Azure Dynamics Reports Record 3rd Quarter 2011 Revenues
By Azure Dynamics Corporation, PRNESunday, November 13, 2011
OAK PARK, Michigan, November 14, 2011 -
- Third quarter revenues up 579% to $12.4 million from $1.8 million, representing 272 units shipments
- Q3 YTD revenues up 171% to $23.1 million from $8.5 million, representing 525 unit shipments
- Q3 gross margin improves to 221% to $167,000 from ($138,000)
- Q3 YTD orders for 2011 deliveries total $33.0 million, representing 719 vehicle orders
- Reaffirms 2011 revenue range of $38 to $45 million - expects 2011 revenues to be at the lower-end of this range
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 light and medium duty commercial vehicles, today announced its financial results for the periods ending September 30, 2011 and confirmed its 2011 financial outlook.
Revenues for the 2011 third quarter increased 579% to $12.4 million compared to $1.8 million in the third quarter of 2010. For the nine months ended September 2011, revenues rose 171% to $23.1 million from $8.5 million for the comparable period a year ago. Unit sales for the 2011 third quarter increased 196% to 272 compared to 92 for the same period last year. The 2011 third quarter included shipments of 143 Transit Connect Electric vans, which launched in April and June, 2011 in North America and Europe, respectively.
“We made significant progress in the third quarter on a number of fronts, and are particularly pleased to report initial revenue from our European operations,” said Scott Harrison, CEO of Azure Dynamics. “Although European shipments began in late June, about one-third of our revenues were generated from outside North America in the third quarter. As we continue to establish distribution relationships in additional countries, and subsequently increase our visibility with commercial fleet buyers, we expect the European contribution to continue to rise.”
“Meanwhile, despite sluggish municipal spending, revenue from the Balance[TM] Hybrid Electric powertrain was up 196% in the quarter to $3.7 million,” Harrison said. ”Although we expect Balance sales to continue to be negatively impacted by tight municipal budgets, these customers have substantial product needs and we remain hopeful that they will seek our energy and environmentally efficient products when they inevitably return to market.”
Net loss for the 2011 third quarter totaled $9.8 million, or $0.01 per share, compared to a loss of $6.7 million, or $0.01 per share, in the third quarter of 2010. Net loss for the 2011 nine month period totaled $26.1 million, or $0.04 per share, compared to a loss of $17.7 million, or $0.03 per share, in the comparable period a year ago. Unit sales for the 2011 nine month period totaled 525, including 249 Balance[TM] Hybrid Electric vehicles, 241 Transit Connect Electric vans, 34 Force Drive[TM] components and one LEEP unit. This compares to unit sales for the 2010 nine month period of 451, including 136 Balance[TM] Hybrid Electric vehicles, 67 Force Drive[TM] and other components and 248 LEEP units.
Gross profit for the 2011 third quarter improved 221%, to $167,000 and for the 2011 nine-month period rose to $470,000, or 2.0% of sales. Gross profit for the 2010 third quarter was ($138,000) and for the 2010 nine-month period was ($6,000).
New orders received during the third quarter of 2011 relating to current year deliveries were $10.6 million, representing 178 vehicles, compared with second quarter 2011 orders of $5.6 million and first quarter 2011 orders of $16.8 million. For the 2011 nine-month period, new order intake for 2011 deliveries total $33.0 million, representing 719 vehicle orders.
Engineering, research and development (”R&D”) expenses in the 2011 third quarter totaled $5.7 million (including $2.7 million in product development costs), compared to $4.0 million (including $3.8 million in product development costs, offset by $1.4 million in customer contributions and $1.3 million in government grants) for the same period in 2010. R&D expenses for the 2011 nine-month period totaled $15.1 million (including $8.6 million in product development costs, offset by $3.4 million in customer contributions), compared to $9.5 million (including $9.6 million in product development costs, offset by $2.2 million in customer contributions and $5.6 million in government grants) for the same period in 2010.
As of September 30, 2011, the Company’s net cash and cash equivalents totaled $1.3 million, and working capital totaled $6.0 million, compared to cash and cash equivalents of $11.7 million, and working capital of $14.7 million, as of June 30, 2011.
On November 4, 2011, Johnson Controls’ Canadian subsidiary acquired, on a private placement basis, 30,796,969 common shares of Azure, at a price of CDN$0.165 per common share, for gross proceeds to Azure of CDN$5,081,500. As a result of this investment, Johnson Controls, through its Canadian subsidiary, now holds approximately 7.2% of the issued and outstanding common shares of Azure.
