TORONTO,
Nov. 14, 2013 /CNW/ - Redline
Communications (www.rdlcom.com Group Inc. TSX: RDL), a leading
provider of secure broadband wireless solutions for
machine-to-machine (M2M) communications, today announced operating
results¹ for the three and nine months ended September 30, 2013.
Financial summary for the three months ended
September 30, 2013 (Q3-2013):
- Order Bookings² of $6.3
million
- Overall revenue was $7.1
million
- Overall gross margin of 69%
- Adjusted EBITDA² loss of $1.5
million
- Completed a Cdn. $10.6 million
private placement financing
- Cash net of bank indebtedness of $14.3
million
Financial Review
Order Bookings² for Q3-2013 were $6.3 million for Q3-2013, down 58% over the same
period in 2012. The shortfall was largely due to fewer orders from
the energy sector where orders were estimated by Management to be
approximately 24% of total Bookings.
"We are seeing strong growth in our sales
pipeline and we are not losing business to competitors," said
Robert Williams, interim CEO of
Redline Communications. "While our excitement about the potential
in the energy market is greater than ever, the timing of the
growing number of potential orders in our pipeline is dependent on
the buying cycles of these large companies."
Order Backlog² at September 30, 2013 was $20.1 million, an increase of $4.0 million over the September 30, 2012 backlog of $16.1 million.
Revenue for Q3-2013 was $7.1 million, down 13% from the $8.1 million reported for the same period in
2012. Lower revenue was related to the timing of the roll-out of
two large contracted oil & gas projects underway in the
Middle East - both are expected to
continue to ship in the fourth quarter of 2013 and into 2014.
Gross margin on core (BWI) product sales for
Q3-2013 was very strong at 72%, an increase of 15 percentage points
over the same period last year. Overall gross margin was 69%, an
increase of 13 percentage points over 56% reported in the same
period in 2012. Higher overall margins in Q3-2013 were due to an
increased percentage of higher margin software sales associated
with the BWI product line, an increase in revenue from high margin
professional services, and a reduction in the amount of lower
margin "other" products that were included in revenue during the
same period last year.
Overall operating expenses for Q3-2013 were in
line with management's expectations at $6.8
million, an increase of 13% over $6.0
million reported for the same period in 2012, and relatively
unchanged from Q2-2013.
The Adjusted EBITDA² loss for Q3-2013 was
$1.5 million, as compared to the
adjusted EBITDA2 loss of $1.1
million for the same period in 2012.
Net Loss for Q3-2013 was $1.2 million, or ($0.08) per share, compared to a net loss of
$5.2 million, or ($0.55) per share for the same period in
2012.
During Q3-2012, the Company completed a bought
deal private placement financing for aggregate gross proceeds of
Cdn $10.6 million, bringing Redline's
current cash position to over $17.6
million with cash net of bank indebtedness of $14.3 million.
On June 20, 2013
Redline announced that it had executed two separate non-binding
letters of intent to acquire two companies. Following due
diligence, Redline has now concluded that it will not pursue these
acquisitions.
Significant company milestones for Q3-
2013:
- Key Customer Wins:
-
- Redline won a strategic managed services contract with a long
term Middle East oil & gas
client, demonstrating additional value beyond network
infrastructure. Part of this contract was to develop a long term
plan to expand this client's Redline network.
- Service Provider revenue continues to be strong, especially in
the Middle East.
- After a successful pilot program, one of the top 10 oil &
gas producers in the world, a "supermajor", has standardized on
Redline for their oilfield networks worldwide, and is now including
Redline in their corporate field telecom shared infrastructure
architecture.
- Product Milestones:
-
- Redline announced that its wireless broadband system for the
sub-700 MHz frequency bands - the so-called television white space
- is the fastest white space technology with the longest range to
be certified by both the U.S. Federal Communications Commission
(FCC) and Industry Canada.
- Management and Board Changes:
-
- Redline announced the appointment of John Wilson to its board of directors. Mr.
Wilson has spent the past 32 years working at the intersection of
technology and the oil & gas industry and is president and
chief executive officer of Quantapoint Inc, a technology-driven
solutions provider to the oil & gas industry.
- Redline announced that Eric
Melka, Redline's CEO, would be taking a medical leave of
absence to address a back injury and subsequent to the end of the
quarter, announced that Mr. Melka would not be returning to his
duties as CEO or Board Member. Robert
Williams, President Middle East and Africa (MENA) for Redline, has assumed the
role of interim CEO.
Conference Call and Webcast - November 15th, 2013 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been
scheduled for November
15th, 2013 at 10:00 a.m.
