At Azure Dynamics (AZD) we are coming off a solid year of technology advancements, sales growth and improved awareness of our products and the benefits they offer in this increasingly green-conscious world. Johnson Controls' $6.3 million equity investment into AZD during the second quarter and the $4 million credit facility we obtained in the third quarter are strong endorsements of our strategy and product portfolio and will help provide added muscle to fund our working capital requirements going forward.
Our core strategy of technology, product, partners and people emphasis has resulted in solid bottom line sales, margin and revenue increases, and significant cost reductions. Our proven and adaptable technology allows AZD to move product to market quickly which is critical to maintain our first-mover advantage in a dynamic industry. Following are some of AZD's most significant highlights of 2010.
Sales:
At AZD we made our first move to commercialization in 2008 and we are extremely proud of our progress since then. In 2010 we continued our focus on the BalanceTM Hybrid Electric vans and shuttle buses with impressive sales and cost improvements.
In addition, we launched our Transit Connect Electric product program with a LEAD customer sales strategy. This LEAD customer program surpassed our initial sales projections with nearly 150 vans sold to a variety of who's who in our target market sectors -- delivery, utility, energy, businesses and governmental organizations. These companies are all critical to the increased acceptance and adoption of electric vehicles in North America and will ultimately become key advocates for the Transit Connect Electric product. During the year, we also added the European market to our Transit Connect Electric program. Europe's higher gas prices, familiarity with the Transit Connect and government incentives for green technology bode well for electric vehicle sales. AZD believes that once European sales start in earnest in mid 2011, they will quickly equal, or perhaps surpass, the North American sales.
Revenues:
Although the year isn't over and the final numbers aren't yet in, it's been a year of solid growth for Azure Dynamics. Revenues will be in excess of $20 million for 2010, more than double the previous year. In conjunction with our margin improvements and cost reduction program that was fully implemented in the second half of the year, this increase in revenues will give us our strongest year-end bottom line ever and will jump-start us for what we anticipate will be even more significant growth in both sales and revenues in 2011.
Product Technology:
Product technology and product excellence are our strong suits at Azure Dynamics. Our industry leading technology is flexible enough to be integrated into a whole range of applications and is the reason we were able to go from product concept to final product assembly on the Ford Transit Connect Electric in a remarkable 13 months. That's breakneck speed in the auto industry! But the Transit Connect Electric wasn't our only product focus in 2010...
• Transition to the Johnson Controls-Saft battery pack during the third quarter ensured that the Balance™ Hybrid Electric product included the latest lithium-ion technology as well as the other engineering updates aimed at improving reliability, durability and efficiency. The battery implementation was part of a broader cost containment plan that reduced the BalanceTM bill of materials by an eye-popping 40%.
• In addition to ongoing testing and validation on the BalanceTM Hybrid Electric and Transit Connect Electric products, we continued validation on the lithium ion battery and initiated a plug-in hybrid variant for the BalanceTM E-450.
• AZD's Force Drive™ technology was the power behind the winning entry in the prestigious international "X Prize" competition. Li-Ion Motors' Wave II, featuring Force Drive™ technology, earned first place in the highly competitive Alternative Side-by-Side class after performing in an intense multi-stage competition.
• In Europe, the Transit Connect Electric successfully completed the prestigious "Brighton to London Run - Future Car Challenge". The vehicle performed flawlessly in its first introduction to European media.
People:
We've often said that those who know Azure best are familiar with the importance we place on people - our employees, our customers and our partners. Just as you can judge a man by his friends, you can judge a company by its relationships, and ours are A-1.
Starting with our Board of Directors, we were delighted to welcome John Formisano as our newest member. John completed his distinguished career at Fed Ex Express as Vice President of Global Vehicles putting him at the top of one of the nation's largest and busiest vehicle fleets. John is also Chairman of the Board of CALSTART, a California-based organization formed to implement clean, efficient transportation solutions.
Our employees are our backbone and their continued tireless efforts have helped us to advance our technology portfolio while reducing costs and improving quality and performance. We can't say enough good things about them.
As mentioned earlier, our 2010 customers represent a who's who among North America's leading fleet operators - AT&T, Fed Ex Express, Purolator Courier, Southern California Edison, New York Power Authority, Cintas, Canada Post, United States Post Office to name just a few. Plus, Azure welcomed a slew of municipalities, universities and health care organizations that have added our BalanceTM shuttle bus to their respective transit fleets. And, of course, Johnson Controls, became a customer in 2010 - this in addition to its roles as both a supplier and investor in our company.
And speaking of partners, we couldn't ask for better ones. Our relationship with Ford Motor Company on the Balance™ Hybrid Electric products, and now on the Transit Connect Electric, is to our way of thinking a perfect example of how business partnerships should work. It is totally seamless, transparent and supportive. Ditto our relationship with Johnson Controls-Saft and with AM General, our newest partner now upfitting our Force Drive™ technology on to the Transit Connect.
