AlarmForce, a super regional alarm company based in Toronto, with operations in North Carolina, Ohio, Georgia, and, as of Jan. 20 in Minnesota, announced late last week that its board of directors has approved the adoption of a Shareholder Protection Rights Plan, what’s known as a “poison pill provision.” The rights plan still has to be approved by shareholders within six months, and will be voted on at its annual meeting April 14.
I haven’t had a chance to talk to Joel Matlin, president of AlarmForce yet, but we’re supposed to catch up later on today.
Invented in the 80s as a device to prevent hostile takeovers, the poison pill provision is intended to make a hostile takeover way too expensive to carry out. It gives a company’s shareholders the ability to buy the company’s stock at a bargain price in the event that a hostile suitor comes calling.
The AlarmForce press release says that “the company is not aware of any specific take-over bid for the company that has been made or is contemplated. The rights plan is not intended to and will not prevent a take-over of the company.”
My friends in finance tell me that the poison pill is typically adopted when the board gets nervous because the stock is undervalued, because they hear rumors about a possible takeover or they’re actually concerned about a hostile takeover. Why don’t all companies adopt this provision? Well, it’s considered by many to be anti-competitive, to make a board and/or CEO a little too comfortable.
One person told me that a number of Canadian companies have decided to do this recently. I’ll be interested to learn the reasons for AlarmForce’s decision to adopt a shareholder rights plan.
AlarmForce’s recent financial results look pretty nice. It’s scheduled to release more financial results today after the market closes for its Q1 2010, which ended Jan. 31.
In late January its 2009 year-end financial records showed “record growth.” It’s a very thinly traded stock that’s trading today around 7.25, close to its 52-week high. Below are some highlights of its 2009 numbers compared to 2008:
Revenue 34,133,000 29,942,000 +14%
Gross profit 26,101,000 23,346,000 +12%
Operating cash flow 6,467,000 6,812,000 -5%
Operating cash flow
excluding working capital 6,718,000 5,176,000 +30%
Subscriber base 102,000 91,000 +12%
EBITDA(x) 9,057,000 7,218,000 +25%
Income before taxes 5,673,000 3,885,000 +46%
Net income 3,780,000 2,610,000 +45%
Net income per share 0.31 0.22 +41%
Diluted Net income per share 0.31 0.22 +41%
I had the chance to talk to Wright Thurston yesterday about his new venture Elevate Marketing Group. I’ll have more in a real story for next week’s newswire, but here’s a little preview.
Some of you may recognize the name Wright Thurston. He was one of the main partners in Firstline Security a summer-sales model company, out of Utah.
For a while a couple years ago, there was talk…more than talk perhaps, about Firstline merging with Pinnacle. That deal didn’t happen, and there’s still some legal wrangling going on with that.
Firstline is still in business in Utah, and being run by Thurston’s former partner, Trevor Keyes.
Back to Thurston: he’s still on the board of Firstline, but left the his position as CEO there at the beginning of 2008.
And he left Utah for OC. The new company is based in San Clemente, Calif. For the past two years, he’s been working on a “bundled services” offering sold across the country using the summer-sales model.
The services include phone, Internet and Dish TV. The company’s sold “thousands of systems” in the past two years but it’s been in a kind of beta mode. This year, Thurston says he’s ready to really launch Elevate big time. What may be of interest to you, my readers, is that this year, Elevate Marketing Group’s bundle will include Internet-based home security. (And IPTV in Q3, he says.)
They’ve got financial backing, but they’re looking for more and have partnered with Pepperwood Partners to do that.
Working with Thurston are other former Firstline executives including: Ben Ward, VP sales for Elevate and a former top VP from Firstline; Jordan Folsom, who’s doing training and marketing for Elevate and was the top sales rep for Firstline.
Broadview Security reported fourth quarter and year-end earnings this morning and “beat Street estimates.” Here’s Reuter’s take on the report
Brink’s Home Security Holdings Inc (CFL.N) posted a better-than-expected quarterly profit, helped by higher margins and an increase in its subscriber base.
For the fourth quarter, net income rose to $17.8 million, or 39 cents a share, compared with $14.8 million, or 32 cents a share, a year ago.
Revenue rose 8 percent to $145.4 million. The company’s subscriber base grew 4.4 percent.
