Good news, bad news at Mace

Good: access line, partnership; Bad: layoffs, losses
Thursday, August 20, 2009

HORSHAM, Pa.—CEO and president Dennis Raefield was noticeably hoarse on this week’s Mace Security International earnings call. He’s had a lot to talk about.

The financial news wasn’t particularly good—another quarter where the best news is that they lost less than a year prior, a nine percent workforce reduction—but there was a brand-new access control line and a new partnership with Xanboo to talk about, and Raefield feels the company is moving in the right direction despite disappointing results.

For the quarter ended June 30, revenues were $8.5 million, compared with $12.9 million a year prior. The company lost $3.5 million, compared with $4 million a year ago. And, no, the discontinuation of the PromoPath business wasn’t offset by gains in the security division. Security sales were off, too.

“The worst of it was May,” Raefield said. For security, “from July of 2008 through May of 2009, every month was slightly down. June was our first ever month increase in the last 11, and we had a sharp upturn of 113 percent or so.” June and July were also higher than May’s low.

Why the turnaround? Raefield said the CSSS central station buy is not included in those numbers, but rather, “we got that bounce more from our strategy of hiring significant outside sales professionals. We had no outside guys in the past,” he said, “we just took phone calls. And we were very aggressive with the inside sales, the telemarketing. I think the bounce is mostly from effort, plain old blocking and tackling—we had been a passive company.”

Also, it’s worth noting that Mace’s DIY direct sales “have been the strongest sales of the group,” with Internet sales tripling this year.

Despite poor sales numbers overall, Raefield is confident it can better support its dealers, and the new access control line is part of that. Targeted to the 30-door arena, though capable controlling 500 doors, MaceTrac is “not going head to head with Honeywell,” Raefield said. Another access line will appeal to the DIY sector, a battery-operated door lock with no wires that allows you to control a door remotely, targeted to the residential and small business market.

Further, there is the partnership with Xanboo that will capitalize on Mace CSSS, giving dealers an alarm monitoring product that sends alarm information to mobile devices. Raefield called the Xanboo deal “unique in the industry,” though Xanboo is also working with UCC, C.O.P.S., Nationwide Digital and other centrals.

On the horizon for Mace is a Q3 launch of its new dealer program and an all-hands-on-deck approach to profitability. “The marketplace is weak,” Raefield said, “but as the economy mends, we’ll be in position to strike hard, and we have the ability to grow rapidly when the marketplace returns. We’re looking to make it through the desert to the other side.”