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20 under 40 nominations

Friday, May 15, 2009
Hey loyal blog readers, you get first crack at the 20 under 40 nominations. Check it out here.

Mace numbers

Friday, May 15, 2009
There's all kinds of 1Q numbers to talk about right now, and most of them reflect a 1Q that was difficult for the industry. Here's what Mace has to say. You'll note that they begin the release with "highlights" from the quarter, which is always a sign that the numbers don't look all that great. But they're not alone with that. Here are some thoughts:
Dennis Raefield, CEO and President of Mace, stated, "I am excited about the future of Mace. We are on track with our growth strategy. Even though our 2009 first quarter sales were soft due to the continuing global economic crisis, we have achieved our cost-cutting goals and have reduced Mace's quarter over quarter losses by improving our gross margin and reducing the Company's overhead.
One "good" thing about the disastrous 1Q worldwide? It's an out for just about any CEO who has to report bad numbers (just as it's an out for any bad salesperson who doesn't hit a goal, etc. - it can make company and talent evaluation difficult for that reason. Is it the economy? Or is it the sales team/products?). Considering Mace is still in the process of a major reorganization, it's difficult to have grounds for disagreeing with the CEO's evaluation.
"We have also improved our Security Division's sales department, product offerings and customer service. We have completed a significant step in our security-oriented growth strategy by acquiring a first class wholesale central monitoring station, which is the platform to build our next generation of services. We plan to roll out new services during both the second and third quarters of 2009. I hope to see continued improvement as we start to see growth rebound in the security sector. I am also pleased to announce that we continue to make progress in selling our remaining car washes, and we are very pleased with the direction of our Digital Media Marketing segment," Mr. Raefield concluded.
I've got some inside dope on what some of those inside services might be. For instance, what if the DVR you bought automatically called home to the Mace central station and self-configured for video monitoring? That would be kind of sweet, right? That will probably happen. A camera company owning a central station could make for some very interesting developments. So, here are the actual numbers:
Total revenues for the first quarter ended March 31, 2009 were $8.6 million, as compared to $12.3 million for the same period in 2008. The decrease in overall revenues during the first quarter of 2009 was primarily due to a decrease in revenues from Mace's Digital Media Marketing segment because of management's decision to discontinue the marketing efforts of its online marketing division, PromoPath, in June 2008. There was also a reduction in sales in Mace's Security and Car Wash segments.
That's almost 30 percent down, year to year. Hard to spin that in a good light.
Loss from continuing operations for the first quarter of 2009 was approximately ($1.7) million, or ($0.10) per share, compared to a loss from continuing operations of ($2.2) million, or ($0.13) per share, for the first quarter of 2008. The reduction in loss from continuing operations was partially due to a reduction in selling, general and administrative ("SG&A") expenses from $5.0 million for the three months ended March 31, 2008 to $3.7 million in the same period in 2009, a decrease of approximately $1.3 million, or 26%. The SG&A expense savings were realized from a reduction in costs with the consolidation of our security division's Ft. Lauderdale, Florida surveillance equipment warehouse operations into our Farmers Branch, Texas facility, with an expense reduction of approximately $140,000, as well as overhead reductions within our Digital Media Marketing segment. SG&A expenses of our Digital Media Marketing segment decreased from $1.3 million in the three months ended March 31, 2008 to $708,000 in the three months ended March 31, 2009. In addition to these cost savings measures, we also noted a reduction in non-cash compensation expense from continuing operations from approximately $253,600 in the three months ended March 31, 2008 to $50,000 in the three months ended March 31, 2009.
But there's the good spin right there. Despite bringing in way less revenue, they still lost less money. They've still got cash on hand, but at some point the red ink has to stop.
The Company's net book value was $41.6 million, or $2.55 per share, at March 31, 2009. In addition, Mace had $53.1 million in total assets, including $8.5 million of cash and short-term investments, at March 31, 2009.
So, with a 1Q loss from continuing operations of $1.7 million, and $8.5 million on hand, the company would only have about a five quarters of cash if they burn at the current rate. I don't expect that to happen, but that shows you the impetus Raefield and company will be under to turn things around.

