TORONTO, Aug. 12, 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 six months ended June 30, 2014.
Financial summary for the three months ended June 30, 2014 (Q2 2014):
- Revenue of $8.7 million
- Gross Margin of 63%
- Adjusted EBITDA² of $1.1 million
- Net Profit of $0.6 million
- Increased Cash by $6.3 million to $20.9 million
- Order Bookings² of $11.5 million
- Order Backlog² of $18.2 million
Overall Revenue for Q2 2014 was $8.7 million, down 3% over the same period in 2013. An increase of approximately $1 million in revenue from oil and gas customers was offset by a decrease in sales to customers in other verticals of approximately $1.1 million when compared to 2013.
Adjusted EBITDA for Q2 2014 was $1.1 million, an improvement of $1.8 million over the Adjusted EBITDA loss of $0.8 million for Q2 2013. The difference can be attributed to continued strong gross margins and lower operating costs in the quarter resulting from the restructuring program initiated in December 2013.
"22% quarter-over-quarter revenue growth combined with continued strong gross margins and well-managed operating costs has enabled us to realize positive EBITDA and increase our cash," said George Kypreos, Redline CFO. "We are delivering to our plan, and we're very pleased with this positive momentum."
Gross margins for Q2 2014 were 63%, which compares to 64% reported for Q2 2013.
Operating expenses for Q2 2014, were $4.7 million, a decrease of 31% compared to $6.9 million reported for the same period in 2013, with the decrease attributed to the restructuring plan put in place during December 2013.
Net profit for Q2 2014 was $0.6 million or $0.04 per share, a $1.1 million improvement over the net loss of $0.5 million, or ($0.04) per share reported in the same period in 2013.
Positive EBITDA combined with the previously announced receipt of approximately CDN $2.1 million in consideration from the exercise of warrants increased cash by $6.3 million, bringing the Company's cash balance to $20.9 million at June 30, 2014.
Order Bookings for Q2 2014 were $11.5 million, up 29% over Q1 2014 and up 3% over the same period in 2013. Total Order Backlog at June 30, 2014 was $18.2 million.
The second quarter of 2014 included a previously announced large contract from a new customer to provide 5 wireless oilfield networks. Smaller contracts were also signed for a video surveillance project in Mexico and for Redline's new offshore product. These new bookings were largely offset by reductions in total order value from military customers during the same period in 2013.
"This was a strong and encouraging quarter for Redline," said Robert Williams, Redline CEO. "Orders came from several market segments and especially from oil and gas where our pilot program continues to demonstrate traction. Looking forward, we are comfortable that our expenses are in line with our revenues and we continue to see opportunities in all of our target markets to drive our top line growth."
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 Q2 2014, the Company added 2 new pilot projects and converted two existing pilot projects into deployed networks. Four other networks were deployed in Q2 2014 bypassing a pilot stage. This brings the total ongoing oil and gas pilot programs to 15, up from two at June 30, 2013.
Conference Call and Webcast – August 13th, 2014 at 10:00 a.m. ET
A conference call and webcast to discuss the Company's financial results have been scheduled for August 13, 2014 at 10:00 a.m. Eastern Time. To participate in the call, please dial 1-647-427-7450 or 1-888-231-8191 approximately 10 minutes before the conference call, and provide passcode 76815260. A recording of the call will be available through October 31, 2014. To listen to the rebroadcast please dial 1-416-849-0833 or 1-855-859-2056 and enter passcode 76815260. A webcast of the call will also be available 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:
- All amounts reported in this press release are in US dollars unless otherwise stated.
- To better assess the health and growth of the Redline's business, the Company sometimes reports on several key metrics, 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 can be found in the Company's Management Discussion and Analysis for the three months ended June 30, 2014 ("Q2 2014 MD&A"), copies of which are available on SEDAR at www.sedar.com. Further details on the three month results ended June 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 June 30, 2014 and the Q2 2014 MD&A.
