Sirit Reports Third Quarter 2009 Financial Results
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Revenue Growth and Improved Margins Compared to Prior Year
TORONTO, Nov. 10 /PRNewswire-FirstCall/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, reports its financial results for the third quarter ended September 30, 2009. All amounts are stated in Canadian Dollars unless otherwise noted.
Q3 2009 Financial Results
Bolstered by increasing sales in Latin America during the third quarter of 2009, Sirit continues to withstand the current weak economic environment achieving revenue growth for the third consecutive quarter in comparison to prior year quarterly results. For the third quarter of 2009, the Company is reporting revenue of $4.4 million (US$4.0 million) representing a 16% quarter over quarter improvement when compared to the $3.8 million (US$3.7 million) reported for third quarter of 2008.
For the first three quarters of 2009, total revenue has reached $15.2 million compared to $12.9 million in the first three quarters of 2008, an improvement of almost 18%. The largest component of the 2009 revenue growth has been from toll related applications across North and South America in accordance with Sirit's strategy to focus on the AVI market. The Company now has its passive toll technology installed in five countries across Latin America, adding Argentina and Colombia during the third quarter. The Company is focusing on adding to this growing list over the next several months.
Ongoing efforts to manage cash spend at Sirit have yielded strong results during the third quarter of 2009. In US Dollars, the Company achieved a cash neutral position beginning and ending the quarter with a cash balance of US$2.5 million. In Canadian Dollars, the reported cash balance of $2.7 million represents a small decline of $0.2 million for the quarter, due solely to a change in the exchange rates during the quarter. This does not impact daily operations as Sirit completes nearly all its business in US Dollars. As the Company has controlled its cash spend during these tough economic times, we expect continued progress as the economy starts to improve and revenue levels increase.
AVI applications contributed $3.2 million or 73% of the reported $4.4 million revenue for the third quarter of 2009. This reflects a $0.5 million or 19% increase compared to AVI related revenue in Q3 2008 of $2.7 million. During the first three quarters of 2009, AVI applications generated revenue of $11.0 million compared to $9.3 million in the first three quarters of 2008.
RFS applications contributed the remaining $1.2 million or 27% of the total third quarter 2009 revenue. This is comparable to the $1.1 million reported in Q3 2008 when RFS related revenue represented 29% of the total quarterly revenue. Year-to-date 2009 total RFS related revenue has reached $4.2 million compared to $3.6 million in the first nine months of 2008.
"Sirit has managed the business effectively, achieving a US Dollar cash neutral quarter during some of the toughest economic conditions in recent history. Our efforts to match current revenue and expense levels have been successful in generating this positive result for the Company. We are looking towards Q4 2009 to be the strongest of the year as we continue to strengthen our overall financial condition," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit.
Sirit reports an improved gross profit for the third quarter of 2009 of 39.2% up from 33.1% reported in the third quarter of 2008. For the first three quarters of 2009, gross profit is reported at 35.7% compared to 30.0% in the same nine month period in 2008. The improvement in margin experienced in 2009, particularly in the third quarter, has resulted from efforts to reduce manufacturing costs of key products as well as higher margin sales.
Cash operating expenses, consisting of selling, general and administrative as well as development costs are $1.9 million down from $2.5 million in Q3 2008 and $2.1 million in Q2 2009. The lower levels of cash operating expenses during 2009 result from temporary salary cutbacks by staff at all levels as well as a company-wide commitment to controlling discretionary spending. The remaining expenses including stock compensation, amortization and foreign exchange, all non-cash expenses, were $0.8 million during the third quarter of 2009 compared to $0.6 million in the third quarter of 2008. The Company will closely manage operating expense levels with the intention of achieving recurring operating profits.
For the third quarter of 2009, net loss is $1.0 million compared to $2.0 million reported in Q3 2008. For the first three quarters of 2009 net loss is reported at $2.9 million, a significant improvement from the $5.5 million reported in the first nine months of 2008.
Q3 2009 Corporate Highlights
The following highlights some of Sirit's successes during the third
quarter of 2009:
- Sirit announced the first installation of its electronic toll
collection ("ETC") system in Cartagena, Colombia with its partner
Simplexity, one the largest system integrators of Toll Solutions in
Latin America. The system utilizes Sirit's IDentity 5100 ("ID5100")
readers and ISO 18000 6C passive tags. The ETC system will cover a 17
mile, 4 lane urban highway with a total of 5 toll plazas connecting
industrial areas in the south with downtown Cartagena and the Port of
Manga.
