Q3 2020 Genasys Inc Earnings Call
Thank you for holding ladies and gentlemen, you are in line for this Genesis incorporated conference call.
This time, we are still gathering additional participants we will get started momentarily. We thank you for your patience enough that you. Please continue to hold.
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Good afternoon, and welcome to the Genesis incorporated fiscal third quarter 2020 financial results Conference call. All lines have been placed under listen only mode and the floor will be opened for your questions. Following the presentation.
If you shed require assistance throughout the conference. Please press Star then zero on your telephone keypad to reach a life operator.
At this time it it's my pleasure to turn the floor over to Sadia Chiller <unk> Investor Relations for Genesis, Sir the floor is yours.
Thank you, yes, good afternoon, everyone and welcome to get this fiscal third quarter Twentytwenty.
Financial results conference call.
Yes, Hello, English the nation School Genesis.
With me on the car today or they go down call. It. She thinks he can do all pieces and then its decline Chief financial officer, Okay. That's it.
Before we begin I would like to take this opportunity to remind you that during the course of this call management will make forward looking statements.
Then statements of historical facts statements made during this call, but I'll, probably looking statements are based on current expectations.
During this call they may discuss companies flat expectations outlook, our forecast for future performance. These forward looking statements are subject to known what else nice and uncertainties, including without limitation to figure out the proposed I need a mobile transaction to close on the expected timeline well at all.
They affect I'll make a mobile announcement of the transaction on customer relationships and operating business.
The ability to meet all closing conditions go the I make a mobile transaction.
The consequences solve the called me 19 outbreak.
That makes.
Yes, and uncertain at this many of which in a lot of practice off circumstances.
Beyond the Companys control. These forward looking statements are based on information and management expectations adds up to date.
Got it does may differ materially from our current expectations.
But more information regarding potential risks and uncertainties lease up what does it affect a section of the company's form 10-K for the fiscal year ended September Thirtyth 2090.
Dennis is disclaim any any any in debt obligation to update those.
<unk> looking statements, except as otherwise specifically stated they may also discuss non-GAAP operating metrics <unk> bookings and backlog, which we believe the wide helpful information to investors, let's stick to evaluating the company's performance.
Reconsider bookings and backlog, leading indicators of future revenues and uses metrics to <unk> to support production flat.
Bookings Anthony internal operational metric that Michelle older dollar value of the customer purchase autos executed in a given pretty it regardless of the timing of the related revenue recognition.
Backlog is it makes it off buckets autos, we see that adjusted Hubris here in the next 12 months.
Finally, yeah, we'd be able to this call will be available in approximating before I was to the Investor Relations page that site.
This time it it's my pleasure took on the old <unk> thousand the flow or what the Genesis CFO then its clot Dennis.
Thank you such a and welcome everyone.
Well open today's calls with a recap the fiscal third quarter Twentytwenty financial results.
Richard will then provide an update on the business.
Afterward, we will open the call for questions.
Revenues for the third quarter fiscal year, Twentytwenty were $12 million the highest revenue for any third quarter in the company's history.
This compares with revenues of 8.9 million in the third fiscal quarter of 29 team.
35% increase in revenues was due to a larger backlog at March 31, Twentytwenty as compared to March 31, 29 team.
And strong acoustic hailing device revenues in the current year period.
Gross profit was 6.5 million or 54.1% of revenue.
The increase increase in gross profit margin compared to last year was largely due to the additional leverage of fixed overhead cost gained on the higher revenues.
Operating expenses in fiscal Q3 were 4.5 million an increase from 3.9 million in the same period a year ago.
The increase is primarily due to higher selling general and administrative expenses to support our higher revenue and future revenue growth opportunities.
With higher revenues and gross margin, we generated net income of $1.5 million or four cents per diluted share in the fiscal third quarter.
This compares with net income of $600000 or two cents per diluted share in the same quarter last year.
Cash generated from operating activities in the quarter was $5.8 million.
Our balance sheet remains strong.
Cash cash equivalents totaled $20.7 million on June 30, Twentytwenty up from 16.4 million or March 31, 2020, and 18.8 million on September 30, 20, United team.
The 4.3 million increase in cash and cash equivalents from the last quarter was due to cash provided by operating activities.
Working capital increased by 1.4 million to 26.9 million at June 30, Twentytwenty compared to 24.8 million at September 30, 2019th.
The increasing working capital was primarily due to the net income from operations and cash received from exercise of stock options in the first nine months of fiscal year Twentytwenty.
