Azure Dynamics Announces Second Quarter 2008 Results
OAK PARK, MI, Aug. 12 /CNW/ - Azure Dynamics Corporation (TSX: AZD, LSE:
ADC & OTCQX: AZDDF) - ("Azure" or the "Company"), a leading developer of
hybrid electric and electric powertrains for commercial vehicles, today
reported its second quarter financial results for the period ending June 30,
2008. The Company also provided an update on product development activities.
Second Quarter 2008 Highlights
- Revenue for the second quarter totaled $3.4M representing an increase
of 470% compared to the same quarter last year
- The Company shipped a record number of units during the second
quarter: 35 Balance(TM) Hybrid Electric, 14 CitiBus(TM) Series Hybrid
Electric shuttle buses and 37 Force Drive(TM) Electric vehicle
systems
- Key deliveries were made to FedEx Express, AT&T, Pennsylvania
Department of Transportation and several others
- The Company signed its first four dealerships with a Sales & Service
agreement that allows each of the dealerships to service the growing
market demand for Azure's vehicles
"The second quarter was a watershed period in meeting Azure's commitment
to commercialization," said Azure Dynamics' Chief Executive Officer, Scott T.
Harrison. "Production began on our Balance(TM) Hybrid Electric, integrated on
the Ford E450 Chassis, and orders and revenue are following. Customers using
the vehicle report that it is meeting or exceeding expectations from both a
performance and cost metric. The Balance(TM) Hybrid Electric was designed and
built to serve the delivery vehicle market niche and all of our indicators,
including increased sales and growing interest from potential customers,
suggest that the market is responding favorably."
Product Developments
Series Hybrid Electric (G1):
----------------------------
- Purolator's fleet of 49 G1 hybrid vehicles has accumulated over
700,000 miles as of June 30, 2008. The vehicles are deployed in
Montreal, Ottawa, Toronto and Vancouver. Two of the 19 diesel hybrids
have now surpassed three years in service, while the 30 G1 gas
hybrids will soon be approaching a year and a half in service.
- As of June 30, 2008 the Company had completed assembly of all 59
units in the G1 hybrid cab chassis production run at Product Concepts
Inc. Orders have been received for 15 of the 59 which were delivered
to Startrans for body build for various customers including
Pennsylvania DOT within the quarter.
Balance(TM) Hybrid Electric (P1):
---------------------------------
- The Company delivered 20 pre-production step vans to FedEx Express in
California and the vehicles began revenue service.
- The Company initiated the accelerated seven year Altoona durability
test on the shuttle bus variant. The Altoona testing is expected to
be completed in the third quarter, at which point the Balance(TM)
Hybrid Electric shuttle bus will be eligible for funding programs
administered by the Federal Transit Administration (FTA) in the
United States.
- An order for 15 hybrid chassis from AT&T was received. These AT&T
chassis were hybridized within the quarter and will begin service in
the third quarter once their body builds are complete.
LEEP Freeze(TM) & LEEP Lift(TM) (Low Emission Electric Power):
--------------------------------------------------------------
- Within the quarter, Azure delivered one LEEP Freeze(TM) system to
Kidron which is being used for sales and marketing purposes.
- Within the quarter the Company continued the development and build of
the first demonstration LEEP Lift(TM) system as part of the
memorandum of understanding (MOU) with Altec, a leading manufacturer
of aerial boom trucks.
Force Drive(TM) (Electric Solutions):
-------------------------------------
- During the quarter, Azure continued the controlled production of its
Force Drive(TM) systems planned for delivery against a 200 unit
release within the supply agreement with Electro Autos of Mexico.
Azure's scope of supply for the 1,000 Force Drive(TM) systems
includes the motor, controller, gearbox and 12 V converters.
In addition, a number of key sales initiatives are expected to contribute
positively to Azure's performance in the second half of 2008, including the
following:
- Production has commenced on the Company's largest order to date of
105 Balance(TM) Hybrid Electric systems for Purolator Courier Ltd.,
Canada's largest courier company
- The Company's plan to sign approximately 50 dealers over the next
year in major metro markets in the United States and Canada is on
target. This will broaden Azure's distribution network for its
Balance(TM) Hybrid Electric medium-duty trucks
- New fleets with over 5,000 estimated annual commercial vehicle
purchases are either currently engaged in an active product trial or
demonstration for the Balance(TM) Hybrid Electric, or are expected to
enter into one during the third quarter
- Beyond major fleet holders, Azure is attracting interest and orders
from marquee, civic-minded organizations like the West Harlem Art
Fund in Northern Manhattan and the Smithsonian Institution in
Washington D.C.
"On July 18, 2007, a barrel of oil cost $75. Exactly one year later, that
same barrel cost $131. As a result, Americans drove 9.6 BILLION fewer miles in
May 2008 compared to May 2007," said Jay Sandler, Azure Dynamics Vice
President of Sales. "Most of our commercial customers don't have the option to
simply stop driving. Instead, they need transportation to be more economical
without sacrificing any performance or dependability. Our Balance(TM) Hybrid
Electric is a valid solution offering significant economic advantages over
conventionally equipped vehicles. The second quarter saw our sales and revenue
ramp-up begin, and with increased attention from fleet managers, we expect to
continue to grow share in the markets we serve."
