Thruvision (THRU) is an interesting Technology Company that appeals to me as a serious growth prospect.
When it comes to investments, I guess that I'm no different to the vast majority, in that I tend to have a broad spread of stocks/sectors ranging from value/high yield/recovery and growth.
In relation to the latter I have been fortunate enough to enjoy some notable success stories through Identifying growth prospects at a relatively early stage, or before the wider market latches on to it.
Frontier Developments is a case in point, the shares now standing at £25.00 each against the 95p entry point for me back in 2013.
I subsequently covered the company many times in the Cambridge News and have watched this super success story unfold over the years.
Future (FUTR) has been another decent winner, although I confess to leaving the party too early in its case.
Having bought at various stages from 8p-10p, the shares subsequently consolidated, the share price equating to circa £1.40p, but today stand at a significantly higher £18.00.
Of course there have been some duds along the way, but fortunately the gainers have considerably outweighed the losers, which brings me on to another potential winner that looks an ideal novel disruptor and could, with some luck reward me well over time.
Thruvision (THRU) caught my eye some months back and looks absolutely ripe for potentially serious growth over the longer term, where, although in the short term the Covid19 situation has had a possible detrimental effect on its growing revenues, paradoxically, as we move forward, it could prove to be the making of the business.
THRU, is a technology company based in Oxford that specialises in developing and providing specialist people-screening systems that span areas from weapons, explosives and numerous types of contraband.
These are already being used at specific Airports, Railway Stations, Ports and even large Warehouse operations, but where, given the recent Covid related issues wide spread adoption could now well be on the cards.
A closer look at THRU reveals that it has a specific product that is ideal for the post Covid climate and which if adopted across the board of aviation alone, would see the current touch and search or close up scans become obsolete.
Indeed, Airports and the like are faced with distinct problems with an eventual resumption of the vast flow of people in ensuring that various aspects of security are undertaken at a safe distance.
The video clip below provides for a quick glimpse of THRU's system in action against the existing methods as shown on the left of the clip.
As can be seen, the system appears tailor made for the way forward in terms of maintaining a safe distance for all concerned and would appear to have the ideal USP to meet what is and will be required in the future.
Unlike many businesses which come to market and years down the line are still looking to build revenue, THRU is already actively generating sales and has now penetrated into at least twenty countries across the world.
Having been spun out of the Governments highly regarded Rutherford Labs in 2002 the company has patented its tech and seen $50m of research funding pumped into the operation over the years, which is obviously quite considerable.
However, as with many of these start up companies rooted in academia, there is often a case of a distinct lack of commercial know how and it appears that it is only in more recent years that a more aggressive approach has been adopted.
Thruvision was, in its form of a private business eventually acquired by Digital Barriers in 2012, a buy and build operation in the AIM tech space before that company sold off its other assets to management and took on the THRU name in 2017, thus concentrating on the latter's technology.
What we now have, is a more concentrated and focused business in the technology security space, with a very strong and growing presence in the Americas which now accounts for more than half of total revenues.
As a loss maker at present (which is the rub) therefore falling into the more blue sky speculative bracket, it is at present a smaller interest play for me, buying at 24p against the current 28p.
That said, THRU doesn't need to go shaking the investor money tree any time soon, as it is well funded with a decent £8.4m net cash position, so it has the funds to see it through to an inflexion point that would put it on the map.
For the year ended March 2020 it delivered £8m in revenues which was a substantial increase on 2019 of £6m, whilst 2017 came out at £3m, showing that the technology was already proving attractive prior to the Covid.
As revenue has increased, losses have also reassuringly reduced moving from a £2.9m deficit in 2017 to last years £1.2m, indicating that they are moving in the right direction as sales gather momentum, perhaps boding well for the future.
Although it is clearly frustrating for the company that it has seemingly been curtailed by Covid as mentioned at the outset, this looks a temporary set back that should lead to a clearer acceleration in its products moving forward, as operators look at new ways of undertaking various aspects of security.
What is clear, is that as it entered the Covid challenges it was already on a very positive trajectory with a rapidly-growing market acceptance of its leading product range and that is now likely to prove resurgent as we hopefully move forward beyond the current spike.
Looking at what is regarded as a ground breaking lead product as shown in the video, this operates at what is a substantial distance, removing that need for pat-downs or the use of the detection wands.
The company has also and encouragingly more recently said that the pandemic had lead to a number of new potential customers considering taking up the Thruvision system which sits well for the medium to longer term.
It is also now at a more mature stage of its evolution in that it has a greater range of products in its portfolio with margins improving and which also carry with them servicing contracts once adopted and embedded, although the real value is in the hardware sales.
Importantly, there has been some strong progress made with US Federal Government agencies and with that nation becoming increasingly insular and security conscious, it is perhaps not surprising that management has expressed confidence in building on recent momentum.
Aviation is actually a relatively new target market for THRU, only being developed/targeted over the last year or so and the company has now secured US Transport Security Adminstration approval for screening empoyees at US Airports.
Los Angeles, Seattle and LaGuardia are already on board as customers in this area, but perhaps much more exciting and potentially meaningful is the approval process for the company's system for passenger screening which is already underway.
A successful outcome for this could prove transformational for the business effectively opening up the market for mass adoption right across the International Aviation security market at a commercial level.
The company is also already active and growing across customs where its systems have been deployed at cross border checkpoints where it identifies specific objects.
And Its customers are reassuringly big and well known names, including Hong kong customs and the US State Dept Bureau of Narcotics and Law enforcement amongst others.
