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TZ Limited Reaches Distribution Deal With U-Systems For TZ SwingHandle™

TZ Limited (ASX:TZL) has entered into a distribution agreement with leading UK manufacturer of data rack solutions for the international data and telecoms markets its TZ SwingHandle™ and other Infrastructure Protection (NYSEARCA:IXP) products.

The agreement secures the use of TZ SwingHandle™ across the entire U-Systems range of 19" cabinets as well as non-exclusive distribution for TZ SlideHandle™ and the TZ Centurion™ System.

U-Systems is a leading UK manufacturer and recognised go-to supplier of world class, high quality 19" cabinet, cooling and soundproof rack solutions for the international data and telecoms markets.

Under the three-year agreement, U-Systems has an annual purchase commitment for a minimum volume of 6,000, 7,000 and 8,000 units respectively for the next three calendar years.

Over the course of this first year, U-Systems will transition to the TZ locking standard.

Michael Cook, Managing Director of U-Systems Limited commented:

"We are committed to designing and manufacturing world class, quality racking enclosures and cooling products that dramatically reduce noise, heat and costs in data centres and offices.

"The TZ SwingHandle™ and IXP cabinet security systems are innovative and in our opinion, the best on the market. It is a great fit with our own philosophy of innovative thinking in our designs and using state-of-the-art manufacturing processes."

TZ executive chairman Mark Bouris said:

"Our TZ SwingHandle™ is the first modular rack locking offering in the market that comprises a mechanical lock with the capability of being electronically upgraded in-the-field with the simple attachment of a proprietary TZ module.

"By offering a mechanical lock substitute with an upgrade path to rack manufacturers and suppliers, we are hoping to target the 90% of the rack enclosure market that still use mechanical locks to secure their racks.

"U-Systems is an innovator in data centre rack design and manufacture and a great partner for the inaugural sale of our new SwingHandle™ product range."

Momentum building

Earlier this week, TZ Limited secured a strategically important purchase order for a Smart Locker System from a major U.S. biotechnology corporation based in the Bay Area of the West Coast worth an initial A$225,000.

This represents the first commercial deal by its wholly-owned subsidiary Telezygology that provides a total turn-key and customised hardware and software solution to the large U.S. corporate market.

It follows the company securing a six-year contract for the supply of electronic parcel lockers to Pos Malaysia Berhad.

This covers turnkey supply of TZ hardware and software as well as support and maintenance services over the proof-of-concept, pilot and roll-out phases of the project.

It includes customisation, integration, testing, commissioning and post-implementation support of the lockers and is expected to deliver annuity style revenue.

TZ has also made inroads into the university and residential college market with its recent initial purchase order from the University of Technology, Sydney Housing Service for the deployment of a Parcel Locker System at their Broadway campus.

In addition, the company has delivered its 100th POPStation Locker Bank to Singapore Post and anticipates that the Singaporean postal operator will further expand its network.

Seeking to drive further growth, the company is offering shareholders up to $15,000 worth of shares priced at the lower of a 10% discount to 5-day VWAP or $0.125 each.

Proceeds will be used to deliver further contract wins in its Packaged Asset Delivery (PAD) and IXP businesses, expand the company's tender team to execute in response to new tender requests and fund the costs of marketing its Day Locker offering to existing accountable mail customers in the U.S.

Analysis

The agreement for the use of TZ SwingHandle™ in U-Systems range of 19" cabinets by U-Systems and comments from its managing director demonstrates the potential for the TZ offering to gain significant market share.

By offering a mechanical lock substitute with an upgrade path to rack manufacturers and suppliers, TZ has mapped a path to gain market share from the 90% of the rack enclosure market, that still use mechanical locks to secure their racks.

With U-Systems transitioning to the TZ locking standard, the way is open for the company to secure further use of its product by other manufacturers.

Based on estimated revenues for FY15 as well as incorporating recent contract wins and growing momentum Proactive Investors recently set a new price target of $0.25-$0.27 in 12 months.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.