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by: Tess Nacelewicz - Wednesday, November 20, 2013

Just about one year after The ADT Corp. split from Tyco International and became a stand-alone, publicly traded company, the company reported today that its RMR climbed 4.7 percent in Q4 and that the rise was helped by its acquisition of Devcon Security this summer.

Boca Raton, Fla.-based ADT, which officially became independent Sept. 28, 2012, reported its Q4 and fiscal year 2013 results today. It added 100,000 subscribers in 2013, bringing its total customer based to 6.5 million, the company said.

ADT also reported average revenue per user (ARPU) had climbed to $40.31, an increase of 3.7 percent, and said that helped increase RMR. The company also said its ADT Pulse overall take rate was at 32 percent in Q4, up from 13 percent last year due to new customers and price escalations to existing ones.

In the earnings call, ADT CEO Naren Gursahaney said, "We recently passed the 500,000 mark with Pulse customers. Just to put that into perspective for you, if Pulse was a stand-alone business, it would be the sixth largest security provider in North America. While this a major milestone for us, it still only represents about 8% of our total customer base, so we still have a tremendous opportunity to further grow our Pulse customer base."

Gursahaney also said that in Q4, "Net attrition increased by 10 basis points sequentially and 40 basis points year-over-year to 13.9 percent, with more than 100 percent of the increase attributable to higher relocation disconnects as a result of the continued recovering in the housing markets." The company is launching new programs to address attrition, which it plans to announce soon, he said.

The company’s revenue increased in Q4 by 4 percent to $846 million from $812 million, higher than the $843.8 million analysts expected. EBITDA was $431 million in Q4,  up 7.5 percent compared to the previous year.

Much of ADT’s total revenue is recurring revenue, the report said. RMR was $777 million in Q4. The company also said small business RMR growth for fiscal 2013 was 7 percent, up from 3 percent in 2012.

Just before its Nov. 20 earnings report, ADT announced this week it was defending its turf by suing Utah-based Vision Security for the second time over Vision’s alleged deceptive sales practices. The new lawsuit comes shortly after Vision and Security Networks, of which Vision is an affiliate, “settled with ADT for $2.2 million and agreed to a permanent injunction [from] engaging in similar practices,” according to an ADT news release.

Vision told me it denies ADT's allegations and intends to fight them.

The AP reported ADT’s shares closed at $42.81 yesterday, Nov. 19. Shares are down 8 percent for the year to date, the AP said.

Gursahaney predicted positive results for fiscal 2014, with revenues and RMR climbing 4 percent to 5 percent. "I'm confident the momentum we have built, coupled with the improvement programs we have implemented to address our challenges, will position us for continued revenue growth and operational improvements in 2014," he said.

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by: Tess Nacelewicz - Wednesday, November 13, 2013

[UPDATE ON NOV. 14: I heard back late yesterday from SolarCity, which confirmed that Vivint Solar COO Brendon Merkley has joined SolarCity. Molly Canales, a communications associate with that company, told me in an email, "Brendon has accepted an offer to join SolarCity and we’re excited to welcome him aboard." So my report below is no longer speculative.]

Vivint Solar has been making headlines of late regarding the rapid success of the 2-year-old business and the new round of financing it just secured. Now here’s more about the company: The COO of Vivint Solar—a division of home automation/home security provider Vivint—has reportedly jumped ship for SolarCity, Vivint Solar’s larger competitor.

If true, COO Brendon Merkley is following in the footsteps of former Vivint Solar CEO Tanguy Serra, who bailed for SolarCity last spring.

Last month, Vivint Solar announced it had secured $540 million in new financing. And this month, the success of Vivint Solar—based in Provo, Utah—was the topic of Reuters feature story titled, “Knock! Knock! Solar company wins converts going door to door.” The story says that Vivint has quickly captured a 9 percent share of the residential solar installation market in the United States.

Interestingly, the Nov. 8 also extensively quotes COO Merkley on some of the secrets of Vivint Solar’s success. Vivint Solar also announced in June that Merkley had been elected as the executive committee’s state policy committee chair for the Solar Energy Industry Association.

But Reuters reports that SolarCity remains the market leader, with a 26 percent share.

And yesterday, Greentech Media reported that Merkley had defected to SolarCity.

I have reached out to Vivint Solar and SolarCity but Greentech Media says in its Nov. 12 report that it has already done that. “Vivint has confirmed that Merkley has left the firm. SolarCity has confirmed that Merkley is joining the firm,” the site reported.

Greg Butterfield this fall took over Serra’s old job as CEO of Vivint Solar. Who will replace Merkley? Stay posted!

