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ADT partners with State Farm to promote Pulse

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Tuesday, December 3, 2013

Security companies often use as a selling point the fact that insurance companies give discounts to homeowners who have a security system. But ADT announced this week that it is leveraging that insurance company relationship in a new way: by partnering with State Farm to give that leading insurer’s customers special deals on Pulse. And the customers who get Pulse can also end up with a discount on their State Farm home insurance.

Seems like a pretty smart way to get customers to sign up for a smart home solution—and one that benefits both of these big companies.

Here’s more from ADT’s Dec. 3 release:
 

ADT today announced it is teaming up with State Farm to help its customers better manage and control their homes. ADT will provide special offers on its ADT Pulse home security and automation solution to State Farm customers, who may also qualify for home insurance discounts. The special offer also includes a free in-home security consultation, 24/7 professional monitoring by trained ADT security specialists and custom installation with a six-month money-back guarantee.

… “The average insurance claim for a home burglary or fire can cost thousands of dollars,” said Don Boerema, chief corporate development officer at ADT. “Through home automation capabilities and enhanced security features, ADT Pulse is the ideal solution to help State Farm customers connect to their families and homes to mitigate loss.”

“As the leading provider of homeowners insurance in North America, State Farm has a keen interest in helping customers prevent loss,” said Jack Weekes, operations vice president at State Farm. “By teaming up with ADT and other home control and monitoring providers, we are helping customers protect their family and property in today’s high tech world.”

The deal caught the attention of Insurance & Technology magazine, a business trade publication for insurers, which says in an article that it's "the latest sign that the smart device revolution is poised to shake up the insurance industry." The article wonders if insurers can "find the right tone and offering to capitalize" on the new trend. I'm wondering what other security companies will team up with insurers to better promote their security products.

Ascent Capital reaps windfall of Security Networks acquisition

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Tuesday, November 26, 2013

Buoyed by the $487 million acquisition of Security Networks, Ascent Capital, the holding company that owns Monitronics, posted some sterling numbers for the third quarter of 2013—numbers that underscore why investment firms continue to find the RMR model attractive (long-term contracts, high margins, cash flow predictability). The list goes on.

Ascent’s net revenue for the three and nine months (ended Sept. 30, 2013) increased 36.8 percent and 27.4 percent, respectively. The growth was fueled by an increase in subscriber accounts and “the related increase in monthly recurring revenue,” according to an Ascent news release.

Security Networks was no small acquisition; when it was purchased in July it was the fourteenth largest residential alarm monitoring company in the United States. In addition to bringing in 225 dealers, the move brought another 195,000 accounts into the fold.

Ascent also reported that Monitronics’ adjusted EBITDA for the three and nine months intervals increased 35.2 percent and 27.1 percent, respectively. They also saw a modest increase in RMR per subscriber (6.3 percent).

The news release would suggest this isn’t the last we’ve heard from Ascent Capital on the acquisition front in the alarm space. Ascent chairman and CEO Bill Fitzgerald stated, “Looking ahead, we remain committed to identifying accretive acquisition opportunities, making certain that we continue to put shareholder capital to work in an effective and productive manner.”

Mike Haislip, president and CEO of Monitronics, noted that the near-term goals include further integrating the Security Networks business, and positioning the combined company for future growth.

What will Avigilon do with $69 million?

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Tuesday, November 26, 2013

Avigilon now has $69 million (Canadian) at its disposal for “general purposes and strategic acquisitions.”

The HD surveillance provider, which got into access control last May with the $17 million purchase of Red Cloud, today announced that it closed a $69 million bought deal equity financing.

So what will Avigilon do with the funds? I called Avigilon this morning to ask about plans for the funds. In an email response Alexander Fernandes, Avigilon president and CEO said: "... we look forward to growing Avigilon even further and will continue to consider potential opportunities as they arise. Although we are not presently considering any specific acquisitions, we are regularly presented with opportunities. The proceeds of our recent bought deal financing will allow us the flexibility to act upon any strategic opportunities that could complement Avigilon’s original focus on video surveillance."

I asked Avigilon CEO Alexander Fernandes about possible acquisitions in an interview one year ago. This was prior to the Red Cloud acquisition, and he said that an access control purchase was possible.

Here’s an excerpt from that interview.

With money in the bank, Avigilon will continue to add employees. The healthy balance sheet provides “stability and a better cushion,” Fernandes said. And while Fernandes emphasized that the company is “focused on internal growth,” it is in a position to make an acquisition if it sees fit. 

What might fit? “Something outside of video but complementary and related … like analytics,” Fernandes said. Or access control? “That’s possible,” he responded

Think it might acquire some more analytics capabilities now? We’ll see.

AVigilon is also pouring money into its growth plan. Its recent investor presentation outlines the following steps to get to its goal of $500m in revenue in 2016. 1. Expanding its sales reach (in North America, South America, EMEA and the UK; expanding into APAC with a dedicated sales force; growing the business development team to target enterprise opportunities) 2. Building brand awareness; and 3. Accelerating innovation by investing in R&D team; improving product development structure to get products to market faster.

