Double Digits
by Laura Stepanek
May 1, 2008
The 100 largest security installation and
monitoring companies, the SDM 100, attained double-digit growth in 2007 in both
recurring monthly revenue and total revenue.
What do you remember about 1991? In May of that
year, SDM marked publication of the first annual SDM 100, a ranking by revenue
of the largest security installation companies in the United States. The SDM
100 proved to be a cornerstone of the security industry, as it heralded in a
new era of public information about an industry that was — and still is —
largely privately held.
Although some entities exist only in the memories of today’s security dealers,
it is encouraging that many of the companies ranked 18 years ago still rank
among the largest today.
In May 1991, the first annual SDM 100 had total annual revenue of $2.32
billion. This year’s 18th annual SDM 100 brings the total to $7.58 billion.
The primary objective of the SDM 100 is to measure consumer dollars gained by
alarm companies, in order to present an account of the size of the market
captured by the 100 largest security providers. SDM 100 firms are actually
ranked, not by their total gross revenue, but by their recurring monthly
revenue (RMR). RMR is the amount of contractually recurring revenues due from
customers, for such services as monitoring, contracted service, system
maintenance and leasing of security systems.
RMR is typically the basis for valuation of an alarm company. The amount of
RMR, along with other factors, is assigned a multiple, such as 40 times RMR, to
determine a firm’s value in an acquisition. RMR is the language of alarm
company executives and is meaningful in comparative analysis among industry
peers.
Only 28 companies on the SDM 100 earned more than $1 million in recurring
monthly revenue in 2007. Overall, it appears that the 100 firms collectively
grew RMR by less than 1 percent. However, that number is misleading due to an
adjustment of ADT’s recurring revenue. (In 2007 SDM provided an estimated
figure for ADT of $240 million; in 2008, ADT reported its own RMR of $219
million, causing an effect on the total SDM 100 figures that appear to show
flat growth.) If ADT is omitted from total figures, then growth in RMR for the
other 99 companies proves to be a healthier 14 percent.
The health of the security installation and monitoring industry also was proven
by the addition of nearly 5,000 more people employed by these 100 largest firms
in 2007.
No. 1 – ADT – Subscribers, sales revenue
(residential and non-residential), employees, and locations are estimated by
SDM.
No. 3 – Protection One – $3.6 million RMR is from non-owned accounts.
No. 4 – Monitronics International Inc. – $300,000 RMR is from non-owned
accounts.
No. 5 – Stanley Convergent Security Solutions Inc. – Formerly ranked as HSM
Electronic Protection Services Inc.; SDM’s 2005 Dealer of the Year.
No. 7 – Vector Security Inc. – $53,000 RMR is from non-owned accounts. SDM’s
2003 Dealer of the Year. No. 9 – Guardian Protection Services – SDM’s
1999 Dealer of the Year.
No. 10 – Bay Alarm Company – SDM’s 1998 Dealer of the Year.
No. 15 – Guardian Alarm Co. – $1,100 RMR is from non-owned accounts.
No. 16 – Interface Security Systems & The Greater Alarm Co. – $3,734 RMR is
from non-owned accounts.
No. 18 – CPI Security Systems Inc. – SDM’s 2000 Dealer of the Year.
No. 19 – AFA Protective Systems Inc. – $25,000 RMR is from non-owned accounts.
No. 20 – Alarm Detection Systems Inc. – $39,735
RMR is from non-owned accounts. SDM’s 1984 Dealer of the Year.
No. 22 – ACA Security is operated by Alarm Capital Alliance II LLC.
No. 25– ADS Security – $46,505 RMR is from non-owned accounts.
No. 27 – Per Mar Security Services – $18,902 RMR is from non-owned accounts.
No. 28 – General Security Inc. – $127,572 RMR is from non-owned accounts.
No. 30 – Kimberlite Corp. – doing business as Sonitrol of Fresno, Sonitrol of
Stockton, Sonitrol of Modesto, Sonitrol of Bakersfield, Sonitrol of NW Los
Angeles/Ventura Co., Sonitrol of San Francisco, Sonitrol of Marin/Sonoma Cos.,
Sonitrol of Napa/Solano Cos., Sonitrol of Oakland, Sonitrol of So. Alameda Co.,
Sonitrol of Contra Costa Co., Sonitrol of Berkeley/Richmond.
No. 31 – Ackerman Security Systems – SDM’s 2007
Dealer of the Year.
No. 32 – Mountain Alarm – $205,000 RMR is from non-owned accounts. SDM’s 1996
Dealer of the Year.
No. 33 – New York Merchants Protective Co. Inc. – $59,251 RMR is from non-owned
accounts.
No. 34 – First Alarm Security Services – Less than $5,000 RMR is from non-owned
accounts.
No. 36 – Safeguard Security and Communications Inc. – SDM’s 2002 Dealer of the
Year.
No. 37 – Alert Alarm of Hawaii – $1,530 RMR is from non-owned accounts. SDM’s
2006 Dealer of the Year. No. 40 – Supreme Security Systems Inc. – $1,054
RMR is from non-owned accounts.
No. 42 – Sonitrol Cascades – $111,000 RMR is from non-owned accounts.
No. 43 – Security Equipment Inc. – $2,520 RMR is from non-owned accounts.
No. 44 – Doyle Security Systems Inc. – $29,251 RMR is from non-owned accounts.
SDM’s 1997 Dealer of the Year.
No. 46– Custom Security Systems – Monitors an additional 25,445 subscriber
accounts owned by other dealers, resulting in $190,831 RMR.
