TORONTO, Aug. 8, 2018
/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,
2018.
Key Financial Highlights for the three months ended June 30, 2018 ("Q2 2018") include:
- Revenues of $7.3 million, up 48%
over Q2 2017
- Gross margins of 55%, up 3 percentage points over Q2 2017
- Operating expenses of $3.7
million, up 15% over Q2 2017
- Net profit of $0.3 million, an
improvement of $1.0 million over Q2
2017
- Adjusted EBITDA1 of $0.6
million, an improvement of $1.0
million over Q2 2017
- Cash of $11.4 million, up
$0.3 million from Q1 2018
- Bookings1 of $7.1
million, up 16% over Q2 2017
- Order Backlog1 of $6.9
million, down 13% from Q1 2018
Key Financial Highlights for the six months ended June 30, 2018 include:
- Revenues of $13.0 million, up 40%
over the same period in 2017
- Gross margins of 53%, down 1 percentage point over the same
period in 2017
- Operating expenses of $7.1
million, up 11% over the same period in 2017
- Net loss of $0.1 million, an
improvement of $1.3 million over the
same period in 2017
- Adjusted EBITDA of $0.4 million,
an improvement of $1.1 million over
the same period in 2017
- Cash of $11.4 million, down
$0.5 million from Q4 2017
- Bookings of $14.4 million, up 27%
over the same period in 2017
- Order Backlog of $6.9 million, up
13% over Q4 2017
Financial Review
Revenues for Q2 2018 were $7.3
million up 48% over Q2 2017, driven largely by increased
demand for customers in the oil and gas sector. Total Bookings were
$7.1M, up 16% over the same period in
2017. "The ongoing recovery of oil prices is fueling a resurgence
in business from the oil and gas sector, especially outside of
North America," stated
Rob Williams, Redline CEO. "We're
seeing multiple customers in this sector grow their Redline
networks. We also continue to work with multiple new oil and mining
prospects who are testing our iLTETM solution."
Overall gross margin for the second quarter of 2018 was 55%, up
three percentage points over the same period in 2017 as a result of
an expected shift in product sales to include more sales of higher
margin industrial products to customers in the energy and mining
markets.
Overall operating expenses for the second quarter of 2018 were
$3.7 million, up 15% over the same
period in 2017. The increase in operating expenses was mainly
a result of increased personnel costs, including recruitment,
salary increases, and commissions.
Higher revenues and strong gross margins have resulted in a
significantly improved bottom line over the same period last year,"
stated Joan Ritchie, Redline CFO.
"We are now carefully investing in growing our team to be able to
sustain this momentum."
Adjusted EBITDA for the second quarter of 2018 was $0.6 million, an improvement of $1.0 million over the Adjusted EBITDA loss of
$0.4 million in the same period in
2017. Net profit for the second quarter of 2018 was $0.3 million, or $0.02 per share, an improvement of $1.0 million over the net loss of $0.7 million, or ($0.04) per share reported in the second quarter
of 2017.
At June 30th, 2018,
Redline held cash of $11.4 million,
up $0.3 million from March 31, 2018.
Conference Call and Webcast – August
9th, 2018 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday, August 9,
2018 at 10:00 a.m. Eastern
Time. To participate, please dial 1-647-427-7450
approximately 10 minutes before the conference call, and provide
conference ID 3371409. A recording of the call will be available
through August 16, 2018 on Redline's
website or by dialing 1-416-849-0833 and entering the same
conference ID.
