TORONTO, March 12, 2015 /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
results¹ for the three months (fourth quarter) and the fiscal year
ended December 31, 2014.
Financial highlights for the fiscal year ended December 31, 2014 include:
- Cash of $16.4 million as of
December 31, 2014, up $2.9 million over 2013, with cash flow of
$3.2 million from operating
activities, up $6.8 million over
2013
- Order Bookings² were $40.8
million, up 10.7% over 2013
- Revenues were $36.4 million, up
14.9% over 2013
- $17.4 million Order Backlog² at
December 31, 2014, up 2.4% over
2013
- 56% overall gross margin, down five percentage points over
2013
- Operating expenses were $18.4
million, down 29.3% over 2013
- Adjusted EBITDA² of $3.0 million,
an increase of $8.6 million over the
Adjusted EBITDA loss of $5.6 million
in 2013
- EPS of $0.15 compared to EPS of
($0.29) in 2013, an improvement of
$0.44 per share
- Acquired the assets of PureWave Networks, a privately held
wireless technology company located in Santa Clara, California, for a cash purchase
price of $2 million in September 2014.
Financial Review
Order Bookings for the fourth quarter and year ended
December 31, 2014 were $12.0 million and $40.8
million respectively, up 88% and 11% over the same periods
in 2013. Management estimates that approximately 50% of total
Bookings for the year were from customers in the Energy sector,
accounting for the majority of the year-over-year growth in total
order value and providing a balanced mix of orders from different
market segments. Total recognized revenue for the fourth
quarter and year ended December 31,
2014 was $11.5 million and
$36.4 million, up 50% and 15% over
the same periods in 2013.
Gross margin on Redline product sales during the fourth quarter
and year ended December 31, 2014 was
69% and 67% respectively, up one percentage point over the same
periods in 2013. Overall gross margin for the fourth quarter
and year ended December 31, 2014 was
53% and 56% respectively, down eight and five percentage points
over the same periods in 2013. This was due to a larger percentage
of revenue from lower margin professional services and sales of
3rd party equipment.
Overall operating expenses for the fourth quarter and year ended
December 31, 2014, were $4.9 million and $18.4
million, an improvement of 17% and 29% over the same periods
in 2013. The restructuring announced on December 3, 2013 resulted in a cost savings of
$8.0 million which was partially
offset by $0.7 million in additional
costs incurred in the fourth quarter 2014 as a result of the
acquisition of the assets of PureWave Networks.
Adjusted EBITDA for the fourth quarter and year ended
December 31, 2014 was $1.4 million and $3.0
million respectively, an increase of $2.5 million and $8.6
million over the corresponding periods in 2013. The Adjusted
EBITDA increase for both periods was a result of the decrease in
operating costs and increase in revenue and gross profit as
compared to the corresponding periods in 2013.
"2014 was a year in which Redline realized growth in orders,
revenues, net income and cash, even as we completed the purchase of
the assets of PureWave Technologies and introduced new products,"
said Robert Williams, Redline CEO.
"It's a testament to the discipline and focus of our team that we
have grown in all areas while reducing our expenses, and it
positions us well going into 2015."
Increased revenues and decreased operating costs resulted in a
Net Profit for the fourth quarter of 2014 of $1.4 million, or $0.08 per share as compared to a Net Profit of
$0.1 million, or $0.01 per share in the fourth quarter of 2013.
For the full year 2014, Redline reported a Net Profit of
$2.5 million, or $0.15 per share, as compared to a Net Loss of
$4.1 million, ($0.29) per share in 2013.
At December 31st, 2014,
Redline held cash of $16.4 million,
up $2.9 million from the cash of
approximately $13.5 million at
December 31, 2013.
Conference Call and Webcast – March
13th, 2015 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Friday March 13, 2015
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 91333078. A
recording of the call will be available through April 30, 2015 on Redline's website.
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
|
All amounts reported
in this press release are in US dollars unless otherwise
stated.
|
2
|
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","EPS
excluding the non-cash expense relating to the fair market
adjustment on the Debenture", and "Amortized Deferred Revenue".
