TORONTO, May 12, 2021 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), the creator of powerful
wireless data infrastructure for mission-critical applications in
challenging locations, today announced operating results (in US
dollars unless otherwise noted) for the first quarter ended
March 31, 2021.
Revenue for the first quarter ended March
31, 2021 ("Q1 2021") was $3.7
million, down 17% from Q1 2020. The decline was primarily
the result of business impacts associated with COVID-19 including,
but not limited to, access to customer sites, delays in customer
purchasing decisions and longer supplier lead times. However,
the sales pipeline indicates that there is pent-up demand from
customers to expand and upgrade current installations to support
mission-critical applications, including industrial LTE mobile
network infrastructure.
Order Bookings1 for Q1 2021 were $3.3 million, down 44% compared to same quarter
in the previous period. Order Backlog for the quarter ended
March 31, 2021 was $11.3 million, down 4% from Q4 2020.
"In the quarter, we were pleased to announce the $14M CDN investment by the Canadian Government's
Strategic Innovation Fund (SIF) which will help finance accelerated
development of our innovative industrial 5G network
solutions. While Bookings and revenue were impacted by COVID,
including a delayed shipment of a $1.6M order, our pipeline continues to grow,
especially for industrial LTE solutions" stated Stephen Sorocky, Redline's CEO. "We are
building on Bookings received for our industrial LTE products in Q4
2020, accelerating development, and expanding channel partnerships
to meet the demand coming from current and prospective customers in
our pipeline. We were pleased to receive our first order for a
limited release of our next generation virtual fiber product, the
RDL 3200 , scheduled for shipment in June and which will serve as a
reference for this exciting evolution of our product
line".
Key financial highlights for the three months ended
March 31, 2021 ("Q1 2021")
include:
|
Q1
2021
|
Q1
2020
|
Increase
(decrease)
|
%
Change
|
Revenue
|
$3.7 M
|
$4.5 M
|
($0.8 M)
|
(17%)
|
Gross profit margin
%
|
69%
|
63%
|
6%
|
|
Operating
expenses
|
$3.9 M
|
$4.1 M
|
($0.2 M)
|
(5%)
|
Net loss
|
$1.2 M
|
$1.0 M
|
($0.2 M)
|
(13%)
|
Adjusted EBITDA
loss1
|
$1.1 M
|
$1.0 M
|
($0.1 M)
|
(11%)
|
CEWS
benefit
|
$0.3 M
|
Nil
|
$0.3 M
|
|
Bookings1
|
$3.3 M
|
$5.9 M
|
($2.6 M)
|
(44%)
|
|
|
|
|
|
|
March 31,
2021
|
December 31,
2020
|
Increase
(decrease)
|
%
Change
|
Cash
|
$4.3 M
|
$5.3 M
|
($1.0 M)
|
(19%)
|
Inventory
|
$6.0 M
|
$5.5 M
|
$0.5 M
|
9%
|
Order
Backlog1
|
$11.3 M
|
$11.8 M
|
($0.5 M)
|
(4%)
|
|
1 See Definitions of
non-GAAP measures below
|
Financial and Business Review
Due to consistent sequential strength in building recurring
revenue streams over the previous eight quarters, the company
achieved record gross margins of 69% in the quarter, resulting in
an increase of 6 percentage points compared to Q1 2020.
Operating expenses for Q1 2021 were $3.9
million, down 5% over Q1 2020. The decline year-over-year
was mainly driven by decreases in Administrative and General
expenses along with decreased costs related to sales, marketing and
travel, as COVID-19 has prompted the suspension of nearly all
business travel. These decreases are partially offset by
increases in the Research and Development and Operations functions
as the company moves forward with new product development and new
product launches.
In the quarter, the Company continued to participate in the
Canada Emergency Wage Subsidy
("CEWS") program recognizing a benefit of $0.3 million which is recorded within other
income.
Net loss for Q1 2021 was $1.2
million, a decrease of $0.2
million over Q1 2020. Adjusted EBITDA loss for Q1 2021
was $1.1 million, as compared to
$1.0 million in Q1, 2020.
Cash Balance, net of borrowings, at the end of Q1 2021 was
$4.3 million, a decrease of
$1.0 million over Q4 2020.
On March 31, 2021 Redline
announced that the Canadian Government had approved an investment
into Redline via their Strategic Innovation Fund (SIF). This
investment brings up to CDN $14
million into the Company, earmarked for the development of
an innovative industrial 5G network solution. Under the terms
of the agreement, the fund will reimburse 41.52% of eligible
R&D costs (labor, equipment and materials) incurred by Redline.
