PI @ Baird - 5/7/23
Fireside chat with CFO Cary
- Went into more detail on the projects that moved to the right about a quarter. One sounds like WalMart's move from tagging retail apparel to general merchandise, and it sounded like the suppliers needed more time to tag their products. The second sounds like UPS. Their confidence remains that both projects will fully deploy.
- Pipeline remains strong. Several programs have been on ice due to supply constraints but nothing has been canceled. He detailed a specific one in Japan for general merch that has been on ice for awhile, it is now earmarked to start in Q3 with 50M tags, the opportunity is 1B tags, with broad rollout taking several quarters.
- On wafer supply, they have started the 2024 convo with TSM, supply can still be tight in 2024, but they feel good about supply for the first time in awhile. They've also been able to build some inventory in Q1 and Q2.
- Growth? The historic CAGR has been 25%. Retail apparel is about 30% penetrated. General Merch. and Supply/Logistics are both <1% penetrated and are both 400B tag opportunities. In a few years they will drive the growth.
- Euro retailer doing loss prevention. First brand was $6M, second was their flagship brand at $18M, they are now doing brands 3 and 4 at $13M. Those are for the infrastructure. There are more brands to go. Other customers are watching this deployment.
- Good discussion on how new customers come to them, how the systems get designed, and how those deployments favor PI's products. Last year they maintained market share despite the supply issues, Volumes are now increasing and they sound confident to grow market share.
- Authenticity - They expected Performance apparel, they didn't expect the pharma interest. Also interest from specialty foods and tax tracking.
- Food is early days but they are seeing interest at the case/box level.
- They'll provide a long term financial model next week, but in general GM has grown from 50 to 53-54 due to the M700, and they have further to go. While R&D will grow with revenue due to the huge opportunities out there, Sales/Mktg and G&A will not.
- Did some market share discussion at the end beyond endpoint IC's, I didn't catch the #'s.
Very good presentation, Cary's best.
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