Q4 2019 Earnings Call
Greetings and welcome to the Muggles security systems fourth quarter and full year 2014 conference call. At this time Ultrascreens really listen only mode. A question answer session will follow the formal presentation. It pretty much <unk> assistant store. The conference. Please press Star Zero Wonder telephone Keypad as reminder, this.
Conference is being recorded.
So my pleasure to introduce your host bread box with he's IR. Please go ahead Sir.
Thank you operator walk into Muggles fourth quarter for your 2019 conference call I would like to welcome all of you to the conference call. Thank the goals management team for hosting this call was on the call today, Mr. drawer, Sharon CEO Mccall and Cobi been occur CFO.
[noise] Dror will summarize key financial and business highlights followed by Koby, who will review Mccall's financial performance, a fourth quarters before year, well then open the call for questions and answers session for we started like to point out. This call. This conference call may contain projections and other forward looking statements regarding future events or future performance of the company. These statements are only.
Predictions AMAK all cannot guarantee that they will attract occur for gold is not assume any obligation to update that information actual results or results for I'm, sorry, actual events or results may differ materially from those projected including as a result of changing market trends reduced demand in the competitive nature of the security systems industry the anticipated and.
Known affected the kroner virus, including our operations at our clients as well as other risks identified the documents filed by the company with this crews Exchange Commission. In addition, during the course of the conference call. We will describe certain non-GAAP financial measures. We should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we've reconciled or not.
GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website I'm a goal security dot com for most directly comparable financial measures and related reconciliation with that I'd like to hand, the call bridge or door. Please go ahead.
Thank you book Wake up one of the beautiful Colin Thank you joining us today.
Yeah, I guess holder.
Your family and friends, though when they when they get <unk>.
You say quite sustainable.
Okay, 19 reported 86.8 minimal revenue achieving a 10% lost a reduction in integrating extensive excuse me the 61% in operating income.
Do you, maybe Don was coming to the tank waste didn't want to be done there's nothing in the expansion of it'd be done now Jean Francois everything Arpus. Thank you might unfold.
We maintained an elevated level for living Yankee like doing well offsetting the lucky in American tuck it did not because they must deal with sandy.
Machine false how could you talk spend in your markets and you want to go along <unk> well the consumables too.
In Poland, We also maintained.
We chose which was the same level is the one we did.
And then the fed tweaking.
[noise], even just a moment.
Okay.
And again Mcgartland do you like we do you know diesel.
Okay, and just $1 Mckool confused why didn't you find the Companys <unk> strength and from this was developed a gold stocks are used to increased 11, new on the pool.
Oh team is it's been actually executing this stuff did you get there must be.
When you sold improving goals to make spending all genetic disease.
With an increased focus on critical because mcus and aligning the R&D resources to meet the requirements of those will be called.
Before moving to operational performance of the business the oldest increased cash generation and it'd be though managing keen to get those its oh business performance, that's why I'm sure what does the body.
We have made the mumbles organization changes, including critical to business divisions, which improves the overall stuck to the business that's to be facing an increasing revenue when you bought the cousins robotics.
Oh performance in Q1, I didn't quite confident consumed the tone that Oh strategy.
The diligent on revenues and walking as evidenced by the bold base. That's at the same blow through that my God integrated solution Division, excluding the Latin American region, and assess the product division delivering 9% growth was only.
The diversification of flipping to students as evidenced by the addition of new geographic new cost another consecutive year over the you'd walk into [laughter] Division.
It makes it live in new Levinson dosed <unk> public executing this school scalability.
Oh stuff. The GE has also been successful <unk> James.
I'm supposed to be.
Gross margin in booking to 19 by 120 basis points.
Primarily due to the increasing since the last spoke at the division softball, since it's amazing.
Driven by you see plenty all we do make an institution softer window announcement to do so both looking about possible.
Hey, just closing all I lost you don't lose all.
I mean Q keen on congrats.
Expenses I think last year opening 2.2 million, we did not keep it going that do not game.
We talk on teaching us look good cheap operational.
Fishing season to 19, we realized the 61% increased operating income you won't building.
In order to support all future boat you haven't been able to consolidate business you need some realized cost saving we give you two officially make new hires to sell to all said.
We anticipate maintaining operating expenses well below living both of which will improve a bit guilty bill.
