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").Second Quarter Ended June 30, 2008 -- Revenues increased 79% to $38.3 million for the second quarter of 2008. -- Gross profit for the second quarter of 2008 increased 154% to $3.2 million from a year ago. In addition, there were no material start-up costs on government contracts this quarter. -- Gross margins for the second quarter of 2008 were 8.5% compared to 6.0% a year ago. The difference between 2008 and 2007 is primarily attributable to the improvement in contract profitability at Paragon. -- Net loss per basic and diluted share for the second quarter of 2008 was $(0.35) compared to $(0.45) a year ago, a 22% improvement. -- EBITDA, as adjusted (see "EBITDA, as adjusted" definition below), for the second quarter of 2008 improved to a positive $752,000 from a negative $771,000 a year ago. Recent Highlights -- Paragon awarded two contracts from Department of Homeland Security and Department of Defense worth approximately $5.0 million in total. -- Cornwall awarded $8.7 million contract to provide armed and unarmed guards at State facilities throughout the State of Florida. -- Contract pipeline totals approximately $612 million, including approximately $345 million of contracts under bid and approximately $267 million of contracts for which bids have been solicited and are being prepared.
"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
"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
The gross profit for the second quarter of 2008 was
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
The operating loss for the second quarter of 2008 was reduced to
EBITDA, as adjusted, was a positive
Interest expense, net, increased to
A tax benefit of
Financial Discussion for the Six Months Ended June 3o, 2008
During the six months ended June 30, 2008 , revenue for Tri-S Security grew
The gross profit for the six months ended June 30, 2008 was
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
The operating loss for the six months ended June 30, 2008 was
EBITDA, as adjusted, was a positive
Interest expense, net, increased to
A tax benefit of
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.
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.Tri-S Security Corporation and Subsidiaries Statements of Operations Unaudited (In thousands, except per share data) Three Three Six Six Months Months Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2008 2007 2008 2007 Revenues $38,346 $21,426 $64,811 $41,631 Cost of revenues: Direct labor 24,294 13,612 40,760 26,307 Indirect labor and other contract support costs 10,403 6,134 17,773 11,385 Amortization of customer contracts 404 404 809 810 35,101 20,150 59,342 38,502 Gross profit 3,245 1,276 5,469 3,129 8.5% 6.0% 8.4% 7.5% Selling, general and administrative 3,135 2,906 6,088 5,522 Amortization of intangible assets 170 221 346 456 3,305 3,127 6,434 5,978 Operating income (loss) (60) (1,851) (965) (2,849) Other income (expense): Interest expense, net (1,481) (472) (2,349) (930) Interest on series C redeemable preferred stock - (75) - (150) Other income - 13 5 563 (1,481) (534) (2,344) (517) Loss before income taxes (1,541) (2,385) (3,309) (3,366) Income tax benefit (55) (792) (8) (1,097) Net loss $(1,486) $(1,593) $(3,301) $(2,269) Basic and diluted net income (loss) per common share $(0.35) $(0.45) $(0.79) $(0.65) Basic and diluted weighted average number of common shares 4,203 3,518 4,203 3,511 Tri-S Security Corporation and Subsidiaries Balance Sheets (In thousands, except per share data) Unaudited Audited June 30, 2008 December 31, 2007 Assets Current assets: Cash and cash equivalents $536 $465 Restricted cash 75 348 Trade accounts receivable, net 27,874 13,993 Prepaid expenses and other assets 1,337 353 Total current assets 29,822 15,159 Property and equipment, less accumulated depreciation 821 476 Goodwill 16,078 16,078 Intangibles Customer contracts 1,838 2,647 Deferred loan costs 256 515 Other 708 769 Total assets $49,523 $35,644 Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $1,194 $1,983 Other accrued expenses 1,641 895 Accrued salary and benefits 5,552 3,940 Asset based lending facility 26,753 11,625 Accrued Interest 357 - Income taxes payable 184 586 Term loan 2,500 10% convertible notes 7,584 7,473 Long-term debt - current portion - 8 Total current liabilities 45,765 26,510 Other liabilities: Term loan - 2,500 Accrued interest expense - long term 315 353 Series D preferred stock subject to mandatory redemption 1,500 1,500 1,815 4,353 Total liabilities 47,580 30,863 Stockholders' equity: Common stock, $0.001 par value, 25,000,000 shares authorized, 4,203,280 shares issued and outstanding at June 30, 2008 and December 31, 2007. 4 4 Treasury stock (105) (105) Additional paid-in capital 16,831 16,368 Retained deficit (14,787) (11,486) Total stockholders' equity 1,943 4,781 Total liabilities and stockholders' equity $49,523 $35,644 Tri-S Security Corporation and Subsidiaries Statements of Cash Flows Unaudited (In thousands) Six Months Six Months Ended Ended June 30, 2008 June 30, 2007 Cash flow from operating activities: Net income (loss) $(3,301) $(2,269) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Gain on Cornwall settlement - (250) Bad debt expense 293 190 Depreciation and amortization 1,362 1,437 Deferred income tax benefits - (282) Common shares, options and warrants in exchange for services and interest 463 148 Non-cash interest expense 111 97 Changes in operating assets and liabilities: Unbilled revenues and trade accounts receivable (14,174) (993) Prepaid expenses and other assets (984) (444) Trade accounts payable (789) 505 Accrued liabilities 2,669 487 Income taxes payable (402) (830) Net cash provided (used) by operating activities (14,752) (2,204) Cash flow from investing activities: Restricted cash 273 244 Purchase of property and equipment (552) (151) Net cash provided (used) by investing activities (279) 93 Cash flow from financing activities: Payment made for Paragon settlement (50) Proceeds from (payments on) asset based lending facility, net 15,128 497 Proceeds of (repayments on) of term loans - 1,789 Deferred financing costs (26) (40) Net cash provided (used) by financing activities 15,102 2,196 Net increase (decrease) in cash and cash equivalents 71 85 Cash and cash equivalents at beginning of period 465 66 Cash and cash equivalents at end of period $536 $151 Supplemental disclosures of cash flow information: Interest paid $1,990 $833 Income taxes paid $394 $14 Tri-S Security Corporation and Subsidiaries EBITDA, as adjusted Three Three Six Six Months Months Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2008 2007 2008 2007 Net Loss $(1,486) $(1,593) $(3,301) $(2,269) Adjustments: Income tax expense (benefit) (55) (792) (8) (1,097) Interest expense, net 1,481 472 2,349 930 Interest on preferred stock subject to mandatory redemption 75 - 150 Other income/(expense) 0 (13) (5) (563) Amortization of intangible assets 170 221 346 456 Amortization of customer contracts 405 404 809 810 Depreciation 110 93 207 171 Start up costs on new contracts 30 290 549 290 Non-cash stock based compensation 97 72 463 148 EBITDA, as adjusted $752 $(771) $1,409 $(974)
SOURCE Tri-S Security Corp.
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