Redline Communications Reports 2020 First Quarter Results

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Ultra Club
$500/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Redline Communications Reports 2020 First Quarter Results

Canada NewsWire

TORONTO, May 13, 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 first quarter ended March 31, 2020.

Key financial highlights for the three months ended March 31, 2020 ("Q1 2020") include:

  • Revenue of $4.5 million, down 23% over Q1 2019
  • Gross margins of 63%, up 13 percentage points over Q1 2019
  • Operating expenses of $4.1 million, up 1% over Q1 2019
  • Net loss of $1.0 million, as compared to net loss of $1.3 million in Q1 2019
  • Cash balance of $6.8 million, up $0.3 million from December 31, 2019
  • Borrowings of $0.0, down $0.7 million from December 31, 2019
  • Adjusted EBITDA1 loss of $1.0 million, versus Adjusted EBITDA loss of $0.8 million in Q1 2019
  • Bookings1 of $5.9 million, up 3% over Q1 2019
  • Order Backlog1 of $9.9 million, up 16% from December 31, 2019

Financial and Business Review

Revenue for the first quarter ended March 31, 2020 was $4.5 million, down 23% over Q1 2019, mainly the result of product shipments which could not be delivered to a small number of customers due to temporary border closures in South America and the Middle East and other logistics challenges associated with COVID-19.

Order Bookings for Q1 2020 were $5.9 million, up 3% over Q1 2019. The increase was primarily driven by an increase in orders from customers in the Company's core industrial vertical markets, including from oil & gas customers.

"The COVID-19 pandemic continues to be a significant concern and has impacted our product shipments and revenue. Nevertheless, we are proud of how we've been able to win new business with increased year over year bookings, generate positive cashflow, eliminate our borrowing, grow our margins, support our customers operations, and ensure the safety of our staff," stated Stephen Sorocky, Redline CEO. "We will continue to closely monitor the ongoing impacts of the COVID-19 pandemic and the recent decline in oil prices on our business and continue to take measures to mitigate negative effects upon our business including aggressively reviewing, monitoring and controlling expenses.  We are encouraged by the new customers we continue to bring onboard, most notably a key win in Saudi Arabia that was announced on April 20 and the market potential of our product development, including the RDL6000 for the USA CBRS market released last week."

Gross margin for Q1 2020 was 63%, up 13 percentage points over Q1 2019. The improvement was a result of a number of factors, most notably a shift in revenue mix to sales of higher margin industrial products to our core verticals and continued quarter-over-quarter growth in revenue from maintenance and support contracts.

Overall operating expenses for Q1 2020 were $4.1 million, up 1% over Q1 2019, primarily a result of increased  research and development costs to support new product development, offset by a decrease in severance costs. 

Net loss for Q1 2020 was $1.0 million, or ($0.06) per share, an improvement of $0.3 million over the net loss of $1.3 million, or ($0.07) per share, for Q1 2019.

"We continue to focus on proactive programs to better manage working capital.  The company has made significant progress in the areas of billing and collections, resulting in positive cashflow from operations of $1.3 million in the quarter and continues to explore new processes and initiative to reduce our level of inventory," stated Philip Jones, Redline CFO.

Adjusted EBITDA loss for Q1 2020 was $1.0 million, as compared to Adjusted EBITDA loss of $0.8 million for Q1 2019.

Annual General Meeting

The Company also announces that after careful consideration and amid COVID-19 concerns, it has decided to schedule its 2020 Annual Shareholders Meeting, normally held in June, on August 17, 2020.   This was not a decision taken lightly but one which will allow the Company to continue to focus its limited resources on operating activities and other matters during these extraordinary times.   Further announcements related to the annual meeting, including shareholder record dates, form of the meeting (virtual platform or in-person) will be made in the following weeks.

Conference Call and Webcast – May 14, 2020 at 10:00 a.m. ET

A conference call and webcast to discuss the results has been scheduled for Thursday, May 14, 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 4186136. A recording of the call will be available through May 21, 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 ended March 31, 2020 ("Q1 2020 MD&A"), copies of which are available on SEDAR at www.sedar.com. Further details on the three months ended March 31, 2020 can be found in the condensed consolidated interim 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 condensed consolidated interim financial statements of the Company for the three months ended March 31, 2020 and the Q1 2020 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 March 31,



2020

2019

Revenue


$

4,475

$

5,834

Net profit (loss)


(1,044)

(1,257)

Add back:





Share based payments


51

114


Depreciation and amortization


269

220


Finance (income) expense


1

(17)


(Gain) loss on fair market value
  of financial instruments


(118)

88


Foreign exchange (gain) loss


(133)

65


Income tax expense


18

6


Total


88

476





Adjusted EBITDA (loss)


$

(956)

$

(781)





Adjusted EBITDA margin


-21%

-13%

 

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)

















March 31,
2020


December 31,
2019

ASSETS






Current assets:







