DailyTrends.com Company of the Week: RELM Wireless (RELM)
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RELM Wireless makes and markets wireless communications equipment consisting of two-way land-mobile radios, repeaters, base stations, and related components and subsystems. The Company employs both analog and digital technologies in its products.
RELM sells its products under the BK Radio and RELM brand names. BK Radio branded products consist of higher-specification land-mobile radios whose primary market focus is professional radio users in the police and public safety segment. The BK Radio products have extensive features and capabilities than the products offered in the RELM and Uniden product lines.
RELM and Uniden branded products provide basic, inexpensive, yet feature-rich and reliable two-way communications for business and industrial users, such as hotels, construction companies, schools, taxicab and limousine companies and airports.
I spent time this week with the President and CEO of the Company, Mr. David Storey.
He was kind enough to provide an interview for all the members.
Chris Lahiji (DailyTrends.com): Mr. Storey, when was the Company founded? Have your products and offerings always been to the law enforcement and government agencies?
David Storey (CEO of RELM): The company was founded in 1947 as Industrial Development Engineering Associates (IDEA) in Indianapolis, and was responsible for what is believed to be the first production transistor radio, the TR-1. The name was later changed to Regency Electronics, Inc., and finally to RELM Wireless Corporation. For most of its existence the company has been involved with wireless communications in various forms, including two-way radio communications. The company, showing keen foresight, invested heavily on communications with emergency, law enforcement and government agencies with the acquisition of the Bendix King Product line in 1993.
Lahiji (DailyTrends.com): When did you take over RELM and obtained the top position? Was it distressed when you came at the helm?
David Storey (CEO of RELM): I joined RELM in June 1998 as EVP & COO and was named President & CEO in July 2000. In the late 80 s and early 90 s the company lost its core strategic focus, having invested in a myriad of non-wireless businesses. In 2000, we were in the process of refocusing solely in wireless communications. Upon being named President & CEO, my primary objectives were to accelerate that process and re-energize our new product development.
Lahiji: Besides two way radios, what else does RELM sell?
David Storey (CEO of RELM): In addition to radios we sell base stations and repeaters. Repeaters expand the range of two-way radios, enabling them to operate over a wider area. Base station components and subsystems are installed at radio transmitter sites to improve performance by reducing or eliminating signal interference and to enable the use of one antenna for both transmission and reception. Through partnering arrangements, we also offer data communications capabilities.
Lahiji: After 9/11, did the Company see a surge in buying? Given the current budget for the Department of Homeland Security, what type of growth do you think your industry will experience in the next several years?
David Storey (CEO of RELM): There was not an immediate surge in buying after 9/11. Those events, however, have contributed the current security-conscious climate and the need for fast, reliable communications. This in turn has started to drive increased LMR market growth, which is accelerating. We believe this trend will continue at an increasing pace. Homeland Security and other federal government agencies will be a big part of this growth. It will spread to state and local agencies as well.
Lahiji: Who do you guys directly compete with? How are you different than the competition?
David Storey (CEO of RELM): The dominant competitor is Motorola. There are a host of other, smaller companies both domestic and internationally. We compete on a platform of rock-solid reliability, ease of use, and lowest cost. Our quality, durability and operating specifications meet, and in important characteristics such as battery-life and audio quality, often exceed those of our competition, at a price that in some cases is less than half the price of competitive products.
Lahiji: Finally, you guys signed a monstrous five million dollar contract with the Department of Forestry. Have you positioned yourselves well in bidding and winning larger contracts for 2005?
David Storey (CEO of RELM): I believe we have. The increasing need for effective and reliable two-way communications is undeniable, as is the mounting budget pressure on government, public safety and security agencies. We believe RELM offers the best value in the market place to satisfy these needs, so do our customers. Their experiences with, and testimonials about, our products are an important factor in winning new customers. CDF is the latest example. There will be others. We have also forged relationships with larger strategic partners that will enable us to participate in contracts that otherwise would be beyond the scope of companies our size.
END OF INTERVIEW
FINAL TAKE by Lahiji
I personally love this Company and own shares in it. There is no question in my mind that Mr. Storey has fixed all the problems with RELM since coming on the job and is now positioned well for growth.
Insiders own 1/3 of the company outright and the stock has over $10 million in current assets.
Expect this gem to ink more deals with the department of Homeland Security as communication is the most important thing for law enforcement and military.
Believe it or not, this is another great stock that will probably be bought out in the next couple of years.
It should be above three dollars a share in my opinion, and investors will eventually figure that the current value is an attractive price.
Chris Lahiji will be available to take your questions until Thursday, March 10. Please use the form below to submit your questions.