TORONTO, March 13, 2019 /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 fourth quarter and the year
ended December 31, 2018.
Key financial highlights for the three months ended December 31, 2018 ("Q4 2018") include:
- Revenues of $7.5 million, down 9%
over Q4 2017
- Gross margins of 55%, down 1 percentage point from Q4 2017
- Operating expenses of $4.1
million, up 7% over Q4 2017
- Net profit of $0.2 million, down
$0.6 million from Q4 2017
- Cash of $9.6 million, down
$0.1 million from Q3 2018
- Adjusted EBITDA1 of $0.2
million, down $0.8 million
over Q4 2017
- Bookings1 of $11.0
million, up 96% over Q4 2017
- Order Backlog1 of $10.1
million, up 28% from Q3 2018
Key financial highlights for the year ended December 31, 2018 include:
- Revenues of $27.1 million, up 19%
over 2017
- Gross margins of 52%, down 2 percentage points over 2017
- Operating expenses of $14.8
million, up 8% over 2017
- Net loss of $0.4 million, an
improvement of $1.2 million over
2017
- Cash of $9.6 million as of
December 31, 2018, down $2.3 million from 2017
- Adjusted EBITDA1 of $0.3
million, an improvement of $0.6
million over 2017
- Bookings1 of $33.1
million, up 30% over 2017
- Order Backlog1 of $10.1
million, up 65% from 2017
Financial Review
Revenue in the fourth quarter of 2018 was $7.5 million, up 14% over the third quarter of
2018, due to a large shipment to a major telecom service provider
in Africa. Annual revenue for 2018
was $27.1 million, up 19% over 2017,
due to increased activities in oil & gas and military sectors.
Revenue for the fourth quarter of 2018 was down 9% over the same
period in 2017, because a large offshore oil & gas deployment
in Q4 2017 was not repeated in Q4 2018.
"Redline ended 2018 showing revenue and bookings growth over
last year. Healthy gross margins supported a profitable fourth
quarter and a reduced net loss for the year as compared to 2017,"
stated Robert Williams, Redline's
outgoing CEO.
Order Bookings for the fourth quarter and year ended
December 31, 2018 were $11.0 million and $33.1
million respectively, up 96% and 30% over the same periods
in 2017. The increase in Order Bookings year over year came from
all sectors, including oil & gas, military and telecom service
providers.
"We are seeing increasing demand from both new and existing
clients across multiple vertical markets and in multiple
geographies for both our traditional RDL-3000 product as well as
our more recently introduced iLTETM product line which
we continue to roll out," added Mr. Williams.
Overall gross margin for the fourth quarter and year ended
December 31, 2018 was 55% and 52%
respectively, as compared to 56% and 54% in the same periods in
2017, with the decrease largely attributed to ongoing industry
challenges associated with shortages of some product
components.
Overall operating expenses for the fourth quarter and year ended
December 31, 2018 were $4.1 million and $14.8
million, up 7% and 8% respectively over the same periods in
2017. The increase in operating expenses in the fourth
quarter 2018 over the same period in 2017 was the result of
severance costs and sales commissions. The increase in operating
expenses in the twelve months ended December
31, 2018 was primarily a result of workforce additions in
support of market expansion and higher commissions related to
improved revenues.
Adjusted EBITDA for the fourth quarter 2018 was $0.2 million, down $0.8
million over the Adjusted EBITDA of $1.0 million for the same period in 2017.
The adjusted EBITDA for the year ended December 31, 2018 was $0.3
million, an improvement of $0.6
million over the same period in 2017.
Net Profit for the fourth quarter of 2018 was $0.2 million, or $0.01 per share, as compared to $0.8 million, or $0.05 per share, in the fourth quarter of 2017.
For the full year 2018, the Company reported a Net Loss of
$0.4 million, or ($0.02) per share, as compared to a Net Loss of
$1.6 million, or ($0.09) per share, in 2017.
At December 31st, 2018,
Redline held cash of $9.6 million,
down $0.1 million from September 30, 2018, and down $2.3 million from December
31, 2017.
"It has been a pleasure serving as CEO at Redline for the past 5
years," said Robert Williams. "I am
pleased to hand the reins to Stephen
Sorocky, confident in his demonstrated track record of
transitioning hardware companies to generate increased amounts of
recurring revenues. I wish Stephen and the rest of the Redline team
all the best moving forward."
"On behalf of the board of Redline and the entire company, I
wish to thank Rob for his years of dedicated services and
leadership. Rob has made a solid contribution as we evolved our
business, especially during the oil and gas downturn as we reduced
costs and right sized the business," said Nizar J. Somji, Chairman.