With that I'd like to turn the call over to Richard.
Thank you Dennis and good afternoon to everybody on the call.
Thanks to the outstanding work of the Genesis team and the support of our suppliers and service providers. During this unprecedented pandemic fiscal third quarter revenues were a record for any third quarter.
These results were in line with the outlook provided on prior calls where I said revenues in the second half of fiscal 2020 were expected to be much stronger than fiscal first half revenues.
Fiscal third quarter bookings were 22.7 million up 118% from the same period last year, U.S. Army and Navy orders as well as other domestic and international defense Maritime Lauren enforcement bordering homeland security orders generated the majority of the fiscal third quarter bookings.
Backlog at June Thirtyth, 2020 was 26.4 million an increase of 26% from the same period a year ago.
Our strong bookings and backlog keep the company on track for another fiscal year of record revenues.
As discussed on our last call as an essential provider of critical communication systems and solutions Genesis has stayed open and the production flow remains busy building and shipping products and systems I.
Our supply chain continues to deliver the pods needed to build our industry, leading hardware and public safety mass notification systems for a growing customer base.
Ongoing civil unrest and cobot 19 communication applications have increased demand for the hardware and software communication systems from law enforcement and public safety agencies.
The crowd noise generated by lodge in boisterous protesters overpowers bullhorns in vehicle P.A. systems.
All right systems and show voice Communications I, clearly heard from safe standoff distance to provide police and first responders more time to assess and probably de escalator dangerous situations.
We design, our El Red voice communication systems to help safeguard the public and protect offices.
Police departments in New York City, Chicago, Portland, San Jose, Colorado Springs, Phoenix, Columbus, Charleston, Fort Lauderdale Rapid city and other cities are deploying our it systems for everyday duties and elevated risk operations.
More than 450, U.S. cities now use L. Red boys broadcast systems for a variety of public safety applications.
We continue to make significant progress and enhancing in building out our critical communication platform.
Mass notification industries, only multichannel platform that unifies hardware and software systems for national regional local and enterprise application.
With the acquisition of enterprise software provider Annika model, we're expanding our SaaS business into several large vertical markets. The integration of Amica mobiles critical events situational awareness communications and control technology and products will accelerate our software business growth as.
We empower companies government entities communities, and educational and medical institutions to improve safety and security for employees residents students and staff.
And alleviate potential threats from disasters critical events and other crisis situation.
Our enhanced critical communication platform will be fully scalable for small businesses will large deployments with millions of users.
As we announced in today's financial results press release, we are pursuing additional acquisition as part of the strategy to expand the company's revenue.
Navigating todays business currents from a strong financial position with the objective of accelerating revenue growth.
Companies possessing complimentary products services and technology that may lack the financial strength to whether a prolonged period of disruption provide us with favorable M&A opportunities.
To facilitate further M&A efforts, we are augmenting our June 32020, total of $28.1 million of cash cash equivalents and marketable securities.
Filing a $100 billion shelf registration.
As you are aware many companies fire file a sell an S. Three shelf registration and keep it on file.
It is considered good corporate strategy to have available.
Although we do not intend to utilize the S. Three immediately having a shelf registration in place office the company the greatest flexibility and attracting and closing acquisitions that we believe will substantially enhance our business by expanding our addressable markets and maximizing shareholder value.
Regarding our business in Australia, using the location base SMS text alerts functionality of our national emergency warning system or news thousands of bushfire notifications were delivered by Australian emergency services to mobile phones of at risk populations during the severe 2019.
2020 fire season.
Since the implementation of news emergency services in Australia have used it to deliver more than $150 million emergency SMS text through two of the nations three large telecoms.
Genesis submitted proposals to the telecom providers.
For the country's 2020 Tenda award announcements have continued to move to the right.
But I do expect the announcements this quarter.
In June we hosted two well attended European Webinars that detailed wide Genesis and news provide the best solutions for the member state to fulfill the June 2022 E. C C National public warning system Director Directive.
As a reminder, the directive mandates that every you member state implement the public warning system that can send emergency alerts to the mobile phones of residents and visitors in the case of disaster other critical events.
The system must include Geo targeted emergency Cume communications and be able to notify residents and visitors of emergencies without having to opt in.
News provides unparalleled situational and geospatial data on population density and movements during a disaster a critical event.
While integrating with network feeds to offer active and passive location data in real time Geo fencing.
