SDM: What is your revenue forecast/expectation for 2021?

Brinkman: We are expecting and budgeting for a 7-8 percent increase and of that about 10-15 percent growth on installations. Some of that is pent-up demand and the needs of customers that are changing from the standpoint of access and video surveillance, coupled with a lot more cloud and remote services. Customers are upgrading in order to have the capacity to do that. Honestly, our sales team is really hitting their stride, and that is also a factor.

Loud: The second half of 2020 has been incredibly robust. I don’t see a change of that in our forecast whatsoever. We are just dealing with organic growth, not even acquisitions or other pieces we have on the radar. We are looking for healthy and robust sales. In talking to our manufacturers and other dealers I don’t have many that have had that bad of a financial struggle. For us, being about 60 percent residential and 40 percent commercial, even the folks that had stacks of paper on their desks of proposals from us and many other companies that didn’t push the button and say let’s move forward, they did eventually get through that stack of papers and say, “Hey those cameras and access control do make sense. It is over time for me to upgrade that fire system or do a revamp of that.” So we are looking for a strong, healthy 2021.

Something else I’ll share is that just prior to COVID-19 we got our trademark for life safety facility manager. When you deal with sprinklers, NFPA 72 system tests, hood systems, we put a full program together to basically say you have known and trusted us for 25 years now; give us the opportunity to be your partner so you have one call to put all this together. As we have gotten to the 4th quarter we see our sales team lighting up about this.

Garner: We did two acquisitions in Reno, so that will be primary driver of our growth. Our backlog is consistent with where it was a year ago. Sales and bookings remain strong. We are not breaking records like Loud is, but we are forecasting about 10 percent growth in 2021, largely driven by acquisitions.

Duncan: We are forecasting 20 percent growth. Some of it ties to how we have significantly scaled our go-to-market structure, sales team and some additional technologies we are using, partnerships, product enhancements, particularly around interactive video, and personal protection monitoring. I talked about this whipsaw effect with all this pent-up demand that we saw swing back dramatically in the third quarter. So our expectation is that we are going to probably see Q1 slow down as people wait for things to calm down, but I think we will see the same Q2 whipsaw as organizations become more comfortable with the state of the economy. That is really in line with what was our 2020 forecast. We view this as being a temporary situation and we can see the light at the end of the tunnel, and the expectation is that any gap in Q1 we will see made up over the course of 2021.

From a product standpoint we have seen a significant change and shift and with that comes increased opportunity. There are several factors like crime and the perception that it is higher, and the social unrest behind it; so I think the desire to protect customers, assets and employees is just being highlighted. We have developed a number of different products like personal protection monitoring that an individual can wear, including audio and video, audits and voice downs. These are products that fit this new environment and should represent opportunities for us to drive revenue.

SDM: How did your company’s 2020 recurring monthly revenue (RMR) change compared with 2019? And how do you expect 2021 RMR will change compared with 2020?

Garner: In 2020 we grew our RMR 28 percent. A small percentage, probably 3-5 percent of that was organic and the rest was through acquisition. In 2021 we are probably just going to be focused on digesting those two large acquisitions. Our organic estimate is once again between 3-5 percent organic RMR growth and that is all we are shooting for in 2021.

Brinkman: We had about a 2 percent growth in 2020 for RMR. We are anticipating  probably about 3-5 percent in this coming year plus looking at some acquisitions. We are focused on not just traditional alarm monitoring but the interactive automation as well as really ramping up our ability to do more cloud services. We in the game now at least so we are hoping that number is conservative as we get more traction both from an access and a video standpoint.

Loud: The month of October was the lowest attrition month we have had in a given month in probably five years. Everyone was just frozen. As we look at what is coming down the road, we will hopefully see a reduction in the attrition factor. We have done one acquisition this year and I think we will have the opportunity to do one or maybe two more this year, which will certainly be a nice rise in our RMR. I mentioned earlier our Life Safety Facility Manager program. Our organic RMR from June to now has been a strong and steady increase. I doubt we will stay at that pace, but if we can blend that normal organic growth with some reduction of the attrition and fill in the life safety and some acquisitions we will certainly be north of 20 percent. I don’t have a hesitation with that number.

Duncan: We have a legacy interface business that has a regional alarm company that operates in California and the Midwest with a big presence in the Southeast and Central South. Then we have our group of consumer facing distributed enterprise like retail, restaurants, both dine-in and quick serve.

SDM: What are the biggest growth opportunities you see for your business in 2021?

Duncan: For us it is a lot of these new products that tie back to interactive video, talking about crime, policies around COVID-19, the new store formats where you have employees working outside of the four walls doing curbside, and doing personal protection monitoring when they are moving outside of the typical store format. The whole interactive video suite along with all the integrated audio to be able to voice down into different environments represents a huge opportunity. Then also there is this business intelligence video analytics opportunity. For example, if social distancing isn’t being adhered to in a store we can do voice talk down to remind them of store policy. All of these uses of video and business intelligence and analytics are very apropos for where we are going in 2021. I think  this has just accelerated the adoption for these products. There is just a much higher awareness of how organizations can use technology to secure assets, and protect their employees and customers.

