TORONTO, May 11 -- Sirit Inc. (TSX: SI), a leading provider of radio frequency identification (RFID) technology, today reported its financial results for the first quarter ended March 31, 2006. All amounts are stated in Canadian Dollars unless otherwise noted.
First Quarter 2006 Financial Highlights
- Total revenue in Q1 2006 reached $5.4 million, an increase of 22% from Q1 2005 and 27% from Q4 2005.
- Automatic Vehicle Identification ("AVI") revenue grew by 33% in the first quarter reaching $4.4 million when compared to $3.3 million in the first quarter of 2005.
- Radio Frequency Solutions ("RFS") applications revenue remained consistent with prior year first quarter at $1.0 million. Fluctuations in quarterly RFS results are expected to continue.
- Net loss for the quarter was $1.0 million, the same level as Q1 2005.
- Cash utilization of $0.9 million during the quarter is consistent with prior two quarters.
Revenue for the three months ended March 31, 2006 totaled $5.4 million, a 22% or $1.0 million increase from $4.4 million in the first three months of 2005. The increase in total revenue is attributable to growth in toll tag sales during the quarter as sales volumes return to historical levels.
Revenue from sales of RFS related products was $1.0 million during the quarter compared to $1.1 million in the 2005 first quarter. Sales of RFS products are expected to vary on a quarterly basis as customers continue to focus on testing with timing of large volume rollouts unpredictable.
Gross margin for the first quarter of 2006 was similar to the first quarter of 2005 at 36.9% compared to 37.5%. The increase in margin compared to the fourth quarter of 2005 (35.8%) is attributable primarily to absorption of fixed overhead costs associated with the increased sales volume.
Total operating expenses during the first quarter were $3.0 million compared to $2.7 million in the same period in 2005. The increase relates primarily to increased development costs, salary increases, stock-based compensation and foreign exchange.
The Company utilized $0.9 million of cash to fund operations during the quarter resulting in a cash balance of $5.2 million at March 31, 2006. Working capital at March 31, 2006 is $5.8 million compared to $6.5 million at December 31, 2005. At March 31, 2006 there were approximately 93.3 million shares outstanding.
"Sirit is focused on executing its growth strategy. The strong first quarter results represent the second consecutive quarter of increased revenue generation and demonstrate the first steps toward achieving sustained growth. While the Company has been able to maintain its cash spending levels, increased expenditures are expected for the next several quarters as the Company integrates operations from its two recent acquisitions," commented Anastasia Chodarcewicz, Vice President Finance and CFO, Sirit Inc.
"I am delighted that the AVI related revenue is returning to historical levels of growth. This application area provides us with a recurring revenue base from which to leverage cash generated in support of growth into new and exciting application areas," said Norbert Dawalibi, President and CEO, Sirit Inc. "We remain confident that our business is solid and will look to ensure we continue this growth trend throughout 2006."