SECU SSC Security Services Corp

REGINA, SK, Dec. 19, 2022 /CNW/ - SSC Security Services Corp. ("SSC" or the "Company) (TSXV: SECU) (OTCQX: SECUF), a national provider of cyber, physical and electronic security services to commercial, industrial and public sector clients across Canada, is pleased to release its results for the fourth quarter and year end for the 2022 fiscal year ended September 30, 2022. All figures are presented in Canadian dollars.

"In my discussions with shareholders and prospective shareholders this fall, I have been saying that we want SSC to be the most conservative holding in your portfolio," said Chairman & CEO Doug Emsley. "We want to be consistently reliable, with no surprises and no hype – some might even call this boring.

"The security industry operates behind the scenes in our economy without much fanfare. But demand for our services grows at 5-10% every year. Our job is to provide good customer service so we grow at a rate faster than that, and use our 70+ years of experience in this industry to manage the Company so the bottom line grows even faster than the top line.

"SSC is very well capitalized with no debt, pays a regular dividend, buys back its own stock regularly, and our management team has extensive experience in the security industry. This year, we paid cash for a competitor 3x our size and are working hard to integrate it into our operations.

"Our customers pay us to help them sleep well at night. We think our shareholders should be able to sleep at night too."

FY2022 HIGHLIGHTS

• On June 1, 2022, we closed the acquisition of Logixx Security Inc. in an all-cash transaction. A full quarter of Logixx' revenue is included in our Q4 numbers for the first time. The year ended September 30, 2022 includes only four months of Logixx' revenue. Pro forma annual revenue of the Company is expected to be over $100 million.
• During the fiscal year ended September 30, 2022, revenue for the full fiscal year was $49.7 million, up 171% over revenue recorded in the same period last year. During Q4, we recorded revenue of $26.5 million, up 382% from the same quarter last year.
• Adjusted EBITDA for the fiscal year was $2.1 million ($0.11 per share), down from $3.3 million ($0.17 per share) last year as a result of large one-time gains during the previous period. Adjusted EBITDA in Q4 was $1.4 million ($0.07 per share), which is 305% higher than in Q3 and 263% higher than the $0.4 million ($0.02 per share) recorded during Q4 last year.
• During the fiscal year, we continued to convert assets related to our legacy business into cash, bringing in about $15.1 million in cash in the process. During the fiscal year, we also paid $0.12 per share in dividends to shareholders and bought back 757,700 shares of the Company at an average of $2.90 per share.
• We finished the year ended September 30 with (comparison to previous year end):
• • Cash and cash equivalents of $11.2 million ($28.8 million);
  • Loans and mortgages receivable of $4.5 million ($12.5 million);
  • Total shareholders' equity of $70.6 million ($75.9 million); and
  • Long-term debt of nil (nil).

Key Performance Indicators for the comparable periods are summarized below: 

REVENUE, GROSS PROFIT & NET INCOME

Revenues for the year ended September 30, 2022 were $49.7 million compared with $18.3 million during the previous year, an increase of $31.4 million, or 171%. The increase in revenues was due primarily to the acquisition of Logixx and the inclusion of Logixx' revenue starting on June 1, 2022.  The prior year included only eight months of revenue from the SRG acquisition, compared to a full year of revenue included in the 2022 fiscal year results. See the segment comparisons in Note 4 of the financial statements for a presentation of the year-to-year changes.

Gross profit and gross margin for the year ended September 30, 2022 increased to $8.5 million (17.0% of revenue) from $3.0 million (16.6% of revenue) during the previous year. The growth in gross profit is a result of our shift into the security business, which began in 2021, as well as the addition of Logixx starting June 1, 2022. The gross margin % for all periods remains slightly above our long-term expectations for the security business due to contributions to gross margin from our legacy business.

Comprehensive net loss for the year ended September 30, 2022 was $1.0 million (loss of $0.05 per share), compared to comprehensive net income in the previous year of $1.9 million (gain of $0.10 per share). The prior period featured significant gains associated with the gradual wind-down of our legacy business.

ADJUSTED EBITDA

Adjusted EBITDA is the primary KPI used by the Company to measure the financial performance of the Company. Adjusted EBITDA for the year ended September 30, 2022, was $2.1 million, as compared to $3.3 million during the previous year end. The decrease is mainly a function of gains realized in the Company's legacy business during the previous year. Until the legacy business wind-up is substantially complete, it will be difficult to make comparisons to prior periods.

A reconciliation of earnings to EBITDA and Adjusted EBITDA is provided in the Non-IFRS section of the MD&A published concurrently with this press release.*

BALANCE SHEET

Key balance sheet items are summarized below:

UPDATE ON NORMAL COURSE ISSUER BID

During the year ended September 30, 2022, we bought back 757,700 shares at an average price of $2.90 per share. (Prior year: 534,136 shares at an average price of $2.61 per share.) Since October 1, 2022 to the date of this news release, we have purchased 69,600 shares at an average price of $2.93 per share.

We continue to believe that our shares have been trading in a price range which does not adequately reflect their value and that the purchase of shares under the NCIB will enhance shareholder value in general.

OUTLOOK

We have been working to integrate Logixx into the operations of the Company and expect this work to continue into the first half of FY2023. We expect demand for security services to continue to grow and our national presence to assist in winning new contracts. Additional growth may come via acquisition, as we look to acquire other companies in the Canadian security industry. Additional acquisitions will help us reach our goals more quickly, but we will not rush to complete new deals and we will maintain our financial conservatism throughout.

In our legacy business, the majority of our legacy assets are expected to convert to cash over the next year. Our objective is to make these resources available for the expansion of our security business.

We plan to continue to distribute capital to shareholders via the dividend, operate with minimal to no debt while maintaining solid liquidity, and focus on maximizing Adjusted EBITDA per share.

ABOUT SSC

SSC Security Services Corp. is a national provider of cyber, physical and electronic security services to corporate and public sector clients across Canada. For more information, please visit www.securityservicescorp.ca.

For further information, please contact:

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Forward Looking Statements

This release includes forward-looking statements regarding SSC and its business. Such statements are based on the current expectations and views of future events of SSC's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting SSC, including risks regarding the security industry, the agricultural industry, economic factors and the equity markets generally and many other factors beyond the control of SSC. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and SSC undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

*Non-IFRS Measures

SSC measures key performance metrics established by management as being key indicators of the Company's strength, using certain non-IFRS performance measures, including:

• EBITDA, EBITDA per share, Adjusted EBITDA, and Adjusted EBITDA per share.

The Company uses these non-IFRS measures for its own internal purposes. These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and these measures may be calculated differently by other companies. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Company provides these non-IFRS measures to enable investors and analysts to understand the underlying operating and financial performance of the Company in the same way as it is frequently evaluated by Management. Management will periodically assess these non-IFRS measures and the components thereof to ensure their continued use is beneficial to the evaluation of the underlying operating and financial performance of the Company.  For more detailed information, please refer to pages 22 and 23 of the Company's Management Discussion and Analysis dated December 19, 2022 available on the Company's website at www.securityservicescorp.ca and on SEDAR at www.sedar.com.

SOURCE SSC Security Services Corp.