On Friday, March 16th we had the opportunity to visit with the Company and observe its semiannual Fleet Management Solutions Trade Show. The show was attended by over 250 potential buyers consisting of local, county, and state municipal publicly safety representatives and agency heads from all over the east coast, many of who controlled significant budgets upwards of several hundred million dollars or more.
We had an opportunity to speak with a number of buyers, including, the agency head for a nearby county with one million residents, who controlled a significant public safety budget, and was also a customer of Brekford’s eticket products.
It was observed that the Company has a significant intangible asset in being able to form relationships with grassroots local representatives and agency heads who are buyers of its products and services such as vehicle upfitting, eticketing, license plate readers, etc.
The Company’s complete end-to-end suite of products and services gives the Company a major competitive advantage over even larger competitors, as they are in a position to message and cultivate long-term relationships with buyers that have purchased multiple products.
We observed a lot of potential “low hanging fruit” at the Fleet Management Show for Auto-traffic enforcement services as an add-on product for a number of established customers, many of whom have had relationships with the Company for many years.
In 2011 the Company entered and established a presence in the automotive traffic enforcement industry. Over the next three to five years, the Company expects greater growth. This is because a number of their clients who were essentially watching the company last year now feel more comfortable placing orders with the Company’s now firmly established credibility. The Company is also poised to enter other states along the Eastern Seaboard.
This week’s announcement of the Riviera Beach Florida contract – the Company’s first outside of the state of Maryland – is the tip of the iceberg as Brekford is poised to show significant growth in 2012 versus last year.
The Company has provided revenue and net income guidance of approximately $26 million and net income of approximately $2.3 million or $.06 EPS in 2012, and approximately $36 million and $3.3 million or $.08 EPS in 2013, respectively.
BFDI shares at the current levels appear to be substantially undervalued, and are an attractive long-term pure play in the burgeoning automotive traffic enforcement industry: