TORONTO, Nov. 3, 2014 /CNW/ - Redline Communications
(www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of
mission-critical networks, today announced unaudited operating
results¹ for the three and nine months ended September 30, 2014.
Financial summary for the three months ended September 30, 2014 (Q3 2014):
- Revenue of $9.1 million
- Gross Margin of 50%
- Adjusted EBITDA² of $0.4
million
- Net Loss of $0.1 million,
($0.01 per share)
- Cash balance of $16.5
million
- Order Bookings² of $8.4
million
- Order Backlog² of $17.4
million
Overall Revenue for Q3 2014 was $9.1
million, up 29% over the same period in 2013, largely
attributed to increasing revenue from the oil and gas sector.
Overall gross margins for Q3 2014 were 50%, a 19 percentage
point decrease from the 69% reported for the same period in 2013.
In Q3 2014, Redline recognized a greater than usual percentage of
revenue from services and third party products, which are sold by
Redline as part of a complete solution for a customer's network.
This revenue, typically sold at lower margins than the hardware and
software portion of a network, was sold at a lower than average
margin during this quarter, pulling down the overall gross
margin.
"We're pleased to see our revenues increase year over year, and
quarter over quarter as Q3 is traditionally a slower quarter for
Redline." said George Kypreos,
Redline CFO. "We continue to see demand for Redline to act as the
overall network solution provider which gives us better control
over the quality of the solution and increased revenue for services
and third party products. While the increase in revenue from third
party products has put and may continue to put downward pressure on
overall margins, we expect to see them improve and be closer to
normal levels in future quarters."
Overall operating expenses for Q3 2014, were $4.5 million, a decrease of 34% compared to
$6.8 million reported for the same
period in 2013, with the decrease attributed to the restructuring
plan put in place in December
2013.
Adjusted EBITDA for Q3 2014 was $0.4
million, an increase of $1.9
million over the Adjusted EBITDA loss of $1.5 million for the corresponding period in
2013. The improvement was primarily the result of lower operating
costs resulting from the restructuring program initiated in
December 2013.
Net loss for Q3 2014 was $0.1
million or ($0.01) per share,
a $1.1 million improvement over the
net loss of $1.2 million, or
($0.08) per share reported in the
same period in 2013.
During Q3 2014, the Company used $2
million in cash for working capital and $2 million to acquire the assets of Purewave
Networks, bringing the Company's cash balance to $16.5 million at September
30, 2014.
Order Bookings for Q3 2014 were $8.4
million, up 34% over the same period in 2013. Total Order
Backlog at September 30, 2014 was
$17.4 million.
Customers in the oil and gas sector accounted for 73% of total
order value for Q3 2014. Among the five orders for new oilfield
networks were two large contracts for digital oilfield networks
from two new South American customers as well as a smaller order in
the USA for an oilfield owned and
operated by a "super-major" oil company, one of the five largest
publicly-owned global oil and gas companies. This is the second
super-major oil company to deploy Redline into their digital
oilfield operations. This brings the total number of deployments
for oilfield networks in 2014 to 12, up from three during the same
nine-month period in 2013.
"With a record 12 pilot projects started in Q3, Redline
continues to successfully penetrate the oil and gas sector," said
Robert Williams, Redline CEO. "We
now have 22 prospective customers piloting our products in their
actual field environments, paving the way for many more full
deployments to add to the 39 Redline networks already in place
across the globe."
Redline tracks the number of pilot projects within the Energy
sector as an indicator of future Order Bookings. Pilot projects
vary in size and scope and give prospective customers the
opportunity to evaluate Redline's solutions in a real field
setting. In Q3 2014 Redline initiated pilot projects in 12 new
oilfields in 10 different countries. This brings the total number
of pilot projects deployed in 2014 to 20, as compared to 4 pilot
projects initiated during the same nine-month period in 2013.
On September 9, 2014 Redline
announced that it had signed a definitive agreement to acquire the
assets of PureWave Networks, a privately-held LTE wireless
technology company for a cash purchase price of $2 million. Redline has hired 7 former
PureWave Networks employees and is working to integrate the team
and the technology. The acquisition of PureWave's technology assets
will enable Redline to accelerate the expansion of its suite of
high performance rugged network solutions to include LTE-based
capabilities.
