|
Redline Communications Reports 2017 Third Quarter Results
TORONTO, Nov. 8, 2017 /CNW/ - Redline Communications (www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of wide-area wireless networks for the most challenging applications and locations, today announced operating results (in US dollars unless otherwise noted) for the three months ended September 30, 2017 (Q3 2017).
Q3 2017 Financial Highlights:
- Revenues of $5.2 million, unchanged from Q3 2016
- Gross margins of 50%, down 6 percentage points over Q3 2016
- Operating expenses of $3.5 million, a reduction of 14% over Q3 2016
- Net loss of $1.0 million, an improvement of $0.2 million over Q3 2016
- Adjusted EBITDA loss of $0.6 million, an improvement of $0.3 million over Q3 2016
- Cash of $11.0 million, down $0.5 million from Q2 2017
- Bookings of $8.4 million, up 102% over Q3 2016
- Order Backlog of $9.1 million, up 44% over Q2 2017
Financial Review
Order Bookings for Q3 2017 were $8.4 million, up 38% over Q2 2017 and up 102% from the same period in 2016. Total revenue for Q3 2017 was $5.2 million, up 6% over Q2 2017 and unchanged from the same period in 2016.
"Redline has now seen four consecutive quarters of Bookings growth, fueled most recently by an increase in orders from the oil and gas sector and growing revenue from our LTE solution," stated Robert Williams, Redline CEO. "This growth in orders coupled with ongoing interest in our LTE product line is encouraging, and we are focused on having this trend continue."
Overall gross margin for Q3 2017 was 50%, down six percentage points over the same period in 2016 and down two percentage points over Q2 2017. The decrease is attributed to an increase in lower-margin third party product sales in the quarter.
Overall operating expenses for Q3 2017 were $3.5 million, down 14% over the same period in 2016, and up 9% over $3.2 million in Q2 2017. The year-over-year decrease in operating costs is attributed to cost reduction initiatives implemented during the fourth quarter of 2016 to reduce compensation costs and contractual costs, partially offset by a planned increase in spending in Q3 2017 in support of the Company's growth in orders.
Net Loss for Q3 2017 was $1.0 million, or ($0.06) per share, an improvement of $0.2 million or 18% as compared to a Net Loss of $1.2 million, or ($0.07) per share in the same period in 2016. Net Loss for Q2 2017 was $0.7 million.
Adjusted EBITDA loss for Q3 2017 was $0.6 million, an improvement of $0.3 million, or 34% over the same period in 2016. Adjusted EBITDA loss for Q2 2017 was $0.4 million.
At September 30, 2017, Redline held cash of $11.0 million, down $0.5 million from Q2 2017 and down $0.1 million from December 31, 2016.
Conference Call and Webcast – November 9th, 2017 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been scheduled for Thursday November 9, 2017 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 98024063. A recording of the call will be available through November 17, 2017 on Redline's website or by dialing 1-416-849-0833 and entering the same passcode.
About Redline Communications
Redline Communications (www.rdlcom.com) is the creator of powerful wide-area wireless networks for mission-critical applications in challenging locations. Redline networks are used by oil and gas companies to manage onshore and offshore assets, by militaries for secure battlefield communications, by municipalities to remotely monitor infrastructure, and by 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 M2M, 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:
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|
|
1
|
To better assess the health and growth of the Redline's business, the Company reports on several non-IFRS metrics, including "Orders or Bookings", "Shipped or Shipments", "Backlog", "EBITDA", "Adjusted EDITDA (Loss)", and "EPS excluding non-cash gain (loss) on fair market value of financial instruments". 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 nine months ended September 30, 2017 ("Q3 2017 MD&A"), copies of which are available on SEDAR at www.sedar.com. Further details on the three and nine months ended September 30, 2017 can be found in the condensed consolidated interim statement of financial position, condensed consolidated interim statement of comprehensive income, condensed consolidated interim statement of changes in equity and condensed consolidated interim 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 and nine months ended September 30, 2017 and the Q3 2017 MD&A.