On November 11, 2011, the Company filed a final short form prospectus with the Canadian securities regulatory authorities indicating the terms and pricing of its previously announced public offering of common shares and warrants for gross proceeds of up to CDN$6.1 million. The public offering is expected to close on or about November 18, 2011, subject to customary closing conditions.
2011 FINANCIAL OUTLOOK
“Our focus in 2011 for Transit Connect Electric was to successfully introduce the program worldwide, establish and optimize our manufacturing facilities, begin building the distribution network and realize initial sales. We believe we have accomplished those goals and are encouraged by the interest shown for the product,” Harrison concluded.
Based on current market conditions, orders to date and future order expectations, the Company reaffirms its previous issued 2011 revenue range of $38 to $45 million and expects 2011 revenues to be at the lower-end of this range.
The Company’s 2011 third quarter financial statements and MD&A are available at www.sedar.com or on the Company’s website at www.azuredynamics.com.
Conference Call
Management will host a webcast and conference call on Wednesday, November 16, 2011, at 10:00 a.m. Eastern Standard Time to discuss today’s announcement in more detail. Interested listeners can access the call toll free at 1-877-317-6789 from the United States and at 1-866-605-3852 from Canada. Participants from outside North America can participate in the call by dialing 1-412-317-6789. It is recommended that you access the call at least fifteen minutes before the scheduled start time. An accompanying presentation will be posted to the company’s website, www.azuredynamics.com, immediately prior to the call.
For those unable to participate in the live conference, a call replay will be posted on Azure’s website no later than November 17, 2011.
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 light and medium duty 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, production costs, gross margins, third quarter 2011 results and financial outlook for 2011. 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, unprecedented recent volatility in global financial and capital markets, 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
Unaudited Interim Consolidated Balance Sheets
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
September December
30 31
As at 2011 2010
$ $
ASSETS
Current assets
Cash and cash equivalents 1,291 11,737
Accounts receivable 7,325 10,107
Inventory (Note 3) 13,545 5,590
Prepaid expenses 1,238 949
Total current assets 23,399 28,383
Non-current assets
Restricted cash 629 597
Investment in ND Solectria, LLC (Note 9) 324 319
Property and equipment (Note 9) 3,514 2,781
Other assets 74 114
Intangible assets 4,709 5,590
Goodwill 2,932 2,932
Total non-current assets 12,182 12,333
Total assets 35,581 40,716
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 16,023 15,783
Customer deposits & deferred revenue 112 96
Current portion of government financial
obligations (Note 4, 9) 1,143 993
Current portion of obligations under capital
leases 106 82
Total current liabilities 17,384 16,954
Non-current liabilities
Obligations under capital leases 75 96
Customer deposits & deferred revenue 494 507
Government financial obligations (Note 4, 9) 4,481 4,582
Total non-current liabilities 5,050 5,185
Shareholders' equity
Share capital (Note 5) 227,170 208,570
Contributed surplus 10,040 8,271
Cumulative translation adjustment (Note 9) 363 32
Deficit (224,426) (198,296)
Total equity 13,147 18,577
Total equity and liabilities 35,581 40,716
Azure Dynamics Corporation
Unaudited Interim Consolidated Statements of Comprehensive Loss
(Stated in thousands of Canadian dollars, except per share amounts
and number of shares)
For the three months For the nine months
ended September 30 ended September 30
2011 2010 2011 2010
$ $ $ $
Revenues 12,426 1,830 23,125 8,545
Cost of sales 12,259 1,968 22,655 8,551
Gross profit 167 (138) 470 (6)
Expenses
Engineering,
research,
development and
related costs, net 5,703 3,952 15,100 9,452
Selling and
marketing 1,036 553 2,821 1,640
General and
administrative 2,628 1,931 7,687 6,303
Total expenses 9,367 6,436 25,608 17,395
Loss from operations (9,200) (6,574) (25,138) (17,401)
