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Vivint in top 50 of Forbes’ top 100!

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Wednesday, February 20, 2013

Vivint made it into Forbes’ annual ranking of America's Most Promising Companies this year, marking the first time the Provo, Utah-based home automation/home security company was named to the exclusive list.

And with a ranking of 46 out of the 100 privately held companies listed, Vivint—which bills itself as the largest home automation services company in North America--actually made it into the top 50 of those successful businesses.

Revenue growth and hiring are two factors used to determine which companies make the list. Forbes lists Vivint’s revenues as $400 million and the number of its employees as 2,533.

Pivot3, an Austin, Texas-based provider of video surveillance storage solutions, is the other security company on this year’s list. Ranking #74, Pivot3 has $31 million in revenue and 92 employees, according to Forbes.

Vivint President Alex Dunn told Security Systems News, “It’s really nice to have third-party validation of what we're trying to accomplish … and it will help bring credibility to our strong management team and the company. But, in the end our success is not based on what awards we win and don’t win, but on how we take care of our customers and how we innovate around products and services [ensuring they’re] simple to use and affordable.”

Here’s more from Vivint’s news release on the Forbes’ list.
 

Vivint's inclusion on Forbes' list comes after a momentous year for the company, in which it crossed the threshold of $30 million in recurring monthly revenue--one of only three companies in its industry to achieve this milestone. Since 2007, the company has experienced a growth rate of 400 percent. Acquired in 2012 for more than $2 billion by Blackstone [http://www.securitysystemsnews.com/article/blackst..., Vivint was selected to the Forbes list for its growth (in both sales and hiring), the quality of its management team and its investors, product strength, margins, market size, and key strategic partnerships.

One metric never says it all. For the Most Promising list, Forbes strove for a holistic gauge of young, privately held companies, trying to pin down their trajectories by looking at a slew of variables. Over the course of six months, Forbes reviewed thousands of applications. Forbes turned to CB Insights, a Manhattan-based data research firm that specializes in assessing private companies, to refine the search. Their MOSAIC software scans 45,000 sources to measure a company's health. A new distribution deal, for example, marks a positive signal, while the loss of an executive is a negative. MOSAIC gathers those myriad signals into a final score that Forbes uses as an initial guide in producing the list. After verifying sales numbers, speaking with each company and debating their merits and blemishes, Forbes produces a final ranking.

To view the complete 2013 list of America's Most Promising Companies, visit www.forbes.com.

 

G4S Technology gets new EVP

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Wednesday, February 20, 2013

G4S’s integration business, G4S Technology, (formerly Adesta), has a new EVP: Sam Belbina. Belbina will be in charge of business development, marketing and communications, and strategic initiatives such as new markets and the expansion of National and Global Services business.

Belbina comes from Schneider Electric where he ran sales for the Schneider/Pelco video brand and the integrated security solutions business in the United States. “In this role, he captured and managed over $400M in business,” G4S said.  

Belbina will report to Bob Sommerfeld, president of G4S Technology.

SAFE Security expands into DIY, with help from Honeywell

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Wednesday, February 13, 2013

Wow! SAFE Security is really making news lately. First, it was acquired late last year by ICV Partners, a New York-based investment firm focused on lower middle-market companies.

Then, it announced earlier this month that it had just bought about 24,000 alarm monitoring accounts from Orem, Utah-based Pinnacle Security—a summer-model company the select assets of which Protection 1 recently purchased.

Now, SAFE announced today that it’s entering the DIY home security market by launching a new division, SAFE@home, that “allows homeowners to self install a Honeywell wireless security system with professional monitoring.”

Here’s more from a news release from the San Ramon, Calif.-based company, which has operations in 44 states:
 

SAFE Security, one of the nation’s largest security alarm companies has launched a new division, SAFE@home. This new division will enable a consumer to self install a wireless security system at their home with ease. This DIY home alarm system will include professional UL certified Five Diamond monitoring by SAFE Security and will not require a phone line. The home security system can be controlled remotely by a smartphone or tablet via Honeywell’s Total Connect. The system is available across the continental US.