Cash 



$

6,838,831


$

6,507,606


Trade receivables



4,210,852


7,089,043


Other receivables



109,910


260,216


Inventories 



7,876,803


7,707,578


Deferred cost of revenue



3,817


6,910


Prepaid expenses and other deposits



336,436


285,519





19,376,649


21,856,872

Non-current assets:







Property, plant and equipment



999,961


999,435


Intangible assets



1,345,163


1,373,526


Right of use assets



730,904


798,080


Other assets 



70,866


76,284





3,146,894


3,247,325

Total Assets



$

22,523,543


$

25,104,197








LIABILITIES AND SHAREHOLDERS' EQUITY 






Current liabilities:







Trade and other payables



$

5,113,330


$

6,035,496


Income tax payable



12,398


12,398


Deferred revenue



2,285,866


1,966,282


Lease liabilities



240,600


277,945


Borrowings



-


716,832





7,652,194


9,008,953

Non-current liabilities:







Deferred revenue



337,169


429,414


Lease liabilities



654,108


788,572





991,277


1,217,986

Total Liabilities



8,643,471


10,226,939








SHAREHOLDERS' EQUITY






Share capital 



172,929,341


172,929,341

Contributed surplus



9,572,632


9,525,694

Deficit



(168,621,901)


(167,577,777)





13,880,072


14,877,258

Total Liabilities and Equity



$

22,523,543


$

25,104,197

 

REDLINE COMMUNICATIONS GROUP INC.





Condensed Consolidated Interim Statements of Comprehensive Loss



(Unaudited, Expressed in U.S. dollars)














Note


Three months ended March 31,



2020


2019

Revenue



$

4,474,589


$

5,833,514

Cost of revenue



1,650,163


2,900,333

Gross profit



2,824,426


2,933,181








Expenses:







Research and development



1,124,986


491,246


General and administrative



1,279,764


1,452,760


Sales and marketing



1,457,650


1,868,954


Operations and customer support



238,572


234,494





4,100,972


4,047,454

Loss before undernoted items



(1,276,546)


(1,114,273)








Other (income) expenses:







Finance (income) expense



1,027


(16,991)


(Gain) loss on fair market value of financial instruments



(118,561)


88,379


Foreign exchange (gain) loss



(132,788)


65,487





(250,322)


136,875

Loss before income taxes



(1,026,224)


(1,251,148)

Income tax expense



17,900


6,260

Net loss and total comprehensive loss



$

(1,044,124)


$

(1,257,408)















Loss per share







Basic and diluted



$

(0.06)


$

(0.07)

 

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, 2019


$

172,929,341

$

9,292,321

$

(163,832,939)

$

18,388,723


Net loss


-

-

(1,257,408)

(1,257,408)


Stock option expense


-

93,445

-

93,445

Balance at
March 31, 2019


$

172,929,341

$

9,385,766

$

(165,090,347)

$

17,224,760

Balance at
January 1, 2020


$

172,929,341

$

9,525,694

$

(167,577,777)

$

14,877,258


Net loss


-

-

(1,044,124)

(1,044,124)


Stock option expense


-

46,938

-

46,938

Balance at
March 31, 2020


$

172,929,341

$

9,572,632

$

(168,621,901)

$

13,880,072

 

REDLINE COMMUNICATIONS GROUP INC.




Condensed Consolidated Interim Statements of Cash Flows




(Unaudited, Expressed in U.S. dollars)












Three months ended March 31,

Note

2020

2019

Cash flows from (used in) operating activities:





Net loss


$

(1,044,124)

$

(1,257,408)


Adjustments to reconcile net loss to net cash from operating activities:






Finance (income) expense


1,027

(16,991)



Depreciation and amortization of non-current assets


269,200

219,700



Stock option expense


46,938

93,445



Foreign exchange (gain) loss on cash held in foreign currency


55,395

(29,178)



Foreign exchange (gain) loss on borrowings and lease liabilities


(102,900)

60,277





(774,464)

(930,155)


Change in non-cash operating assets and liabilities: 






(Increase) decrease in deferred cost of revenue


3,093

(1,812)



Increase in deferred revenue


227,339

136,918



Change in other non-cash operating assets and liabilities 


1,891,607

1,241,894

Cash from operating activities


1,347,575

446,845

Cash flows used in investing activities:





Acquisition of property, plant and equipment


(92,187)

(40,269)


Acquisition of intangible assets


(82,000)

(14,100)

Cash used in investing activities


(174,187)

(54,369)

Cash flows used in financing activities:





Interest income


16,307

42,988


Interest expense


(12,648)

(14,448)


Repayment of borrowings


(701,491)

(735,505)


Repayment of lease liabilities


(88,936)

(86,129)

Cash used in financing activities


(786,768)

(793,094)

Foreign exchange gain (loss) on cash held in foreign currency


(55,395)

29,178

Increase (decrease) in cash


331,225

(371,440)

Cash, beginning of the period


6,507,606

9,625,845

Cash, end of the period


$

6,838,831

$

9,254,405

 

SOURCE Redline Communications Group Inc.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/May2020/13/c1463.html

Copyright CNW Group 2020

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).