|
|
Adjusted EBITDA Loss
|
|
|
|
|
|
|
(Unaudited, Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
The table below reconciles Adjusted EBITDA loss to the most directly comparable IFRS measure:
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
|
Revenue
|
$
|
5,203
|
$
|
5,210
|
|
$
|
14,466
|
$
|
16,432
|
|
Net loss
|
(968)
|
(1,182)
|
|
(2,381)
|
(4,656)
|
|
Add back:
|
|
|
|
|
|
|
Share based payments
|
147
|
53
|
|
305
|
227
|
|
Depreciation and amortization
|
172
|
256
|
|
567
|
772
|
|
Finance (income) expense
|
4
|
23
|
|
18
|
(179)
|
|
Loss on fair market value
of financial instruments
|
-
|
-
|
|
-
|
16
|
|
Foreign exchange (gain) loss
|
55
|
(35)
|
|
125
|
108
|
|
Income tax expense
|
7
|
1
|
|
19
|
28
|
|
Total
|
385
|
298
|
|
1,034
|
972
|
|
|
|
|
|
|
|
|
Adjusted EBITDA loss
|
$
|
(583)
|
$
|
(884)
|
|
$
|
(1,347)
|
$
|
(3,684)
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
-11%
|
-17%
|
|
-9%
|
-22%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
|
$
|
11,038,667
|
$
|
11,147,235
|
|
Trade receivables
|
|
7,155,813
|
|
7,837,145
|
|
Other receivables
|
|
196,503
|
|
231,398
|
|
Inventories
|
|
5,729,053
|
|
5,513,985
|
|
Prepaid expenses and other deposits
|
|
317,383
|
|
151,880
|
|
|
|
24,437,419
|
|
24,881,643
|
|
Non-current assets:
|
|
|
|
|
|
Property, plant and equipment
|
|
889,378
|
|
1,119,690
|
|
Intangible assets
|
|
1,236,531
|
|
1,494,603
|
|
Other assets
|
|
83,972
|
|
78,908
|
|
|
|
2,209,881
|
|
2,693,201
|
|
Total Assets
|
$
|
26,647,300
|
$
|
27,574,844
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Trade and other payables
|
$
|
5,255,196
|
$
|
3,322,059
|
|
Income tax payable
|
|
10,741
|
|
10,741
|
|
Deferred revenue
|
|
1,023,399
|
|
960,475
|
|
Borrowings
|
|
773,553
|
|
1,478,418
|
|
|
|
7,062,889
|
|
5,771,693
|
|
Non-current liabilities:
|
|
|
|
|
|
Borrowings
|
|
1,441,859
|
|
1,340,165
|
|
Other payables
|
|
182,314
|
|
247,799
|
|
|
|
1,624,173
|
|
1,587,964
|
|
Total Liabilities
|
|
8,687,062
|
|
7,359,657
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Share capital
|
|
172,929,341
|
|
172,929,341
|
|
Contributed surplus
|
|
9,124,325
|
|
8,998,245
|
|
Deficit
|
|
(164,093,428)
|
|
(161,712,399)
|
|
|
|
17,960,238
|
|
20,215,187
|
|
Total liabilities and equity
|
$
|
26,647,300
|
$
|
27,574,844
|
|
REDLINE COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Comprehensive Loss
|
|
|
|
|
|
|
(Unaudited, Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenue
|
|
$
|
5,202,859
|
|
$
|
5,209,736
|
|
$
|
14,465,760
|
|
$
|
16,431,949
|
|
Cost of revenue
|
|
2,597,019
|
|
2,309,535
|
|
6,837,408
|
|
7,395,306
|
|
Gross profit
|
|
2,605,840
|
|
2,900,201
|
|
7,628,352
|
|
9,036,643
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
591,733
|
|
703,902
|
|
1,683,103
|
|
2,275,254
|
|
Administration and finance
|
|
1,254,673
|
|
1,228,582
|
|
3,422,285
|
|
4,683,001
|
|
Sales and marketing
|
|
1,467,343
|
|
1,894,061
|
|
4,194,752
|
|
5,923,678
|
|
Operations and customer support
|
|
194,297
|
|
267,126
|
|
546,637
|
|
836,502
|
|
|
|
3,508,046
|
|
4,093,671
|
|
9,846,777
|
|
13,718,435
|
|
Loss before undernoted items
|
|
(902,206)
|
|
(1,193,470)
|
|
(2,218,425)
|
|
(4,681,792)
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
Finance (income) expense
|
|
3,602
|
|
22,887
|
|
18,029
|
|
(178,846)
|
|
Loss on fair market value of financial instruments
|
|
-
|
|
-
|
|
-
|
|
16,314
|
|
Foreign exchange (gain) loss
|
|
54,938
|
|
(34,585)
|
|
125,243
|
|
108,313
|
|
|
|
58,540
|
|
(11,698)
|
|
143,272
|
|
(54,219)
|
|
Loss before income taxes
|
|
(960,746)
|
|
(1,181,772)
|
|
(2,361,697)
|
|
(4,627,573)
|
|