“With an increased demand in the residential security market for a self installed alarm system coupled with increased technology that allows for a wireless security system to be setup in minutes, SAFE@home is well positioned to be a leader in the DIY security space,” said Paul Sargenti, SAFE’s President and CEO. “We’ve partnered with Honeywell to provide a state of the art wireless security system and will accommodate Wi-Fi for IP alarm communications. This will allow our customers to take advantage of being able to self-install their wireless security system. By enabling our customers to self install, they will save money by not requiring an alarm company to install the alarm system.”

Customers can select from 3 complete packages and add on additional hardware to best fit their needs.

I’ve reached out to Sargenti to learn more about all these developments. Look for more about SAFE Security on our site in the near future.

 

Martha talks to Mike Barnes: RMR growth rate, other metrics revealed

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Wednesday, February 13, 2013

I had a chance today to talk to Mike Barnes about last week's Barnes Buchanan Conference. Below are some highlights of our conversation.

Interested in more insight on RMR and related growth? Check out the April issue of SSN for the 3rd annual Special Report of the SSN/Barnes Associates Wholesale Monitoring study. The study will also be available online on www.securitysystemsnews.com, and featured in a future Thursday morning newswire

The SSN/Barnes Associates Wholesale Monitoring study tracks the number of accounts monitored by the wholesale monitoring segment. As Barnes says, "There has always been great clarity on the performance of the top players, which on a combined basis have an approximate 51 percent market share." The challenge has always been to determine what is happening with the many thousands of smaller alarm companies that comprise the other half of the industry—this survey sheds light on that question. This year the response rate was even greater, thanks in part to the CSAA Contract Monitoring Council, which is a new co-sponsor of the survey.

Martha: What's the Barnes outlook for 2013?

Mike: We are bullish on 2013.  Even with the economy still sputtering and some remaining challenges in the commercial segment, I think 2013 is likely to be better than most people are predicting.
 
Martha: What highlights can you share about the categories you generally hit on: growth, structure, operating metrics, market values?

Mike: The big surprise for 2012 was how much the industry grew RMR and related revenues. Our research indicates that these revenues grew by an astounding 8 percent. Quite a bit higher than expected. Overall industry revenues were flat, due to the decline in installation revenues. That is, installation revenues were down and RMR was up. This dynamic appears to be a combination of price shifting, where lower average-installation fees are exchanged for higher ongoing service charges, and continued shrinking revenues in the large commercial systems segment.

Martha: What was the most surprising metric this year?

Mike: By far the growth in industry RMR was the surprise metric. Additionally, it appears that this growth had a nice balance, with about half coming from higher average RMR per system, and the other half from a net increase in the number of systems.
 
Martha: Your bubble charts are always an interesting part of your Industry and Market Overview presentation. I heard there are now green bubbles on the bubble chart? What can you tell me about that? What new information do the new greeen bubbles bring to light?

Mike: Our bubble charts are a great way to graphically view acquisition activity. Each bubble denotes a transaction on a time-and-valuation multiple basis, with the size of the bubble indicating the amount of RMR involved. Basically you see three variables in a simple graphic. HIstorically, we have also added a fourth variable by shading the bubbles one of two colors to indicate the type of buyer, either an existing industry player or a new player buying a platform company. This illustrates how active each type of buyer is, and highlights the fact that new players entering the industry typically pay higher relative prices due to a combination of their selecting the better performers and paying a premium for their highly selective requirements. 

This year we introduced a third color (green) which reflected transactions where only accounts were sold. Take the recent sale of a block of accounts by Pinnacle to Monitronics: As one would expect, the pattern becomes clear that accounts and their associated RMR have a finite value and trade within a relatively tight range, which is, of course, supported by the activity in the dealer program market. It also highlights that fact that when the market trades security alarm companies above this range, it is typically because of the account-origination capability. That is, the ability of the company to originate new customer accounts and related RMR at a cost and volume that is accretive to value. 

It is often overlooked that when a company trades for a high multiple, say 45 times RMR, this is usually not an indication that the RMR sold was worth that amount.  Rather, it is probably the case that the existing account base was valued at something in the 30s as a multiple of RMR, and the difference is predominantly reflecting the value of the account generation engine. This helps bring better clarity to the valuations realized by Vivint and other higher growth companies, and ultimately help buyers and sellers have a more productive conversation when referencing market transactions in their negotiations.
 
Martha: Other than the "must attend" Barnes' Industry and Market Overview, were there any notable educational sessions or talks?

