Massive Profits For Carrier Access / LenelS2
Carrier's access control businesses (LenelS2, Onity, Supra) have massive profit margins, doubling that of even very profitable security businesses.
Based on Honeywell SEC filings (Honeywell recently agreed to acquire Carrier Access), we examine how profitable these businesses are, why they are so profitable, why they do not invest more in those businesses (related, see Why Lenel Perpetual Problems Are Economically Rational Analyzed) and what this portends for the future of them inside Honeywell.
Executive *******
******* ****** ******* ****** ******* *** 40%+, ******* ****** **** ** ******* and ********* *******, *** ** ** 4 ***** ** **** ** ********** companies **** ** *****.*** *** ******. Strong ****** ******* *** ******** ********* are ********* ** *** ***** ** 15 ** **%, **** ******* ****** far ********* ****.
**** ** * ********* **** ** the ****-** **** ***** ********** **** and *** ******** *************** **** *** product *********** **** ******* *** *** and **** ** ****** ********* ** do (********* *** *** **** *****-**** cash ********** ******** ** *******).
Revenue ~$*** *******
******* ****** ********* *** ~$*** ******* in ***** **** ****, ********* *********** *** ** ********'* ****:
********* ** ****** *** * $* billion-plus ****** ********, ***** ******* **** its ******** ****** ******** ** ***** $300 *******. ** ******* **** ******** its ***** ******** ******** **********, ********* video ************, ***** *** ********** ******* position ** ****** ******* **** *******. Also, ***** ******** ***** *******, ********* ******** ** "*****[***] * leading******** ************ ********** ****** ******* ** ****** of $* *******" ***** ** ********** with *** ************** **** **** ** all ********* ******** **********.
Profits **%+
******* ****** ******** ****** ****** ******* are ** ***** **% ***** ** what ********* *** ********. ***** ******** on *********'* **********, **** ******* * 50%+ ****** ****** ****** (*.*., * price ** $*.** ******* ******* ** a *** ****** ****** $*** ******* EBITDA ****** ********* ~$*** ******* *****).
*******, ***** ** *******'* **********, *** margin ** ***** *** ***** *************** high (**** **, ******* ********* * 17x ****** ********* ******* $*** ******* EBITDA, *** $***).
*** ~$** ******* ****** ********** ** from ********* ******** ******, ** ** says, "********* ** *** ******** *** run-rate **** *********." ** ****, *******'* is * ***** ********** ** *** access **********' ******* *********.
*******, *******, ********* **** **** ** make ***** ********** **** **** **********. While ** **** *** ****** **** actions ** **** ****, "***-**** **** synergies" ******** ******* ******* ** ***** companies ******* *** ********* ***** *** deal ** ****.
****-**
***** ********* ** ****** ~$* ******* for ***** **********, *********'* *** ********** to ********* **** ** ***** **** as ******* ** **** ** *** existing ********* ********:
* ***** **** ** ****-**, ******* my ******** ** ****, ****-** ** me ** ***** ** ****** ** our **** ********* *** ******* *** growth ** ******* ****** ** *** business ******. ** ****'* **** **** business **. ** *** *** *** Buildings ******** ********, *** ******** ** to **** ******** ***** *** *********, which *** ******** *** *** ********. We *** * ******** ******** ** security **** *** ******** ** **** portfolio ***** ** * ********** ******. And ********* * **** ** * bolt-on, ******* **'* * ********* ** our ********. **'** *** ******* * new *********. **'** *** ********* **** new ****. **'* ********* ** ********** extremely ****. *** *********, *** ********** to *** *********** ***** **** ** extremely ******.
Higher **** ******** *******
*** ******** ******* ***** ******* *** significantly *****. ****** *** ****** ******** an **** ******** **** ********, **** the ******** ******** **** *******'* ****** margins **** **% ** ****:
** ******** ** ***********, **** *** businesses **** ****** ******* **** **%, so *** ******* **** *********.
Consistent **** ******* **********
*******, ******* ******* ********** ** **** spoken **** **** *** ***** **** estimated *** ***** / ******* ****** businesses **** ********** ****** ******* ** over **%. ** ****, **** **** not ******** **, ****** ****** *** company ******, ** ** *** ******, disclose **** ******** ******* ********** **** profits *** ****** **** ****.
