Inc. Annual of - Communications Systems,...
Transcript of Inc. Annual of - Communications Systems,...
Communications Systems, Inc
infrastructure & services for global communications
Welcome to Communications Systems, Inc. Annual Meeting of Shareholders
2014
Communications Systems, Inc
infrastructure & services for global communications
2013 Performance
• Exceptional revenue and adjusted operating profit performance– 2013 full year revenue of $131,300,000, a 26% increase– 2013 full year adjusted operating profit of $7,006,000– 2013 full year net loss of ($958,000)
• JDL – record year for revenue– Strong performance driven primarily by Broward services and Miami
Dade hardware sales• Transition Networks business contracted due to a decline in Federal
Government sales and legacy product salability– Management team focused on repositioning the product franchise for
growth with new products• Suttle – Strong year with an improved economy and key account
performance– 21% increase in sales and 110% increase in operating income
Communications Systems, Inc
infrastructure & services for global communications
Business Process Improvement
• New ERP system (IFS) implementation rollout is proceeding without significant problems.– Offers improvements in product development, manufacturing and customer service
• Transition Networks has operated more than one year since implementing the new ERP system with minimal problems.– Now looking to gain business advantage with implementation throughout the business operations
• Suttle on track to go live in the first quarter of 2015.• “Steady as you go” implementation has reduced risk and enhanced implementation.
Communications Systems, Inc
infrastructure & services for global communications
Restructuring Our Approach to Corporate Management
• Formed the “Office of the Chair” in September 2013• Appointed business presidents for Transition Networks, JDL and Suttle
• Improved decision making and shortened lines of authority
• Looking Ahead– Corporate Scientist– Interim CEO
Communications Systems, Inc
infrastructure & services for global communications
George WakilehVice President of Global Business & Technology Development
Appointed
Corporate ScientistFor outstanding technical and business development contributions.
George Wakileh joined Suttle, in 2009, to implement a strategic innovation process, re‐structure the product roadmap, and lead the company's business development efforts.
He holds a BS in Electronics Engineering Technology from Mankato State University, and has been engaged in the telecommunications industry for over 20 years.
Highlights of his telecommunications career:
• Senior Systems Engineer at ADC.
• Engineering Manager and Director of Product Development and Engineering for Americable /APA Optics (now Clearfield), where he developed the company's Fiber‐To‐The‐Home product lines.
• Engineering Director and Director of Product Management and Innovation Strategy at Emerson Network Power. In this role, George directed an $85M business for Emerson's FTTX programs into Tier 1 and Tier 2 US Communication Service Providers.
George is highly respected in the telecom industry as a strategic thinker and innovator, and for expanding the Intellectual Property offering and Patent Portfolio for each of his employers.
Communications Systems, Inc
infrastructure & services for global communications
Interim CEO
• Interim CEO responsibility passes to Roger Lacey• Strategic levers will remain in place
– Business portfolio future options assessment– Focus on corporate costs and productivity– Rebuilding the entrepreneurial spirit and focus on shareholder returns
• Office of the Chair remains intact– Curt Sampson– Roger Lacey– Ed Freeman
• Appointment of new CEO will depend on portfolio assessment
Communications Systems, Inc
infrastructure & services for global communications
Q1 2014
• Q1 2014 was challenging as individual businesses build for future growth and profitability.
• Continued to build our strong financial position.– $32.7 mil cash and investments and $63 mil in working capital
• Made people investments with long‐term growth horizon.– Engineering, Sales, Marketing
• Future– Opportunities in each business unit– New products and services, global expansion
• Maintained excellent dividend.
Communications Systems, Inc
infrastructure & services for global communications
Strong Dividend Yield
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Price $
Year
Stock Price, Dividend and Dividend Yield 1993 ‐ 2013
Stock Dividend yield (Dividend/Share Price)
Outstanding record of dividend payments
Communications Systems, Inc
infrastructure & services for global communications
Public Company Since 1981 Listed on the NASDAQ Stock symbol: JCS Revenues $131,320,000 Total Assets (12/31/13) $103,533,000 Adjusted Operating Income $7,006,000 Net Loss* ($958,000) Earnings Per Share ($0.11) Dividends Per Share $0.64 Stockholders Equity (12/31/13) $88,622,000 Market Cap (12/31/13) $95,284,000 Shares Outstanding (12/31/13) 8,553,320* Includes $5.8 million goodwill impairment charge
Financial Results2013 Annual Figures
Communications Systems, Inc
infrastructure & services for global communications
Public Company Since 1981 Listed on the NASDAQ Stock symbol: JCS Revenues $25,198,000 52 Week Range (3/31/14) $9.55 - $13.92 Total Assets (3/31/14) $101,073,000 Net Loss ($141,000) Earnings Per Share ($0.02) Dividends Per Share $0.16 Stockholders Equity (3/31/14) $87,448,000 Market Cap (3/31/14) $83,703,000 Shares Outstanding (3/31/14) 8,600,247
