Azure Dynamics Reports Record 2010 4th Quarter and Full Year Revenues
By Azure Dynamics Corporation, PRNETuesday, March 22, 2011
Fourth quarter 2010 revenues up three-fold to $13.4 million from $4.4 million and gross margin improves $3.2M year over year
OAK PARK, Michigan, March 23, 2011 - Azure Dynamics Corporation (TSX: AZD)(OTC: AZDDF), a world leader in the
development and production of hybrid electric and electric components and
powertrain systems for commercial vehicles, today announced its financial
results for the three and twelve months ended December 31, 2010. The Company
also provided an update on corporate and product development activities
during the year.
Revenue for the fourth quarter of 2010 increased 205% to $13.4 million
compared to $4.4 million in the fourth quarter of 2009. For the year ended
December 31, 2010 revenue increased 133% to $21.9 million compared to $9.4
million in 2009. Net loss for the fourth quarter of 2010 totaled $10.8
million, or $(0.02) per share compared to a loss of $8.0 million or $(0.02)
per share in the fourth quarter of 2009. For the year ended December 31,
2010, the Company's net loss was $28.1 million, or $(0.05) per share,
compared to a net loss of $27.8 million, or $(0.07) per share in 2009.
"We are very pleased with our record fourth quarter and full year
revenues, which met our expectations despite a sluggish, but improving
commercial truck market," said Scott Harrison, CEO of Azure Dynamics. "During
the fourth quarter, we shipped a record 381 vehicles, including 30 Transit
Connect Electric vehicles, which were more than our entire 2009 vehicles
shipments of 335 units and demonstrates the strength of our business model.
We are winning with new and repeat customers and showing it with significant
revenue growth - growth that we expect to be even more dramatic in 2011."
Before contributions, the Company's engineering, research and development
("R&D") expenses in the fourth quarter totaled $7.5 million (including $4.0
million in product development costs), compared to $5.2 million for the same
period in 2009 (including $2.9 million in product development costs). For the
year ended December 31, 2010, the Company's engineering and R&D expenses
totaled $24.9 million (including $13.6 million in product development costs)
compared to $15.7 million in 2009 (including $6.1 million in product
development costs).
"Our most notable accomplishment in 2010 was the development and initial
deliveries of the innovative Transit Connect Electric," Harrison said. "Just
13 months after the program was officially announced, 30 Transit Connect
Electric vans were shipped to LEAD customers and to European constituencies.
This incredibly short product development time highlights our technological
know-how and product flexibility and bodes well for our future in a dynamic
industry."
As of December 31, 2010, the Company's cash and cash equivalents totaled
$11.8 million and working capital totaled $9.6 million. Additionally, in
October, 2010, the Company obtained a $4 million credit facility to provide
an additional source to help fund working capital requirements.
Subsequent to year-end, on February 8, 2011, the Company closed on the
sale of 61.0 million common shares which resulted in $20.1 million of gross
proceeds to fund its ongoing product development and commercialization
efforts as well as general corporate purposes.
"With our stronger balance sheet and the added financial flexibility, we
believe Azure is well positioned to capitalize on the increasing demand for
our products and on the opportunities to integrate our technology onto
additional market leading commercial vehicles," Harrison concluded.
"Additionally, with the threat of continued higher fuel prices, the growing
concern for the environment and continued government incentive programs,
Azure's outlook is promising."
2010 and Year-To-Date Highlights
- On February 8, 2011, Azure announced agreements with 76 additional
dealerships to represent Azure's innovative products including the Transit
Connect Electric and the Balance(TM) Hybrid Electric in key markets across
North America bringing the total number of dealerships in the Azure program
to 103.
- On January 18, 2011, Azure announced that it has received an order for
50 Balance(TM) Hybrid Electric units from a world leading logistics
organization. The customer also previously submitted Azure's single largest
Transit Connect Electric order of 30 units.