The Genesis news platform is cloud based Geo redundant and end to end encrypted.
New speeches top level reliability and security by employing no single point of failure and Geo redundant architecture. All location data is de personalized allows in allowing users to stay safe and informed without giving up their privacy.
With more than 50 years of industry experience. The Genesys engineering team excels in the customization deployments developing new feature sets and solving challenge challenges dynamically.
Based on our years of experience and success in Australia, locating the mobile phones of at risk individuals and delivering emergency a lower alerts through telecom providers with industry, leading speed and reliability, we anticipate receiving our piece from the European Union member Nations later, this calendar year and early 2021.
Our multichannel critical communication platform includes news includes PSS or personal safety service includes TSM or team safety management and the industry's best voice broadcast mass notification systems.
Our unifying the delivery of emergency alerts and potentially lifesaving information through multiple communication channels Genesis provides a reliable redundant and resilient platform than shows critical communications are delivered to help keep to help keep people say during public safety threats and enables enterprise and gun.
Moments organizations to send information to groups or individual before during and after a critical events.
With the political unrest cobot 19, future Pandemics, another naturals and manmade disasters disasters continuing to increase throughout the world Genesis systems and solutions are providing essential proving to be essential to help keep people safe.
In closing we had an exceptional Q3 and are on track for a record performance in fiscal 2020.
With our robust balance sheet backlog and business pipeline, we're also well positioned to live to deliver record revenues in the coming fiscal year.
With that I'll turn it back over to the operator for Q1 night.
Thank you ladies and gentlemen, if you have a question or comment star one on your telephone keypad at this time.
Our one for any questions or comments.
Well pause for just a moment to assemble the roster.
We'll go first to Edwin at Ascendiant capital.
Yes, congratulations on the quarter. My question is on the M&A up with Amiga do you feel that you can take on additional acquisitions Broadway or do you need to Digest This acquisition first.
No I think we can do more than one thing at a time Ed so.
We're not start that sounds great anyway.
That sounds great and then in terms of obviously with the disrupt our you know with disruption with what's going on with cobot has that changed.
Any of your business at all either manufacturing supply chain or even for requests for proposals from.
Customers.
It's headed.
An impact yes.
As I mentioned, although the the cities that have been ordering product mainly.
So orders have.
Volume has certainly gone up the size of the orders however has not been huge they're buying ones and twos and threes.
We have seen a increase in demand for Genesis products and services and software.
What we see a case a slowness in the communities the government's getting the RFP is out and awarded but so the the long term I see this is proving to create more demand for Genesis short term, we might have to fight.
Some slower bookings.
Great well. Thank you for asking my question. Thank good luck.
Thank you.
Well take our next question from Ryan Mcwilliams at Steven.
Hey, guys congrats on the make a mobile contract.
I think it really fills out your product suite, but you are leading hardware platform you're fully featured public warning products now enterprise massification oriented product.
Just in terms of the recent acquisition how do you plan to build out that go to market to support this function and is there any individual company vertical.
And we'll try to target initially like or.
Sector vertical thanks.
Brian I answer your first question, we are stabling running a.
Sales force.
On North America.
Caused the feature sets that emeka brings as well as the feature sets that Genesis ad.
So we will be hiring sales people that will be geographically dispersed throughout North America. So that's how we're going to go after it.
In terms of.
What was the second question Ryan It was first verticals Oh verticals you're okay.
What it means that brings to us is verticals that include.
For both of Us in Canadian government.
Veterans administration.
Cities States, so I think they will.
To provide to us.
The credentials.
Backdrop of those credentials that we did not currently have in the enterprise world.
Perfect one more for me just on the it make mobile acquisition again.
How do you feel this expands your addressable market on the software side and then down the line do you think you could see your.
Installed base of hardware customers, leading to public warning opportunities and then within is covered geographies, leading to additional nazification opportunities within enterprises or local state governments with the Indic mobile deal.
I do so the first question is the size of the market you know that at least as good as I do and it's.
Worldwide its into billions of dollars.
I think our hardware sales will be get software sales here in the United States and I think the software sales will be get some hardware sales in the EU.
I think the enterprise solution that Amica provides is another vertical that we were just barely scratching into and this will as I mentioned a member rocks.
Substantially accelerate that growth.
Congrats again looking forward to see what's next.
Thank you.
Thank you bye.
Next question please.
Well go next Ricky Rivershore investment.
Good afternoon, Thanks for taking my questions and congratulations on a record quarter.