Also of interest and a now established arm is that of loss prevention for businesses, where in a warehouse or other large setting, items can disappear through theft proving costly and disruptive to businesses.
The usual and long standing system of patting employees down through a manual search can no longer be easily implemented, hence big retailers are buying into the THRU tech, with a recent glowing endorsement from Morrisons.
Customers across this space include Sony, Hermes, JD Sports, Next and Morrisons and encompasses any area from fashion retail, to food, healthcare and engineering.
Interestingly and perhaps also reassuring, is that there are some very well known and respected Institutional holders of the shares including Schroders, Herald, Henderson and Invesco amongst others whilst Exec Directors do have skin in the game.
Early last month I managed to catch up with the CEO Colin Evans, in order to hear a bit more on the company and perhaps gain a further insight into the technology and the prospects of the business.
Perhaps not the best of timing from me, as THRU was in a closed period, so there were obviously going to be restrictions on what could or couldn't be said.
I nevertheless felt the exercise worthwhile as such opportunities always provide for a better handle or feel of a business and at the least presents an opportunity to ask specific questions.
In our chat, Evans said that where as previously THRU had really had to put themselves out in the spotlight with customers, now interested parties are approaching them.
As part of that he says that some potential customers had come to them asking about a rental/leasing option and they have subsequently done some business on that basis which has been very successful and as a result of that, this is an area THRU is now looking to expand and build on.
Evans points out that the system it provides for screening people involves quite a capital outlay, so a rental option makes for good commercial sense for some and will obviously be good for THRU moving forward.
Covid has clearly amplified the case for adoption of the product, as health and safety issues in distribution centres alone is now paramount and that is highly unlikely to change and see operations revert back to the old format of pat and searching.
In terms of the technology which is patented the CEO confirms that as far as they are aware, it is indeed the only one of its type on the market.
Although there is seemingly plenty to go for across distribution centres, particularly with the vastly increased on-line retail traffic which is not going to diminish, the area of Airports looks like a real target market.
THRU'S system as mentioned is already being used in the US which has seen Los Angeles World Airports adopting it for the screening of employees and Evans says that has been very successful.
In relation to the technology, the system measures the thermal energy emitted by the human body, showing objects that block that energy as dark spots on the body’s thermal outline, an image often termed the “green ghost”.
Unlike other high power stand-off body scanners, Thruvision is completely safe and respectful, and as a passive technology, does not require certification to prove it does not cause radio interference with other safety critical systems.
Importantly, it functions perfectly from 3 metres up to eight metres away and can scan up to 2000 people in an hour, so would certainly be suitable for through traffic on a commercial flight basis.
To date, over 200 units have been deployed across the globe covering 19 countries which includes customs, aviation security, border control and the distribution centres for supply chain loss prevention.
Asking Evans about the important timing on clearance for commercial customers at airports across the US, he was not prepared to provide any comment, citing it as being highly confidential and sensitive.
In previous releases though, it has been stated that it was expected by the end of 2020.
The process should actually be a formality given that the system is already being used by the US homeland security and the aviation industry for screening its own employees, so with the current situation and the best of way of moving forward the case for adoption is arguably compelling.
Regarding the aviation industry across Europe, Evans confirms that it is a region they are actively targeting, although he points out that at present flight activity is not running anywhere near the level as that across the US, which perhaps implies that any potential trials will have been slowed.
That shouldn't be a concern though as we proceed forward and again the prospects here look extremely exciting.
Evans also provided an update on the system being trialled with London Underground which commenced last Autumn and he confirms that the trial is still ongoing despite Covid obviously reducing the numbers of people travelling and perhaps interrupting the trial process.
This is another area for obvious growth potential as it has the ability to detect hidden objects such as knives or even worse explosive devices and it can be housed in various places, both at high and low points of placement.
Since we spoke, THRU last week provided an update to the market which was by and large positive given the Covid issues and in the process announced another decent contract win.
“Thruvision (AIM: THRU) the specialist provider of people-screening technology to the international security market, is pleased to announce a strategically important contract award by the US Government's Customs and Border Protection (CBP) for further units and associated support services totalling $4.9 million, of which $4.3 million is expected to be delivered in FY21.
This latest award, in line with the Company's expectations, is a follow-on order by CBP to that of $3.0 million made in 2019.
Commenting on the award, Colin Evans, Chief Executive, said
"We are delighted that CBP has added to its existing fleet of Thruvision units.
This award reinforces Thruvision's international standing as a first choice provider of security technology which, in this era of COVID-19, eliminates the close-proximity physical searching, or 'patting-down', of individuals."
Ongoing travel restrictions and challenges with getting onto customer sites to run operational trials are still hampering our ability to progress sales opportunities with new customers.
However, this award means Thruvision expects to deliver financial results for H1 broadly similar to the same period in FY20. The aviation sector has been severely affected by COVID-19 and our business here has inevitably suffered during the period.
Nonetheless, we continue to make good progress with aviation regulatory approvals which is critical for the longer-term.
Equally, although the pandemic has adversely affected the broader retail sector, interest levels in our Profit Protection business have held up reasonably well and our confidence in our medium-term prospects in this sector has strengthened”.
All in all the company looks to be in a strong position to drive further sales which could seriously ramp up in the coming years and I am happy to sit tight and assess as further news flows.
Although profitability is some way off yet, the technology is gaining traction whilst the shares remain off of the wider market radar.