Financial Results
Revenue for the second quarter of 2008 totaled $3.4 million compared to
$0.6 million in the second quarter of 2007. For the six months ended June 30,
2008, revenue totaled $3.8 million compared to $0.7 million in the same period
a year ago. The increase in revenue for the three and six months ended
June 30, 2008 was due to shipments of Balance(TM) Hybrid Electric, Azure
CitiBus(TM) and Force Drive(TM) Electric products. Net loss for the second
quarter of 2008 was $8.1 million, or $(0.03) cents per share, compared to a
loss of $6.9 million or $(0.03) cents per share in the second quarter of 2007.
Net loss for the six months ended June 30, 2008 was $16.0 million, or $(0.06)
per share, compared to a loss of $13.4 million or $(0.07) per share in the
same period a year ago. The higher loss for the three and six months ended
June 30, 2008 is primarily attributable to higher levels of engineering
expenses and negative gross margin. Engineering expenses were higher as a
result of the Company's ongoing technology development. Negative gross margin
is primarily the result of negative production variances typically associated
with lower volume early stage production.
Before contributions, the Company's engineering, operations and product
development expenses for the quarter totaled $5.7 million (including
$3.4 million in product development costs), compared to $4.2 million for the
same period in 2007 (including $2.4 million in product development costs). For
the first half of 2008, the Company's engineering and R&D expenses totaled
$10.5 million (including $5.8 million in product development costs), compared
to $8.5 million in the first half of 2007 (including $4.8 million in product
development expenses). During the second quarter, the Company focused on the
production and sale of its Balance(TM) Hybrid Electric program and component
development, as well as ongoing production activities associated with a
CitiBus(TM) a Series Hybrid Electric shuttle bus and Force Drive(TM) Electric
components.
As of June 30, 2008, the Company's net cash and cash equivalents totaled
$5.4 million, and working capital totaled $17.5 million, compared to cash and
cash equivalents of $16.8 million, and working capital of $19.6 million, as at
June 30, 2007, and cash and cash equivalents of $24.1 million, and working
capital of $32.3 million, as at December 31, 2007. The reduction in net cash
and cash equivalents from December 31, 2007 is mainly due to cash used in
support of product development and the Company's ongoing efforts to
commercialize its products.
The Company's fiscal 2008 second quarter financial statements and MD&A
are available at www.sedar.com or on the Company's website at
www.azuredynamics.com.
About Azure Dynamics
Azure Dynamics Corporation (TSX: AZD) (LSE: ADC) (OTCQX: 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 various 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 and LSE Exchanges do not accept responsibility for the adequacy
or accuracy of this release.
Forward-looking Statements
This press release contains forward-looking statements. More
particularly, this press release contains statements concerning Azure's
business development strategy, projected commercial revenues and product
deliveries.
The forward-looking statements are based on certain key expectations and
assumptions made by Azure, including expectations and assumptions concerning
achievement of current timetables for development programs, target market
acceptance of Azure's products, current and new product performance,
availability and cost of labour and expertise, and evolving markets for power
for transportation vehicles. Although Azure believes that the expectations and
assumptions on which the forward-looking statements are based 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 inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors
and risks. These include, but are not limited to, the risks associated with
Azure's early stage of development, lack of product revenues and history of
losses, requirements for additional financing, uncertainty as to commercial
viability, uncertainty as to product development and commercialization
milestones being met, uncertainty as to the market for Azure's products and
unproven acceptance of Azure's technology, competition for capital, product
market and personnel, uncertainty as to target markets, dependence upon third
parties, changes in environmental laws or policies, uncertainty as to patent
and proprietary rights, availability of management and key personnel, and
acquisition integration risk. These risks are set out in more detail in
Azure's annual information form which can be accessed 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.