The first investment submission of approximately $460K for the period between August 2020 and March 31,
2021 was submitted to the fund just after the close of Q1.
This first payment is expected to be received by Redline in Q2 2021
and going forward, payments to Redline from the fund will be made
quarterly.
"Although bookings declined in the quarter due to deployment
delays caused by COVID-19 lockdowns and restrictions globally,
growing recurring revenues helped to reduce the financial impact to
operations and we are pleased with the growing proportion of our
pipeline associated with our mobility solutions," stated CFO
Philip Jones. "The SIF funding
program provides low-cost capital for us to accelerate
product development with capital efficiency so that we can capture
growing customer demand for industrial data infrastructure to
support mission critical IoT applications. "
Conference Call and Webcast – May 13,
2021 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been
scheduled for Thursday, May 13, 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 8884985. A
recording of the call will be available through May 20, 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 months ended March 31, 2021 ("Q1 2021 MD&A"),
copies of which are available on SEDAR at www.sedar.com. Further
details on the three months ended March 31, 2021 can be found in
the condensed consolidated 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 financial statements
of the Company for the three months ended March 31, 2021 and the Q1
2021 MD&A.
|
Adjusted EBITDA
(Loss)
|
(Unaudited, Expressed
in thousands of U.S. dollars)X
|
|
The table below
reconciles Adjusted EBITDA (loss) to net profit (loss):
|
|
Three months ended
March 31,
|
|
2021
|
2020
|
Revenue
|
$
|
3,729
|
$
|
4,475
|
Net profit
(loss)
|
(1,178)
|
(1,044)
|
Add back:
|
|
|
Share based
payments
|
37
|
51
|
Depreciation and
amortization
|
255
|
269
|
Canada Emergency Wage
Subsidy
|
(294)
|
-
|
Finance (income)
expense
|
4
|
1
|
(Gain) loss on fair
market value of financial instruments
|
74
|
(118)
|
Foreign exchange
(gain) loss
|
32
|
(133)
|
Income tax
expense
|
5
|
18
|
Total
|
113
|
88
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(1,065)
|
$
|
(956)
|
|
|
|
Adjusted EBITDA
margin
|
-29%
|
-21%
|
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,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
4,299,308
|
|
$
|
5,334,486
|
|
Trade
receivables
|
|
|
3,264,792
|
|
4,237,183
|
|
Other
receivables
|
|
|
427,103
|
|
180,881
|
|
Inventories
|
|
|
5,963,798
|
|
5,492,931
|
|
Deferred cost of
revenue
|
|
|
156
|
|
498
|
|
Prepaid expenses and
other deposits
|
|
|
605,254
|
|
431,559
|
|
|
|
|
14,560,411
|
|
15,677,538
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
843,217
|
|
901,234
|
|
Intangible
assets
|
|
|
1,076,111
|
|
1,148,050
|
|
Right of use
assets
|
|
|
514,852
|
|
565,213
|
|
Other
assets
|
|
|
66,227
|
|
65,223
|
|
|
|
|
2,500,407
|
|
2,679,720
|
Total
Assets
|
|
|
$
|
17,060,818
|
|
$
|
18,357,258
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
4,201,297
|
|
$
|
3,944,374
|
|
Income tax
payable
|
|
|
29,459
|
|
29,459
|
|
Deferred
revenue
|
|
|
1,716,935
|
|
2,057,944
|
|
Lease
liabilities
|
|
|
252,372
|
|
250,068
|
|
|
|
|
6,200,063
|
|
6,281,845
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
359,654
|
|
364,391
|
|
Lease
liabilities
|
|
|
485,586
|
|
554,396
|
|
|
|
|
845,240
|
|
918,787
|
Total
Liabilities
|
|
|
7,045,303
|
|
7,200,632
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,741,659
|
|
9,704,769
|
Deficit
|
|
|
(172,655,485)
|
|
(171,477,484)
|
|
|
|
|
10,015,515
|
|
11,156,626
|
Total Liabilities
and Equity
|
|
|
$
|
17,060,818
|
|
$
|
18,357,258
