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Garda World Security reports 39% increase in Q1 profit, tops Street views

Published: 23:17 25 May 2012 AEST

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Garda World Security (TSE:GW) reported its "best first quarter ever" on Friday, it said, with earnings exceeding analysts’ expectations.

For the three months that ended April 30, the Montreal-based security services provider posted net income of $6.3 million, or 20 cents per share, up 39 percent from $4.48 million, or 14 cents per share, a year ago.

Revenues rose 12.1 percent to $321 million, from $286 million in the same period last year, with the company noting that organic growth contributed $31.8 million or 11 percent.

Analysts polled by Thomson Reuters had expected earnings of 16 cents per share, on $302-million of revenue.
Gross margins rose to 24 percent, from 22.5 percent in the year ago quarter.

"In the first quarter, we successfully sustained the strong momentum we had established over the past three quarters," said senior VP and CFO Patrick Prince.

"All of our operating units delivered solid growth and very good margins for the quarter. Organic growth takes time and requires investments, but our performance and improved operating profit for the last three quarters confirm that we are delivering value.

"The numbers speak for themselves."

Garda's security solutions business posted $171.7 million in revenues, up 15.8 percent from $148 million a year earlier, with Canadian security up 17 percent, excluding airport operations.

Emerging markets within the security solution segment posted $36 million in revenues, up 85 percent from $19.4 million in the same quarter of 2011.

The Montreal-based security firm said revenues from the company’s cash logistics business rose 8.1 percent to $148.7 million.

"This is our best first quarter ever and a great start to the year," said Garda's president and CEO, Stephan Cretier.

"We expect to improve on that performance quarter after quarter as growth continues across all our platforms.

"The remarkable results of our business platforms allow us to pursue opportunities with even greater confidence while we continue to invest in our growth, expand our footprint and build a stronger organization."

Garda’s revenue in the latest period benefited from the acquisition of the Aeroguard. In October 2011, the company made its largest acquisition in four years as it bought private airport screening company Aeroguard for $16 million.

In August of last year, Aeroguard signed a five-year contract with the Canadian Air Transport Security Authority to provide screening services at 15 airports in the Prairies and Northwest Territories.

Under the contract, estimated to be worth $84 million in annual revenues or $421 million over five years, Aeroguard is responsible for screening at the Calgary, Winnipeg and Edmonton airports.

The contract can be extended to 2022, making it worth twice as much.

In the same month, Garda won the largest contract in its history with a five-year deal worth around $650 million to provide airport screening at 15 Ontario airports, including Toronto's Pearson Airport.

An extension option raises the potential value to $1.3 billion through 2022.

Looking ahead, Garda reiterated its previous guidance, saying it continues to expect strong organic growth and operating profit of $145 million in the full year 2012.

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