CSAA five Diamond Certs rolling in

Friday, May 15, 2009
It's that time of year again. All the centrals out there with the wherewithal to prove they've completed the necessary training are reporting their CSAA Five Diamond Central Station Certification has been renewed. Just today I received word that Monitronics International in Dallas, and RFI Security in San Jose, Calif. have received their renewal certs from the CSAA. The CSAA’s Five Diamond Certification program is designed to create standards of excellence for the industry. In order for a central station to earn its Five Diamond Certification, all its operators must undergo the online training course and pass a test, demonstrating proficiency in: alarm verification (reduction of false alarms); communications with public service answering points such as 911; electronic communications equipment; the codes and practices of such standards organizations as Underwriters Laboratories, Factory Mutual, and the National Fire Protection Association; the handling of a wide scenario of emergency preparedness situations. And for those central in Canada or South America who speak French or Spanish, the training, as I noted in an earlier post, is now available in multiple languages with the cooperation of CANASA and ALAS. According to the CSAA, there are over 2,700 central stations in the United States, and of this group fewer than 100 (less than 3%) central stations have undergone the process and achieved certification. Keep up the good work guys!

Henry Bros. financials for 1Q

Thursday, May 14, 2009
First quarter numbers are coming in throughout the industry (I'll have Mace later). Here's how one of our few public integrators did: Eh.
Henry Bros. Electronics, Inc. Reports First Quarter 2009 Results FAIR LAWN, N.J., May 14 /PRNewswire-FirstCall/ -- Henry Bros. Electronics, Inc. (NASDAQ:HBE) , a turnkey provider of technology-based integrated electronic security solutions, today announced results for the first quarter ended March 31, 2009. The Company reported revenue of $15.3 million for the first quarter of 2009, representing a 3.8% decrease over revenue of $15.9 million for the same period a year ago. The slight decrease in revenue in the recent first quarter is primarily due the winding down of work completed on contracts for several large public agencies in the New York Metropolitan area, as well as a decline in revenue from the Company's Arizona and California operations. Partially offsetting these declines was an increase in revenue from the Company's Colorado and Virginia operations and revenue recorded under the Tactical Video Capture System ("TVCS") contract with L-3 Communications.
So, down, but not badly down, even in a brutal quarter that crushed any number of businesses. But this makes sense to me, considering that these are primarily long-term jobs that wouldn't just go away because the economy's in the tank. The effects of that 1Q will probably be felt late this year, early next year, when the pipeline is dry because nothing new was generated (that's just a guess, obviously).
The Company reported net income of $166,122 or $0.03 per diluted share, for the first quarter ended March 31, 2009, compared to net income of $283,957, or $0.05 per diluted share, in the comparable period of 2008. The Company's decrease in net income is principally the result of higher personnel related costs as part of a strategic growth initiative to increase the sales force by 62%. This initiative was implemented in order to take advantage of an anticipated increase in security spending related to public projects and the expansion of the Company's footprint into Houston, Texas and Grand Junction, Colorado.
Earning $166,000 on $15.3 million in sales is living dangerously. That's roughly a net margin of 1.1 percent. Thin.
The Company's backlog as of March 31, 2009 was $20,133,794, compared to $22,404,437 at March 31, 2008. The aforementioned work completed on several large public agency jobs in the New Jersey / New York area during the year ended December 31, 2008 is the primary factor in the decline in the backlog, partially offset by the L-3 Contract bookings.
The backlog's down, but not overwhelmingly so. That L-3 deal is big, obviously.
Jim Henry, CEO of Henry Bros. Electronics, commented, "While the revenue and net income that we generated during the first quarter was down slightly from last year's comparable period, bookings were in line with the prior year's quarter of $11.7 million and the proposal dollar volume doubled in the first quarter of 2009 versus the prior year. In addition, we have undertaken several reinvestment initiatives in the last several months including the expansion of our geographic footprint, an increase in sales staff, and the introduction of new products and services. Our management team and Board take pride in our ability to effectively anticipate and react accordingly to changes. This was true before the current recession when we curtailed spending and increased system efficiencies, and is true now as we increase staff to prepare for the anticipated project growth in our industry."
Well, if you invest in increasing your sales staff by almost 70 percent, I hope the bookings are at least flat and the proposals are almost doubled. Otherwise, you've just increased your people spend without getting anything in return. I'm not sure that's a good sign, even with the bad 1Q.
Henry continued, "As the new administration prepares to increase spending in areas in which our company has cultivated a strong operational expertise, we have worked to ensure that we have the right regional teams in place to effectively compete for these large infrastructure projects. This increased push to capture a significant number of these jobs is against the backdrop of the very successful management of our TVCS project, which began in October 2008. We strongly believe that our continuing work with several large municipalities and government organizations, coupled with our strong performance with the TVCS project, puts us in a very good position to increase our capture rate of projects related to the integrated security needs of the government as they look to improve our nation's infrastructure. For these reasons we are reiterating our guidance for a 6% operating margin on consolidated revenue of $80 million in 2009".
That operating margin seems awful low to be sustainably profitable. I'm assuming that's taking into account the investments in people and geography and 2010 will be aiming higher.