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, 2014 ("Q4 and 2014
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, 2014 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, 2014 and the Q4
and 2014 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.redlinecommunications.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,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
16,364,077
|
|
$
13,473,246
|
|
Trade
receivables
|
|
|
12,163,006
|
|
10,340,537
|
|
Other
receivables
|
|
|
780,313
|
|
1,155,514
|
|
Inventories
|
|
|
5,479,981
|
|
6,138,547
|
|
Deferred cost of
revenue
|
|
|
-
|
|
40,059
|
|
Prepaid expenses and
other deposits
|
|
|
595,174
|
|
928,350
|
|
|
|
|
35,382,551
|
|
32,076,253
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
1,590,011
|
|
1,768,479
|
|
Intangible
assets
|
|
|
1,943,678
|
|
59,809
|
|
Other
assets
|
|
|
77,250
|
|
99,753
|
|
|
|
|
3,610,939
|
|
1,928,041
|
Total
Assets
|
|
|
$
38,993,490
|
|
$
34,004,294
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
6,307,092
|
|
5,553,916
|
|
Income tax
payable
|
|
|
155,063
|
|
153,403
|
|
Deferred
revenue
|
|
|
1,467,123
|
|
1,105,333
|
|
Borrowings
|
|
|
4,311,077
|
|
4,981,078
|
|
|
|
|
12,240,355
|
|
11,793,730
|
Non-current
liabilities
|
|
|
|
|
|
|
Other
payables
|
|
|
478,311
|
|
788,592
|
|
Other financial
liability
|
|
|
159
|
|
111,548
|
|
Convertible debenture
(principal and interest)
|
|
|
265,614
|
|
287,175
|
|
Fair market value
adjustment on convertible debenture
|
|
|
91,040
|
|
920,739
|
|
|
|
|
835,124
|
|
2,108,054
|
Total
Liabilities
|
|
|
13,075,479
|
|
13,901,784
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,617,023
|
|
168,903,267
|
Share purchase
loan
|
|
|
-
|
|
(365,780)
|
Warrant
|
|
|
310,000
|
|
310,000
|
Contributed
surplus
|
|
|
8,167,450
|
|
8,911,025
|
Deficit
|
|
|
(155,176,462)
|
|
(157,656,002)
|
|
|
|
|
25,918,011
|
|
20,102,510
|
Total liabilities
and equity
|
|
|
$
38,993,490
|
|
$
34,004,294
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Comprehensive Income (Loss)
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$ 11,542,106
|
|
$ 7,687,118
|
|
$ 36,438,811
|
|
$ 31,702,847
|
Cost of
revenue
|
|
|
5,444,019
|
|
2,997,792
|
|
15,984,952
|
|
12,328,254
|
Gross
profit
|
|
|
6,098,087
|
|
4,689,326
|
|
20,453,859
|
|
19,374,593
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
792,432
|
|
1,206,873
|
|
3,031,637
|
|
6,049,163
|
|
Administration and
finance
|
|
|
1,685,415
|
|
2,099,519
|
|
6,029,204
|
|
8,173,840
|
|
Sales and
marketing
|
|
|
2,134,537
|
|
2,297,358
|
|
8,130,326
|
|
10,331,375
|
|
Operations and
customer support
|
|
|
307,912
|
|
331,170
|
|
1,210,641
|
|
1,485,420
|
|
|
|
|
4,920,296
|
|
5,934,920
|
|
18,401,808
|
|
26,039,798
|
Profit (loss) before
undernoted items
|
|
|
1,177,791
|
|
(1,245,594)
|
|
2,052,051
|
|
(6,665,205)
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(gains)
|
|
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
|
26,596
|
|
41,564
|
|
127,450
|
|
274,638
|
|
Restructuring
costs
|
|
|
-
|
|
841,069
|
|
-
|
|
841,069
|
|
Gain on fair market
value
of financial instruments
|
|
|
(105,098)
|
|
(2,301,672)
|
|
(556,228)
|
|
(3,778,206)
|
|
Foreign exchange
gain
|
|
|
(159,971)
|
|
(4,778)
|
|
(45,072)
|
|
(134,316)
|
|
|
|
|
(238,473)
|
|
(1,423,817)
|
|
(473,850)
|
|
(2,796,815)
|
Profit (loss) before
income taxes
|
|
|
1,416,264
|
|
178,223
|
|
2,525,901
|
|
(3,868,390)
|
Income tax
expense
|
|
|
3,293
|
|
51,114
|
|
46,361
|
|
248,634
|
Net profit (loss) and
total comprehensive income (loss)
|
|
|
$ 1,412,971
|
|
$ 127,109
|
|
$ 2,479,540
|
|
$ (4,117,024)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
0.08
|
|
$
0.01
|
|
$
0.15
|
|
$
(0.29)
|
|
Diluted
|
|
|
$
0.08
|
|
$
0.01
|
|
$
0.15
|
|
$
(0.29)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Changes in Equity
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Share
purchase
loan
|
Warrant
