TORONTO, Nov. 12, 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 third quarter ended
September 30, 2018.
Key Financial Highlights for the three months ended September 30, 2018 ("Q3 2018") include:
- Revenues of $6.6 million, up 26%
over Q3 2017
- Gross margins of 46%, down 4 percentage points over Q3
2017
- Operating expenses of $3.5
million, up 1% over Q3 2017
- Net loss of $0.5 million, an
improvement of $0.5 million over Q3
2017
- Cash of $9.8 million, down
$1.6 million from Q2 2018
- Adjusted EBITDA1 loss of $0.3
million, an improvement of $0.3
million over Q3 2017
- Bookings1 of $7.6
million, down 9% over Q3 2017
- Order Backlog1 of $7.9
million, up 14% from Q2 2018
Key Financial Highlights for the nine months ended September 30, 2018 include:
- Revenues of $19.6 million, up 35%
over the same period in 2017
- Gross margins of 51%, down 2 percentage points over the same
period in 2017
- Operating expenses of $10.6
million, up 8% over the same period in 2017
- Net loss of $0.6 million, an
improvement of $1.8 million over the
same period in 2017
- Cash of $9.8 million, down
$2.2 million from Q4 2017
- Adjusted EBITDA1 of $0.1
million, an improvement of $1.4
million over the same period in 2017
- Bookings1 of $22.0
million, up 12% over the same period in 2017
- Order Backlog1 of $7.9
million, up 29% over Q4 2017
Financial Review
Revenues for Q3 2018 were $6.6
million up 26% over Q3 2017, driven largely by increased
demand from customers in the oil and gas sector. Total Bookings
were $7.6M, down 9% over the same
period in 2017, mainly due to reduced orders from the energy
sector, offset by increased orders from the service provider
sector.
Order Bookings and Backlog both increased quarter over quarter
while Revenue was down slightly, reflecting fluctuations due to
timing of large projects in different industries and in different
parts of the world rather than a long term trend. Quarter
over quarter increase in Bookings can be attributed to a growth in
orders from the telecom service provider sector.
"We're pleased to see that our ongoing investments in the Energy
and Service Provider markets continue to contribute to our top
line," stated Robert Williams,
Redline CEO. "Our entry into the African market has resulted in a
$1.3 million order from a major
telecom service provider and our oil and gas customers are
continuing to expand their Redline networks."
Overall gross margin for the third quarter of 2018 was 46%, down
four percentage points over the same period in 2017 as a result of
higher production costs associated with component shortages and
aggressive pricing to capture a narrowband replacement opportunity
with Redline's more powerful broadband solution in the energy
sector.
LTE opportunities for the Company continue to progress in the
Mining, Energy and Utility markets. One of Redline's larger
mining customers has expanded the scope of its deployment to
include control of autonomous vehicles. This demanding
application is showcasing the effectiveness of Redline's LTE
network to support these advanced requirements.
Overall operating expenses for the third quarter of 2018 were
$3.5 million, up 1% over the same
period in 2017. The increase in operating expenses was mainly
a result of increased personnel costs, including additional salary
and recruitment costs, as the Company invests to capture LTE
opportunities as well as higher commission costs related to
improved revenue, offset by reduced costs associated with strategic
initiatives.
Adjusted EBITDA loss for the third quarter of 2018 was
$0.3 million, an improvement of
$0.3 million over the Adjusted EBITDA
loss of $0.6 million in the same
period in 2017. Net loss for the third quarter of 2018 was
$0.5 million, or ($0.03) per share, an improvement of $0.5 million over the net loss of $1.0 million, or ($0.06) per share reported in the third quarter
of 2017.
At September 30th, 2018, Redline
held cash of $9.8 million, down
$1.6 million from June 30, 2018.