Analysts on average expected earnings of 29 cents a share, before special items, on revenue of $145.9 million, according to Thomson Reuters I/B/E/S.
Operating profit margin for the latest fourth quarter was 18.9 percent compared with 18.3 percent last year.
The increase in margin was due to the reduction in royalty rate charged to the company by its former parent and higher profits from recurring services on the larger subscriber base, Brink’s said.
Shares of the company closed at $41.20 Tuesday on the New York Stock Exchange. (Reporting by Divya Sharma in Bangalore; Editing by Anne Pallivathuckal)
I’m back to security after a week of school vacation fun with the fam. Lots of stuff to weed through in my inbox, but I came across this interesting announcement from last week.
Mike Snyer, former ADT president and a 30-year employee of ADT, has stepped back into security for the first time since leaving ADT in 2006 for a post at Vonage.
I haven’t met Mike Snyder, but I’ve heard from lots of people that he’s well liked and respected in the industry.
So where’d he go? Proximex, a “PSIM” software developer, announced last week that Snyder has joined its advisory Board. (PSIM is an acronym for physical security information management; it refers to software that controls and integrates disparate physical security systems.)
In its announcement, Promixex notes that Snyder joins Bill Crowell, former Silicon Valley CEO and NSA deputy director, who became an Advisory Board member last month.
From the release:
“Together, the Proximex Advisory Board brings extraordinary expertise in the areas of both physical and logical security.”
“I’m very impressed with the Proximex strategies to deliver the best in PSIM today while preparing companies for future security integrations,” Snyder said in a prepared statement. “This company has a unique ability to provide exceptional system deployment and customer service while bringing PSIM benefits to the business level by extending the life of major portions of embedded security expenditures and, thereby, stretching budgets and making security purchases last longer. Proximex is also looking ahead to guide companies on integrating information from other business applications and systems. I believe that focusing on the customer is an integral part of success so I look forward to helping Proximex expand and deliver on these important market strategies.”
Snyder started at ADT as a sales representative, and held several management positions, culminating in the role of president and COO for North America in 1997, a position he held for nearly ten years.
More from the release:
During this decade at ADT, Mr. Snyder grew revenues more than 6-fold along with industry-leading levels of free cash flow and operating income. Utilizing an aggressive and balanced strategy of direct and indirect distribution, numerous acquisitions, market segmentation and new product development, ADT grew its customer base within North America to more than 6 million customers. In addition, the ADT Call Center and Service Strategy was developed and deployed, resulting in the highest customer satisfaction in company history.
“We’re extremely pleased that Mike agreed to join our Board,” said Jack Smith, chief executive officer for Proximex. “Mike’s experience with physical security technology, customer acquisition and retention, and strategic program development is hard to beat, and we look forward to his strategic insight, practical guidance and leveraging the relationships that he has built. With both Mike and Bill’s guidance, Proximex will continue to deliver on the needs of the physical security market.”
It was another fine Barnes Buchanan conference at the end of last week. The conference sessions ended on Friday, but there was golf and tennis on Saturday and a number of people I talked to were heading down to the Superbowl.
Thanks to a big blizzard in the Capitol Region, flights to Philly & DC were getting cancelled right and left on Friday. That had a lot of Barnes attendees contemplating sitting out the storm in Palm Beach.
I managed to re-route my flights and get back to Maine on Friday night. I wouldn’t have been exactly heartbroken to tough it out at The Breakers for a couple more days, but I was eager and very happy to get home.
So the mood on Friday, what with people getting snowed in at Palm Beach and all, was sunny. And the mood overall, especially compared to last year, was pretty peppy as well.
CapitalSource’s Bill Polk wrapped up his talk on this up note: “Transaction economics are getting much more favorable and buyers are ready to step back into the market. Specialty lenders remain willing to advance at levels perceived to be highly risky by generalist lenders.”
And, while Mike Barnes reported a slowdown in sales and installation (13 percent overall) and a resulting dip in revenues (8 percent mostly from larger systems integration companies– which was expected. Revenues remained flat or dipped only slightly for the traditional security alarm segment.) He had good news as well: “It’s irrefutable that the RMR base is up and that’s really good news for the industry.” He predicts an increase in M& A activity.
