VOXCOM Income Fund

VOXCOM Income Fund

August 15, 2006 06:00 ET

Voxcom Income Fund Announces Second Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - Aug. 15, 2006) - VOXCOM Income Fund (TSX:VOX.UN) (the "Fund") announced today its financial results for the three months ended June 30, 2006.

The Fund commenced operations on May 20, 2005, when it indirectly acquired all of the securities of VOXCOM Incorporated. Comparative results for the second quarter of 2005 reflect the combined activities of the Fund and VOXCOM Incorporated.


- Total revenue of $9.7 million, a 7.6 per cent increase compared to second quarter of 2005

- Gross profit increased 6.7 per cent from 2005 to $7.1 million

- Normalized EBITDA for the quarter increased by $1.1 million, or 27.0 per cent, to $5.0 million

- Declared cash distributions of $2.3 million, for a payout ratio of 93.4 per cent

- Number of customer accounts at June 30, 2006, was 114,500, an increase of 9,700 from June 30, 2005

"Second quarter results are on track with expectations and reflect our ongoing ability to effectively manage our attrition rate and customer retention costs," said Brad Sparrow, President and CEO of VOXCOM. "We delivered growth organically and through three acquisitions, again demonstrating our ability to locate, evaluate and execute on accretive opportunities. The full financial contribution of these acquisitions will be reflected in future quarters."

For the three months ended June 30, 2006, compared to the same period last year:

- Total revenue increased by $0.7 million to $9.7 million, an increase of 7.6 per cent, reflecting the increase in the total number of customer accounts and an increase in the number of additional services provided to customers. Recurring monthly revenue (RMR) per account decreased by $0.10 to $29.01 as a result of customer accounts purchased in May that had an average RMR of $24.60. The Fund continues to proactively market additional services to those customers to increase their average RMR per account.

- Gross profit increased by 6.7 per cent to $7.1 million and represents 73.5 per cent of total revenue, compared to a gross profit margin of 74.1 per cent last year. The increased gross profit is attributable to the increase in total revenue arising from the increased total number of customers. The reduction in the gross profit margin reflects increased costs associated with an increased staff complement and average wage cost.

- Sales and marketing expenses were consistent with the same period last year, now representing 3.5 per cent of total revenue and reflecting the focus on the Authorized Dealer network and National Marketing programs. General and administration expenses for the period were $1.7 million, a decrease of $0.7 million from the same period last year and a decrease in percentage of total revenue to 17.5 per cent from 26.4 per cent last year when $0.8 million in one-time costs were incurred by VOXCOM Incorporated prior to the IPO.

- Earnings from operations before interest, taxes, depreciation and amortization ("Normalized EBITDA") increased by $1.1 million, or 27 per cent, to $5.0 million for the quarter, representing 52.2 per cent of total revenue compared to 44.2 per cent last year, which includes the one-time IPO general and administration costs.

- The Fund declared three cash distributions to unitholders totaling $2.3 million from distributable cash of $2.4 million for a payout ratio of 93.4 per cent.

- Total number of customers at the end of the second quarter was 114,500, compared to 104,800 at the same date last year. The annualized RMR attrition rate decreased to 8.9 per cent from 9.2 per cent.

Statement of Distributable Cash (See Non-GAAP Measures)

(in thousands of dollars, except per Quarter Ended Six Months Ended
unit amounts) (unaudited) June 30, 2006 June 30, 2006
Net earnings for the period $ 1,123 $ 2,505
Financing expenses $ 753 $ 1,432
Income tax (recovery) $ (98) $ (193)
Amortization $ 3,289 $ 6,316
EBITDA $ 5,067 $ 10,060
Amortization of leasehold inducement ($28) $ (56)
Normalized EBITDA $ 5,039 $ 10,004
Customer retention costs $ (1,803) $ (3,595)
Interest expense $ (734) $ (1,390)
Income taxes $ (7) $ (17)
Maintenance capital expenditures $ (82) $ (138)
Cash available for distribution $ 2,413 $ 4,864

Distributions declared $ 2,253 $ 4,506

Net earnings per unit $ 0.1371 $ 0.3058

Distributable cash per unit $ 0.2946 $ 0.5938
Distributions declared per unit $ 0.2751 $ 0.5502
Distributions declared/distributable
cash 93.4% 92.7%

Combined Operating Results for the Three Months ended June 30, 2006 and
June 30, 2005

VOXCOM Income Fund Combined Results
Three months Three months
(in thousands of dollars, except ended ended
per unit amounts) (unaudited) June 30, June 30,
2006 2005(1)
Monitoring and Service Revenue $ 9,426 $ 8,766
Installation Revenue $ 229 $ 206
Total Revenue $ 9,655 $ 8,972
Gross Profit $ 7,097 $ 6,652
Gross Profit - % of total revenue 73.5% 74.1%

RMR - end of period $ 3,049 $ 2,791

Operating Expenses
Sales and Marketing $ 338 $ 282
Sales and Marketing - % of total
revenue 3.5% 3.2%
General and Administration $ 1,692 $ 2,372
General and Administration - % of
total revenue 17.5% 26.4%
Stock-Based Compensation - $ 452
Amortization $ 3,289 $ 2,927

Normalized EBITDA $ 5,039 $ 3,969
Normalized EBITDA - % of total revenue 52.2% 44.2%

Other Expenses
Financing Expenses $ 753 $ 2,152
Income Tax (Recovery) $ (98) $ 15

Net Earnings/(Loss)
Net Earnings/(Loss) $ 1,123 $ (1,548)
Net Earnings per Unit $ 0.1371 -

Customer Growth and Retention
Total Number of Customers 114,500 104,800
Total Number of Additional Value-Added
Services 69,400 55,100
RMR Attrition Rate - Security Accounts
(annualized) 8.9% 9.2%

(1) The June 30, 2005 amounts are a proforma combination of the
unaudited interim financial results of the Fund of the period May 20,
2005 to June 30, 2005, and the historical unaudited VOXCOM Incorporated
results of the period April 1, 2005 to May 19, 2005.

Conference Call and Webcast

Management will host a conference call to discuss second quarter results on Tuesday, August 15, 2006, at 11 a.m. ET. To access the call, dial 416-644-3414 or 1-800-814-4861. A recording of the call will be available as of 1 p.m. the same day until midnight August 22, 2006. To access the recording, dial 416-640-1917 or 1-877-289-8525, followed by passcode 21194823#. The conference call will also be available via webcast at www.voxcomincomefund.com.

Forward Looking Statements

This document may contain "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Additional information relating to the Fund, including all public filings, is available at on SEDAR (www.sedar.com) and at www.voxcomincomefund.com.

Non-GAAP measures
EBITDA and distributable cash are non-GAAP financial measures, but management believes they are useful in measuring the Fund's performance. Readers are cautioned that these measures should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Fund's performance or as a measure of the Fund's liquidity and cash flow. The Fund's method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Fund's non-GAAP measures may not be comparable to similarly titled measures used by other issuers.

About VOXCOM Income Fund

VOXCOM Income Fund holds all the issued and outstanding common shares of VOXCOM Incorporated ("VOXCOM"). VOXCOM is a national leader of security alarm installation and monitoring services in Canada, serving more than 116,000 residential and commercial customers. VOXCOM provides monitoring services for security alarm systems and LifeCall emergency response systems to all provinces from its head office and call centre in Edmonton, and has branch offices in major centres across the country. VOXCOM also maintains extensive marketing partnerships and a network of Authorized Dealers throughout Canada. Information about VOXCOM Incorporated can be found at www.voxcom.com.

Contact Information