TORONTO, Nov. 11, 2021 /CNW/ - Redline Communications
Group Inc. (TSX: RDL), a leading provider of mission-critical data
infrastructure for remote & harsh environments, today announced
operating results for the third quarter ended September 30, 2021.
All figures are in US Dollars unless otherwise noted.
- Revenues increased 9.3% to $5.2
million from $4.7 million in
Q2 2021 and decreased $0.04 million
from Q3 2020
- Q3 2021 Gross margin was 66% compared to 52% for Q3 2020 and
61% for Q2 2021.
- Over 70% of revenues were fulfilled via distribution and
reseller partners
- Bookings $6.3 million in Q3 2021
an increase of 20% from Q2 2021 reflecting sales momentum since the
beginning of the year.
- Backlog increased to $12.5M at
the end of Q3 2021 (up from $11.8M at
Q2 2021)
- Adjusted EBITDA loss improved to $195,000 in Q3 2021 compared to losses of
$668,000 in Q2 2021 and $409,000 in Q3 2020.
"We are pleased to report quarter over quarter improvements in
cash, revenues, bookings, backlog, EBITDA and net profit," stated
Richard Yoon, Chief Executive
Officer. "The company has made great strides this past quarter in
driving revenue growth while also increasing gross margin to 66%, a
dramatic improvement over the 52% achieved in the same quarter last
year. I am extremely encouraged by the current market conditions
and the increase in deployments from our customer base.
Coming out of the softness in the business caused by the COVID
pandemic, we are seeing more customers ramping up their digital
transformation plans, which we expect to be a key driver of product
demand in the coming quarters".
Financial and Business Review
Gross margin of 66% in Q3 2021 was up 5 percentage points from
Q2 2021 and up substantially from 52% in Q3 2020. The changes are
primarily due to changes in sales mix.
Total operating expenses for Q3 2021 were $3.9 million, up 12% from $3.5 million in Q3 2020 and flat compared to Q2
2021. The year-over-year increase was due primarily to increased
expenses in R&D related to new product development as well as
increased sales costs associated with the increase in gross
profit.
Adjusted EBITDA loss for Q3 2021 was $0.2
million, an improvement of $0.5
million and $0.2 million
compared to Q2 2021 and Q3 2020 respectively.
Net loss improved from $0.7
million in Q2 2021 and $0.4
million in Q3 2020 to $0.1 million in Q3 2021.
Key financial
highlights for the three months ended September 30, 2021 ("Q3
2021") include:
|
|
|
|
|
|
|
|
|
|
Q3
2021
|
Q2
2021
|
Increase
(decrease)
|
%
Change
|
Q3
2020
|
Increase
(decrease)
|
%
Change
|
Revenue
|
$5.2 M
|
$4.7 M
|
$0.5 M
|
9%
|
$5.2 M
|
($0.04 M)
|
-1%
|
Gross profit margin
%
|
66%
|
61%
|
5%
|
|
52%
|
14%
|
|
Operating
expenses
|
$3.9 M
|
$3.9 M
|
-
|
0%
|
$3.5 M
|
$0.4 M
|
12%
|
Net loss
|
$0.1 M
|
$0.7 M
|
$0.6 M
|
86%
|
$0.4 M
|
$0.3 M
|
72%
|
Adjusted EBITDA
loss1
|
$0.2 M
|
$0.7 M
|
$0.5 M
|
71%
|
$0.4 M
|
$0.2 M
|
52%
|
CEWS
benefit
|
$0.2 M
|
$0.4 M
|
($0.2 M)
|
-50%
|
$0.3 M
|
($0.1 M)
|
-27%
|
Bookings1
|
$6.3 M
|
$5.3 M
|
$1.0 M
|
20%
|
$6.5 M
|
($0.2 M)
|
-3%
|
|
|
|
|
|
|
|
|
|
September 30,
2021
|
June 30,
2021
|
Increase
(decrease)
|
%
Change
|
September 30,
2020
|
Increase
(decrease)
|
%
Change
|
Cash
|
$3.8 M
|
$2.7 M
|
$1.1 M
|
41%
|
$5.1 M
|
($1.3 M)
|
25%
|
Inventory
|
$4.7 M
|
$5.1 M
|
($0.4 M)
|
-8%
|
