TORONTO, May 4, 2016 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
mission-critical wireless networks, today announced unaudited
operating results¹ for the three months ended March 31, 2016 (Q1 2016).
Q1 2016 Financial Highlights
- $6.2M Revenue
- 59% Gross Margin
- $0.6M Adjusted EBITDA² loss
- $0.9M Net Loss
- $13.0M Cash
- $6.9M new Order Bookings²
- $17.7M Order Backlog²
Total revenue for Q1 2016 was $6.2
million, up $1.1 million or
21% over the preceding quarter, down $3.4
million or 35% over the same period in 2015. The
year-over-year decrease can be attributed to lower sales to energy
companies whose businesses have been affected by the downturn in
global oil prices.
Order Bookings for Q1 2016 were $6.9
million, up 13% over the same period in 2015. The
Order Backlog at March 21, 2016 was a
healthy $17.7 million, up
$4.4 million or 33% when compared to
the same period in 2015.
"Redline is making progress in the diversification of its
business. In Q1 2016, approximately 80% of our new orders came from
customers in markets other than oil and gas," stated Rob Williams, Redline CEO. "We will continue to
grow and diversify our customer base and we know that we are also
well positioned in the energy sector once the oil and gas sector
rebounds."
Overall operating expenses for Q1 2016 were $4.6 million, a decrease of $0.2 million, or 4% compared to $4.8 million reported for the same period in
2015, primarily as a result of decreased numbers of staff and their
associated costs. The decreases were partially offset by an
increase in costs to support the upcoming LTE product line and
legal fees to implement a shareholder rights plan.
Adjusted EBITDA loss for Q1 2016 was $0.6
million, an improvement of $0.5
million or 44% over the Adjusted EBITDA loss of $1.1 million for the quarter ended December 31, 2015, but an increased loss of
$2 million over the Adjusted EBITDA
of $1.3 million for the same period
in 2015. The increased loss over Q1 2015 can largely be attributed
to lower revenues in the period.
Net loss for Q1 2016 was $0.9
million or ($0.05) per share,
a $2.0 million decrease over the net
profit of $1.1 million, or
$0.06 per share reported in the same
period in 2015. As of March 31,
2016, the Company reported $13.0
million of cash, a decrease of $1.6
million over the $14.5 million
as at December 31, 2015. The decrease
was largely attributable to the net loss and increased working
capital requirements.
The Company had 17,215,469 common shares outstanding as of
March 31, 2016.
Conference Call and Webcast – May 5th,
2016 at 10:00 a.m. ET
A conference call and webcast to discuss the Company's financial
results have been scheduled for May 5,
2016 at 10:00 a.m. Eastern
Time. To participate in the call, please dial 1-647-427-7450
approximately 10 minutes before the conference call, and provide
passcode 93573631. A recorded webcast of the call will be available
on Redline's website
at http://www.rdlcom.com/en/about/investors/webcasts through
July 31, 2016.
About Redline Communications
Redline Communications (www.rdlcom.com) is the creator of
powerful wide-area wireless networks for the most challenging
applications and locations. 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 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", and "Amortized Deferred
Revenue". Further information including definitions of these
categories can be found in the Company's Management Discussion and
Analysis for the three months ended March
31, 2016 ("Q1 2016 MD&A"), copies of which are available
on SEDAR at www.sedar.com. Further details on the three month
results ended March 31, 2016 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 March 31, 2016 and the Q1 2016
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.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)
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
12,986,728
|
$
|
14,548,954
|
|
Trade
receivables
|
|
|
|
8,316,306
|
|
8,187,806
|
|
Other
receivables
|
|
|
|
422,570
|
|
466,668
|
|
Inventories
|
|
|
|
6,213,900
|
|
7,100,207
|
|
Deferred cost of
revenue
|
|
|
|
33,318
|
|
-
|
|
Prepaid expenses and
other deposits
|
|
|
|
608,419
|
|
266,578
|
|
|
|
|
28,581,241
|
|
30,570,213
|
Non-current
assets:
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
1,362,825
|
|
1,389,727
|
|
Intangible
assets
|
|
|
|
1,904,841
|
|
1,974,672
|
|
Other
assets
|
|
|
|
81,170
|
|
64,755
|
|
|
|
|
3,348,836
|
|
3,429,154
|
Total
Assets
|
|
|
$
|
31,930,077
|
$
|
33,999,367
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
3,600,213
|
$
|
4,475,662
|
|
Income tax
payable
|
|
|
