Garda World Security Corporation
TSX : GW

Garda World Security Corporation

May 28, 2009 08:45 ET

Garda Reports Strong First Quarter Results

Outstanding Gross Margin-Solid Operational Performance-Positive Outlook

MONTREAL, QUEBEC, CANADA--(Marketwire - May 28, 2009) - Garda World Security Corporation (TSX:GW) (Garda), one of the most trusted cash logistics, physical security and global risk consulting firms in the world, announced today its financial results for the first quarter ended April 30, 2009.

For the Quarter Ended April 30, 2009 (from continuing operations)

- Revenues increased by 5.9% to $279.2 million.

- Gross margin increased from 25.1% to a record level of 27.0%.

- EBITDA grew by 6.7% to reach $31.7 million reflecting a strong operating performance in all business segments.

- Net income amounted to $2.5 million or $0.08 per share.

- Total assets reached $955.0 million.

- The unprecedented level of gross margin and higher EBITDA is mainly due to a performance increase in the Canadian physical security operations and to a strong performance in the US cash logistics business resulting from operational efficiencies and the implementation of cost control measures.

"Our strong performance and unprecedented level of margins in the first quarter of fiscal 2010 reflects the excellent execution of our plans throughout our business units," said Francois Rodrigue, Chief Financial Officer. "This was accomplished in a continuing general economic slowdown and the critical US credit market. Both our cash logistics and physical security segments continued to deliver solid performance in this challenging environment, strengthened by a renewed focus on our core competencies."

"Considering that the first quarter is usually our weakest period of the year, we are extremely pleased with these results," said Stephan Cretier, President and CEO. "We have jump-started the year with all business units performing well. Our premium security services respond to the needs of the markets we serve, evidenced by several long-time clients renewing existing contracts and expanding their business with us. The past year and a challenging global economy have honed our resiliency and entrepreneurial spirit. While we remain prudent given the North American economic climate, our first quarter results confirm the success of our approach."

FINANCIAL HIGHLIGHTS


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In thousands of dollars except per share amounts. Q1 2010 Q1 2009 Q1 2008
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Revenues from continuing operations 279,231 263,617 199,378

Earnings before interest, income taxes,
depreciation and amortization ("EBITDA")
from continuing operations 31,689 29,698 16,822

Income before financing expenses and
income taxes from continuing operations 17,722 18,533 10,391

Net income for the quarter 2,529 4,545 5,796

Basic net income per share 0.08 0.14 0.19

Diluted net income per share 0.08 0.14 0.18

Cash flows from operations 17,471 18,200 13,673

Total assets 954,994 950,072 986,434

Total long-term debt 646,718 615,456 628,330
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(1) EBITDA (earnings before interest, income taxes, depreciation and
amortization) and cash flows from operations are not an accepted
performance measures as per Canadian GAAP.


OUTLOOK

During fiscal year 2009, Garda achieved the monumental task of integrating AT Systems, the most important acquisition in our history. Today, thanks to the hard work of many people who persevered in spite of tremendous unforeseen challenges and obstacles, our US Cash Logistics organization is strong, well positioned in the market and has become a key driver of our future growth.

Throughout 2010, we will keep our focus and attention on our key objectives in order to create and sustain value. Each business unit is focused on excellent opportunities.

Cash Logistics

We count on the enhancement of our technologies that enable us to offer innovative solutions to our clients. We are creating value by maximizing the growth potential in the US market as banks outsource their cash management, and in targeted niche markets in the retail and commercial sectors.

Physical Security

With the intent of solidifying our market position in Canada, we are taking concrete steps such as cultivating a better more profitable book of business, building superior premium service offerings, reinforcing our brand image and improving internal processes to enhance operational efficiencies.

Global Risk Consulting

We are focusing our operations and efforts on key growth markets including natural resources, development, government and humanitarian relief organizations in order to maximize the potential of this higher margin business unit. For example, among other things, we continue to expand our activities in Kurdistan and Iraq, are working toward solid profitability in Afghanistan and Pakistan and are also developing new markets for our services in Latin America and North Africa.

MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)

Revenues

Revenues for the quarter ended April 30, 2009 rose to $279,231 from $263,617 for the corresponding quarter last year, an increase of $15,614 or 5.9%. The increase in revenues results mainly from the strengthening of the US dollar in relation to the Canadian dollar between Q1 2009 and Q1 2010 and a decrease of 6.0% in the revenues generated by the US cash logistics operations.

Revenues in the physical security segment amounted to $121,052 for the quarter ended April 30, 2009 compared to $118,828 for the corresponding quarter last year, an increase of $2,224 or 1.8%. This increase in revenues in the physical security segment is mainly due to the net impact of the strengthening of the US dollar in relation to the Canadian dollar and the slight reduction of 1.3% in the level of activity in the Canadian physical security between Q1 2009 and Q1 2010. Revenues in the cash logistics segment rose to $158,179 from $144,789 for the corresponding quarter last year, an increase of $13,390 or 9.2%. This increase in revenues is attributable to the net impact of the strengthening of the US dollar in relation to the Canadian dollar and the decrease in revenues generated during Q1 2010.

Revenues in Canada amounted to $118,206 compared with $119,203 for the corresponding quarter last year, while revenues in the United States and other rose to $161,025 from $144,414 for the corresponding quarter last year.

Gross profit

Gross profit rose by 14.0% or $9,076 from $66,211 for the quarter ended April 30, 2008 to $75,287 for the quarter ended April 30, 2009. This increase in gross profit is attributable to the improved performance in the Canadian physical security operations and the consistently strong performance in the cash logistics segment. Consequently, gross margin from continuing operations as a percentage of revenues increased from 25.1% to 27.0%.

Net income for the period

Net income was $2,529 ($0.08 basic and diluted per share) for the quarter ended April 30, 2009, compared with $4,545 ($0.14 basic and diluted per share) for the corresponding quarter last year, a decrease of $2,016 ($0.06 basic per share).

Cash flows

Operating activities

Cash flows from operations amounted to $17,471 for the quarter ended April 30, 2009, compared with $18,200 for the corresponding quarter last year. This decrease of $729 or 4% is mainly attributable to the net impact of the decrease in net income and the increase in amortization expense.

Changes in non-cash working capital items used cash of $12,775 during the quarter ended April 30, 2009, compared to cash used in the amount of $6,498 in the corresponding quarter last year. This decrease in the changes in non-cash working capital items results from a reduction in accounts payable and accrued liabilities offset by an increase in accounts receivable as at April 30, 2009.

Operating activities generated cash of $4,696 during the quarter ended April 30, 2009, compared to cash generated in the amount of $11,702 in the corresponding quarter last year.

FORWARD-LOOKING STATEMENTS

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 technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new services, the enhancement of existing services, and the introduction of competing products having technological or other advantages, 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. While management may elect to, the company is under no obligation (and expressly disclaims any such obligation), and does not undertake to update or alter this information before the next quarter.

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 2009 Annual Report. Throughout this discussion, all amounts are in Canadian dollars unless otherwise indicated.

MD&A FILING

Garda's Management's Discussion and Analysis for the quarter ended April 30, 2009 was filed with SEDAR on May 28, 2009 and available on the web site http://www.gardaglobal.com in the investor's section as of May 28, 2009.

ABOUT GARDA

Garda, one of the largest integrated physical security and cash logistics firm worldwide on an annualized revenue basis, is well known for addressing complex security and investigations issues. As a leading provider in security services, Garda is recognized as one of the fastest growing companies with operations across Canada, the United States, Latin America, Europe, the Middle East, Africa, and Asia. With approximately 50,000 dedicated professionals, Garda offers integrated solutions in cash logistics, physical security, global risk consulting and pre-employment screening. Its team includes specialists and some of the most highly qualified and best-trained experts in the industry. For more information, visit: http://www.gardaglobal.com, http://www.gardacashlogistics.com and http://www.garda-world.com.

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