SSC Security Services Corp. Announces FY2021 Year End Results
REGINA, SK, Dec. 6, 2021 /CNW/ - SSC Security Services Corp. (formerly Input Capital Corp.) ("SSC" or the "Company) (TSXV: SECU) (OTCQX: SECUF), a leading provider of physical and cyber security services, is pleased to release its results for the 2021 fiscal year ended September 30, 2021. All figures are presented in Canadian dollars.
"As I wrote in my October 4 letter to shareholders, our pivot to the security industry is moving along rapidly," said President & CEO Doug Emsley. "Over the last fiscal year, we have done two acquisitions, significantly wound down our legacy agriculture business and became a strong player in the physical and cyber security industries.
"Our rebranding is complete, and our balance sheet makes us one of the best capitalized companies in the Canadian security industry. Our senior management team has over 70 years of experience building and operating profitable security companies, and as we head into a new fiscal year, we look forward to leveraging that experience and balance sheet to create value for our shareholders."
- Over the year, we reduced our agriculture book from over $44 million to about $24.4 million, paid down $5.2 million in long-term debt, bought back 1.6 million shares outstanding via our NCIB, grew from 9 employees to about 625 employees, and increased our cash position by about $1.5 million. In addition, we pivoted from the agriculture industry to the security industry with two acquisitions:
- On February 1, 2021, we acquired SRG Security Resource Group Inc. ("SRG"), a leading Canadian cyber security and physical security company based in Regina, Saskatchewan, for $19.4 million, subject to normal working capital and holdback adjustments. Of that purchase price, $12.3 million was paid in cash and 8,883,930 shares were issued at a fair value as at the date of acquisition of $7.1 million.
- On July 10, 2021, the Company finalized an asset purchase agreement with Impact Security Group Inc. ("Impact") to purchase all Impact security and guard contracts in the Province of Saskatchewan, Canada. The purchase price was $2.0 million, with $1.35 million in cash paid on closing and the balance to be paid as an earnout based on the performance of the contracts over the next twelve months.
- Recorded full year revenue of $20.3 million, which includes only eight months of security-related revenue because the SRG acquisition closed on February 1. Security revenue represented 58.4% of revenue in the fiscal year.
- Comprehensive after-tax net income of $1.9 million for the full fiscal year.
- Adjusted EBITDA of $2.9 million ($0.05 per share) for the full fiscal year.
- Increased our cash position by $1.5 million while repaying $5.2 million in long-term debt, bringing our total debt outstanding to approximately $2.5 million. Subsequent to year-end, we paid down another $2.065 million in debt.
- Paid a quarterly dividend of $0.01 per share, or $0.04 per share annualized.
- We finished the fiscal year ended September 30 with:
- Cash and cash equivalents of $28.8 million;
- Loans and mortgages receivable of $12.5 million;
- Total shareholders' equity of $75.9 million; and
- Long-term debt of $2.5 million.
Key Performance Indicators for the COMPARABLE periods are summarized below:
Key Performance Indicators
Fiscal Year ended
Security revenue as a percent of total revenue
Adjusted EBITDA per share (basic)
Comprehensive net income (loss)
Comprehensive net income per share (basic)
REVENUE & NET INCOME
Revenues for the fiscal year ended September 30, 2021 were $20.3 million compared with $25.6 million for the same period last year. The decrease in revenues was due to the decline in crop revenue from a smaller book of canola contracts this year compared to last year, partially offset by eight months of security revenue resulting from the acquisition of SRG completed on February 1, 2021.
Revenue from agriculture was $8.4 million for the fiscal year ended September 30, 2021, compared to $25.6 million for the previous fiscal year. Revenue from security services was $11.8 million during the fiscal year. We expect agriculture revenue to continue declining, resulting in an increase in the proportion of our revenue associated with security.
Streaming Contract Portfolio
As of September 30, 2021, we have active streaming contracts with 26 farmers, primarily located in Saskatchewan. We expect this number to drop rapidly over the next fiscal year, reducing agriculture to a tiny part of our business.
Key balance sheet items are summarized below:
Statements of Financial Position
Sept 30, 2021
Sept 30, 2020
Crop interests and other financial assets
Loans and mortgages receivable
Total shareholders' equity
Common shares outstanding
Book value per share
UPDATE ON NORMAL COURSE ISSUER BID
On December 29, 2020, we announced the renewal of the Normal Course Issuer Bid (NCIB), allowing the company to buy back up to 3,400,000 of its Class A common shares during the 2021 calendar year. Under our NCIB, during the fiscal year ended September 30, 2021, we bought back a total of 1,602,409 shares at an average price of $0.87 per share (on a pre-consolidation basis).
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 book of canola streaming contracts continues to decline rapidly as farmers take advantage of low interest rates and high canola prices to refinance and/or buy out of their contracts with us. This means that we have become a security company much faster than we originally expected.
Further, the remaining volume of our agriculture business has shrunk to such an extent that the impact of the price of canola on our financial results is small. Future growth will be in the security segment, in part from organic growth as SRG wins new contracts, and via acquisition, as SSC and SRG look to acquire other companies in the Canadian cyber and physical security space(s).
We plan to continue to distribute capital to shareholders via the dividend, eliminate our 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 agriculture 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 agriculture business or on our security business.
On October 1, 2021, the Company changed its name from Input Capital Corp. to SSC Security Services Corp. and changed its ticker symbol on the TSX Venture Exchange from "INP" to "SECU" in conjunction with a 1-for-3 share consolidation. In keeping with this change, the quarterly dividend has been adjusted from $0.01 per share to $0.03 per share.
On October 8, 2021, we paid off $2.065 million in long term debt, leaving a balance outstanding of only $0.475 million.
On November 15, 2021, the Company's shares began trading on the OTCQX in the United States, under the symbol "SECUF".
SSC Security Services Corp. is a leading provider of physical and cyber 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:
- Adjusted Net Income (Loss), Adjusted Net Income (Loss) 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 Input's Management Discussion and Analysis available on the Company's website at www.securityservicescorp.ca and on SEDAR at www.sedar.com.
SOURCE SSC Security Services Corp.