- On January 17, 2011, Azure announced that Purolator had placed an order
for 600 units - the single largest order for Azure technology. 200 units will
be delivered in 2011 with an additional 200 units scheduled in both 2012 and
2013, subject to annual authorizations by Purolator. The initial 200 units
will be built and delivered primarily in the third and fourth quarters of
2011.
- On December 16, Azure announced closing of the LEAD customer program
after achieving its objective of identifying ten premiere vehicle fleets to
place early units in 2010 with volume orders for fulfillment in 2011. Those
ten LEAD customers accounted for nearly 150 Transit Connect Electric
vehicles.
- On December 7, Azure, in collaboration with Ford Motor Company and AM
General, announced the early production and first deliveries of the Transit
Connect Electric vans just 13 months after the collaboration to develop the
zero-emission vehicle was first announced.
- On October 22, Azure announced the appointment of John Formisano to its
Board of Directors. Formisano recently retired from Federal Express
Corporation where he served as Vice President - Global Vehicles. Formisano is
also Chairman of the Board of CALSTART, the leading catalyst organization for
the global clean transportation technology industry.
- On October 5th, Azure Dynamics secured a $4 million credit facility
from Silicon Valley Bank to support the company's growth strategy and provide
financial flexibility.
- On September 22, a wholly-owned Canadian subsidiary of Johnson Controls
Inc. purchased approximately 21,080,000 common shares and Azure received
gross proceeds of $6,324,000. Johnson Controls is also a Transit Connect
Electric LEAD customer.
- On May 26, 2010, Cintas Corporation purchased 100 Balance(TM) Hybrid
Electric Walk in Vans for deployment at its California facilities and
therefore qualify for the state's Hybrid Voucher Incentive Program funding
with incentives of $25,000 per unit.
- On May 18, AM General was selected to upfit the base Ford Transit
Connect with the Azure Force Drive(TM) electric drive train components. The
final assembly will be completed at an AM General Engineering and Product
Development Center in Livonia, Michigan.
- On May 3, Azure and Ford Motor Company announced plans to expand the
Transit Connect Electric program to the European market capitalizing on the
Transit Connect's successful history in Europe.
- On February 10, the Transit Connect Electric made its debut at the
Chicago Auto Show. Azure collaborated with Ford Motor Company to introduce
the Transit Connect Electric, a pure electric powered version of the 2010
North American Truck of the Year.
- During the fourth quarter of 2010, Azure shipped 381 units, a 114%
increase over the 178 units shipped in the same period a year ago. 2010
shipments total 832 units, a 148% increase over the 335 units sold during
2009. 2010 marquis customers include Purolator, Cintas Corporation, Schwans,
Illinois Department of Transportation, King County, WA Federal Transit
Administration, TruGreen and the North Central Texas Council of Governments.
2011 FINANCIAL OUTLOOK
The global light and medium duty commercial truck markets are expected to
continue their gradual recovery during 2011. The Transit Connect Electric has
been successfully introduced in North America and in Europe with the
manufacturing launch scheduled for April and June, respectively. Based on the
Company's current backlog and future order expectations, 2011 revenues are
expected to be in a range of $52 million to $68 million. The Company expects
2011 results to be significantly stronger in the second half of the year due
to the launch of Transit Connect Electric, as well as the first and second
quarters being typically the slowest due to the seasonality of order flow.
Unit volume for 2011 is expected to be in the range of 1,300 to 1,500 units,
consisting of approximately 700 to 800 Balance(TM) Hybrid Electric
drive-trains and LEEP systems and 600 to 700 Force Drive(TM) Electric
drive-trains for the Transit Connect Electric.
The Company's complete fiscal 2010 audited year-end financial statements
and MD&A are available at www.sedar.com or on the Company's website at
www.azuredynamics.com.
Azure will host a conference call to discuss 2010 earnings today,
Wednesday, March 23 at 5:00 p.m. eastern daylight time. Interested listeners
can access the call toll free at 1-888-227-6699 and should call in at least
fifteen minutes before the scheduled start time. Interested participants from
outside North America can participate in the call by dialing +1-303-223-4369.
