Operational strength reflected in double digit growth, improved margins
and realized acquisition synergies
TORONTO, Nov. 13 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, today reported its financial results for the third quarter ended September 30, 2007. All amounts are stated in Canadian Dollars, unless otherwise noted.
Financial Achievements
---------------------
- The third quarter of 2007 represents the seventh consecutive quarter
of revenue growth compared to the same quarter in the prior year.
- Sirit achieved a revenue growth rate of 11% (19% in US Dollars
excluding foreign exchange impact) compared to the third quarter of
2006. Total year-to-date revenue reached $19.1 million, a
$3.1 million or 19% growth rate over the first nine months of 2006
(22% in US Dollars excluding foreign exchange impact).
- Development expenses of $0.7 million reflect ongoing operating
requirements when compared to the $1.6 million in the prior year
required to complete development activities assumed in the 2006
acquisitions.
- Total operating expenses remained consistent with the first two
quarters of 2007. Excluding foreign exchange losses, for the three
months ended September 30, 2007, operating expenses were
$3.3 million, a $1.1 million decrease over the same period in 2006.
- Excluding the impact of foreign exchange, the Company utilized
$0.3 million of cash in the third quarter of 2007, a significant
improvement over the $2.7 million of cash utilized in the third
quarter of 2006.
"This quarter extends our year-over-year revenue growth trend achieving another solid quarter for the Company. The reported 11% increase in third quarter revenue compared to the prior year represents the seventh consecutive quarter of double digit growth for Sirit," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "In line with our expectations, Sirit continued to manage its expenses and control cash spending reflecting an overall solid operation poised to take on future expansion projects as they arise."
Revenue of $4.2 million from automatic vehicle identification ("AVI") applications increased by $0.5 million or 14% versus the $3.7 million in the third quarter of 2006. This level of revenue is $0.9 million lower than Q2 2007 reflecting the quarterly seasonal slow down experienced now for the past three years as well as foreign exchange impact. Radio frequency solutions ("RFS") applications revenue remained consistent at $1.4 million for both the third quarter of 2007 and 2006. The decline from the second quarter of this year reflects the uneven timing and size of deployments as the industry continues to slowly ramp up as well as foreign exchange impact.
Gross profit of 35.9% during the third quarter is consistent with Q2 2007 and higher than the 33.2% reported in Q3 2006. The improvement over the prior year reflects the specific mix of customers during the quarter.
The foreign exchange loss of $0.6 million primarily 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 $0.6 million in foreign exchange, operating loss for the quarter was $1.2 million compared to a loss of $2.7 million in Q3 2006. The Company reported a net loss of $1.8 million in Q3 2007 compared to a net loss of $2.6 million in Q3 2006.
Quarterly Highlights
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Sirit continued to advance its business during Q3 2007:
- Sirit's INfinity 510 was ranked first over six other leading
competitive European RFID readers by ODIN technologies in the first
European RFID Reader Benchmark(TM).
- Sirit announced support for Microsoft's BizTalk Server 2006 R2 and
IBM's WebSphere RFID Premises Server, version 6.0 with the
INfinity 510. The device agents facilitate fast and seamless
integration of Sirit readers into implementation environments using
either of the two software infrastructures.
- The Company continues to support and deliver to its previously
announced customers in Near Field Communications applications.
- Sirit supported its sales and marketing efforts by participating in a
number of industry conferences and exhibitions including the
24th International German Logistics Congress where Sirit participated
with METRO Group highlighting the portal set-up of the Infinity 510
as used in their REAL hyperstores.
"This year has been filled with many positive achievements that position Sirit ahead of our competition. We continue to demonstrate that our current operations, with a minimal cash burn rate, are self-sustaining for the current and longer term," stated Norbert Dawalibi, President and CEO, Sirit Inc. "With a strong portfolio of products lead by the INfinity 510 and new AVI IDentity series solutions as well as solid operations, we are able to focus on longer-term, high growth opportunities."
