TORONTO, Aug. 4, 2016 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
mission-critical wireless networks, today announced unaudited
operating results1 for the three months ended
June 30, 2016 (Q2 2016).
Q2 2016 Financial Highlights
- $5.0M Total Revenue, down
44%
- 49% Gross Margin
- $2.2M Adjusted EBITDA2
loss
- $2.5M Net Loss
- $11.0M Cash
- $6.0M new Order
Bookings2
- $10.9M Order
Backlog2
Total revenue for Q2 2016 was $5.0
million, down 44% over the same period in 2015 as the
Company continues to see softness in the energy sector and focuses
on developing new markets. Overall operating expenses were
$5.0 million for Q2 2016, virtually
unchanged over the same period last year. The Company has made
further cost reductions that will have a positive impact in the
third quarter.
Overall gross margin for Q2 2016 was 49%, down 9 percentage
points from the 58% reported in the same period in 2015, largely
attributed to a large customer order sold at lower than usual
margins.
Adjusted EBITDA loss for Q2 2016 was $2.2
million or -43% of revenue, a decrease of $2.8 million over the Adjusted EBITDA of
$0.6 million or 7% of revenue
reported in the same period in 2015. The Adjusted EBITDA decrease
was primarily a result of the decrease in overall sales volume and
lower gross margins associated with a large order.
"Redline is committed to a strategy of market
diversification and we are executing on that strategy as we
continue our investment in the development of our LTE product line
which we expect to formally launch in the coming weeks," said
Robert Williams, Redline CEO.
"While we know this strategy will take some time, we believe
that we will begin to see the results of our efforts in the coming
quarters."
Net loss for Q2 2016 was $2.5
million or ($0.15) per share,
a $2.8 million decrease over the net
profit of $0.3 million, or
$0.02 per share reported in the same
period in 2015. As of June 30,
2016 the Company had a cash balance of $11.0 million, a decrease of $2.0 million over the $13.0 million as at March
31, 2016.
Order Bookings for the three months ended June 30, 2016 were $6.0
million, down 32% over the same period in 2015. The
Order Backlog at June 30, 2016 was
$10.9 million.
The Company had 17,215,469 common shares outstanding as of
June 30, 2016.
Conference Call and Webcast – August
5th, 2016 at 10:00 a.m.
ET
A conference call and webcast to discuss the Company's financial
results have been scheduled for August 5,
2016 at 10:00 a.m. Eastern
Time. To participate in the call, please dial 1-647-427-7450
approximately 10 minutes before the conference call, and provide
passcode 48141747
A recorded webcast of the call will be available on Redline's
website through October 31,
2016.
About Redline Communications
Redline Communications (www.rdlcom.com) is the creator of
powerful wide-area wireless networks for the most challenging
applications and locations. Used by oil and gas companies to manage
their assets, militaries for secure battlefield communications,
municipalities to remotely monitor highways, utilities and other
infrastructures, and telecom service providers to deliver premium
services, Redline's powerful and versatile networks reliably and
securely deliver voice, data, M2M and video communications for
mission-critical applications.
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 key metrics,
including "Orders or Bookings", "Backlog", "EBITDA", "Adjusted
EBITDA", "EPS excluding the non-cash expense relating to the fair
market adjustment on financial instruments", and "Amortized
Deferred Revenue". Further information including definitions
of these categories can be found in the Company's Management
Discussion and Analysis for the three months ended June 30, 2016
("Q2 2016 MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three month results ended
June 30, 2016 can be found in the condensed consolidated interim
statement of financial position, condensed consolidated interim
statement of comprehensive loss, 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 June 30, 2016
and the Q2 2016
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 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.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.