Net income in 218 was impacted by my guess foreign exchange expensive and accounting effect. When they go long experience you do come back copies adjustment cash balances out within the U.S. dollar.
Calling.
And then speech they do the changes in currency valuations, we called it is my guess financially.
Expense domain.
This adjustment doesn't always take document for U.S. dollar about it but there's an uh huh.
No impact on a net income making companies on the call supporting data is equally.
As a result, nobody else in foreign exchange rate can obscure oh profitability performance.
Well this is only use and be Don and I guess last week do even even Oh, there's no <unk> impact from foreign exchange fluctuations.
And our them on the district doesn't believe that that'd be dies a bit the major oil companies performed.
Well to 19, we didn't even than the outstanding something.
I'd be though it's an ongoing it'd be though marching up at 9.4%.
It to maintaining you made solid progress and always talked when you get down given Kenya skiing, she I guess funky.
10 million, you mean asphalt, but anything that you're going to <unk> technology.
Two of these will see sounds good day border protection.
It wasn't extensively jvs installation cooked up so two major.
I mentioned the airports.
In Spain be extended though although it's a little something came from the security with the advanced Chemokines small appliances. It. They teach people. We also want to significant conflict with the Israeli military for Veeco mounted difficulty system for a day and Michael motivation capability.
In terms of local markets.
And do not seem to be made advancements in oil and gas collection and a good sequential such including Apple We love the new constitute the global away thoughtful.
Well, that's what's fueling the airport you know meal.
In southeast Asia, she'll be securing new contract, we take books Lymphoseek.
On the phone on the platform, we advanced instant ink when he got phone Opensaf still what do you want solution will be all six you were getting information management you access control feature.
Using electronic access Pumpkin software code that we acquired a lot and getting the Boston integrating.
Maybe if you're modeling all existing you didn't mention anything debt.
Before I move on to talk about future goals I'd like to highlight the outstanding performance of the fourth quarter.
Gross margin improvement in the quarter by 740 basis points to 48% operating income increased to 2.9 million.
Good to 475000, plus loss a year now they're going to net income of 1.8 meeting compared to a lot. So well have a thousand hello and good afternoon.
As a result, it'd be dying to fourth quarter was keep on pull me no increases, although one of them, 60% on did really well well, maybe the multimode walking 0.1% them before well, though I'll hold that 4.9 last year. He has a strong finish to the you, especially given the challenging having a company compared to me.
<unk>.
Let me shift my comments today to old nipple goals, you upset the ambitious goals when they want to explain how we plan to children.
Basically we now need to shoot for book of business divisions with them mandate to streamline don't bring additional structure on their focus on full capability.
The new appointments of impressive.
Checkbook, all doesn't bring tremendous conduct industry experience, both really pull directly to me and this new structure would enable us to improve execution and glycol performance mobile.
Each individually as an increased focus on the technology and operationally the only thing all go to market started.
As we leverage all capabilities with the new organizational structure and companies like like thinks the socialism going in full capability.
Well, I mean, God logistics quote constitute institution and I could decline okay.
Well the fortune games, not because we did do full stop would be too expensive to be payments, if you'll get some future.
Good thing.
That can each product softness from cusick I think you'll just finishing on we can you just.
Solution.
No that's called capabilities in each of those local.
In each of those loved because.
We can provide unique solution beyond security for example into oil and gas sector. The company, Kentucky secured facility and.
Five times, even go pick a father.
Ladies down to fight the bike.
If I didn't use their high indication on someone trying to dig next week.
It does anyone know vehicle intend to apply basic mortgage debt gets old fueling.
Well in 510 fold the same customer given bike doesn't make it cools the big developing new fine I, just find that I've just that problem.
Yes, and then yeah, we allocated resources it spend all capability.
In the logistics Lucky Federal security cameras, installing <unk> money going back even deeper than big at melting also money towards the middle packages.
If you start getting a let's keep the package has actually been teaches defunct conveyor belt. Then back then it was mtwo. If it is 100 <unk> I'd also like them at all.
Full collection I'm teaching.
Developing system to detect I'd be shocked the wants to prevent supposed to be give those devices being you do you think they go to school or Piedmont.
Indicating I suppose that's true, but because we are targeting met managing functionality to manage on sites up.
