AlarmForce Industries Inc.
TSX : AF

AlarmForce Industries Inc.

September 13, 2010 16:19 ET

AlarmForce Announces Growth in Q3 Revenues and Earnings

TORONTO, ONTARIO--(Marketwire - Sept. 13, 2010) - AlarmForce Industries Inc. (TSX:AF) AlarmForce Industries Inc., Canada's largest manufacturer and installer of live two-way voice home alarms systems, is pleased to announce results for the nine months ended July 31, 2010:

  July 31, 2010   July 31, 2009   Change  
   
  (9 months ended)   (9 months ended)   (over same period)  
   
Revenue $ 27,633,000   $ 25,277,000   +9 %
   
Income before income taxes $ 5,219,000   $ 4,609,000   +13 %
   
Net income $ 3,605,000   $ 3,099,000   +16 %
   
Cash flow from operations $ 5,340,000   $ 4,617,000   +16 %
   
EBITDA $ 8,274,000   $ 7,476,000   +11 %
   
EBITDA/share $ 0.67   $ 0.62   +8 %
   
EBITDA before marketing expenses $ 14,923,000   $ 14,424,000   +3 %
   
Basic Net income / share $ 0.29   $ 0.26   +11 %
Diluted Net income / share $ 0.29   $ 0.26   +11 %
                 
 
* EBITDA (Earnings Before Interest, Income Taxes, Depreciation, and Amortization) is a key measure in the security industry and should not be interpreted as GAAP)

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 Canadian GAAP, it may not be considered in isolation of GAAP 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 Canadian GAAP, it is unlikely to be comparable to similar measures presented by other issuers.

Joel Matlin, President and CEO, announced that, "AlarmForce closed the third quarter of 2010 with both revenues and earnings continuing an upward trend. Total AlarmForce subscribers increased to 110,600, which reflects a 12% annual growth rate in the net subscriber base. Total revenues for the third quarter increased to $9.5 million, an 11% increase, while total revenues for the nine months ended July 31, 2010 increased to $27.6 million, a 9% increase over revenues of 25.3 million in 2009."

"Net Income for the nine month period increased by 16% from $3.1 million to $3.6, while Income before income taxes increased to $5.2 million in the nine-month period, which is net of the cost of current research and development. We have expensed expenditures of $0.6 million related to current research and development of our Application Based Video System, ViewForce. Excluding the impact of this special research and development charge, earnings before income taxes increased from $4.6 million to $5.8 million, a 26% increase reflecting higher profitable margins from our organic growth in the nine month period. The positive effects of both double-digit subscriber growth and increased efficiency from economies of scale are reflected in these results."

"EBITDA increased from $7.5 million to $8.3 million for the nine months, an 11% increase. This includes the effect of marketing program expenses which reduce operating income. Excluding marketing expenses, EBITDA increased from $14.4 million to $14.9 million for the nine months, a 3% increase. With monthly recurring subscriber revenues representing over 90% of our total revenues and the net increase in subscribers, our cash flows from operations increased to $5.3 million for the nine months, an increase of 16% over the comparative period."

Mr. Matlin continued, "We believe that our results continue to surpass the performance of the residential alarm industry as a whole, with most of our competitors realizing single-digit or even negative organic growth in the current market due in part to the contraction of new housing construction. However, our results indicate that the AlarmForce marketing model which focuses on existing homes, has proven resilient."

"In addition to this resilience in the current market conditions, we anticipate that our new ViewForce technology will fill consumer needs beyond the benefits of traditional alarm systems. ViewForce is anticipated to be completed and launched in early 2011."

"This addition to our two-way voice alarm technology will significantly expand our market reach to existing AlarmForce subscribers and, most importantly, to the larger consumer home market. In preparation for this exciting new growth opportunity we are in the midst of a major expansion of our physical customer support and sales facilities to be completed by the end of this fiscal year."

"In the third quarter, as previously announced, we entered the State of Minnesota, and started installing systems in Minneapolis-St. Paul. We expect to accelerate our U.S. expansion in the future under our controlled growth model as our ViewForce technology takes hold in 2011. For the remainder of 2010, we are optimistic that growth in bottom- line earnings will continue to outpace the growth in top-line revenues."

Mr. Matlin closed by saying: "We are continuing to invest in our brand and value proposition with zero debt on our balance sheet. Furthermore we are continuing to fund our technology development, growth in the subscriber base and physical expansion out of internal cash flows. We are very excited about the growth of our business in Canada and the U.S. and we hope to increase our market share in both the home alarm and the anticipated consumer video market."

"I would like to thank our subscribers, investors, employees and the Directors for their support and confidence in the past and continuing into the future."

AlarmForce provides security and personal emergency response monitoring and related services to residential and commercial subscribers throughout Canada and selected centers across the United States. The Company is a leading provider of two-way voice alarm systems in Canada and 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.

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