TORONTO, Aug. 12, 2014 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
mission-critical networks, today announced unaudited operating
results¹ for the three and six months ended June 30, 2014.
Financial summary for the three months ended June 30, 2014 (Q2 2014):
- Revenue of $8.7 million
- Gross Margin of 63%
- Adjusted EBITDA² of $1.1
million
- Net Profit of $0.6 million
- Increased Cash by $6.3 million to $20.9
million
- Order Bookings² of $11.5
million
- Order Backlog² of $18.2
million
Overall Revenue for Q2 2014 was $8.7
million, down 3% over the same period in 2013. An
increase of approximately $1 million
in revenue from oil and gas customers was offset by a decrease in
sales to customers in other verticals of approximately $1.1 million when compared to 2013.
Adjusted EBITDA for Q2 2014 was $1.1
million, an improvement of $1.8
million over the Adjusted EBITDA loss of $0.8 million for Q2 2013. The difference can be
attributed to continued strong gross margins and lower operating
costs in the quarter resulting from the restructuring program
initiated in December 2013.
"22% quarter-over-quarter revenue growth combined with continued
strong gross margins and well-managed operating costs has enabled
us to realize positive EBITDA and increase our cash," said
George Kypreos, Redline CFO. "We are
delivering to our plan, and we're very pleased with this positive
momentum."
Gross margins for Q2 2014 were 63%, which compares to 64%
reported for Q2 2013.
Operating expenses for Q2 2014, were $4.7
million, a decrease of 31% compared to $6.9 million reported for the same period in
2013, with the decrease attributed to the restructuring plan put in
place during December 2013.
Net profit for Q2 2014 was $0.6
million or $0.04 per share, a
$1.1 million improvement over the net
loss of $0.5 million, or ($0.04) per share reported in the same period in
2013.
Positive EBITDA combined with the previously announced receipt
of approximately CDN $2.1 million in
consideration from the exercise of warrants increased cash by
$6.3 million, bringing the Company's
cash balance to $20.9 million at
June 30, 2014.
Order Bookings for Q2 2014 were $11.5
million, up 29% over Q1 2014 and up 3% over the same period
in 2013. Total Order Backlog at June
30, 2014 was $18.2
million.
The second quarter of 2014 included a previously announced large
contract from a new customer to provide 5 wireless oilfield
networks. Smaller contracts were also signed for a video
surveillance project in Mexico and
for Redline's new offshore product. These new bookings were largely
offset by reductions in total order value from military customers
during the same period in 2013.
"This was a strong and encouraging quarter for Redline," said
Robert Williams, Redline CEO.
"Orders came from several market segments and especially from oil
and gas where our pilot program continues to demonstrate
traction. Looking forward, we are comfortable that our
expenses are in line with our revenues and we continue to see
opportunities in all of our target markets to drive our top line
growth."
Redline tracks the number of pilot projects within the Energy
sector as an indicator of future Order Bookings. Pilot projects
vary in size and scope and give prospective customers the
opportunity to evaluate Redline's solutions in a real field
setting. In Q2 2014, the Company added 2 new pilot projects
and converted two existing pilot projects into deployed networks.
Four other networks were deployed in Q2 2014 bypassing a pilot
stage. This brings the total ongoing oil and gas pilot programs to
15, up from two at June 30, 2013.
Conference Call and Webcast – August
13th, 2014 at 10:00 a.m.
ET
A conference call and webcast to discuss the Company's financial
results have been scheduled for August 13,
2014 at 10:00 a.m. Eastern
Time. To participate in the call, please dial 1-647-427-7450
or 1-888-231-8191 approximately 10 minutes before the conference
call, and provide passcode 76815260. A recording of the call will
be available through October 31,
2014. To listen to the rebroadcast please dial
1-416-849-0833 or 1-855-859-2056 and enter passcode 76815260. 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) is the creator of
powerful wide-area wireless networks for the most challenging
applications and locations. They are used by oil and gas
companies to manage their assets, militaries for secure battlefield
communications, municipalities to remotely monitor highways,
utilities and other infrastructures, and telecom service providers
to deliver premium services. Redline's powerful and versatile
networks reliably and securely deliver voice, data, M2M and video
communications for mission-critical applications. For more
information visit www.rdlcom.com.
NOTES:
- All amounts reported in this press release are in US dollars
unless otherwise stated.