Hi, how kids computer cannot make those than other people are thinking for the come on the whole thing would be giving up they've been calling to given.
The M&A targets, we have identified for Twentytwenty <unk>, okay, what the cousin <unk> expansion goals.
You want to acquire technology that getting another big capabilities are problem distinct lot pulling them, bringing new technology innovation and expertise.
I was comping the advanced stage with several other condition called.
Even though and that caching naked guess bottle 50, 51.6 million with no debt. We believed that we are well positioned to respond to changes in the book into that.
By increasing the technology, you know offering both organically and through M&A going up and you, but equally from all while I didn't gross margin Sensata division, while maintaining expenses controls in the increasing Polish Oklahoma, we anticipate continuing improvement in profitability can distinguish up almost.
Yeah.
We do strategic initiatives, we knew the sheep and that's the whole thing combining a music emanate mcgalley's know what position to continue to go.
Somebody else copy GE to justify all within your seems an important the performance of albeit it's going to market most school that.
Well executing its copies you've spoken publicly can go in full keep up because.
Yeah, we've made significant steps to improve that bless nonconformists, a ball company under the 10, our financial inclusion.
I'd like to thank the entire among painful dike exceptional performance into Nike did a good those outstanding results.
Hi volume the duplicate did the dedication and hard woke up all global team and appreciate the commitment to all stopping.
Before I hand, the call <unk> I'd like to equipment, and then put them to go on a Vivus then I'll be.
Well, that's a worldwide transports that didnt embedded into countries. They support and therefore, we have relatively weak international involved.
We do anything no smoking ban on all the employees at this time.
Company as a pleasant in China sensing that continue to decline isn't anybody since at least an impact them all but one of these <unk> [noise].
In Africa, and Latin America, either less clear what the impact will be but the at this time when we have not seen a slowdown.
Manufacturing is one in Canada, and Oh, we have no disruption in all woman country function.
We are looking at the continues to gain during the event Oh, Okay. Nick the woke emotionally and then any <unk> compete.
Well you still unclear Oldham Global places we continue the fact that yeah entered the Weiss for Lincoln profitable like dealing with the strong cash position and those that well why that's me the confidence that my balance sheet and do the classes and continuing smoking to use get though.
And now I would like to hand that Michael for mobile computing Sun life financial.
And I certainly don't go did go ahead.
Thank you draw.
Revenue for the full year 2019 ended December 31st 2019 was $86.8 million.
Or a 6.2% decline from the last year's record Oh said 92.6 million.
The decline was due to lower turnkey project revenue.
Led by growth in the product sales.
The geographic breakdown of the percentage of revenue for 2019 showed increased diversification into high like this I had included the comparison to 2018.
Israel, 22% in person.
America, 23% versus 26%.
Latin American 9%.
28%.
Europe, 22% that 15%.
Africa, 13% versus eight cents.
Oh, yeah, and the rest of the world 11% to their system.
The revenue breakdown between my gut integrated solution divisions and sense, that's one of the division.
Which includes Oh, so video with 40% for product [laughter] <unk> project.
Oh, My God integrated solution divisions revenue declined 14% year over year and since that point of division revenue increased by 9% year over year.
I would love to point out that's into something they seemed my God had to materially tiny comes to mind the Tom.
Significant revenue stream, while in 2019, I'll read and hear from project has been more diverse.
Full year gross margin in 2019 was 44.6 Percentof revenue.
43.5% last year.
The change in the gross margin is a function of the revenue mix between them I got integrated solution Division and Censtar.
Oh 2019 operational expenses.
Were $32.7 million.
10.5 to six reduction from 36.5 million last year.
I know that in 2018, when could soon or recurring expense items.
We had there was a onetime impact to 1.3 million dollar expense related to doubtful debt.
Lots of which was collected during 2019 of the parts what the settlement reached with a customer.
In addition, luckier, we incurred a 1 million dollar expense related to the impairment.
Good we'll balance across historical liquidation.
Operating income for 2019 was what $6 million compared with $3.8 million in 2018.
The grades in operating income was due to the Bucks organon, what's your non recurring expenses as mentioned as well due to all improved operational efficiency.
Net income attributable to my God shareholder in 2019 was $2.3 million or seven cents per share. This net income of $2.9 million.
Well I said Trisha in 2018.