-------------------------------------------------------------------------
Azure Dynamics Corporation
Consolidated Balance Sheets
(Stated in Thousands)
June 30 December 31
2008 2007
As at (unaudited) (audited)
-------------------------------------------------------------------------
$ $
ASSETS
Current
Cash and cash equivalents 5,428 24,133
Accounts receivable 3,151 590
Contributions receivable 1,127 1,128
Inventory (Note 3) 11,374 10,201
Prepaid expenses 1,039 702
------------------------
22,119 36,754
Restricted cash 1,206 1,172
Property and equipment 5,867 5,746
Intangible assets, net of amortization 8,674 9,283
Goodwill 2,932 2,932
------------------------
40,798 55,887
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 4,399 4,275
Customer deposits & deferred revenue 153 166
Current portion of notes payable (Note 4) 38 35
Current portion of obligations under capital
leases (Note 5) 35 -
------------------------
4,625 4,476
------------------------
Long-term
Obligations under capital leases (Note 5) 141 -
Customer deposits & deferred revenue 1,046 941
Notes payable (Note 4) 2,103 2,064
------------------------
------------------------
3,290 3,005
------------------------
------------------------
Shareholders' equity
Share capital (Note 6) 140,663 140,665
Contributed surplus (Note 6) 6,110 5,605
Deficit (113,890) (97,864)
------------------------
32,883 48,406
------------------------
40,798 55,887
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Azure Dynamics Corporation
Consolidated Statements of Operations, Comprehensive Loss, and Deficit
(Stated in Thousands)
For the three months For the six months
ended June 30 ended June 30
(unaudited) (unaudited)
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Revenues 3,383 593 3,753 749
Cost of sales 3,565 603 4,082 670
------------------------ ------------------------
Gross Margin (182) (10) (329) 79
------------------------ ------------------------
Expenses
Engineering,
research,
development and
related costs, net 5,505 3,921 10,243 7,869
Selling and marketing 691 863 1,613 1,694
General and
administrative 1,663 2,157 3,550 4,122
------------------------ ------------------------
Total expenses 7,859 6,941 15,406 13,685
------------------------ ------------------------
Loss from operations (8,041) (6,951) (15,735) (13,606)
------------------------ ------------------------
------------------------ ------------------------
Interest and other
income, net 99 106 245 304
Interest expense (3) - (3) -
Other Expense (109) - (561) -
Foreign currency
gains/(losses) (65) (71) 28 (121)
------------------------ ------------------------
Net loss and
comprehensive loss
for the period (8,119) (6,916) (16,026) (13,423)
Deficit, beginning of
period (105,771) (74,136) (97,864) (67,629)
------------------------ ------------------------
Deficit, end of period (113,890) (81,052) (113,890) (81,052)
-------------------------------------------------------------------------
Loss per share - basic (0.03) (0.03) (0.06) (0.07)
Weighted average number
of shares - basic(x) 279,376 198,276 279,376 198,276
(x) No fully diluted earnings per share have been disclosed, as these
would be anti dilutive.
-------------------------------------------------------------------------
Azure Dynamics Corporation
Consolidated Statements of Cash Flows
(Stated in Thousands)
For the three months For the six months
ended June 30 ended June 30
(unaudited) (unaudited)
2008 2007 2008 2007
$ $ $ $
---------------------- --------------------------------------------------
Cash flows from
operating activities
Net loss for the
period (8,119) (6,916) (16,026) (13,423)
Adjustments for:
Amortization of
property and
equipment and other
assets 224 225 447 440
Amortization of
intangible assets 374 404 716 741
Unrealized foreign
currency gains/(losses) (1) (79) 21 (72)
(Gain)/Loss on
Disposal of Assets - 166 - 166
Stock option
compensation expense 98 288 452 524
Deferred Share Units
compensation expense 21 53
------------------------ ------------------------
(7,403) (5,912) (14,337) (11,624)
Changes in non-cash
working capital items (703) 2,636 (3,888) 2,316
Movement due to
exchange impact 69 146 35 164
------------------------ ------------------------
------------------------ ------------------------
Total Cash flows from
operating activities (8,037) (3,130) (18,190) (9,144)
------------------------ ------------------------
Cash flows from
financing activities
Issuance of common
shares (net of costs) (1) - (1) 15
Principle payments on
notes payable (9) (9) (18) (19)
Proceeds from
obligations under
capital lease (8) - (10) -
Movement due to
exchange impact - (191) - (214)
------------------------ ------------------------
Total Cash flows from
financing activities (18) (200) (29) (218)
------------------------ ------------------------
Cash flows from
investing activities
Acquisition of
property and
equipment (195) (508) (385) (841)
Acquisition of
intangible assets (45) (56) (108) (69)
Changes in Restricted
Cash - - - (225)
------------------------ ------------------------
Total Cash flows from
investing activities (240) (564) (493) (1,135)
------------------------ ------------------------
Increase (decrease) in
cash and cash
equivalents (8,295) (3,894) (18,712) (10,497)
Exchange impact on
cash held in
foreign currency (5) 149 7 152
Cash and cash
equivalents, beginning
of period 13,728 20,592 24,133 27,192
------------------------ ------------------------
Cash and cash
equivalents, end of
period 5,428 16,847 5,428 16,847
------------------------ ------------------------
------------------------ ------------------------
Non cash investing and
financing activities:
Vehicles and equipment
acquired under
capital lease 77 - 185 -
------------------------ ------------------------
------------------------ ------------------------
For further information: Ryan Carr, Chief Financial Officer, (248) 298-2403,
Email: rcarr(at)azuredynamics.com; Pat Liebler, Liebler!MacDonald, (313)
832-4376, Email: pat(at)lieblergroup.com; Stuart Skinner, Richard Kenny,
Tel: +44 207 260 1000, Numis Securities Limited as Nominated Adviser to the
Company; David Poutney Tel: +44 207 260 1000, Numis Securities Limited as
Broker to the Company
(AZD. ADC)
END
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