Quarterly Revenues up 15% Year over Year to
$4.3 Million
TORONTO, May 12, 2022
/CNW/ - Redline Communications Group Inc. (TSX: RDL), a leading
provider of mission-critical data infrastructure for remote &
harsh environments, today announced operating results for the first
quarter ended March 31, 2022.
All figures are unaudited and in US Dollars unless otherwise
noted.
- Quarterly revenues increased $0.6
million or 15% compared to Q1 2021 to $4.3 million.
- Q1 2022 gross margin was 54% compared to 48% for Q4 2021.
- Over 75% of revenues were fulfilled via distribution and
reseller partners, an increase from 60% in Q4 2021.
- Bookings1 of $3.4
million in Q1 2022 increased by 2% compared to Q1 2021.
- Backlog1 increased to $12.5
million at the end of Q1 2022, an 11% increase compared to
$11.3 million at the end of Q1
2021.
- Net loss of $2.7 million, as
compared to a net loss of $1.2
million in Q1 2021.
- Adjusted EBITDA1 loss was $1.7 million in Q1 2022 compared to losses of
$1.4 million in Q4 2021 and
$1.1 million in Q1 2021 due mainly to
non-recurring costs related to the proposed transaction with Aviat
Networks Inc.
Financial and Business
Review
Gross margin of 54% in Q1 2022, up from the 48% achieved in Q4
2021, mainly as the result of a decrease in the inventory provision
required in Q1 2022. Gross margin was down 15% compared to Q1 2021
as a result of both inventory provisions recorded and sales mix
achieved in the current quarter.
Total operating expenses for Q1 2022 were $4.3 million, down $0.1
million from Q4 2021 and up $0.4
million compared to Q1 2021 due to non-recurring
professional fees associated with the Aviat transaction (announced
April 13, 2022) that were in
incurred in Q1 2022.
Adjusted EBITDA loss for Q1 2022 was $1.7
million, an increase of $0.3
million from Q4 2021 due to the Aviat transaction costs and
$0.6 million from Q1 2021 due to the
Aviat transaction costs but also a lower gross profit compared to
the prior year due to the product sales mix.
|
____________________
|
|
1 Non-IFRS
measure. See note 1 below.
|
|
Key financial
highlights for the three months ended March 31, 2022 ("Q1 2022")
include:
|
|
|
|
|
|
|
|
|
|
Q1 2022
|
Q4 2021
|
Increase (decrease)
|
% Change
|
Q1 2021
|
Increase (decrease)
|
% Change
|
|
Revenue
|
$4.3 M
|
$5.9 M
|
($1.6 M)
|
-27%
|
$3.7 M
|
$0.6 M
|
15%
|
|
Gross profit margin
%
|
54%
|
48%
|
6%
|
|
69%
|
(15%)
|
|
|
Operating
expenses
|
$4.3 M
|
$4.4 M
|
($0.1 M)
|
-2%
|
$3.9 M
|
$0.4 M
|
10%
|
|
Net loss
|
$2.7 M
|
$2.3 M
|
($0.4 M)
|
-17%
|
$1.2 M
|
($1.5 M)
|
-125%
|
|
Adjusted EBITDA
loss1
|
$1.7 M
|
$1.4 M
|
($0.3 M)
|
-21%
|
$1.1 M
|
($0.6 M)
|
-55%
|
|
CEWS benefit
|
$0.0 M
|
$0.02 M
|
($0.02 M)
|
-100%
|
$0.3 M
|
($0.3 M)
|
-100%
|
|
Bookings1
|
$3.4 M
|
$7.5 M
|
($4.1 M)
|
-55%
|
$3.3 M
|
$0.1 M
|
2%
|
|
|
|
|
|
|
|
|
|
March 31,
2022
|
December 31,
2021
|
Increase
(decrease)
|
% Change
|
March 31,
2021
|
Increase
(decrease)
|
% Change
|
|
Cash
|
$8.1 M
|
$10.1 M
|
($2.0 M)
|
-20%
|
$4.3 M
|
$3.8 M
|
88%
|
|
Inventory
|
$4.2 M
|
$4.0 M
|
$0.2 M
|
5%
|
$6.0 M
|
($1.8 M)
|
-30%
|
|
Order
Backlog1
|
$12.5 M
|
$13.6 M
|
($1.1 M)
|
-8%
|
$11.3 M
|
$1.2 M
|
11%
|
Due to the transaction in progress between Redline
Communications Group Inc. and Aviat Networks Inc. (announced on
April 13, 2022), Redline will not be
holding an earnings call to discuss the Q1 2022 results.