The decline in 2019 net income was primarily due to $1.7 billion, Oh said, no catch financial expenses compared to financial income.
1.4 million dollar in 2018.
Expenses, many due to the strong depreciation of the U.S. dollar again, the good news like you said kill it in 2019, which affected devaluation.
With me denominated monetary assets held in Israel.
In 2019, our EBITDA and should feel is most representative measure.
The performance of profitability for our business was $8.1 million up 70 cents compared with.
$7 million in 2018.
Now about the fourth quarter results revenue for the fourth quarter 2019 was 23.8 million.
Dried up 9% compared with the revenue went to 6.1 million in the fourth quarter of 2018.
Regarding the fourth quarter revenue was primarily due to the who could have been took a significant portion.
Okay project in the Latin America in the fourth Cortile Glassia.
The fourth quarter is seasonally strongest quarter.
What till 2019 away for that our highest revenue for the year with a 7% didn't queen sequentially.
The geographic breakdown.
Revenue for the fourth quarter was as follows.
Israel, 18%.
Okay.
North America, 24% persist one 2%.
I see America represents about 28%.
Fourth quarter 2018, you look toward to 7% 17%.
Asacol, 12%.
Okay.
Asia and the rest of the world, 16% [laughter].
The breakout between my guys integrated solution and Censtar product revenue were 47 and brought up [laughter] Roger.
Censtar products Division revenue grew 14% year over year.
Got integration solutions Division revenue declined 23% year over year.
Fourth quarter blended gross margin was 48%.
New because 41% last year.
In the fourth quarter, Oh, Yeah. The gross margin was particularly high due to the better margins delivered by our integrated solutions Division.
Oh operating expenses that were $8.5 million at 22.6% reduction from the prior year <unk> fourth quarter operating expenses.
11 million.
The reduction in operating expenses it attributable primarily to that one of the expense items incurred in 2018.
Previously explained.
Operating income was 2.9 million compared to an operating loss for $435000 in the fourth quarter 2018.
Net income attributable to my goal a shareholder in the quarter was 1.8 million or five cents per share versus a net net loss I'll say hundred thousand dollar.
Well one cents per share in the fourth quarter over the last year.
EBITDA for the fourth quarter was <unk> point $4 million increase how did that 61%.
Paired with EBITDA of $1.3 million into fourth quarter over the last year.
Cash short term deposit and restricted deposits as of December 31st 2019.
Our 51.6 million or two point 23.
<unk> dollars per share.
Working capital went up by a.
Close to $10 million by the end of 2019 in comparison to the until the last year.
The majority of this increase is driven by the highest billing level in Q4, 2019, a big portion of which had been collected and converted into cash during 2020.
That concludes my remarks, there we are happy to take your questions now.
Operator.
Thank you went up.
Question answer session, if you'd like to be placed into question Q. Please press star one under telephone keypad.
A confirmation tone.
A question Q.
The press Star <unk>.
Question for me Q.
It's confusing speaker equipment, maybe necessary to pick up or handset before pressing the star keys once again that star one to be placed the question.
One moment please poll for questions.
Our first question.
From Thurman Willis from a GAAP securities is in July.
Gentlemen, thank you for taking my call I know you know on the long term.
Oh sure older and own quite a few share. So just want to made a couple of remarks, you had a great quarter and you had a great year and I congratulate you.
Even though I'm sorry, you're having to report on such a negative day in the market in under such dire circumstances.
But looking at my goal.
If we X cash you're trading at 18% of revenues, which is unheard of.
We ex cash and take the last two quarters, you're trading at a 2.5 P.E.
Again that 18% of revenues on a 2.5 P. I know that we've talked for several years about acquisitions. My first question is what the follow up I would hope that an acquisition would be accretive number one and Oh can you. Please explain to me.
Me well their stock trading at $2, an 80 cents.
Why we would not.
I'll put into place a 10% stock repurchase program.
And then I have one follow up if you'll come back to me after those.
Okay. So let me just discuss the artsy abode. The acquisition has been called me will this be could bode Michelle.
So we have fuel or talked with you know a pipeline.
That's to be up you're seeing now well in close contact with them.
Hopefully, we'll be able to close the next few months at least one.
But again it depends on the situation Oh, that's about them.
A few weeks ago I was more.
Certainly it will happen not only depends I'm.
What can be stretching the market but.
