Genasys Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Searle - Roth Capital - Analyst : Hey, good afternoon. Thanks for taking the questions. Dennis, congratulations and good luck on your retirement.

Question: Scott Searle - Roth Capital - Analyst : Maybe just to dive in quickly to start on PREPA, rev-rec issues or assembly gets to change, but in terms of things progressing, it seems on track. Just want to make sure I understand a couple of things for starters that the initial material shipment were basically at cost. So, we're looking at zero gross margin before we start to see the rev-rec again, and then much, much higher gross margins on the remaining portion of the contract as you hit those installed milestones. Is that correct?

Question: Scott Searle - Roth Capital - Analyst : Got you. Okay. And then moving beyond the 1st 3 groups, I think there are 7 groups in total. I'm wondering what the progress is, on groups 4 to 7 at this point in time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 8:30PM, GNSS.OQ - Q2 2025 Genasys Inc Earnings Call

Question: Scott Searle - Roth Capital - Analyst : Got you. Okay. And moving on to the impact of federal budgets in terms of what they contribute to your state agencies and state customers. I'm wondering if there's a number in terms of that opportunity pipeline that is dependent on those federal funds. Just kind of a number of ballpark in terms of percentage. And I'm not sure if you provided a total for the opportunity pipeline other than saying it was growing pretty significantly.

Question: Scott Searle - Roth Capital - Analyst : Okay. And moving over to CROWS, it sounds like you don't have an order in hand yet, but you're getting close. I think in terms of how you size the opportunity before, in terms of thousands of vehicles, that the CROWS opportunity would be larger than it historically represented before the old program expired. I'm wondering if that still holds and you would expect this to annualize out at some point in time of $10 million to $15 million or so a year.

Question: Scott Searle - Roth Capital - Analyst : Gotcha. And finally, and then I'll jump back in the queue. It seems like there's a lot of announcements that go outside of, I'll call it your traditional core base in terms of, local, state, and federal agencies starting to see more utilities. You also announced a Qua product in the last week or so. I'm wondering if you could just give us a quick update in terms of what's going on in those non-traditional markets and opportunities if you're starting to gain some momentum on that front. Thanks.

Question: Scott Searle - Roth Capital - Analyst : And let me just throw one last in supply chains. I know you had some comments in tariffs not being meaningful, but there were some long lead time items in terms of polls and other things as related to the proper contract. I'm just wondering if you're seeing any other pressures on that front. Thanks.

Question: Mike Latimore - Northland Capital - Analyst : All right, great. Thank you. Yeah, Dennis, congratulations and great working with you over several years here.

Question: Mike Latimore - Northland Capital - Analyst : I guess just on the supplies for the Puerto Rico deal, I think you said you've received some and some are on order. Can you just kind of give an update on what percent of the total amount you've received? What percent on order? And for those that are on order, when do you expect to receive them?

Question: Mike Latimore - Northland Capital - Analyst : Okay. Is that different? I thought there was a large tranche in the supposed to be in mid-May here.

Question: Mike Latimore - Northland Capital - Analyst : Okay, got it. Can you talk about recognizing the hardware at cost in the 3rd quarter. I assume there's a similar dynamic in the 4th quarter as well, given you'll get some of the hardware supplies in the 4th quarter. How do we think about the balance there?

Question: Mike Latimore - Northland Capital - Analyst : Okay. And then over the course of this program, you still expect the same level of EBITDA and cash flow as always.

Question: Mike Latimore - Northland Capital - Analyst : Okay. Thank you.

Question: Edward Woo - Ascendiant Capital - Analyst : Yeah, I'd also like to congratulate you, Dennis. I hope you enjoy your retirement. My question is, you mentioned that in the U.S., because of some of the federal budget issues. Have you noticed any longer lead times with any international opportunities?

Question: Edward Woo - Ascendiant Capital - Analyst : Great. Well, that's all the questions I have. I wish you guys good luck and congratulations again, Dennis. Good luck.