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 can be found in the
Company's Management Discussion and Analysis for the three months
ended March 31, 2022 ("Q1 2022 MD&A"), copies of which are
available on SEDAR at www.sedar.com and a reconciliation to their
closest IFRS measure is set forth below. Further details on the
three months ended March 31, 2022, 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, 2022, and the Q1 2022
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,
(unaudited)
|
|
|
|
|
(in
thousands)
|
2022
|
2021
|
|
Revenue
|
$
|
4,296
|
$
|
3,729
|
|
Net profit
(loss)
|
(2,672)
|
(1,178)
|
|
Add back:
|
|
|
|
Share based
payments
|
26
|
37
|
|
Depreciation and
amortization
|
266
|
255
|
|
Canada Emergency Wage
Subsidy
|
-
|
(294)
|
|
Finance
expense
|
202
|
4
|
|
Loss on fair market
value
of financial instruments
|
343
|
74
|
|
Foreign exchange
loss
|
113
|
32
|
|
Income tax
expense
|
5
|
5
|
|
Total
|
955
|
113
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(1,717)
|
$
|
(1,065)
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-40%
|
-29%
|
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,
2022
|
|
December 31,
2021
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
8,070,897
|
|
$
|
10,071,592
|
|
Trade
receivables
|
|
|
4,078,855
|
|
4,709,988
|
|
Other
receivables
|
|
|
505,359
|
|
308,079
|
|
Inventories
|
|
|
4,162,691
|
|
4,049,386
|
|
Deferred cost of
revenue
|
|
|
-
|
|
23
|
|
Prepaid expenses and
other deposits
|
|
|
892,109
|
|
911,063
|
|
|
|
|
17,709,911
|
|
20,050,131
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
551,987
|
|
624,198
|
|
Intangible
assets
|
|
|
814,606
|
|
894,002
|
|
Right of use
assets
|
|
|
505,784
|
|
575,333
|
|
Other
assets
|
|
|
66,643
|
|
65,688
|
|
|
|
|
1,939,020
|
|
2,159,221
|
|
Total Assets
|
|
|
$
|
19,648,931
|
|
$
|
22,209,352
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
4,091,431
|
|
$
|
4,946,019
|
|
Income tax
payable
|
|
|
27,493
|
|
27,493
|
|
Deferred
revenue
|
|
|
2,102,066
|
|
1,701,548
|
|
Lease
liabilities
|
|
|
407,955
|
|
397,808
|
|
|
|
|
6,628,945
|
|
7,072,868
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
908,798
|
|
838,790
|
|
Lease
liabilities
|
|
|
292,867
|
|
390,808
|
|
Other financial
liabilities - Loan from Strategic Innovations Fund
|
|
|
441,019
|
|
416,230
|
|
Other financial
liabilities - Warrants associated with term
loan
|
|
|
1,292,754
|
|
947,808
|
|
Deferred grant Income
- Loan from Strategic Innovations Fund
|
|
|
657,313
|
|
666,791
|
|
Term loan
(principal and accrued interest)
|
|
|
5,148,494
|
|
4,950,515
|
|
|
|
|
8,741,245
|
|
8,210,942
|
|
Total Liabilities
|
|
|
15,370,190
|
|
15,283,810
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
|
Contributed
surplus
|
|
|
9,838,812
|
|
9,813,158
|
|
Deficit
|
|
|
(178,489,412)
|
|
(175,816,957)
|
|
|
|
|
4,278,741
|
|
6,925,542
|
|
Total Liabilities and Equity
|
|
|
$
|
19,648,931
|
|
$
|
22,209,352
|
|
REDLINE
COMMUNICATIONS GROUP INC.
