Redline Communications Reports 2020 Second Quarter Results
TORONTO, Aug. 10, 2020 /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 second quarter ended June 30, 2020.
Key financial highlights for the three and six months ended June 30, 2020 ("Q2 2020") include:
Financial and Business Review
Revenue for the second quarter ended June 30, 2020 was $4.1 million, down 28% over Q2 2019, mainly the result of approximately $1.8 million of product shipments to a single customer that continues to be delayed due to the impact of COVID-19.
Order Bookings for Q2 2020 were $4.6 million, down 25% over Q2 2019. The decrease was primarily due a decrease in orders from telecom service providers. Orders from other markets remain largely flat.
"Redline's backlog of orders continues to grow during the COVID-19 pandemic. We're focused on mission critical applications in demanding industrial markets such as IoT. This strategy generates higher gross margins as we expand existing networks built with our Virtual Fiber technology," stated Stephen Sorocky, Redline CEO. "The pandemic has impacted our shipments and revenues but we're aggressively controlling expenses and continue the development of LTE/5G products."
Gross margin for Q2 2020 was 58%, down a single percentage point over Q2 2019. The decrease was a result of a number of factors, primarily the result of the change in revenue mix year over year, with the 2020 Q2 having a greater percentage of sales from the lower margin, non-core verticals. This was partially offset by continued quarter-over-quarter growth in revenue from maintenance and support contracts, which, in addition to being recurring revenue, also have higher margins.
Overall operating expenses for Q2 2020 were $3.8 million, down 13% over Q2 2019, primarily a result of decreased sales and marketing costs, as COVID-19 prompted the suspension of all business travel and the cancelation of in-person marketing events.
In the quarter, the Government of Canada announced the Canada Emergency Wage Subsidy ("CEWS") in response to the COVID-19 pandemic. The Company has recognized $0.7 million of CEWS benefit as part of other income, covering periods up to end of June.
Net loss for Q2 2020 was $0.9 million, or ($0.05) per share, essentially unchanged from the net loss of $0.9 million, or ($0.05) per share, for Q2 2019.
Adjusted EBITDA loss for Q2 2020 was $1.1 million (excluding the CEWS benefit of $0.7 million), as compared to Adjusted EBITDA loss of $0.6 million for Q2 2019.
Conference Call and Webcast – August 11, 2020 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been scheduled for Tuesday August 11, 2020 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 7769062. A recording of the call will be available through August 18, 2020 on Redline's website or by dialing 1-416-849-0833 and entering the same passcode.
About Redline Communications
Forward Looking Statements
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.
SOURCE Redline Communications Group Inc.
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