Brekford Corp announced on Tuesday that it recorded solid first quarter results, providing clues for second half financial results. Looking past Tuesday’s announcement, investors can look forward to – potentially – a strong second half.
Revenues are expected to accelerate in the second half of 2012, as a result of previously announced contracts with the municipalities of Greenbelt and Denton, MD and Rivera Beach, FL. All of which will begin to contribute to the Company’s top line and add to the Company’s base business.
The Company’s profitability is forecasted to increase significantly in the second half. Despite frontloaded cost, the Company had a strong operational performance by posting better than expected gross and operating profit margins. The Company is growing very rapidly and doing a good job of controlling expenses. The coming surge in revenue will have a positive effect on the Company’s second half EPS.
As was discussed in our recent interview with Brekford’s management team, the Company is quickly becoming an industry leader when it comes to innovation of cutting edge automated traffic safety solutions. Innovation is happening at a breakneck pace because the Company’s smaller size gives them an opportunity to innovate faster in comparison to their competitors.
This was independently confirmed in a recent letter directed to the Greenbelt MD City Counsel regarding the township’s vender selection process for the expansion of the City’s automated enforcement program. The letter goes on to spell out that Brekford was chosen over industry giant ASC and other smaller competitors, because they have the best and most cutting edge solutions in the industry. The letter will be available on Brekford’s landing page this weekend:
Currently it takes the Company four to seven months to bring new contract revenues online. Brekford’s CEO, C.B. Brechin highlighted the fact that they are working on state-of-the-art technology that will bear lower upfront costs and shorten deployment. An announcement in the future could positively affect the Company’s cost structure and earnings guidance. But more importantly it would further cement Brekford’s place in the industry as a technological leader, widening the divide between it and its competitors, and ultimately further drive revenues.
Finally, the Company publicly stated its intention to launch its financial services group and announce its initial contracts in the current quarter. Brekford’s financial services group is a new business line focused on parking, red light, speed, and parking ticket collections, and represents a 20 billion dollar opportunity in the US.
Brekford is at the forefront in an industry in its early stages in the US and is currently the only publicly traded pure play in automated traffic enforcement. Long term investor can directly participate in the industries growth by accumulating positions in Brekford’s common stock.
To see our recent interview with Brekford’s management team:
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