Mike: We were extremely proud of this year’s conference, both because we had both the right attendees and great content.  Our company presentations provided great insight into several players that are using new and innovative business models. Protect America is a great example. They are using a “direct to consumer” model that allows them to close the sale over the phone or internet, and to ship pre-programed and configured systems which are then installed by the consumer.  It was amazing to hear how successful and large the company has become. Our C-Suite Roundtable was also notable with 4 of the top executives of major companies, including ADT, discussing trends and issues associated with the industry. These segments, combined with ones focusing exclusively on the capital markets and the largest deals that occurred in 2012…and, of course our industry overview…really gave our attendees a great conference.

$7 billion bucks, not bad

 - 
Tuesday, February 12, 2013

I was talking to Capital One's Bill Polk today about some deals Capital One has closed on—stay tuned for stories on those later this week—and we started talking about the larger deals that happened in 2012.

This was a topic of conversation at the Barnes Buchanan Conference 2013, which took place last week Feb. 7-10, at the Breakers in Palm Beach. I normally go there directly from TechSec, which was Feb. 5&6 in Fort Lauderdale, but I had to miss it this year. I was sorry to miss the conference of course, but a BFF's milestone birthday party in Cincinnati won out.  More on TechSec and Barnes also this week.

So Polk was saying that the larger deals this year, such as Vivint and Securitas Direct, ADT (there were like five of them) totalled up, brought $7 billion dollars into the security industry in 2012. "We've never seen $7 billion come into the industry over a 12-month period before," Polk said.

"What's going on here? The story is that the size and growth in this industry has reached the point where sophisticated capital structured [deals] are finding their way to the top of the house," Polk said.

He said the Interface Security deal was particularly interesting. (Capital One worked with Imperial Capital on that deal.) As Imperial Capital's John Mack pointed out when I reported that story a couple of weeks ago, Polk said, "Normally the bond market likes much larger deals, but the Interface deal was oversubscribed [because they liked the company.]"

Now, bond market deals are not for everyone in the security industry. Not even close.

The "traditional lender, such as Capital One,will continue to play a really important role," Polk said. Instead, the past year's bond market deals signify that the security industry is maturing.

MIlestones all around.

 

Deadly shooting follows low-priority alarm in Colorado Springs

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Wednesday, February 6, 2013

It was what the Colorado Springs Police Department calls a Priority Three alarm: A minor incident “requiring a response that is dispatched based on the availability of patrol units.” What followed was the nightmare scenario dreaded by police, alarm companies and alarm users alike.

According to CSPD spokeswoman Barbara Miller, a security alarm was triggered at the home of David Dunlap and Whitney Butler at 11:10 a.m. on Jan. 14. The alarm company, ADT, then called Dunlap’s cellphone and left a message for him to call back. At 11:18, ADT called police to notify them about the alarm.

Based on department policy to reduce the burden of false alarms in the city, officers were not dispatched.

“We had no units available,” Miller told Security Systems News. “We do priority calls. … If there is a ‘crime in progress’ call [with a life-threatening situation], those are first. If it’s a human-activated alarm or a panic alarm, that’s also a high priority. We would respond immediately to that.”

At 11:25, Dunlap returned ADT’s call and was informed about the alarm, but he did not call police, Miller said. Thirty-five minutes later, CSPD responded to a report of shots fired at the couple’s Bassett Drive address. Police say Dunlap and Whitney were killed as they entered their home by 17-year-old Macyo January, who was arrested three days later and charged with first-degree murder.

Miller said the incident calls attention to a common and potentially dangerous oversight by alarm users: If an alarm is activated, they should not assume there will be an immediate response from law enforcement.

“Many times, the alarm company will notify the owner that their house alarm has been activated. If that person returns to his or her home to check on the alarm, they must be extremely cautious and vigilant,” she said. “For instance, if they notice a front door that might be slightly opened or a broken window, or see a suspicious vehicle parked outside their home, we would strongly recommend that they call 911 so an officer can check for a possible burglary in progress or burglary that just occurred.”

Miller said that Colorado Springs police will respond to any activation when there is evidence that a crime has been committed—“i.e., a responsible party is on scene and has told the alarm company there is a broken window at the residence or business. Another example would be an alarm service indicates they have video surveillance inside of the business and they can see someone inside of the location.”

