Gatekeeper Systems Selected to Upgrade Video Monitoring System as part of a Large SEPTA Manufacturing Contract

With the decision to establish a separate corporate division in order to expand its operations into the United States, Gatekeeper Systems (TSXV: GSI – $0.11 & OTC: GKPRF – $0.09 & Fra: 1GK – €0.06) embarked on an ambitious growth strategy that is now bearing plenty of rewards.

The Company leveraged an existing service contract with the Southeast Pennsylvania Transportation Authority (SEPTA) to spearhead its sales drive. Amounting to a large percentage of the total revenue for the US division, this one client has followed up with additional orders to embrace Gatekeeper technology as part of its ongoing standard operations management. The relationship has continued to build momentum as SEPTA has further expanded its service arrangement with Gatekeeper.

Expansion of Service Partnership With Key Corporate Client

This week, in a significant news release regarding SEPTA and Gatekeeper USA Inc, yet another agreement was announced to upgrade Gatekeeper’s technology on buses to be delivered by New Flyer as part of SEPTA’s plan to support passenger safety. With a contract awarded for the installation of its high definition video monitoring systems on its new fleet of modern hybrid diesel-electric buses, SEPTA has once again demonstrated its confidence in Gatekeeper from service provider to high definition video technology supplier to enhance the security for millions of passengers that commute daily on its trains and buses.

This agreement is related to a five year contract that is already in process with New Flyer of America Inc. for the purchase of 525 hybrid diesel-electric Xcelsior buses. These modern buses are equipped with advanced technology that includes a variety of safety features and they are designed to operate efficiently and with lower pollution emissions. SEPTA anticipates the Xcelsior buses will eventually comprise 95% of its bus fleet and the choice to invest in this advanced technology represents a statement of corporate values and leadership for the transit authority.

It is fitting then that SEPTA has also opted for the most advanced video monitoring system on these buses and has partnered with Gatekeeper to install its high definition cameras as standard equipment on each new bus prior to delivery from the factory. The new high definition multi camera system has built-in GPS and analytics capabilities.

Of note, the Gatekeeper video system will replace the camera system from a third party that had originally been specified for this bus contract when it was first tendered. This decision came after SEPTA completed an in-depth technology evaluation for the product line. The New Flyer contract is currently in its third year and there are 335 buses remaining to be delivered on which the Gatekeeper camera systems will be installed.

Important Implications Towards Future Sales Growth for US Subsidiary

While any important contract announcement is welcome news, this deal bears benefits for Gatekeeper beyond the initial sale and installation. The announcement comes on the heels of another significant contract award from SEPTA just last month, and it is now the third agreement issued to Gatekeeper by this large public transit operator.

Secondly, the choice to upgrade in the midst of a large order to modernize its entire fleet is an indication that SEPTA has recognized the Gatekeeper technology as superior to other systems available.

This will be considered as a clear validation for Gatekeeper and its product line that will be noticed by other public transportation providers throughout the country. And as the largest bus manufacturer and parts supplier in the United States, this deployment as preferred equipment installed on New Flyer hybrid buses may open doors for the Company to win sales as part of other contracts with New Flyer clients in the future.

The agreement is scheduled to take effect immediately, and Gatekeeper may realize revenue from the first installations completed prior to the end of this year. The additional revenues from this sale thereafter will contribute further growth for the US division for at least two more years.

SEPTA’s New Flyer Xcelsior XDE40 bus in Philadelphia. This bus is equipped with a Cummins ISL, an Allison EP40 HybriDriv, and soon a Gatekeeper high definition multi camera system.

SEPTA’s New Flyer Xcelsior XDE40 bus in Philadelphia. This bus is equipped with a Cummins ISL, an Allison EP40 HybriDriv, and soon a GateKeeper high definition multi camera system.

Conclusion

With its technology established providing high quality video surveillance for school bus operators, Gatekeeper made the strategic decision to expand into the public transportation market. The Company also chose to create a US-based subsidiary to pursue the larger market opportunity beyond its home base in Canada. These initiatives have already contributed successful results for Gatekeeper with its advanced technology systems that are rapidly becoming accepted as essential equipment for a very large market sector. The longer term sales growth implications are exceptional.

This latest agreement with SEPTA has positioned Gatekeeper as a reputable and reliable supplier of critical safety technology with documented benefits providing passenger safety and lower costs related to litigation expenses. The rollout of Gatekeeper video monitoring and passenger safety products across most of the fleet of trains and buses for SEPTA will serve to showcase the appeal and effectiveness of this technology system.

Furthermore, SEPTA is a valuable partner to have with an almost constant demand for new installations or upgrades. For example, due to a 2017 SEPTA train crash near the 69th Street Station in Delaware County, SEPTA is obligated by the National Transportation Safety Board (NTSB) to install Crash/Fire Worthy Hard Drives on its entire fleet of trains. Products which could be perfectly delivered by… Gatekeeper.

As the contracts with SEPTA are fulfilled and installations are completed, ongoing monitoring and service arrangements are expected to increase revenues for Gatekeeper. The boost to the top line will appear immediately in quarterly financial statements and a rapid growth profile for the Company will support a premium market valuation. Meanwhile, the expectation for further growth in this large market, in addition to the strong performance established in the school bus transportation sector, will position this story as a rising star with a higher share price objective. Recommendation: BUY.

Smallcaps.us Advice: BuyPrice Target: $0.28Latest Company Report (pdf)
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