I’ll have more on Polk’s and Barnes’ talks in stories on the web site over the next couple days, but here are some show tidbits:
I checked on the attendance numbers, and they were indeed up. There were roughly 200 attendees this year, last year there were about 165.
I mentioned before, that I was pleasantly surprised to see a few more women in the audience. I learned that half of (Devcon CEO) Robert Farenhem’s four-person executive staff is female. I met Kimberly Marcil and Ann McDonald, and I’m happy to have two more names to add to my contact list for next year’s Women in Security special report.
More on Devcon: John Gilligan of Golden Gate Capital (the San Francisco private equity group that bought Devcon last fall, and that owns Pinnacle Security) spoke during one of the sessions. He’d been to his first Devcon board meeting on Wednesday and said that Robert had presented 25 possible acquisition opportunities–a combination of companies and books of accounts–to the board. Gilligan said they “ranged from $5,000 in RMR to a million in RMR.” He said to expect to see a series of acquisitions by Devcon “over the course of the next 6, 12 to 18 months.”
Back to the attendance numbers, Mike Barnes told me that he thought more people were sitting in the sessions—instead of making deals in the hallways—this year. Maybe that’s because there were more financial folks who are taking a new look at the industry.
At dinner on Thursday, I sat with Todd Miller, an attorney with Akerman Senterfitt, Brian Dettmann of Morgan Joseph, some of the Devcon people and some of the Pinnacle people. I had a chance to meet Kelly Walker, Pinnacle Security president in person for the first time.
Pinnacle just announced last month that it would be the first to use a new interactive touch screen it helped GE develop. At dinner Kelly showed Todd and I how he can see live footage and control systems at his cabin in the Utah mountains from a dining room at The Breakers. I’ve seen this kind of technology before (2GIG’s GO!Control; Honeywell’s Total Connect) but it’s usually been on the show floor or at a conference exhibit space.
Kelly was also among a few people who told me they’re gearing up for the Security 5K at ISC West. Hooray.
In case you haven’t heard about it, It’s a fun run that’s taking place Thursday morning, March 25. All of the money raised goes to a great cause–Mission 500, which sponsors needy children. Click here for more details. You can register the day of the event. But you should register online now to make it easier for you and organizers.
Kelly said he’s been challenged in the Security 5K by Andy Lund, Pinnacle’s Director of Sales Support. The terms of the wager were not released, but Kelly and Andy apparently had a preliminary showdown on the office treadmills last week, and have a rematch scheduled for next week.
Any one else out there stepping up to the challenge?
We’ve just listened to presentations by four company CEOs:
Brett Bontranger, Stanley Convergent
Robert Kleinman, AFA Protective Systems
Terry Olah, Alarm Detection Systems
Rich Perry, Security Networks
Now, Tom Buchanan leading a roundtable discussion. One note, since I can’t type nearly as fast as Sam, there’s some paraphrasing in my live blogging.
Tom: Can you talk about the last 12 months’ affect on attrition on your residential business?
Rich: We always see a bump around the holidays. Last year we were concerned that it would keep going up. We were pleasantly surprised that it didn’t.
Terry: We had an uptick of about a half percentage. When you look at components, you can divide attrition into two: Those who move, which can recapture; and those who don’t move. We saw higher percentage of attrition with those who didn’t move.
Tom: Robert, on the commercial side?
Robert: We were surprised, we had one significant loss-a big customer, but if you take that out, attrition was less than last year …. Another thing, our customers were paying their bills, if they left that was not the reason.
Tom: Did you delay any business initiatives in 2009, that you will ramp back up in 2010?
Robert: We didn’t delay initiatives
Terry: We didn’t ramp back any initiatives. We moved forward with some technology initiatives such as managed access, video monitoring.
Tom: Did you change the way you approached the market?
Rich: No. Our affiliates run their marketing their own way, and I didn’t see any big changes.
Terry: We continued what we were doing. We expanded some marketing on the technology side. You’ll find us on Facebook and Twitter, though that hasn’t had a material impact on sales yet.
Tom: What about different areas of the country that were particularly hard hit?
Robert: New Jersey and Florida were hit hard. Indications as of the end of January, are that thing are getting better.