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by: Tess Nacelewicz - Wednesday, November 6, 2013

Honeywell this week released its new 6100 Series Custom Alpha and Fixed-Language Keypads—and it’s great that the keypads will benefit dealers by giving customers a wider range of choices and saving installation time and money.

But as a boomer, I must confess that what jumped out at me is the fact that the keypad’s display area is 32 percent larger and the words and icons easier to read. I’m not in marketing, but it seems to me that feature is a great way to promote these keypads to boomers. That’s a group for whom security and home automation is important—but who also would like to be able to read the darn panel without having to hunt down their eyeglasses!

Here’s more from  Honeywell’s Nov. 4 announcement:

Honeywell today released the 6100 Series Custom Alpha and Fixed-Language Keypads, giving security dealers a broader portfolio to accommodate a range of homeowner budgets and lifestyles. The Custom Alpha keypads feature VISTA Intelligent Programming (VIP)—an intuitive, menu-based programming option for the most common functions that helps reduce installation time and labor costs. VIP is currently available with Honeywell’s VISTA-20P control panels.

Easy-to-use graphics and a symmetrical design give the 6100 Series the same look and feel as Honeywell’s home and business controllers with touchscreen displays. The seven-model suite offers larger screens with light, neutral backlighting that blends with most interiors. The devices occupy less wall space while providing 32-percent larger display areas with bold fonts and graphic icons, which are ideal for the elderly or visually impaired. Additionally, function and arming keys provide quick set-up and easier use. These new models offer voice, integrated RF or a hardwired zone to best meet the needs of the installation, and the homeowner’s budget.

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by: Tess Nacelewicz - Wednesday, October 30, 2013

The good news keeps on coming from SAFE Security. I just wrote recently how the San Ramon, Calif.-based company—celebrating its silver anniversary this year—has doubled in size. Now, SAFE has announced this week that it has acquired more than 16,000 accounts, representing $650,000 in RMR.

The new accounts are CastleRock Security residential and commercial alarm monitoring subscriber accounts.

“These accounts fit very nicely into our U.S. and Canada footprint,” Paul Sargenti, SAFE president, CEO and founder, said in a prepared statement in an Oct. 29 news release. “With this acquisition we have more than doubled our account base since 2012. We are well equipped to assimilate them and look forward to providing the highest standard in security services to these new subscribers.”

Sargenti added, “SAFE is firmly positioned as a full service alarm company and this purchase complements our other growing revenue channels.”

The company says it also is seeing strong organic growth from its dealer program, SAFE Dealer Network.

by: Tess Nacelewicz - Tuesday, October 22, 2013

Timothy McGinn and David L. Smith, former partners in the Albany, N.Y.-based brokerage firm of McGinn, Smith & Co., which conducted dealings in the alarm industry, will serve out their fraud sentences in the same penitentiary, according to a recent Albany Business Review report.

I wrote here in August about their sentencing, after the two were convicted earlier this year of fraud, conspiracy and tax evasion in a Ponzi-like scheme that caused investors to lose millions. A judge called 65-year-old McGinn “arrogant” and sentenced him to 15 years in prison. Smith, 68, convicted of fewer counts than McGinn, received a 10-year sentence.

Now, the Albany Business Review reports, the two are both in the same prison in Brooklyn, N.Y. Here’s more from the Oct. 17 article:

The federal Bureau of Prisons says both men are now at the Metropolitan Detention Center, in Brooklyn.

Prosecutors say as many as 900 investors lost money. …

Attorneys for McGinn and Smith originally believed the two would wind up in different prisons. Smith had requested to remain fairly close to his family, who live in Saratoga Springs.

Attorneys say that McGinn, meanwhile, needs special medical attention for his diabetes, and residual concerns resulting from a heart attack in 2010, months after the FBI and IRS and the Securities and Exchange Commission began probing the McGinn-Smith operations.

The two pleaded not guilty to the charges they faced, and maintained their innocence when testifying at trial. They are preparing an appeal, which may not be heard for several years.
 

 

 

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by: Tess Nacelewicz - Wednesday, October 16, 2013

A recent post on Honeywell’s The Security Channel blog caught my eye because it refutes the notion that only large companies can reap the benefits of being integrators. That’s not the case, says Jason Lutz, business development manager, First Alert Professional and CSS, in his post this week titled “Simple Integrations Can Lead to Increased RMR.”

Here’s what he says in his intriguing intro: “There are few things that can make some dealers cringe more than when I begin to talk about integrating systems. Many dealers think they are too small to do integrated systems or that integrating systems can be too complicated or even that there isn’t enough Recurring Monthly Revenue (RMR) and therefore it’s not worth the hassle. Before I go further, let’s clarify what an integrated system is and how much money you are leaving on the table by not offering it.”