Eastern Time. To participate, please dial 1-647-427-7450 or
1-888-231-8191 approximately 10 minutes before the conference call,
and provide passcode 90027350. A recording of the call will
be available through November 30,
2013. To listen to the rebroadcast please dial
1-416-849-0833 or 1-855-859-2056 and enter passcode 90027350.
A webcast of the call will also be available on Redline's website
at http://www.rdlcom.com/en/about/investors/webcasts.
About Redline Communications
Redline Communications (www.rdlcom.com) the innovator of Virtual
Fiber™, a specialized wireless broadband system used by companies
and governments worldwide to cost-effectively deploy distributed
services and applications. Redline Virtual Fiber™ solutions are
used to facilitate and enhance public safety networks, deploy and
extend secure networks, connect digital oilfields and smart grids,
and bring dedicated Internet access wherever and whenever it's
needed. Redline has been delivering powerful, versatile and
reliable wireless systems to governments, the military, oil &
gas, and the telecom industry for over a decade through its global
network of certified partners. For more information visit
www.rdlcom.com.
NOTES: |
|
1 |
All amounts reported in this press
release are in US dollars unless otherwise stated. |
|
2 |
To better assess the health and
growth of the Redline's business, the Company uses non-IFRS
measures to assess its operating performance. These include but are
not limited to "Orders or Bookings", "Shipped or Shipments",
"Backlog", "EBITDA", "Adjusted EBITDA", "Income before
non-operating items", "EPS excluding the non-cash expense relating
to the fair market adjustment on the Debenture", and "Amortized
Deferred Revenue". Securities regulations require that companies
caution readers that earnings and other measures adjusted to a
basis other than IFRS do not have standardized meanings and are
unlikely to be comparable to similar measures used by other
companies. Accordingly, they should not be considered in isolation.
Further information including definitions of these categories can
be found in the Company's Management Discussion and Analysis for
the three months and nine months ended September 30, 2013 ("Q3 2013
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the results for the three and
nine months ended September 30, 2013 can be found in the
condensed consolidated interim statement of financial position,
condensed consolidated interim statement of comprehensive loss,
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 months
and nine months ended September 30, 2013 and the Q3 2013
MD&A. |
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 affects 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,
2013 |
|
|
December 31,
2012 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
|
$ |
17,607,660 |
|
$ |
8,286,732 |
|
Trade receivables |
|
|
|
12,388,761 |
|
|
12,639,570 |
|
Other receivables |
|
|
|
1,414,889 |
|
|
571,382 |
|
Inventories |
|
|
|
5,951,883 |
|
|
6,973,414 |
|
Deferred cost of revenue |
|
|
|
87,888 |
|
|
905,250 |
|
Prepaid expenses and other deposits |
|
|
|
945,289 |
|
|
1,061,622 |
|
|
|
|
|
38,396,370 |
|
|
30,437,970 |
Non-current assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
1,834,406 |
|
|
875,352 |
|
Intangible assets |
|
|
|
80,090 |
|
|
107,593 |
|
Other assets |
|
|
|
102,174 |
|
|
99,180 |
|
|
|
|
|
2,016,670 |
|
|
1,082,125 |
Total Assets |
|
|
$ |
40,413,040 |
|
$ |
31,520,095 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
$ |
3,353,590 |
|
$ |
2,296,855 |
|
Trade and other payables |
|
|
|
5,928,243 |
|
|
4,249,973 |
|
Income tax payable |
|
|
|
142,953 |
|
|
292,927 |
|
Deferred revenue |
|
|
|
1,351,683 |
|
|
2,796,497 |
|
Borrowings |
