Garda World Security Corporation
TSX : GW

Garda World Security Corporation

December 10, 2009 08:01 ET

Garda Announces Solid Third Quarter Results

MONTREAL, QUEBEC, CANADA--(Marketwire - Dec. 10, 2009) - Garda World Security Corporation (TSX:GW) (Garda), one of the most trusted Cash Logistics, Physical Security and Global Risk Consulting firms in the world, announced today its financial results for the third quarter ended October 31, 2009.

Highlights for the Third Quarter Ended October 31, 2009

- Net income of $1.4 million (or $0.04 per share) for Q3-10 compared with a net loss of $2.2 million (or $0.07 per share) for Q3-09, an increase of $3.6 million.

- Excluding unrealized losses on derivative financial instruments (swap), net income from continuing operations was $3.8 million (or $0.12 per share) for Q3-10 compared with a net loss of $1.4 million (or $0.04 per share) for Q3-09, an increase of $5.2 million.

- EBITDA increased by 4.1% to $30.2 million (11.5% of revenues) for Q3-10 compared to $29.0 million (10.3% of revenues) for Q3-09 due to the consistently strong operational performance.

- Continued strong efforts to achieve operational efficiencies resulted in a higher gross margin of 25.6% in Q3-10 from 25.0% in Q3-09 despite an overall revenue decline. For the first nine months of the fiscal year, the gross margin rose by $13.8 million or 7% (increasing from 24.5% to 26.2% as a percentage of revenues).

- Cash flows from operations increased by 14% to $18.2 million.

- Long-term debt was reduced by $138.7 million from Q3-09, a further additional reduction of $7.6 million in Q3-10.

"Our strong performance and results reflect the rigor and discipline we are applying throughout all our business units," commented Senior Vice President & CFO Patrick Prince. "Our increased profitability and the ongoing reduction of our debt demonstrate our commitment to our long-term growth objectives."

"The secret behind Garda's success has been its historical focus on organic growth. We have spent the last months hunting for business opportunities in each of our operational units and this has resulted in a strong pipeline of potential new contracts. Thanks to the continuous efforts of our business development teams, these opportunities position Garda for a jump start in 2010," concluded President & CEO Stephan Cretier.



FINANCIAL HIGHLIGHTS
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In thousands of dollars Q3 2010 Q3 2009 Q3 2008
except per share amounts. (restated) (restated)
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Revenues from continuing operations 263,373 281,534 274,405

Earnings before interest, income taxes,
depreciation and amortization ("EBITDA")(1)
from continuing operations 30,249 28,971 22,939

Income before financing expenses and
income taxes from continuing operations 17,378 15,807 16,217

Net income (loss) for the period 1,379 (2,166) 4,306

Adjusted net income (loss) from
continuing operations for the period(2) 3,762 (1,400) 3,883

Basic net income (loss) per share 0.04 (0.07) 0.14

Adjusted basic net income (loss) from
continuing operations per share(2) 0.12 (0.04) 0.13

Diluted net income (loss) per share 0.04 (0.07) 0.13

Cash flows from operations(1) 18,236 16,014 12,581

Total assets 819,667 1,096,624 901,779

Total long-term debt 546,063 684,720 577,261
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(1) EBITDA (earnings before interest, income taxes, depreciation and
amortization) and cash flows from operations are not an accepted
performance measures as per Canadian GAAP.
(2) Excluding unrealized losses on derivative financial instruments
(net of taxes).


OUTLOOK

Garda continues to achieve strong benefits from the efficiency and cost control initiatives established in our operational review earlier this year. These efforts are continuing and will drive the strong performance we are achieving throughout the entire organization. We will maintain our focus on key objectives to create and sustain value. Each business unit remains focused on excellent revenue opportunities for the remainder of this fiscal year and beyond.

Cash Logistics

As banks and targeted niche markets in the retail and commercial sectors continue to outsource their cash management, we are continuing to enhance our technologies to offer innovative solutions targeted to create efficiency for our clients, as we maximize our North American growth potential.

Physical Security

Our progress and success in cultivating a better thus more profitable book of business, enables us to build superior premium service offerings, reinforce our brand image and enhance operational efficiencies. By improving internal processes, we continue to strengthen and solidify our leadership and market position in Canada.

Global Risk Consulting

We continue to maximize the potential of this high margin business unit with our successful focus on key growth markets including natural resources, infrastructure development, government and humanitarian relief organizations. We continue to expand our activities in Kurdistan and Iraq as existing clients expand their use of our services throughout the region. We are making progress toward solid profitability in Afghanistan and Pakistan and in establishing new markets for our services in Latin America and North Africa.

MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Revenues

Revenues for the quarter ended October 31, 2009 amounted to $263,373 from $281,534 for the corresponding quarter last year, a decrease of $18,161 or 6.5% . The decrease in revenues results mainly from the impact of the strengthening of the Canadian dollar in relation to the US dollar between Q3 2009 and Q3 2010 and the decrease in revenues generated by the US cash logistics operations due to the current economic conditions.