Conference Call and Webcast – November
13th, 2018 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Tuesday, November 13th,
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 3975607. A recording of the call will be available
through November 20, 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 nine months ended September 30, 2018 ("Q3 2018
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and nine month results
ended September 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 nine months ended
September 30, 2018 and the Q3 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
September 30,
|
Nine months ended
September 30,
|
|
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
$
|
6,575
|
$
|
5,203
|
$
|
19,581
|
$
|
14,466
|
Net loss
|
(516)
|
(968)
|
(595)
|
(2,381)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
65
|
147
|
260
|
305
|
|
Depreciation and
amortization
|
147
|
172
|
451
|
567
|
|
Finance (income)
expense
|
(18)
|
4
|
(39)
|
18
|
|
Gain on fair market
value
|
|
|
|
|
|
of financial
instruments
|
(11)
|
-
|
(11)
|
-
|
|
Foreign exchange
(gain) loss
|
17
|
55
|
(6)
|
125
|
|
Income tax
expense
|
9
|
7
|
17
|
19
|
|
Total
|
209
|
385
|
672
|
1,034
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(307)
|
$
|
(583)
|
$
|
77
|
$
|
(1,347)
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-5%
|
-11%
|
0%
|
-9%
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
9,762,826
|
|
$
|
11,960,062
|
|
Trade
receivables
|
|
|
8,654,446
|
|
8,160,646
|
|
Other
receivables
|
|
|
376,563
|
|
304,526
|
|
Inventories
|
|
|
5,441,581
|
|
5,438,530
|
|
Prepaid expenses and
other deposits
|
|
|
422,677
|
|
211,511
|
|
|
|
|
24,658,093
|
|
26,075,275
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
831,645
|
|
829,720
|
|
Intangible
assets
|
|
|
1,123,120
|
|
1,169,733
|
|
Other
assets
|
|
|
77,249
|
|
83,600
|
|
|
|
|
2,032,014
|
|
2,083,053
|
Total
Assets
|
|
|
$
|
26,690,107
|
|
$
|
28,158,328
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
$
|
5,677,557
|
|
$
|
5,698,664
|
|
Income tax
payable
|
|
|
10,741
|
|
10,741
|
|
Deferred
revenue
|
|
|
1,257,871
|
|
1,275,875
|
|
Borrowings
|
|
|
728,854
|
|
792,051
|
|
|
|
|
7,675,023
|
|
7,777,331
|
Non-current
liabilities:
|
|
|
|
|
|
|
Borrowings
|
|
|
695,033
|
|
1,434,388
|
|
Other
payables
|
|
|
158,798
|
|
169,793
|
|
|
|
|
853,831
|
|
1,604,181
|
Total
Liabilities
|
|
|
8,528,854
|
|
9,381,512
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
172,929,341
|
|
172,929,341
|
Contributed
surplus
|
|
|
9,271,437
|
|
9,155,798
|
Deficit
|
|
|
(164,039,525)
|
|
(163,308,323)
|
|
|
|
|
18,161,253
|
|
18,776,816
|
Total liabilities
and equity
|
|
|
$
|
26,690,107
|
|
$
|
28,158,328
|
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,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
$
|
6,575,071
|
|
$
|
5,202,859
|
|
$
|
19,581,404
|
|
$
|
14,465,760
|
Cost of
revenue
|
|
|
|
3,557,287
|
|
2,597,019
|
|
9,611,289
|
|
6,837,408
|
Gross
profit
|
|
|
|
3,017,784
|
|
2,605,840
|
|
9,970,115
|
|
7,628,352
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
|
597,706
|
|
591,733
|
|
1,794,589
|
|
1,683,103
|
|
Administration and
finance
|
|
|
|
977,165
|
|
1,254,673
|
|
3,240,639
|
|
3,422,285
|
|
Sales and
marketing
|
|
|
|
1,749,347
|
|
1,467,343
|
|
4,964,627
|
|
4,194,752
|
|
Operations and
customer support
|
|
|
|
212,729
|
|
194,297
|
|
604,634
|
|
546,637
|
|
|
|
|
|
3,536,947
|
