Financial Information
Financial results and trends
Our accomplishments in 2006 included a number of record highs including a stellar increase of 22% in revenue compared to 2005. This follows on the heels of a 20% annual increase in revenue from 2004 to 2005. Therefore while our base has grown, the growth rate reached a new record in 2006. As a result of the growth in subscribers, the stable gross margin and operating cost management, our operating cash flows increased to $4.9 million, up 41% from 2005. Net income was up 84% from the prior year, and earnings per share up 71%.
Net income per share on a diluted basis increased from $0.07 in 2005 to $0.12 in 2006. While income before income taxes increased by 94% to $2,510,000 in 2006, the net income increased by 84% to $1,492,000. Our annual budget for marketing expenditure increased from $4.8 million in 2005 to $6.2 million in 2006, mainly as a result of the US advertising and account creation costs. This increase also reflects the discretionary nature of the marketing budgets.
Under the Management’s Discussion and Analysis section, the company has provided a reconciliation of Adjusted EBITDA (before discretionary marketing expenditures) to earnings under generally accepted accounting policies, and based on this the company’s Adjusted EBITDA has increased by 24% from 2005 to over $11 million in 2006.
During the course of the year, the company relocated the Toronto head office from formerly leased space to a new office building in order to provide sufficient space and functionality to continue servicing the company’s growing subscriber base for the foreseeable future. The new premises house the AlarmForce central monitoring station, manufacturing facilities and administrative offices all in the same location. The relocation was accomplished smoothly during 2006 without disruption to core operations and customer service.
In connection with the purchase of the new office building in 2006, the company has arranged a $1 million fixed term loan to finance a portion of the purchase price, resulting in an increase in the long-term debt on our balance sheet. At the same time the company’s operating, revolving debt decreased by $660,000 during the year, highlighting the company’s positive net operating cash flows. Our cash flows from operations including recurring monthly revenues continue to exceed the cash requirement to finance new growth in subscribers, which is made up of capital costs for equipment and installation. At the end of the year our debt per subscriber was approximately $19 per account
including the fixed term loan. Our strong balance sheet and financial resources are a key differentiating factor in how the company compares to the other major alarm companies in the industry.
In the US, we have increased the number of new subscribers by focusing on the selected states of North Carolina and Ohio where our brand and base have now been firmly established. We have announced our entry into Georgia commencing in 2007, which will add another 9 million people to the approximately 20 million people already
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Testimonials
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I want to thank you most sincerely for your response this morning when I apparently triggered a false alarm at our residence and left our back door unlocked. I was having some difficulty with my wife when we left (she has Alzheimer's disease). When I returned about an hour later I noticed the door was now locked and the telephone was ringing. It was your office with notification of the alarm and your response. Our son also phoned shortly afterwards to advise that you had notified him also in response to the alarm. I had also neglected to turn on my cell phone. Again, my sincere appreciation for your immediate response and corrective action; but then, that's why we subscribe to AlarmForce. But please accept my apology for causing the problem in the first place.
-Norman, ON -
Kenneth was professional, polite, patient. verbally skilled, helpful, i.e. excellent in every aspect.
-Caroly, Charlotte, NC -
Thank you very much AlarmForce, we are very satisfied with your service.
-Danielle, ON -
Doing a great job! Can't beat it for the money.
-Lonnie, NC -
We have had other alarm companies in the past and were very selective when choosing our alarm company on our last move. We checked out the local and national competitors. AlarmForce openly discussed the prices and service contract while others did not. AF also is one of the fewer companies that offer live voice through a speaker and can monitor any situation. This is great for our family and two children as it makes them feel safer knowing there is a LIVE person to talk to - or they can monitor what's really happening in our house. Sales staff is professional and never pushy.
-Jody S. - St. Albert, AB -
Fabulous people - all questions answered. Installation - outstanding.
-Kelly, ON -
Getting AlarmForce was one of the best things we ever did for our family. Last summer we were notified via cell phone of a potential break-in. We were 5 minutes away from our home and when we arrived an official AlarmForce security person was already at our home. Fortunately we believe one of our cats set the alarm off and it was a false alarm but the speed that AlarmForce used was incredibly comforting for us. Thank you. AlarmForce to us is a necessity not a luxury and gives us complete peace of mind. I also appreciate the "emergency" button on the control panel, especially when I have my elderly parents (both with health issues) staying with us. Being that they live out of town and do not know this area very well, if I leave them alone to run errands, etc. I simply remind them if there is a health issue, just press this button and the phone will ring within minutes (we are equipped for voip). Thank you again AlarmForce and continued success with your excellent products, staff and service!
-Gordon, ON -
I feel very comfortable with your alarm system. When testing and the alarm has gone off, they phone right away. My other alarm company waited 2-3 minutes before they phoned. I'm alone a lot and lot at night and feel very secure with AlarmForce. Thank you.
-Rod, AB
