Tri-S Security Announces Results for the 2nd Quarter Ended June 30, 2008

ATLANTA , Aug. 12 /PRNewswire-FirstCall/ -- Tri-S Security Corp. (Nasdaq: TRIS), a provider of security services and equipment for government and private entities, today announced its results of operations for the second quarter ended June 30, 2008 . Tri-S provides security services through its two wholly-owned subsidiaries, The Cornwall Group, Inc. ("Cornwall") and Paragon Systems, Inc. ("Paragon").

"Our second quarter 2008 results continue to show the improvement we noted in the first quarter, particularly in terms of both revenue growth and positive EBITDA, as adjusted," said Ronald Farrell , Chairman and CEO, Tri-S Security Corp. "Our contract pipeline continues to be strong, and we remain very encouraged about winning new contracts at both Paragon and Cornwall. Since the first of this year, Tri-S has been awarded new contracts worth approximately $372 million over the contract terms and we intend to continue to build on this success," added Mr. Farrell.

"We remain excited with our financial performance this quarter and we are very optimistic about our full year 2008 results based upon our numbers for the first half of 2008," Mr. Farrell concluded.

Financial Discussion for Second Quarter Ended June 3o, 2008

During the second quarter of 2008, revenue for Tri-S Security grew 79% to $38.3 million from $21.4 million in the second quarter of 2007. This increase was the result of internal growth principally at Paragon. Paragon now represents 73% of revenue for the second quarter of 2008 compared to 53% a year ago.

The gross profit for the second quarter of 2008 was $3.2 million compared to $1.3 million for the second quarter of 2007, an increase of 154%. There were no material start-up costs on government contracts effecting gross margins this quarter.

Gross margins for the second quarter of 2008 were 8.5% compared to 6.0% a year ago, an improvement of 42%.

General and administrative costs for the second quarter of 2008 totaled $3.1 million compared to $2.9 million in the second quarter of 2007. General and administrative costs represented 8% of revenue for the second quarter of 2008 down from 14% of revenue in the same quarter for 2007.

The operating loss for the second quarter of 2008 was reduced to $60,000, compared to an operating loss of $1.9 million for the second quarter of 2007.

EBITDA, as adjusted, was a positive $752,000 for the second quarter of 2008 as compared to a negative $771,000 for the second quarter of 2007

Interest expense, net, increased to $1.5 million in the second quarter of 2008 compared to $0.5 million in the second quarter of 2007. This increase is primarily attributable to a higher borrowing base due to increased revenue from new contracts, over advance interest on our borrowing facility and interest on our $2.5 million term loan issued in March 2007 . As a result, the loss before income tax was $1.5 million in the second quarter of 2008 compared to $2.4 million in the comparable period last year, a 35% improvement.

A tax benefit of $55,000 was recorded for the second quarter of 2008 compared to a tax benefit of $792,000 for the second quarter of 2007 due to management's decision to record a valuation allowance of $497,000 against deferred tax assets in the second quarter of 2008. Net loss for the second quarter of 2008 was $1.5 million compared to a net loss of $1.6 million in the second quarter of 2007.

Financial Discussion for the Six Months Ended June 3o, 2008

During the six months ended June 30, 2008 , revenue for Tri-S Security grew 56% to $64.8 million from $41.6 million in the six months ended June 30, 2007 . This increase was the result of internal growth principally at Paragon. Paragon now represents 69% of revenue for the six months ended June 30, 2008 compared to 52% a year ago.

The gross profit for the six months ended June 30, 2008 was $5.5 million compared to $3.1 million for the six months ended June 30, 2007 , an increase of 75%. Included in this figure are start-up costs totaling $0.5 million in the six months ended June 30, 2008 and $0.3 million in the six months ended June 30, 2007 .

Gross margins for the six months ended June 30, 2008 , were 8.4% compared to 7.5% a year ago, the majority attributable to the improvement in contract profitability at Paragon.

