2 M
|
($0.1 M)
|
(41%)
|
Adjusted EBITDA
loss1
|
$0.4 M
|
$0.0 M
|
($0.4 M)
|
(1139%)
|
CEWS
benefit
|
$0.3 M
|
Nil
|
$0.3 M
|
|
Bookings1
|
$6.6 M
|
$5.8 M
|
$0.8 M
|
15%
|
|
|
|
|
|
|
September 30,
2020
|
June 30,
2020
|
Increase
(decrease)
|
%
Change
|
Cash
|
$5.1 M
|
$5.1 M
|
$0.0 M
|
1%
|
Inventory
|
$6.5 M
|
$7.2 M
|
($0.7 M)
|
(9%)
|
Order
Backlog1
|
$11.1 M
|
$10.3 M
|
$0.8 M
|
8%
|
Key financial highlights for the nine months ended
September 30, 2020 include:
|
2020-09
YTD
|
2019-09
YTD
|
Increase
(decrease)
|
%
Change
|
Revenue
|
$13.8 M
|
$18.6 M
|
($4.8 M)
|
(26%)
|
Gross profit
margin %
|
57%
|
54%
|
3%
|
|
Operating
expenses
|
$11.3 M
|
$12.5 M
|
($1.2 M)
|
(9%)
|
Net loss
|
$2.2 M
|
$2.4 M
|
$0.2 M
|
7%
|
Adjusted EBITDA
loss
|
$2.4 M
|
$1.4 M
|
($1.0 M)
|
(72%)
|
CEWS
benefit
|
$1.0 M
|
Nil
|
$1.0 M
|
|
Bookings
|
$17.1 M
|
$17.6 M
|
($0.5 M)
|
(3%)
|
|
|
|
|
|
|
September 30,
2020
|
December 31,
2019
|
Increase
(decrease)
|
%
Change
|
Cash
|
$5.1 M
|
$6.5 M
|
($1.4 M)
|
(21%)
|
Inventory
|
$6.5 M
|
$7.7 M
|
($1.2 M)
|
(15%)
|
Order
Backlog
|
$11.1 M
|
$8.5 M
|
$2.6 M
|
30%
|
Financial and Business Review
Gross profit margin for Q3 2020 was 52%, down by 6 percentage
points over Q2 2020 and down 2 percentage points over Q3 2019. The
decrease over both periods was a result of a number of factors,
primarily the change in revenue mix year over year, combined with
some transactions in 2020 Q3 that had non-recurring lower margins.
This was partially offset by continued quarter-over-quarter growth
in revenue from maintenance and support contracts, which, in
addition to being recurring revenue, also have higher margins.
Overall operating expenses for Q3 2020 were $3.5 million, down 9% quarter over quarter and
down 16% over Q3 2019. Both decreases were primarily the result of
decreased costs associated in sales ,marketing and travel, as
COVID-19 has prompted the suspension of nearly all business travel
and the cancelation of in-person marketing events from March 2020 onward.
In the quarter, the Company continued to participate in the
Canada Emergency Wage Subsidy
("CEWS") program, where the Company has recognized $1.0 million of CEWS benefit as part of other
income, covering periods up to the end of September.
Net loss for Q3 2020 was $0.3
million, or ($0.02) per share,
an improvement of 60% over Q2 2020 and down 41% from the net loss
of $0.2 million, or ($0.01) per share, for Q3 2019.
Adjusted EBITDA loss for Q3 2020 was $0.4
million, an improvement of 63% over Q2 2020 and as compared
to an essentially break-even Adjusted EBITDA for Q3 2019.