Conference Call and Webcast – November
4th, 2014 at 10:00 a.m.
ET
A conference call and webcast to discuss the Company's financial
results have been scheduled for November 4,
2014 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 24222776. A recording of the call will be available
through January 31, 2015 on Redline's
website at http://www.rdlcom.com/en/about/investors/webcasts.
About Redline Communications
Redline Communications (www.rdlcom.com) is the creator of
powerful wide-area wireless networks for the most challenging
applications and locations. They are 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:
|
1
|
All amounts reported
in this press release are in US dollars unless otherwise
stated.
|
2
|
To better assess the
health and growth of the Redline's business, the Company sometimes
reports on several non-IFRS financial measures, including "Orders
or Bookings", "Backlog", "EBITDA", "Adjusted EBITDA", "EPS
excluding the non-cash expense relating to the fair market
adjustment on financial instruments". Further information
including definitions of these categories and reconciliation to
their most directly comparable IFRS measures can be found in the
Company's Management Discussion and Analysis for the three months
ended September 30, 2014 ("Q3 2014 MD&A"), copies of which are
available on SEDAR at www.sedar.com. Further details on the three
month results ended September 30, 2014 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 September 30, 2014 and the Q3 2014 MD&A. Any
non-IFRS financial measures should be considered in context with
the IFRS financial statement presentation and should not be
considered in isolation or as a substitute for IFRS revenues, net
income or cash flows. Further, Redline's financial measures may be
calculated differently from similarly titled financial measures of
other companies.
|
|
|
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.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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
|
$
16,532,255
|
|
$
13,473,246
|
|
Trade
receivables
|
|
10,121,824
|
|
10,340,537
|
|
Other
receivables
|
|
791,473
|
|
1,155,514
|
|
Inventories
|
|
6,376,448
|
|
6,138,547
|
|
Deferred cost of
revenue
|
|
-
|
|
40,059
|
|
Prepaid expenses and
other deposits
|
|
423,992
|
|
928,350
|
|
|
|
34,245,992
|
|
32,076,253
|
Non-current
assets:
|
|
|
|
|
|
Property, plant and
equipment
|
|
1,857,316
|
|
1,768,479
|
|
Intangible
assets
|
|
1,833,173
|
|
59,809
|
|
Other
assets
|
|
80,016
|
|
99,753
|
|
|
|
3,770,505
|
|
1,928,041
|
Total
Assets
|
|
$
38,016,497
|
|
$
34,004,294
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Trade and other
payables
|
|
6,047,636
|
|
5,553,916
|
|
Income tax
payable
|
|
155,063
|
|
153,403
|
|
Deferred
revenue
|
|
1,515,532
|
|
1,105,333
|
|
Borrowings
|
|
4,868,777
|
|
4,981,078
|
|
|
|
12,587,008
|
|
11,793,730
|
Non-current
liabilities
|
|
|
|
|
|
Other
payables
|
|
519,256
|
|
788,592
|
|
Other financial
liability
|
|
75,785
|
|
111,548
|
|
Convertible debenture
(principal and interest)
|
|
274,516
|
|
287,175
|
|
Fair market value
adjustment on convertible debenture
|
|
127,596
|
|
920,739
|
|
|
|
997,153
|
|
2,108,054
|
Total
Liabilities
|
|
13,584,161
|
|
13,901,784
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
|