Avigilon had another rosy quarter—doubling its revenues since Q3 of 2012. Last year it reported $25.5 million in Q3 revenues. This year is reported $51.1 million. It reported $12.7 million in EBITDA in Q3, up from $4 million one year ago. And, it reported Q3 net income of $8.6 million, compared to $2.1 million one year ago.  

The company announced the offering earlier this month. It issued 2,863, 270 common shares in Canada, for a price of $24.10 CDN. The offereing was underwritten by syndicate of underwriters led by GMP Securities L.P. and including BMO Capital Markets, National Bank Financial Inc., CIBC World Markets Inc., RBC Capital Markets, PI Financial Corp. and Cantor Fitzgerald Canada Corporation

One of ADT’s largest shareholders sells most of its stake

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Tuesday, November 26, 2013

The ADT Corp. reported yesterday that it was buying back 10.24 million of the shares of its third-largest shareholder, Corvex Management. Keith Meister, the hedge fund’s founder, who had been on ADT’s board since late 2012, also announced his resignation as director.

ADT’s stock price plunged early yesterday morning shortly after the news and while it recovered somewhat, was still down .59 percent this afternoon.

Meister said in a prepared statement, “We initially invested in ADT because of its leading market position and its potential for creating long-term shareholder value. The board and management have achieved admirable results over the past year.”

Now, Corvex will have less than 1 million shares in ADT, The Wall Street Journal reported. The WSJ said ADT bought Corvex’s shares at $44.01 each, so Corvex got a return of about 20 percent on its investment.

What does it all mean? A WSJ report yesterday sheds some light:
 

Within weeks of ADT's debut as a public company in October 2012, Corvex began pushing the company to buy back 30 percent of its stock with borrowed money. The hedge fund at that time said the stock was worth at least $61.

Corvex criticized ADT's conservative approach to debt, calling the company's capital structure "indefensible" during a presentation that accompanied Corvex's disclosure of a 5 percent stake in ADT at the time.

ADT's board has followed much of Corvex's strategy, including financing stock purchases with debt. The company recently announced that it will accelerate the purchase of $400 million of stock under an agreement with J.P. Morgan Chase. Once the purchase of the Corvex shares is completed, the Boca Raton, Fla., company will have spent $2.4 billion to retire about 20 percent of its stock.

 

ADT adds 100,000 customers in fiscal 2013 and its Devcon buy boosts its RMR, but attrition climbs to 13.9 percent

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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.

Security Partners hires new operations manager

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Wednesday, November 20, 2013

Security Partners has hired Richard Bosley III, formerly of AlarmWATCH, to be its new operations manager, a position in which he will oversee the company's development in the wake of acquiring its second central station.

Bosley held multiple positions over an 18-year stint at his former company where he said, at one time or another, he worked “every position,” doing everything from service calls, IT and data entry to marketing and dealer support.

Bosley said his top priority at Security Partners remains on track: to get the Lancaster central station and the San Antonio facility, which it acquired in August, “fully, 100 percent hot redundant.” This involves switching both centrals to the Tadiran phone system and adding Bold’s Manitou servers to the San Antonio central. The two-fold process is scheduled to be completed sometime in January. 

Beyond the primary goal of redundancy, Bosley hopes to use his experience in a diverse range of positions to strengthen the critical relationships between Security Partners and its dealers, and between dealers and end users. “When [dealers] grow, we grow,” he said, adding that Security Partners plans to “refocus the central station to give some customer service training and backup support, and be able to offer services that Security Partners might not have thought about in the past.”

Another major area of emphasis, he said, will be helping dealers grow and market themselves, thereby forging stronger relationships with customers. “If you’re not reaching out to your customers we almost guarantee another alarm company is,” Bosley noted. “We really want to help dealers become more acquainted with end users instead of just installing alarms and collecting checks each month.”

Guardian Protection Services hires VP of dealer program

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Wednesday, November 13, 2013

Weeks after the announcement that Hank Groff, formerly the director of the dealer program at Guardian Protection Services, was tapped to run the partner program at Dynamark, Guardian has made a hiring of its own.

The super-regional, based in Warrendale, Pa., hired Brian Helt to be its new VP of the authorized dealer program, a newly created position, according to a company statement

A 15-year veteran of the industry, Helt comes to Guardian from Interlogix, where he held several sales leadership positions and managed departments dedicated to acquiring and developing business relationships with dealers.

Prior to Interlogix, Helt served in management roles at UTC Fire and Security and GE Security, while being the owner and operator of his own security business in Kansas City.

Helt has experience growing dealer programs, so it will be worth tracking what kind of impact his hiring has for the company, and to see what responsibilities he takes on in the new role. I’m also interested to see what the move means as far as Guardian’s national footprint is concerned.