Brett: There’s been softness in Central California, Vegas, Detroit, and Florida. Even in those areas, we’ve done a good job knowing where the fish are.
Tom: What about employees? Did you have an uptick in layoffs in 2009?
Brett: We had layoffs on G&A side last year with volume down. We right-sized in field. It was a difficult decision. I don’t [anticipate further layoffs] in 2010. But, the market is far from recoved in our view. It’s Something we watch in regular basis.
Tom: What about salary freezes or reductions?
Rich: We froze salaries, which was a little diffiicult to explain in some ways because we were hiring. We blamed it on our banks. (laughing) In all seriousness, even though we were growing our business, were concerned about attrition. At the end of the year, salaries were unfrozen and we paid bonuses.
Terry: As positions turned over, we were able to keep some people by reassigning positions and responsibilities in some cases. That way we were able to get thorugh year without layoffs and with no reduction in benefits.
Tom: Bill Polk mentioned state and local communities being hit hard and not have ability to print their own money like the feds. Are you finding that communities are looking for new ways to tax the security industry, with false alarms? security taxes?
Terry: Not so much with false alarms. A more disturbing trend, in Chicago, a lot municipalities have alarm-company owned equipment at municipality. Typically, the alarm companies collect a fee. More recently there’s been interest and movement in a couple cases of municipalities want to own their own equipment. In the case of fire alarm, the wya to mandate that monitoring be done there.
Rich: We’re licensed in 34 states. It’s a constant struggle to keep up with what they’re doing. So far, it’s been more of a nuisance than anything else, but we’re keeping an eye on it.
Robert: I think they’ve been doing a good job for a whiile figuring out how to tax us.
Tom: What about the crime rate. There are reports that it’s up and then down. What’s your experience?
Robert: There has not been an increase.
Rich: There’s a perception of crime going up. There’s more fear, and from marketing standpoint that’s helped.
Tom: Have you cut back on charitable giving?
Brett: We didn’t cut back. With as many branch offiices as we have, we do a lot of charitable events and we do a lot of community activity. It’s one thiing that bonds our offices. It’s something we promote and plan to continue to do in 2010.
Robert: We haven’t cut back on the dollar amount. We’ve been more selective where we give dollars. That’s were we’ll be for the future.
Tom: What examples do you have of positive things in 2009?
Rich: We grew substantially in 2009, and we worked on solidifying our infrastructure.
Terry: We had more tech time available to us, so we had more time for training. As a result of reassigning some positions instead of layoffs, there was more teamwork, camraderie with employees. Our employees truly appreciated that.
Robert: Our employees were grateful that they have job … We started calling vendors to renegotiate rates and they did renegotiate.
Brett: We grew profits organically. We did lot of acquisitions and got them successfully integrated. We’re sitting in a nice position going into 2010.
Tom: ADT announced the Broadview transaction. How will it impact the industry and your businesses?
Rich: It’s a direct competitor. It’s nuetral and probably positive.
Terry: It’s one less competitor in the door on some alarm systems. It can’t hurt. It’s probably helpful.
Rober: We’re not in the residential business, but if biz, but if ADT has integration problems anything similar to what it had with Wells Fargo, it will lead to customer dissatisfaction. And it may affect their commercial business because (with this transaction) they’ll be perceived more and more as a residential company.
Brett: I don’t have anything to add.
Tom: There will probably be some layoffs. Will you activley target Broadview employees, as it’s been suggested in the press.
Brett: Actively target, no. But we’re always looking to hire good talent.
Tom: What about the impact on ADT and Broadview dealers?
Rich: Those dealers may be nervous. We’ll see what happens, it may present opportunities for companies like ours.
Terry: In my estimation, Broadview ran first class operation, people may have been expecting a more premium price [than mid 40s]. I expect that the multiple that’ll be paid for P1 will be substantially less than Broadview. So, the Broadview transactioin creates a new standard in today’s market, one less than crazier numbers we’ve seen in the past.
Robert: I agree with some of that. But, when we did acquisitions, we look at what that acquisition meant as a fit for us. [Multiples paid for do not necessarily] set a mark for us.. What an acquisition would mean for us is the prime determinant of the price.