Interest and other
income, net 11 62 126 190
Interest expense (256) (241) (776) (690)
Foreign currency
gains/(losses) (464) 19 (540) (52)
(709) (160) (1,190) (552)
Net loss before the
following (9,909) (6,734) (26,328) (17,953)
Share of profit from
investment in ND
Solectria, LLC (Note
9) 66 72 198 214
Net loss for the
period (9,843) (6,662) (26,130) (17,739)
Other comprehensive
(loss) income
Foreign currency
translation
differences of
foreign operations 523 (19) 331 (1)
Total comprehensive
income (loss) for
the period (9,320) (6,681) (25,799) (17,740)
Loss per share -
basic and diluted (0.01) (0.01) (0.04) (0.03)
Weighted average
number of shares -
basic and diluted 689,433,691 626,739,390 679,676,180 613,434,616
Azure Dynamics Corporation
Unaudited Interim Consolidated Statements of Cash Flows
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
For the three For the nine
months months
ended September ended September
30 30
2011 2010 2011 2010
$ $ $ $
Cash flows from
operating activities
Net loss for the period (9,843) (6,662) (26,130) (17,739)
Adjustments for:
Amortization of property
and equipment 322 252 930 707
Amortization of
intangible assets 331 328 992 982
Amortization of other
assets 19 - 52 -
Unrealized foreign
currency (gains)/losses 104 (20) 40 28
Share of profit
receivable from ND
Solectria, LLC (Note 9) (96) (72) (216) (214)
Stock option
compensation expense 281 123 1,597 631
Deferred share units
compensation expense 79 63 227 180
Accretion expense on
government financial
obligations 250 235 762 669
(8,553) (5,753) (21,746) (14,756)
Changes in non-cash
working capital items (1,481) (1,348) (4,970) 203
Total net cash flows
from operating
activities (10,034) (7,101) (26,716) (14,553)
Cash flows from
financing activities
Proceeds from issue of
common shares 8 13 20,205 6,355
Payment for share
issuance costs - - (1,660) (49)
Principal repayments on
government financial
obligations - - (713) (26)
Repayment of obligations
under capital lease (15) (36) (66) (129)
Other assets - (122) (12) (122)
Total cash flows from
financing activities (7) (145) 17,754 6,029
Cash flows from
investing activities
Acquisition of property
and equipment (410) (333) (1,525) (868)
Acquisition of
intangible assets (36) (46) (111) (114)
Dividend received from
ND Solectria, LLC (Note
9) 71 69 207 209
Changes in restricted
cash - (1) - (13)
Total cash flows from
investing activities (375) (311) (1,429) (786)
Decrease in cash and
cash equivalents (10,416) (7,557) (10,391) (9,310)
Exchange impact on cash
held in foreign currency (17) 8 (55) (14)
Cash and cash
equivalents,
beginning of
period 11,724 31,707 11,737 33,482
Cash and cash
equivalents,
end of period 1,291 24,158 1,291 24,158
Azure Dynamics Corporation
Unaudited Interim Consolidated Statement of Changes in Equity
(Stated in thousands of Canadian dollars, except per share amounts and
number of shares)
For the nine months ended September 30, 2011 and 2010
Cumulative Retained
Number of Share Contributed translation earnings
shares capital surplus adjustment (deficit) Total
January 1,
2011 626,880,454 $ 208,570 $ 8,271 $ 32 $(198,296) $ 18,577
Equity
financing 60,984,848 20,125 - - - 20,125
Share issue
costs - (1,660) - - - (1,660)
Exercise of
options 1,616,193 80 - - - 80
Reclass on
exercise of
options to
share
capital - 55 (55) - - -
Share-based
compensation - - 1,597 - - 1,597
Awards of
Deferred
share units - - 227 - - 227
Net loss - - - - (26,130) (26,130)
Effects of
foreign
currency
translation - - - 331 - 331
September
30, 2011 689,481,495 227,170 10,040 363 (224,426) $ 13,147
January 1,
2010 605,084,932 202,250 7,150 - (169,081) 40,319
Equity
financing
(Note 5) 21,080,000 6,324 - - - 6,324
Share issue
costs - (49) - - - (49)
Exercise of
options 702,333 31 - - - 31
Reclass on
exercise of
options to
share
capital - 18 (18) - - -
Share-based
compensation - - 631 - - 631
Awards of
Deferred
share units - - 180 - - 180
Net loss - - - - (17,739) (17,739)
Effects of
foreign
currency
translation - - - (1) - (1)
September
30, 2010 626,867,265 $ 208,574 $ 7,943 $ (1) $(186,820 $ 29,696
FOR MORE INFORMATION, CONTACT:
Juris Pagrabs, Vice President, Investor Relations, +1(248)298-2403 ext 7570, Email: jpagrabs@azuredynamics.com
.
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