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Q2 2008 Henry Bros. Electronics, Inc. Earnings Conference Call - Final.

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Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning, ladies and gentlemen, and welcome to the Henry Bros. Electronics second quarter 2008 conference call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following today's presentation.

It is now my pleasure to introduce Mr. Todd Fromer of KCSA Strategic Communications. Mr. Fromer, you may begin.

TODD FROMER, IR CONTACT, KCSA STRATEGIC COMMUNICATIONS: Thank you. Again, welcome to Henry Bros. Electronics second quarter 2008 conference call. Representing the Company today are Jim Henry, Chief Executive Officer; John Hopkins, Chief Financial Officer; and Brian Reach, President and Chief Operating Officer.

Before I turn the call over to Jim for opening remarks, I will read the Safe Harbor statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained under the heading of Risk Factors listed in the Company's filings with the US Securities and Exchange Commission. Henry Bros. Electronics does not assume any obligation to update the forward-looking information.

With that, I would like to now turn the call over to Jim Henry, the Company's Chief Executive Officer. Jim, the floor is yours.

JIM HENRY, CHAIRMAN, CEO AND FOUNDER, HENRY BROS. ELECTRONICS, INC.: Thank you, Todd. I'd like to welcome everyone to our second quarter 2008 conference call and thank you for your continued interest in Henry Bros.

Before turning the call over to John Hopkins for a detailed review of our quarter, I'd like to first put our top and bottom line results into the context of our overall growth strategy.

During the second quarter, our Company continued to build upon the momentum that we have experienced since the fourth quarter of 2007, growing our revenues to the three months ended June 30, 2008 by 11.9% over the comparable period in 2007.

I am particularly pleased by the quality of this revenue growth as our larger integration regions in New Jersey, Virginia, and California showed improved gross margins over the period.

Over the term, it is the overall objective of Henry Bros. to further establish our national footprint and continue to leverage our highly skilled workforce. Current market trends point to the continued consolidation of much of the technology that drives our industry, and we intend to capitalize on these trends.

The bulk of this consolidation is being driven by the larger conglomerates which, following September 11, have invested heavily in security and software. These systems are more complex today than they've ever been, and require a highly skilled team to install, operate and maintain.

At this time, the channel for these systems to the end user is highly fragmented. A large gap exists between the large security conglomerates and the locally-based integrators in their ability to support many of these new systems. In addition, security integrators with a small geographic footprint are unable to support the needs of the larger end-users utilizing enterprise-wide systems in their operations from coast to coast.

The conglomerates are under strong pressure to ensure their end-users are effectively serviced. This leaves larger conglomerates with the choice of either continuing to rely on a highly fragmented integration channel or to vertically integrate into their business, which historically has not proven to work well in this industry.

This is where Henry Bros. fits into the equation. We see our long-term value proposition as being the go-to company for larger conglomerates and end users, as they seek to award projects to companies that have both the boots-on-the-ground and the technological experience.

We have worked diligently to put the personnel and infrastructure in place, and now are beginning to demonstrate our ability to leverage this infrastructure with the new recent project wins.

During the second quarter, we continued to execute on many of the projects and contracts booked over the past few quarters, including the mobilization efforts to support the previously announced subcontract with L-3 Communications for the TVCS, or Tactical Video Capture System project. Such mobilization efforts include the site surveys for the initial locations; design and engineering of the planned layout and components; development of various operating procedures...

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