In terms of the Amica mobile acquisition. Your press release suggests if this is the cash position is that right.
We havent disclosed the terms a yet Rick we.
Come to an agreement with America and the close is subject to some Canadian government or approvals and some contractual activity that we need to get through between now and closing.
At close I mean, when we finished at closing we obviously will report the financial terms, but there'll be no borrowing of any money. If that's what you're thinking of it so it'll be paid four out of cash.
Okay, Yes, that's what I was thinking of thanks.
In terms of what.
Additional resources Amica brings to you is that going to help you.
Better compete in the U.S. for Genesis or software wins in counties and states that are.
Having their.
Contracts up for renewal.
Yes, but it's not that there are people they have a.
Great group of software develop as much like we have in Madrid.
What amica brings to US is 20 years of history and credentials.
And that was a shortcoming in the enterprise market for Genesis and Emeka fill that void.
Okay.
Thanks, very much that's all I have for now.
All right. So you later thanks.
Thanks next question please.
Once again it was star one if you had a question we'll go next to Scott.
Walrus partners.
Oh.
Hi, Thanks for taking my questions several of them and been answered.
Good quarter, just wanted to as you a file the S. One by amicus and is there a focus for the M&A activity going forward will it be more software based vis-a-vis.
Hardware base I don't know if you got any color for us that would be great. Thanks.
Right.
No not really Scott I mean software is more interesting to us at this time.
Given our position from a hardware perspective in the world marketplace.
But I won't discount anything without looking at it. So I think we'll go wide open.
And maybe just a follow up are are there or there's some.
Yeah from a business development perspective.
You guys you do you guys showing your books do you have could you kind of developing yourself do you got a formal process for BD I mean, you've you've been you've done a couple of deals here, but just trying to figure out.
You know how formal the business deal that BD process will be for you guys.
Well the process to identify it and then prosecute potential M&A is right now still all done internally.
Okay.
Good.
Great.
One last quick question.
Yeah in terms of M&A is it a domestic focus international focus or just hey, where where where there's a good synergy me thats a at this particular pointing to the world I mean, the two acquisitions, we've done so far in Madrid, and no prosecuting on America Emeka and.
Canada.
Canada.
Alright, guys appreciate it thanks good quarter.
Thanks Scott.
Next question please.
Your next to Lloyd Korten Your line is open Sir.
Thank you, Hey, Richard and crew terrific quarter, obviously, thank you.
A few questions.
No particular ought to get homeland security, what's going on with them, we look forward to potentially.
But as you know homeland security and Department of Homeland Security has been Oh.
Not a great contributed to Genesis is a bookings.
We've seen a change in that in the last quarter, where interest and demand for from DHS and ice is has turned to be real so I think its a.
It's a you know the environment, we're currently living in a.
Across the World has shown as I mentioned in my remarks, showing a need for more Genesis hardware and software and DHS is finally come into play.
Yes, there will be wonderful.
Can you you had an announcement a couple of weeks ago about can you explain that to me or us what that's about.
Sure as raised perhaps the the best mapping software it company in the World.
A couple of weeks ago, we are now a couple of more than that but we announced a partnership were with as rate. So our gee I ask platforms that we sell will be powered by as ray as or he brings with it says a feature sets.
Deep feature sets that can then be resold by Genesis.
It's a terrific. Thanks.
Potential revenue for us.
Yes.
Yes, absolutely.
Also.
What's going on.
Over the country today between states in cities and counties.
With financial headaches brewing with lack of revenue.
Is that affecting us what are you hearing.
Well as I've mentioned.
I believe we as I said all year are believed to second half revenues would much stronger than the first half and that proved to be the case in Q3 and it will be the case in Q4 as well.
I see our backlog and demand as we look forward to fiscal year 21 to continue to show growth.
Are you finding any headwinds with that.
Municipalities upgrading their systems to us.
These days.
Yes, given us many municipalities have largely been not working.
You know from four months.
And that has delayed things, but the.
They're coming back to work around the around the globe now and activities picking back up.
Okay, well hopefully listen thank you great quarter look forward to more guys. Thank you.
And with no other questions holding I'll turn the conference back to management for any additional or closing comments.
[noise], we regularly discuss our business at investor events during the year, we invite you to join us for these events.
Thank you for participating in today's call. We look forward to speaking with you again in a few months when we report fourth quarter in fiscal year Twentytwenty result.
And ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect. Your phone line at this time and have a great day.
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