AlarmForce Industries Inc.
TSX : AF

AlarmForce Industries Inc.

March 14, 2011 16:45 ET

AlarmForce Announces New Record for Q1 Results

TORONTO, ONTARIO--(Marketwire - March 14, 2011) - AlarmForce Industries Inc. (TSX:AF), Canada's largest manufacturer and installer of live two-way voice home alarms systems, is pleased to announce results for the three months ended January 31, 2011:

  January 31, 2011   January 31, 2010 Change
         
  (3 months ended)   (3 months ended) (over same period)
         
Revenue $ 9,934,000   $ 9,017,000 10%
             
Income before income taxes $ 2,315,000   $ 1,809,000 28%
             
Net income $ 1,590,000   $ 1,198,000 33%
             
Cash flow from operations $ 1,693,000   $ 1,292,000 31%
             
EBITDA* $ 3,375,000   $ 2,823,000 20%
             
EBITDA* excluding marketing expenses $ 5,665,000   $ 4,927,000 15%
             
Basic Net income / share $ 0.13   $ 0.10 30%
Diluted Net income / share $ 0.13   $ 0.10 30%

* 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 first quarter with a total subscriber base of 116,700 accounts and revenue of $9.9 million, achieving the highest first quarter results in our 23 years of business. The results for subscriber accounts and total revenue both reflect increases of over 10%. In addition, gross margin increased from 77% to 78% as a percentage of revenue. Net income increased from $1.2 million to a new record of $1.6 million for the quarter, representing a 33% increase from the comparative period and continuing the trend for growth in bottom-line earnings to outpace revenues.

"Corresponding to the growth in subscribers and recurring monitoring revenues, EBITDA, which is a key measure used in the security industry to compare performance among competitors, showed a double-digit increase. Excluding marketing expenses, EBITDA increased by 15% from $4.9 million to $5.7 million, while EBITDA (net of marketing expenses) increased from $2.8 million to $3.4 million, a 20% increase over the comparative period.

"Our cash balance increased by $600,000 in the quarter after funding capital expenditures, consisting of new subscriber installations, as well as research and development expenditure related to the application-based remote video security system. Cash flows from operations increased from $1.3 million to $1.7 million, a 31% increase over the comparative period. The increase reflects our successful organic growth model in controlling costs to create new accounts. While our expanding subscriber base across North America and economies of scale are contributing to increases in the Company's earnings, we believe that the brand development of AlarmForce plays a major role in the continuing success and effectiveness of our advertising programs, which are funded entirely from operating cash flows and with no debt on the balance sheet."

"We expect that our cash resources will fund operating as well as future capital expenditures. The development and marketing of our application-based remote video system, which we anticipate launching in the third quarter of this year, will also be financed entirely from operating cash flows."

In closing, Mr. Matlin said that: "We are on track in our development of video applications that will provide new, enhanced monitoring services. We anticipate advertising the new video system in the third quarter and we are planning to offer the enhanced services in all our markets. The potential for significant increases in recurring monitoring revenues, represent an exciting new opportunity for the Company in the next few years."

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 sole 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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