Integrated Alarm rings IPO bell

Success of offering exceeds industry expectations
Monday, September 1, 2003

ALBANY, N.Y. - In late July, Integrated Alarm Services Group raised more than $200 million through its initial public offering of 22 million shares, which culminated a nearly nine-month process.

Flush with that cash, the company is ready to make further advances in its monitoring business, according to Tom Few Sr., chairman and chief executive officer of Criticom, the company’s monitoring arm.

“A large part of the use of proceeds from the public offering is going to be dedicated to enhancing our ability to provide capital throughout the dealer industry, as well as enable us to advance further into the technology side of the business,” Few said. He added that the company is looking into offering technologies like GPS monitoring to its customers.

Some analysts have pointed to the company’s debt – including $12.3 million in losses in the first quarter of this year – as a sign that it is struggling, but that isn’t necessarily the case, said John Mack, chief executive officer of USBX Advisory Services.

“They have some amount of debt on the business, but these are businesses that can reasonably support debt, so it’s not all that unusual. Any well-run company should have some mix of equity and debt,” Mack said. “And $200 million will make a lot of problems go away.”

The $203.5 million in capital the company brought in through its IPO has done nothing if not strengthen the company’s cash flow, Mack said.

“Their IPO was very successful,” he said. “They’ve got a very strong equity position on their balance sheet. They’ve got upwards of $100 million in cash.”

Few said the company has been pleased with the performance of the stock, which at press time was hovering right around its July 24 opening price of $9.25.

“It does seem to be holding its own,” he said. “It was a long and arduous journey, but all’s well that ends well. I guess it says something for persistence.”

The decision to go public – and the ups and downs that followed – was made in the interest of better serving Criticom’s customers, the majority of whom are security dealers, Few said.

“We’re going to expand each segment of our business. Certainly, a good portion is going to be concentrated on bringing new technologies into the monitoring sphere in order to benefit the dealers down the road,” he said. “Our goal is to make it most beneficial for a dealer to tie his wagon to us in anticipation that his personal interests will be served both in the present and going down the road by working with a strategic partner such as ourselves.”

Mack said the industry should expect big things from the company moving forward.

“They’ve got goals of doing acquisitions and building their wholesale division, and they’ve clearly got lots of room to do that with the capital structure that they have today,” he said. “They should have the resources to build themselves into one of the more significant brands and businesses in this industry.”