TORONTO, Nov. 8, 2017 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
wide-area wireless networks for the most challenging applications
and locations, today announced operating results (in US dollars
unless otherwise noted) for the three months ended September 30, 2017 (Q3 2017).
Q3 2017 Financial Highlights:
- Revenues of $5.2 million,
unchanged from Q3 2016
- Gross margins of 50%, down 6 percentage points over Q3
2016
- Operating expenses of $3.5
million, a reduction of 14% over Q3 2016
- Net loss of $1.0 million, an
improvement of $0.2 million over Q3
2016
- Adjusted EBITDA loss of $0.6
million, an improvement of $0.3
million over Q3 2016
- Cash of $11.0 million, down
$0.5 million from Q2 2017
- Bookings of $8.4 million, up 102%
over Q3 2016
- Order Backlog of $9.1 million, up
44% over Q2 2017
Financial Review
Order Bookings for Q3 2017 were $8.4
million, up 38% over Q2 2017 and up 102% from the same
period in 2016. Total revenue for Q3 2017 was $5.2 million, up 6% over Q2 2017 and unchanged
from the same period in 2016.
"Redline has now seen four consecutive quarters of Bookings
growth, fueled most recently by an increase in orders from the oil
and gas sector and growing revenue from our LTE solution," stated
Robert Williams, Redline CEO. "This
growth in orders coupled with ongoing interest in our LTE product
line is encouraging, and we are focused on having this trend
continue."
Overall gross margin for Q3 2017 was 50%, down six percentage
points over the same period in 2016 and down two percentage points
over Q2 2017. The decrease is attributed to an increase in
lower-margin third party product sales in the quarter.
Overall operating expenses for Q3 2017 were $3.5 million, down 14% over the same period in
2016, and up 9% over $3.2 million in
Q2 2017. The year-over-year decrease in operating costs is
attributed to cost reduction initiatives implemented during the
fourth quarter of 2016 to reduce compensation costs and contractual
costs, partially offset by a planned increase in spending in Q3
2017 in support of the Company's growth in orders.
Net Loss for Q3 2017 was $1.0
million, or ($0.06) per share,
an improvement of $0.2 million or 18%
as compared to a Net Loss of $1.2
million, or ($0.07) per share
in the same period in 2016. Net Loss for Q2 2017 was $0.7 million.
Adjusted EBITDA loss for Q3 2017 was $0.6
million, an improvement of $0.3
million, or 34% over the same period in 2016. Adjusted
EBITDA loss for Q2 2017 was $0.4
million.
At September 30, 2017, Redline
held cash of $11.0 million, down
$0.5 million from Q2 2017 and down
$0.1 million from December 31, 2016.
Conference Call and Webcast – November
9th, 2017 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday November 9,
2017 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 98024063. A recording of the call will be available
through November 17, 2017 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
several non-IFRS metrics, including "Orders or Bookings", "Shipped
or Shipments", "Backlog", "EBITDA", "Adjusted EDITDA (Loss)", and
"EPS excluding non-cash gain (loss) on fair market value of
financial instruments". 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 nine months ended
September 30, 2017 ("Q3 2017 MD&A"), copies of which are
available on SEDAR at www.sedar.com. Further details on the three
and nine months ended September 30, 2017 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 and nine
months ended September 30, 2017 and the Q3 2017
MD&A.