- To better assess the health and growth of the Redline's
business, the Company sometimes reports on several key metrics,
including "Orders or Bookings", "Backlog", "EBITDA", "Adjusted
EBITDA", "EPS excluding the non-cash expense relating to the fair
market adjustment on financial instruments". Further
information including definitions of these categories can be found
in the Company's Management Discussion and Analysis for the three
months ended June 30, 2014 ("Q2 2014
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three month results ended
June 30, 2014 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
ended June 30, 2014 and the Q2 2014
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 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.redlinecommunications.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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
|
$
20,935,013
|
|
$
13,473,246
|
|
Trade
receivables
|
|
7,576,765
|
|
10,340,537
|
|
Other
receivables
|
|
1,093,939
|
|
1,155,514
|
|
Inventories
|
|
6,407,106
|
|
6,138,547
|
|
Deferred cost of
revenue
|
|
-
|
|
40,059
|
|
Prepaid expenses and
other deposits
|
|
612,460
|
|
928,350
|
|
|
|
36,625,283
|
|
32,076,253
|
Non-current
assets:
|
|
|
|
|
|
Property, plant and
equipment
|
|
1,640,107
|
|
1,768,479
|
|
Intangible
assets
|
|
145,018
|
|
59,809
|
|
Other
assets
|
|
83,992
|
|
99,753
|
|
|
|
1,869,117
|
|
1,928,041
|
Total
Assets
|
|
$
38,494,400
|
|
$
34,004,294
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Trade and other
payables
|
|
5,103,601
|
|
5,553,916
|
|
Income tax
payable
|
|
155,063
|
|
153,403
|
|
Deferred
revenue
|
|
2,575,371
|
|
1,105,333
|
|
Borrowings
|
|
5,061,615
|
|
4,981,078
|
|
|
|
12,895,650
|
|
11,793,730
|
Non-current
liabilities
|
|
|
|
|
|
Other
payables
|
|
625,601
|
|
788,592
|
|
Other financial
liability
|
|
135,910
|
|
111,548
|
|
Convertible debenture
(principal and interest)
|
|
287,514
|
|
287,175
|
|
Fair market value
adjustment on convertible debenture
|
|
141,900
|
|
920,739
|
|
|
|
1,190,925
|
|
2,108,054
|
Total
Liabilities
|
|
14,086,575
|
|
13,901,784
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
|
172,446,878
|
|
168,903,267
|
Share purchase
loan
|
|
-
|
|
(365,780)
|
Warrant
|
|
310,000
|
|
310,000
|
Contributed
surplus
|
|
8,145,683
|
|
8,911,025
|
Deficit
|
|
(156,494,736)
|
|
(157,656,002)
|
|
|
|
24,407,825
|
|
20,102,510
|
Total liabilities
and equity
|
|
$
38,494,400
|
|
$
34,004,294
|
|
|
|
|
|
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Income
(Loss)
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
|
2014
|
|
2013
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ 8,682,128
|
|
$ 8,924,258
|
$ 15,770,069
|
|
$ 16,946,999
|
|
Cost of
revenue
|
|
3,176,179
|
|
3,204,129
|
5,975,127
|
|
7,173,182
|
|
Gross
profit
|
|
5,505,949
|
|
5,720,129
|
9,794,942
|
|
9,773,817
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
607,460
|
|
1,405,716
|
1,443,854
|
|
3,184,650
|
|
|
Administration and
finance
|
|
1,732,069
|
|
2,266,236
|
3,079,323
|
|
3,922,586
|
|
|
Sales and
marketing
|
|
2,096,786
|
|
2,839,638
|
3,883,107
|
|
5,441,466
|
|
|
Operations and
customer support
|
|
300,097
|
|
393,184
|
594,325
|
|
763,634
|
|
|
|
|
4,736,412
|
|
6,904,774
|
9,000,609
|
|
13,312,336
|
|
Profit (loss) before
undernoted items
|
|
769,537
|
|
(1,184,645)
|
794,333
|
|
(3,538,519)
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(gains)
|
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
37,189
|
|
85,249
|
74,456
|
|
167,128
|
|
|
Loss (gain) on fair
market value
of financial instruments
|
|
194,493
|
|
(466,428)
|
(389,847)
|
|
(520,821)
|
|
|
Foreign exchange
gain
|
|
(60,279)
|
|
(270,318)
|
(88,961)
|
|
(355,753)
|
|
|
|
|
171,403
|
|
(651,497)
|
(404,352)
|
|
(709,446)
|
|
Profit (loss) before
income taxes
|
|
598,134
|
|
(533,148)
|
1,198,685
|
|
(2,829,073)
|
|
Income tax
expense
|
|
11,498
|
|
741
|
37,419
|
|
173,064
|
|
Net profit (loss) and
total comprehensive income (loss)
|
$
586,636
|
|
$ (533,889)
|
$ 1,161,266
|
|
$ (3,002,137)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.04
|
|
$
(0.04)
|
$
0.07
|
|
$
(0.22)
|
|
|
Diluted
|
|
$
0.04
|