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) | |||||
June 30, | December 31, | ||||
ASSETS | |||||
Current assets: | |||||
Cash | $ 20,935,013 | $ 13,473,246 | |||
Trade receivables | 7,576,765 | 10,340,537 | |||
Other receivables | 1,093,939 | 1,155,514 | |||
Inventories | 6,407,106 | 6,138,547 | |||
Deferred cost of revenue | - | 40,059 | |||
Prepaid expenses and other deposits | 612,460 | 928,350 | |||
36,625,283 | 32,076,253 | ||||
Non-current assets: | |||||
Property, plant and equipment | 1,640,107 | 1,768,479 | |||
Intangible assets | 145,018 | 59,809 | |||
Other assets | 83,992 | 99,753 | |||
1,869,117 | 1,928,041 | ||||
Total Assets | $ 38,494,400 | $ 34,004,294 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities | |||||
Trade and other payables | 5,103,601 | 5,553,916 | |||
Income tax payable | 155,063 | 153,403 | |||
Deferred revenue | 2,575,371 | 1,105,333 | |||
Borrowings | 5,061,615 | 4,981,078 | |||
12,895,650 | 11,793,730 | ||||
Non-current liabilities | |||||
Other payables | 625,601 | 788,592 | |||
Other financial liability | 135,910 | 111,548 | |||
Convertible debenture (principal and interest) | 287,514 | 287,175 | |||
Fair market value adjustment on convertible debenture | 141,900 | 920,739 | |||
1,190,925 | 2,108,054 | ||||
Total Liabilities | 14,086,575 | 13,901,784 | |||
SHAREHOLDERS' EQUITY | |||||
Share capital | 172,446,878 | 168,903,267 | |||
Share purchase loan | - | (365,780) | |||
Warrant | 310,000 | 310,000 | |||
Contributed surplus | 8,145,683 | 8,911,025 | |||
Deficit | (156,494,736) | (157,656,002) | |||
24,407,825 | 20,102,510 | ||||
Total liabilities and equity | $ 38,494,400 | $ 34,004,294 | |||
REDLINE COMMUNICATIONS GROUP INC. | ||||||||||
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) | ||||||||||
(Unaudited, expressed in U.S. dollars) | ||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||
2014 | 2013 | 2014 | 2013 | |||||||
Revenue | $ 8,682,128 | $ 8,924,258 | $ 15,770,069 | $ 16,946,999 | ||||||
Cost of revenue | 3,176,179 | 3,204,129 | 5,975,127 | 7,173,182 | ||||||
Gross profit | 5,505,949 | 5,720,129 | 9,794,942 | 9,773,817 | ||||||
Expenses: | ||||||||||
Research and development | 607,460 | 1,405,716 | 1,443,854 | 3,184,650 | ||||||
Administration and finance | 1,732,069 | 2,266,236 | 3,079,323 | 3,922,586 | ||||||
Sales and marketing | 2,096,786 | 2,839,638 | 3,883,107 | 5,441,466 | ||||||
Operations and customer support | 300,097 | 393,184 | 594,325 | 763,634 | ||||||
4,736,412 | 6,904,774 | 9,000,609 | 13,312,336 | |||||||
Profit (loss) before undernoted items | 769,537 | (1,184,645) | 794,333 | (3,538,519) | ||||||
Other expenses (gains) | ||||||||||
Finance expense | 37,189 | 85,249 | 74,456 | 167,128 | ||||||
Loss (gain) on fair market value | 194,493 | (466,428) | (389,847) | (520,821) | ||||||
Foreign exchange gain | (60,279) | (270,318) | (88,961) | (355,753) | ||||||
171,403 | (651,497) | (404,352) | (709,446) | |||||||
Profit (loss) before income taxes | 598,134 | (533,148) | 1,198,685 | (2,829,073) | ||||||
Income tax expense | 11,498 | 741 | 37,419 | 173,064 | ||||||
Net profit (loss) and total comprehensive income (loss) | $ 586,636 | $ (533,889) | $ 1,161,266 | $ (3,002,137) | ||||||
Earnings (loss) per share | ||||||||||
Basic | $ 0.04 | $ (0.04) | $ 0.07 | $ (0.22) | ||||||
Diluted | $ 0.04 | $ (0.04) | $ 0.07 | $ (0.22) | ||||||
REDLINE COMMUNICATIONS GROUP INC. | ||||||||
Condensed Consolidated Interim Statements of Changes in Equity | ||||||||
(Unaudited, expressed in U.S. dollars) | ||||||||
Share | Share purchase | Warrant | Contributed | Deficit | Total | |||
Balance at | $ 152,123,803 | $ (365,780) | $ 310,000 | $ 8,361,465 | $ (153,538,978) | $ 6,890,510 | ||
Net loss | - | - | - | - | (3,002,137) | (3,002,137) | ||
Conversion of debenture | 2,132,243 | - | - | - | - | 2,132,243 | ||
Conversion of warrants | 5,334,306 | - | - | - | - | 5,334,306 | ||
