Cash generated from operations on $7 million of revenue
TORONTO, Aug. 9 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, today reported its financial results for the second quarter ended June 30, 2007. All amounts are stated in Canadian Dollars, unless otherwise noted.
Financial Achievements
----------------------
- Reaching a new milestone of $7.0 million in sales, Sirit reports its
third consecutive quarter of record-setting revenue levels.
- Sirit achieved a 26% growth rate compared to the second quarter of
2006 and a further 7% growth over the first quarter of 2007.
- Excluding the impact of foreign exchange, total operating expenses
were $3.1 million down from the $3.2 million reported in Q1 2007.
During the second quarter of 2006, Sirit completed two acquisitions
and with the inclusion of these newly acquired entities, total
operating expenses were $5.1 million.
- Sirit reported $9.7 million in cash at June 30, 2007 compared to
$9.9 million at March 31, 2007. As cash is maintained in US funds to
support primarily US based operations, the US dollar cash balance was
US$9.1 million at June 30, 2007 compared to US$8.5 million at March
31, 2007.
"The second quarter of 2007 represents the strongest quarter in Sirit's history. Strong revenue growth, cash generation from operations and effectively managed operating expenses has placed Sirit in its strongest financial position in the past 5 years," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "In addition, excluding the unrealized foreign exchange losses, Sirit generated approximately $0.6 million in cash from operations, a full two quarters ahead of the Company's targeted year end cash flow neutral position."
Revenue from automatic vehicle identification ("AVI") applications of $5.2 million represented a steady level compared to $5.2 million in Q1 2007 and an 18% growth rate over $4.4 million reported in Q2 2006. Radio frequency solutions ("RFS") applications contributed $1.8 million or a 56% growth rate compared to the $1.1 million reported in Q2 2006 and a 37% growth rate over Q1 2007. For Q2 2007, AVI sales remained strong at the same levels reported in Q1 2007 while the growth in RFS reflects signing new customers as well as experience gained from testing of RFID systems evolving into production pilots and small roll-outs.
Gross profit of 35.9% during the second quarter is up from the 33.4% reported in Q2 2006 and 34.8% in Q1 2007. The improvement in quarterly margin reflects the mix of sales to primarily AVI customers.
The foreign exchange loss of $0.9 million reflects the impact of converting net assets held primarily in US dollars into Canadian dollars for financial reporting purposes only. As day-to-day operations are carried out predominantly in US dollars, the foreign exchange impact is negligible on the conduct of ongoing business.
Excluding $0.9 million in foreign exchange, operating loss for the quarter was $0.6 million compared to a loss of $3.3 million in Q2 2006. The Company reported a net loss of $1.4 million in Q2 2007 compared to a net loss of $3.3 million in Q2 2006.
Quarterly Highlights
--------------------
Sirit continued to advance its business during Q2 2007:
- Sirit announced the continuation of its partnership with the Bay
Area Toll Authority in California with a one-year, $US4.8 million
contract to supply its Title 21-based RFID toll transponders.
- Sirit secured a Near Field Communications ("NFC") contract with
BenQ Corporation, one of the world's largest consumer electronics
original equipment manufacturers.
- Sirit was awarded a contract worth approximately US$10.6 million
over three years from the Transportation Corridor Agencies in
Southern California to supply its Title 21-based RFID toll
transponders.
- The Company announced a partnership with Metro Group AG to provide
Sirit's INfinity 510 UHF reader for Metro's 2007 rollout program at
99 Real hypermarket locations throughout Germany.
- Sirit continues to expand its worldwide distribution network for its
INfinity product line with the addition of Frequensys Software, a
Malaysian-based system integrator. Frequensys joins a growing list
of Asian-based resellers including ECO, Inc. (Korea); Tunity
Technologies Pte Ltd. (Singapore); Smartsoft Technology Ltd. Part.
(Thailand), Cimtrac System (Taiwan) and Systron (China) who sell and
support Sirit's Gen 2, regionally certified INfinity 510 UHF reader
within the Asia-Pacific market.
"We have achieved some very exciting new highs over the past few months as reflected in our revenue growth, cash generation and partnership efforts. While we anticipate that typical seasonality will result in lower third quarter revenue, we have clearly demonstrated our ability to manage operations at sustainable levels two quarters ahead of schedule," stated Norbert Dawalibi, President and CEO, Sirit Inc. "With this important milestone met, we will now focus on driving the business to the next stage in terms of growth and profitability."
Conference Call and Webcast
Sirit will host a conference call to discuss the quarterly results on Thursday August 9, 2007 at 10:00 am EDT. The call will be Webcast on the Internet and is accessible by visiting www.sirit.com.
