TORONTO, March 18 /CNW/ - Sirit Inc. ("Sirit") (TSX: SI), a leading provider of radio frequency identification ("RFID") technology, reports its financial results for the fourth quarter and year ended December 31, 2007. All amounts are stated in Canadian Dollars unless otherwise noted.
For the second consecutive year, Sirit attained double digit growth and a record revenue level. Total revenue for fiscal 2007 reached $24.5 million, a 13% growth rate over the $21.7 million reported for 2006. In constant US dollars, the growth rate was 20% with the difference from the reported Canadian Dollar growth rate due to the strengthening Canadian Dollar in relation to the US Dollar.
Revenue from Sirit's Automatic Vehicle Identification ("AVI") applications reached $18.7 million (US$17.4 million) compared to $16.8 million (US$14.8 million) in 2006 and Radio Frequency Solutions ("RFS") revenue reached $5.8 million (US$5.5 million) compared to $4.9 million (US$4.3 million) in 2006. Sirit effectively managed its resources in 2007 with total cash utilization of $0.5 million and a 24% decrease in total expenses compared to 2006, excluding foreign exchange impacts.
"After successfully integrating two acquisitions in 2006, Sirit managed operations in 2007 at a level that would sustain the business for the long-term. We experienced our first quarterly sales level above $6.5 million in the second quarter of 2007 and reached a cash flow neutral position in the fourth quarter," commented Anastasia Chodarcewicz, Chief Financial Officer, Sirit Inc. "We maintained our position of financial strength which has brought the Company to a point where we can begin to invest in high growth prospects that we believe are starting to take shape."
Fourth Quarter Ended December 31, 2007
Sirit reported total revenue of $5.4 million (US$5.6 million) for the fourth quarter of 2007 compared to $5.7 million (US$5.0 million) in the fourth quarter of 2006. In US Dollars, revenue grew by 12% but declined by just under 5% as reported in Canadian dollars. This reflects an exchange rate difference between Q4 2006 and Q4 2007 of approximately 15%. AVI revenue was $4.2 million or 77% of total sales and RFS revenue contributed $1.2 million or 23% of total sales in Q4 2007.
Gross profit in the fourth quarter of 2007 was 33.1% compared to 27.4% in the fourth quarter of 2006. The fourth quarter of 2006 was impacted by a $0.4 million inventory write-down from a product rationalization effort and a further $0.1 million in the fourth quarter of 2007.
Operating expenses for the fourth quarter of 2007 were $2.8 million, a 26% decrease compared to $3.8 million in the fourth quarter of 2006, both excluding the impact of foreign exchange. The decrease related to the Company completing its acquisition integration efforts during the last quarter of 2006.
Operating loss for the quarter was $1.2 million compared to a $2.2 million loss in the same period last year. Net loss for the quarter was $0.8 million compared to a $2.1 million loss in the last quarter of 2006. During the fourth quarter of 2007, the Company sold its last remaining long-term investment in Horizon Wimba, Inc. for $0.4 million with a gain on sale of $0.3 million.
The Company was cash flow neutral during the fourth quarter of 2007. As a result, Sirit closed the year with $8.9 million in cash, the same amount as the third quarter of 2007 and down $0.5 million for the fiscal year from a cash balance of $9.4 million at December 31, 2006.
Twelve Months Ended December 31, 2007
Total revenue in 2007 of $24.5 million (US$22.9 million) compared to $21.7 million (US$19.1 million) in 2006 is the highest level reported for Sirit to date. This was a significant achievement as the Company experienced its fourth consecutive year of downward pressure on the US Dollar relative to the Canadian Dollar. At year end, the Canadian and US Dollars were virtually at par.
AVI revenue reached $18.7 million in 2007, comprised of $15.8 million from toll related sales and $2.9 million related to parking and access control ("PACS") related sales. For 2006, total AVI revenue was $16.8 million including $14.0 million from tolling related sales and $2.8 million from PACS related sales. The overall growth resulted from the highest volume of toll transponders delivered in a twelve month period by the Company.
RFS revenue reached $5.8 million compared to the $4.9 million in 2006, representing an 18% annual growth rate. The growth is attributed primarily to sales of fixed position readers and new customers testing and piloting RFID technology.
Gross profit for the year was 35.0% consistent with the 34.6% reported for 2006, excluding the previously discussed inventory impact in 2006. Overall margins have been slightly impacted by price reductions in toll transponders during 2007 offset by cost reductions associated with more efficient manufacturing of our fixed position readers.
Total operating expenses for the year were $12.4 million compared to $16.3 million in 2006, both excluding the impact of foreign exchange. The 24% decrease in operating expenses during 2007 compared to 2006 reflects efforts to contain discretionary costs and a streamlined operation after the completion of the integration efforts from two acquisitions in 2006. Including foreign exchange total operating expenses in 2007 were $14.1 million.
Excluding the impact of foreign exchange, the operating loss for the year is $3.8 million, down $5.4 million from a loss in 2006 of $9.2 million. Including foreign exchange expenses of $1.7 million, operating loss for 2007 was $5.5 million.
Net loss for fiscal 2007 is $3.5 million or $0.02 per share, including the gain on sale of the Company's remaining two long-term investments of $1.7 million. This compares to a net loss of $9.0 million or $0.07 per share in 2006. Total shares outstanding at December 31, 2007 are 145.7 million compared to 145.5 million at December 31, 2006.
The Company started the year with $9.4 million in cash and ended the year with $8.9 million, utilizing only $0.5 million in 2007. Cash utilized in 2007 included $1.0 million for operating activities plus $2.1 million earned from the sale of long-term investments net against a reported exchange rate impact of $1.7 million during the year. As the majority of the Company's revenue and expenses are based in US Dollars, the reported foreign exchange loss has minimal impact on operations.
