Redline Communications Reports 2013 Second Quarter Financial Results

TORONTO, Aug. 14, 2013 /CNW/ - Redline Communications (www.rdlcom.com Group Inc. TSX: RDL), a leading provider of secure broadband wireless solutions for machine-to-machine (M2M) communications, today announced operating results¹ for the three months ended June 30, 2013 (Q2-2013).

Financial summary for Q2-2013:

• Order Bookings² of $11.2 million driven by sales to energy sector
  
  
• Overall revenue was $8.9 million, of which $8.1 million was from BWI business
  
  
• Overall gross margin of 64%
  
  
• Adjusted EBITDA² loss of $0.8 million
  
  
• Completed a Cdn. $10.6 million financing subsequent to quarter end

Financial Review

Bookings² related primarily to BWI business were $10.5 million for Q2-2013, up 2.2% over the same period in 2012. While orders to the energy sector were estimated by Management to be approximately 40% of total Bookings, the Company also recognized strong Bookings from Military and Service Provider sectors. Overall Bookings for Q2-2013 were $11.2 million, down 8% over the same period in 2012 due to expected reductions in year over year WiMAX™ Bookings.

Ongoing success at closing larger deals has increased order Backlog² at June 30, 2013 to a record $22.2 million, an increase of $14.4 million over the June 30, 2012 backlog of $7.8 million. The order Backlog provides visibility into future revenue and the Company estimates that approximately $6 million of the current order Backlog will be shipped before the end of 2013.

"We are pleased with the good order momentum we saw in Q2-2013," said Interim CEO Rob Williams. "Orders in Q2-2013 came from all core vertical markets and from both new and existing customers - a good reflection of our growth strategy. It is exciting and encouraging to see high levels of new customer and market activity as well as network expansion orders."

Revenue from BWI product sales was $8.1 million, up 4% over the same period in 2012. Overall revenue was $8.9 million, down $8.5 million from the same period in 2012, the difference entirely attributed to RedMAX™ Amortized Deferred revenue³ which ended June 30, 2012.

Gross margin on BWI product sales was strong at 65%, an increase of 2 percentage points over the same period last year. Overall gross margin was 64%, an increase of 7 percentage points over 57% reported in the same period in 2012.

Overall operating expenses in Q2 2013 were $6.9 million, an increase of 9% over the $6.4 million reported for the same period last year.

Adjusted EBITDA² loss for Q2-2013 was $0.8 million, a decrease of $4.7 million over the Adjusted EBITDA of $3.9 million for the corresponding period in 2012. The change is a direct result of the decrease in overall revenue from the completion of the amortization period of all RedMAX Amortized Deferred Revenue³ at the end of June 30, 2012.

Net Loss for Q2-2013 was $0.5 million, or ($0.04) per share. In Q2-2012 the Company reported net income of $7.8 million, or $0.83 per share although year over year comparisons are difficult as a result of the impact of non-cash items such as Amortized Deferred Revenue from prior RedMAX sales and the significant loss on the fair market value of the Debenture included in 2012 but not to the same extent in 2013.

Subsequent to the end of the quarter, the Company concluded a Cdn. $10.6 million bought deal private placement financing, bringing current cash position to over $20 million with net cash of $16 million. The financing strengthens the Company's balance sheet and will support the Company's growth plans.

In keeping with the Company's stated growth strategy, during Q2-2013 Redline executed two separate non-binding letters of intent to acquire two companies. Since that time, the Company has been engaged in the due diligence process but to date neither deal has been finalized.

Significant company milestones for Q2- 2013:

• Key Customer Wins:
• Redline to provide connectivity to 500 power substations owned by an energy provider in the MENA (Middle East/North Africa) Region.
• Redline to create a wireless infrastructure for a major oil producer in South America, the Company's first wireless digital oil field project in that region.
• Redline awarded a multi-million dollar development contract with a military organization to expand an existing product line
• Newly launched products already well received by customers:
• Redline unveiled its Universal Wireless Transport™ platform (UWT™), the industry's first and only wireless broadband network solution to operate on any frequency between 100 MHz and 6 GHz.
• Redline announced its new White Space System which delivers the industry's highest capacity and longest range in 470-698 MHz band.
• Already strong executive management team buoyed by the addition of new COO, Mario Belanger, previously senior vice president of sales for Bell Canada's Business Markets.

Conference Call and Webcast - August 15th, 2013 at 10:00 a.m. ET

A conference call and webcast to discuss the results will be held August 15, 2013 at 10:00 a.m. ET. To participate, please dial 1-647-427-7450 or 1-888-231-8191 approximately 10 minutes before the conference call, and provide passcode 29508230. A recording of the call will be available through August 31, 2013. To listen to the rebroadcast please dial 1-416-849-0833 or 1-855-859-2056 and enter passcode 29508230. 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) the innovator of Virtual Fiber™, a specialized wireless broadband system used by companies and governments worldwide to cost-effectively deploy distributed services and applications. Redline Virtual Fiber™ solutions are used to facilitate and enhance public safety networks, deploy and extend secure networks, connect digital oil fields and smart grids, and bring dedicated Internet access wherever and whenever it's needed. Redline has been delivering powerful, versatile and reliable wireless systems to governments, the military, oil and gas, and the telecom industry for over a decade through its global network of certified partners. For more information visit www.rdlcom.com.

NOTES:

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 affects 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.