Garda World Security Corporation

Garda World Security Corporation

April 28, 2011 08:00 ET

Garda Delivers Best Financial Results in Its History

Record Net Income of $28.6 million - Organic growth of 8.8% - Operating profit of $128.8 million

MONTREAL, QUEBEC--(Marketwire - April 28, 2011) -Garda World Security Corporation (TSX:GW) (Garda), one of the leading Security Solutions, Cash Logistics and Global Risk Consulting firms in the world, announced today record financial results for the fiscal year ended January 31, 2011 demonstrating its ongoing efforts to be the best operator in the industry.

For the fiscal year ended January 31, 2011, Garda improved all areas of its business:

  • Record net income of $28.6 million $0.90 per share with Q4 net income of $10.7 million.
  • Solid organic growth of 8.8% for the year:
    • 11.7% in Security Solutions Canada;
    • 45.3% in Emerging Markets;
    • 2.2% in Cash Logistics following a strong fourth quarter.
  • Fourth quarter organic growth of:
    • 5.0% in Security Solutions Canada;
    • 67.3% in Emerging Markets;
    • 6.7% in Cash Logistics.
  • Operating profit of $128.8 million or 11.5% of revenues, an increase of 6.7% at constant exchange rate:
    • Security Solutions operating profit reached 7% of revenues, setting the industry benchmark;
    • Cash Logistics reached 16.1% despite several contract start-ups also at the industry benchmark.
  • Cash flow from operations of $74.2 million, an increase of 31% over 2010.
  • Reduced financing expenses by $12.1 million through complete refinancing.
  • Debt leverage ratio continues its reduction at 4.4.

During FY2011, Garda clearly demonstrated its ability to grow organically in all the markets where the company operates. The resilient execution and solid performance delivered throughout the operations displayed the fundamental soundness of its corporate strategy. We are constantly improving management performance and capitalizing on the stable and less costly financial structure provided by our refinancing to drive our future growth.

"During the year, we have seen dramatic evidence of the effectiveness of the platforms we have diligently built and improved during previous years," said Patrick Prince, Senior Vice President and Chief Financial Officer. "Our strong performance is driven through continuous benchmarking of profitability levels throughout all our businesses. Our dedicated leaders are focusing on every detail of their operations in search of maximum efficiency. Supported by our new financial structure, we are ideally positioned for continued growth with exciting opportunities in each of our markets."

"Today, as never before, and in light of the best financial results in Garda's 15 year history, we are perfectly aligned to take advantage of the profound changes occurring in all the markets we serve," said President and CEO Stephan Cretier. "We are anticipating the needs of our clients and delivering solutions with speed and precision as they adjust to unprecedented levels of change. In this dynamic atmosphere, the trust and confidence we have earned from our clients enables us to provide them with the security services they require, not merely to survive, but to thrive and prosper. We are addressing the growth opportunities before us with the zeal and enthusiasm of a truly entrepreneurial organization while providing our shareholders with a sound and secure investment."


Capacity for Continued Growth

In Garda's ongoing effort to be the best operator in the industry, we are poised for growth, both organically and by acquisitions. Our focus on improving margins and operational profits maintains our ability to make Garda the benchmark of our industry. We will continue to deleverage and generate strong cash flow to achieve the operational improvements required to capitalize on ongoing growth opportunities and deliver optimal results. Increasingly our clients are committing to long-term relationships in response to our strong corporate governance practices and commitment to operational excellence.

Garda is well aligned to capitalize on significant growth opportunities in each of its operating sectors:

Cash Logistics

In Cash Logistics, we have meticulously examined all business processes and operations and established the ability to measure performance as never before, giving the company a deeply granular view of the business. We have transformed Garda Cash Logistics into an high performance platform and one of the fastest growing providers to financial institutions and retailers with 6.7% organic growth in the fourth quarter, the majority of it in the US. We enjoy a commanding presence throughout the market and look forward to 2011 with great optimism for continued strong growth.

Security Solutions

As Canada's market leader, Garda Security Solutions intends to expand through organic growth and bolt-on acquisitions. The operation is continuing to redefine the boundaries of what security services can do with highly tailored coast to coast solutions, including public-private partnerships, investigative consulting services and pre-employment screening. Our services are carefully targeted to specific vertical markets including mining, oil & gas, property management, health care and governments. Strong double-digit organic growth is clear proof of the effectiveness of this approach.

Emerging Markets

The most dramatic and vivid examples of Garda's growth potential came from GardaWorld, the Global Risk Consulting operation, which achieved 45% organic growth in FY2011 as it provided impromptu support for clients through the ongoing turmoil in the Middle East and in the aftermath of the Haitian earthquake. GardaWorld accommodated those emergency demands for service while it continued its growth into the Southern region of Iraq supporting the oil and gas industry's reconstruction efforts. The monumental changes now sweeping through the Arab world present Garda with a once-in-a-lifetime opportunity to expand operations and grow tremendously in both the Northern and Southern regions of Iraq.


(In thousands of Canadian dollars, except per share amounts).201120102009
Gross profit268,438280,086277,003
Operating profit(1)128,823128,234116,543
Net income (loss) for the year28,550(35,292)(98,148)
Adjusted net income (loss)(1)28,55010,002(839)
Basic net income (loss) per share0.90(1.12)(3.12)
Basic adjusted net income (loss) per share(1)0.900.32(0.03)
Cash flow from operations(1)74,19556,67643,025
Total assets781,497804,135986,030
Long-term debt (including current portion)572,410552,289661,002
(1)Cash flow from operations, adjusted net income (loss) and operating profit are not an accepted performance measures as per Canadian GAAP.