Conference Call and Webcast – March
14th, 2019 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday, March 14,
2019 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 9976925. A recording of the call will be available through
March 21, 2019 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 "Orders or Bookings", "Shipped or
Shipments", "Backlog", "EBITDA", 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 and twelve months ended December 31, 2018 ("Q4 and 2018
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, 2018 can be found in the consolidated
annual 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 Consolidated
Financial Statements of the Company for the year ended December 31,
2018 and the Q4 and 2018 Year 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
December 31,
|
Year ended December
31,
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
$
|
7,522
|
$
|
8,302
|
$
|
27,103
|
$
|
22,768
|
Net profit
(loss)
|
|
206
|
|
785
|
|
(389)
|
|
(1,596)
|
Add back:
|
|
|
|
|
|
|
|
|
Share based
payments
|
|
45
|
|
74
|
|
305
|
|
379
|
Depreciation and
amortization
|
|
154
|
|
154
|
|
605
|
|
721
|
Finance (income)
expense
|
|
(19)
|
|
7
|
|
(58)
|
|
25
|
Gain on fair market
value
of financial
instruments
|
|
(130)
|
|
-
|
|
(141)
|
|
-
|
Foreign exchange
(gain) loss
|
|
(65)
|
|
(38)
|
|
(71)
|
|
87
|
Income tax expense
(recovery)
|
|
10
|
|
(4)
|
|
27
|
|
16
|
Total
|
|
(5)
|
|
193
|
|
667
|
|
1,228
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
201
|
$
|
978
|
$
|
278
|
$
|
(368)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
3%
|
|
12%
|
|
1%
|
|
-2%
|
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.
|
|
|
|
|
Consolidated
Statements of Financial Position
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
|
9,625,845
|
$
|
11,960,062
|
Trade
receivables
|
|
9,857,857
|
|
8,160,646
|
Other
receivables
|
|
392,632
|
|
304,526
|
Inventories
|
|
6,605,517
|
|
5,438,530
|
Prepaid expenses and
other deposits
|
|
308,273
|
|
211,511
|
|
|
26,790,124
|
|
26,075,275
|
Non-current
assets:
|
|
|
|
|
Property, plant and
equipment
|
|
800,374
|
|
829,720
|
Intangible
assets
|
|
1,277,637
|
|
1,169,733
|
Other
assets
|
|
73,538
|
|
83,600
|
|
|
2,151,549
|
|
2,083,053
|
Total
Assets
|
$
|
28,941,673
|
$
|
28,158,328
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade and other
payables
|
$
|
7,415,403
|
$
|
5,698,664
|
Income tax
payable
|
|
10,741
|
|
10,741
|
Deferred
revenue
|
|
1,626,687
|
|
1,275,875
|
Borrowings
|
|
705,413
|
|
792,051
|
|
|
9,758,244
|
|
7,777,331
|
Non-current
liabilities:
|
|
|
|
|
Borrowings
|
|
659,522
|
|
1,434,388
|
Other
payables
|
|
135,184
|
|
169,793
|
|
|
794,706
|
|
1,604,181
|
Total
Liabilities
|
|
10,552,950
|
|
9,381,512
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
9,292,321
|
|
9,155,798
|
Deficit
|
|
(163,832,939)
|
|
(163,308,323)
|
|
|
18,388,723
|
|
18,776,816
|
Total liabilities
and equity
|
$
|
28,941,673
|
$
|
28,158,328
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Comprehensive Income (Loss)
|
(Expressed in U.S.
dollars)
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
|
$
|
7,522,023
|
$
|
8,302,334
|
$
|
27,103,427
|
$
|
22,768,094
|
Cost of
revenue
|
|
|
3,373,562
|
|
3,680,267
|
|
12,984,851
|
|
10,517,675
|
Gross
profit
|
|
|
4,148,461
|
|
4,622,067
|
|
14,118,576
|
|
12,250,419
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
739,306
|
|
647,162
|
|
2,533,895
|
|
2,330,265
|
Administration and
finance
|
|
|
1,065,240
|
|
1,492,753
|
|
4,305,879
|
|
4,915,038
|
Sales and
marketing
|
|
|
2,112,638
|
|
1,550,475
|
|
7,077,265
|
|
5,745,227
|
Operations and
customer support
|
|
|
228,973
|
|
181,485
|
|
833,607
|
|
728,122
|
|
|
|
4,146,157
|
|
3,871,875
|
|
14,750,646
|
|
13,718,652
|
Profit (loss) before
undernoted items
|
|
|
2,304
|
|
750,192
|
|
(632,070)
|
|
(1,468,233)
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
(18,650)
|
|
6,793
|
|
(58,923)
|
|
24,822
|
Gain on fair market
value of financial instruments
|
|
|
(130,224)
|
|
-
|
|
(140,960)
|
|
-
|
Foreign exchange
(gain) loss
|
|
|
(65,357)
|
|
(38,059)
|
|
(70,946)
|
|
87,184
|
|
|
|
(214,231)
|
|
(31,266)
|
|
(270,829)
|
|
112,006
|
Profit (loss) before
income taxes
|
|
|
216,535
|
|
781,458
|
|
(361,241)
|
|
(1,580,239)
|
Income tax expense
(recovery)
|
|
|
9,949
|
|
(3,647)
|
|
27,375
|
|
15,685
|
Net profit (loss) and
total comprehensive income (loss)
|
|
$
|
206,586
|
$
|
785,105
|
$
|
(388,616)
|
$
|
(1,595,924)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.01
|
$
|
0.05
|
$
|
(0.02)
|
$
|
(0.09)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Changes in Equity
|
(Expressed in U.S.
