AlarmForce Announces Fourth Quarter 2014 Results

TORONTO, ONTARIO--(Marketwired - Jan. 27, 2015) - AlarmForce Industries Inc. (TSX:AF), Canada's largest manufacturer and installer of live two-way voice alarm systems, is pleased to report its financial results for the fourth quarter and full year ended October 31, 2014:

	Three months ended October 31						Twelve months ended October 31
	2014		2013		Change		2014		2013		Change
($ in thousands, except per share and subscriber amounts)
Total revenue	$	13,291	$	12,629	5	%	$	52,582	$	49,108	7	%
Net income	$	2,010	$	2,569	-22	%	$	7,763	$	5,447	43	%
Shares outstanding, diluted		11,707		12,276	-5	%		11,857		12,041	-2	%
Diluted net income per share	$	0.17	$	0.21	-18	%	$	0.65	$	0.45	46	%
Cash flows from operations	$	3,332	$	3,704	-10	%	$	11,779	$	10,858	8	%
EBITDA*		4,137		5,182	-20	%	$	15,859	$	12,799	24	%
Adjusted EBITDA* (before marketing expenses)	$	7,532	$	8,102	-7	%	$	28,298	$	25,454	11	%
Adjusted EBITDA* per diluted share	$	0.64	$	0.67	-4	%	$	2.39	$	2.11	13	%
Recurring monthly revenue (RMR)	$	4,196	$	3,938	7	%	$	4,196	$	3,938	7	%
Total subscribers		144,700		141,200	2	%		144,700		141,200	2	%

*EBITDA is a non-IFRS financial measure and is defined in the disclosure section accompanying this press release.

Fourth quarter revenue increased to $13.3 million, a 5% increase from the comparable quarter of 2013, driven by growth in subscribers of 2% and higher recurring monthly revenue per subscriber. Net income in the fourth quarter decreased by 22% to $2.0 million from $2.5 million in the comparable period of 2013 mainly as a result of increased marketing spend, transitioning to new media planning and increased foreign exchange pressure due to the weakening of the Canadian dollar.

The Company is focused on improving the overall customer experience by investing in new product development, increasing the range of innovative products and services and strategic media planning. Although these initiatives place a downward pressure on the profit margins and earnings in the fourth quarter, the Company expects to benefit in future years.

The Company reported net income of $7.8 million in 2014, an increase of 43% over the comparative year of 2013. Diluted income per share increased to $0.65 reflecting a 46% increase over 2013.

Total revenue for the fiscal year increased by $3.5 million to $52.6 million, an increase of 7% or 5% in constant currency. Canadian revenue increased by 2% to $38.4 million, and US revenue increased by 23% to $14.2 million. The Company ended the fourth quarter with 144,700 subscribers.

Recurring monthly revenue (RMR) increased to $4.2 million, up 7% from 2013. RMR accounted for 92% of the total revenue and the increase was primarily driven by organic subscriber growth and an increase in average monthly subscription rates for new subscribers. While the average revenue per subscriber was $29.01 in 2014, the average revenue per new subscriber in 2014 grew to $32.48, an increase of 7% over the comparable year in 2013.

In 2014, the number of subscribers using VideoRelay grew to 8,700. Approximately 93% of VideoRelay accounts subscribe to alarm services and the adoption rate of VideoRelay service was 14% of new alarm subscriptions in 2014. Also, 58% of all new subscribers added CellWave services in 2014. In December 2014, 34% of alarm subscribers added AlarmForce Connect, a service launched in August 2014 that allows subscribers to monitor and control the home from any IP enabled device.

EBITDA increased to $15.9 million, up 24% from the comparable year. This is inclusive of advertising expenses that strengthen brand awareness and drive subscriber growth. Adjusted EBITDA, excluding the impact of the advertising expenses, increased by 11% from $25.4 million to $28.3 million in 2014. The increase in adjusted EBITDA is reflective of the Company's stronger operational performance and overall efficiencies achieved by controlling direct and administration costs.

Cash flows from operations increased from $10.9 million to $11.8 million for the fiscal year, an increase of $0.9 million or 8% over 2013. In 2014, the Company returned $11.8 million to shareholders in the form of dividends and repurchase of common shares. In addition the Company continued to fund its subscriber growth and product development from internal cash flows, and continues to operate with no debt on its balance sheet.

Mr. Anthony Pizzonia, President and CEO, stated that "We will continue to invest in home automation and new interactive services such as VideoRelay, Cellwave and AlarmForce Connect, which have a favourable impact on revenue growth. Our organic model is well positioned to benefit from the expanding demand for enhanced services, in step with advances in underlying technology and lifestyle choices available to our subscribers."

Mr. Pizzonia closed by saying that "We had a solid year positioning the Company to drive profitable growth in the year ahead. We continue to adapt to changes in the competitive landscape and look to leverage our competitive strengths to deliver a great customer experience and long-term value for our shareholders. We will continue to grow subscribers and we are committed to cost efficiencies that will fuel cash flows from operations and EBITDA."

About AlarmForce

AlarmForce provides security alarm monitoring, personal emergency response monitoring, video surveillance and related services to residential and commercial subscribers throughout Canada and the United States. More information about the Company's products and services can be found at www.alarmforce.com.

Disclosure

EBITDA is defined as earnings before interest expenses, income taxes, depreciation and amortization. EBITDA is a key 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 a measure to assess the 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 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.

RMR is defined as the aggregate sum of the contractually stipulated monthly amounts payable by the Company's subscribers at the end of the year, October 31, 2014. The comparable RMR is calculated in conformity at the end of the comparable year, October 31, 2013.