SECU SSC Security Services Corp

• Q3 2023 revenue of $26.5 million – an increase of $14.7 million over Q3 2022 and $1.3 million higher than last quarter (5.2% increase from last quarter).
• Q3 2023 Adjusted EBITDA of $1.02 million ($0.05 per share) – an increase of $0.66 million over Q3 2022 ($0.03 per share) and $0.2 million greater than last quarter (19.7% increase from last quarter).
• Q3 2023 Adjusted net income of $0.5 million ($0.02 per share) compared with an adjusted net loss of $0.2 million (loss of $0.01 per share) in Q3 2022.

REGINA, SK, Aug. 14, 2023 /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 third quarter of the 2023 fiscal year ended June 30, 2023. All figures are presented in Canadian dollars.

"It is a credit to the over 3,000 employees at SSC that we continue to show improving results," said Chairman and CEO Doug Emsley. "The hard work of combining and integrating new acquisitions as well as large new contracts, while maintaining a culture of excellence in our company requires hard work by all employees and cooperation with our valued customers. I am happy to say that it is working well. Our company continues to grow steadily and conservatively which will ensure our long-term success as we create value for our shareholders."

Q3 2023 HIGHLIGHTS

• During the third quarter ended June 30, 2023, revenue was $26.5 million, up $14.7 million over revenue recorded in the same period last year, and $1.3 million higher than last quarter (5.2% increase from last quarter).
  
  
• Adjusted EBITDA for the quarter was $1.02 million ($0.05 per share), up from $0.36 million ($0.02 per share) during the same quarter last year, and $0.2 million higher than last quarter (19.7% increase from last quarter).
  
  
• During the quarter, we recovered another $1.3 million from our legacy business, paid $0.03 per share in dividends to shareholders and bought back 51,100 shares of the Company at an average of $2.80 per share.
  
  
• We finished the quarter ended June 30 with (comparison to prior quarter – Q2 2023):
• • Cash and cash equivalents of $12.6 million ($12.8 million);
  • Working capital of $27.3 million ($26.0 million);
  • Legacy assets (including assets held for sale and mortgages & loans receivable) of $7.9 million ($10.5 million);
  • Total shareholders' equity of $68.6 million ($69.3 million); and
  • No Debt!

Key Performance Indicators for the quarter and YTD, including comparable periods are summarized below:

REVENUE, GROSS PROFIT & NET INCOME

Revenues for the quarter ended June 30, 2023 were $26.5 million compared with $11.8 million during the same quarter last year, an increase of $14.7 million. The increase in revenues was due primarily to the acquisition of Logixx and the inclusion of Logixx' revenue starting on June 1, 2022. 

Gross profit for the quarter ended June 30, 2023 increased to $4.0 million (15.1% of revenue) from $1.8 million (15.7% of revenue) during the same quarter last year. The growth in nominal gross profit is primarily a result of the addition of Logixx gross margin starting June 1, 2022.

A gross margin percentage of around 15% is in line with our expectations going forward. In prior periods, this figure was higher as a result of contributions to gross margin from our legacy business whose effects were immaterial during this most recent quarter.

Comprehensive net loss for the quarter ended June 30, 2023 was $0.01 million (loss of $0.00 per share), compared to a comprehensive net income in the same quarter last year of $0.8 million (income of $0.04 per share).

Comprehensive net profit for nine months ended June 30, 2023 was $0.23 million (profit of $0.01 per share), compared to a comprehensive net loss for the same nine months last year of $0.0 million (loss of $0.00 per share).

ADJUSTED EBITDA

While Adjusted EBITDA does not have a standardized definition under IFRS, Adjusted EBITDA and Adjusted EBITDA per share are the primary metrics used by management to determine the performance of the Company, and Adjusted EBITDA is the basis on which companies operating in our industry are valued for transaction purposes. Furthermore, we exclude from Adjusted EBITDA any impacts of our Legacy Business so that relevant comparisons can be made today and into the future related to our security business.

Adjusted EBITDA for the quarter ended June 30, 2023, was $1.0 million ($0.05 per share), as compared to $0.4 million ($0.02 per share) during the same quarter last year.

Adjusted EBITDA for the nine months ended June 30, 2023, was $2.7 million ($0.14 per share), as compared to $0.7 million ($0.04 per share) during the same nine months last year. Until the legacy business wind-up is substantially complete, it will be difficult to make comparisons to prior periods.

BALANCE SHEET

Key balance sheet items are summarized below:

UPDATE ON NORMAL COURSE ISSUER BID

During the quarter ended June 30, 2023, we bought back 51,100 shares at an average price of $2.80 per share.

We renewed our NCIB for the current year on January 4, 2023 because 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.

APPOINTMENT OF NEW DIRECTOR

We are pleased to announce the appointment of Laurie Powers, CPA, CA, ICD.D to the Company's Board of Directors, effective immediately. She has also been appointed to the Audit Committee and the Governance & Compensation Committee. Laurie is a seasoned financial executive and corporate director with over 25 years experience in the private and Crown Corporation sectors in organizations ranging from 6 to 500 employees, with over 15 years of board experience. Please see Laurie's biographical information at the end of this press release for more details.

OUTLOOK

We have been working to integrate Logixx into the operations of the Company and expect this work to continue. This includes the consolidation of core accounting and finance operations into the Company's national administrative centre in Regina, a process which is now complete. We are also incrementally harmonizing our physical security brands and guard uniforms under the Logixx name. This will take place over an extended period of time.

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 will maintain our financial conservatism throughout.

We see growing opportunities for the integration of security offerings, particularly where security guard services can be combined or supplemented with electronic monitoring using cameras and sensors. We will continue to look for opportunities to offer these integrated security offerings.

In our legacy business, the majority of our legacy assets are expected to convert to cash within the next year. Our objective is to make these resources available for the expansion of our security business. When taken together, our Cash and Near Cash position is very strong at over $32 million.

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.

BIOGRAPHICAL INFORMATION 

Laurie Powers, CPA, CA, ICD.D is a seasoned financial executive and corporate director with over 25 years experience in the private and Crown Corporation sectors in organizations ranging from 6 to 500 employees, with over 15 years of board experience. Laurie's executive experience includes: President & CEO of Canterra Capital Corp.; Vice President, Private Investments at Harvard Developments Inc.; Chief Financial Officer at each of Victoria Park Capital, Investment Saskatchewan Inc., Information Services Corporation of Saskatchewan, and National Alfalfa Merchants & Processors Inc.; and senior financial management roles at Saskatchewan Crop Insurance Corporation. A Chartered Accountant, Laurie articled with Deloitte & Touche Chartered Accountants in Saskatoon. Today, Laurie sits on the boards of AVAC Group, where she is Chair of the Audit Committee and a member of the HR and Governance Committees; Information Services Corporation (TSX: ISV), where she is Chair of the Audit Committee; and Peace Hills Insurance, where she is a member of the Investment and Audit Committees. Previous board experiences include: the Saskatchewan Roughrider Football Club, Harvard Western Ventures Inc., Bioriginal Food & Science Corp, and Primaxis Technology Ventures Inc. Laurie has a Bachelor of Commerce degree from the University of Saskatchewan, is a member of the Institute of Chartered Accountants of British Columbia and received her ICD.D designation from the Institute of Corporate Directors in 2009. A native- and long-time resident of Saskatchewan, Laurie now resides in Kelowna, British Columbia.

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.

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:

• Adjusted Net Income, Adjusted Net Income 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 August 14, 2023 available on the Company's website at www.securityservicescorp.ca and on SEDAR at www.sedar.com.

SOURCE SSC Security Services Corp.