10/30/2019Redflex Paints $8.6 Million Loss As A Win
Australian photo ticketing vendor Redflex Traffic Systems enters the sixth straight year of profitless operation.
Australian automated enforcement giant Redflex Traffic Systems on Tuesday celebrated positive results at its annual meeting in Melbourne -- except Redflex lost another $8.6 million this year, entering the sixth year without turning a profit. The firm has lost over $80 million since key executives were caught in a corruption scandal. Nonetheless, the firm's new leadership team highlighted marginal improvements in the balance sheet.
"Many of you have been shareholders for several years and know that our company has faced and overcome some extraordinary challenges," Redflex chairman Adam Gray told attendees on Tuesday. "For our fiscal year 2019 we reported an 11 percent increase in revenue, a 32 percent increase in earnings before interest, tax, depreciation and amortization (EBITDA), and our third successive year of expanded EBITDA margins. We also grew meaningfully our new business orders."
The market responded with skepticism. While the annual meeting attendees approved generous bonuses for CEO Mark J. Talbot, the holders of 45.5 million shares held back their approval. Had they voted "no" the bonus would not have been approved. The stock dropped six percent to 47 cents on Tuesday.
"Disappointingly, legislative action, which effectively banned photo enforcement in Texas toward the end of last fiscal year, had a material impact on us and others that were operating throughout the state," Gray said. "For Redflex this meant the loss of recurring revenue accounting for nearly thirteen percent of our top line. The team reacted swiftly to largely buffer the impact, but there is no doubt our consolidated growth trajectory suffered what we believe will be a temporary pause."
The company hopes to finally turn the corner into profitability next year after winning the contract to set up speed cameras and issue automated tickets on Pennsylvania highways. The Australian firm expects to pocket $67 million from Pennsylvania drivers over the next seven years.
As such deals remain problematic, Redflex executives continued to push toward diversification with "urban traffic management solutions" that envision a Redflex camera on every corner with one of a dozen different motorist tracking or ticketing functions.
"Investments in our people and technology continue to expand and leverage our growing expertise in photo enforcement, managed motorways and urban mobility," Gray said.