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Condensed
Consolidated Interim Statements of Comprehensive Loss
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
Thee months ended
March 31,
|
|
|
|
|
2021
|
|
2020
|
Revenue
|
|
|
|
$
|
3,729,115
|
|
$
|
4,474,589
|
Cost of
revenue
|
|
|
|
1,174,497
|
|
1,650,163
|
Gross
profit
|
|
|
|
2,554,618
|
|
2,824,426
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
1,159,906
|
|
1,124,986
|
|
General and
administrative
|
|
|
|
1,017,702
|
|
1,279,764
|
|
Sales and
marketing
|
|
|
|
1,379,092
|
|
1,457,650
|
|
Operations and
customer support
|
|
|
|
353,825
|
|
238,572
|
|
|
|
|
|
3,910,525
|
|
4,100,972
|
Loss before
undernoted items
|
|
|
|
(1,355,907)
|
|
(1,276,546)
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
Covid-19 related
Canada Emergency Wage Subsidy
|
|
|
|
(293,864)
|
|
-
|
|
Finance (income)
expense
|
|
|
|
4,047
|
|
1,027
|
|
Loss (Gain) on
fair market value of financial instruments
|
|
|
74,255
|
|
(118,561)
|
|
Foreign exchange loss
(gain)
|
|
|
|
32,278
|
|
(132,788)
|
|
|
|
|
|
(183,284)
|
|
(250,322)
|
Loss before income
taxes
|
|
|
|
(1,172,623)
|
|
(1,026,224)
|
Income tax
expense
|
|
|
|
5,378
|
|
17,900
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(1,178,001)
|
|
$
|
(1,004,124)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.07)
|
|
$
|
(0.06)
|
|
Basic and
diluted
|
|
|
|
$
|
(0.07)
|
|
$
|
(0.06)
|
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, 2020
|
|
$
|
172,929,341
|
$
|
9,525,694
|
$
|
(167,577,777)
|
14,877,258
|
|
Net loss
|
|
-
|
-
|
(1,044,124)
|
(1,044,124)
|
|
Stock option
expense
|
|
-
|
46,938
|
-
|
46,938
|
Balance at
March 31, 2020
|
|
$
|
172,929,341
|
$
|
9,572,632
|
$
|
(168,621,901)
|
$
|
13,880,072
|
Balance at
January 1, 2021
|
|
$
|
172,929,341
|
$
|
9,704,769
|
$
|
(171,477,484)
|
$
|
11,156,626
|
|
Net loss
|
|
-
|
-
|
(1,178,001)
|
(1,178,001)
|
|
Stock option
expense
|
|
-
|
36,890
|
-
|
36,890
|
Balance at
March 31, 2021
|
|
$
|
172,929,341
|
$
|
9,741,659
|
$
|
(172,655,485)
|
$
|
10,015,515
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
Three months ended
March 31,
|
|
|
2021
|
2020
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(1,178,001)
|
$
|
(1,044,124)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
Finance
expense
|
|
4,047
|
1,027
|
|
|
Depreciation and
Amortization
|
|
254,881
|
269,200
|
|
|
Stock option
expense
|
|
36,890
|
46,938
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(9,143)
|
55,395
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
11,409
|
(102,900)
|
|
|
Loss on disposal of
assets
|
|
1,751
|
-
|
|
|
|
|
(878,166)
|
(774,464)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
|
342
|
3,093
|
|
|
(Increase) Decrease
in deferred revenue
|
|
(345,746)
|
227,339
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
337,525
|
1,891,607
|
Cash from operating
activities
|
|
(886,045)
|
1,347,575
|
Cash flows used in
investing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(76,315)
|
(92,187)
|
|
Acquisition of
intangible assets
|
|
-
|
(82,000)
|
Cash used in
investing activities
|
|
(76,315)
|
(174,187)
|
Cash flows used in
financing activities:
|
|
|
|
|
Interest
income
|
|
2,630
|
16,307
|
|
Interest
expense
|
|
(6,677)
|
(12,648)
|
|
Repayment of
borrowings
|
|
-
|
(701,491)
|
|
Repayment of lease
liabilities
|
|
(77,914)
|
(88,936)
|
Cash used in
financing activities
|
|
(81,961)
|
(786,768)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
9,143
|
(55,395)
|
Decrease in
cash
|
|
(1,035,178)
|
331,225
|
Cash, beginning of
the period
|
|
5,334,486
|
6,507,606
|
Cash, end of the
period
|
|
$
|
4,299,308
|
$
|
6,838,831
|
SOURCE Redline Communications Group Inc.