The conference is about to begin. I’ll have to check with Mike Barnes on numbers, but it’s a full house here. More attendees than I’ve seen in the past 4 years. And guess what? There are a lot more women in the audience.
In my book, that’s progress.
Bill Polk is opening the conference– it’s the 15th annual Barnes Buchanan this year. Polk says “More security transactions born in back of Breakers’ Fish Bar than anywhere else on the planet.”
One year ago we were in crisis; Where are we today?
A little history: “Banks used to be thought of as stodgy…doing things other than blowing up the world economy.” Starting in 1980s shift on Wall Street to a more risky “transaction culture.”
That lasted until costliest day Wall Street history, Sept. 15, 2008 Lehman Brothers went bankrupt” It signified the end of era…It was the “18 days of September,” the “parade of horribles” other bank failures, bailouts, lack of bailouts.
Last year a world in crisis. Today a far cry from a year ago… A yellow happy face on the screen now.”Almost here,” Polk says
Improved market sentiment; unit-tranches and second lien loans starting to make a comeback; pricing decrease but less than large corporate market; focus on maintaining discipline.
What about depth of liquidity? How big can club deal get? This a challenge.
Some notes from slides:
Bank market capacity up and budget up.
M&A and LBO expected to drive market…
Mezzaninie will continue to be important in middle-market sponsored deals in 1Q10. Pricing come down from 18 percent last year to 15 today.
So….cash now available in banks and non-banks and pressures form on high. Lenders getting more aggressive. Deal structure much more conservative than mid decade, but getting more aggressive.
Why so much money? Star of show is high-yield bond market and to lesser extreme mezzanine market. Second part of story is CLO story…institutional investors like hedge funds and CLOs…
CLOs buy into a lot of debt right now. They need to put money to work “while they can still breathe.”
“Investor money needs to be put to work.”
What about regulation?
“Washington become bigger force in market than ever been in history.” Stimulus funds, bail outs etc….
Obama not pro-business? There’s some word out there about this. It’s true, Polk shows slide, that not much private sector experience among Administration appointees.
House sweeping reform bill… Senate hasn’t done anything
Not full picture affect of regulation yet, but know that higher capital requirements
DEBT Burden and our fiscal future.
State and local economies have trouble paying bill now.. They don’t have the money printing presses that fed gov’t has. Not all states equal, for example Wyoming and Nebraska have budget surpluses ex.. this is important because state and local government are big customer of security industry.. Watch your receiveables if do business with these guys.
Lenders: Who’s at BB this year compared to years past?
Lots of changes. Many here in early years, not even in existence today.
“One thing for sure, change in banking is constant.” What does this mean to those at Barnes Buchanan today? Pay attentioin to a five C’s: character, collateral, cash flow, conditions…there was one more, but the one Polk wanted to talk about is conditions.
Conditions in this industry. “The tailwinds are exceptional.” The security market is “extremely complex, driven by many forces.” Increasingly, the lines blur between what’s defense and what’s security. As an example, Northrup Grumman moved its HQ to Wash DC, they’re redefining themselves as security company.
An interesting survey in Foreign Policy magazine of Top 100 global thinkers: what will be 2010 global game changers be? “If you look at what some said…92 percent of answers have at their core a security threat. So, at high level have awful lot of loft and tailwind with us.”
Some conclusions
Strong strategic and financial interest in sector.
Sector perceived as safe harbor in the storm.
Industry credits remain sound.
Certain subsector of security are populated with experienced lenders still in the market for new loans.
Tailwinds continue to drive most security sectors
Credit is relatively more expensive and restrictive compared to mid-decade, but terms more favorable.
Transaction economics are getting much more favorable and buyers to step back into the maarket.. Specialty lenders remain willing to advance at levels perceived to be highly risky by generalist lenders.
After the two-day TechSec Conference held here in Delray Beach, I’m heading up to Palm Beach today for the Barnes Buchanan Conference.
And while TechSec had its share of rock stars–I think many would nominate Frank Yeh (Yeah!) our keynote speaker for one. There will be more at Barnes Buchanan today.
First we’ll have CapitalSource’s Professor Bill Polk who will provide warm-up for the conference with an overview of the financial markets. People I’ve talked to are eagerly awaiting the follow-up to his “Evil Persists (and the security industry does just fine as a result)” talk at the ‘09 conference.
