Listened to the conference call. Seemed clear they're struggling with manufacturing ramp up which will constrain revenues at least in Q1 and hurt margins until 2nd half. Since the vast majority of their business for the next 1-2 years will be from Tier 1s, their acknowledgement of price concessions is a concern that could continue to hurt margins even when they optimize their manufacturing costs.
I understand why they want their backlog to be $8-$10 million and deliverable in 60 days. Given that, it seemed weird they wouldn't say what their current backlog is but are going to PR it soon? Perhaps they just mean their Q1 earnings release in early May.
Sams seems enamored with new products and markets but with not much of a handle on current execution. They can't even keep up with their Tier 1 orders but he thinks it's important to build a full service presence in South Africa? From what I've seen so far, I would deemphasize international and focus on domestic where the opportunities are far greater than their current manufacturing can even accommodate. I could see domestically over time that lower margin Tier 1 orders would be deemphasized as higher margin military and domestic products gain traction.
Regarding their balance sheet I think the big question is when they will again need to again increase production capacity and how that will be financed. If they're doing $60 million in revenue a year on good margins and are solidly profitable they can probably borrow, but if margins are poor and expenses (eg international expansion) are too high, they'll have to do an equity round.
IMO, which admittedly is very subjective, I heard management sound less confident about delivering this year and struggling to get a handle on profitable growth.