We are grateful to each of these individuals and companies for joining us and enabling us to truly become Part of the Solution. We are at the leading edge of the green transportation movement in the significant commercial niche that will help to determine the shape of the transportation future. We think it's a good place to be, the perfect place, in fact, for a company like AZD.
Public Awareness
As our sales continue to increase and more operators are exposed to our products and what they can do, our on-the-street exposure multiplies as well. In addition, we've taken a number of steps to put AZD products in front of critical audiences.
• The Chicago Auto Show "coming out party" for the Transit Connect Electric was a home run of exposure to automotive analysts and journalists with Fox News calling the Transit Connect Electric "one of the most historic cars ever made." Transit Connect Electric's European unveiling at the Hanover (Germany) Auto Show brought new attention to this innovative vehicle across Europe.
• The Transit Connect Electric made a number of additional public appearances in 2010 including a series of demonstration drives for a variety of U.S. federal agency officials in Washington, D.C. We participated in a similar event for Canadian government officials in Ottawa this month. Transit Connect Electric was also featured in a display at the annual CALSTART Hybrid Truck User Forum (HTUF) conference in Dearborn, MI, and at the "Business of Plugging In" conference in Detroit where Michigan Governor Jennifer Granholm spent some time behind the wheel.
• AZD CEO Scott Harrison made two significant appearances on Canada's Business News Network during 2010 and was featured in a number of interviews including a recent one at the Reuters Automotive Summit. AZD products were featured in The New York Times, the Toronto Globe & Mail and literally hundreds of other print, TV and online publications throughout the world.
And in conclusion...
As we said earlier, from just about every angle, 2010 was a very good year for Azure Dynamics.
The economy is starting to come back and businesses are responding, looking at their needs and making purchase decisions they delayed during the recession. There are federal, state and local incentives available to help them do that. Our products are performing well in many of the hardest working fleets on the planet. Meanwhile, the move to green is getting greener and AZD products are ready with the answers that most fleets are looking for. We used the "down time" of the recession wisely and our technology and manufacturing are up and ready to go.
So we're almost there. We expect 2011 to be a banner year for our company and we expect 2012 to be even better. The stars are aligning and our promises are becoming deliverables.
We wish you all the happiest of holidays and a New Year that brings you only things you want. We are grateful for your partnership and appreciate your friendship and we look forward to achieving new heights together.
Sincerely,
The Azure Dynamics Team
Our core strategy of technology, product, partners and people emphasis has resulted in solid bottom line sales, margin and revenue increases, and significant cost reductions. Our proven and adaptable technology allows AZD to move product to market quickly which is critical to maintain our first-mover advantage in a dynamic industry. Following are some of AZD's most significant highlights of 2010.
Sales:
At AZD we made our first move to commercialization in 2008 and we are extremely proud of our progress since then. In 2010 we continued our focus on the BalanceTM Hybrid Electric vans and shuttle buses with impressive sales and cost improvements.
In addition, we launched our Transit Connect Electric product program with a LEAD customer sales strategy. This LEAD customer program surpassed our initial sales projections with nearly 150 vans sold to a variety of who's who in our target market sectors -- delivery, utility, energy, businesses and governmental organizations. These companies are all critical to the increased acceptance and adoption of electric vehicles in North America and will ultimately become key advocates for the Transit Connect Electric product. During the year, we also added the European market to our Transit Connect Electric program. Europe's higher gas prices, familiarity with the Transit Connect and government incentives for green technology bode well for electric vehicle sales. AZD believes that once European sales start in earnest in mid 2011, they will quickly equal, or perhaps surpass, the North American sales.
Revenues:
Although the year isn't over and the final numbers aren't yet in, it's been a year of solid growth for Azure Dynamics. Revenues will be in excess of $20 million for 2010, more than double the previous year. In conjunction with our margin improvements and cost reduction program that was fully implemented in the second half of the year, this increase in revenues will give us our strongest year-end bottom line ever and will jump-start us for what we anticipate will be even more significant growth in both sales and revenues in 2011.
Product Technology:
Product technology and product excellence are our strong suits at Azure Dynamics. Our industry leading technology is flexible enough to be integrated into a whole range of applications and is the reason we were able to go from product concept to final product assembly on the Ford Transit Connect Electric in a remarkable 13 months. That's breakneck speed in the auto industry! But the Transit Connect Electric wasn't our only product focus in 2010...
• Transition to the Johnson Controls-Saft battery pack during the third quarter ensured that the Balance™ Hybrid Electric product included the latest lithium-ion technology as well as the other engineering updates aimed at improving reliability, durability and efficiency. The battery implementation was part of a broader cost containment plan that reduced the BalanceTM bill of materials by an eye-popping 40%.