|
|
|
5,091,321 |
|
|
5,116,527 |
|
|
|
|
|
15,867,790 |
|
|
14,752,779 |
Non-current
liabilities |
|
|
|
|
|
|
|
|
Other payables |
|
|
|
896,861 |
|
|
418,622 |
|
Other financial liability |
|
|
|
375,657 |
|
|
- |
|
Convertible debenture (principal and
interest) |
|
|
|
295,796 |
|
|
1,100,788 |
|
Fair market value adjustment on debenture |
|
|
|
3,066,951 |
|
|
8,357,396 |
|
|
|
|
|
4,635,265 |
|
|
9,876,806 |
Total
Liabilities |
|
|
|
20,503,055 |
|
|
24,629,585 |
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
Share capital |
|
|
|
168,903,267 |
|
|
152,123,803 |
Share purchase
loan |
|
|
|
(365,780) |
|
|
(365,780) |
Warrant |
|
|
|
310,000 |
|
|
310,000 |
Contributed surplus |
|
|
|
8,845,609 |
|
|
8,361,465 |
Deficit |
|
|
|
(157,783,111) |
|
|
(153,538,978) |
|
|
|
|
|
19,909,985 |
|
|
6,890,510 |
Total liabilities and
equity |
|
|
$ |
40,413,040 |
|
$ |
31,520,095 |
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, |
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
7,068,730 |
$ |
8,145,984 |
|
$ |
24,015,729 |
$ |
38,033,918 |
Cost of revenue |
|
2,157,280 |
|
3,606,736 |
|
|
9,330,462 |
|
17,131,369 |
Gross profit |
|
4,911,450 |
|
4,539,248 |
|
|
14,685,267 |
|
20,902,549 |
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
Research and development |
|
1,657,640 |
|
1,426,750 |
|
|
4,842,290 |
|
4,577,763 |
|
Finance and administration |
|
2,151,735 |
|
1,841,489 |
|
|
6,074,321 |
|
5,397,817 |
|
Sales and marketing |
|
2,592,551 |
|
2,277,960 |
|
|
8,034,017 |
|
7,083,711 |
|
Operations and customer support |
|
390,616 |
|
441,107 |
|
|
1,154,250 |
|
1,375,796 |
|
|
|
6,792,542 |
|
5,987,306 |
|
|
20,104,878 |
|
18,435,087 |
(Loss) profit before other expenses |
|
(1,881,092) |
|
(1,448,058) |
|
|
(5,419,611) |
|
2,467,462 |
|
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
|
|
|
Finance expense |
|
65,946 |
|
41,267 |
|
|
233,074 |
|
214,758 |
|
(Gain) loss on fair market value of financial
instruments |
|
(955,713) |
|
3,192,165 |
|
|
(1,476,534) |
|
5,840,382 |
|
Foreign exchange loss (gain) |
|
226,215 |
|
480,272 |
|
|
(129,538) |
|
317,272 |
|
|
|
(663,552) |
|
3,713,704 |
|
|
(1,372,998) |
|
6,372,412 |
Loss before income taxes |
|
(1,217,540) |
|
(5,161,762) |
|
|
(4,046,613) |
|
(3,904,950) |
Income tax expense |
|
24,456 |
|
- |
|
|
197,520 |
|
- |
Net loss and total comprehensive loss |
$ |
(1,241,996) |
$ |
(5,161,762) |
|
$ |
(4,244,133) |
$ |
(3,904,950) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.08) |
$ |
(0.55) |
|
$ |
(0.30) |
$ |
(0.42) |
|
Diluted |
$ |
(0.08) |
$ |
(0.55) |
|
$ |
(0.30) |
$ |
(0.42) |
REDLINE COMMUNICATIONS GROUP
INC. |
|
|
|
|
Condensed Consolidated Interim
Statements of Changes in Equity |
|
|
|
(Unaudited, expressed in U.S.
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital |
Share
purchase
loan |
Warrant |
Contributed
surplus |
Deficit |
Total |
Balance at
December 31, 2011 |
$ 134,336,023 |
$ (365,780) |
$ 310,000 |
$ 7,635,506 |
$ (144,037,436) |
$ (2,121,687) |
|
Net profit |
- |
- |
- |
- |
(3,904,950) |
(3,904,950) |
|
Shares issued
on
conversion of debenture |
205,450 |
- |
- |
- |
- |
205,450 |
|
Shares issued
on
conversion of warrants |
66,434 |
- |
- |
- |
- |
66,434 |
|
Exercise of options |
124,273 |
- |
- |
(70,164) |
- |
54,109 |
|
Share-based payments |
- |
- |
- |
648,125 |
- |
648,125 |
Balance at
September 30, 2012 |
$ 134,732,180 |
$ (365,780) |
$ 310,000 |
$ 8,213,467 |
$ (147,942,386) |
$ (5,052,519) |
Balance at
December 31, 2012 |
$ 152,123,803 |
$ (365,780) |
$ 310,000 |
$ 8,361,465 |
$ (153,538,978) |
$ 6,890,510 |
|
Net loss |
- |
- |
- |
- |
(4,244,133) |
(4,244,133) |
|
Shares issued
on
conversion of debenture |
2,132,243 |
- |
- |
- |
- |
2,132,243 |
|