Financial ResultsQ1 2014 Figures
Communications Systems, Inc
infrastructure & services for global communications
Enabling Your IT to do MORE
June 4, 2014Shareholders Meeting
Communications Systems, Inc
infrastructure & services for global communications
JDL Technologies IncServices Organization
Education CommercialInfrastructure
SalesProfessionalServices
ManagedServices
• Wireless Networks
• Servers• Storage• End Compute• Software• Virtualization
• Virtualization• Networking• Microsoft Stack• Assessments
o HIPAA o Network
• IT Managed Services
• Application Support
• Staff Augmentation
• IaaS• BaaS• AaaS
• eRate• Wired/Wireless Networking• Core Infrastructure• Bring Your Own Device
• Broward School• Network Operations
Center (NOC)• Technical Staffing
Infrastructure Sales / Service Contract Services
Communications Systems, Inc
infrastructure & services for global communications
JDL Technologies Inc
Education
• eRate• Wired/Wireless Networking• Core Infrastructure• Bring Your Own Device
• Broward School• Network Operations
Center (NOC)• Technical Staffing
Infrastructure Sales / Service Contract Services
Communications Systems, Inc
infrastructure & services for global communications
JDL Technologies IncHealthcare
CommercialInfrastructure
SalesProfessionalServices
ManagedServices
• Wireless Networks
• Servers• Storage• End Compute• Software• Virtualization
• Virtualization• Networking• Microsoft Stack• Assessments
o HIPAA o Network
• IT Managed Services
• Application Support
• Staff Augmentation
• IaaS• BaaS• AaaS
HIPAA Regulations & Meaningful Use; Driving Opportunity
Communications Systems, Inc
infrastructure & services for global communications
JDL Technologies Inc
Other Principal Verticals
• Legal & Financial• Business
Services/Manufacturing/Logistics
CommercialInfrastructure
SalesProfessionalServices
ManagedServices
• Wireless Networks
• Servers• Storage• End Compute• Software• Virtualization
• Virtualization• Networking• Microsoft Stack• Assessments
o HIPAA o Network
• IT Managed Services
• Application Support
• Staff Augmentation
• IaaS• BaaS• AaaS
Leveraging Existing Clients – Building Niche Messaging / Vertical Offerings
Communications Systems, Inc
infrastructure & services for global communications
Transition NetworksAnnual Shareholders Meeting
June 4, 2014Minnetonka, MN
Communications Systems, Inc
infrastructure & services for global communications
TN Transformation• Focus on Organizational Excellence• Business Stability• Support channel model while building direct capabilities
• Take advantage of current opportunities in Fed and Enterprise segments
• Strengthen relationships with service providers• Refine product roadmap
Communications Systems, Inc
infrastructure & services for global communications
Customer Solution Space
Ethernet Connectivity
Carrier Ethernet
HardenedEquipment
SecurityHardened Solutions for Security
Applications
Data Security
Service Providers
Power Utilities
Surveillance Integrators
Government Integrators
Communications Systems, Inc
infrastructure & services for global communications
Carrier Ethernet Solutions• Why Carrier Ethernet
– Standardized Services– Scalability– Reliability– Quality of Service
• Carrier Ethernet Differentiators– Rapid service turn‐up– Performance guarantees
– Flexible, on‐demand, dynamic bandwidth allocation
S3280
Cu
Fiber
Macro Cell
Multiple Carrier Opportunities, domestic and abroad
Communications Systems, Inc
infrastructure & services for global communications
• Remote Outdoor Environments• Hazardous environments
Power Utility Wastewater Mining Oil Exploration
Airports Sea Ports Gas Distribution Grain Processing
Supports domestic and global applications
Hardened Ethernet
Communications Systems, Inc
infrastructure & services for global communications
Data Security SolutionsVulnerable Copper• Hackers can tap connections
and detect electrical signals• Breach undetected• Compromised data
Secure Fiber• Properties of fiber provide
needed security• Try to tap into fiber . . .
– Fiber will break– Links will go down– Network managers alerted
Cu
Fiber
Serves Federal Government and Enterprise Channels
Communications Systems, Inc
infrastructure & services for global communications
• Access Security – Locks, Card Readers…
• Surveillance & MonitoringPoE Camera morethan 100M away
Indoor PoE Camera within 100M
Legacy CCTV Camera
Emergency IP Phone within 100M
PoE+ Media Converter
IP Video Encoder
Media Player
PTZ Control
Copper
Fiber
PoE+ Switch
COAX
Composite Video
Addresses enterprise data security concerns
Physical Security
Communications Systems, Inc
infrastructure & services for global communications
Delivering Innovative, Customer‐Centric SolutionsSuttle Customer Engagement Model
Innovative Customer‐Centric Solutions
Operational Capabilities
Knowledge of Customer Business Strategies
Customer RelationshipsSales & Mktg
Strategic Partners
Technology & Market Expertise
Prism
FIOS
U‐verse
Communications Systems, Inc
infrastructure & services for global communications
The Ultrafast Broadband EraMarket Forces
• One Gigabit Broadband Build Drive for Higher Speeds
• Internet of Things Growth in Connected Devices
The new FutureLinkTM brand is Suttle’s next generation of fiber and high-speed copper connectivity solutions, which meet market demands at a lower cost of ownership from the Central Office all the way into the Premise.
Communications Systems, Inc
infrastructure & services for global communications
Enabling Truly Connected Home
High Speed Copper‐Fiber‐Wireless 1Gigabit Broadband Distribution