9/30/2015Redflex Tries To Win Back Shareholders
Redflex red light cameras and speed camera deployments have dropped by half as municipalities reject automated enforcement.
Only a few years ago, Redflex Traffic Systems was at the top of its game. Stock analysts saw unlimited growth potential in the Australian firm that once operated more red light cameras and speed cameras in the United States than anyone else. Redflex was so confident about its bright future that it rebuffed Macquarie Bank's 2011 buyout offer at $2.75 a share.
Today, Redflex trades at 24 cents per share, a top executive has been found guilty on federal corruption charges and the firm faces the prospect of being fined up to $300 million for contract fraud in Chicago, Illinois. In its annual report released Tuesday, the company sought to lure investors back with promises of making a comeback.
"We continue to focus precious resource on improving both our underlying business and the prospect for strategic, profitable growth," Redflex chairman Adam L. Gray wrote. "We believe that we are moving in a positive direction and making the right, although tough, decisions to position the company for future performance improvement and growth."
Early on, growth was a given for Redflex. In 2003, the company ran 135 red light cameras in the United States. In just five years, that figure grew nearly ten-fold to 1267.
"Whilst Redflex is clearly a high growth operation, it is pleasing to record that corporate maturity and stability continue to evolve," Redflex then-chairman Christopher Cooper wrote in the 2008 annual report. "Encouragingly, the company's senior management, which has served us so well, has remained in place as a committed unified team albeit with some valuable additional appointments being made in light of the company's rapid growth. Hopefully such managerial stability will be maintained in years to come."
From a high of over 2000 cameras in 2008, the number of automated ticketing machines fell to just 1081 operational cameras in 2015. The company did not achieve the hoped-for managerial stability, as none of the firm's current directors have lasted more than three years. The firm's top executives were replaced in the wake of scandal and poor performance.
"The North American market remains challenging with banning and restricting legislation resulting in programs being abandoned or deferred and limited new programs," the 2015 annual report explained. "These issues impact the wider photo enforcement market, not just Redflex."
This year, only one municipality signed a new deal with Redflex, and the firm admitted that growth would be "limited." The poor financial results have not affected current and recent company officials. Executive Director Paul Clark pocketed $452,572 last year, while his predecessor Robert DeVincenzi earned $654,029. Outgoing chief financial officer Ron Johnson collected $602,109 and Australian operations chief Richard Fiusco took home $620,0828.
"During 2015 we made significant changes to the group's operations to ensure we remained competitive," Redflex CEO Paul Clark wrote. "We have made a number of changes to the management team, introduced new systems and developed new products to create a platform for growth. In the 2016 financial year we will continue to refine the focus of the business in the following strategically critical areas that are judged most essential to building shareholder value."