Basically it looks positive we're very sort of pipeline looks it because you shouldnt be conditions, we are putting lots of that pulled into eight and and hopefully within the next few months wouldn't be able to announce.
One M&A.
Or you're seeing there will be accretive.
Yes.
Basically all the targets that draw mentioned, yeah, we'll be glad could be and.
Accretive this ER.
It's a one of our Ah I wish that criteria of course and yeah. As you know we are we ask selective on that.
On that and then they Ah targets.
Because it's extremely important for us to ER.
ER to.
Executes the M&A with the strategic value and the financial value to add to our shareholders.
Sure I would add that's a hub our general feeling now when we I in probably just in the very beginning of the a global crisis related to pull in the virus.
Is that that.
Actually Ah from second perspective, or I should be.
For a company with a strong balance sheets with no financial debt.
Actually ER.
Could it [laughter], our expectation and that dog.
It should position us to wear.
To be able to them.
No.
Just to navigate through this crisis.
You know and I'm talking about our ongoing organic operation or but also executes a.
Good M&A deals meaning that.
That's a we believed that said you know good assets good strategic assets.
I will be.
Well it should be potentially available on the market and will enable us to ER.
To do what do we intended to do you know to add to materialize our gross gloves.
Also inorganically for good or more reasonable prices.
And then now what we are they said before and ER and also where that's probably.
Lodging Reits he'll say.
That's socalgas could be available on the markets due to African shell that.
Financial distress.
Like U.S. so were.
Just the Quaker governmental to the potential there over the scope.
Purchase ambitious ER.
You know were definitely a you know first of all the old disappointed but of course of bad performance of the stock.
We totally understand a your view on it and did you all the rest of the shareholders.
It's really good collector or the company or would there such a lots of financial strength.
She balance sheets are two consecutive years, so oh, yeah around $19 million.
Rather the generation two consecutive years of say $7 million to $8 million. That's a positive you did a.
Is traded a you know.
He can smoke.
And you know besides the station Yeah, you know we as a management. So we do evaluate all day available options and Ah you know, where we say no to where you know in college situation on one hand, we you know everything is open.
Loading you know where potential.
ER program as you mentioned, but on the other hand, or we also need your support and long term my understanding that a hub in like Oh, they call and the virus say crisis and such a high uncertainty or.
Into which we need to navigate a company with their almost 500 employees.
And ER.
[music].
Complex a global population.
And we also need to be a there yeah.
Cautious so with regards to what do we go with that cash.
HM very turbulent very much you know where they took the time of course, so we all understand so all the options out on the table and.
And our being evaluated I would say almost on a daily basis, because we also evaluate.
And what we face with her docs to be Coronado disruption.
Also on a daily basis, because the development Ah Ah We did daily you see this on day on the news.
Oh thanks.
Thank you. Thank you for that I had one follow up and really one more suggestion.
I'm happy to see that you hard Hayden and company Brett mass.
Is your Oh.
Oh from and I loved to the announcement that you put out when you hire that from to gain more exposure I fully understand that a with the present situation you cannot traveled the country and Oh, there's a lot about or until the young.
Uncertainty is complete put a challenge you. Once this is over to allow Hayden and company to get you own the road and I think we'll see a major difference when the stock price and then lastly, Oh I would encourage you not to go so a lot.
And you had good revenues this quarter, even though they were down but someone normally thinking would oh I think that you're you you didn't announce anything during the quarter I would ask that you.
Combine some of these orders and put out press releases as to the combination of fall off some of these orders. So that you keep slowed the shareholders informed especially.
During these uncertain times. So thank you for letting me make those suggestions and Oh I believe even with the discount on.
The market in general you are the most undervalued company that I watch out of about 100 stocks, you're probably in the number one most discounted company. So I know that that will correct itself and again as soon as we can I hope we can get out on the road and Ah. Thank you for taking.
From a call.
Thank you.
Thank you and that's good and determine.
Thank you for next question is coming from Sam Rebotsky from if your asset management. Your line is alive.
Yes, good morning draw written Colby on.
On this difficult day to report the numbers seem improvement.
And you talked about making acquisitions that you expect to close.
Is it didn't need 10 to 20 million range, and presumably going forward or the valuations as <unk> and <unk>.
<unk> as mentioned should be.
You should see more things better or better value.