As stated previously, our strategy is to establish platforms and continually improve them with a combination of business development, operational excellence, and focused entrepreneurial leadership in order to achieve our goal to be the best operator in our industry.

In 2011, we focused on this strategy. With the US economic environment affecting our banking and retail customers at the beginning of the year, as well as the uncertainty having an effect on Canadian businesses and development projects, we focused on making improvements and positioning ourselves to take advantage of the economic recovery.

During the year, we continued to take advantage of the many opportunities that were cultivated last year. New contracts started in security solutions, enhanced and reinforced security requirements in Canadian airports and the new Foreign Commonwealth Office (FCO) contract announced last year yielded an organic growth of 16.1% in security solutions.

Cash logistics revenues continued to be affected by the economic activity in the US, but yielded an organic growth of 2.2% during the year. During the year we started the implementation of several new large bank contracts both in Canada and the US which temporarily affected margins during start-up. We have seen the effect of this new business in the fourth quarter with an organic growth of 6.7%.

Net income amounted to $28.6 million or $0.90 per share in 2011 versus an adjusted net income of $10.0 million or $0.32 per share in 2010. There were no adjustments for specific items in the year ended January 31, 2011. Adjustments for specific items in the year ended January 31, 2010 represent charges related to carrying value of long-term debt, charges related to the fair value of derivative instruments, discontinued operations, settlement of litigation and taxes adjustments on specific items.


The increase of $37.4 million in revenues year-over-year is attributable to organic growth. The decline of the US dollar has decreased the revenues by $51.7 million. The revenues at constant exchange rate or organic growth have increased by 8.8% or $89.1 million. Organic growth in security solutions was 16.1%.

Graphic 1: Revenues from continuing operations (CER) is available at the following address:

Security solutions revenues increased by $48.8 million or 11.7% in Canada, as a result of new contracts and enhanced security measures at Canadian airports. Revenues have steadily increased throughout the last fiscal year as business development initiatives were intensified. Revenues from emerging markets (Middle East and North Africa) show organic growth of $28.8 million or 45.3% at constant exchange rate with the beginning of the new FCO contract in Iraq in the first quarter of fiscal 2011.

Cash logistics revenues increased by $11.5 million or 2.2% at constant exchange rate due to start-up of several new large bank contracts both in Canada and the United States in the last four months of the year.

Gross profit

Security solutions' gross profit amounted to $79.7 million, an increase of $5.7 million year-over-year, of which $7.4 million is attributable to organic growth. Cash logistics' gross profit amounted to $188.7 million, a decrease of $17.3 million year-over-year, of which $15.9 million is attributable to the decline of US dollar and the remainder to contracts start-up.

Graphic 2: Gross profit by sector (CER) is available at the following address:

Operating profit

The continuous improvement of all our platforms in terms of efficiencies is a central part of our objective to be 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 $128.8 million, an increase of 0.5% over 2010. At constant exchange rate the operating profit increased from $118.9 million to $126.8 million in the year, an increase of 6.7%. This demonstrates the benefit of our continuous improvement programs.

Graphic 3: Operating profit is available at the following address:

During the year, security solutions' operating profit reached 7.0% of revenues, compared to 6.5% versus last year. Operating profit for the cash logistics segment reached 16.1% of revenues in 2011, compared to 16.4% over 2010, only a slight decrease due to the effects of start-up of contracts on margins and the reduction in volume at the beginning of the year in the US.

Graphic 4: Operating profit by sector (CER) is available at the following address:

Net income for the year

Net income was $28,550 ($0.90 basic and diluted per share) compared to a loss of $35,292 ($1.12 basic and diluted per share) for 2010.

Cash flows

Cash position as at the end of the year amounted to $14,978, an increase of $3,121 versus the end of fiscal 2010. This increase 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 $74,195, an increase of 30.9% over the cash flow generated by the operations in fiscal 2010.

Net change in non-cash working capital balances items used cash of $28,936 compared with cash used in the amount of $11,465 in fiscal 2010. This is mostly attributable to accounts receivable increase due to organic growth of $89,147 in revenues year-over-year.

Financing activities

Cash used for financing activities amounted to $22,330 compared to cash used of $75,261 for fiscal 2010. The decrease is mainly attributable to a one time debt repayment of $43,656 done in 2010 in connection with the sale of the US and Mexican Guarding operations.

Investing activities

Cash used in investing activities amounted to $19,242, compared to cash generated of $14,904 for fiscal 2010. The decrease of $34,136 is attributable to the proceeds of $42,174 received from the disposal of the US and Mexican Guarding operations in 2010. The Corporation also has done a deposit for collateral insurance of $7,523 in 2010 and received $7,277 in 2011. Additions to property, plant and equipment were $21,637 versus $20,077 in 2010. Intangible assets additions totalled $5,101 in 2011 versus $1,116 in 2010.


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 the growth management, the market competition, the cost of financing, government regulations, the collective bargaining, currency fluctuations, the credit risk, the reputational risk and the financial covenants risk, 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.

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 2011 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 28, 2011 at 10:00 AM EST during a conference call with financial analysts and institutional investors. Listeners may access the call by dialing 800-952-6697 or 416-981-9000 for international calls.


Garda's Management's Discussion and Analysis for the fiscal year 2011 ended January 31, 2011 was filed with SEDAR on April 28, 2011 and available on the web site in the investors section as of April 28, 2011.


Garda (TSX:GW) is a global provider of security solutions, 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:

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