SSC Security Services Corp. Announces FY2022 Year End Results: Annual Revenue up 171% YoY and Adjusted EBITDA up 305% QoQ

Canada NewsWire

REGINA, SK, Dec. 19, 2022

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:

 
Key Performance Indicators  Quarter endedSept 30    Fiscal Year endedSept 30 
                            2022        2021        2022           2021 
Revenue                         26,506       5,499         49,697       18,308 
Cost of Sales                   21,818       4,534         41,227       15,268 
Gross Margin                     4,688         965          8,470        3,040 
Gross Margin (%)                17.7 %      17.5 %         17.0 %       16.6 % 
 
Net and comprehensive 
 income (loss)                   (939)       (260)          (981)        1,889 
Net and comprehensive 
 income (loss) per share 
 (basic)                       $(0.05)     $(0.01)        $(0.05)        $0.10 
 
Adjusted EBITDA                  1,445         398          2,144        3,289 
Adjusted EBITDA per share 
 (basic)                         $0.07       $0.02          $0.11        $0.17 
 

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.

 
Net and comprehensive       Quarter endedSept 30    Fiscal Year endedSept 30 
income and Adjusted EBITDA 
                            2022        2021        2022          2021 
Net and comprehensive 
 income (loss)                   (939)       (260)         (981)         1,889 
Adjusted EBITDA                  1,445         398         2,144         3,289 
Adjusted EBITDA per share        $0.07       $0.02         $0.11         $0.17 
 

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:

 
Statements of       As atSept 30, 2022  As atSept 30, 2021  As atSept 30, 2020 
Financial Position 
Cash                            11,195              28,796              27,234 
Accounts 
 receivable                     20,889               4,773                 682 
Legacy contract 
 assets                          8,013              11,470              14,396 
Assets held for 
 sale                              800               3,670               5,890 
Mortgages and 
 loans receivable                4,504              12,501              29,682 
Total assets                    87,669              84,888              81,901 
Total liabilities               17,024               9,021              10,873 
Total 
 shareholders' 
 equity                         70,645              75,867              71,028 
Common shares 
 outstanding                    19,618              20,288              17,843 
Current assets                  37,657              40,039              37,769 
Current 
 liabilities                    13,198               6,883               3,337 
Working capital                 24,459              33,156              34,432 
Long-term debt                       -               2,540               7,536 
 

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:

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