investor update - feb 2014
TRANSCRIPT
© Redline Communications Inc. 2014. All rights reserved.
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March 2014
Redline CommunicationsRob Williams, CEO
© Redline Communications Inc. 2014. All rights reserved.
2| 2 |rdlcom.comForward-Looking Statements
From time to time Redline makes written and oral statements that constitute forward-looking information within the meaning of applicable securities laws (“forward- looking statements”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Business, or developments in Redline’s industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include all disclosure regarding possible events, conditions or results of operations that are based on assumptions about future economic conditions and courses of action. Forward- looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. Redline cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made.
These statements may include, but are not limited to, comments about: our objectives and priorities for the future, our strategies, expectations for our financial condition, the outlook for our operations, and external factors that may impact results, including global economies and industry trends. Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and Redline does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. We caution that this list is not exhaustive of all possible factors. Other factors could adversely affect our results. For more information, please see the discussion on the principal risks that could affect our results, which is included in our most recent MD&A and in our latest annual information form, available on SEDAR at www. sedar.com. The assumptions behind our outlook are also discussed in our public filings.
© Redline Communications Inc. 2014. All rights reserved.
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Powerful wide-area wireless networks for mission-critical applications+ Enables Machine-to-Machine (M2M), voice, data, and video communications
over wide areas, in remote locations+ Oilfields, Military Operations, Critical Infrastructure Monitoring+ Redline engineers, plans, manufactures, delivers and supports
Redline
© Redline Communications Inc. 2014. All rights reserved.
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Publicly traded on Toronto Stock Exchange - RDL 115 employees in 15 countries, offices in Canada, USA, Europe and
Middle East Large and diversified customer base with 90% of revenue from outside
Canada to customers in 70 countries $32M in revenues in 2013, approximately 40% from Energy sector
Redline
© Redline Communications Inc. 2014. All rights reserved.
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Oil and Gas requires reliable, secure, high speed networks in some of the toughest places on the planetRedline has a unique differentiated solution for this market
Key Market – Oil and Gas
© Redline Communications Inc. 2014. All rights reserved.
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Oilfield Challenges Large geography lightly populated with
people and machines, harsh environment Very expensive operations Complex communications needs: M2M,
access to internet and corporate systems,video for collaboration and surveillance for safety
Typically no wireless carriers except satellite, fiber is very expensive, other terrestrial wireless systems fail to deliver
© Redline Communications Inc. 2014. All rights reserved.
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Rugged, Reliable and Secure WirelessLowest meantime between failure, widest temperature rangeHighly secure, FIPS 140-2 certified, approved for Military use
© Redline Communications Inc. 2014. All rights reserved.
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Mobile Drilling Rig
Battery Tank RTU - Remote Terminal UnitPLC - Programmable Logic Controller
Emergency Response
Work VehicleCWE - Collaborative Work Environment
Process Domain
Video Monitoring
To HQCentral Control RoomSCADA Systems
SMART OILFIELD Well Pad
Field Office
Well Head AutomationMobile Field ConnectivityOperational Video Surveillance
Micro Seismic ApplicationsAsset Tracking via RF-IDEnergy ManagementCollaborative Working Env.Smart Drilling
SCADA Wi-Fi
The Digital Oil Field is enabled by Redline Wireless
© Redline Communications Inc. 2014. All rights reserved.
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Governments, military, service provider sales done through VAR channel, Energy sales are largely direct with installs done with local partners
Strategic partners such as Cisco, Honeywell, ABB and Systems Integrators help drive business
Revenue comes from:+ product sales + functionality upgrades via software+ professional services+ recurring support revenue
Redline Business Model
© Redline Communications Inc. 2014. All rights reserved.
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MILITARY:
PUBLIC SAFETY AND WELL-BEING:
TELECOM SERVICE PROVIDERS:
ENERGY :
Customers
© Redline Communications Inc. 2014. All rights reserved.
12| 12 |rdlcom.com2013 Highlights – Financial
Warrant Exercise contributes $13.4M
$10M Bought Deal Financing
Restructuring cuts $10M in annual costs
Jan Dec
© Redline Communications Inc. 2014. All rights reserved.
13| 13 |rdlcom.com2013 Highlights – Financial & Operational
Warrant Exercise contributes $13.4M
$10M Bought Deal Financing
Restructuring cuts $10M in annual costs
Jan
Redline wins BSI Quality Award
CEO takes medical leave, Rob Williams Acting CEO
Redline CEO Resigns
Redline achieves perfect ISO audit
Rob Williams appointed permanent CEO
Dec
© Redline Communications Inc. 2014. All rights reserved.
14| 14 |rdlcom.com2013 Highlights – Financial, Operational & Sales
Warrant Exercise contributes $13.4M
$10M Bought Deal Financing
Restructuring cuts $10M in annual costs
Jan
Redline wins BSI Quality Award
CEO takes medical leave, Rob Williams Acting CEO
Redline CEO Resigns
Redline achieves perfect ISO audit
Rob Williams appointed permanent CEO
First Oil and Gas Customer in South America
New SCADA product for Oil & Gas Market
“Super Major” Customer Win
4 new Oil and Gas Sales people hired for a total of 10
Dec
© Redline Communications Inc. 2014. All rights reserved.
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Revenues and Gross Margin
2011 2012 20130.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
52%
54%
56%
58%
60%
62%
BWI Revenue WiMAX Revenue Gross Margin %$M
Core product revenues maintained as older technology is ended
Gross Margins strong and growing
© Redline Communications Inc. 2014. All rights reserved.
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Energy Sector Momentum
Redline has networks in 27 oil fields with 16 Oil & Gas customers in various stages of deployment
Pilot Projects allow new customers to try Redline in their field(s)
Most fields have the potential to deliver $2-$4M in revenue over several years
2010 2011 2012 20130
5
10
15
20
25
30
0
2
4
6
8
10
Energy Bookings $M Energy Backlog $M # Pilots at year End$M
# Pi
lot I
nsta
llatio
ns
© Redline Communications Inc. 2014. All rights reserved.
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2013 Financial Highlights Top Line
+ $32 million revenue+ $37 million new order bookings + $17M order backlog
Margin and Bottom Line+ 61% gross margin+ $5.5 million Adjusted EBITDA loss
Cash+ C$10.6 million financing
completed+ $13.5 million cash (net of debt)
© Redline Communications Inc. 2014. All rights reserved.
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2014 - the year of sales execution+ Capitalize on unique solution with Oil and Gas “Land Grab”
Strengthen partnerships Maximize new pilots and convert existing pilots
+ Work towards Positive EBITDA Protect revenue stream from non Oil and Gas markets Maintain margins Realize the benefits of Q4-2013 restructuring
+ Develop new products and services for Oil and Gas+ Maintain and enhance high quality Brand
Looking Forward