For the nine (9) month period ended October 31, 2009, sales increased to $815,624 from $814,064 for the same period last year, representing growth of $1,560 or 0.2% . This increase in revenues is mainly generated by the strengthening of the US dollar in relation to the Canadian dollar between 2009 and 2010, compensating for a decrease of 10% in the US cash logistics level of activity.

Revenues in the physical security segment amounted to $120,485 for the quarter ended October 31, 2009 compared to $122,818 for the corresponding quarter last year, a decrease of $2,333 or 1.9%. This decrease in revenues in the physical security segment is due to the strengthening of the Canadian dollar in relation to the US dollar between Q3 2009 and Q3 2010. Revenues in the cash logistics segment amounted to $142,888 compared to $158,716 for the corresponding quarter last year, a decrease of $15,828 or 10%. This decrease in revenues is attributable to the impact of the strengthening of the Canadian dollar in relation to the US dollar between Q3 2009 and Q3 2010 and the decrease in revenues generated during Q3 2010 due to economic conditions.

Revenues in Canada rose to $123,186 compared with $122,976 for the corresponding quarter last year, while revenues in the United States and other amounted to $140,187 from $158,558 for the corresponding quarter last year.

Gross profit

Gross profit declined by 4.0% or $2,816 from $70,340 for the quarter ended October 31, 2008 to $67,524 for the quarter ended October 31, 2009. This decrease in gross profit results from the decrease in level of sales. Gross profit from continuing operations as a percentage of revenues increased from 25.0% to 25.6% reflecting strong operational performance in both the US cash logistics and the Canadian physical security segments.

For the nine (9) month period ended October 31, 2009, gross profit rose to $213,605 from $199,769 for the same period last year, an increase of $13,836 or 6.9%. Gross margin as a percentage of revenues increased from 24.5% to 26.2%. The increase results essentially from operational efficiencies of the US cash logistics segment and the improved performance in the Canadian physical security segment.

Net income (loss) for the period

Net income was $1,379 ($0.04 basic and diluted per share) for the quarter ended October 31, 2009, compared to a loss of $2,166 ($0.07 basic and diluted per share) for the corresponding quarter last year, an increase of $3,545 ($0.11 basic and diluted per share).

Adjusted net income was $3,762 ($0.12 basic and diluted per share) for the quarter compared to an adjusted loss of $1,400 ($0.04 basic and diluted per share) for the corresponding quarter, an increase of $5,162 ($0.17 basic and diluted per share).

For the nine (9) month period ended October 31, 2009 the net income totalled $7,952 ($0.25 basic and diluted per share) compared to $1,177 ($0.04 basic and diluted per share) for the same period last year, an increase of $6,775.

Cash flows

Operating activities

Cash flows from operations amounted to $18,236 for the quarter ended October 31, 2009, compared with $16,014 for the corresponding quarter last year. This increase of $2,222 or 13.9% is mainly attributable to the increase in net income for the period.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Garda's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the company's future operating results and economic performance and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Garda believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the company, they may prove to be incorrect. The company cautions the reader that the current adverse economic conditions make forward-looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the company's expectations. It is impossible for Garda to predict with certainty the impact that the current economic downturn may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Garda currently expects. These factors include technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new services, the enhancement of existing services, and the introduction of competing products having technological or other advantages, many of which are beyond the company's control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the company is under no obligation (and expressly disclaims any such obligation), and does not undertake to update or alter this information before the next quarter.

This press release should be read in conjunction with the company's consolidated financial statements ended October 31, 2009, and the notes thereto, prepared in accordance with Canadian GAAP and the MD&A. All amounts are in Canadian dollars unless otherwise indicated.

MD&A FILING

Garda's Management's Discussion and Analysis for the third quarter ended October 31, 2009 was filed with SEDAR on December 10, 2009 and available on the web site http://www.gardaglobal.com in the investor's section as of December 10, 2009.

ABOUT GARDA

Garda (TSX:GW) is a global provider of cash logistics, global risk consulting and physical security services with headquarters in Montreal, Canada. The firm's 45,000 dedicated professionals, among the most highly qualified and best-trained in the industry, serve clients in countries throughout North America, Europe, Latin America, Africa, Asia, and the Middle East. The company's decentralized management philosophy and structure encourages employees to be entrepreneurial and performance-driven in their approach to client service and the pursuit of excellence in all they do. Garda's global experts take the time to fully understand their clients' business goals and objectives in order to customize solutions with strong local engagement that meet their needs. As a result, clients can improve operational performance and meet their corporate obligations. With proven experience and a commitment to ensuring the highest ethical standards in everything the Corporation does, Garda has earned a reputation for integrity, leadership, and uncompromising safety standards. Most importantly, Garda is a firm in which businesses, governments, and individual clients place their trust. For more information, visit: http://www.gardaglobal.com, http://www.gardacashlogistics.com and http://www.garda-world.com.

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