Ron Walters, director of the Security Industry Alarm Coalition, told SSN that virtually all police agencies, even those with scaled-back response policies, handle human-activated alarms “at a fairly high priority.” That goes for video intrusion alarms as well, but as Walters pointed out, there is only so much a security company can do.

“Alarms are designed as a deterrent and cannot stop a crime from happening,” he said. “The best deterrent remains the threat of response by a well-trained and armed police official.”

Pinnacle Security fined more than $500,000

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Monday, February 4, 2013

Summer-model Pinnacle Security is getting a fresh start after traditional-model home security giant Protection 1 recently purchased select assets from the company.

The deal has great potential, according to an alarm company owner who has married both models.

But it appears that problems from Pinnacle’s past continue to dog it. According to news reports, the Utah-based company now has to pay $525,000 as the result of a lawsuit filed by California’s Contra Costa County, charging Pinnacle with deceptive business practices.

It's not the first time Pinnacle has been sued over such issues.

Over the years the company has been accused in a number of states of deceptive sales practices. Last fall, for example, Pinnacle agreed to pay a $1 million fine in a settlement with the state of Illinois for such alleged violations as “slamming” customers and even hiring felons as sales reps.

According to a news report, the following information was released from the office of Contra Costa County District Attorney Mark A. Peterson. It said that the civil judgment against Pinnacle, in addition to the payment of penalties and costs:

 

o    Requires Pinnacle’s sales representatives to refrain from making false and misleading statements during the door- to-door sales presentations.
o    Prohibits Pinnacle sales representatives from telling consumers that they will get free or discounted products or services if they allow a Pinnacle sign to be placed in their yard.
o    Prohibits Pinnacle sales representatives from telling consumers that sales representatives are engaging in “seed marketing, advertising, marketing, or increasing Pinnacle’s visibility in the neighborhood”.
o    Requires that Pinnacle sales representatives comply with section 17500.3 of the Business and Professions Code by immediately verbally identifying themselves, who they work for, and what they are selling.
o    Requires that Pinnacle use contracts that comply with California’s Unruh Act and federal regulation Z pertaining to retail installment contracts by disclosing, among other things, the total price of the alarm monitoring service for the initial contract term of years.
o    Requires that Pinnacle use Spanish language contracts for customers to whom the sales presentation was made primarily in Spanish.
o    Requires that whenever a sale is made to a customer who already has monitoring equipment installed by another monitoring service provider, that Pinnacle shall not remove that customer’s existing monitoring equipment until such time as the three-day cancellation period (applicable to door-to-door residential sales) has expired.
o    Puts limits on the amount of contract termination fees that can be charged to customers.
o    Requires the payment of restitution to certain customers; and
o    Requires that Pinnacle adopt specified provisions to monitor the future conduct of their sales representatives.

 

Q1 sales, profits up for ADT

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Wednesday, January 30, 2013

Sales of Pulse are up more than 6 percent and recurring revenue up more than 5 percent, The ADT Corp reported today as it released its results from its first quarter ending Dec. 28. The home security/home automation giant also said it added 257,000 new customers and has 6.4 million customer accounts.

When ADT on Sept. 28 became an independent, publicly traded company after spinning off from Tyco International, CEO Naren Gursahaney told me that it was not "a moonshot” for ADT’s residential penetration rate to rise from around the industry standard of about 20 percent to 40 percent.

Of course, it’s too soon to tell if ADT will succeed in that goal, but the company is performing well according to the report it released on Jan. 30. Here’s a synopsis from a Reuters story on the earnings results:
 

Home security services company ADT Corp reported a higher quarterly profit on Wednesday and announced a $600 million accelerated share repurchase.

The company, formerly a part of Tyco, said net earnings had risen 12.9 percent to $105 million, or 44 cents per share, from $93 million, or 39 cents per share, a year earlier.

Analysts on average were expecting a profit of 43 cents per share, according to Thomson Reuters I/B/E/S.

Sales rose 1.8 percent to $809 million, with recurring revenue from existing customers accounting for 92 percent of the total and increasing 5.1 percent from a year earlier.

The Boca Raton, Florida-based company, which provides security monitoring services to homes and small businesses in North America, said it still expected a rise of 4.9 percent to 5.2 percent in recurring revenue in fiscal 2013.