About Azure Dynamics
Azure Dynamics Corporation (TSX: AZD)(OTC: AZDDF) is a world leader in the
development and production of hybrid electric and electric components and
powertrain systems for commercial vehicles. Azure is strategically targeting
the commercial delivery vehicle and shuttle bus markets and is currently
working internationally with a variety of partners and customers. The Company
is committed to providing customers and partners with innovative,
cost-efficient, and environmentally-friendly energy management solutions. For
more information please visit www.azuredynamics.com.
The TSX Exchange does not accept responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements Advisory
Certain information included in this press release constitutes
forward-looking statements and information and future-oriented financial
information under applicable securities legislation and is provided for the
purpose of expressing management's current expectations and plans for the
future. Readers are cautioned that reliance on such information may not be
appropriate for other purposes, such as making investment decisions.
More particularly, this press release contains statements concerning
Azure's anticipated: business development strategy, customer orders, product
deliveries, sales, revenue and revenue growth. The forward-looking statements
are based on a number of key expectations and assumptions made by Azure,
including expectations and assumptions concerning achievement of current
timetables for development programs and sales, target market acceptance of
Azure's products, current and new product performance, availability and cost
of labor and expertise, and evolving markets for power for transportation
vehicles. Although Azure believes that the expectations and assumptions used
to develop the forward-looking statements are reasonable, undue reliance
should not be placed on the forward-looking statements because Azure can give
no assurance that they will prove to be correct.
Since forward-looking statements address future events and conditions, by
their very nature they involve numerous risks and uncertainties that
contribute to the possibility that the projections and forecasts in the
forward-looking statements will not occur and that actual performance or
results could differ materially from those anticipated in the forward-looking
statements. These risks and uncertainties include, but are not limited to,
the risks associated with Azure's stage of development, history of losses and
lack of historical product revenues, uncertainty as to product development
and sales milestones being met, product defect and performance risks,
competition for capital and market share, uncertainty as to target markets,
dependence upon third parties, changes in environmental laws or policies,
uncertainty as to patent and proprietary rights, availability and retention
of management and key personnel, exchange rate and currency fluctuations,
uncertainties relating to potential delays or changes in plans with respect
to product development or capital expenditures, the ability of Azure to
access sufficient capital on acceptable terms, and environmental and safety
risks. This is not an exhaustive list and additional information on these
risks and other factors that could affect Azure's operations and financial
results are included in reports on file with the Canadian securities
regulatory authorities and can be accessed through the SEDAR website at
www.sedar.com.
The forward-looking statements contained in this press release are made
as of the date hereof and Azure undertakes no obligation to update publicly
or revise any forward-looking statements or information, whether as a result
of new information, future events or otherwise, unless so required by
applicable securities laws. Additionally, Azure undertakes no obligation to
comment on the expectations of, or statements made by, third parties about
Azure.
