VOXCOM Income Fund
TSX : VOX.UN

VOXCOM Income Fund

March 23, 2006 07:00 ET

Voxcom Income Fund Announces Year-End and Fourth-Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - March 23, 2006) - VOXCOM Income Fund (TSX:VOX.UN) (the "Fund") today announced its operating results and financial performance for the three months and 226-day period ended December 31, 2005.

The Fund commenced operations on May 20, 2005, when it indirectly acquired all of the securities of VOXCOM Incorporated. The combined operating results for the year ended December 31, 2005, comprise the activities of VOXCOM Incorporated from January 1 to May 19, 2005, and the Fund from May 20 to December 31, 2005.

Highlights:

- Total 2005 revenue of $36.0 million, a 22.1 per cent increase compared to 2004

- Gross profit for 2005 increased 23.5 per cent from 2004 to $26.7 million

- Normalized EBITDA for the year increased by $3.7 million, or 24.8 per cent, to $18.4 million

- Declared cash distributions for the 226-day period totaling $5.6 million, for a payout ratio of 94.8 per cent

- Number of customer accounts at December 31, 2005 was 108,200, an increased of 6,700 from December 31, 2004

"Results for our combined year demonstrate our strong fit with the income fund structure and our ability to deliver reliable distributions to our unitholders," said Brad Sparrow, President and CEO of VOXCOM. "We improved all our key performance measures in 2005 - we are growing our customer base and selling more value-add services while increasing both our gross profit and EBITDA margins. In a year of transition, we achieved significant progress."

"The continued growth of the security sector combined with our scalable business and technical infrastructure should allow us to build on our progress during 2006," said Mr. Sparrow.

For the year ended December 31, 2005, compared to the same period last year:

- Total revenue increased by $6.5 million to $36.0 million, an increase of 22.1 per cent. The purchase of 13,000 accounts from Stealth Alarms contributed approximately $3.7 million of this increase. Recurring monthly revenues increased as a percentage of total revenue, while installation revenue remained stable.

- Gross profit increased by 23.3 per cent to $26.7 million and represented 74.1 per cent of total revenue. The increased gross profit is attributable to the increase in total revenue arising from the growing total number of customers.

- Sales and marketing expenses increased $0.3 million to $1.1 million, representing three 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 $7.1 million. Excluding the one-time costs related to the initial public offering in the amount of $0.8 million, the net increase in general and administration expenses related to ongoing operations was $0.3 million.

- Earnings from operations before interest, taxes, depreciation and amortization ("Normalized EBITDA") increased by $3.7 million, or 24.8 per cent, to $18.4 million for the year, representing 51.2 per cent of total revenue, a margin improvement of 1.1 per cent over the prior year. Without the one-time IPO costs, the margin would have been 53.5 per cent of revenue.

- In the 226-day period, the Fund declared seven cash distributions to unitholders totaling $5.6 million ($0.6781 per unit) from distributable cash of $5.9 million ($0.7157 per unit), for a payout ratio of 94.8 per cent.

- Total number of customers at year end was 108,200, compared to 101,500 last year. The annualized RMR attrition rate decreased to 8.9 per cent from 9.2 per cent.

For the three months ended December 31, 2005, compared to the same period last year:

- Total revenue increased by $1.5 million to $9.3 million, an increase of 19.9 per cent.

- Gross profit increased by 19.4 per cent to $6.8 million and represents 73.4 per cent of total revenue.

- Normalized EBITDA increased by $0.9 million, or 23.5 per cent, to $4.9 million for the quarter, representing 53.2 per cent of total revenue, as compared to 51.6 per cent in the same quarter last year.

- The Fund declared three monthly distributions totaling $2.3 million, from distributable cash of $2.4 million, for a payout ratio of 95.2 per cent.



Statement of Distributable Cash (See Non-GAAP Measures)
------------------------------------------------------------------------
(expressed in thousands of Canadian
Dollars except per unit amounts)
(Unaudited)
Quarter Ended 226-Day Period Ended
December 31, 2005 December 31, 2005
------------------------------------------------------------------------
Net earnings for the period $ 1,552 $ 3,667
Financing expenses $ 647 $ 1,534
Income taxes $ (267) $ (245)
Amortization $ 3,036 $ 7,155
---------- ----------
EBITDA $ 4,968 $ 12,111
Amortization of leasehold
inducement $ (28) $ (69)
---------- ----------
Normalized EBITDA $ 4,940 $ 12,042
Customer retention costs $ (1,864) $ (4,539)
Interest expense $ (628) $ (1,482)
Income taxes $ (15) $ (37)
Maintenance capital
expenditures $ (68) $ (125)
---------- ----------
Cash available for
distribution $ 2,365 $ 5,859
---------- ----------
---------- ----------

Distributions declared $ 2,253 $ 5,554
---------- ----------
---------- ----------

Net earnings per unit $ 0.1895 $ 0.4477

Distributable cash per
unit $ 0.2887 $ 0.7153
Distributions declared per
unit $ 0.2751 $ 0.6781
Distributions
declared/distributable
cash 95.3% 94.8%
------------------------------------------------------------------------


Combined Operating Results for the Year ended December 31, 2005 and
December 31, 2004
Combined
VOXCOM operating VOXCOM
The Fund Incorporated results Incorporated
May 20- January 1- Year ended Year ended
December 31, May 19, December 31, December 31,
2005 2005 2005 2004
--------------------------------------------------------
(in thousands of dollars)
(unaudited)
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
Monitoring and
Service Revenue $22,048 $13,131 $35,179 $28,710
Installation
Revenue $ 526 $ 311 $ 837 $ 792
Total Revenue $22,574 $13,442 $36,016 $29,502
Gross Profit $16,649 $10,036 $26,685 $21,615
Gross Profit -
% of total revenue 74.1% 73.3%

Operating Expenses
Sales and Marketing $ 687 $ 376 $ 1,063 $ 805
Sales and Marketing -
% of total revenue 3.0% 2.7%
General and
Administration $ 3,851 $ 3,208 $ 7,059 $ 5,985
General and
Administration -
% of total revenue 19.6% 20.3%
Stock-Based
Compensation -- $ 560 $ 560 $ 387
Amortization $ 7,155 $ 4,594 $11,749 $10,060

EBITDA
Normalized EBITDA $12,042 $ 6,407 $18,449 $14,787
Normalized EBITDA -
% of total revenue 51.2% 50.1%

Other Expenses
Financing Expenses $ 1,534 $ 3,797 $ 5,331 $ 6,221
Taxes (Recovery) $ (245) $ 13 $ (232) $ (105)
Other Items - (Gain) -- -- -- $ (494)

Net Earnings/(Loss)
Net Earnings/(Loss) $ 3,667 $(2,512) $ 1,155 $(1,244)

Customer Growth and
Retention
Total Number of
Customers 108,200 101,500
Total Number of
Additional
Value-Added Services 61,900 48,600
RMR Attrition Rate -
Security Accounts
(annualized) 8.9% 9.2%


Conference Call and Webcast

Management will host a conference call to discuss 2005 results on Thursday, March 23, 2006, at 11 a.m. ET. To access the call, dial 416-644-3414 or 1-800-814-3911. A recording of the call will be available as of 1 p.m. the same day until midnight March 30, 2006. To access the recording, dial 416-640-1917 or 1-877-289-8525, followed by passcode 21179262#. 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 109,000 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