TIDMADC
Azure Dynamics Reports Fiscal 2008 Year End Results
OAK PARK, MI, March 31 /CNW/ - Azure Dynamics Corporation (TSX: AZD &
LSE: ADC) ("Azure" or the "Company") a leading developer of hybrid electric
and electric powertrains for commercial vehicles, today announced its
financial results for the three and twelve-month periods ended December 31,
2008. The Company also provided an update on corporate and product development
activities in the year.
"2008 was highlighted with the launch of our revolutionary Balance(TM)
Hybrid Electric commercial delivery truck and shuttle bus vehicles. As a
result, we were able to nearly triple our sales revenue versus 2007," said
Scott T. Harrison, Azure Chief Executive Officer. "Significantly, despite the
difficult global and national economies, we're expecting to continue our sales
revenue growth in the upcoming year as more customers continue to seek
vehicles that reduce operational costs and improve their environmental
position."
Key 2008 Milestones
- Completed private placement offering of $25 million at a significant
premium to the market. The financing allows Azure to continue its
product development and commercialization activities.
- Executed an agreement with Waukesha, IN, based Utilimaster for the
assembly, hybridization, and manufacturing engineering of Azure's
Balance(TM) Hybrid Electric (P1) commercial delivery vans and shuttle
buses.
- Shipped a record number of units during the year, including
149 Balance(TM) Hybrid Electric vehicles to a variety of major
delivery van and shuttle bus customers including Purolator, AT&T,
FedEx Express, Consolidated Edison and others.
- Achieved new orders for the LEEP Freeze(TM) (Low Emission Electric
Power) system to provide dependable power for transport refrigeration
and cold storage product protection.
- The Balance(TM) Hybrid Electric shuttle bus passed the U.S. federal
government's rigorous "Altoona" durability test enabling purchasers
of the units to apply for significant financial assistance from the
government.
- As a result of the 2008 initiative to broaden the sales, service and
distribution network for Azure's Balance(TM) Hybrid Electric
vehicles, the company has signed a total of 26 dealerships to date.
- In January 2009, Azure signed a five year supply agreement with
Johnson Controls-Saft under which Johnson Controls-Saft will supply
the Company with its state-of-the-art lithium-ion hybrid batteries.
This agreement with one of the world's leading developers of hybrid
electric technology will enable Azure to provide a cost-effective,
consistent and timely product flow to all of its customers.
Financial Results
Revenue for the fourth quarter of 2008 totaled $2.6 million compared to
$0.5 million in the fourth quarter of 2007. For the year ended December 31,
2008 revenue increased to $7.7 million compared to $2.8 million in 2007. Net
loss for the fourth quarter of 2008 totaled $14.5 million, or $(0.04) per
share compared to a loss of $8.4 million or $(0.03) per share in the fourth
quarter of 2007. For the year ended December 31, 2008, the Company's net loss
was $38.9 million, or $(0.12) per share, compared to a net loss of $30.2
million, or $(0.14) per share in 2007.
Before contributions, the Company's engineering, research and development
("R&D") expenses in the quarter totaled $6.0 million (including $3.1 million
in product development costs), compared to $5.0 million for the same period in
2007 (including $2.7 million in product development costs). For the year ended
December 31, 2008, the Company's engineering and R&D expenses totaled $21.5
million (including $11.6 million in product development costs) compared to
$17.8 million in 2007 (including $10.0 million in product development costs).
As of December 31, 2008, the Company's cash and cash equivalents totaled
$13.8 million and working capital totaled $19.8 million, compared to cash and
cash equivalents of $24.1 million and working capital of $32.3 million as at
December 31, 2007. During the year, the Company completed an equity financing,
raising net proceeds of $24.3 million to fund ongoing product development,
operations and working capital.
Corporate
"During 2008 we accomplished all our major goals and positioned ourselves
to become a major player in the hybrid electric commercial vehicle business in
the future," said Harrison. "Our partnership with Ford to hybridize their
E-450 commercial vans continued to grow stronger, our manufacturing
arrangement with Utilimaster ran smoothly, and our new agreement with Johnson
Controls-Saft resolves potential future battery supply problems, so we feel
very good about where we are. Our products are performing well in customer
fleets and we're hearing from potential new customers on a regular basis.