Shares issued
on
conversion of warrants |
5,334,306 |
- |
- |
- |
- |
5,334,306 |
|
Shares issued
on
private placement |
8,835,392 |
- |
- |
- |
- |
8,835,392 |
|
Exercise of options |
477,523 |
- |
- |
(209,795) |
- |
267,728 |
|
Share-based payments |
- |
- |
- |
693,939 |
- |
693,939 |
Balance at
September 30, 2013 |
$ 168,903,267 |
$ (365,780) |
$ 310,000 |
$ 8,845,609 |
$ (157,783,111) |
$ 19,909,985 |
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, |
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,241,996) |
$ |
(5,161,762) |
|
$ |
(4,244,133) |
|
$ (3,904,950) |
|
Adjustments to reconcile net (loss)
profit to net cash from operating
activities |
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense |
|
|
65,946 |
|
41,267 |
|
|
233,074 |
|
214,758 |
|
|
Depreciation and amortization of non-current assets |
|
|
105,701 |
|
104,508 |
|
|
274,839 |
|
311,396 |
|
|
Loss on disposal of asset |
|
|
28,963 |
|
- |
|
|
28,963 |
|
- |
|
|
Recognition of share based payments |
|
|
209,413 |
|
296,073 |
|
|
693,939 |
|
753,851 |
|
|
Foreign exchange loss (gain) on cash held in
foreign currency |
|
|
42,079 |
|
(6,651) |
|
|
170,636 |
|
(47,768) |
|
|
Foreign exchange loss (gain) on borrowings |
|
|
187,490 |
|
460,173 |
|
|
(376,090) |
|
252,713 |
|
|
(Gain) loss on fair market value of financial instruments |
|
|
(955,713) |
|
3,192,165 |
|
|
(1,476,534) |
|
5,840,382 |
|
|
Income tax |
|
|
24,456 |
|
- |
|
|
197,520 |
|
- |
|
|
|
|
|
(1,533,661) |
|
(1,074,227) |
|
|
(4,497,786) |
|
3,420,382 |
|
Change in non-cash operating assets and
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in deferred cost of revenue |
|
|
(87,888) |
|
921,387 |
|
|
817,362 |
|
6,973,135 |
|
|
Decrease (increase) in deferred revenue |
|
|
350,100 |
|
(1,821,965) |
|
|
(1,444,814) |
|
(13,431,515) |
|
|
Change in other non-cash operating assets and
liabilities |
|
|
1,663,395 |
|
382,651 |
|
|
2,360,985 |
|
(955,291) |
Cash from (used in) operating activities |
|
|
391,946 |
|
(1,592,154) |
|
|
(2,764,253) |
|
(3,993,289) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(832,276) |
|
(38,263) |
|
|
(1,202,398) |
|
(102,549) |
|
Acquisition of intangible assets |
|
|
(16,855) |
|
(4,635) |
|
|
(32,955) |
|
(54,711) |
|
Redemption of investments |
|
|
- |
|
- |
|
|
- |
|
92,144 |
Cash (used in) investing activities |
|
|
(849,131) |
|
(42,898) |
|
|
(1,235,353) |
|
(65,116) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
|
|
(14,903) |
|
34,694 |
|
|
(77,449) |
|
26,267 |
|
Proceeds from exercise of options |
|
|
88,841 |
|
35,153 |
|
|
267,728 |
|
54,109 |
|
Proceeds from conversion of warrants |
|
|
- |
|
31,493 |
|
|
2,931,614 |
|
31,493 |
|
(Payment) proceeds from bank indebtedness |
|
|
(952,007) |
|
- |
|
|
1,056,735 |
|
- |
|
Proceeds from private placement |
|
|
9,322,340 |
|
- |
|
|
9,322,340 |
|
- |
|
Principal payment of obligations under finance
leases |
|
|
(9,798) |
|
- |
|
|
(9,798) |
|
- |
Cash from financing activities |
|
|
8,434,473 |
|
101,340 |
|
|
13,491,170 |
|
111,869 |
Foreign exchange (loss) gain on cash held in
foreign currency |
|
|
(42,079) |
|
6,651 |
|
|
(170,636) |
|
47,768 |
Increase (decrease) in cash |
|
|
7,935,209 |
|
(1,527,061) |
|
|
9,320,928 |
|
(3,898,768) |
Cash, beginning of the period |
|
|
9,672,451 |
|
2,279,577 |
|
|
8,286,732 |
|
4,651,284 |
Cash, end of the period |
|
$ |
17,607,660 |
$ |
752,516 |
|
$ |
17,607,660 |
$ |
752,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
17,607,660 |
$ |
752,516 |
|
$ |
17,607,660 |
$ |
752,516 |
Bank indebtedness |
|
|
(3,353,590) |
|
- |
|
|
(3,353,590) |
|
- |
Cash net of bank indebtedness |
|
$ |
14,254,070 |
$ |
752,516 |
|
$ |
14,254,070 |
$ |
752,516 |
SOURCE Redline Communications Group Inc.