TORONTO, March 30, 2020 /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 fourth quarter and the year
ended December 31, 2019.
Key financial highlights for the three months ended December 31, 2019 ("Q4 2019") versus Q4 2018
include:
- Revenue of $5.0 million, down
33%
- Gross margins of 59%, up 4 percentage points
- Operating expenses of $4.1
million, down 1%
- Net loss of $1.3 million, as
compared to net profit of $0.2
million
- Adjusted EBITDA1 loss of $0.9
million, as compared to Adjusted EBITDA of $0.2 million
- Bookings1 of $6.3
million, down 42%
- Cash balance of $6.5 million,
down $1.7 million from September 30, 2019
- Order Backlog1 was $8.5
million, up 16% from September 30,
2019
Key financial highlights for the year ended December 31, 2019 versus 2018 include:
- Revenue of $23.7 million, down
13%
- Gross margins of 55%, up 3 percentage points
- Operating expenses of $16.6
million including severance costs of $0.8 million, up 12%
- Net loss of $3.7 million, as
compared to net loss of $0.4
million
- Adjusted EBITDA loss of $2.3
million, as compared to Adjusted EBITDA of $0.3 million
- Bookings of $23.9 million, down
28%
- Cash balance of $6.5 million,
down $3.1 million from December 31, 2018
- Order Backlog was $8.5 million,
down 15% from December 31, 2018
Financial and Business Review
Revenue for the fourth quarter and year ended December 31, 2019 was $5.0
million and $23.7 million,
down 33% and 13%, respectively, over the same periods in 2018. In
both time frames, the revenue decrease was driven largely by lower
sales to oil & gas customers in South
America, partially offset by an increase in sales in the
Middle East.
Order Bookings for the fourth quarter and year ended
December 31, 2019 were $6.3 million and $24.0
million, down 42% and 28%, respectively, over the same
periods in 2018. The decrease was primarily due to large multi-year
contracts with oil & gas and military customers signed in late
2018 not repeated in 2019.
"We are focused on diversifying our product development towards
industrial applications of 5G in our iLTE products as well as our
next generation of Virtual Fiber supporting our core markets – oil
& gas, mining and utilities where our rugged products are well
suited," stated Stephen Sorocky,
Redline CEO. "This won't happen overnight, and these are uncertain
times, but we are seeing early signs of market momentum. We are
pleased to see new customer additions and repeat orders from
existing clients, including in the energy sector. As all companies
today, we are closely monitoring the impacts of the COVID-19
pandemic and the recent decline in oil prices on our business and
we are proactively taking measures to mitigate any effects upon our
business. We continue to support our customers operations while
ensuring the safety of our staff."
Gross margin for the fourth quarter and year ended December 31, 2019 was 59% and 55%, 4 percentage
point and 3 percentage point improvements, respectively, over the
same periods in 2018. The improvements reflect the Company's
success in lowering supply chain costs.
Overall operating expenses for the fourth quarter of 2019 were
$4.1 million, essentially unchanged
over the same period in 2018 and over Q3 2019. Overall operating
expenses for 2019 were $16.6 million,
up 12% over 2018, primarily a result of increase in personnel costs
(mainly in research and development,) and severance costs
($0.8 million) associated with
organizational changes implemented by the new executive team.
Additionally, the Company has closed its Santa Clara office in 2019
as the technical capability there has been transferred to the
Markham engineering team.
Net loss for the Q4 2019 was $1.3
million, or ($0.08) per share,
as compared to net profit of $0.2
million, or $0.01 per share,
for Q4 2018. Net loss for 2019 was $3.7
million, or ($0.22) per share,
as compared to net loss of $0.4
million, or ($0.02) per share,
for 2018.
Adjusted EBITDA loss for Q4 2019 was $0.9
million, as compared to Adjusted EBITDA of 0.2 million for
Q4 2018. Adjusted EBITDA loss for 2019 was $2.3 million, as compared to Adjusted EBITDA of
0.3 million for 2018.
Conference Call and Webcast – March
31, 2020 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Tuesday, March 31, 2020
at 10:00 a.m. Eastern Time. To
participate, please dial 1-647-427-7450 approximately 10 minutes
before the conference call, and provide passcode 8782527. A
recording of the call will be available through April 6, 2020 on Redline's website or by dialing
1-416-849-0833 and entering the same passcode.
