redline corporate presentation
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Redline Corporate
Presentation
Spring 2021
Forward Looking Statements – TBC
This disclosure contains “forward-looking information” within the meaning of applicable Canadian securities legislation, including the “safe harbour” provisions of the Securities Act
(Ontario) of the provincial securities laws in Canada and is subject to certain risks and uncertainties which are all outlined in detail in Redline’s regulatory filings, which can be found
on sedar.com.
Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information
with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. It also includes information cited from third party sources. This forward-looking information
is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or
“continue”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and
phrases. Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, that could
cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Although the forward-looking information contained in this
document is based upon what we believe are reasonable assumptions, investors are cautioned against placing undue reliance on this information since actual results may vary
materially from the forward-looking information. Certain assumptions made in preparing the forward-looking information and our objectives include: our ability to generate
sufficient revenue while controlling our costs and expenses; our ability to manage our growth effectively; the absence of material adverse changes in our industry or the global
economy; trends in our industry and markets; our ability to manage risks related to expansion; our ability to maintain good business relationships; our ability to develop products and
technologies that keep pace with the continuing changes in technology, evolving industry standards, new product introductions by competitors and changing client preferences and
requirements; our ability to protect our intellectual property rights; the absence of intellectual property infringement or invalidity claims against us; our ability to manage and
integrate acquisitions; our ability to retain key personnel; our ability to raise sufficient debt or equity financing to support our business growth; and the discretion of the Company
with respect to the use of the proceeds of the offering. Consequently, all forward-looking information contained in this document is qualified by the foregoing cautionary
statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected
consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information
contained in this document is provided as of the date of this presentation, and we do not undertake to update or amend such forward-looking information whether as a result of new
information, future events or otherwise, except as may be required by applicable law. There are a number of non-IFRS measures used in this document, including EBITDA (earnings
before interest, taxes, depreciation and amortization). For the purposes of this document, EBITDA is calculated as revenue less cost of sales and operating expenses. The Company
believes that these non-IFRS measures are appropriate measures of the operating performance of the Company or potential acquisitions. The Company’s calculation of these
measures may differ from the methodology used by other issuers and, accordingly, may not be comparable to such other issuers. The Company believes that these measures are
appropriate measures of the Company’s operating performance because they facilitate an understanding of operating performance without giving effect to certain non-cash and
overhead expenses. None of these measures are equivalent to net income or cash flow from operating activities determined in accordance with IFRS. The industry data, technical
information or other information prepared by third parties presented in this presentation, except where otherwise noted, has been compiled from industry sources and participants
which, although not independently verified by the Company, are considered by the Company to be reliable sources of information. References in this presentation to reports or
articles should not be construed as depicting the complete findings of the entire referenced report or article and such report or article is expressly not incorporated by reference
into this presentation. The Company makes no representation or warranty as to the accuracy or completeness of any data or information prepared by third parties included in this
presentation and the Company assumes no liability whatsoever relating to or resulting from such data or information or the use thereof, errors therein or omissions therefrom. All
figures are presented in US dollars unless otherwise indicated.
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Redline Highlights 2
Preferred Supplier to industrial market with a focus on Energy, Mining &
Utilities with 66 Patents
20+ year global reputation for excellent quality, reliability, & performance
$11.5 million backlog. Zero churn.
Market Cap is 60% of cash + backlog; trades at 0.3x TTM revenue
Over 170 industrial customers with deployments in every region globally
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6Industry-leading reliability leads to Lower Total Cost of Ownership Relative to
Competition6
A leading provider of mission-critical data infrastructure for remote & harsh environments –
including some of toughest places on Earth
How Redline Wins 3
Industrial Clients need Ford 150s not Ferraris
Redline Competitors (Nokia, Ericsson, Huawei)
Customers choose Redline because they demand reliability, durability, ruggedness and ease-of-support for mission critical
applications compared to high speed and high capacity offered by carrier-grade competitors
Low maintenance and longer product life
Can perform in extreme environments
Higher reliability and less downtime
Can easily be fixed or replaced by IT staff
Frequent and high maintenance costs -
Designed for controlled environments-
Complexity requires specialized support-
Expensive to support and requires specialized engineering -
Deployed for decades from the Arctic Tundra to the deserts of Oman
Global Footprint: Over 100 Countries & Best-of-Breed Customers 4
Redline has developed a loyal and diverse customer base with long-standing relationships often greater than 10 years. These
relationships provide opportunities for network expansion and addition of 5G/LTE products
North America
Latin America
Europe
Africa
Australia / Oceania
Middle East & Asia
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1 Royal Air Force of Oman.2 US Marine Corps.
