TORONTO, March 7, 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 fourth quarter and the
fiscal year ended December 31,
2017.
Financial highlights for the fourth quarter ended December 31, 2017 include:
- Revenues of $8.3 million, up 31%
over Q4 2016
- Gross margins of 56%, unchanged from Q4 2016
- Operating expenses of $3.9
million, an increase of 8% over Q4 2016
- Net profit of $0.8 million, an
improvement of $0.9 million over Q4
2016
- Adjusted EBITDA of $1.0 million,
an improvement of $0.7 million over
Q4 2016
- Cash of $12.0 million, up
$0.9 million over Q3 2017
- Bookings of $5.6 million, up 27%
over Q4 2016
- Order Backlog of $6.1 million,
down 33% over Q3 2017
Financial highlights for the fiscal year ended December 31, 2017 include:
- Revenues of $22.8 million,
unchanged from 2016
- Gross margins of 54%, down 1 percentage point over 2016
- Operating expenses of $13.7
million, a reduction of 21% over 2016
- Net loss of $1.6 million, an
improvement of $3.2 million over
2016
- Adjusted EBITDA loss of $0.4
million, an improvement of $3.0
million over 2016
- Cash of $12.0 million as of
December 31, 2017, up $0.8 million over 2016
- Bookings of $25.4 million, up 18%
over 2016
- Order Backlog of $6.1 million, up
8% over 2016
Financial Review
Total revenue for the fourth quarter and year ended December 31, 2017 was $8.3
million and $22.8 million
respectively, with fourth quarter revenue up 31% over the same
period in 2016 and annual revenue relatively unchanged year over
year. Revenue in the fourth quarter 2017 was up 60% over the
prior quarter.
Adjusted EBITDA for the fourth quarter 2017 was $1.0 million, up $0.7
million over the Adjusted EBITDA of $0.3 million for the same period in 2016, largely
due to higher revenues compared to the same period in 2016.
The adjusted EBITDA loss for the year ended December 31, 2017 was $0.4
million, an improvement of $3.0
million over the same period in 2016, attributed to lower
expenses.
"Redline ended 2017 on a positive note. Revenue growth quarter
over quarter coupled with stable gross margins has resulted in a
profitable fourth quarter," stated Robert
Williams, Redline CEO.
Order Bookings for the fourth quarter and year ended
December 31, 2017 were $5.6 million and $25.4
million respectively, up 27% and 18% over the same periods
in 2016. The increase in Order Bookings year over year can be
largely attributed to stronger spending from energy sector clients
in the second half of 2017.
"We are seeing increasing demand from both new and existing
clients across multiple vertical markets and in multiple
geographies," added Williams. "Sales of our traditional RDL-3000
product remain strong, our new iLTETM product is being
well received particularly in the mining sector and our operating
costs have been managed effectively. We believe that our strategy
of revenue diversification and ongoing cost management will
continue to produce improved results going forward."
Overall gross margin for the fourth quarter and year ended
December 31, 2017 was 56% and 54%
respectively, unchanged and down one percentage point over the same
periods in 2016.
Overall operating expenses for the fourth quarter and year ended
December 31, 2017 were $3.9 million and $13.7
million, up 8% and down 21% respectively over the same
periods in 2016. The increase in operating expenses in the
fourth quarter 2017 over the same period in 2016 was the result of
a bad debt expense. The decrease in operating expenses in the year
ending December 31, 2017 was
primarily a result of reduced compensation and contractual
costs.
Net Profit for the fourth quarter of 2017 was $0.8 million, or $0.05 per share as compared to a Net Loss of
$0.1 million, or ($0.01) per share in the fourth quarter of 2016.
For the full year 2017, Redline reported a Net Loss of $1.6 million, or ($0.09) per share, as compared to a Net Loss of
$4.8 million, or ($0.28) per share in 2016.
At December 31st, 2017,
Redline held cash of $12.0 million,
up $0.9 million from September 30, 2017, and up $0.8 million from December
31, 2016.
The Redline Board of Directors also announced today
that Joan Ritchie, who has held the position of Interim Chief
Financial Officer, since September 5,
2017 has been appointed Chief Financial Officer.
Conference Call and Webcast – March
8th, 2018 at 10:00 a.m.
ET
A conference call and webcast to discuss the results has been
scheduled for Thursday March 8, 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 passcode 4379546. A
recording of the call will be available through March 17, 2018 on Redline's website or by dialing
1-416-849-0833 and entering the same passcode.