Azure Dynamics Corporation
Consolidated Balance Sheets
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
December December
31 31
As at 2010 2009
$ $
ASSETS
Current
Cash and cash equivalents 11,838 33,588
Accounts receivable 10,043 2,632
Inventory (Note 5) 5,523 5,215
Prepaid expenses 802 974
28,206 42,409
Restricted cash (Note 4) 796 1,041
Property and equipment (Note 6) 5,740 5,277
Other assets 114 -
Intangible assets (Note 7) 5,590 6,755
Goodwill 2,932 2,932
43,378 58,414
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 16,494 9,837
Customer deposits & deferred revenue
(Note 
118 746
Current portion of notes payable (Note 3) 1,945 66
Current portion of obligations under
capital leases (Note 9) 82 99
18,639 10,748
Long-term
Obligations under capital leases (Note 9) 96 117
Customer deposits & deferred revenue
(Note 577 644
Notes payable (Note 3) - 2,055
19,312 13,564
Shareholders' equity
Share capital (Note 11) 208,570 202,250
Contributed surplus (Note 11) 8,161 7,139
Deficit (192,665) (164,539)
24,066 44,850
43,378 58,414
Nature of operations and going concern (Note 1)
Commitments (Note 9 and 17)
Subsequent events (Note 20)
Approved on behalf of the Board:
"signed D. Campbell Deacon" Director
D. Campbell Deacon
"signed James C. Gouin" Director
James C. Gouin
Azure Dynamics Corporation
Consolidated Statements of Operations, Comprehensive Loss, and Deficit
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
For the three months For the twelve months
ended ended
December 31 December 31
2010 2009 2010 2009
$ $ $ $
Revenues 13,368 4,434 21,913 9,403
Cost of sales 13,072 7,311 21,624 14,349
Gross margin 296 (2,877) 289 (4,946)
Expenses
Engineering, research,
development and related
costs, net (Note 14) 7,508 1,343 17,028 11,852
Selling and marketing 1,143 884 2,784 2,388
General and administrative 2,744 3,129 9,329 9,134
Total expenses 11,395 5,356 29,141 23,374
Loss from operations (11,099) (8,233) (28,852) (28,320)
Interest and other income, net 147 123 555 546
Interest expense (22) (25) (95) (110)
Other income/(expense) - 8 - (586)
Foreign currency gains 214 94 266 662
Net loss and comprehensive
loss (10,760) (8,033) (28,126) (27,808)
Deficit, beginning of
period (181,905) (156,506) (164,539) (136,731)
Deficit, end of period (192,665) (164,539) (192,665) (164,539)
Loss per share - basic and
diluted (0.02) (0.02) (0.05) (0.07)
Weighted average number of
shares - basic and 626,878,734 454,698,412 616,823,270 406,148,487
diluted
Azure Dynamics Corporation
Consolidated Statements of Cash Flows
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
For the years ended December 31
2010 2009
$ $
Cash flows from operating activities
Net loss for the period (28,126) (27,808)
Adjustments for:
Amortization of property and equipment 1,057 1,048
Amortization of intangible assets 1,311 1,460
Amortization of other assets 16 -
Unrealized foreign currency (gains)/losses (366) (448)
Stock option compensation expense 799 400
Deferred share units compensation expense 242 244
(25,067) (25,104)
Changes in non-cash working capital items
(Note 18) (1,327) 8,032
Total cash flows from operating activities (26,394) (17,072)
Cash flows from financing activities
Issuance of common shares (net of costs) 6,301 37,238
Principal repayments on notes payable (65) (69)
Repayment of obligations under capital lease (158) (160)
Other assets (129) -
Total cash flows from financing activities 5,949 37,009
Cash flows from investing activities
Acquisition of property and equipment (1,394) (141)
Acquisition of intangible assets (146) (203)
Sale of property and equipment - 35
Changes in restricted cash 196 211
Total cash flows from investing activities (1,344) (98)
Increase/(Decrease) in cash and cash
equivalents (21,789) 19,839
Exchange impact on cash held in foreign currency 39 (54)
Cash and cash equivalents, beginning of year 33,588 13,803
Cash and cash equivalents, end of year 11,838 33,588
Supplemental cash flow information
Cash paid for interest 95 110
Cash paid for taxes 13 -
Non cash investing and financing activities:
Vehicles and equipment acquired under capital
lease 126 24
For further information:
Juris Pagrabs, Vice President, Investor Relations, +1(248)298-2403 ext
7570 Email: jpagrabs@azuredynamics.com
Pat Liebler, Liebler Group, +1(313)832-4376
Email: pat@lieblergroup.com
For further information: Juris Pagrabs, Vice President, Investor Relations, +1(248)298-2403 ext
7570 Email: jpagrabs at azuredynamics.com , Pat Liebler, Liebler Group, +1(313)832-4376
Email: pat at lieblergroup.com
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