Common shares traded on the Toronto Stock Exchange
Trading symbol: AF
TORONTO, March 13, 2012 /PRNewswire/ - AlarmForce Industries Inc., Canada's largest manufacturer and installer of live two-way voice home alarms systems, is pleased to announce results for the three months ended January 31, 2012:
|Jan. 31, 2012||Jan. 31, 2011||Change|
|(3 months ended)||(3 months ended)||(over same period)|
|Gross profit||$||8,414,000||$||7,730,000||+ 9%|
|Income before income taxes||$||954,000||$||2,315,000||-59%|
|Cash flow from operations||$||1,538,000||$||1,693,000||- 9%|
|EBITDA per share||$||0.18||$||0.28||-34%|
|EBITDA before marketing expenses||$||5,911,000||$||5,665,000||+ 4%|
|Basic Net income / share||$||0.06||$||0.13||-56%|
|Diluted Net income / share||$||0.06||$||0.13||-56%|
* EBITDA (Earnings Before Interest, Income Taxes, Depreciation, and Amortization) is a key measure in the security industry and should not be interpreted as IFRS)
EBITDA is defined as earnings before interest expenses, income taxes, depreciation and amortization. EBITDA is a standard measure used in the security industry to assist in understanding and comparing operating results and is often referred to by our competitors. Management views EBITDA as an important measure of operating performance of the Company. Yet, since it does not have any standardized meaning defined by IFRS, it may not be considered in isolation of IFRS measures such as net income/loss or cash flows, as a measure of liquidity. The Company, however, utilizes these measures in making operating decisions and assessing its performance. Management believes that it is an important measure as it allows the Company to assess its ongoing business without the impact of depreciation or amortization expenses. Since EBITDA is not a defined term under IFRS, it is unlikely to be comparable to similar measures presented by other issuers.
Joel Matlin, President and CEO of AlarmForce, announced that: "We closed our first quarter ended January 31, 2012, with a total subscriber base of 127,200 accounts and revenue of $10.9 million, achieving the highest first quarter results in our 24 years of business. These record results reflect annual increases of 9% and 10% respectively over the comparative first quarter."
"Net income decreased from $1.6 million to $0.7 million for the quarter, representing a 56% decrease from the comparative period, mainly due to the impact on our results of an increase in marketing expenses. The impact of these expenses on reported income is a reflection of our organic growth model, in which the costs to create new subscriber accounts are not capitalized but are expensed. Although the new accounts represent long-term recurring monthly revenues over the life of the subscriber relationship, the costs to create accounts are expensed in the year the account is created. Competitors that acquire accounts, on the other hand, capitalize their acquisition costs, and amortize them over the life of the subscriber relationship."
"EBITDA before marketing expenses increased by 4% from $5.7 million to $5.9 million. EBITDA after marketing expenses decreased from $3.4 million to $2.2 million, a 34% decrease over the comparative period. It is important to understand the drag on reported results due to expensing the up-front costs for new subscriber accounts. The impact on our results is significantly more when we are entering new markets and when we are rolling out new products. The impact from the introduction of our video application system, VideoRelay, is expected to be felt particularly over the next few years, due to increased research and development and marketing expenditures."
"Cash flows from operations decreased from $1.7 million to $1.5 million, a 9% decrease over the comparative period, which reflects the impact of increase in expenses due to growth. Our cash balance increased by $0.3 million in the quarter after funding capital expenditures of $1.2 million, consisting of new subscriber installations."
"Our expansion into Florida to date has been encouraging by way of acceptance of our products. Florida is by far the most populated state AlarmForce has entered. With our current operations in Tampa-St. Petersburg, Orlando, Sarasota and Fort Myers, and our upcoming expansion to Miami-Ft. Lauderdale-Boca Raton and Jacksonville, we believe this market will be a key location in our future."
"Beyond that, our revolutionary, live two-way voice video surveillance system, VideoRelay, offers the consumer an unprecedented level of control never before seen in home security. This product, developed by and exclusive to AlarmForce, allows us to target a wider customer base, since we can install the product in locations that have other company's alarms or bundle it with our home alarm product. This bundling gives our customers an enhanced experience and should increase customer loyalty. Furthermore, we have seen multiple police forces across North America endorse video surveillance as a superior method for home security, thus putting our brand on the forefront of technology."
Mr. Matlin closed by saying: "We are confident of being able to meet our operating and capital requirements in the foreseeable future from internal cash resources. As we continue to roll out our VideoRelay system in Canada and in the U.S., we look forward to record annual subscriber growth."
AlarmForce provides security and personal emergency response monitoring and related services to residential and commercial subscribers throughout Canada and selected centres across the United States. The Company is a leading provider of two-way voice alarm systems in Canada and sole provider of AlarmPlus, a wireless line-cut protection system. More information about the Company's products and services can be found at www.alarmforce.com.
SOURCE Alarmforce Industries Inc.