OAK PARK, Michigan, November 11 /PRNewswire/ -- 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 third quarter financial results for the period ending September 30, 2008. The Company also provided an update on product development activities.
Third Quarter 2008 Highlights
- Completed private placement offering of US$25 million at a significant premium to market. - Achieved new orders for Balance(TM) Hybrid Electric vehicles from Consolidated Edison in New York and from a leading national bakery company. These orders demonstrate the versatility of the Balance(TM) Hybrid Electric vehicles and their potential to infiltrate new markets. - Achieved new orders from Buchy Food Service for the LEEP Freeze(TM) (Low Emission Electric Power) system to provide dependable power for transport refrigeration and cold storage product protection. - Enrolled twelve new Balance(TM) Hybrid Electric Ford dealers to the Azure distribution network as part of the company's commitment to sign approximately 50 dealers in major metro markets. - Shipped 27 Balance(TM) Hybrid Electric vehicles to our largest customer, Purolator, with the remainder of their 105-unit order expected to be shipped in the fourth quarter. - Unveiled the Balance(TM) Hybrid Electric, the only hybrid electric shuttle bus that enables its owners to receive federal funding, 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.
"Completing our private placement offering in the third quarter was a huge success, especially in light of unsettled market conditions," said Scott T. Harrison, Chief Executive Officer. "Product orders were about on pace with our expectations, but we were disappointed to receive a price increase on a key system component. We are aggressively evaluating alternatives to mitigate the impact of this increase as well as to ensure stable supply in order to support future product demand. We are confident that these measures will deliver strong benefit to the company and its customers in the future."
"Two major advantages for Azure Dynamics going forward are the continued and growing demand for green products that will position Azure technology as a high priority for our customers - people want what we have -- and the fact that we have launched product in the marketplace and have extensive manufacturing experience that will enable us to continuously lower our product cost and improve the economics for our customer," Harrison said. "In addition, Azure's products offer fuel efficiency improvements that make them highly competitive against traditionally equipped powertrains and our customer support system is best-in-class."
Serge Viola, Director, National Fleet and Ground Line Haul for Purolator, said "We're delighted with our choice of the Azure Balance Hybrid Electric vehicle for our delivery fleet. We've just taken delivery of the latest version and it appears Azure keeps on getting better. They're helping us reduce operating costs by improving our fuel economy and up time and they're keeping us true to our corporate values as a company that cares and is proactively doing something about protecting the environment."
Product Developments Series Hybrid Electric (G1): ---------------------------- - Purolator's fleet of 49 G1 hybrid vehicles has accumulated over 800,000 miles as of September 30, 2008. The vehicles are deployed in Montreal, Ottawa, Toronto and Vancouver. Eight 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. - As of September 30, 2008 the Company had shipped 16 of 59 G1 hybrid cab chassis cabs which were completed earlier in the year. G1 shuttle buses at BOEDC have been operating in New York for nine months. Balance(TM) Hybrid Electric (P1): --------------------------------- - During the quarter, the Company completed the production launch phase of the main, Balance(TM) Hybrid Electric development program. As a part of the production launch within this quarter the Company commenced the build of 105 P1 Balance hybrid chassis for Purolator. - The 20 pre-production step vans that were delivered to FedEx Express in California in the second quarter have now accumulated over 100,000 miles of revenue service. - The 15 units delivered to AT&T in the second quarter have had their body builds completed and they entered service in September. The Balance(TM) Hybrid Electric shuttle bus will now be eligible for funding programs administered by the Federal Transit Administration (FTA) in the United States. - The accelerated seven year Altoona durability test on the shuttle bus variant was also completed in September and the final report is anticipated to be issued in the fourth quarter, 2008. - Four of the Balance(TM) Hybrid shuttle bus chassis' which were delivered last quarter were completed into shuttle buses and displayed by the respective body builders at BusCon in Chicago in September. BusCon is the bus industry's premiere marketing event. LEEP Freeze(TM) & LEEP Lift(TM) (Low Emission Electric Power): ------------------------------------------------------------ - Azure and Kidron 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. - 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. 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 12V converters.