|
$
(0.04)
|
$
0.07
|
|
$
(0.22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2012
|
$ 152,123,803
|
$
(365,780)
|
$
310,000
|
$
8,361,465
|
$ (153,538,978)
|
$
6,890,510
|
|
|
Net loss
|
-
|
-
|
-
|
-
|
(3,002,137)
|
(3,002,137)
|
|
|
Conversion of
debenture
|
2,132,243
|
-
|
-
|
-
|
-
|
2,132,243
|
|
|
Conversion of
warrants
|
5,334,306
|
-
|
-
|
-
|
-
|
5,334,306
|
|
|
Exercise of
options
|
337,320
|
-
|
-
|
(158,433)
|
-
|
178,887
|
|
|
Share-based
payments
|
-
|
-
|
-
|
484,526
|
-
|
484,526
|
|
Balance at
June 30, 2013
|
$ 159,927,672
|
$
(365,780)
|
$
310,000
|
$
8,687,558
|
$ (156,541,115)
|
$ 12,018,335
|
|
Balance at
December 31, 2013
|
$ 168,903,267
|
$
(365,780)
|
$
310,000
|
$
8,911,025
|
$ (157,656,002)
|
$ 20,102,510
|
|
|
Net profit
|
-
|
-
|
-
|
-
|
1,161,266
|
1,161,266
|
|
|
Exercise of
options
|
1,620,027
|
-
|
-
|
(716,968)
|
-
|
903,059
|
|
|
Conversion of
warrants
|
2,253,156
|
-
|
-
|
-
|
-
|
2,253,156
|
|
|
Share purchase loan
settlement
|
(329,572)
|
365,780
|
-
|
-
|
-
|
36,208
|
|
|
Repurchase and
cancellation
of options
|
-
|
-
|
-
|
(201,793)
|
-
|
(201,793)
|
|
|
Share-based
payments
|
-
|
-
|
-
|
153,419
|
-
|
153,419
|
|
Balance at
June 30, 2014
|
$ 172,446,878
|
$
-
|
$
310,000
|
$
8,145,683
|
$ (156,494,736)
|
$ 24,407,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
Note
|
2014
|
2013
|
|
2014
|
2013
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$
586,636
|
$ (533,889)
|
|
$ 1,161,266
|
$ (3,002,137)
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
37,189
|
85,249
|
|
74,456
|
167,128
|
|
|
Depreciation and
amortization of non-current assets
|
|
99,418
|
87,091
|
|
209,206
|
169,138
|
|
|
Loss on disposal of
asset
|
|
4,960
|
-
|
|
15,652
|
-
|
|
|
Recognition of share
based payments
|
|
157,993
|
299,061
|
|
189,627
|
484,526
|
|
|
Foreign exchange loss
on cash held in foreign currency
|
|
216,424
|
6,796
|
|
399,192
|
128,557
|
|
|
Foreign exchange loss
(gain) on borrowings
|
|
193,624
|
(334,918)
|
|
(45,032)
|
(563,580)
|
|
|
Loss (gain) on fair
market value of Debenture
|
|
194,493
|
(466,428)
|
|
(389,847)
|
(520,821)
|
|
|
Income tax
|
|
-
|
741
|
|
-
|
173,064
|
|
|
|
|
1,490,737
|
(856,297)
|
|
1,614,520
|
(2,964,125)
|
|
Change in non-cash
operating assets and liabilities
|
|
|
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
|
-
|
314,328
|
|
40,059
|
905,250
|
|
|
Increase (decrease)
in deferred revenue
|
|
1,452,135
|
(650,116)
|
|
1,470,038
|
(1,794,914)
|
|
|
Change in other
non-cash operating assets and liabilities
|
16
|
1,212,381
|
(2,566,844)
|
|
2,075,000
|
697,590
|
Cash from operating
activities
|
|
4,155,253
|
(3,758,929)
|
|
5,199,617
|
(3,156,199)
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
5
|
(38,086)
|
(305,955)
|
|
(55,619)
|
(370,122)
|
|
Proceeds on sale of
property, plant and equipment
|
|
924
|
-
|
|
14,424
|
-
|
|
Acquisition of
intangible assets
|
6
|
(120,500)
|
(16,100)
|
|
(140,500)
|
(16,100)
|
Cash used in
investing activities
|
|
(157,662)
|
(322,055)
|
|
(181,695)
|
(386,222)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Finance income
(costs)
|
|
11,228
|
(44,627)
|
|
20,688
|
(62,546)
|
|
Proceeds from
exercise of options
|
|
576,595
|
3,691
|
|
903,059
|
178,887
|
|
Proceeds from
conversion of debenture and warrants
|
|
1,919,290
|
38,781
|
|
1,919,290
|
2,931,614
|
|
Proceeds from bank
indebtedness
|
|
-
|
1,071,566
|
|
-
|
2,008,742
|
Cash from financing
activities
|
|
2,507,113
|
1,069,411
|
|
2,843,037
|
5,056,697
|
Foreign exchange loss
on cash held in foreign currency
|
|
(216,424)
|
(6,796)
|
|
(399,192)
|
(128,557)
|
Increase (decrease)
in cash
|
|
6,288,280
|
(3,018,369)
|
|
7,461,767
|
1,385,719
|
Cash, beginning of
the period
|
|
14,646,733
|
12,690,820
|
|
13,473,246
|
8,286,732
|
Cash, end of the
period
|
|
$ 20,935,013
|
$ 9,672,451
|
|
$ 20,935,013
|
$ 9,672,451
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ 20,935,013
|
$ 9,672,451
|
|
$ 20,935,013
|
$ 9,672,451
|
Bank
indebtedness
|
|
-
|
(4,305,597)
|
|
-
|
(4,305,597)
|
Cash, net of bank
indebtedness
|
|
$ 20,935,013
|
$ 5,366,854
|
|
$ 20,935,013
|
$ 5,366,854
|
|
|
|
|
|
|
|
|
|
SOURCE Redline Communications Group Inc.