|
|
|
|
|
|
Condensed Consolidated Interim Statements of
Financial
Position
|
|
(Unaudited, expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
11,030,512
|
$
|
14,548,954
|
|
Trade
receivables
|
|
|
8,698,195
|
|
8,187,806
|
|
Other
receivables
|
|
|
501,837
|
|
466,668
|
|
Inventories
|
|
|
6,753,057
|
|
7,100,207
|
|
Prepaid expenses and other
deposits
|
|
|
468,740
|
|
266,578
|
|
|
|
|
27,452,341
|
|
30,570,213
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
1,308,791
|
|
1,389,727
|
|
Intangible
assets
|
|
|
1,763,996
|
|
1,974,672
|
|
Other
assets
|
|
|
81,542
|
|
64,755
|
|
|
|
|
3,154,329
|
|
3,429,154
|
Total
Assets
|
|
$
|
30,606,670
|
$
|
33,999,367
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
$
|
5,019,037
|
$
|
4,475,662
|
|
Income tax
payable
|
|
|
94,063
|
|
94,063
|
|
Deferred
revenue
|
|
|
920,247
|
|
1,534,731
|
|
Convertible debenture (principal and
interest)
|
|
|
-
|
|
224,595
|
|
Fair market value adjustment on convertible
debenture
|
|
|
-
|
|
11,817
|
|
Borrowings
|
|
|
781,963
|
|
2,833,752
|
|
|
|
|
6,815,310
|
|
9,174,620
|
Non-current
liabilities:
|
|
|
|
|
|
|
Borrowings
|
|
|
2,089,618
|
|
-
|
|
Other
payables
|
|
|
301,761
|
|
322,116
|
|
|
|
|
2,391,379
|
|
322,116
|
Total
Liabilities
|
|
|
9,206,689
|
|
9,496,736
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,662,177
|
Warrant
|
|
|
-
|
|
310,000
|
Contributed
surplus
|
|
|
8,871,177
|
|
8,457,415
|
Deficit
|
|
|
(160,400,537)
|
|
(156,926,961)
|
|
|
|
|
21,399,981
|
|
24,502,631
|
Total liabilities and
equity
|
|
$
|
30,606,670
|
$
|
33,999,367
|
REDLINE COMMUNICATIONS GROUP
INC.
|
Condensed Consolidated Interim Statements of
Comprehensive Income
(Loss)
|
(Unaudited, expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June
30,
|
Six months ended June
30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
$
|
5,005,605
|
$
|
9,007,030
|
$
|
11,222,213
|
$
|
18,625,694
|
Cost of
revenue
|
|
|
2,536,680
|
|
3,784,637
|
|
5,085,771
|
|
7,537,649
|
Gross
profit
|
|
|
2,468,925
|
|
5,222,393
|
|
6,136,442
|
|
11,088,045
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
715,793
|
|
656,583
|
|
1,571,352
|
|
1,390,325
|
|
Administration and
finance
|
|
|
2,010,261
|
|
1,526,511
|
|
3,454,419
|
|
3,135,121
|
|
Sales and
marketing
|
|
|
1,956,086
|
|
2,437,783
|
|
4,029,617
|
|
4,626,546
|
|
Operations and customer
support
|
|
|
297,663
|
|
333,799
|
|
569,376
|
|
630,057
|
|
|
|
|
4,979,803
|
|
4,954,676
|
|
9,624,764
|
|
9,782,049
|
Profit (loss) before undernoted
items
|
|
|
(2,510,878)
|
|
267,717
|
|
(3,488,322)
|
|
1,305,996
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
(4,849)
|
|
27,544
|
|
(201,733)
|
|
54,931
|
|
Loss on fair market value of financial
instruments
|
|
|
-
|
|
7,794
|
|
16,314
|
|
2,476
|
|
Foreign exchange loss
(gain)
|
|
|
12,303
|
|
(61,855)
|
|
142,898
|
|
(109,483)
|
|
|
|
|
7,454
|
|
(26,517)
|
|
(42,521)
|
|
(52,076)
|
Profit (loss) before income
taxes
|
|
|
(2,518,332)
|
|
294,234
|
|
(3,445,801)
|
|
1,358,072
|
Income tax
expense
|
|
|
27,126
|
|
3,138
|
|
27,775
|
|
3,528
|
Net profit (loss) and total comprehensive income
(loss)
|
|
