9/1/2017Redflex Continues To Bleed Cash
Latest Redflex earnings statement confirms the Australian firm continues to lose money in wake of bribery convictions.
Redflex Traffic Systems has yet to recover from the massive corruption scandal that put a top executive, a lobbyist and a city official behind bars. The Australian firm told investors Monday that revenue has dropped 11.7 percent, creating an overall after-tax loss of $31.7 million for the financial year. Redflex Chairman Adam L. Gray sought to reassure shareholders that Redflex is nonetheless on its way to recovery.
"As a result of the company's remedial efforts over nearly four years, the company has not been prosecuted, it settled a significant civil claim and, importantly, there are no legal impediments to our continued operations in any market around the world," Gray wrote. "We now have a clear path ahead to drive future success with a renewed team, product portfolio, robust pipeline and refreshed systems."
That new team includes Mark J. Talbot, who took over as Redflex CEO last week in the wake of a management shakeup. Talbot was previously in charge of automated ticketing machines at Conduent. He faces a difficult task, as US business continues to slide for the Melbourne-based firm, dropping 13 percent over the past year.
"The decrease in revenue was due to a reduced number of deployed systems in North America resulting from contracts not being renewed, contract expiry and the completion of some large international contracts during the year," the CEO's report to shareholders admitted. "Continuing negative public sentiment impacts the United States market and has either resulted in state legislation prohibiting the introduction of photo enforcement systems or individual municipalities and cities deciding not to renew their contracts. These factors have led to contract terminations, lower contract renewal rates and the delay and reduction of new programs across the United States."
The company is now touting the rebranding of its products as a key move toward restoring municipal confidence in photo ticketing. Last month, Redflex applied for a US trademark for its Alcyon product, which is a "cloud based traffic infringement management service" according to the filing. As part of the same push, the company last year updated its logo.
Given public opposition to cameras in the United States, Redflex believes the hot markets will be Mexico and Canada, along with "potential opportunities" in Latin America. Redflex did not disclose to investors that cameras in its hometown city of Melbourne were compromised by a computer virus in July, infuriating state officials.
Redflex imposed austerity measures to rein in costs in light of the disappointing financial performance. Executive Director Paul Clark saw a 5 percent dip in compensation to $537,020 while the head of US operations, Michael Finn, pocketed $581,426. Finn took over from Karen Finley who was recently moved to the Phoenix Federal Correctional Institution where she is scheduled to be released in time for Christmas next year.