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
1
|
To better assess the
health and growth of Redline's business, the Company reports on
non-IFRS metrics, including "Orders or Bookings", "Shipped or
Shipments", "Backlog", "EBITDA", and "Adjusted EDITDA". 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 six months ended June 30, 2018 ("Q2 2018 MD&A"),
copies of which are available on SEDAR at www.sedar.com. Further
details on the three and six month results ended June 30, 2018 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 six months ended June 30, 2018 and the Q2 2018
MD&A.
|
Adjusted EBITDA
(Loss)
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
The table below
reconciles Adjusted EBITDA (loss) to net profit (loss):
|
|
|
|
Three months ended
June 30,
|
Six months ended June
30,
|
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
$
|
7,304
|
$
|
4,930
|
$
|
13,006
|
$
|
9,263
|
Net profit
(loss)
|
326
|
(675)
|
(79)
|
(1,413)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
149
|
44
|
195
|
158
|
|
Depreciation and
amortization
|
150
|
190
|
305
|
394
|
|
Finance (income)
expense
|
(14)
|
4
|
(22)
|
15
|
|
Foreign exchange
(gain) loss
|
7
|
37
|
(23)
|
70
|
|
Income tax
expense
|
3
|
5
|
9
|
12
|
|
Total
|
295
|
280
|
464
|
649
|
Adjusted EBITDA
(loss)
|
$
|
621
|
$
|
(395)
|
$
|
385
|
$
|
(764)
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
9%
|
-8%
|
3%
|
-8%
|
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)
|
|
|
June 30,
2018
|
December 31,
2017
|
ASSETS
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
11,411,021
|
$
|
11,960,062
|
|
Trade
receivables
|
7,051,552
|
8,160,646
|
|
Other
receivables
|
446,438
|
304,526
|
|
Inventories
|
4,872,636
|
5,438,530
|
|
Prepaid expenses and
other deposits
|
420,417
|
211,511
|
|
|
24,202,064
|
26,075,275
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment
|
817,747
|
829,720
|
|
Intangible
assets
|
1,190,893
|
1,169,733
|
|
Other
assets
|
79,841
|
83,600
|
|
|
2,088,481
|
2,083,053
|
Total
Assets
|
$
|
26,290,545
|
$
|
28,158,328
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
Trade and other
payables
|
$
4,984,716
|
$
5,698,664
|
|
Income tax
payable
|
10,741
|
10,741
|
|
Deferred
revenue
|
1,091,034
|
1,275,875
|
|
Borrowings
|
702,218
|
792,051
|
|
|
6,788,709
|
7,777,331
|
Non-current
liabilities:
|
|
|
|
Borrowings
|
683,262
|
1,434,388
|
|
Other
payables
|
172,115
|
169,793
|
|
|
855,377
|
1,604,181
|
Total
Liabilities
|
7,644,086
|
9,381,512
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
Share
capital
|
172,929,341
|
172,929,341
|
Contributed
surplus
|
9,240,212
|
9,155,798
|
Deficit
|
(163,523,094)
|
(163,308,323)
|
|
|
18,646,459
|
18,776,816
|
Total liabilities
and equity
|
$
|
26,290,545
|
$
|
28,158,328
|
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,
|
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
|
$
|
7,304,387
|
$
|
4,929,502
|
$
|
13,006,333
|
$
|
9,262,901
|
Cost of
revenue
|
|
3,313,489
|
2,365,557
|
6,054,002
|
4,240,389
|
Gross
profit
|
|
3,990,898
|
2,563,945
|
6,952,331
|
5,022,512
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Research and
development
|
|
566,664
|
512,307
|
1,196,883
|
1,091,370
|
|
Administration and
finance
|
|
1,196,250
|
1,097,816
|
2,263,474
|
2,167,612
|
|
Sales and
marketing
|
|
1,697,088
|
1,389,487
|
3,215,280
|
2,727,409
|
|
Operations and
customer support
|
|
209,180
|
193,237
|
391,905
|
352,340
|
|
|
|
3,669,182
|
3,192,847
|
7,067,542
|
6,338,731
|
Profit (Loss) before
undernoted items