Exercise of options | 337,320 | - | - | (158,433) | - | 178,887 | ||
Share-based payments | - | - | - | 484,526 | - | 484,526 | ||
Balance at | $ 159,927,672 | $ (365,780) | $ 310,000 | $ 8,687,558 | $ (156,541,115) | $ 12,018,335 | ||
Balance at | $ 168,903,267 | $ (365,780) | $ 310,000 | $ 8,911,025 | $ (157,656,002) | $ 20,102,510 | ||
Net profit | - | - | - | - | 1,161,266 | 1,161,266 | ||
Exercise of options | 1,620,027 | - | - | (716,968) | - | 903,059 | ||
Conversion of warrants | 2,253,156 | - | - | - | - | 2,253,156 | ||
Share purchase loan settlement | (329,572) | 365,780 | - | - | - | 36,208 | ||
Repurchase and cancellation | - | - | - | (201,793) | - | (201,793) | ||
Share-based payments | - | - | - | 153,419 | - | 153,419 | ||
Balance at | $ 172,446,878 | $ - | $ 310,000 | $ 8,145,683 | $ (156,494,736) | $ 24,407,825 | ||
REDLINE COMMUNICATIONS GROUP INC. | ||||||||
Condensed Consolidated Interim Statements of Cash Flows | ||||||||
(Unaudited, expressed in U.S. dollars) | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||
Note | 2014 | 2013 | 2014 | 2013 | ||||
Cash flows from operating activities: | ||||||||
Net profit (loss) | $ 586,636 | $ (533,889) | $ 1,161,266 | $ (3,002,137) | ||||
Adjustments to reconcile net profit (loss) to net cash from operating activities | ||||||||
Finance expense | 37,189 | 85,249 | 74,456 | 167,128 | ||||
Depreciation and amortization of non-current assets | 99,418 | 87,091 | 209,206 | 169,138 | ||||
Loss on disposal of asset | 4,960 | - | 15,652 | - | ||||
Recognition of share based payments | 157,993 | 299,061 | 189,627 | 484,526 | ||||
Foreign exchange loss on cash held in foreign currency | 216,424 | 6,796 | 399,192 | 128,557 | ||||
Foreign exchange loss (gain) on borrowings | 193,624 | (334,918) | (45,032) | (563,580) | ||||
Loss (gain) on fair market value of Debenture | 194,493 | (466,428) | (389,847) | (520,821) | ||||
Income tax | - | 741 | - | 173,064 | ||||
1,490,737 | (856,297) | 1,614,520 | (2,964,125) | |||||
Change in non-cash operating assets and liabilities | ||||||||
Decrease in deferred cost of revenue | - | 314,328 | 40,059 | 905,250 | ||||
Increase (decrease) in deferred revenue | 1,452,135 | (650,116) | 1,470,038 | (1,794,914) | ||||
Change in other non-cash operating assets and liabilities | 16 | 1,212,381 | (2,566,844) | 2,075,000 | 697,590 | |||
Cash from operating activities | 4,155,253 | (3,758,929) | 5,199,617 | (3,156,199) | ||||
Cash flows from investing activities: | ||||||||
Acquisition of property, plant and equipment | 5 | (38,086) | (305,955) | (55,619) | (370,122) | |||
Proceeds on sale of property, plant and equipment | 924 | - | 14,424 | - | ||||
Acquisition of intangible assets | 6 | (120,500) | (16,100) | (140,500) | (16,100) | |||
Cash used in investing activities | (157,662) | (322,055) | (181,695) | (386,222) | ||||
Cash flows from financing activities: | ||||||||
Finance income (costs) | 11,228 | (44,627) | 20,688 | (62,546) | ||||
Proceeds from exercise of options | 576,595 | 3,691 | 903,059 | 178,887 | ||||
Proceeds from conversion of debenture and warrants | 1,919,290 | 38,781 | 1,919,290 | 2,931,614 | ||||
Proceeds from bank indebtedness | - | 1,071,566 | - | 2,008,742 | ||||
Cash from financing activities | 2,507,113 | 1,069,411 | 2,843,037 | 5,056,697 | ||||
Foreign exchange loss on cash held in foreign currency | (216,424) | (6,796) | (399,192) | (128,557) | ||||
Increase (decrease) in cash | 6,288,280 | (3,018,369) | 7,461,767 | 1,385,719 | ||||
Cash, beginning of the period | 14,646,733 | 12,690,820 | 13,473,246 | 8,286,732 | ||||
Cash, end of the period | $ 20,935,013 | $ 9,672,451 | $ 20,935,013 | $ 9,672,451 | ||||
Cash | $ 20,935,013 | $ 9,672,451 | $ 20,935,013 | $ 9,672,451 | ||||
Bank indebtedness | - | (4,305,597) | - | (4,305,597) | ||||
Cash, net of bank indebtedness | $ 20,935,013 | $ 5,366,854 | $ 20,935,013 | $ 5,366,854 | ||||
SOURCE Redline Communications Group Inc.