CSI Wireless. CSY on the TSX.
CSI has truly achieved a new level in its corporate evolution. CSI continues to strengthen with a talented group of people delivering world class products. CSI's growth over the last several years has been remarkable. From less than $5M in 1997 to more than $70M in 2003 is a testament to the dedication and commitment of the team at CSI Wireless.
Moreover, looking forward we believe that our growth has only just begun. Looking back, I can hardly remember a time where our future has looked brighter. The company has never been better positioned in terms of financial strength, opportunity, performance, and outlook. Now, in 2004, we are set to deliver the most profitable year in the company's history, which will lead to further success in 2005.
Our GPS business continues to beat our expectations, and as of today, our GPS backlog has never been stronger. Although 2003, our first year of Fixed Wireless Telephone (FWT) business was lumpy, it was a very successful start. Volume forecasts for 2004 are now above 2003 levels, and we have already had an excellent start to the year. In fact, demand is beyond what we are able to meet in the first quarter. Overall, both of our business units have been reporting better than expected product demand for 2004, and therefore we expect upside financial performance in 2004, particularly on the bottom line, where we will be delivering record earnings. As of today, purchase orders received for our TDMA FWT in the first quarter are nearly double what we had budgeted for. We have now increased our budget for total FWT volumes for the year.
Overall in 2004, we see demand and revenues growing sequentially throughout every quarter this year.
On top of the TDMA business, the GSM version of our FWT will be commercially available in the second half of this year. 70% of the worlds wireless markets for this type of product are GSM. We will be immediately addressing current opportunities in Latin America, and recently began discussions on several significant opportunities in Asia and the Middle East. Based on current market interest and customer forecasts, we expect the GSM phone to double our FWT business in 2005. We are currently in the midst of discussion for a large opportunity in Asia, and hope to announce details of this in the next quarter. Based on these and other factors, we now believe we can beat current analyst expectations for 2004 earnings by at least 20%.
Our telematics business is also growing. The highlight for 2003 was the improved margins for the product. We are looking forward to releasing our new digital product in Q2. Beyond that, you'll see a brand new product line developing with a new item we call Location-Tag. We have already been contracted by one company who is paying engineering and development costs for this product, which includes a cellular transmitter and GPS receiver, but is designed to focus primarily on location reporting. We have indications of enormous market potential for this product, and have spoken to several potential customers about this product, with applications including money tracking (see www.3sisecurity.com), high value goods and high value asset tracking, as well as security and personal tracking. This product is targeted for shipment in the 4th quarter of 2004.
On the GPS side, the majority of our revenues come from the Precision Agriculture market, and we just heard from our largest customer, RHS Inc., that they had an all time record sales month in February, even though the best months of the Ag business are still to come. The rest of our GPS product line is performing well, and we have some new, very strategic products currently in development.
Financially, we are now debt free, with a healthy cash balance.
Our revenue growth in 2003 was over 30%. This is the 5th straight year that our revenue growth has exceeded 30%, in spite of extremely difficult challenges faced by the technology sector. And a very negative move in foreign currency rates, particularly in 2003.
Even though our revenues increased by over 30% last year, CSI's operating expenses declined by 10% from $18.4M in 2002 to $16.6M in 2003.
Looking forward, we are forecasting another year of record revenues. And with meaningful earnings. As outlined earlier, we are targeting both top line growth along with dramatic bottom line growth over 2003. We are comfortable with current analyst consensus for 2004, however we advise that the successful launch of our GSM FWT announced earlier this year for delivery in the second half, could add significantly to our financial performance. Keeping these factors in mind, we are providing the following guidance...2004 revenues of $74M to $81M, along with net earnings of $4.5M to $6.5M. In general, we are forecasting profitability in every quarter, and sequential revenue growth throughout the year, more heavily weighted towards the second half of the year, and continuing into 2005 with our GSM driven growth. |