LenelS2 **. ***** **. *****
***** ********* **** *** ***** **** revenue *** ******* *** *******, *****, or *****, *** ************* ** **** LenelS2 ** *** ******** ** ******* (generally ********* ** ******** ** *** $300 ** $*** ******* ****** ******* range). ********, ******* *** **** ********* (per ******** *********, ~*** *** *******, <300 *** *****, *** Supra).
Company **********
******* ******* ****** ** ** **%, 40%, ** **% ****** *******, ***** are ***** *** ****** **** ******** norms **** *** *********** **********, ***** companies:
*****.***'* ***-**** ******** ****** ******* *** ~20%, *** **** ***** ****, ******* Access ** ***** *** ******. ** the ***** ****, *****.*** ******* *** more ** ****-**** ****** *** ***********, which ******* *****-**** *******.
** ******* **********, **** **** *** publicly ******, *** ********* ******* **** generally ** *** ** ** **% range, ****** ****, **** *****.***, ******* more ** *** ****** **** ******* Access.
****-**
***** ***** ** **** ***, **** notably, ******** ******* ******, ******* ****-** is **** *** ********** ****** *******. The ********* ***** ** ******** **** the ****** **** ******** ****** *** thousands ** **** ** ********* ** doors ** ***** ****, *** **** the ******** **** *** *** ************* and **** **** * ********** ****** (related, ************ / ********* ****** ******* ******* Guide).
******* ***** **** ***** ** ***** enterprise ****** *******, *** ********* *** quite **** (*******, ***:******** ** ****** ******* ****** **********).
***** ***** ** ********** ** **** its ******* ******** *****, ** *** fewer ********** ******* ****-**** *********, **** with **** **** ****** / *******.
Under **********
*** ***** ******* ** **** **** profits ** ************** ** *** ******* development. *******,******* ** ***** ************ ******** (********* in **** ******), ***** *** ****-**. ** *** other ****, *** ***** ******** *** struggled (********** ******** ***** ****** & ***** Tested).
*******
** ****** ********* ** ******** *******'* profit-maximizing ******** ******* ********* *** ******** about ** **** **** ********* *** deal, ****** **** "**** ******* * double-digit ****-****" **** ** ********** $*** million **** ******** **** ***** ****** businesses ** *** **** **** *****.
***** **** *** * ********** ****** of ********* *******, ** **** **** at *** ******* ** ****-**** ************ for *******'* ****** ******** (********* ** ******* ** ************ ************** ******* *** ***** ****-**** *********).
** *******, #* ** ****** (* assume). *********, ******* *** **** *****, but * ******* #* ** ******** that **** *********** ** ***** ******.
** ******* ** **** ****** ****** at ***** ********* **** **** ****, and * ***'* **** **** ** interpret **** (** **** **) ** us ****** ** ********* **** ****.
****** **** "**** ******* * ******-***** cash-ROIC" **** ** ********** $*** ******* cash ********
*** *** *** *** $*** *******?
**** ***** *** ****** ** ******** cash. ********* *** ******** $*.** ******* in ****** ********* ******. ******-***** ***** 10% (** ******). **, **% ** $4.95 ******* ** $*** *******. ** by ******-***** **** **** **% ** 12%, ***., ** ***** **** ** higher, *** ** *** ******** *** lowest ****** **** ***** *** **** a ***** ** "******-*****".
** * *** ******* ******* ***, I'd ** ********* ********* ***** **** pricing ******* ** ******* ** *** same *******. ***'* *** ***** ******* selling **-******* ******** & ****. **** need ** ** ****** *********** ****** on ******* ***** *****...
*'* ** ********* ********* ***** **** pricing ******* ** ******* ** *** same *******
**** *** **** **? * ***'* know, *** ******** ******* ** *** biggest ********, * *** **** *** mega-integrators *** **** ****** ********* **** manufacturers?
**'* **** ** *** **% ****** margins **** *** **** **** *******, engineering *** ******* *****.