RDL Redline Communications Group Inc

TORONTO, March 12, 2015 /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 results¹ for the three months (fourth quarter) and the fiscal year ended December 31, 2014.

Financial highlights for the fiscal year ended December 31, 2014 include:

• Cash of $16.4 million as of December 31, 2014, up $2.9 million over 2013, with cash flow of $3.2 million from operating activities, up $6.8 million over 2013
• Order Bookings² were $40.8 million, up 10.7% over 2013
• Revenues were $36.4 million, up 14.9% over 2013
• $17.4 million Order Backlog² at December 31, 2014, up 2.4% over 2013
• 56% overall gross margin, down five percentage points over 2013
• Operating expenses were $18.4 million, down 29.3% over 2013
• Adjusted EBITDA² of $3.0 million, an increase of $8.6 million over the Adjusted EBITDA loss of $5.6 million in 2013
• EPS of $0.15 compared to EPS of ($0.29) in 2013, an improvement of $0.44 per share
• Acquired the assets of PureWave Networks, a privately held wireless technology company located in Santa Clara, California, for a cash purchase price of $2 million in September 2014.

Financial Review

Order Bookings for the fourth quarter and year ended December 31, 2014 were $12.0 million and $40.8 million respectively, up 88% and 11% over the same periods in 2013. Management estimates that approximately 50% of total Bookings for the year were from customers in the Energy sector, accounting for the majority of the year-over-year growth in total order value and providing a balanced mix of orders from different market segments.  Total recognized revenue for the fourth quarter and year ended December 31, 2014 was $11.5 million and $36.4 million, up 50% and 15% over the same periods in 2013.

Gross margin on Redline product sales during the fourth quarter and year ended December 31, 2014 was 69% and 67% respectively, up one percentage point over the same periods in 2013.  Overall gross margin for the fourth quarter and year ended December 31, 2014 was 53% and 56% respectively, down eight and five percentage points over the same periods in 2013. This was due to a larger percentage of revenue from lower margin professional services and sales of 3^rd party equipment.

Overall operating expenses for the fourth quarter and year ended December 31, 2014, were $4.9 million and $18.4 million, an improvement of 17% and 29% over the same periods in 2013.  The restructuring announced on December 3, 2013 resulted in a cost savings of $8.0 million which was partially offset by $0.7 million in additional costs incurred in the fourth quarter 2014 as a result of the acquisition of the assets of PureWave Networks.

Adjusted EBITDA for the fourth quarter and year ended December 31, 2014 was $1.4 million and $3.0 million respectively, an increase of $2.5 million and $8.6 million over the corresponding periods in 2013. The Adjusted EBITDA increase for both periods was a result of the decrease in operating costs and increase in revenue and gross profit as compared to the corresponding periods in 2013.

"2014 was a year in which Redline realized growth in orders, revenues, net income and cash, even as we completed the purchase of the assets of PureWave Technologies and introduced new products," said Robert Williams, Redline CEO. "It's a testament to the discipline and focus of our team that we have grown in all areas while reducing our expenses, and it positions us well going into 2015."

Increased revenues and decreased operating costs resulted in a Net Profit for the fourth quarter of 2014 of $1.4 million, or $0.08 per share as compared to a Net Profit of $0.1 million, or $0.01 per share in the fourth quarter of 2013. For the full year 2014, Redline reported a Net Profit of $2.5 million, or $0.15 per share, as compared to a Net Loss of $4.1 million, ($0.29) per share in 2013.

At December 31^st, 2014, Redline held cash of $16.4 million, up $2.9 million from the cash of approximately $13.5 million at December 31, 2013.

Conference Call and Webcast – March 13^th, 2015 at 10:00 a.m. ET

A conference call and webcast to discuss the results has been scheduled for Friday March 13, 2015 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 91333078. A recording of the call will be available through April 30, 2015 on Redline's website.

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:

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 affects 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.

SOURCE Redline Communications Group Inc.