Conference Call and Webcast
Sirit will host a conference call to discuss the quarterly results on Tuesday, November 13, 2007 at 10:00 am EST. 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 14 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
September 30 December 31
2007 2006
------------ -----------
Assets
Current Assets
Cash and cash equivalents $ 8,846 $ 9,397
Accounts receivable 3,359 3,957
Inventory 2,527 2,997
Prepaids and deposits 365 348
----------- -----------
15,097 16,699
Long-term investments 110 849
Property and equipment 1,100 1,095
Intangible assets 1,311 1,734
Goodwill 3,905 3,905
----------- -----------
$ 21,523 $ 24,282
----------- -----------
----------- -----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 4,305 $ 4,954
Current deferred revenue 399 293
Current warranty obligations 106 136
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4,810 5,383
Long-term deferred revenue 562 507
Long-term warranty obligations 109 162
----------- -----------
5,481 6,052
----------- -----------
Shareholders' Equity
Share capital 47,852 47,830
Contributed surplus 2,548 2,075
Deficit (34,358) (31,675)
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16,042 18,230
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$ 21,523 $ 24,282
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Sirit Inc.
Interim Consolidated Statements of Operations, Comprehensive Income and
Deficit
(expressed in thousands of Canadian dollars except per share amounts)
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2007 2006 2007 2006
---------- ---------- ---------- ----------
Revenue $ 5,635 $ 5,086 $ 19,098 $ 16,006
Cost of sales 3,610 3,399 12,311 10,480
---------- ---------- ---------- ----------
Gross profit 2,025 1,687 6,787 5,526
---------- ---------- ---------- ----------
Expenses
Selling, general and
administrative 2,234 2,387 6,541 7,197
Stock-based compensation 106 168 473 596
Development 698 1,551 1,870 4,044
Amortization 234 262 689 621
Foreign exchange loss 597 14 1,573 119
---------- ---------- ---------- ----------
3,869 4,382 11,146 12,577
---------- ---------- ---------- ----------
Operating loss (1,844) (2,695) (4,359) (7,051)
Gain on sale of long-term
investment - - 1,401 -
Interest income, net 90 81 275 166
---------- ---------- ---------- ----------
Net loss and comprehensive
income for the period $ (1,754) $ (2,614) $ (2,683) $ (6,885)
Deficit, beginning of period (32,604) (26,987) (31,675) (22,716)
---------- ---------- ---------- ----------
Deficit, end of period $ (34,358) $ (29,601) $ (34,358) $ (29,601)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted loss
per share $ (0.01) $ (0.02) $ (0.02) $ (0.06)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted weighted
average number of common
shares ('000s) 145,703 145,527 145,642 117,893
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
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cash provided by/(used in):
Operating Activities
Net loss for the period $ (1,754) $ (2,614) $ (2,683) $ (6,885)
Items not involving cash
and cash equivalents 340 430 1,162 1,217
Gain on sale of long-term
investment - - (1,401) -
Foreign exchange loss 597 14 1,573 119
---------- ---------- ---------- ----------
(817) (2,170) (1,349) (5,549)
Net change in non-cash
working capital items 595 (419) 564 (154)
---------- ---------- ---------- ----------
(222) (2,589) (785) (5,703)
---------- ---------- ---------- ----------
Investing Activities
Additions to property and
equipment (61) (120) (271) (274)
Acquisitions, net of
cash acquired - - - (2,667)
Proceeds on sale of long-
term investment - - 2,010 -
---------- ---------- ---------- ----------
(61) (120) 1,739 (2,941)
---------- ---------- ---------- ----------
Financing Activities
Public offering of common
shares, net of associated
expenses - (38) - 11,523
Issuance of common shares
upon exercise of stock
options - 1 22 109
---------- ---------- ---------- ----------
- (37) 22 11,632
---------- ---------- ---------- ----------
Exchange rate impact on cash
and cash equivalents (560) (18) (1,527) (106)
---------- ---------- ---------- ----------
(Decrease)/increase in cash
and cash equivalents (843) (2,764) (551) 2,882
Cash and cash equivalents,
beginning of period 9,689 11,725 9,397 6,079
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 8,846 $ 8,961 $ 8,846 $ 8,961
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash and cash equivalents
consist of:
Cash $ 1,960 $ 1,392 $ 1,960 $ 1,392
Short-term commercial paper 6,886 7,569 6,886 7,569
---------- ---------- ---------- ----------
$ 8,846 $ 8,961 $ 8,846 $ 8,961
---------- ---------- ---------- ----------
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