TORONTO, May 7, 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 first quarter ended
March 31, 2019.
Key financial highlights for the first quarter ended
March 31, 2019 ("Q1 2019")
include:
- Revenues of $5.8 million, up 2%
over Q1 2018
- Gross margins of 50%, down 2 percentage points from Q1
2018
- Operating expenses of $4 million,
up 19% over Q1 2018
- Net loss of $1.3 million, an
increase of $0.9 million from Q1
2018
- Cash of $9.3 million, down
$0.4 million from Q1 2018
- Adjusted EBITDA1 loss of $0.8
million, an increase of $0.5
million over Q1 2018
- Bookings1 of $5.7
million, down 22% over Q1 2018
- Order Backlog1 of $9.8
million, down 2% from Q4 2018
Financial Review
Revenue for the first quarter of 2019 was up 2% over the same
period in 2018, driven by increased revenue from telecom service
providers.
Order Bookings for the first quarter were $5.7 million, down 22% over Q1 2018 due to lower
bookings from the mining sector. Order backlog was
$9.8 million, down 2% from Q4 2018,
and up 24% when compared to the same period in 2018.
Overall gross margin for the first quarter was 50%, as compared
to 52% in the same period in 2018. The decrease reflects a shift in
product mix in Q1 2019 as the Company shipped more lower-margin TV
White Space products to the rural ISP market.
"As I have engaged at Redline, I am excited about the potential
of our business opportunities, particularly in LTE and the
potential for recurring revenues arising from value added
services," stated Stephen Sorocky,
Redline's CEO. "Also, in this quarter, Redline's Internet Service
Provider initiative, launched in late 2018 as part of Microsoft's
Airband program, has resulted in the acquisition of 35 new ISP
customers. We are pleased at the early progress we are making with
this new product offering."
Overall operating expenses for the first quarter of 2019 was
$4.0 million up 19% over the same
period in 2018. The increase in operating expenses in the
first quarter 2019 over the same period in 2018 was the result of
increased headcount in support of LTE deployments and severance
costs.
Adjusted EBITDA loss for the first quarter 2019 was $0.78 million, an increase of $0.54 million over the Adjusted EBITDA loss of
$0.24 million for the same period in
2018.
Net loss for the first quarter of 2019 was $1.3 million, or ($0.07) per share, as compared to $0.4 million, or ($0.02) per share, in the first quarter of
2018.
At March 31st, 2019, Redline held
cash of $9.3 million, down
$0.4 million from December 31, 2018. The decrease is largely
attributable to a scheduled $0.7
million payment against the Company's Ontario Loan, reducing
the amount of the loan outstanding to $0.7
million.
Conference Call and Webcast – May 8th,
2019 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been
scheduled for Wednesday, May 8th,
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 3449679. A recording of the call will be available through
May 15, 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 months ended March 31, 2019 ("Q1 2019 MD&A"), copies
of which are available on SEDAR at www.sedar.com. Further details
on the three months ended March 31, 2019 can be found in the
condensed consolidated interim 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 condensed consolidated interim financial
statements of the Company for the three months ended March 31, 2019
and the Q1 2019 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
March 31,
|
|
|
2019
|
2018
|
Revenue
|
$
|
5,834
|
$
|
5,702
|
Net loss
|
(1,257)
|
(405)
|
Add back:
|
|
|
|
Share based
payments
|
114
|
46
|
|
Depreciation and
amortization
|
220
|
154
|
|
Finance (income)
expense
|
(17)
|
(7)
|
|
(Gain) loss on fair
market value
of financial instruments
|
88
|
-
|
|
Foreign exchange
(gain) loss
|
65
|
(30)
|
|
Income tax
expense
|
6
|
5
|
|
Total
|
476
|
168
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(781)
|
$
|
(237)
|
|
|
|
|
Adjusted EBITDA
margin
|
-13%
|
-4%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
9,254,405
|
|
$
|
9,625,845
|
|
Trade
receivables
|
|
|
6,617,672
|
|
9,857,857
|
|
Other
receivables
|
|
|
348,030
|
|
392,632
|
|
Inventories
|
|
|
6,597,074
|
|
6,605,517
|
|
Deferred cost of
revenue
|
|
|
1,812
|
|
-
|
|
Prepaid expenses and
other deposits
|
|
|
602,918
|
|
308,273
|
|
|
|
|
23,421,911
|
|
26,790,124
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
730,178
|
|
800,374
|
|
Intangible
assets
|
|