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 the 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 twelve months ended December 31, 2017 ("Q4 and 2017
Year MD&A"), copies of which are available on SEDAR at
www.sedar.com. Further details on the three and twelve month
results ended December 31, 2017 can be found in the condensed
consolidated annual audited statement of financial position,
condensed consolidated annual audited statement of comprehensive
income, condensed consolidated annual audited statement of changes
in equity and condensed consolidated annual audited 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 Audited Financial Statements of the Company
for the three and twelve months ended December 31, 2017 and the Q4
and 2017 Year MD&A.
|
Adjusted EBITDA
(Loss)
|
(Unaudited, Expressed
in thousands of U.S. dollars)
|
The table below
reconciles Adjusted EBITDA loss to the most directly comparable
IFRS measure:
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
Year ended December
31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$
|
8,302
|
$
|
6,320
|
$
|
22,768
|
$
|
22,752
|
Net profit
(loss)
|
785
|
(129)
|
(1,596)
|
(4,785)
|
Add back:
|
|
|
|
|
|
Share based
payments
|
74
|
83
|
379
|
310
|
|
Depreciation and
amortization
|
154
|
246
|
721
|
1,018
|
|
Finance (income)
expense
|
7
|
23
|
25
|
(156)
|
|
Restructuring
costs
|
-
|
243
|
-
|
243
|
|
Loss on fair market
value of financial instruments
|
-
|
-
|
-
|
16
|
|
Foreign exchange
loss
|
(38)
|
(55)
|
87
|
53
|
|
Income tax
expense
|
(4)
|
(103)
|
16
|
(75)
|
|
Total
|
193
|
437
|
1,228
|
1,409
|
|
|
|
|
|
|
Adjusted EBITDA
(loss)
|
$
|
978
|
$
|
308
|
$
|
(368)
|
$
|
(3,376)
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
12%
|
5%
|
-2%
|
-15%
|
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,
2017
|
December 31,
2016
|
ASSETS
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
11,960,062
|
$
|
11,147,235
|
|
Trade
receivables
|
8,160,646
|
7,837,145
|
|
Other
receivables
|
304,526
|
231,398
|
|
Inventories
|
5,438,530
|
5,513,985
|
|
Prepaid expenses and
other deposits
|
211,511
|
151,880
|
|
|
26,075,275
|
24,881,643
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment
|
829,720
|
1,119,690
|
|
Intangible
assets
|
1,169,733
|
1,494,603
|
|
Other
assets
|
83,600
|
78,908
|
|
|
2,083,053
|
2,693,201
|
Total
Assets
|
$
|
28,158,328
|
$
|
27,574,844
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
|
Trade and other
payables
|
$
|
5,698,664
|
$
|
3,322,059
|
|
Income tax
payable
|
10,741
|
10,741
|
|
Deferred
revenue
|
1,275,875
|
960,475
|
|
Borrowings
|
792,051
|
1,478,418
|
|
|
7,777,331
|
5,771,693
|
Non-current
liabilities:
|
|
|
|
Borrowings
|
1,434,388
|
1,340,165
|
|
Other
payables
|
169,793
|
247,799
|
|
|
1,604,181
|
1,587,964
|
Total
Liabilities
|
9,381,512
|
7,359,657
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
Share
capital
|
172,929,341
|
172,929,341
|
Contributed
surplus
|
9,155,798
|
8,998,245
|
Deficit
|
(163,308,323)
|
(161,712,399)
|
|
|
18,776,816
|
20,215,187
|
Total liabilities
and equity
|
$
|
28,158,328
|
$
|
27,574,844
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Consolidated
Statements of Comprehensive Loss
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$
|
8,302,334
|
$
|
6,320,376
|
$
|
22,768,094
|
$
|
22,752,325
|
Cost of
revenue
|
3,680,267
|
2,768,040
|
10,517,675
|
10,163,346
|
Gross
profit
|
4,622,067
|
3,552,336
|
12,250,419
|
12,588,979
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Research and
development
|
647,162
|
669,305
|
2,330,265
|
2,944,559
|
|
Administration and
finance
|
1,492,753
|
1,090,756
|
4,915,038
|
5,773,757
|
|
Sales and
marketing
|
1,550,475
|
1,587,059
|
5,745,227
|
7,510,737
|
|
Operations and
customer support
|
181,485
|
227,138
|
728,122
|
1,063,640
|
|
|
3,871,875
|
3,574,258
|
13,718,652
|
17,292,693
|
Profit (loss) before
