TORONTO, March 24, 2021 /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 year ended December 31,
2020.
Revenue for the fourth quarter ended December 31, 2020 ("Q4 2020") was $4.7 million, down 7% from Q4 2019, while revenue
for the year ended December 31, 2020
was $18.5 million, down 22% from the
same period in 2019. The decline for both timeframes were primarily
the result of business impacts associated with COVID-19 such as,
but not limited to, access to customer sites, delays in customer
purchasing decisions and longer supplier lead times.
Order Bookings for Q4 2020 and the year ended December 31, 2020 were $5.5 million and $22.6
million respectively, down 13% and 6% respectively compared
to the previous periods. Order Backlog for the year and quarter
ended December 31, 2020 was
$11.8 million, up 38% over the same
period in 2019.
"We are excited about the sales of our LTE solution in Q4 to
multiple clients in mining and remote learning applications,
capitalizing on demand enabled by the increased spectrum
availability from the CBRS band in the USA. We maintained our critical investments in
our product development for our target market in mission critical
and reliable solutions." stated Stephen
Sorocky, Redline's CEO. "In spite of the continuing pandemic
impacts on our markets, we succeeded in improving the cash balance
at the end of Q4 and we delivered significant progress in our
target to reduce inventory levels."
Key financial highlights for the three months ended
December 31, 2020 ("Q4 2020")
include:
|
Q4
2020
|
Q4
2019
|
Increase
(decrease)
|
%
Change
|
|
Revenue
|
$4.7 M
|
$5.0 M
|
($0.3 M)
|
(7%)
|
|
Gross profit margin
%
|
52%
|
59%
|
(7%)
|
|
|
Operating
expenses
|
$4.3 M
|
$4.1 M
|
$0.2 M
|
5%
|
|
Net loss
|
$1.6 M
|
$1.3 M
|
($0.3 M)
|
(25%)
|
|
Adjusted EBITDA
loss1
|
$1.6 M
|
$0.9 M
|
($0.7 M)
|
(78%)
|
|
CEWS
benefit
|
$0.1 M
|
Nil
|
$0.1 M
|
|
|
Bookings1
|
$5.5 M
|
$6.3 M
|
$0.8 M
|
(13%)
|
|
|
|
|
|
|
December 31,
2020
|
September 30,
2020
|
Increase
(decrease)
|
%
Change
|
|
Cash
|
$5.3 M
|
$5.1 M
|
$0.2 M
|
4%
|
|
Inventory
|
$5.5 M
|
$6.5 M
|
($1.0 M)
|
(16%)
|
|
Order
Backlog1
|
$11.8 M
|
$11.0 M
|
$0.7 M
|
7%
|
Key financial highlights for the twelve months ended
December 31, 2020 include:
|
2020-12
YTD
|
2019-12
YTD
|
Increase
(decrease)
|
%
Change
|
|
Revenue
|
$18.5 M
|
$23.7 M
|
($5.1 M)
|
(22%)
|
|
Gross profit margin
%
|
56%
|
55%
|
1%
|
|
|
Operating
expenses
|
$15.6 M
|
$16.6 M
|
($1.0 M)
|
(6%)
|
|
Net loss
|
$3.9 M
|
$3.7 M
|
($0.2 M)
|
(4%)
|
|
Adjusted EBITDA
loss1
|
$4.1 M
|
$2.3 M
|
($1.7 M)
|
(74%)
|
|
CEWS
benefit
|
$1.2 M
|
Nil
|
$1.2 M
|
|
|
Bookings1
|
$22.6 M
|
$23.9 M
|
($1.4 M)
|
(6%)
|
|
|
|
|
|
|
December 31,
2020
|
December 31,
2019
|
Increase
(decrease)
|
%
Change
|
|
Cash, net of
borrowing
|
$5.3 M
|
$5.8 M
|
($0.5 M)
|
(8%)
|
|
Inventory
|
$5.5 M
|
$7.7 M
|
($2.2 M)
|
(29%)
|
|
Order
Backlog
|
$11.8 M
|
$8.5 M
|
$3.2 M
|
38%
|
|
1 See
Definitions of non-GAAP measures below
|
Financial and Business Review
Gross profit margin for Q4 2020 was 52%, down 7 percentage
points from Q4 2019. Gross Profit margin for the 2020 year was 56%,
up one percentage point over 2019.