$6.5 M
|
($1.8 M)
|
28%
|
Order
Backlog1
|
$12.5 M
|
$11.8 M
|
$0.7 M
|
7%
|
$11.1 M
|
$1.4 M
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key financial
highlights for the nine months ended September 30, 2021
include:
|
|
|
|
|
|
|
|
|
|
2021-09
YTD
|
2021-06
YTD
|
Increase
(decrease)
|
%
Change
|
2020-09
YTD
|
Increase
(decrease)
|
%
Change
|
Revenue
|
$13.7 M
|
$8.5 M
|
$5.2 M
|
61%
|
$13.8 M
|
($0.1 M)
|
-1%
|
Gross profit margin
%
|
65%
|
64%
|
1%
|
|
57%
|
8%
|
|
Operating
expenses
|
$11.6 M
|
$7.8 M
|
$3.8 M
|
49%
|
$11.3 M
|
$0.3 M
|
3%
|
Net loss
|
$2.0 M
|
$1.9 M
|
($0.1 M)
|
-5%
|
$2.3 M
|
$0.3 M
|
12%
|
Adjusted EBITDA
loss1
|
$1.9 M
|
$1.7 M
|
($0.2 M)
|
-12%
|
$2.5 M
|
$0.6 M
|
22%
|
CEWS
benefit
|
$0.9 M
|
$0.67 M
|
$0.23 M
|
34%
|
$1.0 M
|
($0.1 M)
|
-12%
|
Bookings1
|
$14.9 M
|
$8.6 M
|
$6.3 M
|
73%
|
$17.0 M
|
($2.1 M)
|
-12%
|
|
|
|
|
|
|
|
|
|
September 30,
2021
|
June 30,
2021
|
Increase
(decrease)
|
%
Change
|
December 31,
2020
|
Increase
(decrease)
|
%
Change
|
Cash
|
$3.8 M
|
$2.7 M
|
$1.1 M
|
41%
|
$5.3 M
|
($1.5 M)
|
-28%
|
Inventory
|
$4.7 M
|
$5.1 M
|
($0.4 M)
|
-8%
|
$5.5 M
|
($0.8 M)
|
-15%
|
Order
Backlog1
|
$12.5 M
|
$11.8 M
|
$0.7 M
|
7%
|
$11.8 M
|
$0.7 M
|
7%
|
Conference Call and Webcast – November
11, 2021 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday, November 11,
2021 at 10:00 a.m. Eastern
Time. To participate, please dial 1-416-764-8659
approximately 10 minutes before the conference call and provide
passcode 37221496. A recording of the call will be available
through November 18, 2021 on
Redline's website or by dialing 1-416-764-8677 and entering the
passcode 221496.
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
certain non-IFRS metrics, including "Bookings", "Order
Backlog","Adjusted EBITDA" and "Adjusted EBITDA Margin". Further
information including definitions of these measures and a
reconciliation to their closest IFRS measure, if applicable, can be
found in the Company's Management Discussion and Analysis for the
three and nine months ended September 30, 2021 ("Q3 2021
MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and nine months ended
September 30, 2021 can be found in the condensed consolidated
statement of financial position, statement of comprehensive
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 condensed consolidated
financial statements of the Company for the three and nine
months ended September 30, 2021 and the Q3 2021
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,
|
|
|
(unaudited)
|
(unaudited)
|
(in
thousands)
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
$
|
5,195
|
$
|
5,235
|
$
|
13,678
|
$
|
13,833
|
Net profit
(loss)
|
(97)
|
(350)
|
(1,979)
|
(2,251)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
6
|
51
|
92
|
142
|
|
Depreciation and
amortization
|
256
|
263
|
766
|
800
|
|
Canada Emergency Wage
Subsidy
|
(243)
|
(335)
|
(912)
|
(1,041)
|
|
Finance (income)
expense
|
12
|
7
|
28
|
16
|
|
(Gain) loss on fair
market value
of financial instruments
|
(94)
|
(77)
|
26
|
(150)
|
|
Foreign exchange
(gain) loss
|
(46)
|
18
|
2
|
(51)
|
|
Income tax
expense
|
10
|
14
|
53
|
58
|
|
Total
|
(99)
|
(59)
|
55
|
(226)
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
(196)
|
$
|
(409)
|
$
|
(1,924)
|
$
|
(2,477)
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
