Toronto-based RFID technology provider Sirit today reported a steep drop in revenue in both its second quarter and first half of 2008. The company attributed the results largely to lower demand for its automated toll-collection transponder technology during the first six months of 2008, and also pointed a finger at unfavorable exchange rates, as the Canadian dollar has strengthened against its U.S. counterpart in 2008.
Sirit’s total revenue for the quarter, ended June 30, was C$4.8 million (€3 million), down 32% from C$7.0 million (€4.3 million) in the second quarter of 2007. First-half revenue charted a similar path, dropping to C$9.1 from C$13.5 million (€5.6 million from €8.35 million).
“Sirit continued to experience delays in toll transponder orders from our largest toll customer” in the first half, said Sirit CFO Anastasia Chodarcewicz in a statement. “However, expenses in the second quarter remained consistent with the first, even with the acquisition of RSI,” Chodarcewicz said, referring to Sirit’s April purchase of RFID hardware provider RSI ID Technologies.
The company also reported a wider net loss in the second quarter — C$2.2 million versus C$1.4 million (€1.4 million versus €0.87 million) in the same period last year.
During the second quarter, Sirit’s Automatic Vehicle Identification (AVI) applications accounted for C$3.3 million, or 70% of total revenue, down from C$5.2 million (€3.2 million) a year earlier. AVI products include readers and toll transponders related to vehicle tracking and management. Radio Frequency Solutions (RFS) applications, Sirit’s other main business line, contributed C$1.5 million (€0.93 million) in the quarter, compared with C$1.8 million (€1.11 million)in last year’s second quarter. RFS products include readers and reader modules used in asset tracking, cashless payments, inventory management, and supply chain applications.
The company’s quarterly results were “not as great as we would have liked them to be, but I think this is temporary,” Chodarcewicz said in an interview with Manufacturing Executive.
Sirit, which has operated as a publicly traded company for nearly a decade, expected that “2008 would be a slower year,” and Chodarcewicz sought to emphasize that these results are not typical. The California-based toll transponder supplier to which Sirit attributed the majority of its revenue decline in the quarter had an excess of inventory built up throughout 2007, she said, “but all indications from them are that they will start to reorder tags and transponders in the fourth quarter of this year.”
Meanwhile, Sirit continues to win business in other areas, including parking access control, vehicle asset tracking, and retail inventory management, Chodarcewicz said, pointing to the development of new tolling applications and document tracking and control applications through partnerships with 3M.
In the second quarter, the company’s IN510 ultra-high frequency readers were selected to power Checkpoint Systems’ inventory tracking portals at German retailer Metro Group’s outlets, as well as by Finland’s postal service as part of a system to measure and monitor the speed and accuracy of deliveries. During the quarter, Sirit also launched its Infinity 110 high frequency reader module, which is designed for embedded RFID applications.
Sirit said it is focused on controlling expenses to help counterbalance lower revenue levels. “We have already taken certain actions to reduce costs,” Chodarcewicz said, “but at the end of the day we also had the RSI acquisition, so we did some streamlining [with regard to the acquisition] and expect a further drop in expenses.”
“Overall, I continue to be confident about the future for Sirit and I look forward to high growth and achieving profitability in 2009 as we expect to see new application areas become a reality for Sirit,” said Norbert Dawalibi, Sirit’s president and CEO, in a statement.