Yesterday, AlarmForce (TSX:AF) reported its Q1, 2013 results. The company earned $1.37-million on revenue of $11.92-million, besting last year’s $10.92-million topline by more than 9%.
CEO Joel Matlin said the company, which is still in the midst of a strategic review, is getting healthier.
“We continue to grow without adding debt, funding all our costs of growth, including marketing, research and development expenses, from our operating cash flows,” he said. “We anticipate that we will continue our growth in revenues and earnings, with our two-way voice alarm, personal emergency response and remote-access video systems at the forefront of technology and consumer acceptance. I would like to thank our subscribers, investors, employees and directors for their continuing support and confidence in our company’s success.”
Industrial Alliance analyst Steve Li says AlarmForce’s revenue was in line with his estimates. But he says the company’s net additional subscribers number of 1500 was just half of what he expected. That Canada made up only 400 of these subscribers suggests to him that AlarmForce is reaching a a saturation point in the Canadian market. What is more than making up for this slip, says Li, is stronger than expected growth in the company’s VideoRelay and AlarmCare subscribers, which added 800 users in the quarter. The Industrial Alliance analyst says this suggests the penetration and appeal of video surveillance appears to be increasing. Li says this, along with management’s increased focus on the bottom line, has made him more bullish on AlarmForce. In a research update to clients this morning, Li maintained his Speculative Buy rating on AlarmForce, but raised his target by a dollar, to $14.75.
Li notes that Alarmforce’s Q1 EBITDA came in at $3.2M, which was up 45.4% year-over-year, and handily beat his estimate of $1.7-million. He says this jump was due almost entirely to a cutback in marketing expenses to $3.2-million, which was down 23.3%. This number, says Li, illustrates the company’s sensitivity to marketing expenses and the its ability to raise its EBITDA or net margin at any time.
Shares of AlarmForce closed today even at $12.07.