"Our major concern is the same as everybody else, the state of the
economy. Customers are reluctant to make new investments while their own
businesses are in flux and until they have a better idea of where the economy
is headed," said Harrison. "My belief is that opportunity exists at every
inflection point. The economy is certainly at an inflection point and our
recent restructuring and product development activities will enable us to take
full advantage of opportunities as they arise. Furthermore, we are encouraged
by the Obama administration's stimulus plans and believe that Azure's products
will qualify for federal funding assistance from a variety of programs. The
addition of federal support could greatly accelerate our production ramp."
Azure's restructuring, announced this January, included a 25% workforce
reduction, cuts in discretionary spending, and a focused effort to share its
product development costs with its partners. It also involved rationalization
of the product line to allow the company to concentrate its efforts on
existing products and product programs.
Product Development
Azure continued to form significant relationships with industry leaders
to increase penetration into its target markets and advance its product
development programs. Along with Ford Motor Company, StarTrans (a business
division of Supreme Corporation), Utilimaster Corporation and Kidron, Azure
also formed relationships with Altec and launched new products with key
customers such as FedEx Express, AT&T and Purolator.
G1 Series (7,500 to 16,000 lbs. gross vehicle weight, "GVW")
------------------------------------------------------------
- Purolator's fleet of 49 G1 hybrid vehicles has accumulated over
930,000 miles as of December 31, 2008. The vehicles are deployed in
Montreal, Ottawa, Toronto and Vancouver. Nine of the 19 diesel
hybrids have now surpassed three years in service, while the 30 G1
gas hybrids have exceeded a year and a half in service.
- Azure delivered 16 more G1 hybrid shuttle buses (CitiBus Hybrid
Senator HD or "CitiBus") in 2008 including 10 for PennDOT. Five buses
sold to Bronx Overall Economic Development Corporation (BOEDC) have
now been in service for approximately one year.
Balance(TM) Hybrid Electric (P1) Parallel (10,000 - 19,000 lbs. GVW)
--------------------------------------------------------------------
- During 2008, the Company completed the production launch of the main,
Balance(TM) Hybrid Electric development program on the model year
2008 Ford E-450 chassis. The Company also started model year 2009
production in December.
- In total, the Company delivered 149 model year 2008 Balance(TM)
Hybrid Electric chassis in 2008. 105 of these were delivered to
Purolator, 20 to FedEx Express and 15 to AT&T. These vehicles
accumulated more than 200,000 miles while in service in 2008.
- The Federal Transit Administration's accelerated seven year
durability test on the shuttle bus variant was completed in September
in Altoona, Pennsylvania and the final report has now been issued.
This successful completion of this test qualifies Azure's Balance(TM)
gasoline hybrid drive system for federally-supported hybrid bus
purchases by public transit agencies across the United States.
LEEP Freeze(TM) & LEEP Lift(TM) (Low Emission Electric Power)
-------------------------------------------------------------
- Azure and Kidron continued their relationship on the LEEP Freeze(TM)
system and supported 12 fleet demonstrations including over a week
trial in Phoenix during the month of August, where the LEEP
Freeze(TM) system demonstrated its capability to effectively operate
at temperatures above 100 degree F.
- Azure delivered seven LEEP Freeze(TM) systems to Kidron in the fourth
quarter which will be used in conjunction with the Kidron cold plate
technology, of which six were delivered to Buchy Foods in Ohio.
- Azure and Altec signed a Memorandum of Understanding in March, 2008
to develop LEEP Lift(TM) systems for electric utility and telecom
aerial lift trucks. Pursuant to the completion of the definitive
agreement, Altec will integrate Azure's LEEP Lift(TM) systems into
their utility and telecom truck bodies and Altec will market, sell
and service the systems through their existing sales and service
network.