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2013
|
$ 152,123,803
|
$ (365,780)
|
$
310,000
|
$
8,361,465
|
$ (153,538,978)
|
$
6,890,510
|
|
Net loss
|
-
|
-
|
-
|
-
|
(4,117,024)
|
(4,117,024)
|
|
Conversion of
debenture
|
2,132,243
|
-
|
-
|
-
|
-
|
2,132,243
|
|
Conversion of
warrants
|
5,334,306
|
-
|
-
|
-
|
-
|
5,334,306
|
|
Private
placement
|
8,835,392
|
-
|
-
|
-
|
-
|
8,835,392
|
|
Exercise of
options
|
477,523
|
-
|
-
|
(209,795)
|
-
|
267,728
|
|
Share-based
payments
|
-
|
-
|
-
|
759,355
|
-
|
759,355
|
Balance at
December 31, 2013
|
$ 168,903,267
|
$ (365,780)
|
$
310,000
|
$
8,911,025
|
$ (157,656,002)
|
$ 20,102,510
|
|
Net profit
|
-
|
-
|
-
|
-
|
2,479,540
|
2,479,540
|
|
Exercise of
options
|
1,790,172
|
-
|
-
|
(835,117)
|
-
|
955,055
|
|
Conversion of
warrants
|
2,253,156
|
-
|
-
|
-
|
-
|
2,253,156
|
|
|
|
|
|
|
|
|
|
Share purchase loan
settlement
|
(329,572)
|
365,780
|
-
|
-
|
-
|
36,208
|
|
Repurchase and
cancellation of options
|
-
|
-
|
-
|
(201,793)
|
-
|
(201,793)
|
|
Share-based
payments
|
-
|
-
|
-
|
293,335
|
-
|
293,335
|
Balance at
December 31, 2014
|
$ 172,617,023
|
$
-
|
$
310,000
|
$
8,167,450
|
$ (155,176,462)
|
$ 25,918,011
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Cash Flows
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2014
|
2013
|
|
2014
|
2013
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$ 1,412,971
|
$
127,109
|
|
$ 2,479,540
|
$ (4,117,024)
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
26,596
|
41,564
|
|
127,450
|
274,638
|
|
|
Depreciation and
amortization of non-current assets
|
|
178,104
|
110,632
|
|
556,359
|
385,471
|
|
|
(Gain) Loss on
disposal of assets
|
|
(23,757)
|
-
|
|
(8,105)
|
28,963
|
|
|
Recognition of share
based payments
|
|
54,689
|
65,416
|
|
329,543
|
759,355
|
|
|
Foreign exchange loss
(gain) on cash held in foreign currency
|
|
198,866
|
(32,314)
|
|
580,622
|
138,322
|
|
|
Foreign exchange gain
on borrowings
|
|
(174,237)
|
(277,627)
|
|
(486,443)
|
(653,717)
|
|
|
Gain on fair market
value of Debenture
|
|
(105,098)
|
(2,301,672)
|
|
(556,228)
|
(3,778,206)
|
|
|
|
|
1,568,134
|
(2,266,892)
|
|
3,022,738
|
(6,962,198)
|
|
Change in non-cash
operating assets and liabilities
|
|
|
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
|
-
|
47,829
|
|
40,059
|
865,191
|
|
|
(Decrease) increase
in deferred revenue
|
|
(48,409)
|
(246,350)
|
|
361,790
|
(1,691,164)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(1,083,460)
|
1,658,351
|
|
(190,261)
|
4,216,856
|
Cash from (used in)
operating activities
|
|
436,265
|
(807,062)
|
|
3,234,326
|
(3,571,315)
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(7,264)
|
(24,424)
|
|
(403,762)
|
(1,226,822)
|
|
Proceeds on sale of
property, plant and equipment
|
|
201,705
|
-
|
|
216,129
|
-
|
|
Acquisition of
intangible assets
|
|
(191,988)
|
-
|
|
(2,066,022)
|
(32,955)
|
Cash from (used in)
investing activities
|
|
2,453
|
(24,424)
|
|
(2,253,655)
|
(1,259,777)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Finance income
(costs)
|
|
16,198
|
18,348
|
|
58,680
|
(68,899)
|
|
Proceeds from
exercise of options
|
|
18,015
|
-
|
|
955,055
|
267,728
|
|
Proceeds from
conversion of debenture and warrants
|
|
-
|
-
|
|
1,919,290
|
2,931,614
|
|
Repayment of
borrowings
|
|
(442,243)
|
-
|
|
(442,243)
|
-
|
|
Repayment of bank
indebtedness
|
|
-
|
(3,353,590)
|
|
-
|
(2,296,855)
|
|
Proceeds from private
placement
|
|
-
|
-
|
|
-
|
9,322,340
|
Cash (used in) from
financing activities
|
|
(408,030)
|
(3,335,242)
|
|
2,490,782
|
10,155,928
|
Foreign exchange loss
on cash held in foreign currency
|
|
(198,866)
|
32,314
|
|
(580,622)
|
(138,322)
|
(Decrease) increase
in cash
|
|
(168,178)
|
(4,134,414)
|
|
2,890,831
|
5,186,514
|
Cash, beginning of
the period
|
|
16,532,255
|
17,607,660
|
|
13,473,246
|
8,286,732
|
Cash, end of the
period
|
|
$ 16,364,077
|
$ 13,473,246
|
|
$ 16,364,077
|
$ 13,473,246
|
SOURCE Redline Communications Group Inc.