General and administrative costs for the six months ended June 30, 2008 increased by $0.6 million to $6.1 million, primarily due to an increase in stock based compensation. General and administrative costs represented 9% of revenue for the six months ended June 30, 2008 , down from 13% of revenue for the same period for 2007.

The operating loss for the six months ended June 30, 2008 was $1.0 million, compared to an operating loss of $2.8 million for the same period for 2007. Included in this figure are start-up costs totaling $0.5 million in the six months ended June 30, 2008 and $0.3 million in the six months ended June 30, 2007 .

EBITDA, as adjusted, was a positive $1.4 million for the six months ended June 30, 2008 as compared to a negative $1.0 million for the same period for 2007.

Interest expense, net, increased to $2.3 million for the six months ended June 30, 2008 compared to $1.0 million for the same period for 2007. This increase is primarily attributable to a higher borrowing base due to increased revenue from new contracts, over advance interest on our borrowing facility and interest on our $2.5 million term loan issued in March 2007 . As a result, the loss before income tax was $3.3 million for the six months ended June 30, 2008 and $3.4 million for the six months ended June 30, 2007 .

A tax benefit of $8,000 was recorded for the six months ended June 30, 2008 compared to a tax benefit of $1.1 million for the six months ended June 30, 2007 due to management's decision to record a valuation allowance of $1.0 million against deferred tax assets in the first six months of 2008. Net loss for the six months ended June 30, 2008 was $3.3 million compared to a net loss of $2.3 million in the comparable period last year.

In this release, we use the non-GAAP financial measure, EBITDA, as adjusted. EBITDA, as adjusted, is calculated as earnings before interest; taxes; depreciation and amortization; non-cash stock-based compensation; start-up costs on new contracts; and other income/expense. A reconciliation of EBITDA, as adjusted, to net loss for the three and six-month periods ended June 30, 2008 and 2007, is attached to this press release.

Tri-S Security will host a conference call at 10:00 a.m. EDT on Wednesday, August 13, 2008 to discuss its second quarter results and respond to appropriate questions. Anyone interested in participating should call 877- 795-3635 approximately five to ten minutes prior to 10:00 a.m. EDT . Participants should ask for the Tri-S Security Second Quarter 2008 Financial Results conference call.

This call is being webcast by Thomson Financial and can be accessed at Tri-S Security's website at http://www.trissecurity.com. The webcast may also be accessed at Thomson's website at http://www.earnings.com. The webcast can be accessed through Wednesday September 3, 2008 on either site. To access the webcast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player, please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp.

About Tri-S Security Corp.

Based in Atlanta, GA , Tri-S Security Corp. (Nasdaq: TRIS) is a provider of security services and equipment for government and private entities. Security services include uniformed guards, electronic monitoring systems, personnel protection, access control, crowd control and the prevention of sabotage, terrorist and criminal activities. As a leading aggregator of elite security companies, Tri-S Security is designed to build a strong enterprise in which to service a unique customer base that ensures America's safety at home and work. Tri-S Security assumes responsibility for the marketing, infrastructure and overall operational performance for its subsidiaries. Tri-S Security's management leverages highly trained government officers, experienced industry leaders, proven financial executives and infrastructure experts to consolidate the fragmented security industry into one efficient and effective security force.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Federal securities laws. Forward-looking statements are commonly identified by such terms and phrases as "should", "expects", "plans", "anticipates", "believes", "estimates", "projects" and other terms with similar meaning indicating potential impact on our business. Although we believe that the assumptions upon which such forward looking statements are based are reasonable, we can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from our projections and expectations are disclosed in our filings with the Securities and Exchange Commission, including the "Risk Factors" section set forth in our Annual Report on Form 10-K for the year ended December 31, 2007 and in our Quarterly Reports on Form 10-Q filed subsequent thereto. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to their underlying assumptions. We do not undertake to publicly update the forward-looking statements contained herein to conform to actual results or changes in our expectations, whether as a result of new information, future events or otherwise. You may obtain and review our filings with the Securities and Exchange Commissions by visiting http://www.sec.gov.

SOURCE Tri-S Security Corp.



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