172,591,351
|
|
168,903,267
|
Share purchase
loan
|
|
-
|
|
(365,780)
|
Warrant
|
|
310,000
|
|
310,000
|
Contributed
surplus
|
|
8,120,418
|
|
8,911,025
|
Deficit
|
|
(156,589,433)
|
|
(157,656,002)
|
|
|
|
24,432,336
|
|
20,102,510
|
Total liabilities
and equity
|
|
$
38,016,497
|
|
$
34,004,294
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
|
|
Condensed
Consolidated Interim Statements of Comprehensive Income
(Loss)
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenue
|
|
$ 9,126,636
|
|
$ 7,068,730
|
|
$ 24,896,705
|
|
$ 24,015,729
|
Cost of
revenue
|
|
4,565,806
|
|
2,157,280
|
|
10,540,933
|
|
9,330,462
|
Gross
profit
|
|
4,560,830
|
|
4,911,450
|
|
14,355,772
|
|
14,685,267
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
795,351
|
|
1,657,640
|
|
2,239,205
|
|
4,842,290
|
|
Administration and
finance
|
|
1,264,466
|
|
2,151,735
|
|
4,343,789
|
|
6,074,321
|
|
Sales and
marketing
|
|
2,112,682
|
|
2,592,551
|
|
5,995,789
|
|
8,034,017
|
|
Operations and
customer support
|
|
308,404
|
|
390,616
|
|
902,729
|
|
1,154,250
|
|
|
|
4,480,903
|
|
6,792,542
|
|
13,481,512
|
|
20,104,878
|
Profit (loss) before
undernoted items
|
|
79,927
|
|
(1,881,092)
|
|
874,260
|
|
(5,419,611)
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(gains)
|
|
|
|
|
|
|
|
|
|
Finance
expense
|
|
26,398
|
|
65,946
|
|
100,854
|
|
233,074
|
|
Loss (gain) on fair
market value
of financial instruments
|
|
(61,283)
|
|
(955,713)
|
|
(451,130)
|
|
(1,476,534)
|
|
Foreign exchange loss
(gain)
|
|
203,860
|
|
226,215
|
|
114,899
|
|
(129,538)
|
|
|
|
168,975
|
|
(663,552)
|
|
(235,377)
|
|
(1,372,998)
|
Profit (loss) before
income taxes
|
|
(89,048)
|
|
(1,217,540)
|
|
1,109,637
|
|
(4,046,613)
|
Income tax
expense
|
|
5,649
|
|
24,456
|
|
43,068
|
|
197,520
|
Net profit (loss) and
total comprehensive income (loss)
|
$
(94,697)
|
|
$ (1,241,996)
|
|
$ 1,066,569
|
|
$ (4,244,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.01)
|
|
$
(0.08)
|
|
$
0.07
|
|
$
(0.30)
|
|
Diluted
|
|
$
(0.01)
|
|
$
(0.08)
|
|
$
0.06
|
|
$
(0.30)
|
|
|
|
|
|
|
|
|
|
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Condensed
Consolidated Interim Statements of Changes in Equity
|
|
|
|
(Unaudited, expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Share
purchase
loan
|
Warrant
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
December 31, 2012
|
$ 152,123,803
|
$
(365,780)
|
$
310,000
|
$
8,361,465
|
$ (153,538,978)
|
$
6,890,510
|
|
Net loss
|
-
|
-
|
-
|
-
|
(4,244,133)
|
(4,244,133)
|
|
Conversion of
debenture
|
2,132,243
|
-
|
-
|
-
|
-
|
2,132,243
|
|
Conversion of
warrants
|
5,334,306
|
-
|
-
|
-
|
-
|
5,334,306
|
|
Private
placement
|
8,835,392
|
-
|
-
|
-
|
-
|
8,835,392
|
|
Exercise of
options
|
477,523
|
-
|
-
|
(209,795)
|
-
|
267,728
|
|
Share-based
payments
|
-
|
-
|
-
|
693,939
|
-
|
693,939
|
Balance at
September 30, 2013
|
$ 168,903,267
|
$
(365,780)
|
$
310,000
|
$
8,845,609
|
$ (157,783,111)
|
$ 19,909,985
|
Balance at
December 31, 2013
|
$ 168,903,267
|
$
(365,780)
|
$
310,000
|
$
8,911,025
|
$ (157,656,002)
|
$ 20,102,510
|
|
Net profit
|
-
|
-
|
-
|
-
|
1,066,569
|
1,066,569
|
|
Exercise of
options
|
1,764,500
|
-
|
-
|
(827,460)
|
-
|
937,040
|
|
Conversion of
warrants
|
2,253,156
|
-
|
-
|
-
|
-
|
2,253,156
|
|
Share purchase loan
settlement
|
(329,572)