• In addition to ongoing testing and validation on the BalanceTM Hybrid Electric and Transit Connect Electric products, we continued validation on the lithium ion battery and initiated a plug-in hybrid variant for the BalanceTM E-450.
• AZD's Force Drive™ technology was the power behind the winning entry in the prestigious international "X Prize" competition. Li-Ion Motors' Wave II, featuring Force Drive™ technology, earned first place in the highly competitive Alternative Side-by-Side class after performing in an intense multi-stage competition.
• In Europe, the Transit Connect Electric successfully completed the prestigious "Brighton to London Run - Future Car Challenge". The vehicle performed flawlessly in its first introduction to European media.
People:
We've often said that those who know Azure best are familiar with the importance we place on people - our employees, our customers and our partners. Just as you can judge a man by his friends, you can judge a company by its relationships, and ours are A-1.
Starting with our Board of Directors, we were delighted to welcome John Formisano as our newest member. John completed his distinguished career at Fed Ex Express as Vice President of Global Vehicles putting him at the top of one of the nation's largest and busiest vehicle fleets. John is also Chairman of the Board of CALSTART, a California-based organization formed to implement clean, efficient transportation solutions.
Our employees are our backbone and their continued tireless efforts have helped us to advance our technology portfolio while reducing costs and improving quality and performance. We can't say enough good things about them.
As mentioned earlier, our 2010 customers represent a who's who among North America's leading fleet operators - AT&T, Fed Ex Express, Purolator Courier, Southern California Edison, New York Power Authority, Cintas, Canada Post, United States Post Office to name just a few. Plus, Azure welcomed a slew of municipalities, universities and health care organizations that have added our BalanceTM shuttle bus to their respective transit fleets. And, of course, Johnson Controls, became a customer in 2010 - this in addition to its roles as both a supplier and investor in our company.
And speaking of partners, we couldn't ask for better ones. Our relationship with Ford Motor Company on the Balance™ Hybrid Electric products, and now on the Transit Connect Electric, is to our way of thinking a perfect example of how business partnerships should work. It is totally seamless, transparent and supportive. Ditto our relationship with Johnson Controls-Saft and with AM General, our newest partner now upfitting our Force Drive™ technology on to the Transit Connect.
We are grateful to each of these individuals and companies for joining us and enabling us to truly become Part of the Solution. We are at the leading edge of the green transportation movement in the significant commercial niche that will help to determine the shape of the transportation future. We think it's a good place to be, the perfect place, in fact, for a company like AZD.
Public Awareness
As our sales continue to increase and more operators are exposed to our products and what they can do, our on-the-street exposure multiplies as well. In addition, we've taken a number of steps to put AZD products in front of critical audiences.
• The Chicago Auto Show "coming out party" for the Transit Connect Electric was a home run of exposure to automotive analysts and journalists with Fox News calling the Transit Connect Electric "one of the most historic cars ever made." Transit Connect Electric's European unveiling at the Hanover (Germany) Auto Show brought new attention to this innovative vehicle across Europe.
• The Transit Connect Electric made a number of additional public appearances in 2010 including a series of demonstration drives for a variety of U.S. federal agency officials in Washington, D.C. We participated in a similar event for Canadian government officials in Ottawa this month. Transit Connect Electric was also featured in a display at the annual CALSTART Hybrid Truck User Forum (HTUF) conference in Dearborn, MI, and at the "Business of Plugging In" conference in Detroit where Michigan Governor Jennifer Granholm spent some time behind the wheel.
• AZD CEO Scott Harrison made two significant appearances on Canada's Business News Network during 2010 and was featured in a number of interviews including a recent one at the Reuters Automotive Summit. AZD products were featured in The New York Times, the Toronto Globe & Mail and literally hundreds of other print, TV and online publications throughout the world.
And in conclusion...
As we said earlier, from just about every angle, 2010 was a very good year for Azure Dynamics.
The economy is starting to come back and businesses are responding, looking at their needs and making purchase decisions they delayed during the recession. There are federal, state and local incentives available to help them do that. Our products are performing well in many of the hardest working fleets on the planet. Meanwhile, the move to green is getting greener and AZD products are ready with the answers that most fleets are looking for. We used the "down time" of the recession wisely and our technology and manufacturing are up and ready to go.
So we're almost there. We expect 2011 to be a banner year for our company and we expect 2012 to be even better. The stars are aligning and our promises are becoming deliverables.
We wish you all the happiest of holidays and a New Year that brings you only things you want. We are grateful for your partnership and appreciate your friendship and we look forward to achieving new heights together.
Sincerely,
The Azure Dynamics Team
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