And, from the interesting tidbits department, did you know that Rich Perry, CEO of Security Networks, and Security Systems News advisory board member, who will participate in a company presentation roundtable at Barnes Buchanan today, spent some time as an aspiring rock guitarist?
The rock guitarist I refer to, however, is Jeff Baxter. He’s now a defense security guy—a DOD consultant with a high-level security clearance in the Pentagon, advising top military and civilian groups on biological warfare, next-generation technology and unconventional strategies. Back in the day, he was better known as Jeff Skunk Baxter, who played guitar with Steely Dan among others.
Take a listen. According to You Tube: “A rare Steely Dan performance from old grey whistle test (this episode broadcast-1978;performance is early 70’s)-Reelin’ In The Years.Jeff Skunk Baxter on lead guitar.”
This just in: Ron Rothman, who’s been president of Honeywell Security & Communications since 2002, will replace Ben Cornett as president of Honeywell Security Group. Rothman began his career with ADEMCO in the 1980s.
Ron Rothman is the new president of Honeywell Security Group
In his new role, Rothman will report to Roger Fradin, president and CEO of Automation and Control Solutions.
“Ron is a highly accomplished industry leader with many years of experience building our security business, growing new and long-term customer relationships, and bringing product innovations to market,” said Fradin in a prepared statement. “Under Ron, our stable industry leadership, superior customer service, brand recognition and new product pipeline will continue to position Honeywell as a strong industry leader.”
Cornett has served as president of Honeywell Security Group since 2002. He will now serves as chairman of the security business and will assist with the transition until his retirement in March 2011.
“I want to thank Ben for his 15 years of business leadership where he accelerated our global expansion, established strong customer relationships, and founded our highly successful Partner of Choice program,” Fradin said in a prepared statement. “Ben had been instrumental in building this leading business committed to our customers’ success and had been repeatedly recognized with coveted industry accolades for his lasting contributions.”
I’ve got a call into Honeywell to see if I can talk to Rothman, and also to see who’ll replace him at Honeywell Security and Communications.
And I just heard back from Jim Green at Honeywell who said that Rothman will “serve as the interim leader of Honeywell Security & Communications until a successor is announced.”
One of my favorite readers sent Sam a link to this gem. It’s from a column in a publication called The Consumerist. The Consumerist helps out consumers with problems.
This consumer has a security problem: He bought a new house with an existing Protection One security system, but he doesn’t have the code. He doesn’t want to pay for Pro One to monitor his home, he just wants to arm and disarm the system. What to do?
Easy. This reader says just find yourself a rogue installer.
If you are willing to pay a few dollars, hang around a local alarm installers business and just ask one of the service guys (while outside) if he does any “side-jobs.” It’s pretty likely that he might help you out for $25 or so
Think you’ll feel weird hanging around your local alarm installer’s business? It’ll cost you a little more, but there are other ways to find a rogue installer:
There are plenty of ex-alarm company employees and other alarm companies. Get a different alarm company to do it or put an ad in Craigslist and pay one $50 or $100 to reset the alarm if information on how to do it isn’t available on the internet on some forum somewhere.
This reader can relate, and has some observations about different alarm companies:
Exact same thing happened to me. It’s a Brinks system, but I’m definitely not going to sign up with them. Their alarm systems apparently only work if its a white guy breaking in anyway (have you ever seen their commercials? - ALWAYS a white male).
And for busting the code:
They can probably google some info about the control panel for the system to find out how to reset the whole thing, or possibly even try some numbers associated with the house or the alarm company. I wanted to add a second panel in our bedroom at home without paying the original installer, so I looked them up, and tried numbers form their phone number, address, etc. Took me about 3 tries to get the master code. Kind of scary, really. :\
People often use their BIRTHDAYS (month, year) as the code - look at your closing docs, see if you can figure out the birthday of either the husband/wife you purchased from.
I found this: http://tinyurl.com/ylkbb6o
hope it helps. If not, find out the model number and search google for “resetting alarm code MODEL_NUM” you may want to insert manufacturer as well.
And if all else fails:
Contact your state attorney general’s off and see if they can be charged with extortion
This is something readers of The Consumerist care about, 165 people commented. Here’s the whole story.
