AlarmForce Reports Third Quarter 2014 Results

TORONTO, ONTARIO--(Marketwired - Sept. 11, 2014) - AlarmForce Industries Inc. (TSX:AF), Canada's largest manufacturer and installer of live two-way voice home alarm systems, is pleased to announce results for the nine months ended July 31, 2014

	Three months ended						Nine months ended
	July 31, 2014		July 31, 2013		Change		July 31, 2014		July 31, 2013		Change
($ in thousands, except per share and subscriber amounts)
Total revenue	$	13,153	$	12,453	6	%	$	39,291	$	36,479	8	%
Net income	$	1,552	$	148	948	%	$	5,730	$	2,842	102	%
Shares outstanding, diluted		11,900		12,276	-3	%		11,802		12,276	-3.9	%
Diluted net income per share	$	0.13	$	0.01	1205	%	$	0.49	$	0.23	111	%
Cash flows from operations	$	2,821	$	3,495	-19	%	$	8,446	$	7,154	18	%
EBITDA*	$	3,310	$	1,430	132	%	$	11,699	$	7,582	54	%
Adjusted EBITDA* (before marketing expenses)	$	6,331	$	4,599	38	%	$	20,766	$	17,352	20	%
Adjusted EBITDA* per diluted share	$	0.53	$	0.37	42	%	$	1.76	$	1.41	24	%
Recurring monthly revenue (RMR)	$	4,145	$	3,865	7	%	$	4,145	$	3,865	7	%
Total subscribers		144,400		139,400	4	%		144,400		139,400	4	%

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

AlarmForce reported net income increased to $5.7 million over the nine months ended July 31, 2014, an increase of 102% over the comparative period of 2013. Diluted income per share increased to $0.49 reflecting a 111% increase from the comparable period of 2013.

Total revenue increased to $39.3 million year to date, an increase of 8% over the comparative period of 2013. Recurring revenue which made up 92% of total revenue grew by 7% to $4.2 million. This was primarily driven by annualized subscriber growth of 4% to 144,400 subscribers and an increase in ending average revenue per subscriber (ARPU) to $28.71 from $27.73 in the comparative period.

Stronger operational performance and cost efficiencies drove EBITDA to increase to $11.7 million in the first nine months of 2014, up 54% over 2013. While marketing expenses decreased by $0.7 million compared with the comparative period in 2013, the Company expects to maintain the same advertising spend as in 2013. Excluding the impact of these marketing expenses, adjusted EBITDA for the nine month period increased by 20% from $17.3 million to $20.8 million.

Cash flows from operations increased to $8.4 million from $7.2 million, an increase of $1.2 million or 18%. The Company plans to continue funding all growth and product development from the Company's internal cash flows in 2014.

On May 20, 2014, a quarterly dividend of $0.03 was paid in addition to a special one-time dividend of $0.60 per common share. Another quarterly dividend of $0.03 per share was declared on July 8, 2014, which was subsequently paid on August 20, 2014. Over the nine month period, the Company repurchased a total of 314,600 shares for $3.3 million, at an average share price of $9.93.

Mr. Anthony Pizzonia, interim President and CEO, said that "While overall ARPU of the entire subscriber base increased to $28.71, a relatively higher ARPU is associated with new subscriber additions. ARPU for new subscribers added in the nine months of 2014 increased to $30.83. This is the direct result of the take rates on our add-on services such as VideoRelay and Cellwave."

He continued by adding that, "Subsequent to the third quarter, the Company launched AlarmForce Connect, its latest innovation of system interactive services. AlarmForce Connect allows the subscriber to monitor and control their home security system in real time using a mobile device. The enhanced capabilities of this feature include remote arming and disarming, receiving email notifications, and viewing system history or system status. When combined with our standard system, it provides convenience and control to stay remotely connected to any home or business. We expect that AlarmForce Connect, like VideoRelay and CellWave, will drive growth in subscribers and ARPU."

"Our efforts in the quarter reflect the progress we are making to position the Company for future growth as we are committed to investing in innovative home automation and interactive services that will drive growth. We will also continue to focus our attention on providing the subscriber with an integrated customer experience that will increase the life of the subscriber and reduce customer attrition."

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.