Garda World Security Corporation

Garda World Security Corporation

April 30, 2010 08:00 ET

Garda Delivers Strong Year-End Results

Operating Profit increased by 10% - Record Gross Profit at 25.9% - Successful refinancing of all existing bank debt

MONTREAL, QUEBEC, CANADA--(Marketwire - April 30, 2010) - Garda World Security Corporation (TSX:GW) (Garda), one of the most trusted Physical Security, Cash Logistics and Global Risk Consulting firms in the world, announced today its financial results for the fiscal year ended January 31, 2010 which highlights its progress toward becoming the best operator in the industry.

For the fiscal year ended January 31, 2010, Garda improved all areas of its business:

  • Operating profit increased by 10% to C$128.2 million, despite a 2% reduction in revenues due to the weakened U.S. economy, showing improvement for the third year in a row at 11.8% of revenues compared to 10.5% in 2009 and 9.3% in 2008.

  • Adjusted net income of C$10 million or C$0.32 per share versus a loss of C$0.8 million or C$0.03 per share in 2009, a direct result of a more efficient organization. Specific items in 2010 represent expenditures related to the refinancing transaction process, fair value of derivative instruments and discontinued operations. In 2009, specific items related to goodwill impairments, fair value of derivative instruments and discontinued operations. Net loss of C$35 million or C$1.12 per share compared with loss of C$98 million or C$3.12 per share in 2009.

  • Gross profit at an unprecedented 25.9% of revenues versus 25.1% in 2009, a direct result of operational efficiency programs and a reduction of 5.4% in SG&A expenses.

  • Cash flow from operations of C$56.7 million, an increase of 32% compared to 2009.

  • Reduction in long-term debt of C$109 million.

  • Successful refinancing of all existing bank debt after the year-end, with reduction in interest rates, enhanced capital structure and increase in capital available for growth opportunities.

During FY2010, in spite of what was perhaps the most challenging time in Garda's history, the company achieved a solid performance that demonstrated resilience, determination and the fundamental soundness of its corporate strategy.

"Given the difficult U.S. economy and our debt leverage in severely constrained international credit markets, our solid performance and efficiency is a reflection of Garda's focus and resiliency," said Patrick Prince, Senior Vice President and Chief Financial Officer. "We have reduced our risks by successfully refinancing our existing debt while enhancing our capital structure and preparing for growth opportunities across all of our markets. Our relentless focus on execution and the continuous improvement of all our platforms, demonstrated by our strong gross profit of 34.8% in Cash Logistics and 15.1 % in Physical Security, are a solid foundation on which we can continue to build."

"We are very proud of what we have achieved this year," said Stephan Cretier, President and CEO. "We are making excellent progress toward our goal of becoming the best operator in our industry. Our experienced and entrepreneurial management team is disciplined and rigorous in focusing on that goal. We have built strong business platforms to deliver to our clients highly competitive value-added services. Garda is now very well positioned to capitalize on the growth opportunities in all the markets we serve as we continue to make Garda a sound and secure investment for our shareholders."


Investing for the Future

Throughout the year, the company continued to invest in its people to provide an enhanced management structure, more and better organizational systems and tools, including a strong focus on health and safety measures. These investments reflect continuous operational improvements throughout the company's business units, all of which are capitalizing on opportunities in their respective markets and delivering optimal results.

The Power of Diversity

One of the fundamental strengths that enabled the company's performance was its diversity - in terms of personnel, sources of revenue, customer mix, and geography. Garda's professional staff represents an array of experts with a broad range of expertise and experience. Revenue is evenly divided between Physical Security and Cash Logistics and geographically across the U.S. (47%), Canada (46%) and internationally (7%). In Cash Logistics, revenue is split evenly between large national and regional financial institutions and retailers. In Physical Security the company serves a broad range of industries in Canada and international markets including oil & gas, mining, construction as well as humanitarian relief and government organizations. This balance buffers Garda from economic shifts and enables the company to maintain focus on long-term objectives.