- Sirit received approval from Autopistas Urbanas S.A. ("AUSA") to
install Sirit's ETC system in the city of Buenos Aires, Argentina.
The system will utilize 90 ID5100 readers which will support the AUSA
legacy tags.
- Sirit's long-standing customer, the Bay Area Toll Authority ("BATA"),
placed a renewal toll transponder order valued at US$6.6 million over
the next fifteen months. The order includes two options to purchase
up to US$1.7 million in additional toll transponders. Under this
order, Sirit will deliver its traditional sealed Title-21 based toll
transponders including packaged tags available at retail locations.
BATA began taking transponders under this order in late September
2009.
- Sirit introduced the latest addition to its 'IDentity' series of high
performance, fixed position, UHF RFID readers, the IDentity 5200
("ID5200"). The ID5200 is a ruggedized, multi-protocol RFID reader,
providing increased flexibility in configuration options with similar
performance to Sirit's leading ID5100 reader.
- Sirit was honoured with the 2009 North American Award for Competitive
Strategy Leadership by Frost & Sullivan. Sirit's superior
performance, innovation, technological advancement and sound business
strategies have enabled the Company to evolve into the perfect choice
for automotive vehicle identification application solutions,
including vehicle asset tracking, congestion pricing and electronic
vehicle registration.
"We have been executing on our strategy of directing our sales and development efforts on AVI and AVI related market opportunities globally. We have demonstrated success with this strategy through the deployment in five countries across South America of Sirit's passive RFID technology. During the third quarter alone, we announced Argentina and Colombia utilizing Sirit's ID5100 and passive tag technology," noted Norbert Dawalibi, President and CEO, Sirit. "With the economy showing signs of recovery, Sirit is poised for increasing growth from our traditional customers recovering from the recession as well as much larger opportunities, such as electronic vehicle registration, starting to be deployed around the world" added Mr. Dawalibi.
About Sirit Inc.
Sirit Inc. (TSX: SI) is a leading provider of Radio Frequency Identification (RFID) technology worldwide. Harnessing the power of Sirit's enabling-RFID technology, customers are able to more rapidly bring high quality RFID solutions to the market with reduced initial engineering costs. Sirit's products are built on more than 16 years of RF domain expertise addressing multiple frequencies (LF/HF/UHF), multiple protocols and are compliant with global standards. Sirit's broad portfolio of products and capabilities can be customized to address new and traditional RFID market applications including Supply Chain & Logistics, Cashless Payment (including Electronic Tolling), Access Control, Automatic Vehicle Identification, Near Field Communications, Inventory Control & Management, Asset Tracking and Product Authentication. For more information, visit www.sirit.com.
Cautionary Note Regarding Forward-Looking Statements
Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Canadian provincial securities legislation. These forward-looking statements relate to, among other things, Sirit's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "suspect", "outlook", "expect", "intend", "estimate", "anticipate", "believe", "plan", "forecast", "objective" and "continue" (or the negative thereof) and words and expressions of similar import, and may include statements concerning possible or assumed future results, financial outlook and/or future-oriented financial information. Although Sirit believes that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Sirit to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting Sirit's business. Important factors that could cause actual results to differ materially from expectations include but are not limited to: Sirit's ability to achieve commercialization and/or commercial acceptance of its RFID technology; the evolution of, and adoption rate in, the RFID market; Sirit's inability to expand sales both within and outside its traditional markets; changes in Sirit's strategic relationships; Sirit's dependence on resellers, distributors and significant customers; the utility of research and development expenditures undertaken by Sirit; product defects; increased levels of competition; changes in laws and regulations; foreign exchange fluctuations; and Sirit's overall liquidity and capital resources. These and other important risks are discussed in further detail in the section entitled "Risks Factors" in Sirit's Annual Information Form dated March 13, 2009 and in Sirit's management's discussion and analysis found in its 2008 annual report as filed with the securities regulatory authorities in Canada via SEDAR. Although Sirit has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. Unless otherwise required by law, Sirit does not undertake any obligation to update any forward-looking statements contained in this news release as a result of new information, further events or otherwise. This cautionary statement expressly qualifies the forward-looking information in this news release.
"Sirit", the Sirit Design and "vision beyond sight" are all trademarks of Sirit Inc. All other names of actual companies and products mentioned herein may be the trademarks of their respective owners.
Sirit Inc.