Overall operating expenses for Q4 2020 were $4.3 million, up 5% over Q4 2019. For the year
ended December 31, 2020, overall
operating expenses were $15.6
million, down 6% from the same period in 2019. The decrease
year over year was primarily the result of decreased costs
associated in sales, marketing and travel, as COVID-19 has prompted
the suspension of nearly all business travel and the cancelation of
in-person marketing events from March
2020 onward.
In the quarter, the Company continued to participate in the
Canada Emergency Wage Subsidy
("CEWS") program recognizing a benefit of $0.1 million in the quarter and $1.2 million for all of 2020 and is recorded
within other income.
Net loss for Q4 2020 was $1.6
million, an increase of $0.3
million over Q4 2019, while the net loss for the year ended
December 31, 2020 was $3.9 million, an increase of $0.2 million over 2019. Adjusted EBITDA
loss for Q4 2020 was $1.6 million, as
compared to $0.9 million in Q4, 2019.
Adjusted EBITDA loss for the year ended December 31, 2020 was $4.1
million, an increase of $1.7M
over the $2.3 million Adjusted EBITDA
loss in 2019.
Cash Balance, net of borrowings, at the end of 2020 was
$5.3 million, a decrease of
$0.5 million over the same period in
2019.
Conference Call and Webcast – March
25, 2021 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday March 25, 2021
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 4329029. A
recording of the call will be available through April 1, 2021 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
certain non-IFRS metrics, including "Bookings", "Order
Backlog","Adjusted EBITDA" and "Adjusted EBITDA Margin". Further
information including definitions of these measures and a
reconciliation to their closest IFRS measure, if applicable, can be
found in the Company's Management Discussion and Analysis for the
three and twelve months ended December 31, 2020 ("Q4 2020
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and twelve months ended
December 31, 2020 can be found in the condensed consolidated
audited statement of financial position, statement of comprehensive
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
audited financial statements of the Company for the three and
twelve months ended December 31, 2020 and the Q4 2020
MD&A.
|
|
Adjusted EBITDA
(Loss)
|
|
|
|
|
|
(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,
|
|
|
(unaudited)
|
(audited)
|
|
(in
thousands)
|
2020
|
2019
|
2020
|
2019
|
|
Revenue
|
$
|
4,683
|
$
|
5,014
|
$
|
18,515
|
$
|
23,659
|
|
Net profit
(loss)
|
(1,648)
|
(1,324)
|
(3,900)
|
(3,745)
|
|
Add back:
|
|
|
|
|
|
Share based
payments
|
41
|
42
|
183
|
322
|
|
Depreciation and
amortization
|
268
|
252
|
1,068
|
900
|
|
Covid-19 related
Canada
Emergency Wage Subsidy
|
(123)
|
-
|
(1,163)
|
-
|
|
Finance (income)
expense
|
8
|
(1)
|
24
|
(44)
|
|
(Gain) loss on fair
market value
of financial instruments
|
(185)
|
(49)
|
(336)
|
(59)
|
|
Foreign exchange
(gain) loss
|
47
|
29
|
(4)
|
123
|
|
Income tax
expense
|
19
|
167
|
77
|
179
|
|
Total
|
75
|
440
|
(150)
|
1,421
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(1,573)
|
$
|
(884)
|
$
|
(4,050)
|
$
|
(2,324)
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-34%