|
3,508,046
|
|
10,604,489
|
|
9,846,777
|
Loss before
undernoted items
|
|
|
|
(519,163)
|
|
(902,206)
|
|
(634,374)
|
|
(2,218,425)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
|
|
(18,440)
|
|
3,602
|
|
(40,273)
|
|
18,029
|
|
Gain on fair market
value
|
|
|
|
|
|
|
|
|
|
|
|
of financial
instruments
|
|
|
|
(10,736)
|
|
-
|
|
(10,736)
|
|
-
|
|
Foreign exchange
(gain) loss
|
|
|
|
17,333
|
|
54,938
|
|
(5,589)
|
|
125,243
|
|
|
|
|
|
(11,843)
|
|
58,540
|
|
(56,598)
|
|
143,272
|
Loss before income
taxes
|
|
|
|
(507,320)
|
|
(960,746)
|
|
(577,776)
|
|
(2,361,697)
|
Income tax
expense
|
|
|
|
9,111
|
|
6,927
|
|
17,426
|
|
19,332
|
Net loss and total
comprehensive loss
|
|
|
|
$
|
(516,431)
|
|
$
|
(967,673)
|
|
$
|
(595,202)
|
|
$
|
(2,381,029)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
$
|
(0.03)
|
|
$
|
(0.06)
|
|
$
|
(0.03)
|
|
$
|
(0.14)
|
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
|
|
-
|
-
|
(2,381,029)
|
(2,381,029)
|
|
Stock option
expense
|
|
-
|
126,080
|
-
|
126,080
|
Balance at
September 30, 2017
|
|
$
|
172,929,341
|
$
|
9,124,325
|
$
|
(164,093,428)
|
$
|
17,960,238
|
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
|
|
-
|
-
|
(595,202)
|
(595,202)
|
|
Stock option
expense
|
|
-
|
115,639
|
-
|
115,639
|
Balance at
September 30, 2018
|
|
$
|
172,929,341
|
$
|
9,271,437
|
$
|
(164,039,525)
|
$
|
18,161,253
|
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,
|
|
2018
|
2017
|
|
2018
|
2017
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(516,431)
|
$
|
(967,673)
|
|
$
|
(595,202)
|
$
|
(2,381,029)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(18,440)
|
3,602
|
|
(40,273)
|
18,029
|
|
|
Depreciation and
amortization of non-current assets
|
|
146,886
|
172,359
|
|
451,337
|
566,619
|
|
|
Stock option
expense
|
|
31,225
|
21,560
|
|
115,639
|
126,080
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(20,882)
|
(53,021)
|
|
59,536
|
(86,891)
|
|
|
Foreign exchange
(gain) loss on borrowings
|
|
23,935
|
84,018
|
|
(49,187)
|
171,940
|
|
|
IFRS 15 transition
adjustment
|
|
-
|
-
|
|
(136,000)
|
-
|
|
|
|
|
(353,707)
|
(739,155)
|
|
(194,150)
|
(1,585,252)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase (decrease)
in deferred revenue
|
|
166,837
|
161,627
|
|
(18,004)
|
62,924
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(1,422,108)
|
53,249
|
|
(805,805)
|
2,198,244
|
Cash from (used in)
operating activities
|
|
(1,608,978)
|
(524,279)
|
|
(1,017,959)
|
675,916
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(76,063)
|
(11,164)
|
|
(196,255)
|
(51,275)
|
|
Acquisition of
intangible assets
|
|
(16,948)
|
(18,452)
|
|
(210,394)
|
(26,960)
|
Cash used in
investing activities
|
|
(93,011)
|
(29,616)
|
|
(406,649)
|
(78,235)
|
|
|
|
|
|
|
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
|
Net finance
income
|
|
32,912
|
18,984
|
|
88,473
|
51,568
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(801,565)
|
(844,708)
|
Cash from (used in)
financing activities
|
|
32,912
|
18,984
|
|
(713,092)
|
(793,140)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
20,882
|
53,021
|
|
(59,536)
|
86,891
|
Decrease in
cash
|
|
(1,648,195)
|
(481,890)
|
|
(2,197,236)
|
(108,568)
|
Cash, beginning of
the period
|
|
11,411,021
|
11,520,557
|
|
11,960,062
|
11,147,235
|
Cash, end of the
period
|
|
$
|
9,762,826
|
$
|
11,038,667
|
|
$
|
9,762,826
|
$
|
11,038,667
|
SOURCE Redline Communications Group Inc.