Telular: Despite Mixed Report, Stock Remains Attractive

Telular’s (WRLS) new management– Joseph Beatty hired in 2007 (now CEO), and Jonathan Charak (CFO) hired in 2008– have changed the strategic direction of the company, focusing on business segments generating high margin recurring revenue vs selling standalone communications equipment. The recurring revenue business segments are:

Telguard: Provides primary and backup alarm communication solutions for residential, VoIP, small business, financial, commercial and fire system markets. These products transmit full data from virtually all security and fire systems to central stations using the cellular network.

TankLink: In October 2008, Telular expanded its M2M portfolio through the acquisition of SupplyNet Communications (Renamed TankLink), a supplier of wireless tank-level monitoring solutions which closed in October 2008. Tank monitoring products offers solutions for M2M communications. Tank monitoring and automatic replenishment solutions help address the inventory management needs in the petroleum logistics, bulk chemicals and bio fuels industries.

Telular acquired SmarTank in January, 2011, adding to TankLink’s recurring revenue and operating cash flow margins. Results are included in this report. Management noted the acquisition would be immediately accretive and increased guidance for the fiscal year. Financial details concerning the acquisition were discussed in this article.

Telular released its second fiscal year quarterly results on Thursday, May 5, 2011. The report was a mixed bag of positive and negative events. We’ll look at the present numbers along with past results, followed by our opinion.
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