He goes on to explain that “an integrated system can be as simple as two separate systems working together to satisfy a client’s need.”

Then he asks: “Are your current or potential clients expressing needs like these?
*Can you set up my cameras to only record when my system is armed?
*Can you make the cameras record only when I have an alarm?
*Can you let me know when my DVR has a loss of video, loses its connection to the Internet or the hard drive has reached full capacity?”

Lutz goes on to explain how even a small security provider can answer such needs—benefiting both clients and the provider. Check out his post.
 

by: Tess Nacelewicz - Wednesday, October 9, 2013

I’ve written before about how telecoms, cablecos and professional security companies, large and small, are now selling their security/home automation products in a retail environment. Those companies include Comcast, Verizon Wireless, Security Options, The Alarm Company and SecureWatch 24. Now add Link Home Security to the list.

Link, which bills itself as “the leader in do-it-yourself (DIY) wireless security systems,” is now offering a DIY home security/energy/video surveillance package through Costco, the national online retailer. It’s a deluxe package with all the desirable home automation features homeowners have been hearing about—and it includes professional monitoring.

Ogden, Utah-based Link describes its Premium Plus Video Package by saying to customers it “puts you in control of your security, home automation and remote video monitoring and gives you the convenience of premium 'advanced interactive' services managed from your smartphone or secure internet login. The cellular, color touch screen panel does not require a phone line and is Z-Wave(R) enabled—allowing you to add security, safety, energy management and camera components to your system at any time.”

Link said it is offering monitoring for $34.99, which “ includes remote video monitoring and recording plus services like fire monitoring and remote accessibility that you won't find anywhere else. Z-Wave operability is no additional cost. … Cellular signal and 2-way voice communication in emergencies is included as part of the service.”

It said other features of the premium service will allow customers “to augment your existing smoke detectors with a 3-in-1 smoke/heat/freeze sensor (included) that is continually monitored by our UL Listed and 5-Diamond rated central station. The door/window and motion sensors come custom-programmed with the locations you specify, such as "Front Door" or "Master Bedroom Window". Our Z-Wave programmable thermostat (included) offers a “Smart Schedule” that utilizes the other components in your system to recognize activity and usage in the home or business and recommend energy saving HVAC schedules. The two Z-Wave LDM Light/Appliance Modules (included) plug into a standard outlet to control lighting and small appliances. Both the thermostat and light/appliance modules are remotely accessible from a smartphone or secure internet connection so lighting and temperature can be adjusted while away. The HD100 Indoor Camera (included) is easy to install and gives you the peace of mind of being able to keep an eye on the activity in your home or office, observe a live feed in case of an alarm event, or review past video footage at your convenience. The HD100 delivers a high resolution video with infrared “night vision” capability.”

This offering clearly shows that DIY is going beyond simple to incorporate the next level of technology.
 

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by: Tess Nacelewicz - Wednesday, October 2, 2013

News reports lead with stories about how the U.S. government shutdown this week is sabotaging people’s vacation plans at national parks. But Honeywell Chairman and CEO David Cote is concerned about how a long shutdown could have even greater negative repercussions on businesses and our economy.

According to an article this week from MoneyNews, Cote is among a number of CEOs of major corporations to worry the shutdown could harm the economic rebound both at home and abroad.

Here’s some of what Cote had to say, according to that article:
 

“Everyone will get more conservative and pull back on hiring and investing,” Cote, who served on Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, said in an interview with Bloomberg Television’s Trish Regan.

Even if the budget fight is resolved, lawmakers would immediately move to the next dispute over raising the $16.7 trillion debt ceiling.

It also would be a “horrible idea” to block a boost in the federal debt ceiling, as some lawmakers vow to do, Cote said. “When you hear people starting to think that maybe we should default or not raise the debt ceiling and we will play chicken with it, are you actually serious?”

Of course, Honeywell is a huge, diversified company. But if the fears of Cote—recently named “CEO of the Year”—come true and we go back into recession again, smaller security companies also could be impacted in a negative way.

Let’s hope this all gets resolved soon.

 

 

by: Tess Nacelewicz - Monday, September 23, 2013

Exactly why the board of Toronto-based AlarmForce forced out the company’s CEO and founder, Joel Matlin, this summer remains unclear. Deepening the mystery is the fact that over the past year, the publicly traded company did very well with Matlin still at the helm, according to its recently released third quarter results.

I’ve gotten one side of the story: Matlin told me in August that his ouster in July as company CEO and president was “a mutiny created by my CFO, Anthony Pizzonia.”