Conference Call and Webcast – November
12, 2020 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday November 12,
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 9339278. A recording of the call will be available through
November 19, 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
certain non-IFRS metrics, including "Bookings", "Order
Backlog","Adjusted EBITDA" and "Adjusted EBITDA Margin". Further
information including definitions of these measures and a
reconciliation to their closest IFRS measure, if applicable, can be
found in the Company's Management Discussion and Analysis for the
three and nine months ended September 30, 2020 ("Q3 2020
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and nine months ended
September 30, 2020 can be found in the condensed consolidated
interim statement of financial position, statement of comprehensive
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 and
nine months ended September 30, 2020 and the Q3 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
September 30,
|
Nine months ended
September 30,
|
|
|
(unaudited)
|
(unaudited)
|
(in
thousands)
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
$
|
5,235
|
$
|
7,089
|
$
|
13,833
|
$
|
18,645
|
Net profit
(loss)
|
(350)
|
(248)
|
(2,251)
|
(2,420)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
51
|
44
|
142
|
280
|
|
Depreciation and
amortization
|
263
|
210
|
800
|
647
|
|
Covid-19 related
Canada
|
|
|
|
|
|
Emergency Wage
Subsidy
|
(335)
|
-
|
(1,041)
|
-
|
|
Finance (income)
expense
|
7
|
(11)
|
16
|
(43)
|
|
(Gain) loss on fair
market value
|
|
|
|
|
|
of financial
instruments
|
(77)
|
(27)
|
(150)
|
(10)
|
|
Foreign exchange
(gain) loss
|
18
|
(6)
|
(51)
|
94
|
|
Income tax
expense
|
14
|
5
|
58
|
12
|
|
Total
|
(59)
|
215
|
(226)
|
980
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(409)
|
$
|
(33)
|
$
|
(2,477)
|
$
|
(1,440)
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-8%
|
0%
|
-18%
|
-8%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
5,134,358
|
|
$
|
6,507,606
|
|
Trade
receivables
|
|
3
|
4,160,467
|
|
7,089,043
|
|
Other
receivables
|
|
|
442,290
|
|
260,216
|
|
Inventories
|
|
4
|
6,513,001
|
|
7,707,578
|
|
Deferred cost of
revenue
|
|
11
|
1,054
|
|
6,910
|
|
Prepaid expenses and
other deposits
|
|
|
311,876
|
|
285,519
|
|
|
|
|
16,563,046
|
|
21,856,872
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
5
|
955,815
|
|
999,435
|
|
Intangible
assets
|
|
6
|
1,271,374
|
|
1,373,526
|
|
Right of use
assets
|
|
7
|
616,958
|
|
798,080
|
|
Other
assets
|
|
|
62,437
|
|
76,284
|
|
|
|
|
2,906,584
|
|
3,247,325
|
Total
Assets
|
|
|
$
|
19,469,630
|
|
$
|
25,104,197
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
10
|
$
|
3,812,267
|
|
$
|
6,035,496
|
|
Income tax
payable
|
|
|
12,398
|
|
12,398
|
|
Deferred
revenue
|
|
11
|
1,765,428
|
|
1,966,282
|
|
Lease
liabilities
|
|
12
|
239,774
|
|
277,945
|
|
Borrowings
|
|
13
|
-
|
|
716,832
|
|
|
|
|
5,829,867
|
|
9,008,953
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
11
|
298,194
|
|
429,414
|
|
Lease
liabilities
|
|
12
|
577,784
|
|
788,572
|
|
|
|
|
875,978
|
|
1,217,986
|
Total
Liabilities
|
|
|
6,705,845
|
|
10,226,939
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
8
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,663,320
|
|
9,525,694
|
Deficit
|
|
|
(169,828,876)
|
|
(167,577,777)
|
|
|
|
|
12,763,785
|
|
14,877,258
|
Total Liabilities
and Equity
|
|
|
$
|
19,469,630
|
|
$
|
25,104,197
|
REDLINE
COMMUNICATIONS GROUP INC
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
15
|
|
$
|
5,234,885
|
|
$
|
7,089,235
|
|
$
|
13,832,804
|
|
$
|
18,644,734
|
Cost of
revenue
|
|
|
|
2,506,794
|
|
3,291,151
|
|
5,909,158
|
|
8,543,973
|
Gross
profit
|
|
|
|
2,728,091
|
|
3,798,084
|
|
7,923,646
|
|
10,100,761
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
946,317
|
|
1,063,385
|
|
3,116,847
|
|
2,376,048
|
|
General and
administrative
|
|
|
|
1,179,184
|
|
1,156,924
|
|
3,599,198
|
|
3,766,480
|
|
Sales and
marketing
|
|
|
|
1,103,574
|
|
1,588,275
|
|
3,959,091
|
|
5,563,229
|
|
Operations and
customer support
|
|
|
|
221,574
|
|
276,808
|
|
667,848
|
|
763,042
|
|
|
|
|
|
3,450,649
|
|
4,085,392
|
|
11,342,984
|
|