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 13 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 are easily customized to address new and traditional RFID market applications including Supply Chain & Logistics, Cashless Payment (including Electronic Tolling), Access Control, Automatic Vehicle Identification, Inventory Control & Management, Asset Tracking and Product Authentication. For more information, visit www.sirit.com.
Cautionary Note Regarding Forward Looking Statements
Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: 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. 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 which are discussed in the section entitled "Description of the Business - Risks Factors" in Sirit's Annual Information Form dated March 19, 2007 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. Sirit does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, further events or otherwise.
"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
June December
30 2007 31 2006
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 9,689 $ 9,397
Accounts receivable 3,977 3,957
Inventory 2,841 2,997
Prepaids and deposits 415 348
---------- ----------
16,922 16,699
Long-term investments 110 849
Property and equipment 1,132 1,095
Intangible assets 1,452 1,734
Goodwill 3,905 3,905
---------- ----------
$ 23,521 $ 24,282
---------- ----------
---------- ----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 4,740 $ 4,954
Deferred revenue 733 800
Warranty obligations 358 298
---------- ----------
5,831 6,052
---------- ----------
Shareholders' Equity
Share capital 47,852 47,830
Contributed surplus 2,442 2,075
Deficit (32,604) (31,675)
---------- ----------
17,690 18,230
---------- ----------
$ 23,521 $ 24,282
---------- ----------
---------- ----------
Sirit Inc.
Interim Consolidated Statements of Operations
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
---------- ---------- ---------- ----------
Revenue $ 6,964 $ 5,536 $ 13,463 $ 10,920
Cost of sales 4,465 3,685 8,701 7,081
---------- ---------- ---------- ----------
Gross profit 2,499 1,851 4,762 3,839
---------- ---------- ---------- ----------
Expenses
Selling, general and
administrative 2,118 2,972 4,307 4,810
Stock-based compensation 195 226 367 428
Development 568 1,699 1,172 2,493
Amortization 232 219 455 359
Foreign exchange loss 867 62 976 105
---------- ---------- ---------- ----------
3,980 5,178 7,277 8,195
---------- ---------- ---------- ----------
Operating loss (1,481) (3,327) (2,515) (4,356)
Gain on sale of
long-term investment - - 1,401 -
Interest income, net 89 49 185 85
---------- ---------- ---------- ----------
Net loss for the period $ (1,392) $ (3,278) $ (929) $ (4,271)
Deficit, beginning
of period (31,212) (23,709) (31,675) (22,716)
---------- ---------- ---------- ----------
Deficit, end of period $ (32,604) $ (26,987) $ (32,604) $ (26,987)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted loss
per share $ (0.01) $ (0.03) $ (0.01) $ (0.04)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted weighted
average number of common
shares ('000s) 145,673 114,305 145,611 103,847
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cash provided by/(used in):
Operating Activities
Net loss for the period $ (1,392) $ (3,278) $ (929) $ (4,271)
Items not involving cash
and cash equivalents 427 445 (579) 787
Exchange rate impact on
cash and cash
equivalents 740 - 740 -
---------- ---------- ---------- ----------
(225) (2,833) (768) (3,484)
Net change in non-cash
working capital items 791 439 (152) 282
---------- ---------- ---------- ----------
566 (2,394) (920) (3,202)
---------- ---------- ---------- ----------
Investing Activities
Additions to property
and equipment (17) (74) (210) (154)
Acquisitions, net of
cash acquired - (2,667) - (2,667)
Proceeds on sale of
long-term investment - - 2,140 -
---------- ---------- ---------- ----------
(17) (2,741) 1,930 (2,821)
---------- ---------- ---------- ----------
Financing Activities
Public offering of
common shares, net of
associated expenses - 11,561 - 11,561
Issuance of common
shares upon exercise
of stock options 8 108 22 108
---------- ---------- ---------- ----------
8 11,669 22 11,669
---------- ---------- ---------- ----------
Exchange rate impact on
cash and cash equivalents (740) - (740) -
---------- ---------- ---------- ----------
(Decrease)/increase in cash
and cash equivalents (183) 6,534 292 5,646
Cash and cash
equivalents, beginning
of period 9,872 5,191 9,397 6,079
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 9,689 $ 11,725 $ 9,689 $ 11,725
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash and cash equivalents
consist of:
Cash $ 2,455 $ 1,521 $ 2,455 $ 1,521
Short-term commercial
paper 7,234 10,204 7,234 10,204
---------- ---------- ---------- ----------
$ 9,689 $ 11,725 $ 9,689 $ 11,725
---------- ---------- ---------- ----------
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