Interim Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)
Unaudited
As at As at
September 30 December 31
2009 2008
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 2,702 $ 3,325
Accounts receivable 2,744 4,303
Inventory 2,869 3,470
Prepaids and deposits 337 287
------------ ------------
8,652 11,385
Property and equipment 1,959 2,599
Intangible assets 6,223 7,514
Goodwill 3,905 3,905
------------ ------------
$ 20,739 $ 25,403
------------ ------------
------------ ------------
Liabilities
Current Liabilities
Bank indebtedness $ 1,360 $ 1,321
Accounts payable and accrued liabilities 3,247 4,716
Deferred revenue 226 339
Warranty obligations 113 108
Capital lease obligations 404 454
Related party debt 965 -
------------ ------------
6,315 6,938
Long-term deferred revenue 500 442
Long-term warranty obligations 158 150
Long-term capital lease obligations 479 934
Related party debt - 1,100
------------ ------------
7,452 9,564
------------ ------------
Shareholders' Equity
Share capital 51,252 51,252
Contributed surplus 3,436 3,109
Deficit (41,401) (38,522)
------------ ------------
13,287 15,839
------------ ------------
$ 20,739 $ 25,403
------------ ------------
------------ ------------
Sirit Inc.
Interim Consolidated Statements of Operations, Comprehensive Loss
and Deficit
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenue $ 4,447 $ 3,816 $ 15,211 $ 12,873
Cost of sales 2,703 2,554 9,782 8,631
----------- ----------- ----------- -----------
Gross profit 1,744 1,262 5,429 4,242
----------- ----------- ----------- -----------
Expenses
Selling, general and
administrative 1,517 1,744 4,937 5,818
Stock-based compensation 106 90 327 319
Development 411 797 1,444 2,474
Amortization 524 551 1,601 1,264
Foreign exchange
loss/(gain) 128 4 (184) (162)
----------- ----------- ----------- -----------
2,686 3,186 8,125 9,713
----------- ----------- ----------- -----------
Operating loss (942) (1,924) (2,696) (5,471)
Interest (expense)/income,
net (62) (36) (183) 19
----------- ----------- ----------- -----------
Net loss and comprehensive
loss for the period $ (1,004) $ (1,960) $ (2,879) $ (5,452)
Deficit, beginning of
period (40,397) (38,685) (38,522) (35,193)
----------- ----------- ----------- -----------
Deficit, end of period $ (41,401) $ (40,645) $ (41,401) $ (40,645)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
----------- ----------- ----------- -----------
Cash provided by/(used in):
Operating Activities
Net loss for the period $ (1,004) $ (1,960) $ (2,879) $ (5,452)
Items not involving cash
and cash equivalents 767 810 2,337 1,839
Foreign exchange
(gain)/loss 128 4 (184) (162)
----------- ----------- ----------- -----------
(109) (1,146) (726) (3,775)
Net change in non-cash
working capital items 339 58 453 (2,850)
----------- ----------- ----------- -----------
230 (1,088) (273) (6,625)
----------- ----------- ----------- -----------
Investing Activities
Additions to property
and equipment (26) (30) (64) (192)
Acquisition of RSI ID
Technologies, Inc., net - - - (205)
----------- ----------- ----------- -----------
(26) (30) (64) (397)
----------- ----------- ----------- -----------
Financing Activities
(Decrease)/increase in
bank indebtedness (107) (1,077) 39 364
Issuance of common shares
upon exercise of stock
options - - - 15
Issuance of shares in
private placement, net
of costs - 779 - 779
(Decrease)/increase in
related party debt (76) 431 (135) 504
Decrease in capital
lease obligations (174) (64) (505) (53)
----------- ----------- ----------- -----------
(357) 69 (601) 1,609
----------- ----------- ----------- -----------
Exchange rate impact on
cash and cash equivalents (90) (288) 315 (44)
----------- ----------- ----------- -----------
Decrease in cash and cash
equivalents (243) (1,337) (623) (5,457)
Cash and cash equivalents,
beginning of period 2,945 4,735 3,325 8,855
----------- ----------- ----------- -----------
Cash and cash equivalents,
end of period $ 2,702 $ 3,398 $ 2,702 $ 3,398
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Cash and cash equivalents
consist of:
Cash $ 2,038 $ 491 $ 2,038 $ 491
Short-term commercial
paper 664 2,907 664 2,907
----------- ----------- ----------- -----------
$ 2,702 $ 3,398 $ 2,702 $ 3,398
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SOURCE Sirit Inc.
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