|
365,780
|
-
|
-
|
-
|
36,208
|
|
Repurchase and
cancellation of options
|
-
|
-
|
-
|
(201,793)
|
-
|
(201,793)
|
|
Share-based
payments
|
-
|
-
|
-
|
238,646
|
-
|
238,646
|
Balance at
September 30, 2014
|
$ 172,591,351
|
$
-
|
$
310,000
|
$
8,120,418
|
$ (156,589,433)
|
$ 24,432,336
|
|
|
|
|
|
|
|
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,
|
2014
|
2013
|
|
2014
|
2013
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net profit
(loss)
|
$
(94,697)
|
$ (1,241,996)
|
|
$
1,066,569
|
$ (4,244,133)
|
|
Adjustments to
reconcile net profit (loss) to net cash from operating
activities
|
|
|
|
|
|
|
|
Finance
expense
|
26,398
|
65,946
|
|
100,854
|
233,074
|
|
|
Depreciation and
amortization of non-current assets
|
169,049
|
105,701
|
|
378,255
|
274,839
|
|
|
Loss on disposal of
asset
|
-
|
28,963
|
|
15,652
|
28,963
|
|
|
Recognition of share
based payments
|
85,227
|
209,413
|
|
274,854
|
693,939
|
|
|
Foreign exchange loss
on cash held in foreign currency
|
415,412
|
42,079
|
|
814,604
|
170,636
|
|
|
Foreign exchange loss
(gain) on borrowings
|
(267,174)
|
187,490
|
|
(312,206)
|
(376,090)
|
|
|
Gain on fair market
value of Debenture
|
(61,283)
|
(955,713)
|
|
(451,130)
|
(1,476,534)
|
|
|
Income tax
|
-
|
24,456
|
|
-
|
197,520
|
|
|
|
272,932
|
(1,533,661)
|
|
1,887,452
|
(4,497,786)
|
|
Change in non-cash
operating assets and liabilities
|
|
|
|
|
|
|
|
Decrease in deferred
cost of revenue
|
-
|
(87,888)
|
|
40,059
|
817,362
|
|
|
Increase (decrease)
in deferred revenue
|
(1,059,839)
|
350,100
|
|
410,199
|
(1,444,814)
|
|
|
Change in other
non-cash operating assets and liabilities
|
(1,181,801)
|
1,663,395
|
|
893,199
|
2,360,985
|
Cash from (used in)
operating activities
|
(1,968,708)
|
391,946
|
|
3,230,909
|
(2,764,253)
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(340,879)
|
(832,276)
|
|
(396,498)
|
(1,202,398)
|
|
Proceeds on sale of
property, plant and equipment
|
-
|
-
|
|
14,424
|
-
|
|
Acquisition of
intangible assets
|
(1,733,534)
|
(16,855)
|
|
(1,874,034)
|
(32,955)
|
Cash used in
investing activities
|
(2,074,413)
|
(849,131)
|
|
(2,256,108)
|
(1,235,353)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Finance income
(costs)
|
21,794
|
(24,701)
|
|
42,482
|
(87,247)
|
|
Proceeds from
exercise of options
|
33,981
|
88,841
|
|
937,040
|
267,728
|
|
Proceeds from
conversion of debenture and warrants
|
|
-
|
|
1,919,290
|
2,931,614
|
|
Proceeds from
(repayment of) bank indebtedness
|
-
|
(952,007)
|
|
-
|
1,056,735
|
|
Proceeds from private
placement
|
-
|
9,322,340
|
|
-
|
9,322,340
|
Cash from financing
activities
|
55,775
|
8,434,473
|
|
2,898,812
|
13,491,170
|
Foreign exchange loss
on cash held in foreign currency
|
(415,412)
|
(42,079)
|
|
(814,604)
|
(170,636)
|
Increase (decrease)
in cash
|
(4,402,758)
|
7,935,209
|
|
3,059,009
|
9,320,928
|
Cash, beginning of
the period
|
20,935,013
|
9,672,451
|
|
13,473,246
|
8,286,732
|
Cash, end of the
period
|
$
16,532,255
|
$ 17,607,660
|
|
$
16,532,255
|
$ 17,607,660
|
|
|
|
|
|
|
|
|
Cash
|
$
16,532,255
|
$ 17,607,660
|
|
$
16,532,255
|
$ 17,607,660
|
Bank
indebtedness
|
-
|
(3,353,590)
|
|
-
|
(3,353,590)
|
Cash, net of bank
indebtedness
|
$
16,532,255
|
$ 14,254,070
|
|
$
16,532,255
|
$ 14,254,070
|
|
|
|
|
|
|
|
|
SOURCE Redline Communications Group Inc.