$
|
(2,545,458)
|
$
|
291,096
|
$
|
(3,473,576)
|
$
|
1,354,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.15)
|
$
|
0.02
|
$
|
(0.20)
|
$
|
0.08
|
|
Diluted
|
|
$
|
(0.15)
|
$
|
0.02
|
$
|
(0.20)
|
$
|
0.08
|
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,
2015
|
|
$
|
172,617,023
|
$
|
310,000
|
$
|
8,167,450
|
$
|
(155,176,462)
|
$
|
25,918,011
|
|
Net
profit
|
|
|
-
|
|
-
|
|
-
|
|
1,354,544
|
|
1,354,544
|
|
Share-based
payments
|
|
|
-
|
|
-
|
|
211,327
|
|
-
|
|
211,327
|
Balance at
June 30,
2015
|
|
$
|
172,617,023
|
$
|
310,000
|
$
|
8,378,777
|
$
|
(153,821,918)
|
$
|
27,483,882
|
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
|
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,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
Net profit
(loss)
|
$
|
(2,545,458)
|
$
|
291,096
|
$
|
(3,473,576)
|
$
|
1,354,544
|
|
Adjustments to reconcile net profit (loss) to net
cash from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(4,849)
|
|
27,544
|
|
(201,733)
|
|
54,931
|
|
|
Depreciation and amortization of non-current
assets
|
|
255,479
|
|
218,892
|
|
516,292
|
|
424,675
|
|
|
Gain on disposal of
assets
|
|
-
|
|
-
|
|
-
|
|
(9,950)
|
|
|
Recognition of share based
payments
|
|
57,241
|
|
127,964
|
|
103,762
|
|
211,327
|
|
|
Foreign exchange (gain) loss on cash held in foreign
currency
|
|
(6,478)
|
|
(9,483)
|
|
(109,441)
|
|
359,034
|
|
|
Foreign exchange loss (gain) on
borrowings
|
|
15,188
|
|
60,203
|
|
216,414
|
|
(332,403)
|
|
|
Loss on fair market value of financial
instruments
|
|
-
|
|
7,794
|
|
16,314
|
|
2,476
|
|
|
|
|
(2,228,877)
|
|
724,010
|
|
(2,931,968)
|
|
2,064,634
|
|
Change in non-cash operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Decrease in deferred cost of
revenue
|
|
33,318
|
|
-
|
|
-
|
|
-
|
|
|
Decrease in deferred
revenue
|
|
(278,123)
|
|
(468,797)
|
|
(614,484)
|
|
(354,718)
|
|
|
Change in other non-cash operating assets and
liabilities
|
|
537,777
|
|
532,040
|
|
105,663
|
|
(1,350,955)
|
Cash from (used in) operating
activities
|
|
(1,935,905)
|
|
787,253
|
|
(3,440,789)
|
|
358,961
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing
activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and
equipment
|
|
(59,383)
|
|
(51,845)
|
|
(143,243)
|
|
(99,116)
|
|
Proceeds on sale of property, plant and
equipment
|
|
-
|
|
-
|
|
-
|
|
9,950
|
|
Acquisition of intangible
assets
|
|
(1,217)
|
|
(4,492)
|
|
(81,437)
|
|
(201,344)
|
Cash used in investing
activities
|
|
(60,600)
|
|
(56,337)
|
|
(224,680)
|
|
(290,510)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
33,811
|
|
10,749
|
|
37,586
|
|
20,334
|
Cash from financing
activities
|
|
33,811
|
|
10,749
|
|
37,586
|
|
20,334
|
Foreign exchange gain (loss) on cash held in foreign
currency
|
|
6,478
|
|
9,483
|
|
109,441
|
|
(359,034)
|
Increase (decrease) in
cash
|
|
(1,956,216)
|
|
751,148
|
|
(3,518,442)
|
|
(270,249)
|
Cash, beginning of the
period
|
|
12,986,728
|
|
15,342,680
|
|
14,548,954
|
|
16,364,077
|
Cash, end of the
period
|
$
|
11,030,512
|
$
|
16,093,828
|
$
|
11,030,512
|
$
|
16,093,828
|
SOURCE Redline Communications Group Inc.