- The first demonstration LEEP Lift(TM) system was commissioned and
tested during the third quarter and delivered to Altec for additional
internal testing. The initial unit demonstrated up to a 30% fuel
savings versus a conventionally equipped truck on a representative
test cycle. This vehicle will be used for various customer in-service
demonstrations in early 2009.
Other Product Developments
--------------------------
- Azure evaluated, developed and tested advanced energy storage systems
throughout 2008 including NiMH and Li-Ion batteries as well as
ultracapacitors.
- Azure continued to develop and test advanced power electronics,
electric motors and flexible embedded control systems in 2008,
including gasoline engine control, automatic transmission control as
well as advanced energy management and diagnostic strategies.
Sales and Marketing Highlights:
- The Balance(TM) Hybrid Electric is the only hybrid shuttle bus to
have been certified as Altoona tested. Under the current guidelines,
successful completion of this test qualifies Azure's Balance(TM)
Hybrid Electric drive train system for Federal Transit Authority
(FTA) programs of up to 80% funding when purchased by public transit
agencies across the United States. In addition to FTA programs,
Azure's Balance(TM) Hybrid Electric may qualify for up to a $3,000 US
Federal tax credit and/or numerous individual state and agency
programs
- The Company shipped 16 G1 CitiBus Series Hybrid Electric shuttle
buses and 31 Force Drive(TM) Electric vehicle systems in 2008.
- Azure's LEEP system was specified in an order from a major player in
the baking industry. As a whole, the baking industry operates one of
the largest vehicle fleets in North America.
- On January 13, 2009, Johnson Controls-Saft and Azure Dynamics managed
a joint press conference at the North American International Auto
Show at Cobo Hall in Detroit. The conference attracted over 200
guests and resulted in more than 250 relevant media placements.
Coverage of the announcement was included in prestigious outlets such
as: New York Times; Wall Street Journal; Automotive News as well as
significant coverage in on-line news sources like MSN; CNN; AOL;
Yahoo to name just a few.
- Azure Dynamics has been featured in numerous automotive,
environmental, business and lifestyle publications. Select titles
include: Business News Network (BNN), Forbes; Government Product
News; Green Car Journal, Popular Mechanics; Automotive Engineering
International; Trailer Body Builders; Ward's Auto World.
- Displayed the Balance(TM) Hybrid Electric to thousands of potential
customers at the Bus Con Conference at Navy Pier in Chicago and at
the American Public Transit Association in San Diego. Products
received favorable response from shuttle bus industry attendees.
- Azure has signed Sales and Service agreements with 26 Ford
Dealerships in key major metro markets.
- The Company is researching current federal stimulus bill elements and
will manage an aggressive marketing campaign to educate and encourage
customers to participate.
Conclusion
"2009 is going to be a difficult business year for everybody. The economy
is going to take awhile to settle and in the meantime businesses and consumers
alike are going to be nervous about spending," said Harrison. "Having said
that, I'm confident the economy will come back and when it does Azure will be
in a sweet spot to help fleet owners control their fuel and maintenance costs
and decrease the environmental impact of their products. Overall, we are well
positioned and are ready with products the market needs as soon as the market
is ready to purchase again."
The Company's complete fiscal 2008 audited year-end financial statements
and MD&A are available at www.sedar.com or on the Company's website at
www.azuredynamics.com.
Azure Dynamics
Azure Dynamics Corporation (TSX: AZD) (LSE: ADC) 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. Azure Dynamics'
operations are based in North America and Europe.