Financial Results
Revenue for the third quarter of 2008 totaled US$1.3 million compared to US$1.5 million in the third quarter of 2007. For the nine months ended September 30, 2008, revenue totaled US$5.1 million compared to US$2.3 million in the same period a year ago. The lower revenue in the current quarter is primarily attributable to lower sales of the Azure CitiBus(TM) offset by higher sales of Azure's recently launched Balance(TM) Hybrid Electric product. The increase in revenue for the nine months ended September 30, 2008 was due to increased shipments of Balance(TM) Hybrid Electric, Azure CitiBus(TM) and Force Drive(TM) Electric products. Net loss for the third quarter of 2008 was US$8.3 million, or US$(0.03) cents per share, compared to a loss of US$8.5 million or US$(0.04) cents per share in the third quarter of 2007. Net loss for the nine months ended September 30, 2008 was US$24.3 million, or US$(0.08) per share, compared to a loss of US$21.9 million or US$(0.11) per share in the same period a year ago. The greater loss in both the quarter and year to date are primarily the result of increased engineering expenses and negative gross margin. Engineering expenses were higher as a result of the Company's ongoing technology development. Negative gross margin is attributable to production variances, increases in certain component costs and a write down of certain inventory to net realizable value.
Before contributions, the Company's engineering, operations and product development expenses for the quarter totaled US$4.9 million (including US$2.7 million in product development costs), compared to US$4.4 million for the same period in 2007 (including US$2.6 million in product development costs). For the first nine months of 2008, the Company's engineering and R&D expenses totaled US$15.5 million (including US$8.5 million in product development costs), compared to US$12.8 million in the same period of 2007 (including US$7.4 million in product development expenses). During the third quarter the Company focused on the production and sale of its Balance(TM) Hybrid Electric program and its Force Drive(TM) Electric component development, as well as ongoing production activities associate with Azure CitiBus(TM).
As of September 30, 2008, the Company's net cash and cash equivalents totaled US$21.2 million, and working capital totaled US$33.6 million, compared to cash and cash equivalents of US$5.9 million, and working capital of US$11.5 million, as at September 30, 2007, and cash and cash equivalents of US$24.1 million, and working capital of US$32.3 million, as at December 31, 2007. The increase in cash inflows from the third quarter 2007 is mainly attributable to the private placement of 100,000,000 shares completed during the third quarter 2008 which resulted in net proceeds of approximately US$24.4 million.
The Company's fiscal 2008 third quarter financial statements and MD&A are available at http://www.sedar.com or on the Company's website at http://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 http://www.azuredynamics.com.
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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 http://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 Sheet (Stated in Thousands) September 30 December 31 2008 2007 As at (unaudited) (audited) ------------------------------------------------------------------------- US$ US$ ASSETS Current Cash and cash equivalents 21,207 24,133 Accounts receivable 3,123 590 Contributions receivable 1,228 1,128 Inventory and related prepayments (Note 3) 11,949 10,201 Prepaid expenses 836 702 -------------------------------- 38,343 36,754 Restricted cash 1,258 1,172 Property and equipment 6,343 5,746 Intangible assets, net of amortization 8,344 9,283 Goodwill 2,932 2,932 -------------------------------- 57,220 55,887 ------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 4,198 4,275 Customer deposits & deferred revenue 387 166 Current portion of notes payable (Note 4) 40 35 Current portion of obligations under capital leases (Note 5) 91 - ------------------------------- 4,716 4,476 Long-term Obligations under capital leases (Note 5) 234 - Customer deposits & deferred revenue 843 941 Notes payable (Note 4) 2,185 2,064 ------------------------------- 3,262 3,005 ------------------------------- Shareholders' equity Share capital (Note 6) 165,057 140,665 Contributed surplus (Note 6) 