Redline Revenue Streams & Pipeline Breakdown 5
43%
2%
55%
0%
Pipeline by Product Category
Mobility
Services
Fixed-Wireless
Core Software
Product Category
Market Segments
13% 3%
6%
25%
27%
6%
12%
8%
Pipeline by End-Market
UtilityTransportationTelecom Service ProviderOil & GasMilitaryMiningGovernmentOther
75%
11%
14%
2020 Revenue Streams
Hardware andSoftware Products
ProfessionalServices and 3rdParty Equipment
Maintenance andSupport
60%
3%
1%
7%
5%
18%
7%
2020 Revenue by End-Market
Oil & Gas
Mining
Utilities
Municipal
Military
Service Provider
Other
Fixed Data to Mobile Data – Massive $15B Opportunity* 6
$4.5B in devices and infrastructure for mining, oil & gas, utilities segments alone [Mobile Experts]
40% CAGR in Industrial Private Networks [Harbor]
Industrial Video Surveillance Market Growing 12.9% CAGR [valuates.com]
Growing Need for security provided by Private Networks and encryption
Opportunities from CBRS Spectrum Opening in USA for NEW Industrial Customers
– over 25% of current pipeline
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Emerging Mission-Critical Industrial Data Requirements
in Remote Areas Require LTE/5G Mobility
*2020 to 2026
US Infrastructure Spend + COVID-19 Snapback increase size of TAM6
Growing Demand For Industrial LTE / 5G Private Networks
Sources: Harbor Research, Deloitte and Global Market Estimates Research & Consultants. 1 Private LTE network infrastructure generated revenue by end market.
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Real-Time
SurveillanceAutonomous Vehicles
Authentication &
Access Control
Worker Safety
Monitoring
Remote Diagnostics
and Predictive
Maintenance
Asset Management &
Uptime Assurance
Reliability Scalability Mobility
Low LatencySecurity
Key Requirements
Applications
Low Total Cost of Ownership
43% of total pipeline is LTE/5G Mobility
50% of LTE/5G Mobility opportunities are client up-sells/cross-sells
In Q4 - booked nearly $1m of Mobility deals – most ever in a quarter
Our Product Roadmap to Support 5G Upgrade Cycle 8
Develop a new generation of Virtual FiberTM products to
support existing & new network expansion
Deliver reliability & performance features for LTE / 5G market
that are comparable to our fixed wireless reputation
Enhancing features and capabilities of active products and
release new products for emerging industrial 5G networks
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Evolve towards converging Virtual FiberTM and iLTETM product
lines for flexibility and cost advantage
Product Roadmap & R&D driven by customer demand
Product Development Focus
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Our Strategic Focus 9
• Product Development: Maintain quality, reliability & performance attributes in next gen
products for existing and new customer network expansion
• Sales & Marketing: Extend industrial market reach. Increase recurring revenue.
• Product Development: Finish LTE/5G R&D upgrade to fulfill demand in pipeline
• Upsell/Cross-sell application layer data mobility for remote fixed wireless deployments.
• Product Development: Connectivity to application layer including IoT and Surveillance
• Accelerate revenue growth by adding sales capabilities and local market partners to support
growing end-market segments.
• Package solutions into Virtual FiberTM & iLTETM solution bundles
• Add warranty & support packages to all future hardware deployments
• Grow higher margin support revenues for LTE/5G network customer support
Expand Fixed Wireless Install Base
Add Mobility to Current Install Base
Expand Market Reach
Increase Recurring Revenue
SIF Accelerates Our LTE/5G Rollout & Future-Proofs Products 10
Scale R&D & Product Development efficiently with low-cost access to capital
• $14M CDN R&D cost sharing repayable on incremental revenues from 2028 – 2043
• Low-cost source of product development financing for 40% of expenditures
• Accelerates Redline’s product development roadmap to provide LTE/5G mobility solutions.
• Accelerates Internet of Things deployments to Mining, Oil & Gas and utilities markets
Mobility Solutions represent 43% of our current pipeline
FINANCIAL SUMMARY 11
Recurring Revenue represents 17% of total revenue
and 25% of Gross Margin contribution
Q1 2021 recurring revenue grew by 11% y/y
2021 pipeline and $11.5m backlog imply that there is a
post-pandemic snap-back as customers move towards
an upgrade cycle.
Price (May 17, 2021)
Shares Outstanding (M)
Market Capitalization (M)
Enterprise Value (M)
Net Cash (M) (Mar 31, 2021)
$0.65
17.2
$11.2
$6.9
$4.3
Institutions
23%
Key Metrics
Stock Chart
CAPITAL MARKETS SUMMARY
COMPARABLE VALUATIONS 13
Vecima Networks Inc. (TSX:VCM)
Airgain, Inc. (NasdaqCM:AIRG)
Baylin Technologies Inc. (TSX:BYL)
Digi International Inc. (NasdaqGS:DGII)
Redline Communications Group Inc. (TSX:RDL)
TEV/Total Revenues LTM - Latest
0.3x
2.8x
1.9x
0.9x
3.3x
Implied EV/Rev Median EV (TSX:RDL) $ 51M
Implied Market Cap $ 57M
Implied Median Share Price $ 3.31
Current TSX-RDL Share Price $ 0.65
WHY INVEST NOW? 14
Trading at 0.3x TTM Revenue & 1.5x cash with $23M of annual sales &
$11.5m of backlog
RDL trades at an 87% discount to the peer median with similar attributes
Major Upsell Opportunity: 50% of mobility pipeline is from existing
customers
Major New Market Opportunity: CBRS opens up government & utilities in
North America –which is now about 25% of our pipeline
SIF reduces nextgen LTE/5G Product Development risk to fulfill nearly
half of pipeline
Thank You for Your Time!
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