Ruggedized Phone Group Takes The Bullitt, Calls In PWC As Administrative Receiver

UK-based ruggedized phone maker Bullitt Group has called in PWC as administrative receivers after its management team seemingly failed to pull off a proposed restructure.

Bullitt designed and sold ruggedized smartphones with brands such as Caterpillar, JCB and Land Rover, and also had a deal with Motorola to develop Moto-branded rugged devices. Last it year it rolled out a satellite messaging phone, the Cat S75, along with the Bullitt Satellite Connect service.

The group however ran into financial difficulties, and was the subject of talk among credit insurers in recent weeks over concerns about its survivability. The picture became a bit clearer at the weekend.

In a filing with Companies House, the UK company repository, Bullitt Group confirmed the "Appointment of an administrator" with the registered office address changed to Leeds.

The document is not yet fully accessible, however The Register was able to confirm with PWC that it is handling the process.

We have sent a list of questions to PWC asking why Bullitt Group went under; if there is any interest in the assets; what the returns prospects are for creditors; and what happens to the existing product warranties, something that will interest customers in 70+ countries that bought Bullitt Group phones.

The vendor was reported to be on the brink of insolvency in January. According to The Telegraph, it planned to transfer the satellite connectivity business and 100 or so employees to a new company owned by its creditors.

A spokesperson for the company had told the paper that the satellite service, satellite assets and business of Bullitt Group were being sold to a new company with shareholders including secured lenders and "industry and strategic partners."

The new operation was going to license the tech and service to mobile operators, other phone brands, as well as customers in enterprise, government and military. "All Bullitt Group employees will transfer to the new company."

According to filings at Companies House, Bullitt Group Limited directors Colin Batt, David Floyd and Richard Wharton incorporated new companies including Bullitt Satellite Communications Limited, Bullitt Solutions Limited, Bullitt Services Limited, and RCD 2023 Limited between late November and early December.

That restructuring effort didn't succeed and The Register additionally asked PWC what happened to those plans.

We have followed developments at the company closely over the past four weeks and despite repeated attempts, Bullitt Group didn't respond. The web pages have been 404ing and calls to the switchboard remain unanswered.

Staff have written on LinkedIn about the layoffs of the entire workforce. The mass layoffs, along with the website and comms being shut down, indicate that PWC will not be able to sell Bullitt Group as a going concern.

The smartphone market has gone through a tough period over the past year or two, with buyers choosing to hold onto their devices for longer as inflation pushed up the price of just about everything. There is also a trend towards premium devices such as those made by Apple, which recently claimed the top spot in the global market for the first time. "It is extremely sad, particularly for the 100 employees that look like being affected, but a reflection of just how hard it is to make money in the smartphone business as the category matures and becomes increasingly dominated by Apple and Samsung," said Ben Wood, chief analyst at CCS Insight.

However, the situation may also point to a lack of interest in satellite connected devices. Smartphone chipmaker Qualcomm, which debuted a satellite service at last year's CES, cancelled its agreement with satellite operator Iridium in November last year when it found that phone makers were not implementing support for the feature in their Android devices.

In profit and loss accounts for the year ended December 31, 2021 – the latest available – Bullitt Group reported a loss before tax of $11.1 million, wider than the $10.6 million pre-tax loss in the earlier year, on the back of a 50 percent spike in revenue to $179.67 million.

The company revealed in the accounts it had been sold back to existing shareholders in March 2019 after a "turbulent 18 month period of significant loss making under private equity ownership."

Business Fund Group then took over the stake from Exponent Private Equity.

The fresh owners "invested new capital, secured ongoing financing facilities, agreed arrangements with key suppliers, and act quickly to rightsize the business operations and overheads," the accounts state.

"They also began a refresh and refocus of Bullitt's product portfolio, with particular attention paid to the amount of development cost being spent on new products, as well as the markets being addressed and the optimal price points to be achieved."

"At the end of 2019 Bullitt's directors were pleased to note that these actions, along with the robustness that had clearly still remained within the underlying business model, had seen a turnaround in results and a return toward the financial stability that has previously been evident within Bullitt's results prior to its 2017 sale."

COVID 19 had a "very significant negative impact upon trading almost immediately and throughout the rest" of 2020.

According to Canalys, the ruggedized smartphone sector began as a niche and "has only become more niche over the last years," according to Runar Bjørhovde, analyst.

• Users now keep cellphones for 40+ months and it's hurting the secondhand market
• Euro shoppers popping more and more premium phones in the basket
• Qualcomm and Iridium's satellite link-up loses signal
• Starlink starts advertising Direct to Cell satellite phone service as coming in '2024'

"Ruggedized specialists are commonly focused on a few regions or markets and lack the scale that is needed to withstand demand headwinds due to the high fixed costs and slim sales margins," he told us.

"Rugged specialists such as France's Crosscall and Poland's Hammer has been able to remain consistent in their respective markets, but both have followed a more regular and aggressive product launch cycle than Bullit alongside really pushing into key client segments, such as emergency services and construction companies. Specialist vendors have also had a tough time competing with Samsung's Xcover series, [which] have driven some decent volumes with support from much larger enterprise sales organization and software such as Samsung Knox."

He told us these brands are under more pressure from "changing market dynamics" but also the "durability and robustness of regular smartphones are getting better."

We await the responses from PWC. ®