12,468,799
|
Loss before
undernoted items
|
|
|
|
(722,558)
|
|
(287,308)
|
|
(3,419,338)
|
|
(2,368,038)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Covid-19 related
Canada Emergency Wage Subsidy
|
18
|
|
(334,763)
|
|
-
|
|
(1,040,717)
|
|
-
|
|
Finance (income)
expense
|
|
16
|
|
7,422
|
|
(10,966)
|
|
16,179
|
|
(43,195)
|
|
(Gain) loss on fair
market value of financial instruments
|
|
|
(77,476)
|
|
(27,073)
|
|
(151,169)
|
|
(9,913)
|
|
Foreign exchange
(gain) loss
|
|
|
|
17,680
|
|
(6,237)
|
|
(51,170)
|
|
93,528
|
|
|
|
|
|
(387,137)
|
|
(44,276)
|
|
(1,226,877)
|
|
40,420
|
Loss before income
taxes
|
|
|
|
(335,421)
|
|
(243,032)
|
|
(2,192,461)
|
|
(2,408,458)
|
Income tax
expense
|
|
|
|
14,498
|
|
4,967
|
|
58,644
|
|
12,024
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(349,919)
|
|
$
|
(247,999)
|
|
$
|
(2,251,105)
|
|
$
|
(2,420,482)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8
|
|
$
|
(0.02)
|
|
$
|
(0.01)
|
|
$
|
(0.13)
|
|
$
|
(0.14)
|
|
Basic and
diluted
|
|
9
|
|
$
|
(0.02)
|
|
$
|
(0.01)
|
|
$
|
(0.13)
|
|
$
|
(0.14)
|
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
|
|
-
|
-
|
(2,420,482)
|
(2,420,482)
|
|
Stock option
expense
|
|
-
|
188,772
|
-
|
188,772
|
Balance at
September 30, 2019
|
|
$
|
172,929,341
|
$
|
9,481,093
|
$
|
(166,253,421)
|
$
|
16,157,013
|
Balance at
January 1, 2020
|
|
$
|
172,929,341
|
$
|
9,525,694
|
$
|
(167,577,777)
|
$
|
14,877,258
|
|
Net loss
|
|
-
|
-
|
(2,251,105)
|
(2,251,105)
|
|
Stock option
expense
|
|
-
|
137,626
|
-
|
137,626
|
Balance at
September 30, 2020
|
|
$
|
172,929,341
|
$
|
9,663,320
|
$
|
(169,828,882)
|
$
|
12,763,779
|
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,
|
Note
|
2020
|
2019
|
|
2020
|
2019
|
Cash flows from (
used in) operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(349,919)
|
$
|
(247,999)
|
|
$
|
(2,251,105)
|
$
|
(2,420,482)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
7,422
|
(10,966)
|
|
16,179
|
(43,195)
|
|
|
Depreciation and
amortization of non-current assets
|
|
263,423
|
210,422
|
|
800,695
|
647,741
|
|
|
Stock option
expense
|
|
50,618
|
38,009
|
|
137,626
|
188,772
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(5,483)
|
17,385
|
|
39,285
|
(29,800)
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
17,774
|
(21,561)
|
|
(50,456)
|
75,413
|
|
|
(Gain) Loss on
disposal of assets
|
|
|
(1,801)
|
|
5,668
|
(1,801)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,165)
|
(16,511)
|
|
(1,302,108)
|
(1,583,352)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase)
in deferred cost of revenue
|
|
1,141
|
(3,155)
|
|
5,856
|
(8,349)
|
|
|
(Decrease) increase
in deferred revenue
|
|
(172,612)
|
341,324
|
|
(332,074)
|
124,663
|
|
|
Change in other
non-cash operating assets and liabilities
|
17
|
489,891
|
113,864
|
|
1,705,346
|
999,514
|
Cash flows generated
by (used in) operating activities
|
|
302,255
|
435,522
|
|
77,020
|
(467,524)
|
|
|
|
|
|
|
|
Cash flows generated
by (used in) investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
5
|
(90,048)
|
(15,739)
|
|
(239,296)
|
(112,752)
|
|
Proceeds on sale of
property, plant and equipment
|
|
-
|
25,812
|
|
-
|
25,812
|
|
Acquisition of
intangible assets
|
6
|
(109,750)
|
-
|
|
(240,173)
|
(14,100)
|
Cash flows (used in)
generated by investing activities
|
|
(199,798)
|
10,073
|
|
(479,469)
|
(101,040)
|
|
|
|
|
|
|
|
Cash flows generated
by (used in) financing activities:
|
|
|
|
|
|
|
|
Interest
income
|
|
2,704
|
31,331
|
|
22,255
|
109,876
|
|
Interest
expense
|
|
(10,126)
|
(13,250)
|
|
(33,748)
|
(41,041)
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(701,491)
|
(735,505)
|
|
Repayment of lease
liabilities
|
|
(48,781)
|
(64,136)
|
|
(218,530)
|
(234,803)
|
Cash used in
financing activities
|
|
(56,203)
|
(46,055)
|
|
(931,514)
|
(901,473)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
5,483
|
(17,385)
|
|
(39,285)
|
29,800
|
Increase (decrease)
in cash
|
|
51,737
|
382,155
|
|
(1,373,248)
|
(1,440,237)
|
Cash, beginning of
the period
|
|
5,082,621
|
7,803,453
|
|
6,507,606
|
9,625,845
|
Cash, end of the
period
|
|
$
|
5,134,358
|
$
|
8,185,608
|
|
$
|
5,134,358
|
$
|
8,185,608
|
SOURCE Redline Communications Group Inc.