undernoted items
|
750,192
|
(21,922)
|
(1,468,233)
|
(4,703,714)
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
Finance (income)
expense
|
6,793
|
22,962
|
24,822
|
(155,884)
|
|
Restructuring
costs
|
-
|
242,632
|
-
|
242,632
|
|
Loss on fair market
value of financial instruments
|
-
|
-
|
-
|
16,314
|
|
Foreign exchange
(gain) loss
|
(38,059)
|
(55,074)
|
87,184
|
53,239
|
|
|
(31,266)
|
210,520
|
112,006
|
156,301
|
Profit (loss) before
income taxes
|
781,458
|
(232,442)
|
(1,580,239)
|
(4,860,015)
|
Income tax expense
(recovery)
|
(3,647)
|
(103,005)
|
15,685
|
(74,577)
|
Net profit (loss) and
total comprehensive income (loss)
|
$
|
785,105
|
$
|
(129,437)
|
$
|
(1,595,924)
|
$
|
(4,785,438)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.05
|
$
|
(0.01)
|
$
|
(0.09)
|
$
|
(0.28)
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
Consolidated
Statements of Changes in Equity
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Warrant
|
Contributed
surplus
|
Deficit
|
Total
|
Balance at
January 1, 2016
|
$
|
172,662,177
|
$
|
310,000
|
$
|
8,457,415
|
$
|
(156,926,961)
|
$
|
24,502,631
|
|
Net loss
|
-
|
-
|
-
|
(4,785,438)
|
(4,785,438)
|
|
Conversion of
debenture
|
267,164
|
-
|
-
|
-
|
267,164
|
|
Expiry of
warrants
|
-
|
(310,000)
|
310,000
|
-
|
-
|
|
Stock option
expense
|
-
|
-
|
230,830
|
-
|
230,830
|
Balance at
December 31, 2016
|
$
|
172,929,341
|
$
|
-
|
$
|
8,998,245
|
$
|
(161,712,399)
|
$
|
20,215,187
|
|
Net loss
|
-
|
-
|
-
|
(1,595,924)
|
(1,595,924)
|
|
Stock option
expense
|
-
|
-
|
157,553
|
-
|
157,553
|
Balance at
December 31, 2017
|
$
|
172,929,341
|
$
|
-
|
$
|
9,155,798
|
$
|
(163,308,323)
|
$
|
18,776,816
|
REDLINE
COMMUNICATIONS GROUP INC.
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net profit
(loss)
|
|
$
|
785,105
|
$
|
(129,437)
|
$
|
(1,595,924)
|
$
|
(4,785,438)
|
|
Adjustments to
reconcile net profit (loss) to cash from operating
activities:
|
|
|
|
|
|
|
|
Finance (income)
expense
|
|
6,793
|
22,962
|
24,822
|
(155,884)
|
|
|
Depreciation and
amortization of non-current assets
|
|
154,449
|
246,303
|
721,068
|
1,018,272
|
|
|
Gain on disposal of
assets
|
|
-
|
-
|
-
|
(10,213)
|
|
|
Stock option
expense
|
|
31,473
|
47,510
|
157,553
|
230,830
|
|
|
Foreign exchange
(gain) loss on cash held in foreign currency
|
|
2,974
|
26,947
|
(83,917)
|
(62,850)
|
|
|
Foreign exchange
(gain) loss on borrowings
|
|
(11,079)
|
(65,960)
|
160,861
|
106,624
|
|
|
Loss on fair market
value of financial instruments
|
|
-
|
-
|
-
|
16,314
|
|
|
|
|
969,715
|
148,325
|
(615,537)
|
(3,642,345)
|
|
Change in non-cash
operating assets and liabilities:
|
|
|
|
|
|
|
|
Increase (decrease)
in deferred revenue
|
|
252,476
|
140,748
|
315,400
|
(574,256)
|
|
|
Change in other
non-cash operating assets and liabilities
|
|
(285,142)
|
326,445
|
1,913,102
|
961,456
|
Cash from (used in)
operating activities
|
|
937,049
|
615,518
|
1,612,965
|
(3,255,145)
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(3,589)
|
-
|
(54,864)
|
(196,816)
|
|
Proceeds on sale of
property, plant and equipment
|
|
-
|
-
|
-
|
20,300
|
|
Acquisition of
intangible assets
|
|
(24,404)
|
-
|
(51,364)
|
(81,437)
|
Cash used in
investing activities
|
|
(27,993)
|
-
|
(106,228)
|
(257,953)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Finance
income
|
|
15,313
|
5,085
|
66,881
|
48,529
|
|
Repayment of
borrowings
|
|
-
|
-
|
(844,708)
|
-
|
Cash from (used in)
financing activities
|
|
15,313
|
5,085
|
(777,827)
|
48,529
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(2,974)
|
(26,947)
|
83,917
|
62,850
|
Increase (decrease)
in cash
|
|
921,395
|
593,656
|
812,827
|
(3,401,719)
|
Cash, beginning of
the period
|
|
11,038,667
|
10,553,579
|
11,147,235
|
14,548,954
|
Cash, end of the
period
|
|
$
|
11,960,062
|
$
|
11,147,235
|
$
|
11,960,062
|
$
|
11,147,235
|
SOURCE Redline Communications Group Inc.