Condensed Consolidated
Interim Statements of Comprehensive Loss
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
4,296,393
|
|
$
|
3,729,115
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
1,985,510
|
|
1,174,497
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
2,310,883
|
|
2,554,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
1,343,475
|
|
1,159,906
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
1,555,820
|
|
1,017,702
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
|
|
1,118,834
|
|
1,379,092
|
|
|
|
|
|
|
|
|
|
|
|
Operations and customer
support
|
|
|
|
301,827
|
|
353,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,319,956
|
|
3,910,525
|
|
|
|
|
|
|
|
|
|
|
|
Loss before undernoted
items
|
|
|
|
(2,009,073)
|
|
(1,355,907)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Emergency Wage
Subsidy
|
|
|
|
-
|
|
(293,864)
|
|
|
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
|
|
202,091
|
|
4,047
|
|
|
|
|
|
|
|
|
|
|
|
Loss on fair market
value of financial instruments
|
|
|
|
343,018
|
|
74,255
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
113,467
|
|
32,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
658,576
|
|
(183,284)
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
|
(2,667,649)
|
|
(1,172,623)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
4,806
|
|
5,378
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(2,672,455)
|
|
$
|
(1,178,001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.16)
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
$
|
(0.16)
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
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, 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
|
|
Balance at
January 1, 2022
|
|
$
|
172,929,341
|
$
|
9,813,158
|
$
|
(175,816,957)
|
6,925,542
|
|
Net loss
|
|
-
|
-
|
(2,672,455)
|
(2,672,455)
|
|
Stock option
expense
|
|
-
|
25,654
|
-
|
25,654
|
|
Balance at
March 31, 2022
|
|
172,929,341
|
9,838,812
|
(178,489,412)
|
4,278,741
|
|
REDLINE
COMMUNICATIONS GROUP INC.
Condensed Consolidated
Interim Statements of Cash Flows
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2022
|
2021
|
|
Cash flows (used in)
operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(2,672,455)
|
$
|
(1,178,001)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
Finance
expense
|
|
202,091
|
4,047
|
|
|
Depreciation and
Amortization
|
|
266,220
|
254,881
|
|
|
Stock option
expense
|
|
25,654
|
36,890
|
|
|
Foreign exchange loss
(gain) on cash held in foreign currency
|
|
13,167
|
(9,143)
|
|
|
Foreign exchange loss
on borrowings and lease liabilities
|
|
82,566
|
11,409
|
|
|
Loss on disposal of
assets
|
|
-
|
1,751
|
|
|
|
|
|
|
|
|
|
|
(2,082,757)
|
(878,166)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
|
23
|
342
|
|
|
Decrease (increase) in
deferred revenue
|
|
470,526
|
(345,746)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(516,040)
|
337,525
|
|
Cash (used in)
operating activities
|
|
(2,128,248)
|
(886,045)
|
|
Cash flows (used in)
investing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(45,064)
|
(76,315)
|
|
Cash (used in)
investing activities
|
|
(45,064)
|
(76,315)
|
|
Cash flows from (used
in) financing activities:
|
|
|
|
|
Interest
income
|
|
5,167
|
2,630
|
|
Interest
expense
|
|
(82,049)
|
(6,677)
|
|
Government Loan (SIF)
including Deferred Grant Income
|
|
15,311
|
-
|
|
Warrants
|
|
344,946
|
-
|
|
Repayment of lease
liabilities
|
|
(97,591)
|
(77,914)
|
|
Cash generated from
(used in) financing activities
|
|
185,784
|
(81,961)
|
|
Foreign exchange (loss)
gain on cash held in foreign currency
|
|
(13,167)
|
9,143
|
|
(Decrease) in
cash
|
|
(2,000,695)
|
(1,035,178)
|
|
Cash, beginning of the
period
|
|
10,071,592
|
5,334,486
|
|
Cash, end of the
period
|
|
$
|
8,070,897
|
$
|
4,299,308
|
SOURCE Redline Communications Group Inc.