Guy gets photo taken while trying to steal home camera

Wednesday, May 13, 2009
Here's a news story out of Bakersfield, Calif. about a guy who tries to steal a home security camera, and guess what? Can you say doofus? Surprise, surprise, surprise. They get a photo of him and his car! OK, this guy's audacity and stupidity is staggering, but the story is actually pretty scary. The woman said that she and her husband were on alert because they'd previously noticed a security camera had been turned upside down, and they'd been followed home a few days before. A Bakersfield cop said that the theft of home security cameras is not unusual. And you'll never guess what he said these thieves do with the cameras...he said they like to install them in their own homes. Here's the story, with accompanying video.

A glimpse at IP video spending in 1Q

Wednesday, May 13, 2009
I've been hearing anecdotally that spend on IP video has been slowing rapidly (as has analog) with the recession. Here's at least one actual indicator, in the 1Q results of Optelecom-NKF, which chose a couple years back to refocus its business on IP video surveillance. Since that link may be password protected, here's the dope:
Optelecom-NKF Reports First Quarter 2009 Results GERMANTOWN, Md., May 12 /PRNewswire-FirstCall/ -- Optelecom-NKF, Inc. (NASDAQ:OPTC) , a leading global provider of Siqura(R) advanced IP-video network solutions, today announced first quarter 2009 results. Revenues for the first quarter totaled $8.6 million, compared to $10.5 million for the same quarter of 2008. Video over IP-related revenue climbed 10% in the first quarter to $2.9 million, compared to last year's $2.6 million.
So, even though Optelecom is down fairly significantly for the quarter, IP video revenue is actually up 10 percent. That's pretty interesting. It could just be that the company has shifted resources to sell into that space particularly, but it's still a good sign.
The Company reported a net loss of $765 thousand, or $(0.21) per share, in the quarter ending March 31, 2009. This compares to net income of $148 thousand, or $0.04 per share, one year earlier. Adjusted EBITDA for the quarter (as defined in the addendum to this release) was a loss of $551 thousand compared to profit of $976 thousand for the same quarter last year.
Basically, the company went from making money to losing money. Let's hope that's the economy and not an indicator of a bad decision on the part of management to focus on IP video.
"The sharp contraction in the global economy was the dominant force affecting our first quarter performance along with a reduction in reported revenue from foreign exchange translation rates," said Ed Ludwig, Optelecom-NKF's Chairman and CEO. "Orders slowed this winter as customers delayed projects in the face of budgetary concerns. As we look for signs of a bottom in the economic contraction and we actively contain costs, I view our long-term business prospects with measured optimism based on feedback from current customers and visits we've had with prospective customers."
So, they say it's the economy, not the focus. Since Axis is one of the few IP video companies with public numbers, and they've had some rough times, it's good to see another IP video company at least succeeding at IP video, even if it hasn't made for a profitably quarter.

Mace hires Giacalone as president of Mace CSSS

Wednesday, May 13, 2009
[caption id="attachment_1882" align="aligncenter" width="225" caption="New Mace CSSS president Peter Giacalone"]New Mace CSSS president Peter Giacalone[/caption] Mace today announced it had hired Peter P. Giacalone to serve as the president of its new Security Services Division, which includes newly acquired wholesale monitoring company, Mace CSSS, Inc. Located in Anaheim, Calif., Mace CSSS, Inc. is a national UL listed central station that monitors approximately 30,000 end user accounts on behalf of more than 300 dealer clients. Mace CSSS also provides high quality nationwide video monitoring services, including CCTV, IP and other configurations. Giacalone, with over 30 years of combined experience in both the electronic security and wholesale monitoring industries, will oversee all general management and sales, as well as marketing, efforts associated with the Mace Security Services Division and Mace CSSS, Inc. He will also develop Mace's new commercial dealer program, which will support the customers of Mace's monitoring services and surveillance products. Giacalone is currently the Chairman of the Central Station Alarm Association's Audio Verification Standards Committee and the Security Industry Association's Two Way Audio Verification Standards Committee. He is also a frequent guest speaker at the International Security Conference. Giacalone was COO of Criticom International/King Central-Monital.