|
Adjusted EBITDA
Loss
|
|
|
|
|
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
|
|
|
|
The table below
reconciles Adjusted EBITDA loss to the most directly comparable
IFRS measure:
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Revenue
|
$
|
5,203
|
$
|
5,210
|
|
$
|
14,466
|
$
|
16,432
|
Net loss
|
(968)
|
(1,182)
|
|
(2,381)
|
(4,656)
|
Add back:
|
|
|
|
|
|
|
Share based
payments
|
147
|
53
|
|
305
|
227
|
|
Depreciation and
amortization
|
172
|
256
|
|
567
|
772
|
|
Finance (income)
expense
|
4
|
23
|
|
18
|
(179)
|
|
Loss on fair market
value
of financial
instruments
|
-
|
-
|
|
-
|
16
|
|
Foreign exchange
(gain) loss
|
55
|
(35)
|
|
125
|
108
|
|
Income tax
expense
|
7
|
1
|
|
19
|
28
|
|
Total
|
385
|
298
|
|
1,034
|
972
|
|
|
|
|
|
|
|
Adjusted EBITDA
loss
|
$
|
(583)
|
$
|
(884)
|
|
$
|
(1,347)
|
$
|
(3,684)
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-11%
|
-17%
|
|
-9%
|
-22%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
11,038,667
|
$
|
11,147,235
|
|
Trade
receivables
|
|
7,155,813
|
|
7,837,145
|
|
Other
receivables
|
|
196,503
|
|
231,398
|
|
Inventories
|
|
5,729,053
|
|
5,513,985
|
|
Prepaid expenses and
other deposits
|
|
317,383
|
|
151,880
|
|
|
|
24,437,419
|
|
24,881,643
|
Non-current
assets:
|
|
|
|
|
|
Property, plant and
equipment
|
|
889,378
|
|
1,119,690
|
|
Intangible
assets
|
|
1,236,531
|
|
1,494,603
|
|
Other
assets
|
|
83,972
|
|
78,908
|
|
|
|
2,209,881
|
|
2,693,201
|
Total
Assets
|
$
|
26,647,300
|
$
|
27,574,844
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade and other
payables
|
$
|
5,255,196
|
$
|
3,322,059
|
|
Income tax
payable
|
|
10,741
|
|
10,741
|
|
Deferred
revenue
|
|
1,023,399
|
|
960,475
|
|
Borrowings
|
|
773,553
|
|
1,478,418
|
|
|
|
7,062,889
|
|
5,771,693
|
Non-current
liabilities:
|
|
|
|
|
|
Borrowings
|
|
1,441,859
|
|
1,340,165
|
|
Other
payables
|
|
182,314
|
|
247,799
|
|
|
|
1,624,173
|
|
1,587,964
|
Total
Liabilities
|
|
8,687,062
|
|
7,359,657
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
9,124,325
|
|
8,998,245
|
Deficit
|
|
(164,093,428)
|
|
(161,712,399)
|
|
|
|
17,960,238
|
|
20,215,187
|
Total liabilities
and equity
|
$
|
26,647,300
|
$
|
27,574,844
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
$
|
5,202,859
|
|
$
|
5,209,736
|
|
$
|
14,465,760
|
|
$
|
16,431,949
|
Cost of
revenue
|
|
2,597,019
|
|
2,309,535
|
|
6,837,408
|
|
7,395,306
|
Gross
profit
|
|
2,605,840
|
|
2,900,201
|
|
7,628,352
|
|
9,036,643
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
591,733
|
|
703,902
|
|
1,683,103
|
|
2,275,254
|
|
Administration and
finance
|
|
1,254,673
|
|
1,228,582
|
|
3,422,285
|
|
4,683,001
|
|
Sales and
marketing
|
|
1,467,343
|
|
1,894,061
|
|
4,194,752
|
|
5,923,678
|
|
Operations and
customer support
|
|
194,297
|
|
267,126
|
|
546,637
|
|
836,502
|
|
|
|
3,508,046
|
|
4,093,671
|
|
9,846,777
|
|
13,718,435
|
Loss before
undernoted items
|
|
(902,206)
|
|
(1,193,470)
|
|
(2,218,425)
|
|
(4,681,792)
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
3,602
|
|
22,887
|
|
18,029
|
|
(178,846)
|
|
Loss on fair market
value of financial instruments
|
|
-
|
|
-
|
|
-
|
|
16,314
|
|
Foreign exchange
(gain) loss
|
|
54,938
|
|
(34,585)
|
|
125,243
|
|
108,313
|
|
|
|
58,540
|
|
(11,698)
|
|
143,272
|
|
(54,219)
|
Loss before income
