SiGEM Inc. on July 18 reported record second quarter revenue and a $22 million period-end order backlog as demand for its telematics solutions continued to advance sharply in key global markets.
Revenue for the three months ended June 30, 2001 was $8.9 million, more than double the revenue of $4.0 million achieved a year ago, and 14 percent higher than the previous record set in the first quarter of 2001.
Growth was generated in both Telematics Systems and Telematics OEM segments, which represented 62 percent and 38 percent respectively of total revenue in the quarter, according to SiGEM.
Telematics Systems includes sales of complete systems and related services such as ePiNG FleetMonitor ASP to telematics customers as well as dispatch systems to the public transportation market. The Telematics OEM segment includes sales of receivers, antennas and standalone devices to original equipment manufacturers and service providers.
"SiGEM's rapid success in penetrating key markets so far this year demonstrates the growing acceptance of the company's expanded technology offerings, the value of our global sales network and, most fundamentally, the high level of demand that now exists for services that can enable a new form of in-vehicle communications," said Herb Woods, SiGEM president and CEO. "Although SiGEM set new sales records in both the first and second quarters of 2001, we believe these early
milestones will be surpassed in the months to come as our solutions become firmly entrenched with leading telematics players."
As a result of higher revenue and enhanced margins, gross profit for the second quarter increased to $2.8 million from $2.3 million in the previous quarter. As expected, at 32 percent, gross profit margin increased over the 29 percent achieved in the first quarter although it is still below the company's long-term objective of 38 percent to 40 percent, a target range to be achieved through a combination of better efficiencies, higher sales volumes and proportionately greater
sales of value-added telematics and dispatch systems offerings, according to Woods.
Woods said the company continued to aggressively develop its business through investments in selling, marketing and product development to ensure SiGEM remains well positioned in the emerging telematics value chain. As a result, selling, general and administration expenses were $3.8 million,
versus $1.4 million in the same quarter of 2000, while R&D expenses were $1.1 million, compared to $0.6 million in the second quarter last year.
As expected, SiGEM reported a reduced operating loss for the second quarter of $2 million compared to a loss of $2.3 million in the first quarter of 2001.
Other Highlights and Performance Measures
In the second quarter, SiGEM:
* Secured new dispatch systems orders from leading taxi companies, including Chicago Yellow and Dial Car in New York, as it continued to strengthen its global leadership in this market sector.
* Completed the installation of an ePiNG system at Diamond Taxi in Toronto, which provides advanced communications between Diamond's 450 cabs and its dispatch operations.
* Announced a partnership with GenRad Inc., to offer a business-to-business telematics solution that incorporates diagnostic capabilities. Development is progressing well on this next generation telematics platform, specifically aimed at fleets in Europe and North
* Formed a strategic alliance with WirelessCar, a global business-to-business provider of integrated telematics services, to gain ubiquitous network access, billing and taxation capabilities for SiGEM's telematics services aimed at vehicle manufacturers and fleet managers in Europe, Asia and the United States.
SiGEM was also chosen by Canadian Business
Magazine as one of the top 10
technology companies in Canada in the Technology 100 list published in June. The ranking was based on a number of indicators including sales growth and R&D investing.
Cash on Hand
As expected, SiGEM ended the quarter with $2.1 million in cash on hand versus $4.7 million at March 31, 2001. Based on expected sales volumes in the second half of the year, its stepped up program of cash management and new credit lines, the company says it believes it has the means to meet business requirements this year.
As previously stated, the company is targeting to achieve operating profitability and positive cash flow by the end of the fourth quarter.
Period End Backlog
While fulfilling record order volumes in the first and second quarters of 2001, SiGEM's backlog, representing firm orders on hand, remained strong at $22 million at June 30, 2001, up from $21 million at the end of the first quarter and 175 percent higher than at December 31, 2000. Approximately 70 percent of this backlog is for Telematics Systems and the remainder is for Telematics OEM.
"Judging from quotation activity, period end order backlog and our broader European and North American customer and partner networks, SiGEM is well positioned for strong revenue growth in the second half of this year and
well beyond," Woods said. "Firm orders on hand for delivery over the next two quarters will assure a strong close to the year and by fully
capitalizing on SiGEM's new relationships with world-leading telematics players and fleet managers, we expect to add to our order book during this period. To this end, we have secured a number of trials for our newest
solution - ePiNG FleetMonitor - with prospective customers, and we expect these trials to lead to solid new orders with recurring revenue streams. Our new distribution partners are also now fully assimilated, giving SiGEM greater sales potential in the small to mid sized telematics fleet market heading into the last half of the year."
Woods said the year is "shaping up as planned: record sales, record backlog, and new partnerships that enable marketing leadership and put SiGEM on the road to sustainable, long-term operating profitability."
) has an installed base of more than 165,000 units and 20 years' experience in location-based fleet management.
Headquartered in Ottawa, Canada, with operations in the U.S. and the U.K., SiGEM develops and markets the ePiNG family of hardware, software and services for a variety of wireless location-based applications.
SiGEM works with some of the industry's key players, including GenRad, Bell Mobility, WirelessCar, Tyco Electronics and STMicroelectronics, to assemble solutions for specific customer requirements.
As wireless equipment and location-based services become standard in cars, trucks, heavy equipment, and other vehicles, SiGEM says its mission is to provide the most widely used and
feature-rich telematics platform.