2008 Perspective
We expect 2008 to bring another year of increased revenue growth across all of our application areas. This growth however, will follow a different revenue trend when compared to prior years as we anticipate that the majority of our revenue will come in the second half of the year.
In our AVI applications, our largest customer, which last year contributed 30% of our revenue in the first half of 2007, has been shifting a portion of their projected deliveries under their existing agreement with Sirit to the second half of 2008. This will result in our AVI revenue being lower in the first half of 2008 when compared to the first half of 2007. From our RFS applications, we will continue to experience quarterly fluctuations in our results due to the timing of specific deliveries and deployments by our customers.
"We strongly believe our value is not accurately reflected when considering, in isolation, fluctuations in short-term results due to timing of specific orders. We are working hard on an increasing number of opportunities in a focused and targeted manner that we expect will convert into major wins throughout 2008. These exciting prospects combined with our operational strengths should bring increased value to all shareholders of the Company," noted Norbert Dawalibi, President and CEO, Sirit Inc.
During 2008, expect to learn about new partnerships and look for new product announcements as well as participation in more global projects. These will be the catalysts to bring the Company to higher levels of growth, resultant profitability and increased overall value.
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 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
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)
As at December 31
Unaudited
2007 2006
---------- ----------
Assets
Current Assets
Cash and cash equivalents $ 8,855 $ 9,397
Accounts receivable 2,951 3,957
Inventory 2,450 2,997
Prepaids and deposits 233 348
---------- ----------
14,489 16,699
Long-term investments - 849
Property and equipment 1,070 1,095
Intangible assets 1,205 1,734
Goodwill 3,905 3,905
---------- ----------
$ 20,669 $ 24,282
---------- ----------
---------- ----------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 4,178 $ 4,954
Deferred revenue 306 293
Warranty obligations 134 136
---------- ----------
4,618 5,383
Long-term deferred revenue 569 507
Long-term warranty obligations 124 162
---------- ----------
5,311 6,052
---------- ----------
Shareholders' Equity
Share capital 47,852 47,830
Contributed surplus 2,699 2,075
Deficit (35,193) (31,675)
---------- ----------
15,358 18,230
---------- ----------
$ 20,669 $ 24,282
---------- ----------
---------- ----------
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 Twelve Months Ended
December 31 December 31
2007 2006 2007 2006
---------- ---------- ---------- ----------
Revenue $ 5,426 $ 5,709 $ 24,524 $ 21,715
Cost of sales 3,631 4,144 15,942 14,624
---------- ---------- ---------- ----------
Gross profit 1,795 1,565 8,582 7,091
---------- ---------- ---------- ----------
Expenses
Selling, general and
administrative 1,757 1,933 8,298 9,130
Stock-based compensation 151 163 624 759
Development 755 1,473 2,625 5,517
Amortization 182 251 871 872
Foreign exchange loss/(gain) 138 (50) 1,711 69
---------- ---------- ---------- ----------
2,983 3,770 14,129 16,347
---------- ---------- ---------- ----------
Operating loss (1,188) (2,205) (5,547) (9,256)
Other income - 78 - 78
Loss on disposal of assets - (34) - (34)
Gain on sale of long-term
investments 263 - 1,664 -
Interest income, net 90 87 365 253
---------- ---------- ---------- ----------
Net loss and comprehensive
loss for the period (835) (2,074) (3,518) (8,959)
Deficit, beginning of period (34,358) (29,601) (31,675) (22,716)
---------- ---------- ---------- ----------
Deficit, end of period $(35,193) $(31,675) $(35,193) $(31,675)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted loss
per share $ - $ (0.01) $ (0.02) $ (0.07)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted weighted
average number of common
shares ('000s) 145,703 145,533 145,657 124,859
Sirit Inc.
Interim Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)
Unaudited
Three Months Ended Twelve Months Ended
December 31 December 31
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cash provided by/(used in):
Operating Activities
Net loss for the period $ (835) $ (2,074) $ (3,518) $ (8,959)
Items not involving cash
and cash equivalents 333 448 1,495 1,665
Gain on sale of long-term
investments (263) - (1,664) -
Foreign exchange loss/(gain) 138 (50) 1,711 69
---------- ---------- ---------- ----------
(627) (1,676) (1,976) (7,225)
Net change in non-cash
working capital items 431 (53) 995 (207)
---------- ---------- ---------- ----------
(196) (1,729) (981) (7,432)
---------- ---------- ---------- ----------
Investing Activities
Additions to property
and equipment (45) (8) (316) (282)
Acquisitions, net of
cash acquired - - - (2,667)
Proceeds on sale of
long-term investments 374 2,063 2,384 2,063
---------- ---------- ---------- ----------
329 2,055 2,068 (886)
---------- ---------- ---------- ----------
Financing Activities
Public offering of common
shares, net of associated
expenses - (17) - 11,506
Issuance of common shares
upon exercise of stock
options - - 22 109
---------- ---------- ---------- ----------
- (17) 22 11,615
---------- ---------- ---------- ----------
Exchange rate impact on cash
and cash equivalents (124) 127 (1,651) 21
---------- ---------- ---------- ----------
Increase/(decrease) in cash
and cash equivalents 9 436 (542) 3,318
Cash and cash equivalents,
beginning of period 8,846 8,961 9,397 6,079
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 8,855 $ 9,397 $ 8,855 $ 9,397
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash and cash equivalents
consist of:
Cash $ 1,826 $ 1,277 $ 1,826 $ 1,277
Short-term commercial paper 7,029 8,120 7,029 8,120
---------- ---------- ---------- ----------
$ 8,855 $ 9,397 $ 8,855 $ 9,397
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------