Here’s also some of what ADT had to say in its report:

Naren Gursahaney, ADT’s Chief Executive Officer, said … “Looking ahead to the balance of the year we will continue to focus on our ultimate objective of creating long-term value for our shareholders by reinvesting in our business to drive profitable growth, and returning excess cash to our shareholders.”

Recurring revenue, which made up 92% of total revenue in the quarter, was up 5.1%. Recurring revenue growth was driven by a 4.7% increase in ending average revenue per customer, which rose to $39.27, and 0.5% net growth in ending customer accounts. Non-recurring revenue declined 25.3% as the company’s mix of newly installed systems continues to shift toward more ADT-owned systems, increasing deferred revenue and reducing current period installation revenue. Total revenue of $809 million increased 1.8%, compared to the first quarter of 2012. Attrition was flat sequentially at 13.8%. ADT added 257,000 new customers and closed the quarter with 6.4 million customer accounts.

EBITDA before special items was $417 million, 6.1% higher than the first quarter of the prior year, and EBITDA margin before special items was 51.5%, a 210 basis point improvement. The margin expansion was mainly due to the favorable impact from the mix shift to more ADT-owned systems and was also aided by cost control initiatives that helped to offset the expense impact of dis-synergies caused by the separation from the Tyco commercial business and Hurricane Sandy.

 

Hot button: Who’s getting into mobile PERS now?

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Wednesday, January 30, 2013

The world of mobile PERS and remote health monitoring continues to expand.

At the Consumer Electronics Show in Las Vegas earlier this month, ADT announced that it was getting into the game by teaming with Ideal Life, a Toronto-based company whose health monitoring and information technology will be integrated with ADT Pulse to provide “proactive prevention” for people managing chronic health conditions. The system uses digital, wireless, secure two-way communicators to measure and relay information about glucose levels, blood pressure, body weight, oxygen saturation and heart rate.

Royal Philips Electronics, which has long been a player in personal emergency response systems, also made news at CES by introducing Lifeline GoSafe. The mobile PERS system combines the company’s AutoAlert fall-detection capability with two-way cell communication and up to seven user-location technologies.

“Our intention is that GoSafe will provide users with the confidence to get back to activities or go to places they have scaled back on, knowing that help is easily accessible,” Rob Goudswaard, senior director of product and service programs for Philips Home Monitoring, said in a prepared statement.

The need to provide more protection for seniors as they maintain their independence isn’t lost on Mace Security International, which is “looking hard” at getting into the mobile PERS space, CEO and President John McCann told SSN last week.

“I think you’re going to see a shift from just home security to security 24/7,” McCann said. “As you look at that shift in the world, and I use my dear sweet mother as an example, I’m a little more worried when she’s on the road than when she’s at home. Therefore we’re looking at how do we increase that fence around her so she’s safe, so loved ones feel that the person they’re worried about is safe.”

Security dealers who want to take advantage of this growing market might want to think about attending the second annual PERS Summit, which will be held Sept. 10-12 in Park City, Utah. Last year’s inaugural session brought together more than 100 dealers, service providers and manufacturers’ reps for three days of networking. To learn more, go to www.perssummit.com.

New jobs for Tyco’s Hauhn, Monaco

 - 
Wednesday, January 30, 2013

Two Tyco IS executives have new/expanded roles, according to an internal Tyco announcement. 

Effective this week, Jay Hauhn is now VP, Product Management and Industry Relations; Hank Monaco is now VP, Marketing.

As VP, Product Management and Industry Relations, Hauhn will oversee product technology and innovation as well as industry and government relations. He will lead product and service solution development and engineering, and is charged with the development and implementation of product strategy. Hauhn will also be in charge of the technology roadmap for strategic product vision. Hauhn, who has served as Tyco's VP, Industry Relations, will work continue to work with industry associations and Tyco’s Government Relations office.

As VP, Marketing for Tyco IS, Monaco will lead advertising, branding, communications, interactive marketing, strategy, business development and product marketing. Monaco will also identify new market opportunities and drive the development of new value-added products and services.  Most recently, Monaco was VP Commercial Customer Marketing. The company said he “played a key role in leading the development and implementation of vertical market solutions roadmap … [and] developed the commercial business first ‘customer experience platform and attrition / price-based churn models,’ which enabled the business to prioritize initiatives to improve customer retention.”

 

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