6,384 5,605 Deficit (122,199) (97,864) ------------------------------- 49,242 48,406 ------------------------------- 57,220 55,887 ------------------------------------------------------------------------ Azure Dynamics Corporation Consolidated Statements of Operations, Comprehensive Loss, and Deficit (Stated in Thousands) For the three months For the nine months ended September 30 ended September 30 (unaudited) (unaudited) 2008 2007 2008 2007 ------------------------------------------------------------------------ US$ US$ US$ US$ Revenues 1,325 1,534 5,078 2,283 Cost of sales 2,132 1,731 6,214 2,401 --------------------- -------------------- Gross Margin (807) (197) (1,136) (118) --------------------- -------------------- Expenses Engineering, research, development and related costs, net 4,832 4,132 15,074 11,949 Selling and marketing 818 940 2,430 2,603 General and administrative 1,798 1,870 5,349 5,864 --------------------- -------------------- Total expenses 7,448 6,942 22,853 20,416 --------------------- -------------------- Loss from operations (8,255) (7,139) (23,989) (20,534) --------------------- -------------------- Interest and other income, net 40 156 285 460 Interest expense (3) - (6) - Other Expense - (1,537) (561) (1,748) Foreign currency gains/(losses) (91) 66 (64) (55) --------------------- -------------------- Net loss and comprehensive loss for the period (8,309) (8,454) (24,335) (21,877) Deficit, beginning of period (113,890) (81,052) (97,864) (67,629) --------------------- -------------------- Deficit, end of period (122,199) (89,506) (122,199) (89,506) ------------------------------------------------------------------------ Loss per share - basic (0.03) (0.04) (0.08) (0.11) Weighted average number of shares - basic (x) 316,333 198,276 291,785 198,276 (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 nine months ended September 30 ended September 30 (unaudited) (unaudited) 2008 2007 2008 2007 ------------------------------------------------------------------------ US$ US$ US$ US$ Cash flows from operating activities Net loss for the period (8,309) (8,454) (24,335) (21,877) Adjustments for: Amortization of property and equipment and other assets 252 226 699 665 Amortization of intangible assets 347 348 1,063 1,090 Unrealized foreign currency gains/(losses) 64 20 85 (52) (Gain) / Loss on Disposal of Assets - 19 - 185 Stock option compensation expense 181 284 633 809 Deferred Share Units compensation expense 93 63 146 63 --------------------- -------------------- (7,372) (7,494) (21,709) (19,117) Changes in non-cash working capital items (680) (2,796) (4,563) (480) Movement due to exchange impact 65 (79) 95 85 --------------------- -------------------- Total Cash flows from operating activities (7,987) (10,369) (26,177) (19,512) --------------------- -------------------- Cash flows from financing activities Issuance of common shares (net of costs) 24,394 (88) 24,392 (73) Principle payments on notes payable (9) (8) (27) (27) Proceeds from obligation under capital lease (10) - (20) - Movement due to exchange impact - (151) - (365) --------------------- -------------------- Total Cash flows from financing activities 24,375 (247) 24,345 (465) --------------------- -------------------- Cash flows from investing activities Acquisition of property and equipment (577) (201) (961) (1,042) Acquisition of other assets (17) (27) (125) (96) Changes in Restricted Cash - (201) - (426) --------------------- -------------------- Total Cash flows from investing activities (594) (429) (1,086) (1,564) --------------------- -------------------- Increase (decrease) in cash and cash equivalents 15,794 (11,045) (2,918) (21,541) Exchange impact on cash held in foreign currency (15) 50 (8) 201 Cash and cash equivalents, beginning of period 5,428 16,847 24,133 27,192 --------------------- -------------------- Cash and cash equivalents, end of period 21,207 5,852 21,207 5,852 --------------------- -------------------- --------------------- -------------------- Non cash investing and financing activities: Vehicles and equipment acquired under capital lease 151 - 336 - --------------------- -------------------- --------------------- --------------------
For further information: Ryan Carr, Chief Financial Officer +1-248-298-2403, Email: rcarr@azuredynamics.com; Pat Liebler, Liebler!MacDonald, +1-313-832-4376, Email: pat@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
