VOXCOM Income Fund

VOXCOM Income Fund

November 14, 2006 18:00 ET

VOXCOM Income Fund Announces Third Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - Nov. 14, 2006) - VOXCOM Income Fund (the "Fund") (TSX:VOX.UN) announced today its financial results for the three months ended September 30, 2006.


- Total revenue of $10.0 million, a 10.2 per cent increase compared to third quarter of 2005

- Gross profit increased 10.0 per cent from 2005 to $7.4 million

- Normalized EBITDA for the quarter increased by $0.3 million, or 6.2 per cent, to $5.2 million

- Declared cash distributions of $2.3 million, for a payout ratio of 92.6 per cent

- Number of customer accounts at September 30, 2006, was 118,300, an increase of 11,700 from September 30, 2005

"We had solid performance across all of our key metrics during the third quarter and continue to be on track to achieve our goals for 2006," said Brad Sparrow, President and CEO of VOXCOM. "With the two recent acquisitions now completely integrated into our operations, we will see their full financial contribution in future quarters. Our partnership with Home Depot is in a phased rollout across Canada and we are encouraged by the early results."

"The federal government's recent tax announcement has created confusion and uncertainty in the trust marketplace but it does not diminish the strength of our underlying business model," stated Mr. Sparrow. "While we have initiated a preliminary review of various options and scenarios, including how best to utilize the Fund's significant unrecognized tax assets and loss carry forwards, we remain focused on increasing the Fund's base of recurring revenues, maintaining stable distributions and growing unitholder value."

On November 13, 2006, VOXCOM announced a licensing agreement with Infinity Systems Pty Ltd. to be the exclusive Canadian provider and licensee of Infinity's leading mobile video and remote monitoring services. The new agreement enables VOXCOM to provide new security options to a potentially broader security marketplace.

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

- Total revenue increased by $0.9 million to $10.0 million, an increase of 10.2 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 security account decreased by $0.26 to $28.77 as a result of customer accounts purchased in July and August that had average RMR of $22.72 and $26.25 respectively. Consistent with past acquisitions, the Fund proactively markets additional services to those customers to increase their average RMR per account.

- Gross profit increased by 10.0 per cent to $7.4 million and represents 73.7 per cent of total revenue, compared to a gross profit margin of 73.8 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 continues to reflect increased costs associated with an increased staff complement and average wage cost.

- Sales and marketing expenses increased $0.1 million from the same period last year, now representing 3.4 per cent of total revenue and reflecting increased marketing efforts to increase the sales volumes of new customers generated by the Authorized Dealer network and National Marketing programs. General and administration expenses for the period were $1.8 million, an increase of $0.3 million from the same period last year and an increase in percentage of total revenue to 18.3 per cent from 16.9 per cent last year, primarily due to increased staffing to support growth activities and professional fess incurred relating to corporate governance and planning.

- Earnings from operations before interest, taxes, depreciation and amortization ("Normalized EBITDA") increased by $0.3 million, or 6.5 per cent, to $5.2 million for the quarter, representing 51.7 per cent of total revenue compared to 53.5 per cent last year. The reduction in EBITDA margin reflects the increased sales and marketing expenses and 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 92.6 per cent.

- Total number of customers at the end of the third quarter was 118,300, compared to 106,600 at the same date last year. The annualized RMR attrition rate decreased to 8.4 per cent from 8.6 per cent.

Statement of Distributable Cash (See Non-GAAP Measures)

A reconciliation of distributable cash to cash flows provided by operating activities as required by CSA Staff Notice 52-306 is available in the MD&A.

(in thousands of dollars,
except per unit amounts) Quarter Ended Nine Months Ended
(unaudited) September 30, 2006 September 30, 2006
Net earnings for the period $ 926 $ 3,431
Financing expenses $ 864 $ 2,296
Income tax (recovery) ($ 99) ($ 292)
Amortization $ 3,528 $ 9,844
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EBITDA $ 5,219 $15,279
Amortization of leasehold inducement ($ 28) ($ 84)
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Normalized EBITDA $ 5,191 $15,195
Customer retention costs (1,821) (5,416)
Interest expense (847) (2,237)
Income taxes (8) (25)
Maintenance capital expenditures (81) (219)
--------- ---------
Cash available for distribution $ 2,434 $ 7,298
--------- ---------
--------- ---------

Distributions declared $ 2,254 $ 6,760
--------- ---------
--------- ---------

Net earnings per unit $0.1131 $0.4189

Distributable cash per unit $0.2972 $0.8910
Distributions declared per unit $0.2751 $0.8253
Distributions declared/distributable cash 92.6% 92.6%

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

(in thousands of dollars, VOXCOM Income Fund VOXCOM Income Fund
except per unit amounts) Three Months Ended Three Months Ended
(unaudited) September 30, 2006 September 30, 2005
Monitoring and Service Revenue $ 9,802 $ 8,900
Installation Revenue $ 236 $ 212
Total Revenue $10,038 $ 9,112
Gross Profit $ 7,400 $ 6,725
Gross Profit - % of total revenue 73.7% 73.8%

RMR - end of period $ 3,122 $ 2,822

Operating Expenses
Sales and Marketing $ 346 $ 278
Sales and Marketing - % of total revenue 3.4% 3.0%
General and Administration $ 1,835 $ 1,542
General and Administration - % of total
revenue 18.3% 16.9%
Stock-Based Compensation - -
Amortization $ 3,528 $ 2,806

Normalized EBITDA $ 5,191 $ 4,876
Normalized EBITDA - % of total revenue 51.7% 53.5%

Other Expenses
Financing Expenses $ 864 $ 603
Income Tax (Recovery) ($ 99) $ 15

Net Earnings/(Loss)
Net Earnings/(Loss) $ 926 $ 1,481
Net Earnings per Unit $0.1131 $0.1808

Customer Growth and Retention
Total Number of Customers 118,300 106,600
Total Number of Additional Value-Added
Services 73,600 58,500
RMR Attrition Rate - Security Accounts
(annualized) 8.4% 8.6%

Conference Call and Webcast

Management will host a conference call to discuss third quarter results on Wednesday, November 15, 2006, at 11 a. m. ET. To access the call, dial 416-644-3414 or 1-800-814-4941. A recording of the call will be available as of 2 p. m. the same day until midnight November 22, 2006. To access the recording, dial 416-640-1917 or 1-877-289-8525, followed by passcode 21205595#. 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 earnings 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 118,000 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

  • VOXCOM Income Fund
    Brad Sparrow
    President & CEO
    (780) 462-1657 or Toll Free: (800) 661-2178
    Email: brad.sparrow@voxcom.com
    VOXCOM Income Fund
    Keith Muncy
    Chief Financial Officer
    (780) 462-1657 or Toll Free: (800) 661-2178
    Email: keith.muncy@voxcom.com