-4%
|
-8%
|
-14%
|
-18%
|
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,
2021
|
December 31,
2020
|
ASSETS
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
3,803,539
|
$
|
5,334,486
|
|
Trade
receivables
|
5,184,606
|
4,237,183
|
|
Other
receivables
|
209,687
|
180,881
|
|
Inventories
|
4,679,132
|
5,492,931
|
|
Deferred cost of
revenue
|
23
|
498
|
|
Prepaid expenses and
other deposits
|
417,722
|
431,559
|
|
|
14,294,709
|
15,677,538
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment
|
700,457
|
901,234
|
|
Intangible
assets
|
922,459
|
1,148,050
|
|
Right of use
assets
|
464,778
|
565,213
|
|
Other
assets
|
85,278
|
65,223
|
|
|
2,172,972
|
2,679,720
|
Total
Assets
|
$
|
16,467,681
|
$
|
18,357,258
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
Trade and other
payables
|
$
|
3,641,582
|
$
|
3,944,374
|
|
Income tax
payable
|
29,459
|
29,459
|
|
Deferred
revenue
|
931,300
|
2,057,944
|
|
Lease
liabilities
|
298,456
|
250,068
|
|
|
4,900,797
|
6,281,845
|
Non-current
liabilities:
|
|
|
|
Deferred
revenue
|
1,151,589
|
364,391
|
|
Lease
liabilities
|
356,902
|
554,396
|
|
Other financial
liabilties - SIF Loan
|
307,162
|
-
|
|
Deferred Grant Income
- SIF Loan
|
493,090
|
-
|
|
|
2,308,743
|
918,787
|
Total
Liabilities
|
7,209,540
|
7,200,632
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
Share
capital
|
172,929,341
|
172,929,341
|
Contributed
surplus
|
9,785,302
|
9,704,769
|
Deficit
|
(173,456,503)
|
(171,477,484)
|
|
|
9,258,140
|
11,156,626
|
Total Liabilities
and Equity
|
$
|
16,467,681
|
$
|
18,357,258
|
See accompanying
notes to the interim condensed consolidated financial
statements
|
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,
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
$
|
5,194,806
|
$
|
5,234,885
|
13,678,100
|
$
|
13,832,804
|
Cost of
revenue
|
1,789,633
|
2,506,794
|
4,829,013
|
5,909,158
|
Gross
profit
|
3,405,173
|
2,728,091
|
8,849,087
|
7,923,646
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Research and
development
|
1,063,194
|
946,317
|
3,439,727
|
3,116,847
|
|
General and
administrative
|
1,188,355
|
1,179,184
|
3,373,983
|
3,599,198
|
|
Sales and
marketing
|
1,294,906
|
1,103,574
|
3,849,943
|
3,959,091
|
|
Operations and
customer support
|
316,828
|
221,574
|
971,165
|
667,848
|
|
|
3,863,283
|
3,450,649
|
11,634,818
|
11,342,984
|
Loss before
undernoted items
|
(458,110)
|
(722,558)
|
(2,785,731)
|
(3,419,338)
|
|
|
|
|
|
|
Other (income)
expenses:
|
|
|
|
|
|
Canada Emergency Wage
Subsidy
|
(243,273)
|
(334,763)
|
(912,721)
|
(1,040,717)
|
|
Finance (income)
expense
|
11,501
|
7,422
|
23,379
|
16,179
|
|
Loss (Gain) on
fair market value of financial instruments
|
(93,654)
|
(77,476)
|
26,564
|
(151,169)
|
|
Foreign exchange loss
(gain)
|
(45,785)
|
17,680
|
2,854
|
(51,170)
|
|
|
(371,211)
|
(387,137)
|
(859,924)
|
(1,226,877)
|
Loss before income
taxes
|
(86,899)
|
(335,421)
|
(1,925,807)
|
(2,192,461)
|
Income tax
expense
|
9,841
|
14,498
|
53,212
|
58,644
|
Net loss and total
comprehensive loss
|
$
|
(96,740)
|
$
|
(349,919)
|
$
|
(1,979,019)
|
$
|
(2,251,105)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.01)
|
$
|
(0.02)
|
$
|
(0.11)
|
$
|
(0.13)
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to the interim condensed consolidated financial
statements
|
|
|