IFSEC awards

Tuesday, May 12, 2009
Not sure if anyone cares or not, but here are the annual IFSEC award winners. No link, so see below:
Last night, the IFSEC Security Industry Awards 2009 were handed out to the deserved winners at a black-tie gala dinner at the Hilton Birmingham Metropole. Organised in association with the British Security Industry Association (BSIA), the awards acknowledge the people, products and technological advancements that have played a big part in the security industry over the past year. The winners of the 2009 awards are as follows: Access Control Product of the Year, sponsored by smarti ELECTRA - TAB Systems Inc. CCTV Product of the Year, sponsored by Norbain VCC-HD4000P - SANYO Europe Communication Product of the Year, sponsored by IFSEC SA DualCom DigiPlus - CSL DualCom Intruder Alarm Product of the Year, sponsored by TAB Systems RLS-3060 Redscan - Optex (Europe) Physical Security Product of the Year, sponsored by Genie CCTV Guardian Smoke Screen and Securi-Dock - Concept Smoke Screen in partnership with G4S Integrated Security Product of the Year Emergency Messaging and Mass Notification System - Dedicated Micros Security Project or Installation of the Year Heathrow terminal 5 Car Park Solution - Siemens Building Technologies Security Solutions Guarding Service Delivery to Customer Merseyrail Electrics Security Team - Carlisle Security AND V&A Museum of Childhood, Activity Assistants - Wilson James Policing Partnership of the Year Docklands Light Railway Travel Safe Officer Team - Carlisle Security
Of all of those, I guess I'd say most cool for Dedicated Micros. I don't think many people think of them for mass notification, but they've obviously delivered a quality product.

IFSEC, Day 1

Tuesday, May 12, 2009
Ah, lovely Birmingham... Okay, no, I'm not at IFSEC. But Steven Sachoff, our European editor, is. Check out his fancy new blog. Lots of good stuff about Norbain, Basler, Saab, and more.

SIA denounces president's budget proposal

Monday, May 11, 2009
The Security Industry Association today blasted President Obama’s budget proposal, saying it "includes ill-advised and disappointing reductions in funding for crucial physical security programs."   Obama's proposed fiscal year 2010 budget would cut hundreds of millions of dollars from transit, port and school security programs and provide them with much less money than the amount authorized by Congress or recommended in recent legislation, a release from SIA said. Here's more:
Obama seeks to reduce funding for both the Transit Security Grant Program and the Port Security Grant Program from the current $388.6 million each to $250 million each for the fiscal year that begins Oct. 1. Congress authorized $900 million for the transit program and $400 million for the port program for fiscal 2010.   Obama would keep funding for the Secure Our Schools program at the current level of $16 million, but this is well below the $50 million authorization level recommended in the School Safety Enhancements Act that was unanimously passed in September by the House of Representatives.   “President Obama is looking for cuts in all the wrong places,” SIA Director of Government Relations Don Erickson said. “We understand and support efforts to be fiscally responsible, but taking money away from programs that protect children in the classroom and the millions of Americans traveling on our mass transit systems or conducting business at our nations’ ports is not in any way responsible. It is a misguided step in the wrong direction.”   The Transit Security Grant Program provides federal money to regional transit systems to help them protect critical infrastructure from terrorism. The Port Security Grant Program provides financial assistance to port areas for the same purpose. The Secure Our Schools program funds the development of school safety resources and security improvements at schools.   SIA will work to secure full funding for all three programs, Erickson said.   “Funding these programs at their authorized levels would total just over $1.3 billion,” he noted. “For transit systems, ports and schools, that is a significant amount of money that can go a long way toward stopping people who wish to do us harm. For the federal government, though, it represents less than one-half of one-tenth of one percent of the annual budget. These cuts are supposed to represent fiscal restraint, but they will lessen national security much more than they reduce federal spending.”