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DailyTrends.com Company of the Week: Henry Brothers Electronics (HBE)

Chris Lahiji
Chris Lahiji
Daily Trends.com
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I can not believe no one has picked up on this company yet and it makes me giddy just thinking about it!

No one is better positioned to benefit after the London subway attacks.

In an insecure world, Henry Brothers fights the good fight.

The security systems integrator designs, installs, and maintains closed-circuit television (CCTV) and access control systems. The company also installs system components such as CCTVs, intercoms, alarm monitors, video recorders, and card access controls.

The New York Metropolitan Transit Authority and the Port Authority of New York and New Jersey together make up more than 40% of the company's sales.

CEO James Henry and COO Irvin Witcosky each own about 28% of Henry Bros, which has acquired wireless communications equipment manufacturer Airorlite Communications.

Henry Bros security system was recently selected by the Santa Clara Valley Transportation Authority to provide and install video surveillance systems on 80 light rail vehicles and provide maintenance for three years.

Also, it recently received a follow-up order to furnish and install Mobile Digital Video Recorder systems on San Francisco Municipal Light Rail Vehicles (LRV). By the end of 2005, the entire LRV fleet will be fully equipped with on-board video surveillance systems...

The company has been posting strong growth as Q1 sales came in at $8.6 million, up 52% year over year. Its 2004 sales were up 62% year. The company recently affirmed full year guidance for sales of $36-$40 million and EPS of $0.17-$0.21. With just a $23 million market cap, the stock trades at just 0.6x sales, although it is not very liquid.

Read this article from the NY Daily News: http://www.nydailynews.com/front/story/329197p-281338c.html

If you are too listless, here is an excerpt:

The MTA first wave of major anti-terrorism projects will include installing high-tech surveillance systems to protect its underwater tunnels, the Daily News has learned. ... The intelligent CCTV [closed circuit television] systems will be among the contracts totaling up to $400 million worth of anti-terror projects the MTA plans to award by the end of the year, the sources said.

Last week, the company reported second quarter earnings and they were strong:

  • 2005 Second Quarter Revenues Grow 56% from Last Year
  • Sequential Revenues Rise 18% from First Quarter 2005
  • 5.8% Operating Margin Exceeds Target
  • Second Quarter EPS Increases to $0.05 per share
  • Backlog was at $17 million

Sales for the quarter ended June 30, 2005 increased $3,674,336, or 56 percent, to $10,198,826 from $6,524,490 for the same period a year ago. On a sequential basis, sales increased $1,585,752, or 18 percent from $8,613,074 in the first quarter of 2005.

Net income for the quarter ended June 30, 2005 was $305,972 or $0.05 per share, compared to a net loss of $54,823, or ($0.01) per share, for the same period in 2004. On a sequential basis, net income increased 391 percent over $62,297, or $0.01 per share, reported for the first quarter of 2005.

Mr. Henry added that revenue in the second quarter was driven primarily by new or expanded projects in the New York metropolitan area, which continues to be a strong and growing market for us. They remain particularly active with The Triborough Bridge and Tunnel Authority (TBTA) of New York, and are beginning to see accelerated demand in the New York City area for other security projects.

He remained optimistic about future growth.

For full disclosure purposes, I personally own shares in HBE.

Chris Lahiji will be available to take your questions until Thursday, August 26. Please use the form below to submit your questions.

 
 
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