TrickleStar has new products planned outside US market

Singapore

SINCE its listing in 2019, TrickleStar has had a rough time. Its financial results were impacted first by listing costs and then by the Covid-19 pandemic.

But the maker of energy-saving devices has shown confidence enough in its future to pay out a dividend for FY2020. And chief executive Bernard Emby believes a new product will soon allow the company to win customers outside the US.

TrickleStar's flagship product is an advanced power strip that reduces power usage when a plugged-in device, such as a TV or computer, is not in use. The company claims to have about 75 per cent of the market for advanced power strips in the US.

It also sells smart thermostats, an energy-saving sensor for dryers, and an electric water heater controller.

According to Mr Emby, 2020 started out quite well for the company. "(The) first quarter was an absolute record quarter for us - we thought we were going to have a fantastic year," he said in an interview with The Business Times.

But as Covid-19 spread across the US, sales "fell off a cliff".

"Most of our products are delivered into people's houses by contractors. Contractors (would) go into their house, and physically install the product," he said. "Obviously, with all the concerns around Covid, nobody wanted to let strangers into their house."

The group's revenue in FY2020 fell 11 per cent year-on-year (y-o-y) to US$12.9 million, from FY2019's US$14.5 million.

TrickleStar's net profit for the year, however, more than trebled - from US$0.2 million to US$0.7 million.

This was mostly due to a low base effect. In FY2019, TrickleStar had reported net charges related to its initial public offering (IPO) amounting to US$1.12 million.

Following its latest profit number, TrickleStar is now in a positive equity position. The company therefore chose to pay out a dividend of 0.45 US cent per share, equivalent to 52 per cent of net profit.

The outlook for the company has improved, too. Mr Emby said sales have been picking up again since the later half of last year. With the vaccination drive in the US well underway, he is sanguine on the group's recovery.

One potential risk though is the global components shortage. The current situation is unlikely to impact TrickleStar's existing product lines, he said. Orders were placed six to 12 months in advance and there is "plenty of production coming through", Mr Emby said.

There may, however, be some strain on upcoming products yet to be introduced in the market.

"Customers haven't seen those products yet, and we can't secure components. That's going to be the challenge for us, to see how we manage our way through that," said Mr Emby.

The company has eight new products being rolled out this year. Launch plans for these are in place and components have been booked, but if the response to these new products is overwhelmingly positive then TrickleStar could struggle to get enough components to meet the demand.

TrickleStar is working with five different manufacturers for its products - spanning geographies such as China, Malaysia and Vietnam - so as to ensure diversification.

This diversification was one it had promised to embark on during its IPO.

In 2019, during Donald Trump's presidency, the company's products that came from China were subject to a 25 per cent tariff. Thus, in 2020, TrickleStar moved a significant part of its production to Malaysia.

Executive director N Gunananthan said the tariffs had impacted TrickleStar in FY2019 and FY2020, but he is hopeful that the move to Malaysia will be positively reflected in this year's numbers.

As at end-December 2020, the group's cash and cash equivalents had risen to US$3.7 million from US$2.6 million at end-2019.

Mr Gunananthan attributed this strong cash position to the leanness of the company, which has just 20 employees, and low operating expenditures.

Since the company was founded in 2008, TrickleStar has tried to keep its business asset light.

"We wanted to make sure that we focused on doing the things that we're good at," Mr Emby said.

"There's lots of companies that are very good at manufacturing, for example. So we didn't set out to reinvent the wheel and become an electronics manufacturer. We outsource all of the electronics manufacture, we outsource all the third party logistics services, we outsource a lot of things."

TrickleStar is more focused on coming up with ideas for new products and figuring out how to bring them to the market. Emphasis is also placed on brand development, growing its distribution network and building its team.

In some product categories, TrickleStar is a newcomer in a mature market. Smart thermostats and water heater controllers, for example, are already available from a variety of brands.

But Mr Emby hopes TrickleStar will be able to develop more products in market segments where it can gain full market share. Its DryerSaver, for instance, switches off the dryer once clothes are dry to conserve energy. In this product category, Mr Emby said there is currently no competition.

One of the products Mr Emby is particularly excited about this year is targeted around "making the whole computing experience significantly more energy efficient".

TrickleStar has been working on this product for the past two years, and is expecting to launch it in September. It is USB-powered, which will allow it to be used outside of the United States too.

"I think 2022 is going to be a fascinating year for us with all of the new products, but particularly with this new computing product we're releasing," said Mr Emby. "We're going to see that product go into multiple markets, Singapore included."