And what impact has this corona had on doing your business.
And and if it say takes its certainly a couple of months for what impact do you think this will have going forward on your sales et cetera.
[noise], no where youre asking few questions. The first involved then you kind of acquisitions. So yes. This isn't in the range up to.
Revenues are up to.
And on 20 million or below.
Yeah, No way looking ahead.
ER, but again it will depend called the situation when ER [noise] continue on the won't be the core nobody was and maybe we'll be able to you can find something or are there or even a high revenue competing there it's true that really be able to isn't it.
Hello.
Oh gosh, that's we haven't been introduced controlled tuna <unk>.
So a this is from the acquisition.
Hi.
The entrance into one of my we'll see.
He is on on a week or on a stable situation.
Currently a as I mentioned and walk in my and.
I don't know discussion is that.
During the spring goods worldwide. We are many sales guys inside the countries, including Technicolor booking.
So.
The guys can support and promote though sales in the countries even if the.
If you cannot flying between different dairy goes well since probably even a in the but does situation than the rest of the.
Don't add the collection is if the the.
Customers of sense dog, and then use it wasn't going to do some at board and a in the coming multiples. So.
From delivery point of view, the population and he's running smoking.
It's also.
Required by the Israeli ammo D could be supposed them on a daily basis.
And the same for the relation and Canada is also looking and even if we'll have to shut it down there well most of the people and operation can continue to walk.
So again I stayed with situation, we don't know a walked will be today, let's just do they will come on what kind of completion the different government.
We will do now, but it sounded to me the suspended all over the wall.
Makes almost no I put it can be these deal.
[noise] or was that you need a and as far as you were bidding on a lot of contracts in your backlog say was kept improving Oh, what is your backlog now compared to the.
[laughter] compared to the September quarter, and the previous quarter and are you building on a lot of jobs more than you had previously or what is the status of bad.
[laughter] rethink bidding more well known focusing on those full but because the well bidding more and more fluctuate.
Understanding the customer base to Brazil.
No we are building on a few.
[noise] nice knowledge and project, but I don't know what will be the outcome because it depends if the customers will continue to do this works or not.
But there's no bidding on a pretty loud the content do they.
All right well well undergraduate <unk> will be winter.
Thank you and the decoupled as mentioned earlier, we are in the same level of a the backlog. We ended the two meeting well start to 19.
So we kept the backlog or independent.
Well, that's good and congratulation on your selection of Brett Larsen Hayden IR and good luck and hopefully we have some improvement in the stock after everything on Corona get cured. Good luck going forward. Thank you.
Thank you Sam.
Thanks.
Thank you. My next question is coming from Dan Weston from Westcap management. Your line is not alive.
Yeah, Hi, thanks for taking the questions guys.
Some of which had been answered <unk>.
Just on the backlog since we ended there could you quantify that a I don't have the 18 ending year backlog what was the actual figure.
[noise] was $16 million around 16 of them.
60 million, thanks, Colby and or are you able to break that down between product and project.
Right. We the majority of the vast majority is of course projects.
Since products delivered.
You know that they average delivery time off that physical product varied between two to three months and Ah.
And dad software license portion is basically.
It's it's an immediate delivery because it's a licensed downloads so yeah. So naturally.
The vast majority of the backlog is ER is a project related.
Got it and then thank you for that Cobi the.
Recurring revenue as a percentage of total is what today.
We believe it's a scenario a wants it.
Got it are you seeing are you seeing any growth in that recurring revenue portion of your business.
We see a gradual growth there.
It takes a bit longer than a dozen our internal targets, but we're definitely go into this direction. We try to we just see we do see more at maintenance and support contract.
Yeah for our S Symphony licensed products and ER and our goal is definitely get to bundle our project offering with the with follow up maintenance contract.
So yeah, it's Ah.
Yeah.
It's growing but ER, but.
And.
You know not as far as everyone said, but its into right direction.
And I appreciate that.
Yeah, Let me just finish on that the recurring revenue what percentage of your recurring revenue is pure maintenance software maintenance revenue.
Oh yeah.
So clear maintenance revenue is if you take a for example, if you look at.
Our software sale.
So where our average.
Actually.
Of maintenance and support contracts with the with the license is around 20% to 25%.
Wow, Okay, yeah, yeah.