Income tax expense
|
|
6,927
|
|
653
|
|
19,332
|
|
28,428
|
|
Net loss and total comprehensive loss
|
|
$
|
(967,673)
|
|
$
|
(1,182,425)
|
|
$
|
(2,381,029)
|
|
$
|
(4,656,001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.06)
|
|
$
|
(0.07)
|
|
$
|
(0.14)
|
|
$
|
(0.27)
|
|
REDLINE COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Changes in Equity
|
|
|
|
(Unaudited, Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Warrant
|
Contributed surplus
|
Deficit
|
Total
|
|
Balance at
January 1, 2016
|
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
-
|
-
|
-
|
(4,656,001)
|
(4,656,001)
|
|
Conversion of debenture
|
|
267,164
|
-
|
-
|
-
|
267,164
|
|
Expiry of warrants
|
|
-
|
(310,000)
|
310,000
|
-
|
-
|
|
Stock option expense
|
|
-
|
-
|
183,320
|
-
|
183,320
|
|
Balance at
September 30, 2016
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,950,735
|
$
|
(161,582,962)
|
$
|
20,297,114
|
|
Balance at
January 1, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
|
-
|
-
|
-
|
(2,381,029)
|
(2,381,029)
|
|
Stock option expense
|
|
-
|
-
|
126,080
|
-
|
126,080
|
|
Balance at
September 30, 2017
|
|
$
|
172,929,341
|
$
|
-
|
$
|
9,124,325
|
$
|
(164,093,428)
|
$
|
17,960,238
|
|
REDLINE COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Cash Flows
|
|
|
|
|
|
|
|
(Unaudited, Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(967,673)
|
$
|
(1,182,425)
|
|
$
|
(2,381,029)
|
$
|
(4,656,001)
|
|
Adjustments to reconcile net loss to net cash from operating activities:
|
|
|
|
|
|
|
|
|
Finance (income) expense
|
|
3,602
|
22,887
|
|
18,029
|
(178,846)
|
|
|
Depreciation and amortization of non-current assets
|
|
172,359
|
255,677
|
|
566,619
|
771,969
|
|
|
Gain on disposal of assets
|
|
-
|
(10,213)
|
|
-
|
(10,213)
|
|
|
Stock option expense
|
|
21,560
|
79,558
|
|
126,080
|
183,320
|
|
|
Foreign exchange (gain) loss on cash held in foreign currency
|
|
(53,021)
|
19,644
|
|
(86,891)
|
(89,797)
|
|
|
Foreign exchange (gain) loss on borrowings
|
|
84,018
|
(43,830)
|
|
171,940
|
172,584
|
|
|
Loss on fair market value of financial instruments
|
|
-
|
-
|
|
-
|
16,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(739,155)
|
(858,702)
|
|
(1,585,252)
|
(3,790,670)
|
|
Change in non-cash operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase (decrease) in deferred revenue
|
|
161,627
|
(100,520)
|
|
62,924
|
(715,004)
|
|
|
Change in other non-cash operating assets and liabilities
|
|
53,249
|
529,348
|
|
2,198,244
|
635,011
|
|
Cash from (used in) operating activities
|
|
(524,279)
|
(429,874)
|
|
675,916
|
(3,870,663)
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
(11,164)
|
(53,573)
|
|
(51,275)
|
(196,816)
|
|
Proceeds on sale of property, plant and equipment
|
|
-
|
20,300
|
|
-
|
20,300
|
|
Acquisition of intangible assets
|
|
(18,452)
|
-
|
|
(26,960)
|
(81,437)
|
|
Cash used in investing activities
|
|
(29,616)
|
(33,273)
|
|
(78,235)
|
(257,953)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Finance income
|
|
18,984
|
5,858
|
|
51,568
|
43,444
|
|
Repayment of borrowings
|
|
-
|
-
|
|
(844,708)
|
-
|
|
Cash from (used in) financing activities
|
|
18,984
|
5,858
|
|
(793,140)
|
43,444
|
|
Foreign exchange gain (loss) on cash held in foreign currency
|
|
53,021
|
(19,644)
|
|
86,891
|
89,797
|
|
Decrease in cash
|
|
(481,890)
|
(476,933)
|
|
(108,568)
|
(3,995,375)
|
|
Cash, beginning of the period
|
|
11,520,557
|
11,030,512
|
|
11,147,235
|
14,548,954
|
|
Cash, end of the period
|
|
$
|
11,038,667
|
$
|
10,553,579
|
|
$
|
11,038,667
|
$
|
10,553,579
|
SOURCE Redline Communications Group Inc.
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