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 labor 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)
December 31 December 31
As at 2008 2007
-------------------------------------------------------------------------
$ $
ASSETS
Current
Cash and cash equivalents 13,803 24,133
Accounts receivable 2,317 590
Contributions receivable (Note 14) - 1,128
Inventory (Note 6) 8,318 10,201
Prepaid expenses 675 702
--------------------------
25,113 36,754
Restricted cash (Note 5) 1,440 1,172
Property and equipment (Note 7) 6,194 5,746
Intangible assets (Note 8) 8,012 9,283
Goodwill (Note 3) 2,932 2,932
--------------------------
43,691 55,887
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 4,806 4,275
Customer deposits & deferred revenue (Note 9) 360 166
Current portion of notes payable (Note 4) 74 35
Current portion of obligations
under capital leases (Note 10) 114 -
--------------------------
5,354 4,476
Long-term
Obligations under capital leases (Note 10) 263 -
Customer deposits & deferred revenue (Note 9) 839 941
Notes payable (Note 4) 2,459 2,064
--------------------------
3,561 3,005
--------------------------
Shareholders' equity
Share capital (Note 12) 165,007 140,665
Contributed surplus (Note 12) 6,500 5,605
Deficit (136,731) (97,864)
--------------------------
34,776 48,406
--------------------------
43,691 55,887
Approved on behalf of the Board:
"signed Scott T. Harrison" Director
-----------------------------
Scott T. Harrison
"signed Dennis A. Sharp" Director
-----------------------------
Dennis A. Sharp
The accompanying notes are an integral part of these consolidated
financial statements.
-------------------------------------------------------------------------
Azure Dynamics Corporation
Consolidated Statements of Operations, Comprehensive Loss and Deficit
(Stated in Thousands, except per share amount and number of shares)
For the years ended December 31
2008 2007
-------------------------------------------------------------------------
$ $
Revenues 7,651 2,801
Cost of sales 12,866 3,098
--------------------------
Gross Margin (5,215) (297)
--------------------------
Expenses
Engineering, research, development
and related costs, net 22,286 16,690
Selling and marketing 3,418 3,683
General and administrative 7,314 7,813
--------------------------
Total expenses 33,018 28,186
--------------------------
Loss from operations (38,233) (28,483)
--------------------------
Interest and other income, net 347 934
Interest expense (10) -
Other expense (568) (2,604)
Foreign currency losses (403) (82)
--------------------------
Net loss and comprehensive loss (38,867) (30,235)
Deficit, beginning of year (97,864) (67,629)
--------------------------
Deficit, end of year (136,731) (97,864)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per share - basic and diluted (0.12) (0.14)
Weighted average number of shares -
basic and diluted 313,802,407 214,273,669
The accompanying notes are an integral part of these consolidated
financial statements.
-------------------------------------------------------------------------
Azure Dynamics Corporation
Consolidated Statements of Cash Flows
(Stated in Thousands)
For the years ended December 31
2008 2007
-------------------------------------------------------------------------
$ $
Cash flows from operating activities
Net loss for the period (38,867) (30,235)
Adjustments for:
Amortization of property and equipment 1,005 931
Amortization of intangible assets 1,414 1,431
Unrealized foreign currency losses 525 (516)
Loss on disposal of assets - 214
Stock option compensation expense 711 967
Deferred share units compensation expense 184 826
--------------------------
(35,028) (26,382)
Changes in non-cash working capital items
(Note 18) 1,625 (2,809)
--------------------------
Total cash flows from operating activities (33,403) (29,191)
--------------------------
Cash flows from financing activities
Issuance of common shares (net of costs) 24,342 27,858
Principle payments on notes payable (40) (36)
Repayment of obligations under capital lease (26) -
--------------------------
Total cash flows from financing activities 24,276 27,822
--------------------------
Cash flows from investing activities
Acquisition of property and equipment (1,089) (1,278)
Acquisition of intangible assets (143) (172)
Changes in restricted cash - (473)
--------------------------
Total cash flows from investing activities (1,232) (1,923)
--------------------------
Decrease in cash and cash equivalents (10,359) (3,292)
Exchange impact on cash held in foreign currency 29 233
Cash and cash equivalents, beginning of year 24,133 27,192
--------------------------
Cash and cash equivalents, end of year 13,803 24,133
--------------------------
--------------------------
Supplemental cash flow information
Cash paid for interest 19 -
--------------------------
--------------------------
Non cash investing and financing activities:
Vehicles and equipment acquired under
capital lease 364 -
--------------------------
--------------------------
The accompanying notes are an integral part of these consolidated
financial statements.
For further information: Ryan Carr, Chief Financial Officer, (248) 298-2403
ext 1206, Email: rcarr(at)azuredynamics.com; Pat Liebler, Liebler Group, (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
(ADC)
END
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