We can we can talk about that maybe offline dig into little bit.
But can you can you tell us what type of margins, you're receiving right now on your recurring revenue stream.
It's typically higher generally higher than.
Then they are they going to sales.
What would it be safe to assume maybe 70, 75% or higher than that.
So it depends because you know we have that we have.
To where you know what project Division and product division they differ significantly on day I imagine <unk> level.
As a as it can there you can see so yeah for each division you're talking to the product division or gross margin aid in typically in the area Oh.
60% to 65% so that makes it supports in that area would be a you know a few margins going say higher than that.
Good project.
Average gross margin is around 35%.
ER. So a you know their maintenance and support contract project contracts would be you know where to an extent higher than that level.
I appreciate that color [noise].
You had a pretty big uptick in your receivables sequentially. I think you mentioned in your prepared commentary that you collected or some of that cash as we stand today would it be reasonable to assume that your cash balance today is equal or higher than where it was in your end of Q3.
Yes as of today it should they definitely a higher.
And then my junior shooting range they.
Oh excuse me sorry.
And you were about 55 million I think in Q3 Uh huh.
Okay. So that you know, we we should be in that direction.
And the much we build an extra at our Aaas you can see I grew where.
It significantly by the end of 2008 universes 18.
The majority of that actually went to a governmental sector.
So and so where do you know we do follow closely like now, especially like to be Corona buyers, but are you know at the moment, we don't see any specific adults.
[noise] very good.
Drawer I want to talk a little bit about some of the contracts you announced a or talked about on your third quarter call.
One of which was a contract with a global online logistics provider in Europe.
How how's that contract shaping up you're indicating that you might be able to leverage that into more of your distribution centers.
Has there been any change to that outlook or have you received any more contracts from that particular customer.
Uh huh with these customers not only onstage and deployment of the of the product and a semi solutions.
Hopefully once we're done with this wouldn't be able to increase a then I'm more sites we have skewing.
As I mentioned, a in what they said earlier.
Got logistics is vertical we are focusing on.
And the only nine now just the logistics simco, though over the online or bundles.
Going like Crazy, all the time and.
As I said also we are looking into a increasing go offering based on my way breeding management the solution that software.
We'll give them or solution that a managed or it could just movement not only security we are using the same security cameras, but different analytic. So ugly comes you. All did did the one project like this end of last year and different 19 and.
No we are pursuing a few other they'd be so you deserve a major verticals juggling market and really big market. Then I think we're doing a there's going to John capabilities and includes increased revenues from this is nothing but again, we are focused on winning a bulk of the M&A. There's been looking because also to acquire more technology.
To be scenario. So yes, it's it's a good wanting to be have continued to what's going on.
I appreciate that last couple of quick ones the acquisition targets that you're you're currently evaluating.
Or is it safe to say that those are all products based potential acquisitions versus project based.
Well I'm no wonder if you're looking at no wall or because they have both from a or one of them. All three companies you are looking good novel.
Blink brings all sit technology into their intermodal.
Sure. It's not the project is more solution based companies, but again they have their own.
Our unique technology.
Hey, due to softer over the holiday level combination of both.
Very good and then finally since we're kinda up a couple of weeks away from the end of your first quarter without giving specific guidance or.
How's that been tracking so far for your first quarter.
Would you would you think that your your results for Q1 will be somewhat similar to what you reported in your Q4.
[noise] add them typically actually you know there's only a our fourth quarter is the strongest quicker.
And the second half is also the stronger has a this is Dave mainly bye bye.
By the weather and eventually both projects and also product sales are targeting gas system integrators that work outside in the field. So at North America Europe. Yeah. You know there was much like digging jewelry engaging the weeks at time that.
So January February.
Typically slower and ER and then they you know the pace there.
Again increases as we approach Q3 in Q4.
Oh, so when that when the budget say I guess are released yeah. This is the typical situation of course, you know this yeah I'd twentytwenty with the with the current situation. There no. It's that we are very very cautious because today the level of uncertainties very high so overall, it's too.
Let it too early to know, but as a general expectation.
And you know our Q on Q2 are typically.
So a quarter or you know, but everything should be a obviously a analyzed as a part of the entire year <unk> by the way during our conversation I just double check the the cash balances. So you know to reply to your previous question then specifically so yes, we.