taxes
|
|
(960,746)
|
|
(1,181,772)
|
|
(2,361,697)
|
|
(4,627,573)
|
Income tax
expense
|
|
6,927
|
|
653
|
|
19,332
|
|
28,428
|
Net loss and total
comprehensive loss
|
|
$
|
(967,673)
|
|
$
|
(1,182,425)
|
|
$
|
(2,381,029)
|
|
$
|
(4,656,001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.06)
|
|
$
|
(0.07)
|
|
$
|
(0.14)
|
|
$
|
(0.27)
|
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, 2016
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
-
|
-
|
-
|
(4,656,001)
|
(4,656,001)
|
|
Conversion of
debenture
|
|
267,164
|
-
|
-
|
-
|
267,164
|
|
Expiry of
warrants
|
|
-
|
(310,000)
|
310,000
|
-
|
-
|
|
Stock option
expense
|
|
-
|
-
|
183,320
|
-
|
183,320
|
Balance at
September 30, 2016
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,950,735
|
$
|
(161,582,962)
|
$
|
20,297,114
|
Balance at
January 1, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
|
-
|
-
|
-
|
(2,381,029)
|
(2,381,029)
|
|
Stock option
expense
|
|
-
|
-
|
126,080
|
-
|
126,080
|
Balance at
September 30, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
9,124,325
|
$
|
(164,093,428)
|
$
|
17,960,238
|
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,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(967,673)
|
$
|
(1,182,425)
|
|
$
|
(2,381,029)
|
$
|
(4,656,001)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
3,602
|
22,887
|
|
18,029
|
(178,846)
|
|
|
Depreciation and
amortization of non-current assets
|
|
172,359
|
255,677
|
|
566,619
|
771,969
|
|
|
Gain on disposal of
assets
|
|
-
|
(10,213)
|
|
-
|
(10,213)
|
|
|
Stock option
expense
|
|
21,560
|
79,558
|
|
126,080
|
183,320
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(53,021)
|
19,644
|
|
(86,891)
|
(89,797)
|
|
|
Foreign exchange
(gain) loss on borrowings
|
|
84,018
|
(43,830)
|
|
171,940
|
172,584
|
|
|
Loss on fair market
value of financial instruments
|
|
-
|
-
|
|
-
|
16,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(739,155)
|
(858,702)
|
|
(1,585,252)
|
(3,790,670)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase (decrease)
in deferred revenue
|
|
161,627
|
(100,520)
|
|
62,924
|
(715,004)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
53,249
|
529,348
|
|
2,198,244
|
635,011
|
Cash from (used in)
operating activities
|
|
(524,279)
|
(429,874)
|
|
675,916
|
(3,870,663)
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(11,164)
|
(53,573)
|
|
(51,275)
|
(196,816)
|
|
Proceeds on sale of
property, plant and equipment
|
|
-
|
20,300
|
|
-
|
20,300
|
|
Acquisition of
intangible assets
|
|
(18,452)
|
-
|
|
(26,960)
|
(81,437)
|
Cash used in
investing activities
|
|
(29,616)
|
(33,273)
|
|
(78,235)
|
(257,953)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Finance
income
|
|
18,984
|
5,858
|
|
51,568
|
43,444
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(844,708)
|
-
|
Cash from (used in)
financing activities
|
|
18,984
|
5,858
|
|
(793,140)
|
43,444
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
53,021
|
(19,644)
|
|
86,891
|
89,797
|
Decrease in
cash
|
|
(481,890)
|
(476,933)
|
|
(108,568)
|
(3,995,375)
|
Cash, beginning of
the period
|
|
11,520,557
|
11,030,512
|
|
11,147,235
|
14,548,954
|
Cash, end of the
period
|
|
$
|
11,038,667
|
$
|
10,553,579
|
|
$
|
11,038,667
|
$
|
10,553,579
|
SOURCE Redline Communications Group Inc.