IRVING, Texas, Aug. 5 /PRNewswire-FirstCall/ -- Brink's Home Security Holdings, Inc. (NYSE: CFL), a premier provider of monitored security services in North America now operating under the brand Broadview Security, today reported financial results for the second quarter ended June 30, 2009.
"I am pleased with our continued organic growth in revenue, operating profit, and our customer base in a challenging economic climate," said president and chief executive, Bob Allen. He continued, "We recently launched our new brand, Broadview Security, and are encouraged by the positive reception from both existing and prospective customers. We are excited about the future with our new brand and look forward to building upon the heritage of success that we have demonstrated over the last 26 years. For the full year, our expectations remain unchanged: we expect growth in our monthly recurring revenue, GAAP operating profit, and subscriber base, despite pressure on the customer disconnect rate."
Second Quarter Results
Revenue for the second quarter of 2009 was $140.0 million, representing an increase of 4.6 percent from $133.9 million recorded in the same period one year ago. The increase in revenue was primarily due to continued growth in the subscriber base, up 5.2 percent from a year ago, and higher average monitoring rates, partially offset by a decline in revenue in our new construction business. Also, the comparison is impacted by a $1.8 million non-cash accounting correction that increased revenue in the second quarter of 2008.
Operating profit was $27.5 million, an increase of 8.7 percent from $25.3 million in the second quarter of 2008. Second quarter 2009 operating profit margin was 19.6 percent, up from 18.9 percent in the comparable quarter in 2008. The improvement in operating profit was due primarily to the increase in size of the subscriber base and a reduction in royalty rate charged to the Company by its former parent. (Historically, the royalty rate had been approximately 7 percent of revenue, but decreased to approximately 1.25 percent of revenue beginning November 1, 2008.) Operating profit in the second quarter was reduced by $2.2 million of expense associated with the Company's new brand initiative. The Company also incurred increased expense in its base level marketing program in the second quarter to build momentum in sales activities preceding the brand launch. The increase over the comparable quarter approximated $1.4 million, or $0.02 per diluted share. The comparability of the two quarters is also affected by the previously referenced non-cash accounting correction which increased second quarter 2008 operating income by $2.4 million.
Net income for the second quarter of 2009 was $16.6 million and diluted GAAP earnings per share were $0.36, representing an increase of 7.1 percent from net income of $15.5 million and pro forma earnings per share of $0.34 in the same period last year. (The terminology 'pro forma earnings per share' is used in conjunction with the financial results for the three and six months ended June 30, 2008 since the Company was not public at that time and the fully diluted number of shares outstanding are, therefore, calculated on a 'pro forma' basis.) The increase in net income was primarily due to the lower royalty expense incurred in the second quarter of 2009 and, to a lesser extent, the profit impact of the larger subscriber base, partially offset by the previously referenced new brand development expenses and the effect of the accounting correction on 2008 results. Brand development expenses reduced net income by $1.4 million, or $0.03 per share, in the second quarter of 2009. The accounting correction increased 2008 net income by $1.5 million, or $0.03 per share, in the second quarter 2008.