A Trusted Name

The company's results also reflect the success of its client centric culture which provides value-added services, adaptability to changing market conditions and proactive interactions with clients that continually exceed expectations. Increasingly clients are committing to long-term contracts and relationships indicative of their trust and confidence in Garda's corporate governance and commitment to operational excellence. Around the world, Garda is partnering in the strategic growth and success of its clients.

Cash Logistics

In each of its operating sectors, Garda is well aligned to capitalize on significant market dynamics. In Cash Logistics, the company's U.S. national footprint and fully integrated approach to managing the cash supply chain provide financial and retail clients with attractive outsourcing solutions. Garda has created a credible, viable alternative to the competition and, as a result, is winning new contracts and expanding existing accounts.

Physical Security

In the Canadian Physical Security market, Garda's strategy of tailored premium services in health care and other high-end markets is setting the industry standard and assuring continued market leadership. The company is continuing to build and maintain a more profitable book of business while distinguishing its brand.

International operations

GardaWorld, the Global Risk Consulting business, is expanding in support of clients around the world, particularly in South America and Africa and in specific industries such as natural resources, development and construction, government and humanitarian relief organizations. GardaWorld is also well-positioned to support infrastructure reconstruction in its established operations in Iraq and Afghanistan.


  2010   2009   2008
(In thousands of Canadian dollars, except per share amounts).     (restated)   (restated)
Revenues 1,083,087   1,104,788   1,014,164
Gross profit 280,086   277,003   229,227
Operating profit(1) 128,234   116,543   94,728
Net income (loss) for the year (35,292 ) (98,148 ) 14,696
Adjusted net income (loss)(1) 10,002   (839 ) 6,836
Basic net income (loss) per share (1.12 ) (3.12 ) 0.47
Basic adjusted net income (loss) per share(1) 0.32   (0.03 ) 0.22
Cash flow from operations(1) 56,676   43,025   57,017
Total assets 804,135   986,030   953,447
Long-term debt (including current portion) 552,289   661,002   623,148
(1) Cash flow from operations, adjusted net income (loss) and operating profit are not an accepted performance measures as per Canadian GAAP.


The strategy of the Corporation is to establish platforms and then continually improve them with a combination of business development, operational excellence and focused entrepreneurial leadership in order to achieve our goal of becoming the best operator in our industry.

In 2010 we focused on this strategy. With the difficult U.S. economic environment which affected our banking and retail customers, as well as the general uncertainty affecting Canadian businesses and development projects, we focused on making improvements and positioning ourselves to take advantage of the economic recovery.

During the year, our divisions applied pricing discipline, improved profitability through increased efficiency, signed new customers and secured long-term contracts with existing customers.

For the third consecutive year, we improved our operational performance (see graphic 1) with a gross profit level of 25.9%, an improvement of 14.6% since 2008, and an operating profit level of 11.8%, an increase of 26.9% over the same three-year period.

"Graphic 1: Operational performance" is available at the following address:

We also divested our U.S. and Mexican guarding operations for net cash proceeds of $42.2 million, applied to reduce debt. We generated cash flow from operations of $56.7 million, an increase of 31.7% over 2009. As a result, total long-term debt was reduced by $108.7 million during the year.

At the corporate level, subsequent to year-end, we successfully refinanced our bank debts, lowering interest rates and increasing capital availability for the future.

Adjusted net income totalled $10.0 million in 2010 versus a loss of $0.8 million in 2009, again a direct result of a more efficient organization. Specific items in 2010 represent charges related to the refinancing transaction process, fair value of derivative instruments and discontinued operations. In 2009, specific items related to goodwill impairments, fair value of derivative instruments and discontinued operations.


The decrease in revenues of 2% resulted essentially from the impact of a reduction of 5.6% in the level of activity in the U.S. cash logistics operations due to economic conditions. Revenues in physical security continued to show growth of 1.5% despite extensive portfolio management efforts to improve our book of business which positively impacted our margins.

"Graphic 2: Revenues" is available at the following address:

Physical security revenues increased by 2.2% in Canada, as we performed extensive portfolio management to improve our book of business and shift to more profitable accounts. Revenues have steadily increased throughout the year as business development initiatives were intensified. Revenues outside Canada dropped slightly as we redeployed resources with the completion of some contracts and reassigned them to new contracts in Iraq.

