SSC Security Services Corp. Announces FY2023 Q1 Results

• Q1 2023 revenue of $28.0 million – an increase of $22.1 million over Q1 2022, and $1.5 million higher than the previous quarter (Q4 2022).
• Q1 2023 Adjusted EBITDA of $0.9 million – an increase of $0.8 million over Q1 2022.
• Q1 2023 Adjusted net income of $0.3 million or $0.01 per share compared with $0.1 million or $0.00 per share in Q1 2022.

REGINA, SK, Feb. 16, 2023 /CNW/ - SSC Security Services Corp. ("SSC" or the "Company) (TSXV: SECU) (OTCQX: SECUF), a national provider of cyber, physical and electronic security services to commercial, industrial and public sector clients across Canada, is pleased to release its results for the first quarter of the 2023 fiscal year ended December 31, 2022. All figures are presented in Canadian dollars.

"The results for the first quarter of FY2023 are starting to show the benefits of our becoming a national security services provider as a result of the Logixx acquisition," said Chairman & CEO Doug Emsley. "This represents a great team effort during a busy time of year in our industry, and I want to be sure to acknowledge everyone across the company who contributed to this result.

"Our integration of Logixx into SSC continues. We are optimizing the way services are offered by SRG and Logixx to ensure geographic efficiency and coherence and are working to consolidate our core accounting and finance functions into our national administration centre. We expect these efforts to offer administrative efficiencies once fully in place."

Q1 2023 HIGHLIGHTS

• During the first quarter ended December 31, 2022, revenue was $28.0 million, up $22.1 million over revenue recorded in the same period last year and representing organic growth of 5.7% from last quarter (Q4 2022).
• Adjusted EBITDA for the quarter was $0.9 million ($0.04 per share), up from $0.05 million ($0.00 per share) during the same quarter last year.
• During the quarter, we converted $1.4 million in legacy assets to cash, realizing a $0.4 million write-up in the process. We also paid $0.03 per share in dividends to shareholders and bought back 134,600 shares of the Company at an average of $2.76 per share.
• We finished the quarter ended December 31 with (comparison to prior quarter – Q4 2022):
• Cash and cash equivalents of $9.2 million ($11.2 million);
• Working capital of $25.2 million ($24.5 million);
• Legacy assets (including assets held for sale and mortgages & loans receivable) of $12.0 million ($13.3 million);
• Total shareholders' equity of $70.0 million ($70.6 million); and
• Long-term debt of nil (nil).

Key Performance Indicators for the quarter and previous comparable period are summarized below:

REVENUE, GROSS PROFIT & NET INCOME

During the first quarter ended December 31, 2022, revenue was $28.0 million, up $22.1 million over revenue recorded in the same period last year and representing organic growth of 5.7% from last quarter (Q4 2022).  The Year-over-Year increase in revenues was due primarily to the acquisition of Logixx on June 1, 2022, but the Quarter-over-Quarter increase is entirely internally generated organic growth.

Gross profit for the quarter ended December 31, 2022 increased to $4.2 million (15.1% of revenue) from $0.9 million (15.7% of revenue) during the same quarter last year. The growth in gross profit is primarily a result of the addition of Logixx gross margin starting June 1, 2022.

A gross margin percentage around 15% is in line with our expectations going forward. In previous quarters, this figure had been higher as a result of contributions to gross margin from our legacy business whose effects were immaterial during this quarter.

Comprehensive net income for the quarter ended December 31, 2022 was $0.3 million (profit of $0.01 per share), compared to a comprehensive net loss in the same quarter last year of $0.5 million (loss of $0.02 per share).

ADJUSTED EBITDA

Adjusted EBITDA is the primary KPI used by the Company to measure the financial performance of the Company. Adjusted EBITDA for the quarter ended December 31, 2022, was $0.9 million ($0.04 per share), as compared to $0.05 million ($0.00 per share) during the same quarter last year. Until the legacy business wind-up is substantially complete, it will be difficult to make comparisons to prior periods.

BALANCE SHEET

Key balance sheet items are summarized below:

UPDATE ON NORMAL COURSE ISSUER BID

During the quarter ended December 31, 2022, we bought back 134,600 shares at an average price of $2.76 per share.

We renewed our NCIB for the upcoming year on January 4, 2023 because 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.

ENGAGEMENT OF STONEGATE CAPITAL PARTNERS

We have retained Stonegate Capital Partners Inc. ("Stonegate") of Dallas, Texas to provide advisory and institutional outreach services in the United States, with the objective of raising SSC's profile among US investors. Under the terms of the twelve-month contract, Stonegate will be paid at a rate of USD $4,000 per month.

Stonegate Capital Partners provides corporate communications, corporate access and capital markets advisory services. Stonegate is a privately owned firm based in Dallas, Texas. For more information, see www.Stonegateinc.com.

OUTLOOK

We have been working to integrate Logixx into the operations of the Company and expect this work to continue in FY2023. This includes the consolidation of core accounting and finance operations into the Company's national administrative centre.

We expect demand for security services to continue to grow and our national presence to assist in winning new contracts. Additional growth may come via acquisition, as we look to acquire other companies in the Canadian security industry. Additional acquisitions will help us reach our goals more quickly, but we will not rush to complete new deals and will maintain our financial conservatism throughout.

In our legacy business, the majority of our legacy assets are expected to convert to cash over the next year. Our objective is to make these resources available for the expansion of our security business. When taken together, our Cash and Near Cash position is over $33 million.

We plan to continue to distribute capital to shareholders via the dividend, operate with minimal to no debt while maintaining solid liquidity, and focus on maximizing Adjusted EBITDA per share.

ABOUT SSC

SSC Security Services Corp. is a national provider of cyber, physical and electronic 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.

*Non-IFRS Measures

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, Adjusted Net Income 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 pages 21 and 22 of the Company's Management Discussion and Analysis dated February 16, 2023 available on the Company's website at www.securityservicescorp.ca and on SEDAR at www.sedar.com.

SOURCE SSC Security Services Corp.

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