Is ASG the next great alarm company?

Sunday, April 1, 2007

BELTSVILLE, Md.-- The news out of ASG's Beltsville headquarters in early March had a familiar ring, another solid company acquired (this time it's a fire integrator in Dallas) that will help this super-regional build density in its hubs.
"Hopefully, you see a pattern here," said Bob Ryan, ASG's vice president of marketing and sales. Since chief executive officer Joe Nuccio took over a reorganized ASG in 2003, the company has been growing steadily. Michael Barnes, a partner in Barnes Associates, an investment banking and consulting firm that specializes in the security alarm industry, complimented ASG's business model: "They have remained geographically-focused, broad based in their service offerings for both residential and commercial customers, and been disciplined in their acquisition activity."
With nearly $3 million in RMR, ASG "will soon be sneaking up on being one of the top 10 alarm companies in the nation," Barnes predicted.
Where is ASG headed? Is it positioning itself to be the next HSM? "They don't have the geographic breadth of HSM, but we should all keep an eye on them. There are similarities," said Barnes. "First, Joe Nuccio worked with Jim Covert for a number of years, and he has a similar drive to succeed. Second, ASG has significant management depth, much as HSM. And, lastly, ASG has some heavyweight investors that have the capacity to continue to support their rapid growth."
On March 2, ASG announced the acquisition of Abbot Security of Dallas. Ralph Masino, ASG's chief financial officer, described the deal as a "model transaction" that "adds density to the existing market and significant fire capability to our Dallas operation."
Abbot specializes in large commercial fire integration projects and also has traditional burglar alarm accounts. The company brings 5,200 customers and $135,000 in RMR. Dallas is now ASG's biggest branch, with $750,000 in RMR.
The Abbot acquisition follows the December acquisition of Accutech, a Washington, D.C.-based integrator that brought capabilities in government contract work.
Ryan said Abbot is "a 10-year-old company that's homegrown with an account base that was built in the right way, one customer at a time, and who are very loyal." In addition, Abbot has "design professionals, project managers, and a very experienced fire staff. The acquisition will allow us to take on larger projects and spin [Abbot's fire customers] into our specialty, big security integration projects."Abbot's 24 employees, including former owner Kelly Gill, have joined ASG. Gill is leading fire sales in the Dallas market for ASG.
Abbot was not looking to be acquired. "Rory Russell [of Acquisition Funding Services] was instrumental in getting the seller to come out of the woodwork," Ryan said. Russell sourced the transaction and represented the seller in the deal.
Gill said, "Until I started talking to Joe [Nuccio, chief executive officer of ASG] and Ralph, I worried about keeping the structure of the company together, but the more I got to talking with them, the more I realized it would be a good match."
Gill and the other former Abbot employees are in the process of moving into ASG's Dallas branch office.
ASG's focus has been on developing the competency and resources of its three hubs in Texas and the Mid-Atlantic region. In the next 24 months, Ryan said, with the built-in capability for sales, design, installation and service in each of these hubs, the plans are to further build its commercial integrated services.
Speaking at the March 6 and 7 Security Growth Conference in Santa Monica, Calif., ASG CEO Nuccio said ASG expects to hit $3 million in RMR in 2007. "Our sweet spot is in that commercial engineered system, $25,000 to $150,000 [projects] is a nice place to play in," he said. "We're not going to do airports, but we'll do some pretty large projects, we're very structured in our fire business. We have a good, efficient commercial channel."
Barnes said, "I can't say enough good about the company. We know the management team, and have seen their operating metrics. They are delivering some really impressive results ... the kind that can get a lot of attention ... much like HSM."
L. Samuel Pfeifle contributed to this report.