|
|
|
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, 2020
|
|
$
|
172,929,341
|
$
|
9,525,694
|
$
|
(167,577,777)
|
14,877,258
|
|
Net loss
|
|
-
|
-
|
(2,251,105)
|
(2,251,105)
|
|
Stock option
expense
|
|
-
|
137,626
|
-
|
137,626
|
Balance at
September 30, 2020
|
|
$
|
172,929,341
|
$
|
9,663,320
|
$
|
(169,828,882)
|
$
|
12,763,779
|
Balance at
January 1, 2021
|
|
$
|
172,929,341
|
$
|
9,704,769
|
$
|
(171,477,484)
|
$
|
11,156,626
|
|
Net loss
|
|
-
|
-
|
(1,979,019)
|
(1,979,019)
|
|
Stock option
expense
|
|
-
|
80,533
|
-
|
80,533
|
Balance at
September 30, 2021
|
|
$
|
172,929,341
|
$
|
9,785,302
|
$
|
(173,456,503)
|
$
|
9,258,140
|
|
|
|
|
|
|
|
See accompanying
notes to the interim condensed consolidated financial
statements
|
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,
|
|
|
|
2021
|
2020
|
2021
|
2020
|
Cash flows from (used
in) operating activities:
|
|
|
|
|
|
Net loss
|
$
|
(96,740)
|
$
|
(349,919)
|
|
(1,979,019)
|
$
|
(2,251,105)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
Finance
expense
|
11,501
|
7,422
|
23,379
|
16,179
|
|
|
Depreciation and
Amortization
|
256,318
|
263,423
|
766,820
|
800,695
|
|
|
Stock option
expense
|
(5,587)
|
50,618
|
80,533
|
137,626
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
(4,403)
|
(5,483)
|
(20,062)
|
39,285
|
|
|
Foreign exchange
(gain) loss on borrowings and lease liabilities
|
(17,622)
|
17,774
|
5,001
|
(50,456)
|
|
|
Loss on disposal of
assets
|
-
|
|
1,753
|
5,668
|
|
|
|
|
|
|
|
|
|
|
143,467
|
(16,165)
|
(1,121,595)
|
(1,302,108)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
2
|
1,141
|
475
|
5,856
|
|
|
Decrease (Increase)
in deferred revenue
|
30,792
|
(172,612)
|
(339,446)
|
(332,074)
|
|
|
Change in other
non-cash operating assets and liabilities
|
710,407
|
489,891
|
(471,442)
|
1,705,346
|
Cash generated from
(used in) operating activities
|
884,668
|
302,255
|
(1,932,008)
|
77,020
|
Cash flows from (used
in) investing activities:
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(65,294)
|
(90,048)
|
(176,583)
|
(239,296)
|
|
Proceeds on sale of
property, plant and equipment
|
-
|
-
|
4,600
|
-
|
|
Acquisition of
intangible assets
|
(61,330)
|
(109,750)
|
(69,785)
|
(240,173)
|
Cash (used in)
investing activities
|
(126,624)
|
(199,798)
|
(241,768)
|
(479,469)
|
Cash flows from (used
in) financing activities:
|
|
|
|
|
|
Interest
income
|
1,825
|
2,704
|
5,881
|
22,255
|
|
Interest
expense
|
(6,976)
|
(10,126)
|
(22,237)
|
(33,748)
|
|
Government Loan (SIF)
including Deferred Grant Income
|
340,353
|
|
793,229
|
-
|
|
Repayment of
borrowings
|
-
|
|
-
|
(701,491)
|
|
Lease Right of Use
Asset
|
51,274
|
-
|
51,274
|
-
|
|
Repayment of lease
liabilities
|
(50,449)
|
(48,781)
|
(205,380)
|
(218,530)
|
Cash generated from
(used in) financing activities
|
336,027
|
(56,203)
|
622,767
|
(931,514)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
4,403
|
5,483
|
20,062
|
(39,285)
|
Increase (Decrease)
in cash
|
1,098,474
|
51,737
|
(1,530,947)
|
(1,373,248)
|
Cash, beginning of
the period
|
2,705,065
|
5,082,621
|
5,334,486
|
6,507,606
|
Cash, end of the
period
|
$
|
3,803,539
|
$
|
5,134,358
|
$
|
3,803,539
|
$
|
5,134,358
|
|
|
|
|
|
|
|
See accompanying
notes to the interim condensed consolidated financial
statements
|
SOURCE Redline Communications Group Inc.