About Redline Communications
Redline Communications (TSX:RDL) designs and manufactures
powerful wide-area wireless networks for mission-critical
applications in challenging locations. Redline networks are used by
oil & gas companies onshore and offshore, mining companies on
surface and underground operations, by municipalities to remotely
monitor infrastructure, and by specialized 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 IoT, 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 the Redline's business, the Company reports on
non-IFRS metrics, including "Bookings", "Order Backlog" 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 months and year ended December 31, 2019
("Q4 2019 MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three months and year ended
December 31, 2019 can be found in the consolidated statement of
financial position, statement of comprehensive income (loss),
statement of changes in equity and 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 consolidated financial
statements of the Company for the three months and year ended
December 31, 2019 and the Q4 2019 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
December 31,
|
Year ended December
31,
|
|
2019
|
2018
|
2019
|
2018
|
Revenue
|
$
|
5,014
|
$
|
7,522
|
$
|
23,659
|
$
|
27,103
|
Net profit
(loss)
|
(1,324)
|
206
|
(3,745)
|
(389)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
42
|
45
|
322
|
305
|
|
Depreciation and
amortization
|
252
|
154
|
900
|
605
|
|
Finance (income)
expense
|
(1)
|
(19)
|
(44)
|
(58)
|
|
Gain on fair market
value
of financial instruments
|
(49)
|
(130)
|
(59)
|
(141)
|
|
Foreign exchange
(gain) loss
|
29
|
(65)
|
123
|
(71)
|
|
Income tax
expense
|
167
|
10
|
179
|
27
|
|
Total
|
440
|
(5)
|
1,422
|
667
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(884)
|
$
|
201
|
$
|
(2,323)
|
$
|
278
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-18%
|
3%
|
-10%
|
1%
|
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.
|
|
|
Consolidated
Statements of Financial Position
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
December 31,
2019
|
December 31,
2018
|
ASSETS
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
6,507,606
|
$
|
9,625,845
|
|
Trade
receivables
|
7,089,043
|
9,857,857
|
|
Other
receivables
|
260,216
|
392,632
|
|
Inventories
|
7,707,578
|
6,605,517
|
|
Deferred cost of
revenue
|
6,910
|
-
|
|
Prepaid expenses and
other deposits
|
285,519
|
308,273
|
|
|
21,856,872
|
26,790,124
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment
|
999,435
|
800,374
|
|
Intangible
assets
|
1,373,526
|
1,277,637
|
|
Right of use
assets
|
798,080
|
-
|
|
Other
assets
|
76,284
|
73,538
|
|
|
3,247,325
|
2,151,549
|
Total
Assets
|
$
|
25,104,197
|
$
|
28,941,673
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
Trade and other
payables
|
$
|
6,035,496
|
$
|
7,415,403
|
|
Income tax
payable
|
12,398
|
10,741
|
|
Deferred
revenue
|
1,966,282
|
1,022,252
|
|
Lease
liabilities
|
277,945
|
-
|
|
Borrowings
|
716,832
|
705,413
|
|
|
9,008,953
|
9,153,809
|
Non-current
liabilities:
|
|
|
|
Deferred
revenue
|
429,414
|
604,435
|
|
Lease
liabilities
|
788,572
|
-
|
|
Borrowings
|
-
|
659,522
|
|
Other
payables
|
-
|
135,184
|
|
|
1,217,986
|
1,399,141
|
Total
Liabilities
|
10,226,939
|
10,552,950
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
Share
capital
|
172,929,341
|
172,929,341
|
Contributed
surplus
|
9,525,694
|
9,292,321
|
Deficit
|
(167,577,777)
|
(163,832,939)
|
|
|
14,877,258
|
18,388,723
|
Total Liabilities
and Equity
|
$
|
25,104,197
|
$
|
28,941,673
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
Revenue
|
$
|
5,014,264
|
|
$
|
7,522,023
|
|
$
|
23,658,998
|
|
$
|
27,103,427
|
Cost of
revenue
|
2,077,014
|
|
3,373,562
|
|
10,620,987
|
|
12,984,851
|
Gross
profit
|
2,937,250
|
|
4,148,461
|
|
13,038,011
|
|
14,118,576
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
1,032,259
|
|
739,306
|
|
3,408,307
|
|
2,533,895
|
|
General and
administrative
|
1,380,234
|
|
1,065,240
|
|
5,146,714
|
|
4,305,879
|
|