|
-18%
|
-22%
|
-10%
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
December 31,
2020
|
|
December 31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
5,334,486
|
|
$
6,507,606
|
|
Trade
receivables
|
|
3
|
4,237,183
|
|
7,089,043
|
|
Other
receivables
|
|
|
180,881
|
|
260,216
|
|
Inventories
|
|
4
|
5,492,931
|
|
7,707,578
|
|
Deferred cost of
revenue
|
|
11
|
498
|
|
6,910
|
|
Prepaid expenses and
other deposits
|
|
|
431,559
|
|
285,519
|
|
|
|
|
15,677,538
|
|
21,856,872
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
5
|
901,234
|
|
999,435
|
|
Intangible
assets
|
|
6
|
1,148,050
|
|
1,373,526
|
|
Right of use
assets
|
|
7
|
565,213
|
|
798,080
|
|
Other
assets
|
|
|
65,223
|
|
76,284
|
|
|
|
|
2,679,720
|
|
3,247,325
|
|
Total
Assets
|
|
|
$
18,357,258
|
|
$
25,104,197
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
10
|
$
3,944,374
|
|
$
6,035,496
|
|
Income tax
payable
|
|
|
29,459
|
|
12,398
|
|
Deferred
revenue
|
|
11
|
2,057,944
|
|
1,966,282
|
|
Lease
liabilities
|
|
12
|
250,068
|
|
277,945
|
|
Borrowings
|
|
13
|
-
|
|
716,832
|
|
|
|
|
6,281,845
|
|
9,008,953
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
11
|
364,391
|
|
429,414
|
|
Lease
liabilities
|
|
12
|
554,396
|
|
788,572
|
|
|
|
|
918,787
|
|
1,217,986
|
|
Total
Liabilities
|
|
|
7,200,632
|
|
10,226,939
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Share
capital
|
|
8
|
172,929,341
|
|
172,929,341
|
|
Contributed
surplus
|
|
|
9,704,769
|
|
9,525,694
|
|
Deficit
|
|
|
(171,477,484)
|
|
(167,577,777)
|
|
|
|
|
11,156,626
|
|
14,877,258
|
|
Total Liabilities
and Equity
|
|
|
$
18,357,258
|
|
$
25,104,197
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue
|
|
15
|
|
$
|
4,682,586
|
|
$
|
5,014,264
|
|
$
|
18,515,390
|
|
$
|
23,658,998
|
|
Cost of
revenue
|
|
|
|
2,261,793
|
|
2,077,014
|
|
8,170,951
|
|
10,620,987
|
|
Gross
profit
|
|
|
|
2,420,794
|
|
2,937,250
|
|
10,344,439
|
|
13,038,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
1,357,115
|
|
1,032,259
|
|
4,473,962
|
|
3,408,307
|
|
General and
administrative
|
|
|
|
1,296,248
|
|
1,380,234
|
|
4,895,446
|
|
5,146,714
|
|
Sales and
marketing
|
|
|
|
1,373,832
|
|
1,453,002
|
|
5,332,922
|
|
7,016,231
|
|
Operations and
customer support
|
|
|
|
276,158
|
|
250,081
|
|
944,006
|
|
1,013,123
|
|
|
|
|
|
4,303,353
|
|
4,115,576
|
|
15,646,336
|
|
16,584,375
|
|
Loss before
undernoted items
|
|
|
|
(1,882,560)
|
|
(1,178,326)
|
|
(5,301,897)
|
|
(3,546,364)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Covid-19 related
Canada Emergency Wage Subsidy
|
2
|
|
(122,664)
|
|
-
|
|
(1,163,382)
|
|
-
|
|
Finance (income)
expense
|
|
16
|
|
7,790
|
|
(949)
|
|
23,970
|
|
(44,144)
|
|
Gain on fair market
value of financial instruments
|
|
|
(184,939)
|
|
(49,118)
|
|
(336,107)
|
|
(59,031)
|
|
Foreign exchange
(gain) loss
|
|
|
|
47,023
|
|
29,390
|
|
(4,147)
|
|
122,918
|
|
|
|
|
|
(252,790)
|
|
(20,677)
|
|
(1,479,666)
|
|
19,743
|
|
Loss before income
taxes
|
|
|
|
(1,629,770)
|
|
(1,157,649)
|
|
(3,822,231)
|
|
(3,566,107)
|
|
Income tax
expense
|
|
|
|
18,832
|
|
166,707
|
|
77,476
|
|
178,731
|
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(1,648,602)
|
|
$
|
(1,324,356)
|
|
$
|
(3,899,707)
|
|
$