Basically a high in the level of their cash position similar to what he had just Q3 so basically.
Section of the cash collections that we had from and the Q4 buildings.
Very good no I appreciate that Cobi endorsed thank you very much I appreciate you taking the questions.
Thank you and then.
That's my next question is coming from Stephen harmful from active investment partners. Your line is alive.
Thank you a couple things.
Many of them have been answered and.
I certainly concur with a the very first speaker regarding.
The value of the company and the discount it's trading at relative to.
What we would think of a value than we've been a top 10 shareholder for many years, though I haven't.
Participated in the call.
I'm curious as to.
First Israel's attitude toward Youre being a and M&A target.
Given that there are now silicon valley companies or start ups.
With a significant funding who are.
Aiming at your space.
Could you comment on that.
Yeah, and getting the and I don't think on two didn't seem to question, but then you walking lucky there isn't really Ambled Dee Ann.
I mean acres will eliminate so.
Well being acquired by Cowen <unk> Company.
Yes.
I don't see any major wish you all loophole there.
Well definitely yeah, we are not smoking onto them will be a descriptions are well known as the other names on the low and I don't see any major league.
I'm being.
And on the buyer pool in company.
Okay jump beyond that I can the basket, we just in the button in the major we should called.
Thank you are on the question of buybacks I understand that that that's difficult or when you take a very liquid stock and make it less liquid on the other end.
To the extent that you are in an acquisition mode. You can really issue those those shares I do think it's a good idea for you to go on the road and to talk about the opportunities in these four verticals vis-a-vis where you are now the competitor.
As the market share and so forth and.
I do appreciate but the one time I've called him he answered his own phone immediately.
And that is both rare and very welcome.
Thank you and I appreciate your progress.
Thank you very much.
Q.
Thank you. Our next question is coming from can vary from Oppenheimer. Your line is now live.
Hi, I'm, just a follow up some questions on a your logistics.
Solution that you I worked out in the fourth quarter.
About how long did that take two.
Iraqi Q2 up from start to finish.
Well just too well you can tell.
Yeah.
That's very between the project.
No I mean three to six from.
Three to six months, we can now deployed if if.
Again, we have the all the tools all the in house.
If we need to do some specific or.
Developments on the alone we've done so it depends on complicates. It did then takes more time other than that it would be.
<unk> to take the same as bill doing any other project and once they are we still have the Kim rather than the.
The software.
Isn't implemented this so we could <unk> don't need then the only issue, there's something and take a.
Known good die and make them.
Developmental to specific I'll go with the customer need.
Something unique you don't them yet.
And how large of a facility did you a pretax.
In the U.S linked quarter.
How large of a facility how large was the warehouse.
Oh no.
[noise]. It was something like are gonna be didn't do all of them, yet and we got appeal, but there was a between want to get all of those are very material and.
And they want that we did the also the installation of Oh.
Equal poised to the old Vms solution that wasn't the bit.
And I'm home all many school Skillfeed those will meet or was it.
Well, it's a major one in New York.
I cannot reveal him so I cannot be the names. So those are actually few customers that you're looking at.
Due to doubling their stick to that will now and then.
Single names.
Understood how the customer customers.
Educated that.
They're interested in.
Pursuing a more of these type of a integration.
I've your product products.
Yes, yes, they did.
And ER.
In a recent article a interview.
Where are you talked about a goal of 150 million.
In revenue for a over the next two years or could you talk a little bit about how you're going to cheese echo.
I didn't I don't think administering three years, but then they always said, it's something that bill can get.
This will.
Be based on Oh blank, most don't or something I made that they had been the pipe.
What we want to achieve it by focusing on those for both the Cogs in the M&A in those verticals.
Understood.
I think you covered most of my other question so Doug.
I'll go back into queue for now thanks.
Thank you Kim.
Thank you we reach of our question answer session.
Looking back over to management pretty for closing comments.
Okay. Thank you so again on behalf will diminish anywhere from one guy we'd like to thank you fully <unk> continued interest in the and long term supporting small business.
I hope that we all know doesn't really in the business wise.
This equates to a safe Sunday, continuing increasing the company value on day next month and Neil.
Absolutely. Thank you.
Thank you.
Teleconference. You may disconnect. Your lines. This time and have a wonderful day, we thank you for your participation today.
Thank you.
Thank you very much.