|
94,063
|
|
94,063
|
|
Deferred
revenue
|
|
|
|
1,198,370
|
|
1,534,731
|
|
Convertible debenture
(principal and interest)
|
|
|
|
-
|
|
224,595
|
|
Fair market value
adjustment on convertible debenture
|
|
|
|
-
|
|
11,817
|
|
Borrowings
|
|
|
|
749,076
|
|
2,833,752
|
|
|
|
|
5,641,722
|
|
9,174,620
|
Non-current
liabilities:
|
|
|
|
|
|
|
|
Borrowings
|
|
|
|
2,078,355
|
|
-
|
|
Other
payables
|
|
|
|
321,802
|
|
322,116
|
|
|
|
|
2,400,157
|
|
322,116
|
Total
Liabilities
|
|
|
|
8,041,879
|
|
9,496,736
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Share
capital
|
|
|
|
172,929,341
|
|
172,662,177
|
Warrant
|
|
|
|
310,000
|
|
310,000
|
Contributed
surplus
|
|
|
|
8,503,936
|
|
8,457,415
|
Deficit
|
|
|
|
(157,855,079)
|
|
(156,926,961)
|
|
|
|
|
23,888,198
|
|
24,502,631
|
Total liabilities
and equity
|
|
|
$
|
31,930,077
|
$
|
33,999,367
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Condensed
Consolidated Interim Statements of Comprehensive Income
(Loss)
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Revenue
|
|
$
|
6,216,608
|
$
|
9,618,664
|
Cost of
revenue
|
|
|
2,549,091
|
|
3,753,012
|
Gross
profit
|
|
|
3,667,517
|
|
5,865,652
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Research and
development
|
|
|
855,559
|
|
733,742
|
|
Administration and
finance
|
|
|
1,444,158
|
|
1,608,610
|
|
Sales and
marketing
|
|
|
2,073,531
|
|
2,188,763
|
|
Operations and
customer support
|
|
|
271,713
|
|
296,258
|
|
|
|
4,644,961
|
|
4,827,373
|
Profit (loss) before
undernoted items
|
|
|
(977,444)
|
|
1,038,279
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
(196,884)
|
|
27,387
|
|
Loss (gain) on fair
market value of financial instruments
|
|
|
16,314
|
|
(5,318)
|
|
Foreign exchange loss
(gain)
|
|
|
130,595
|
|
(47,628)
|
|
|
|
(49,975)
|
|
(25,559)
|
Profit (loss) before
income taxes
|
|
|
(927,469)
|
|
1,063,838
|
Income tax
expense
|
|
|
649
|
|
390
|
Net profit (loss) and
total comprehensive income (loss)
|
|
$
|
(928,118)
|
$
|
1,063,448
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.05)
|
$
|
0.06
|
|
Diluted
|
|
$
|
(0.05)
|
$
|
0.06
|
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, 2015
|
$
|
172,617,023
|
$
|
310,000
|
$
|
8,167,450
|
$
|
(155,176,462)
|
$
|
25,918,011
|
|
Net profit
|
|
-
|
|
-
|
|
-
|
|
1,063,448
|
|
1,063,448
|
|
Share-based
payments
|
|
-
|
|
-
|
|
83,363
|
|
-
|
|
83,363
|
Balance at
March 31, 2015
|
$
|
172,617,023
|
$
|
310,000
|
$
|
8,250,813
|
$
|
(154,113,014)
|
$
|
27,064,822
|
Balance at
January 1, 2016
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
|
-
|
|
-
|
|
-
|
|
(928,118)
|
|
(928,118)
|
|
Conversion of
debenture
|
|
267,164
|
|
-
|
|
-
|
|
-
|
|
267,164
|
|
Share-based
payments
|
|
-
|
|
-
|
|
46,521
|
|
-
|
|
46,521
|
Balance at
March 31, 2016
|
$
|
172,929,341
|
$
|
310,000
|
$
|
8,503,936
|
$
|
(157,855,079)
|
$
|
23,888,198
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net profit
(loss)
|
$
|
(928,118)
|
$
|
1,063,448
|
|
|
|
|
|
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities:
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(196,884)
|
|
27,387
|
|
|
Depreciation and
amortization of non-current assets
|
|
260,813
|
|
205,783
|
|
|
Gain on disposal of
assets
|
|
-
|
|
(9,950)
|
|
|
Recognition of share
based payments
|
|
46,521
|
|
83,363
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(102,963)
|
|
368,517
|
|
|
Foreign exchange loss
(gain) on borrowings
|
|
201,226
|
|
(392,606)
|
|
|
Loss (gain) on fair
market value of financial instruments
|
|
16,314
|
|
(5,318)
|
|
|
(703,091)
|
|
1,340,624
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
Increase in deferred
cost of revenue
|
|
(33,318)
|
|
-
|
|
|
(Decrease) increase
in deferred revenue
|
|
(336,361)
|
|
114,079
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(432,114)
|
|
(1,882,995)
|
Cash used in
operating activities
|
|
(1,504,884)
|
|
(428,292)
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(83,860)
|
|
(47,271)
|
|
Proceeds on sale of
property, plant and equipment
|
|
-
|
|
9,950
|
|
Acquisition of
intangible assets
|
|
(80,220)
|
|
(196,852)
|
Cash used in
investing activities
|
|
(164,080)
|
|
(234,173)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Finance
income
|
|
3,775
|
|
9,585
|
Cash from financing
activities
|
|
3,775
|
|
9,585
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
102,963
|
|
(368,517)
|
Decrease in
cash
|
|
(1,562,226)
|
|
(1,021,397)
|
Cash, beginning of
the year
|
|
14,548,954
|
|
16,364,077
|
Cash, end of the
year
|
$
|
12,986,728
|
$
|
15,342,680
|
SOURCE Redline Communications Group Inc.