Redline Communications Reports 2021 Third Quarter Results
Canada NewsWire
TORONTO, Nov. 11, 2021
TORONTO, Nov. 11, 2021 /CNW/ - Redline Communications Group Inc. (TSX: RDL), a leading provider of mission-critical data infrastructure for remote & harsh environments, today announced operating results for the third quarter ended September 30, 2021.
All figures are in US Dollars unless otherwise noted.
-- Revenues increased 9.3% to $5.2 million from $4.7 million in Q2 2021 and
decreased $0.04 million from Q3 2020
-- Q3 2021 Gross margin was 66% compared to 52% for Q3 2020 and 61% for Q2
2021.
-- Over 70% of revenues were fulfilled via distribution and reseller
partners
-- Bookings $6.3 million in Q3 2021 an increase of 20% from Q2 2021
reflecting sales momentum since the beginning of the year.
-- Backlog increased to $12.5M at the end of Q3 2021 (up from $11.8M at Q2
2021)
-- Adjusted EBITDA loss improved to $195,000 in Q3 2021 compared to losses
of $668,000 in Q2 2021 and $409,000 in Q3 2020.
"We are pleased to report quarter over quarter improvements in cash, revenues, bookings, backlog, EBITDA and net profit," stated Richard Yoon, Chief Executive Officer. "The company has made great strides this past quarter in driving revenue growth while also increasing gross margin to 66%, a dramatic improvement over the 52% achieved in the same quarter last year. I am extremely encouraged by the current market conditions and the increase in deployments from our customer base. Coming out of the softness in the business caused by the COVID pandemic, we are seeing more customers ramping up their digital transformation plans, which we expect to be a key driver of product demand in the coming quarters".
Financial and Business Review
Gross margin of 66% in Q3 2021 was up 5 percentage points from Q2 2021 and up substantially from 52% in Q3 2020. The changes are primarily due to changes in sales mix.
Total operating expenses for Q3 2021 were $3.9 million, up 12% from $3.5 million in Q3 2020 and flat compared to Q2 2021. The year-over-year increase was due primarily to increased expenses in R&D related to new product development as well as increased sales costs associated with the increase in gross profit.
Adjusted EBITDA loss for Q3 2021 was $0.2 million, an improvement of $0.5 million and $0.2 million compared to Q2 2021 and Q3 2020 respectively.
Net loss improved from $0.7 million in Q2 2021 and $0.4 million in Q3 2020 to $0.1 million in Q3 2021.
Key financial highlights for the three months ended
September 30, 2021 ("Q3 2021") include:
Q3 2021 Q2 2021 Increase % Change Q3 2020 Increase % Change
(decrease) (decrease)
Revenue $5.2 M $4.7 M $0.5 M 9% $5.2 M ($0.04 M) -1%
Gross profit
margin % 66% 61% 5% 52% 14%
Operating
expenses $3.9 M $3.9 M - 0% $3.5 M $0.4 M 12%
Net loss $0.1 M $0.7 M $0.6 M 86% $0.4 M $0.3 M 72%
Adjusted
EBITDA
loss(1) $0.2 M $0.7 M $0.5 M 71% $0.4 M $0.2 M 52%
CEWS benefit $0.2 M $0.4 M ($0.2 M) -50% $0.3 M ($0.1 M) -27%
Bookings(1) $6.3 M $5.3 M $1.0 M 20% $6.5 M ($0.2 M) -3%
September June Increase % Change September Increase % Change
30, 2021 30, (decrease) 30, 2020 (decrease)
2021
Cash $3.8 M $2.7 M $1.1 M 41% $5.1 M ($1.3 M) 25%
Inventory $4.7 M $5.1 M ($0.4 M) -8% $6.5 M ($1.8 M) 28%
Order
Backlog(1) $12.5 M $11.8 M $0.7 M 7% $11.1 M $1.4 M 13%
Key financial highlights for the nine months ended
September 30, 2021 include:
2021-09 2021-06 Increase % Change 2020-09 Increase % Change
YTD YTD (decrease) YTD (decrease)
Revenue $13.7 M $8.5 M $5.2 M 61% $13.8 M ($0.1 M) -1%
Gross profit
margin % 65% 64% 1% 57% 8%
Operating
expenses $11.6 M $7.8 M $3.8 M 49% $11.3 M $0.3 M 3%
Net loss $2.0 M $1.9 M ($0.1 M) -5% $2.3 M $0.3 M 12%
Adjusted
EBITDA
loss(1) $1.9 M $1.7 M ($0.2 M) -12% $2.5 M $0.6 M 22%
CEWS benefit $0.9 M $0.67 M $0.23 M 34% $1.0 M ($0.1 M) -12%
Bookings(1) $14.9 M $8.6 M $6.3 M 73% $17.0 M ($2.1 M) -12%
September June Increase % Change December Increase % Change
30, 2021 30, (decrease) 31, 2020 (decrease)
2021
Cash $3.8 M $2.7 M $1.1 M 41% $5.3 M ($1.5 M) -28%
Inventory $4.7 M $5.1 M ($0.4 M) -8% $5.5 M ($0.8 M) -15%
Order
Backlog(1) $12.5 M $11.8 M $0.7 M 7% $11.8 M $0.7 M 7%
Conference Call and Webcast -- November 11, 2021 at 10:00 a.m. ET
A conference call and webcast to discuss the results has been scheduled for Thursday, November 11, 2021 at 10:00 a.m. Eastern Time. To participate, please dial 1-416-764-8659 approximately 10 minutes before the conference call and provide passcode 37221496. A recording of the call will be available through November 18, 2021 on Redline's website or by dialing 1-416-764-8677 and entering the passcode 221496.
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 certain non-IFRS metrics,
including "Bookings", "Order Backlog","Adjusted EBITDA"
and "Adjusted EBITDA Margin". Further information
including definitions of these measures and a reconciliation
to their closest IFRS measure, if applicable, can
be found in the Company's Management Discussion and
Analysis for the three and nine months ended September
30, 2021 ("Q3 2021 MD&A"), copies of which are available
on SEDAR at www.sedar.com. Further details on the
three and nine months ended September 30, 2021 can
be found in the condensed consolidated statement of
financial position, statement of comprehensive 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 financial
statements of the Company for the three and nine months
ended September 30, 2021 and the Q3 2021 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 Nine months ended September
September 30, 30,
(unaudited) (unaudited)
(in thousands) 2021 2020 2021 2020
Revenue $ 5,195 $ 5,235 $ 13,678 $ 13,833
Net profit
(loss) (97) (350) (1,979) (2,251)
Add back:
Share based
payments 6 51 92 142
Depreciation
and
amortization 256 263 766 800
Canada
Emergency Wage
Subsidy (243) (335) (912) (1,041)
Finance
(income)
expense 12 7 28 16
(Gain) loss on
fair market
value
of financial
instruments (94) (77) 26 (150)
Foreign
exchange
(gain) loss (46) 18 2 (51)
Income tax
expense 10 14 53 58
Total (99) (59) 55 (226)
Adjusted EBITDA
(loss) $ (196) $ (409) $ (1,924) $ (2,477)
Adjusted EBITDA
margin -4% -8% -14% -18%
Forward Looking Statements