Safety measures
Flyht's (TO:FLY) new management appears to have addressed the financial challenge that faced the company. This should remove the shackles from the equity and allow focus to return to the trading outlook. The growing recurring revenues and reduction in losses are encouraging, with the main product mandated only in China and at airline option elsewhere. If sales momentum can be maintained and regulatory adoption increased, a move to sustained profitability and cash generation should be feasible.
Trading results showing progress
FLYHT has already experienced its two highest quarterly sales achievements in 2015. Q3 sales of C$2.52m rebounded sharply from a disappointing Q2 (C$1.60m) to almost match the record Q1 revenue (C$2.57m). Nine months' sales of C$6.69m were thus up 43% on the prior year. The flagship Automated Flight Information Reporting System (AFIRS) products experienced relatively flat sales in Q315, but the unrecognised revenue element increased significantly, with substantial Q4 shipments of kits expected. Software add-ins such as FLYHTStream, which automatically transmits aircraft black box data by satellite in an emergency situation without having to recover the units themselves, provide growing sources of high-margin recurring revenues of voice and data service contracts. These are driven by the installed base and the value of functionality supplied. As there is limited attrition of the installed base, these should rise at an increasing rate as larger contracts are procured and executed. The recurring revenues generate higher growth margins, which should improve the sustainability of profits and cash flows.
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