|
(3,744,838)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8
|
|
$
|
(0.10)
|
|
$
|
(0.08)
|
|
$
|
(0.23)
|
|
$
|
(0.22)
|
|
Basic and
diluted
|
|
9
|
|
$
|
(0.10)
|
|
$
|
(0.08)
|
|
$
|
(0.23)
|
|
$
|
(0.22)
|
|
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, 2019
|
|
$
172,929,341
|
$
9,292,321
|
$
(163,832,939)
|
$
18,388,723
|
|
Net loss
|
|
-
|
-
|
(3,744,838)
|
(3,744,838)
|
|
Stock option
expense
|
|
-
|
233,373
|
-
|
233,373
|
|
Balance at
December 31, 2019
|
|
$
172,929,341
|
$
9,525,694
|
$
(167,577,777)
|
$
14,877,258
|
|
Balance at
January 1, 2020
|
|
$
172,929,341
|
$
9,525,694
|
$
(167,577,777)
|
$
14,877,258
|
|
Net loss
|
|
-
|
-
|
(3,899,707)
|
(3,899,707)
|
|
Stock option
expense
|
|
-
|
179,075
|
-
|
179,075
|
|
Balance at
December 31, 2020
|
|
$
172,929,341
|
$
9,704,769
|
$
(171,477,484)
|
$
11,156,626
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
Note
|
2020
|
2019
|
|
2020
|
2019
|
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,648,602)
|
$
|
(1,324,356)
|
|
$
|
(3,899,707)
|
$
|
(1,324,356)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
7,790
|
(949)
|
|
23,969
|
(949)
|
|
|
Depreciation and
Amortization
|
|
267,981
|
252,453
|
|
1,068,676
|
252,453
|
|
|
Stock option
expense
|
|
41,449
|
44,601
|
|
179,075
|
44,601
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(12,166)
|
(19,119)
|
|
27,119
|
(19,119)
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
35,387
|
34,171
|
|
(15,069)
|
34,171
|
|
|
Loss on disposal of
assets
|
|
|
17,706
|
|
5,668
|
17,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,308,161)
|
(995,493)
|
|
(2,610,269)
|
(995,493)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease
in deferred cost of revenue
|
|
556
|
1,439
|
|
6,412
|
1,439
|
|
|
Decrease in deferred
revenue
|
|
358,713
|
644,346
|
|
26,639
|
644,346
|
|
|
Change in other
non-cash operating assets and liabilities
|
17
|
1,231,462
|
(410,540)
|
|
2,936,808
|
(410,540)
|
|
Cash generated by
(used in) operating activities
|
|
282,570
|
(760,248)
|
|
359,590
|
(760,248)
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
5
|
(38,332)
|
(436,807)
|
|
(277,628)
|
(436,807)
|
|
Proceeds on sale of
property, plant and equipment
|
|
-
|
14,800
|
|
-
|
14,800
|
|
Acquisition of
intangible assets
|
6
|
-
|
(460,000)
|
|
(240,173)
|
(460,000)
|
|
Cash used in
investing activities
|
|
(38,332)
|
(882,007)
|
|
(517,801)
|
(882,007)
|
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
|
Interest
income
|
|
3,184
|
19,963
|
|
25,439
|
19,963
|
|
Interest
expense
|
|
(10,974)
|
(11,853)
|
|
(44,722)
|
(11,853)
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(701,491)
|
-
|
|
Repayment of lease
liabilities
|
|
(48,486)
|
(62,976)
|
|
(267,016)
|
(62,976)
|
|
Cash used in
financing activities
|
|
(56,276)
|
(54,866)
|
|
(987,790)
|
(54,866)
|
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
12,166
|
19,119
|
|
(27,119)
|
19,119
|
|
Decrease in
cash
|
|
200,128
|
(1,678,002)
|
|
(1,173,120)
|
(1,678,002)
|
|
Cash, beginning of
the period
|
|
5,134,358
|
8,185,608
|
|
6,507,606
|
9,625,845
|
|
Cash, end of the
period
|
|
$
|
5,334,486
|
$
|
6,507,606
|
|
$
|
5,334,486
|
$
|
7,947,843
|
SOURCE Redline Communications Group Inc.