|
1,207,037
|
|
1,277,637
|
|
Right of use
assets
|
|
|
966,220
|
|
-
|
|
Other
assets
|
|
|
74,486
|
|
73,538
|
|
|
|
|
2,977,921
|
|
2,151,549
|
Total
Assets
|
|
|
$
|
26,399,832
|
|
$
|
28,941,673
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
5,511,613
|
|
$
|
7,415,403
|
|
Income tax
payable
|
|
|
10,741
|
|
10,741
|
|
Deferred
revenue
|
|
|
1,763,605
|
|
1,626,687
|
|
Lease
liabilities
|
|
|
301,018
|
|
-
|
|
Borrowings
|
|
|
675,664
|
|
705,413
|
|
|
|
|
8,262,641
|
|
9,758,244
|
Non-current
liabilities:
|
|
|
|
|
|
|
Lease
liabilities
|
|
|
912,431
|
|
-
|
|
Borrowings
|
|
|
-
|
|
659,522
|
|
Other
payables
|
|
|
-
|
|
135,184
|
|
|
|
|
912,431
|
|
794,706
|
Total
Liabilities
|
|
|
9,175,072
|
|
10,552,950
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,385,766
|
|
9,292,321
|
Deficit
|
|
|
(165,090,347)
|
|
(163,832,939)
|
|
|
|
|
17,224,760
|
|
18,388,723
|
Total Liabilities
and Equity
|
|
|
$
|
26,399,832
|
|
$
|
28,941,673
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
$
|
5,833,514
|
|
$
|
5,701,946
|
Cost of
revenue
|
|
|
|
2,900,333
|
|
2,740,513
|
Gross
profit
|
|
|
|
2,933,181
|
|
2,961,433
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
491,246
|
|
630,219
|
|
Administration and
finance
|
|
|
|
1,452,760
|
|
1,067,224
|
|
Sales and
marketing
|
|
|
|
1,868,954
|
|
1,518,192
|
|
Operations and
customer support
|
|
|
|
234,494
|
|
182,725
|
|
|
|
|
|
4,047,454
|
|
3,398,360
|
Loss before
undernoted items
|
|
|
|
(1,114,273)
|
|
(436,927)
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
|
(16,991)
|
|
(7,466)
|
|
Loss on fair market
value of financial instruments
|
|
|
88,379
|
|
-
|
|
Foreign exchange
(gain) loss
|
|
|
|
65,487
|
|
(29,948)
|
|
|
|
|
|
136,875
|
|
(37,414)
|
Loss before income
taxes
|
|
|
|
(1,251,148)
|
|
(399,513)
|
Income tax
expense
|
|
|
|
6,260
|
|
5,444
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(1,257,408)
|
|
$
|
(404,957)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
$
|
(0.07)
|
|
$
|
(0.02)
|
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, 2018
|
|
$
|
172,929,341
|
$
|
9,155,798
|
$
|
(163,308,323)
|
$
|
18,776,816
|
|
IFRS 15 transition
adjustment
|
|
-
|
-
|
(136,000)
|
(136,000)
|
|
Net loss
|
|
-
|
-
|
(404,957)
|
(404,957)
|
|
Stock option
expense
|
|
-
|
14,521
|
-
|
14,521
|
Balance at
March 31, 2018
|
|
$
|
172,929,341
|
$
|
9,170,319
|
$
|
(163,849,280)
|
$
|
18,250,380
|
Balance at
January 1, 2019
|
|
$
|
172,929,341
|
$
|
9,292,321
|
$
|
(163,832,939)
|
$
|
18,388,723
|
|
Net loss
|
|
-
|
-
|
(1,257,408)
|
(1,257,408)
|
|
Stock option
expense
|
|
-
|
93,445
|
-
|
93,445
|
Balance at
March 31, 2019
|
|
$
|
172,929,341
|
$
|
9,385,766
|
$
|
(165,090,347)
|
$
|
17,224,760
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2019
|
2018
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(1,257,408)
|
$
|
(404,957)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
Finance (income)
expense
|
|
(16,991)
|
(7,466)
|
|
|
Depreciation and
amortization of non-current assets
|
|
219,700
|
153,870
|
|
|
Stock option
expense
|
|
93,445
|
14,521
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(29,178)
|
41,288
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
60,277
|
(43,758)
|
|
|
IFRS 15 transition
adjustment
|
|
-
|
(136,000)
|
|
|
|
|
(930,155)
|
(382,502)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
(Increase) decrease
in deferred cost of revenue
|
|
(1,812)
|
-
|
|
|
Increase (decrease)
in deferred revenue
|
|
136,918
|
(37,216)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
1,241,894
|
664,992
|
Cash from (used in)
operating activities
|
|
446,845
|
245,274
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(40,269)
|
(102,095)
|
|
Acquisition of
intangible assets
|
|
(14,100)
|
(166,667)
|
Cash used in
investing activities
|
|
(54,369)
|
(268,762)
|
|
|
|
|
Cash flows used in
financing activities:
|
|
|
|
|
Interest
income
|
|
42,988
|
28,457
|
|
Interest
expense
|
|
(14,448)
|
(1,625)
|
|
Repayment of
borrowings
|
|
(735,505)
|
(801,565)
|
|
Repayment of lease
liabilities
|
|
(86,129)
|
-
|
Cash used in
financing activities
|
|
(793,094)
|
(774,733)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
29,178
|
(41,288)
|
Increase (decrease)
in cash
|
|
(371,440)
|
(839,509)
|
Cash, beginning of
the period
|
|
9,625,845
|
11,960,062
|
Cash, end of the
period
|
|
$
|
9,254,405
|
$
|
11,120,553
|
SOURCE Redline Communications Group Inc.