Release Date: February 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you comment on the number of device activations this quarter relative to the prior quarter and year-over-year? A: We don't disclose exact numbers, but activations increased by about 1,000 in December compared to November, September, and June. We expect activations to strengthen as there's a delay from radio sales to activation due to distribution and dealer processes.
Q: With recurring service revenue decelerating for three quarters, what do you view as the steady-state growth rate for RSR, and when will it accelerate? A: In Q3, we expect the growth rate to drop to around 12-12.5%. By Q4, we anticipate an increase due to strong radio sales from Q1. We aim for a 20% growth rate, excluding new products like Prima or MVP.
Q: How do the fires in Los Angeles and Pasadena, and the ongoing tariff wars, impact your numbers? A: Tariffs benefit us as our products are assembled in the Dominican Republic, unlike competitors who manufacture in China and Mexico. This makes us more competitive. The fires will lead to rebuilding, primarily residential, but we expect increased demand for commercial fire alarm systems.
Q: Did you provide a breakdown of equipment revenue, and how much variability are you seeing among distributors? A: Intrusion and access revenue was $7.6 million, locking was $14.2 million, and recurring was $21.2 million. The shortfall was due to one distributor reducing inventory for year-end, not due to demand changes. They expect business as usual moving forward.
Q: Given slower demand, are you adjusting operating expenses? A: No adjustments are planned. We continue to invest in sales and engineering to bring products to market faster. Our profitability and cash flow support this strategy.
Q: Can you update us on the ADI relationship? A: The relationship is progressing well, introducing us to more dealers. We aim for ADI to become a 10% equipment sales customer, and their sell-through stats are promising.
Q: Should we expect normal seasonal patterns for equipment revenue in June? A: Historically, Q4 is the strongest quarter. We expect Q3 to improve over Q2, with Q4 being even better, barring unforeseen circumstances.
Q: Should equipment revenue grow year-over-year in Q3? A: Q3 last year included a large New York City project, making comparisons difficult. We expect distributor business to return, but hitting $30 million depends on special projects.
Q: Are you considering more aggressive stock repurchases given current stock performance? A: We approach buybacks opportunistically. We balance buybacks with maintaining cash for potential acquisitions and dividends. Stock buybacks remain part of our strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.