Sales and
marketing
|
1,453,002
|
|
2,112,638
|
|
7,016,231
|
|
7,077,265
|
|
Operations and
customer support
|
250,081
|
|
228,973
|
|
1,013,123
|
|
833,607
|
|
|
4,115,576
|
|
4,146,157
|
|
16,584,375
|
|
14,750,646
|
Profit (loss) before
undernoted items
|
(1,178,326)
|
|
2,304
|
|
(3,546,364)
|
|
(632,070)
|
|
|
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
(949)
|
|
(18,650)
|
|
(44,144)
|
|
(58,923)
|
|
Gain on fair market
value of financial instruments
|
(49,118)
|
|
(130,224)
|
|
(59,031)
|
|
(140,960)
|
|
Foreign exchange
(gain) loss
|
29,390
|
|
(65,357)
|
|
122,918
|
|
(70,946)
|
|
|
(20,677)
|
|
(214,231)
|
|
19,743
|
|
(270,829)
|
Profit (loss) before
income taxes
|
(1,157,649)
|
|
216,535
|
|
(3,566,107)
|
|
(361,241)
|
Income tax
expense
|
166,707
|
|
9,949
|
|
178,731
|
|
27,375
|
Net profit (loss) and
total comprehensive income (loss)
|
$
|
(1,324,356)
|
|
$
|
206,586
|
|
$
|
(3,744,838)
|
|
$
|
(388,616)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.08)
|
|
$
|
0.01
|
|
$
|
(0.22)
|
|
$
|
(0.02)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
Consolidated
Statements of Changes in Equity
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Deficit
|
Total
|
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
|
|
-
|
-
|
(388,616)
|
(388,616)
|
|
Stock option
expense
|
|
-
|
136,523
|
-
|
136,523
|
Balance at
December 31, 2018
|
|
$
|
172,929,341
|
$
|
9,292,321
|
$
|
(163,832,939)
|
$
|
18,388,723
|
|
Net loss
|
|
-
|
-
|
(3,744,838)
|
(3,744,838)
|
|
Stock option
expense
|
|
-
|
233,373
|
-
|
233,373
|
Balance at
December 31, 2019
|
|
$
|
172,929,341
|
$
|
9,525,694
|
$
|
(167,577,777)
|
$
|
14,877,258
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$
|
(1,324,356)
|
$
|
206,586
|
|
$
|
(3,744,838)
|
$
|
(388,616)
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
(949)
|
(18,650)
|
|
(44,144)
|
(58,923)
|
|
|
Depreciation and
amortization of non-current assets
|
|
252,453
|
153,650
|
|
900,194
|
604,987
|
|
|
Stock option
expense
|
|
44,601
|
20,884
|
|
233,373
|
136,523
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
(19,119)
|
66,182
|
|
(48,919)
|
125,718
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
|
34,171
|
(73,042)
|
|
109,584
|
(122,229)
|
|
|
Loss on disposal of
assets
|
|
17,706
|
-
|
|
15,905
|
-
|
|
|
IFRS 15 transition
adjustment
|
|
-
|
-
|
|
-
|
(136,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(995,493)
|
355,610
|
|
(2,578,845)
|
161,460
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease
in deferred cost of revenue
|
|
1,439
|
-
|
|
(6,910)
|
-
|
|
|
Increase (decrease)
in deferred revenue
|
|
644,346
|
368,816
|
|
769,009
|
350,812
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(410,540)
|
(551,069)
|
|
588,974
|
(1,356,874)
|
Cash from (used in)
operating activities
|
|
(760,248)
|
173,357
|
|
(1,227,772)
|
(844,602)
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(436,807)
|
(30,611)
|
|
(549,559)
|
(226,866)
|
|
Proceeds on sale of
property, plant and equipment
|
|
14,800
|
-
|
|
40,612
|
-
|
|
Acquisition of
intangible assets
|
|
(460,000)
|
(246,285)
|
|
(474,100)
|
(456,679)
|
Cash from (used in)
investing activities
|
|
(882,007)
|
(276,896)
|
|
(983,047)
|
(683,545)
|
Cash flows used in
financing activities:
|
|
|
|
|
|
|
|
Interest
income
|
|
19,963
|
34,896
|
|
129,839
|
127,777
|
|
Interest
expense
|
|
(11,853)
|
(2,156)
|
|
(52,894)
|
(6,564)
|
|
Repayment of
borrowings
|
|
-
|
-
|
|
(735,505)
|
(801,565)
|
|
Repayment of lease
liabilities
|
|
(62,976)
|
-
|
|
(297,779)
|
-
|
Cash from (used in)
financing activities
|
|
(54,866)
|
32,740
|
|
(956,339)
|
(680,352)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
19,119
|
(66,182)
|
|
48,919
|
(125,718)
|
Increase (decrease)
in cash
|
|
(1,678,002)
|
(136,981)
|
|
(3,118,239)
|
(2,334,217)
|
Cash, beginning of
the period
|
|
8,185,608
|
9,762,826
|
|
9,625,845
|
11,960,062
|
Cash, end of the
period
|
|
$
|
6,507,606
|
$
|
9,625,845
|
|
$
|
6,507,606
|
$
|
9,625,845
|
SOURCE Redline Communications Group Inc.