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……………………..New Products and Technology …………. > Profits ………. > Growth

 The last two years have been frustrating ones.

 I believe we are making all the right moves to grow the company, but the anticipated Growth has not occurred.

2011 was a tale of two halves; the first half continued the malaise we encountered in the fourth quarter of 2010, we then shifted into cost reduction mode and reversed our fortunes in the second half …….. But……we attained our profitability through aggressive cost reduction actions not through success on the top line.

In my letter to you last year I summarized the Business Case which I believe in and supports the premise of Growth for our Business Plan. In it I outlined the Evolution of RELM, the Obstacles and Opportunities, the strategy about supporting our Legacy Customers, and Capturing New Customers.

Over the last twelve years the company has been re-constructed from the ground up, pulling out the roots of what was and planting the seeds of success and growth.

This action plan was not easy and literally every process in the company was addressed. This expansive effort started with a Company wide Commitment to Total Quality which led to the development of our Hybrid Manufacturing Process. We then re-tooled our Engineering effort, creating an engine of High Quality Designs in the total range of APCO P-25 Public Safety Voice Communications be they VHF, UHF, or 700/800 MHz. This includes the new exciting KNG line of over sixty portable and mobile offerings increasing our footprint in the LMR arena to its largest presence ever.

I believe in our "Formula" of Owning Your Technology thus controlling your destiny and your costs leading to High Gross Margins and Profits!!!   

I believe that our company is on firm technological footing and the investment in our P-25 solutions will lead to a growing revenue line.

So why hasn’t this success happened faster?It’s a valid and important question to ask.

With our heavy reliance on federal customers, the federal budget and funding of expected initiatives has been problematic over the last two years. That said, these are the cards we have been dealt and I intend to win and return this company to its glory days of consistent profitability.

RELM, with all of this new technology and products, is the "new kid on the block", trying to penetrate new Customers and Markets that have been the bastion of the competition. We have worked diligently for two years on compliance testing and CAP Approval on our competitor’s infrastructure to prove our worth and, just like seeds fighting through the earth to reach the sunlight, we are making progress towards our goals of capturing additional market share.

Signs of Progress

  • Revenues for the New KNG product line grew 90% in 2011 over 2010.
  • P-25 Trunking Technology facilitated the sale of $5 million dollars of KNG Portables and Mobiles in 2011.
  • Shipments of the KNG products outpaced our Legacy "D" series by 24% in 2011.
  • Shipments of UHF KNG Portables were greater than KNG VHF Portables; a first that supports our growth strategy into other frequency markets.
  • Our first material international win in Australia with the new KNG line.

An Important Potential Revenue Stimulus for 2012 should be the January 1, 2013 deadline for Narrowbanding. This mandate is the result of an FCC effort to ensure the most efficient use of spectrum. After January 1, 2013 licensees not operating at 12.5 KHz will be in violation and could be subject to enforcement action.

All of RELM’s products can help these customers comply with the mandate, with World Class Quality and affordable prices.

Reviewing the Numbers

Over the last 10 years RELM has shipped over 400,000 radios, 225,000 of them to the public safety markets and since 2003 94,000 APCO P-25 Digital radios, mostly VHF with gross margins ranging between 50 and 60%. These numbers although impressive don’t scratch the surface of the market potential in the LMR market.

Now, with RELM’S new technologically rich suite of products addressing a much broader potential market and offering more diverse solutions to a new cadre of customers I can’t help, but believe these numbers will grow over a shorter period of time with the pendulum dramatically swinging to the APCO Digital KNG Product line, thus realizing the strategy for which we have worked so long and hard, and producing Growing Revenues and Profits.

The RELM Team and I will work tirelessly to make this happen in 2012 and then set our sights on beating Our Record of Five Consecutive Years of Profits.

As alwaysthank you for your support and faith in Your Company, RELM Wireless Corporation.   


 

David P. Storey
President/C.E.O.
RELM Wireless Corporation

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