Cash logistics revenues decreased by 4.6% mainly because of the effects of the economic activity in the U.S.

After a difficult start of the year we saw activity levels stabilize in the second half of the year both in the U.S. and in Canada.

Gross profit

Our relentless focus on operational efficiencies has once again and for the third consecutive year, resulted in improvements in gross profit. Physical security gross profit amounted to 15.1% compared to an increase of 8.6% over 2009 and 18.9% in 2008 (see graphic 3). Cash logistics' gross profit, at 34.8%, showed an increase of 3.3% over 2009 and 10.5% in 2008 (see graphic 3) despite a loss of volume due to the economic slowdown in the U.S.

"Graphic 3: Gross profit by sectors" is available at the following address:

Fixed costs, general and administrative expenses

The same focus was also applied to fixed costs, general and administrative expenses which decreased by 5.4% in 2010.

Operating profit

The continuous improvement of all our platforms in terms of efficiencies is a central part of our objective to become the best operator in the industry and the reason why we focus on operating profit as a key measurement of the performance of our platforms.

Operating profit was $128.2 million, an increase of 10% from the prior year, a direct result of our improved gross margin of 25.9% and our focus on achieving efficiencies in our organization which resulted in the decrease of fixed costs, general and administrative expenses.

"Graphic 4: Operating profit by sectors" is available at the following address:

Physical security operating profit reached 6.5% of revenues in 2010 an increase of 16.1% over 2009 and 27.5% over 2008. Operating profit for cash logistics improved again in 2010 as we focused on efficiencies following the acquisition and integration of ATI Systems International Inc. in 2007. It reached 16.2% of revenues in 2010, an improvement of 12.5% over 2009 and of 23.7% over the level of 2008.

Net loss for the year

Net loss for the year was $35,292 ($1.12 per share) compared with a loss of $98,148 ($3.12 per share) in 2009.

Cash flows

Cash position at the end of the year amounted to $11,857, a decrease of $13,333 versus the end of fiscal 2009. This decrease is explained by the following:

Operating activities

Cash flow from operations, which is in direct relation to the operating profit generated by the business segments of the Corporation, amounted to $56,676, an increase of 31.7% over the cash flow generated by the operations in fiscal 2009. This is in direct relation to the increase of Garda's operating profit.

Net change in non-cash working capital balances items used cash of $11,465 compared with cash generated in the amount of $37,162 in fiscal 2009. This is attributable to timing of payroll in 2010, an increase in revenues to be billed due to new physical security contracts started in January 2010 and stabilization in accounts receivable after a large management effort in collections in 2009 particularly in the U.S.

Financing activities

Cash used for financing activities amounted to $75,261 and represents mainly the repayment of long- term debt.

Investing activities

Investing activities generated $14,904 in cash resulting from the proceeds of the sale of the U.S. and Mexican Guarding operation for $42,174. Additions to property plant and equipment were $20,077 in 2010 versus $24,586 in 2009 as the Corporation extended its strict control programs to capital expenditures. The Corporation also incurred $7,523 in 2010 related to collateral for insurance provision (2009 – nil).


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 analysis should be read in conjunction with the company's consolidated financial statements, and the notes thereto, prepared in accordance with Canadian GAAP and the MD&A included in the company's 2010 Annual Report. Throughout this discussion, all amounts are in Canadian dollars unless otherwise indicated.


Stephan Cretier, President & CEO, and Patrick Prince, Senior Vice President and Chief Financial Officer, will discuss the year-end results today, April 30, 2010 at 11:30 AM ET during a conference call with financial analysts and institutional investors. Listeners may access the call by dialing 416-981-9000 or 800-736-4610 for international calls.


Garda's Management's Discussion and Analysis for the fiscal year 2010 ended January 31, 2010 was filed with SEDAR on April 30, 2010 and available on the web site in the investors section as of April 30, 2010.


Garda (TSX:GW) is a global provider of physical security, cash logistics and global risk consulting 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:, and

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