Garner: I think there are really two areas of focused growth in our marketplace. Small and medium business I think there is a huge opportunity to upgrade customers to a better platform, that being cloud video and cloud access control. Our manufacturers are finally catching up to the demand. But if you think about how many businesses are out there that maybe are not even our customers yet that are still using Vista or other older technology there is a a lot of opportunity to sell to small businesses. We can say, hey you can unlock or lock or disarm remotely now.  You can see if your employees are showing up on time. That is not totally new or specific to COVID-19, but there is definitely demand for it. They wanted it before, but it was a luxury and now they kind of need it because you can’t always have everyone at the office. That’s one area that I think we are going to see some good growth. Then, we are historically very much a fire alarm company. About half of our revenues come from fire alarm installation and inspections and service. We see huge opportunity to continue to grow in that space. We are still very focused on the fire alarm but more so on the retrofit than new construction. We see that as a potentially big growth driver for 2021 as well

Brinkman: I would say all of us are having to look at how to be more effective in our businesses, and that goes for customers as well. We have been thrust into this different way of doing business and trying to be as profitable as possible while dealing with all the unknowns, especially the uncontrollable ones. We see an opportunity in 2021 to continue to leverage the remote ways businesses can be effective and how they can manage their businesses a little better by leveraging technology put it in the palm of their hands. Where before it was more of a luxury and now we have all had to do things like this remote video call. Now you have fewer people in office, but you still have to have a lot of controls in place, probably now more than ever, because there are fewer eyes on site. There are more vulnerabilities to brick and mortar businesses with more people who aren’t supposed to be there trying to get in fewer people on site to make sure they don’t. So leveraging the technology is something we are really good at doing, and educating our customers on how they can do that in a very cost-effective way. Also I see that our customers — because there have been a lot of stops and starts — people are a little gun shy about capital expenses so we are looking at how we can have more managed services. Goes hand in hand with how they are running their business smarter, with leveraging technology and remote services.

Loud: I think growth opportunities, obviously we are aggressively going after cellular updates. The communication factor that we have going on with subscribers, from systems upgrades and enhancements for interactive services. We undertook this pretty aggressively starting back in February. But certainly I hope the biggest will be our Life Safety Facility Manager aspect. We have been far more focused in the last two or three years on the promotional side of everything and we have been seen substantial movement on the commercial piece of it, which was a defensive play from DIY and the bigger residential competitive factors. From the growth of Life Safety Facility Manager, we will certainly look for the right acquisition piece of the puzzle if that presents itself along the way and interactive solutions commercial, which for us is primarily access control, and certainly fire solutions is a key piece of our business also.

SDM: What or who do you view as your company’s greatest competition in 2021? Is it DIY, or something else?

Loud: For the four of us on this call, when you look at the effects of DIY and what we thought three and five years ago, when we thought about Comcast and AT&T, we thought the world was over as we knew it. But when you look now at where some of those are and you look at the effect of what it is doing to you on a monthly basis, I would have to guess in all of our cases it is minute relative to where it was say, two or three years ago. We have a huge Comcast presence here and they have stopped all their marketing quite some time ago. I thought they would have done more.

My personal take on DIY is that in the telling of time over the last few years, that is not our typical customer. We even tried to get into a partnership and I spent a lot of money and we literally got five customers. We turned the marketing spicket on and we never got there. Did we lose some customers to SimpliSafe along the way? Absolutely. But it’s just not near the numbers we thought.

Garner: Denver is a test market for Comcast and we were hit pretty hard when they came in, but we are not seeing anything from them right now. For us, it is other local and regional companies and Ring on the residential side.

Brinkman: For us it is the unknown how the pandemic is going to continue to negatively affect our customers in certain market segments. What we have seen over the past nine months and the impact to many of our locally owned businesses has been significant. We are watching and waiting to see how they will all come out of it.

Duncan: As a large commercial security and network integrator, we always have had to take on well-known challengers, but that’s nothing new for Interface. As businesses change their models to adapt to the significant changes in consumer behavior and regulations, managed service providers like Interface are well placed to help steer enterprises through these choppy waters with innovative technologies, customizable solutions and superior customer experience.

SDM: Did you experience any supply chain issues as a result of COVID-19?

Brinkman: We had some challenges. But we got in front of some things early on when we thought we might have an issue with some big jobs we had coming up. Throughout the fall we had significant backlog with one manufacturer in particular for basic devices, which caused a huge backlog with our residential and small commercial customers who are usually just expecting a one to two week turnaround and it was weeks into months.

Loud: Same for us. For me personally, I don’t think we had any pandemic or COVID-related supply chain issues. I was forecasting it, but my fear never became a reality. We were purchasing based on what we knew we would consume throughout the year. We went far beyond just the cellular devices in buying ahead. 

Garner: I didn’t see any impact. Our manufacturers did a good job. There were a few items from every vendor that occasionally were tough to get throughout the year, but we were either able to find a substitute or go with a different product offering to make it work. We didn’t wait for product; we would adjust on the fly and go a different route.

Duncan: We had some minor ones but we got creative to work around them. We had a 1200 site video integration project and we had to get creative and clever but it was nothing that caused any real disruption and generally all related to the manufacturing.