SSC Security Services Corp. Announces FY2022 Q2 Results
REGINA, SK, May 16, 2022 /CNW/ - SSC Security Services Corp. ("SSC" or the "Company) (TSXV: SECU) (OTCQX: SECUF), a leading provider of cyber and physical security services to commercial, industrial and public sector clients across Canada, is pleased to release its results for the second quarter of the 2022 fiscal year ended March 31, 2022. All figures are presented in Canadian dollars.
"The quarter ending March 31, 2022 is the last quarter we will report as a small security company," said President & CEO Doug Emsley. "During the last few months, we have been working hard to close our transformative acquisition of Logixx Security Inc. ("LSI"). We expect the shareholders of LSI's parent company, Avante Logixx Inc., to vote in favour of the sale to us of LSI at their Special Meeting on May 30th, and we plan to close the transaction shortly thereafter. After that transaction, SSC will have over $100 million in annual revenue, quadrupling the size the of our business with over 2,100 employees nation-wide, all while remaining debt free and very well capitalized. We look forward to taking advantage of other opportunities to grow our company in the security services business."
Q2 2022 HIGHLIGHTS
- On February 9, 2022, the Company announced that it had entered into a definitive agreement to acquire Avante Logixx Inc. (TSXV: XX) via Plan of Arrangement. On March 30, 2022, it was announced that the Plan of Arrangement had been mutually terminated by the parties in favour of a new Share Purchase Agreement, whereby SSC will purchase all of the shares of Logixx Security Inc. from Avante Logixx Inc. in an all-cash transaction. The deal is subject to a vote of the Avante shareholders scheduled for May 30, 2022, and if successful, is expected to close shortly thereafter. For more information, please see the March 30 press release here: https://securityservicescorp.ca/news-releases/122693/.
- During the quarter, we recorded revenue of $5.5 million, over 99% of which is from the security segment of our business. We entered into the security business partly through the comparable period the year before, making year-over-year comparisons difficult. Security revenue was down approximately 5.5% from the previous reported quarter, which included the Christmas shopping season, a seasonally busier time for security companies with retail clients.
- During the quarter, we continued to convert assets related to our legacy business into cash, which allowed us to eliminate our debt, pay $0.03 per share in dividends, and buy back 73,600 shares of the Company, while still increasing our overall cash position.
- Adjusted EBITDA in the quarter was $195,000 ($0.01 per share).
- Paid a quarterly dividend of $0.03 per share, or $0.12 per share annualized.
- We finished the quarter ended March 31 with (comparison to previous quarter):
- Cash and cash equivalents of $31.8 million (up 1.9% from $31.2 million);
- Loans and mortgages receivable of $7.0 million (down 15.8% from $8.3 million);
- Total shareholders' equity of $72.4 million (down 1.5% from $73.5 million); and
- Long-term debt of nil (down from $475K).
Key Performance Indicators for the COMPARABLE periods are summarized below:
Key Performance Indicators
Six months ended
Cost of Sales
Gross Margin (%)
Comprehensive net income (loss)
Comprehensive net income (loss) per
Adjusted EBITDA per share (basic)
REVENUE & NET INCOME
Revenues for the quarter ended March 31, 2022 were $5.5 million compared with $4.6 million during the comparable quarter ended March 31, 2021, an increase of $0.9 million. The increase in revenues was due in part to the fact that only two months of security revenue were recorded in the prior period because the SRG acquisition closed on February 1, 2021. However, revenue growth in security more than made up for the $2 million decline in legacy business revenue compared to the same quarter during the previous year.
During the quarter, we recorded a comprehensive net loss of $0.3 million (loss of $0.01 per share), compared to comprehensive net income in the previous year's comparable period of $0.1 million (gain of $0.01 per share).
Adjusted EBITDA for the quarter ended March 31, 2022, was $0.2 million, as compared to loss of $0.1 million during the comparable quarter ended March 31, 2021. The increase is a function of the company's shift to the security business and the continued fall-off of our legacy business. The decline in the six month period ended March 31 compared to last year is a result of an outsized one-time gain during the comparable period related to our legacy business.
Net Income and Adjusted EBITDA
Six months ended
Net income (Loss)
Adjusted EBITDA per share
A reconciliation of earnings to EBITDA and Adjusted EBITDA is provided in the Non-IFRS section of this MD&A.*
Key balance sheet items are summarized below:
Statements of Financial Position
Mar 31, 2022
Mar 31, 2021
Legacy contract assets
Assets held for sale
Mortgages and loans receivable
Total shareholders' equity
Common shares outstanding
Book value per share
UPDATE ON NORMAL COURSE ISSUER BID
On December 29, 2021, we announced the renewal of our Normal Course Issuer Bid (NCIB), allowing the Company to buy back up to 1,275,000 of its common shares during the 2022 calendar year. During the quarter ended March 31, 2022, we bought back 73,600 shares at an average price of $2.96 per share. During the fiscal year to date, we have purchased 586,700 shares at an average price of $2.97 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.
Our legacy business has become an immaterial part of our income statement, although it still occupies a significant part of our balance sheet. We continue to make significant progress converting these assets into cash, and expect this trend to continue. Our objective is to make these resources available for redeployment into our security business.
All future growth will be in the security segment, in part from organic growth as SRG wins new contracts, launches new products, and via acquisition, as SSC and SRG look to acquire other companies in the Canadian cyber and physical security spaces, such as the recently announced Logixx acquisition.
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 on a per share basis.
The ongoing effects of the COVID-19 pandemic and uncertainty within international markets could impact the Company's financial performance for the year ended September 30, 2022 and, possibly, beyond. The financial impact will be dependent on the spread and duration of the pandemic and on related restrictions and government advisories. We have not seen any material impact on our security or legacy business to date, but we have seen some shifting of client demand for security services as a result of COVID. Demand is smaller in certain market segments, such as airport security services, but higher in other segments. Given the balance of uncertainties, the long-term financial impact on the Company, if any, cannot be determined with any certainty. Taken together, COVID-19 has not had a material impact on the results of our business.
SSC Security Services Corp. is a leading provider of cyber and physical 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.
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 page 23 and 23 of the the Company's Management Discussion and Analysis dated May 16, 2022 available on the Company's website at www.securityservicescorp.ca and on SEDAR at www.sedar.com.
SOURCE SSC Security Services Corp.