Pizzonia, who is now interim CEO and president as the company searches for a replacement for Matlin, has not responded to my repeated requests for comment.

Matlin, who resigned from the company’s Board of Directors after his ouster, also told me that the company he founded in 1988 is “probably one of the best growing alarm companies in North America, with zero debt.” Third quarter figures released earlier this month confirm AlarmForce is very healthy.

For example, the company said in a news release that “revenue in the third quarter grew by $3 million to $36 million, or 9 percent, over the comparative period of 2012. Canadian revenue was up 4 percent to $28.0 million and U.S. revenue was up 29 percent to $8.5 million over the comparative period of 2012.”

Also, it said that RMR “increased by 8 percent in the third quarter and accounted for 91 percent of the total revenue. RMR growth was driven by an increase in subscribers and by a 2.5 percent increase in average revenue per subscriber, which rose to $27.07 as compared to $26.40 in the third quarter of 2012.” RMR is now more than $3.7 million.

The release also confirmed that the company has no debt and “funded all growth and product development from internal cash resources.”

Pizzonia said in a prepared statement: “For the remaining balance of the fiscal year, we will focus on growing our subscribers, increasing operating efficiencies, pursuing accretive investments that drive organic growth and returning excess cash to shareholders in the form of both dividends and share buybacks.”

AlarmForce provides security alarm monitoring, PERS, video surveillance and related services to residential and commercial customers throughout Canada and in the United States. The company is a leading provider of two-way voice alarm systems in Canada.

When I reached out to Matlin this month about the company’s earnings, he said his lawyer had advised him not to comment. Pizzonia has not responded to another request for comment.

Matlin had told me previously that he was working with his legal team to hold a proxy vote that he believes will result in the replacing of the board that forced him out.

However, the company already has moved to replace Matlin on the board. AlarmForce said Tobias Behrenwaldt “would serve as an independent director of the company until election at the next annual meeting of shareholders in 2014.” Behrenwaldt is currently a partner in Behrenwaldt Investment GmbH, the company said.

Matlin previously had complained to me that the board has too many investment types on it. “Now you have the financial guys running the company, certainly not the marketing guys,” he said. The board this summer also suspended Matlin’s son, a key member of AlarmForce’s marketing team, Matlin said.

Marketing expenses last year were substantial, according to the company’s third-quarter results release: “EBITDA increased to $7.6 million, or 78 percent, due to the reduction of advertising expenses related to the launch of VideoRelay in 2012. Excluding the impact of these marketing expenses that result in a charge to operating income, adjusted EBITDA increased by 1 percent to $17.4 million from $17.2 million.”

Was this an issue? Your guess is as good as mine. Stay posted as I follow this story.

by: Tess Nacelewicz - Wednesday, September 18, 2013

After a gunman killed 12 people at the Washington Navy Yard on Monday, news reports say Defense Secretary Chuck Hagel will be reviewing physical security and access at all Defense Department installations around the world.

Presumably, he’ll be looking at whether those facilities have mass notification systems (MNS)—because it’s not clear whether the Navy yard had one. Even if it did, it may need improvement, because news reports indicate that only fire alarms were sounding and people inside the building were running out not knowing that a man with mental health problems, Aaron Alexis, 34, a civilian contractor and military veteran, was spraying the place with bullets.

For example, NBC News reported:

[A] worker there, Todd Brundidge, said he heard a fire alarm go off and later saw the gunman come around the corner.

"He turned our way and started firing, and we ran downstairs to get out of the building," Brundidge said. "No words. He raised the gun and started firing."

And USA Today reported:

Terrie Durham, an executive assistant at Naval Sea Systems Command, said a fire alarm sounded and she was trying to leave with a group of people when they encountered a shooter.

"We couldn't see his face, but we could see him with the rifle," Durham said. "He raised and aimed at us and fired. And he hit high on the wall."

In this case, sounding a fire alarm and having occupants leave that building may have been the right response … or would it have been better to have them shelter in place? A well-designed MNS, using the fire alarm system as its backbone, affords different options for different situations.

I’ve written before—in a story on the need for MNS, also known as an emergency communication system or ECS, in schools to protect students and staff from shooters there—that the military developed mass notification systems. The need for them became apparent after a 1996 terrorist bombing at a multi-story building in Saudi Arabia where American military personnel were housed. The only way to alert building occupants was the fire alarm, but lives were lost because evacuating in response to the fire alarm meant walking into the area where the bomb exploded.

The Department of Defense concluded an alert system was needed that could send a variety of messages in different kinds of emergencies, not just fires.

If the Navy yard didn’t have an MNS that could have helped in this situation, that would be sadly ironic.

 

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