"While the automotive and commercial vehicle industries struggled along with the rest of the economy to recover during the quarter, we saw definite signs of improvement and opportunity," said Scott Harrison, Azure Chief Executive Officer. "Interest from our current and prospective customers picked up significantly and several new orders that had been on hold were released late in the quarter and into the fourth quarter. We see that trend continuing to improve as we move closer to the end of the year."
Harrison said that interest in fuel efficient green products continues to mushroom in the commercial vehicle industry and that as federal stimulus funds are released he expects more companies and municipalities to take advantage of them to order electric vehicles equipped with Azure technology.
"It’s clear that we have the right products for today’s market and as we continue to amass on-the-road experience and customer understanding of our unique product benefits, the market is responding," said Harrison. "Our more than two decades of development work in alternative vehicle transportation systems is finally starting to pay off."
Subsequent to the quarter end, Azure announced significant advancements for each of its core technologies. On October 14th, the Company announced its largest LEEP(TM) Freeze order to date with 248 units for Schwan Food Company. On October 30th, Azure and Ford Motor Company jointly announced that Azure’s Force(TM) Drive technology would power the Transit Connect battery electric vehicle, the first of four electric vehicles coming from Ford in the next three years. Then, on November 9th, Azure announced 51 additional Balance(TM) Hybrid Electric sales to FedEx Express, most of which will be deployed at an all-hybrid facility in Bronx, New York.
"We’re delighted at the amount of financial support that is being made available to the Company to assist us in our development efforts for the Transit Connect battery electric vehicle. For the first time in the Company’s history, we will share the development costs of a major product program with several project collaborators. Additionally, we’re evaluating several commitment letters received from government for a significant economic package to further reduce our overall development costs," said Harrison. "With the added financial benefits of sharing development costs, and support from government, we are now more confident than ever in our ability to continue delivering our innovative products to meet the growing customer demand."
Third Quarter 2009 Highlights
On July 9, Azure was awarded a 16 vehicle contract from the Hybrid Truck Users Forum’s (HTUF) Small Hybrid Bus Working Group. HTUF’s Small Hybrid Bus Working group is a joint program between CALSTART and the U.S. Army TARDEC’s National Automotive Center (NAC) and is supported by the Federal Transit Administration. Azure won the competitive bid process because its technology provided the flexibility to service the needs of a broad range of HTUF constituents.
– On August 5, the Company announced a successful bid for up to 50 Balance(TM) Hybrid Electric shuttle buses for the State of Kentucky. Ten buses were ordered immediately by three separate Kentucky municipalities with an option for up to 40 additional buses.
– On August 13, Azure Dynamics closed a private placement offering for gross proceeds of approximately CDN$10,000,000. The offering was conducted through a syndicate of agents co-led by Raymond James Ltd. and TD Securities Inc. and including Paradigm Capital Inc. and Stonegate Securities, Incorporated as co-managers.
– On August 18, the NAPA Valley Unified School District (NAPA) in California purchased the nation’s first NEXBUS, the only hybrid electric Type A school bus available in North America. NEXBUS is produced by Collins Bus Corporation and features Azure Dynamics’
Balance(TM) Hybrid Electric drive train. Collins is the largest builder of Type A (short) school buses and Azure’s exclusive partner in producing certified hybrid school buses.
– On August 25, Azure announced the sale of five Balance(TM) Hybrid Electric buses to Votran, the transit entity for Volusia County, Florida. Votran, which used FTA stimulus funds to cover 100 percent of the cost of the vehicles, will integrate the buses into its county-wide paratransit service.
– On August 26, Azure announced that the United States Postal Service (USPS) had added a Balance(TM) Hybrid Electric vehicle to its fleet. The Azure product, a Balance(TM) Hybrid Electric two-ton walk-in van, will actively participate in the USPS fleet in Long Island, New York, for a twelve month pilot program. Azure has an additional 30 vehicles already in service with USPS.
– On September 24, Azure’s Balance(TM) Hybrid Electric technology was approved by the Michigan Department of Transportation (MDOT) for use by state transportation agencies. The MDOT contract creates a fixed price for up to 50 buses and will remain in effect for up to three years with a total maximum value of $5.6 million.
– On September 30, Azure’s dealer, Colonial Equipment Co., was awarded a bid with Howard County, Maryland, for up to 25 of the Azure CitiBus(TM) units with 17 units immediately ordered.
– As the fourth quarter began in October, Azure received two separate orders from Kidron Body Company for a total of 257 Low Emission Electric Power (LEEP(TM) Freeze) systems.
Financial Results
Revenue for the third quarter of 2009 totaled $3.2 million compared to $1.3 million in the third quarter of 2008. For the nine months ended September 30, 2009, revenue totaled $5.0 million compared to $5.1 million in the same period a year ago. Net loss for the third quarter of 2009 was $5.7 million, or $(0.01) cents per share, compared to a loss of $8.3 million or $(0.03) cents per share in the third quarter of 2008. Net loss for the nine months ended September 30, 2009 was $19.8 million, or $(0.05) per share, compared to a loss of $24.3 million or $(0.08) per share in the same period a year ago.
Before contributions, the Company’s engineering, operations and product development expenses for the quarter totaled $3.3 million (including $1.2 million in product development costs), compared to $4.9 million for the same period in 2008 (including $2.7 million in product development costs). For the first nine months of 2009, the Company’s engineering and R&D expenses totaled $10.4 million (including $3.2 million in product development costs), compared to $15.5 million in the same period of 2008 (including $8.5 million in product development expenses).
As of September 30, 2009, the Company’s net cash and cash equivalents totaled $5.3 million, and working capital totaled $11.1 million, compared to cash and cash equivalents of $21.2 million, and working capital of $33.6 million, as of September 30, 2008. Revenue for the third quarter increased significantly and the company is in the process of completing delivery of several previously announced orders for which it expects to receive payment during the fourth quarter of 2009 and the first quarter of 2010.
The Company is progressing in its discussions with Technology Partnerships Canada ("TPC") with respect to extending the length and modifying the scope of its existing grant program from TPC to include additional costs related to the development of the Balance(TM) Hybrid Electric P1 parallel hybrid program. Azure’s application for an amendment totaling approximately $2.8 million has been submitted and is currently under review. Management believes that this request will be approved sometime during the fourth quarter of 2009.
Azure Dynamics Corporation (TSX: AZD) 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.