Roundup of debut Honeywell Connect2013

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Wednesday, November 13, 2013

The Honeywell Connect2013 event, which took place November 8-10 in Los Angeles, was declared a success by all the dealers I spoke to.

Of course, dealers generally enjoy themselves at these conventions. There are networking events and parties, educational sessions and parties, awards and parties, speeches and more parties. You get the idea. Honeywell works hard to ensure that its dealers are treated well.

But this particular event was new; It's the is first time the manufacturer gathered all three dealer programs for one convention in one place: First Alert Professionals, CSS Dealers, and HIS dealers. So you've got resi-focused dealers, commercial installers and systems integrators. Honeywell pulled it off—that's what I heard.

The two general sessions featured Honeywell executives talking about priorities, trends, new products and initiatives. A handful of dealers from all three programs also gave 10-minute talks during the general sessions. Here are some highlights:

John Loud of LOUD Security, spoke about the builder market. It was something LOUD was heavily invested in pre-recession. Business dwindled during the recession, but has since been revamped and revived. Loud talked about the "LOUD way" his company rebuilt the new LOUD Builder Program. In the past 12 months, that program has generated $1 million in new revenue for LOUD Security and also helped generate a 72-percent increase in interactive services revenue.

Dave Hood of First Alarm sounded the alarm about going with the all-in-one L5100 panel. Tradition is good, but staying traditional means losing business, he said.

RFI's Brad Wilson, a systems integrator, does business in Silicon Valley with some of the most tech-savvy customers in the country. Wilson obviously has some insight into how security technology—and Honeywell dealer attitudes and priorities—need to progress. He talked about the importance of "building your bench" in the workplace, the advent and affect of the cloud on the security business, importance of RMR even in large systems integration projects, and how many technologies are coming down market, and fast.

Honeywell Security president Ron Rothman talked about sales and advised attendees to spend more time figuring out why you won the someone's business than analyzing why you lost another job. Think about this, he said, and then share what you learn with your employees.

Keynote speaker Roy Spence, of Southwest Airlines fame, talked about the need for thosein the room to reenergize their "entreprenuerial drive to get the 75 percent of the market [that does not have home security.]" He advised the group to think about "where your talent [in security] and the needs of the world intersect." That intersection, he said, is "peace of mind." The same way Southwest Airlines "democratized air travel," the security industry can "democratize peace-of-mind." He warned that if the security industry doesn't take this task to heart, someone else will.

Arturo Ramirez Jr. received the Honeywell Life Safety Award this year for rescuing a woman and four children from a fire. The award is always given by Larry King via video presentation. This year, Larry King presented the award in person. King said: "I couldn't be here in spirit, so I thought I'd come in person." Yup, it was Larry King Live this time.

Jeremy Bates of Bates Security talked about social media. It's part of the company's overall marketing plan. Bates Security engages in a number of social media but focuses its efforts on Facebook, and it hired a marketing specialist to oversee company efforts. A couple of interesting statistics: 46 percent of consumers turn to social media before making a purchase; 70 percent of people on social media don't post, they "lurk." Bates says he wants to ensure that those lurkers have plenty of information about Bates Security available to them via social media.

Todd Bertocchi of Safeguard Security discussed the benefit of managed and hosted service, making the analogy of security dealers moving "from being peddlers [of products] to partners." He said that "hosted systems create RMR, standalone systems do not."

Other product annoucements and initiatives announced at the show:

Total Connect with Voice. Honeywell had a little clubhouse outfitted like a livingroom with "Total Connect with Voice" at the Thursday night cocktail party. In a demonstration for some members of the media, Honeywell's David Gottlieb would say a command for the room to go into nighttime mode: Instantly shades drew shut, the television shut off and lights dimmed. When he issued the command for daytime mode, it all reversed. Very George Jetson.

Honeywell announced that it will have a Casi-Rusco migration solution. There's "a huge installed base, it's a huge opportunity for you," Honeywell's senior director of marketing, Alan Stoddard said.

Stoddard gave these details on the soon-to-be-released Honeywell LYNX Touch 7000/L5200: You can view video on display and connect 84 zones. It has a 7-inch display; two-way voice over wifi, and a number of other newer features.

Honeywell's Marek Robinson talked about how the manufactureris helping FAP, CSS and HIS dealers with demand creatioin. He said that in 2013 year to date, the Honeywell website has "generated 2,000 plus leads that its given to dealers. His goal is to "double that in 2014."

Robinson also described two new partnerships. Honeywell is launching a partner program in Atlanta where it will sell alarm systems from kiosks at Sprint stores. The pilot project will commence next month with Ackerman Security in Norcross, Ga. Honeywell declined to comment further on the deal at this point. I saw Ackerman's Jim Callahan at the event, and he promises to fill me in on details at a later date.

The other partnership is with LifeWay Christian Stores. The goal of this program, according to my notes, is to generate a whopping 40,000 leads for commercial facilities.

 

 

 

 

 

 

 

Another shake-up at the top for Vivint Solar?

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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!

Honeywell’s new keypad line has boomer appeal

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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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