TORONTO, Aug. 7, 2019 /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 second quarter ended June 30, 2019 ("Q2 2019").

Key financial highlights for Q2 2019 versus Q2 2018 include:

• Revenues of $5.7 million, down 22%
• Gross margins of 59%, up 4 percentage points
• Operating expenses of $4.3 million, up 18%
• Net loss of $0.9 million, as compared to net profit of $0.3 million
• Adjusted EBITDA¹ loss of $0.6 million (including severance costs of $0.3 million), as compared to Adjusted EBITDA of $0.6 million
• Bookings¹ of $6.1 million, down 14%
• Order Backlog¹ of $9.6 million, up 39%

Key financial highlights for the six months ended June 30, 2019 versus the same period in 2018 include: 

• Revenues of $11.6 million, down 11%
• Gross margins of 55%, up 2 percentage points
• Operating expenses of $8.4 million, up 19%
• Net loss of $2.2 million, as compared to net loss of $0.1 million
• Adjusted EBITDA loss of $1.4 million (including severance costs of $0.6 million), as compared to Adjusted EBITDA of $0.4 million
• Bookings of $11.9 million, down 18%

"I am excited by Redline's opportunities in mission critical applications where we excel. I am focused on improving cash flow and achieving positive EBITDA each quarter. Our immediate priorities are to generate more sales in attractive verticals, to streamline production and deliveries, and to manage costs," stated Stephen Sorocky, Redline's CEO.

Financial Review

Revenues for Q2 2019 were $5.7 million, a decrease of $1.6 million or 22% over the same period in 2018 and largely unchanged from Q1 2019. In both time frames, lower comparable sales to the oil and gas sector were partially offset by increased sales to telecom service providers.

Order Bookings for Q2 2019 were $6.1 million, down 14% over Q2 2018 with the decrease primarily due to a large mining order received in 2018 not repeated in Q2 2019.  Order backlog was $9.6 million at end of Q2 2019.

Overall gross margin for Q2 2019 was 59%, a 4 percentage point improvement over the 55% recorded in the same period in 2018. The increase reflects the product mix which consisted of higher margin sector controller hardware and software keys.

On a consecutive quarterly basis, gross margins for the second quarter of 2019 were 59%, a 9 percentage point improvement over the first quarter of 2019, resulting in a $0.44 million increase in gross profit. This more than offset slightly higher operating expenses to produce a $0.34 million improvement in the net loss quarter-over-quarter.

Overall operating expenses for the second quarter of 2019 were $4.3 million, up 18% over the same period in 2018 and up 7% over Q1 2019.  The increase in operating expenses in the second quarter 2019 over the same period in 2018 was the result of increased headcount, commissions and severance costs.

Adjusted EBITDA loss for Q2 2019 was $0.6 million, a decline of $1.2 million over the Adjusted EBITDA of $0.6 million for Q2 2018 and an improvement of $0.15 million over Q1 2019 as growth in gross profit more than offset higher operating expenses.

Net loss for the second quarter of 2019 was $0.9 million, or ($0.05) per share, as compared to net profit of $0.3 million, or $0.02 per share, in the second quarter of 2018.

At June 30^th, 2019, Redline held cash of $7.8 million, down $1.5 million from March 31, 2019.

Conference Call and Webcast – August 8^th, 2019 at 10:00 a.m. ET

A conference call and webcast to discuss the results has been scheduled for Thursday, August 8^th, 2019 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 6167829. A recording of the call will be available through August 15, 2019 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.

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.

SOURCE Redline Communications Group Inc.

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