Relm Wireless virtually breaks even in second quarter
Relm Wireless, West Melbourne, Fla., has announced operating results for the second quarter and six months ended June 30, 2002.
For the three months ended June 30, 2002, Relm reported net income of $3,000, compared to net income of approximately $145,000 or the comparable quarter in 2001.
For the six months ended June 30, 2002, Relm reported a net loss of $113,000, excluding a one-time $900,000 loss on a note receivable, compared to a net loss of approximately $142,000 for the comparable period in 2001. Including the loss on the note receivable, the net loss for the six months ended June 30, 2002 was $1 million.
Revenue for the three months ended June 30, 2002, decreased 19.4% to $5 million, from $6.2 million for the same period last year. Revenue for the six months ended June 30, 2002 decreased 11.0% to $9.7 million, from $10.9 million for the same period last year.
The company attributed the decreases in revenues and net income primarily to a lack of BK Radio product sales to the Communications Electronics Command of the U. S. Army. During the same period last year, revenues from product shipments to CECOM totaled $1.2 million. The contract under which those shipments were made expired in October 2001. In March 2002, Relm responded to a solicitation for a proposed new CECOM contract. The evaluation of proposals for this solicitation is in process, and a contract has not yet been awarded.
Overall, revenues from BK Radio products, which primarily serve the government and public safety market segment, decreased approximately $700,000 for the second quarter. The decrease in revenues from CECOM was partially offset by increases in sales of BK Radio products to various federal and state forest firefighting agencies, and increased sales of the S-series repeaters and base stations.
Sales of Uniden and RELM products in the business and industrial market segment decreased approximately $600,000. Relm said that customer demand in that market segment continued to be weak, reflecting the lack of a sustained economic recovery. Modest revenue increases in the Relm product line were realized from the continued introduction of a new family of portable radios, the RP series. Relm said that the RP series is designed as a full-featured, low-cost line to for business and industrial users.
Customer orders totaling $1 million were received during the quarter for Uniden ESAS systems, one of which is for the expansion of a system installed earlier this year.
Gross margins for the three months ended June 30, 2002 were 31.1% compared to 28.1% for the same period in the prior year. For the six months ended June 30, 2002, gross margins were 29.9% compared to 27.4% for the same period in the prior year. The improvement in gross margins reflected initiatives to reduce direct product costs and manufacturing infrastructure costs. These initiatives, which began in 2000, have included facility and staff reductions, and leveraging strategic external manufacturing relationships, some of which are offshore. The company said that additional initiatives designed to further reduce product costs are under way.
Relm’s president, David P. Storey, said: “Although revenues during the second quarter were disappointing, particularly in the business and industrial segment, we are continuingto execute the necessary steps, in all facets of the business, toward realizing our goal of profitable growth. A number of new products and technologies, such as EarthLoc tracking, have already been introduced and others are planned for the near future.”
Storey said that the two new models of radios for business and industrial users yielded some revenue growth in the RELM product line. He said that the company expects to accelerate is growth with the addition of two more portable models due shortly, and planned new mobile products.
“The development of our digital portable radio, the DPH, is progressing as scheduled, and we expect to introduce the product later this year. Undoubtedly, this is an aggressive agenda during difficult economic times. I am delighted to see the entire company rising to the challenge,” Storey said.
Storey said that the company’s manufacturing initiatives during the second quarter continued to improve gross margins and gave the company a small profit despite decreases in revenue.
“Gross margins for the second quarter this year were 31.1%, the highest of any quarter in recent years. By comparison, gross margins were a mere 14% as recently as 1997,” Storey said.
He expressed confidence that the combination of new products and effective operations would position Relm for a “bright future.”
Relm manufactures two-way FM business band radios and high-specification public safety mobile and portable radios, repeaters and accessories, base station components and subsystems. Its products are sold under the RELM Communications, Uniden PRC and BK Radio brand names.