dollars)
|
|
|
Share
capital
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2017
|
$
|
172,929,341
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
Net loss
|
|
-
|
|
-
|
|
(1,595,924)
|
|
(1,595,924)
|
Stock option
expense
|
|
-
|
|
157,553
|
|
-
|
|
157,553
|
Balance at
December 31, 2017
|
$
|
172,929,341
|
$
|
9,155,798
|
$
|
(163,308,323)
|
$
|
18,776,816
|
IFRS 15 transition
adjustment
|
|
-
|
|
-
|
|
(136,000)
|
|
(136,000)
|
Net loss
|
|
-
|
|
-
|
|
(388,616)
|
|
(388,616)
|
Stock option
expense
|
|
-
|
|
136,523
|
|
-
|
|
136,523
|
Balance at
December 31, 2018
|
$
|
172,929,341
|
$
|
9,292,321
|
$
|
(163,832,939)
|
$
|
18,388,723
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Consolidated
Statements of Cash Flows
|
(Expressed in U.S.
dollars)
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
2018
|
2017
|
2018
|
2017
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
|
|
|
|
Net profit
(loss)
|
$
|
206,586
|
$
|
785,105
|
$
|
(388,616)
|
$
|
(1,595,924)
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(18,650)
|
|
6,793
|
|
(58,923)
|
|
24,822
|
Depreciation and
amortization of non-current assets
|
|
153,650
|
|
154,449
|
|
604,987
|
|
721,068
|
Stock option
expense
|
|
20,884
|
|
31,473
|
|
136,523
|
|
157,553
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
66,182
|
|
2,974
|
|
125,718
|
|
(83,917)
|
Foreign exchange
(gain) loss on borrowings
|
|
(73,042)
|
|
(11,079)
|
|
(122,229)
|
|
160,861
|
IFRS 15 transition
adjustment
|
|
-
|
|
-
|
|
(136,000)
|
|
-
|
|
|
355,610
|
|
969,715
|
|
161,460
|
|
(615,537)
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase in deferred
revenue
|
|
368,816
|
|
252,476
|
|
350,812
|
|
315,400
|
Change in other
non-cash operating assets and liabilities
|
|
(551,069)
|
|
(285,142)
|
|
(1,356,874)
|
|
1,913,102
|
Cash from (used in)
operating activities
|
|
173,357
|
|
937,049
|
|
(844,602)
|
|
1,612,965
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(30,611)
|
|
(3,589)
|
|
(226,866)
|
|
(54,864)
|
Acquisition of
intangible assets
|
|
(246,285)
|
|
(24,404)
|
|
(456,679)
|
|
(51,364)
|
Cash used in
investing activities
|
|
(276,896)
|
|
(27,993)
|
|
(683,545)
|
|
(106,228)
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
|
|
Net finance
income
|
|
32,740
|
|
15,313
|
|
121,213
|
|
66,881
|
Repayment of
borrowings
|
|
-
|
|
-
|
|
(801,565)
|
|
(844,708)
|
Cash used in
financing activities
|
|
32,740
|
|
15,313
|
|
(680,352)
|
|
(777,827)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(66,182)
|
|
(2,974)
|
|
(125,718)
|
|
83,917
|
Increase (decrease)
in cash
|
|
(136,981)
|
|
921,395
|
|
(2,334,217)
|
|
812,827
|
Cash, beginning of
the period
|
|
9,762,826
|
|
11,038,667
|
|
11,960,062
|
|
11,147,235
|
Cash, end of the
period
|
$
|
9,625,845
|
$
|
11,960,062
|
$
|
9,625,845
|
$
|
11,960,062
|
SOURCE Redline Communications Group Inc.