TORONTO – August 4, 2016 – Redline Communications (www.rdlcom.com) Group Inc. (TSX: RDL), a leading provider of mission-critical wireless networks, today announced unaudited operating results¹ for the three months ended June 30, 2016 (Q2 2016).

Q2 2016 Financial Highlights

  • $5.0M Total Revenue, down 44%
  • 49% Gross Margin 
  • $2.2M Adjusted EBITDA² loss
  • $2.5M Net Loss
  • $11.0M Cash
  • $6.0M new Order Bookings²
  • $10.9M Order Backlog²

Total revenue for Q2 2016 was $5.0 million, down 44% over the same period in 2015 as the Company continues to see softness in the energy sector and focuses on developing new markets. Overall operating expenses were $5.0 million for Q2 2016, virtually unchanged over the same period last year. The Company has made further cost reductions that will have a positive impact in the third quarter.

Overall gross margin for Q2 2016 was 49%, down 9 percentage points from the 58% reported in the same period in 2015, largely attributed to a large customer order sold at lower than usual margins.

Adjusted EBITDA loss for Q2 2016 was $2.2 million or -43% of revenue, a decrease of $2.8 million over the Adjusted EBITDA of $0.6 million or 7% of revenue reported in the same period in 2015. The Adjusted EBITDA decrease was primarily a result of the decrease in overall sales volume and lower gross margins associated with a large order.

“Redline is committed to a strategy of market diversification and we are executing on that strategy as we continue our investment in the development of our LTE product line which we expect to formally launch in the coming weeks,” said Robert Williams, Redline CEO. “While we know this strategy will take some time, we believe that we will begin to see the results of our efforts in the coming quarters.”

Net loss for Q2 2016 was $2.5 million or ($0.15) per share, a $2.8 million decrease over the net profit of $0.3 million, or $0.02 per share reported in the same period in 2015. As of June 30, 2016 the Company had a cash balance of $11.0 million, a decrease of $2.0 million over the $13.0 million as at March 31, 2016.

Order Bookings for the three months ended June 30, 2016 were $6.0 million, down 32% over the same period in 2015. The Order Backlog at June 30, 2016 was $10.9 million.

The Company had 17,215,469 common shares outstanding as of June 30, 2016.

Conference Call and Webcast – August 5th, 2016 at 10:00 a.m. ET

A conference call and webcast to discuss the Company’s financial results have been scheduled for August 5, 2016 at 10:00 a.m. Eastern Time. To participate in the call, please dial 1-647-427-7450 approximately 10 minutes before the conference call, and provide passcode 48141747
A recorded webcast of the call will be available on Redline’s website through October 31, 2016.

About Redline Communications
Redline Communications (www.rdlcom.com) is the creator of powerful wide-area wireless networks for the most challenging applications and locations. 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.

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Redline Contact(s)

Jane Todd
Chief Financial & Operating Officer
+1-905-479-8344
mailto:jtodd@rdlcom.com
Cory Pala
Investor Relations
+1-416-657-2400
cory.pala@evestor.com

NOTES: 
1 All amounts reported in this press release are in US dollars unless otherwise stated. 
2 To better assess the health and growth of the Redline’s business, the Company 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”, and “Amortized Deferred Revenue”. 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, 2016 (“Q2 2016 MD&A”), copies of which are available on SEDAR at www.sedar.com. Further details on the three month results ended June 30, 2016 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, 2016 and the Q2 2016 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.