|
|
321,716
|
(628,902)
|
(115,211)
|
(1,316,219)
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(14,367)
|
3,881
|
(21,833)
|
14,427
|
|
Foreign exchange
(gain) loss
|
|
7,026
|
36,686
|
(22,922)
|
70,305
|
|
|
|
(7,341)
|
40,567
|
(44,755)
|
84,732
|
Profit (Loss) before
income taxes
|
|
329,057
|
(669,469)
|
(70,456)
|
(1,400,951)
|
Income tax
expense
|
|
2,871
|
5,210
|
8,315
|
12,405
|
Net profit
(loss) and total comprehensive income (loss)
|
|
$
|
326,186
|
$
|
(674,679)
|
$
|
(78,771)
|
$
|
(1,413,356)
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
share
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.02
|
$
|
(0.04)
|
$
|
(0.00)
|
$
|
(0.08)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
Condensed
Consolidated Interim Statements of Changes in Equity
|
(Unaudited, Expressed
in U.S. dollars)
|
|
|
|
Share
capital
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2017
|
$
|
172,929,341
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
-
|
-
|
(1,413,356)
|
(1,413,356)
|
|
Stock option
expense
|
-
|
104,520
|
-
|
104,520
|
Balance at
June 30, 2017
|
$
|
172,929,341
|
$
|
9,102,765
|
$
|
(163,125,755)
|
$
|
18,906,351
|
Balance at
January 1, 2018
|
$
|
172,929,341
|
$
|
9,155,798
|
$
|
(163,308,323)
|
$
|
18,776,816
|
|
IFRS 15 transition
adjustment
|
-
|
-
|
(136,000)
|
(136,000)
|
|
Net loss
|
-
|
-
|
(78,771)
|
(78,771)
|
|
Stock option
expense
|
-
|
84,414
|
-
|
84,414
|
Balance at
June 30, 2018
|
$
|
172,929,341
|
$
|
9,240,212
|
$
|
(163,523,094)
|
$
|
18,646,459
|
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,
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net profit
(loss)
|
$
|
326,186
|
$
|
(674,679)
|
$
|
(78,771)
|
$
|
(1,413,356)
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities:
|
|
|
|
|
|
|
Finance (income)
expense
|
(14,367)
|
3,881
|
(21,833)
|
14,427
|
|
|
Depreciation and
amortization of non-current assets
|
150,581
|
190,453
|
304,451
|
394,260
|
|
|
Stock option
expense
|
69,893
|
49,616
|
84,414
|
104,520
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
39,130
|
(16,852)
|
80,418
|
(33,870)
|
|
|
Foreign exchange
(gain) loss on borrowings
|
(29,363)
|
51,172
|
(73,122)
|
87,922
|
|
|
IFRS 15 transition
adjustment
|
-
|
-
|
(136,000)
|
-
|
|
|
|
542,060
|
(396,409)
|
159,557
|
(846,097)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
Increase (decrease)
in deferred revenue
|
(147,625)
|
21,800
|
(184,841)
|
(98,703)
|
|
|
Change in other
non-cash operating assets and liabilities
|
(48,689)
|
371,600
|
616,303
|
2,144,995
|
Cash from (used in)
operating activities
|
345,746
|
(3,009)
|
591,019
|
1,200,195
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(18,097)
|
(23,035)
|
(120,192)
|
(40,111)
|
|
Acquisition of
intangible assets
|
(26,779)
|
-
|
(193,446)
|
(8,508)
|
Cash used in
investing activities
|
(44,876)
|
(23,035)
|
(313,638)
|
(48,619)
|
|
|
|
|
|
Cash flows used in
financing activities:
|
|
|
|
|
|
Finance
income
|
28,728
|
17,006
|
55,561
|
32,584
|
|
Repayment of
borrowings
|
-
|
-
|
(801,565)
|
(844,708)
|
Cash from (used in)
financing activities
|
28,728
|
17,006
|
(746,004)
|
(812,124)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
(39,130)
|
16,852
|
(80,418)
|
33,870
|
Increase (decrease)
in cash
|
290,468
|
7,814
|
(549,041)
|
373,322
|
Cash, beginning of
the period
|
11,120,553
|
11,512,743
|
11,960,062
|
11,147,235
|
Cash, end of the
period
|
$
|
11,411,021
|
$
|
11,520,557
|
$
|
11,411,021
|
$
|
11,520,557
|
SOURCE Redline Communications Group Inc.