Garda World Security Corporation
TSX : GW

Garda World Security Corporation

September 15, 2009 07:01 ET

Garda Announces Strong Second Quarter Results

MONTREAL, QUEBEC--(Marketwire - Sept. 15, 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 second quarter ended July 31, 2009.



Highlights for the Second Quarter Ended July 31, 2009

- Net income of $4.0 million (or $0.13 per share) compared with a net loss
of $1.2 million (or a net loss of $0.04 per share) for Q2-09 due to
strong operating performance and expense efficiencies.

- EBITDA of $29.3 million compared to $22.8 million for Q2-09, an increase
of 28%.

- Physical Security sector increased its EBITDA by 31% due to stronger
margins and expense efficiencies.

- Cash Logistics sector increased its EBITDA by 22% due to margin
increases and expense reductions despite significant volume decrease in
the US operations.

- Overall revenue growth of 1.5% despite weak economic environment
specifically in the US Cash Logistics operations.

- Physical Security sector grew by 1.5% despite weak economic environment
and portfolio management review.

- Cash Logistics sector grew by 1.6% despite significant volume reduction
in the US due to weak economic environment. Strong performance in the
Canadian Cash Logistics operation with growth of 3.8%.

- Cash flows from operations increased by 98% to $16.9 million.

- Overall debt reduction of $110.4 million since January 2009 achieved by
repayment of $54 million with the sale of US-Mexico Guarding operations
and the strengthening of the Canadian dollar in relation to the US
dollar.

- Total bank debt of $494 million compared to $586 million in January
2009.

- Overall strong efforts in operational efficiencies resulted in higher
margins and good cash generation despite overall weak economic activities
in the United States.


"Garda's performance is driven by our intense focus on execution and increased service levels. Overall, our operational efficiencies have resulted in higher margins and strong cash generation despite the current climate in the US," said President and CEO Stephan Cretier. "Our ability to assist our main customers in capitalizing on new opportunities and swiftly changing market dynamics to achieve their business goals ensures our sustained performance."

"We have made excellent progress in reducing our debt thus strengthening our financial flexibility. We will continue to benefit from cost controls and improved efficiencies that we have achieved since the beginning of the year. The discipline and rigor of these initiatives are now part of our business model for continuous improvement of all our business units. We remain prudent but as business conditions improve, Garda's operational business units are well positioned to capitalize on market opportunities," Mr. Cretier concluded.



FINANCIAL HIGHLIGHTS

-------------------------------------------------------------------------
In thousands of dollars
except per share amounts. Q2 2010 Q2 2009 Q2 2008
-------------------------------------------------------------------------

Revenues from continuing operations 273,020 268,913 277,749

Earnings before interest, income
taxes, depreciation and
amortization ("EBITDA") from
continuing operations(1) 29,275 22,840 19,995

Income before financing expenses
and income taxes from continuing
operations 16,527 10,632 7,704

Net income (loss) for the quarter 4,044 (1,202) (1,342)

Basic net income (loss) per share 0.13 (0.04) (0.09)

Diluted net income (loss) per share 0.13 (0.04) (0.09)

Cash flows from operations(1) 16,884 8,520 12,513

Total assets 822,855 957,591 957,203

Total long-term debt 553,599 623,458 620,184
-------------------------------------------------------------------------

(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.


OUTLOOK

Garda continues to benefit from the efficiency and cost control initiatives established in our recent operational review. These efforts will continue to drive the strong performance we are achieving throughout the entire organization. For the remainder of this fiscal year, we will keep our focus and attention on key objectives to create and sustain value as each business unit remains focused on excellent revenue opportunities.

Cash Logistics

The ongoing enhancement of our technologies enables us to offer innovative solutions to our clients and continue to create value by maximizing North American growth potential, as banks and targeted niche markets in the retail and commercial sectors continue to outsource their cash management.

Physical Security

We continue to solidify our market position in Canada as we take concrete steps such as cultivating a better thus more profitable book of business, building superior premium service offerings, reinforcing our brand image and enhancing operational efficiencies by improving internal processes.

Global Risk Consulting

Our focus on key growth markets including natural resources, development, government and humanitarian relief organizations continues to maximize the potential of this higher margin business unit. We continue to expand our activities in Kurdistan and Iraq, work toward solid profitability in Afghanistan and Pakistan and establish new markets for our services in Latin America and North Africa.

MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Revenues

Revenues for the quarter ended July 31, 2009 rose to $273,020 from $268,913 for the corresponding quarter last year, an increase of $4,107 or 1.5%. The increase in revenues results mainly from the net impact of the strengthening of the US dollar in relation to the Canadian dollar between Q2 2009 and Q2 2010 and a decrease of 10% in the revenues generated by the US Cash Logistics operations due to the current economic slow-down.

For the six (6) month period ended July 31, 2009, sales increased to $552,251 from $532,530 for the same period last year, representing growth of $19,721 or 3.7%. This increase in revenues is mainly generated by the strengthening of the US dollar in relation to the Canadian dollar between Q2 2009 and Q2 2010.

Revenues in the Physical Security segment amounted to $121,715 for the quarter ended July 31, 2009 compared to $119,970 for the corresponding quarter last year, an increase of $1,745 or 1.5%. This increase in revenues in the Physical Security segment is due to the strengthening of the US dollar in relation to the Canadian dollar between Q2 2009 and Q2 2010. Revenues in the Cash Logistics segment rose to $151,305 from $148,943 for the corresponding quarter last year, an increase of $2,362 or 1.6%. This increase in revenues is attributable to the net impact of the strengthening of the US dollar in relation to the Canadian dollar between Q2 2009 and Q2 2010 and the decrease in revenues generated during Q2 2010 due to the economic slow-down.

Revenues in Canada amounted to $121,601 compared with $120,127 for the corresponding quarter last year, while revenues in the United States and other rose to $151,419 from $148,786 for the corresponding quarter last year.

Gross profit

Gross profit rose by 12.0% or $7,576 from $63,218 for the quarter ended July 31, 2008 to $70,794 for the quarter ended July 31, 2009. This increase in gross profit is attributable to the improved performance of the Global Risk Consulting Group and the consistently strong performance in the Cash Logistics segment. Consequently, gross margin from continuing operations as a percentage of revenues increased from 23.5% to 25.9%.

For the six (6) month period ended July 31, 2009, gross profit rose to $146,081 from $129,429 for the same period last year, an increase of $16,652 or 12.9%. Gross margin as a percentage of revenues increased from 24.3% to 26.5%. The increase results essentially from operational efficiencies of the US Cash Logistics segment and the improved performance in the Global Risk Consulting Group.

Net income (loss) for the period

Net income was $4,044 ($0.13 basic and diluted per share) for the quarter ended July 31, 2009, compared to a loss of $1,202 (-$0.04 basic and diluted per share) for the corresponding quarter last year, an increase of $5,246 ($0.17 basic and diluted per share).

For the six (6) month period ended July 31, 2009 the net income totalled $6,573 ($0.21 basic and diluted per share) compared to $3,343 ($0.11 basic and diluted per share) for the same period last year, an increase of $3,230.

Cash flows

Operating activities

Cash flows from operations amounted to $16,884 for the quarter ended July 31, 2009, compared with $8,520 for the corresponding quarter last year. This increase of $8,364 or 98.2% is mainly attributable to the increase in net income for the period.

Changes in non-cash working capital items used cash of $2,182 during the quarter ended July 31, 2009, compared to cash used in the amount of $1,894 in the corresponding quarter last year.

Operating activities generated cash of $14,702 during the quarter ended July 31, 2009, compared to cash generated in the amount of $6,626 in the corresponding quarter last year.

For the six (6) month period ended July 31, 2009, the cash from operations totalled $34,355 compared to $26,720 for the same period last year, an increase of $7,635.

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 July 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 second quarter ended July 31, 2009 was filed with SEDAR on September 14, 2009 and available on the web site http://www.gardaglobal.com in the investor's section as of September 15, 2009.

ABOUT GARDA

Garda, one of the largest integrated Physical Security and Cash Logistics firm worldwide on an annualized revenue basis, is well known for addressing complex security and investigations issues. As a leading provider in security services, Garda is recognized as one of the fastest growing companies with operations across Canada, the United States, Latin America, Europe, the Middle East, Africa, and Asia. With approximately 45,000 dedicated professionals, Garda offers integrated solutions in Cash Logistics, Physical Security, Global Risk Consulting and Pre-Employment Screening. Its team includes specialists and some of the most highly qualified and best-trained experts in the industry. For more information, visit: http://www.gardaglobal.com, http://www.gardacashlogistics.com and http://www.garda-world.com.

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