No. 47 – Sonitrol Security Systems of Buffalo, Rochester, Toronto – $8,000 RMR
is from non-owned accounts.
No. 57 – F.E. Moran Inc. Alarm and Monitoring
Services – $3,440 RMR is from non-owned accounts.
No. 60 – Electronix Systems Central Station Alarms Inc. – $82,000 RMR is from
non-owned accounts.
No. 62 – National Guardian Security Services
Inc. – $50,591 RMR is from non-owned accounts.
No. 63 – Blue Ridge Security Systems Inc. – $69,886 RMR is from non-owned
accounts.
No. 65 – A-Com Protection Services Inc. – $40,833 RMR is from non-owned
accounts.
No. 66 – A-1 Security Ltd. – On April 1, 2008, Stanley Convergent Security Solutions Inc. announced
the acquisition of A-1 Security.
No. 67 – Scarsdale Security Systems Inc. – $7,200 RMR is from non-owned
accounts.
No. 70 – Richmond Alarm Co. – $81,354 RMR is from non-owned accounts.
No. 73 – World Wide Security & GC Alarm –
$40,000 RMR is from non-owned accounts.
No. 75 – Safe Systems Inc. – $178,455 RMR is from non-owned accounts.
No. 76 – Security Systems of America – $37,986 RMR is from non-owned accounts.
No. 83 – Century Tel Security Systems Inc. –
$1,954 RMR is from non-owned accounts.
No. 84 – CIA Security – $6,000 RMR is from non-owned accounts.
No. 89 – Dehart Alarm Systems Inc. – $1,200 RMR is from non-owned accounts.
No. 90 – Custom Alarm – SDM’s 1995 Dealer of the Year.
No. 100 – Audio Sentry Corp. – $3,421 RMR is
from non-owned accounts.
SDM 100: Growth in Action
The table, right, presents aggregate figures for
the SDM 100 group of companies, which are ranked by their recurring monthly
revenue — an industry standard of valuation of a security monitoring business.
Most of the SDM 100 firms are privately held. Submitting recurring monthly
revenue is required for ranking; other figures are not required but mostly
provided. Most firms — but not all — also reported their total annual revenue,
number of subscribers, and installation volumes. Therefore, one should exercise
caution in using this information to extrapolate industry totals or to
benchmark. (See footnotes above for more detailed information.)
RMR Adjustment
Recurring monthly revenue (RMR) improved less
than 1 percent in 2007; however, what appears to be flat growth is actually an
adjustment made for one company, ADT, which reported significantly lower RMR in
2007 than SDM had estimated for ADT the prior year. If ADT’s recurring monthly
revenue were removed from the growth calculation, then RMR improves by 14
percent for the remaining 99 companies. RMR is derived from customer billing
for services such as monitoring, contracted maintenance, and leasing of
security systems.
Dealers' Eggs in Several Baskets
Security alarm companies derive their revenue
from a wide variety of product categories, including the most sizeable, burglar
alarm systems, which comprised 44 percent of dealers’ revenue in 2007 — the
same as in 2006.
12 Million Customers Served by SDM 100
SDM 100 firms in aggregate have 12.5 million
customers under contract, an improvement of nearly 11 percent from 2006 to
2007. The No. 1 firm, ADT Security Services, stands at approximately 6 million
subscribers (estimated), while No. 2, Brink’s Home Security, reported 1.2
million, and No. 3, Protection One, reported 1.7 million customers.
Based on responses from, or estimates of, 97 firms. Not included: Safeguard
Security and Communications Inc.; SDA Security; and SSD Alarm Systems, Kern
Security Systems & Alpha Burglar & Fire.
Source: 2008 SDM 100, SDM Magazine, May 2008
Total Revenue Surges 10 Percent
The SDM 100 grew their total annual revenue by
10 percent in 2007 to reach $7.58 billion. One-by-one, the SDM 100 firms
illustrated their remarkable ability to top their prior-year results. Among 96
out of 100 firms for which year-to-year revenue could be compared, 87 companies
improved their total revenues, many by double-digits.
Source: 2008 SDM 100, SDM Magazine, May 2008
Top Companies Ranked by Residential Customers
Rank by Non-Residential Installation Revenue
Rank by Total Annual Revenue
SDM 100 Alphabetical Index to Companies
Notable Achievements
- No. 2, Brink’s Home Security, achieved greater than 12 percent RMR
growth in 2007. The firm added 300 full-time positions in 2007.
- No. 3, Protection One grew its RMR by 34 percent compared with the
2007 SDM 100 report, and added 600 employees.
- No. 6, Slomins Inc., broke the $10 million mark in RMR in 2007.
- No. 7, Vector Security, added 40 new full-time employees in 2007.
- No. 9, Guardian Protection Services, added 133 full-time positions.
- No. 10, Bay Alarm Company, operating since 1946, broke the 100,000 mark
for total customers. It also added 40 full-time employees in 2007.
- No. 11, Apx Alarm Security Solutions Inc., rose up from a ranking of
No. 18 last year; the firm reached more than 100,000 subscribers.
- No. 12, ASG Security, gained more than 37,000 accounts through
acquisition in 2007, helping to grow its RMR by 53 percent to $3.8 million. The
firm now employs nearly 600 people.
- No. 16, Interface Security Systems & The Greater Alarm Co. (in Calif.), broke the $3 million level in RMR.
- No. 17, Central Security Group, broke the 100,000 mark for total
customers.
- No. 20, Alarm Detection Systems Inc., improved its RMR by more than
14 percent, breaking the $2 million mark in monthly recurring revenue.
- No. 23, Security Networks, improved RMR by 24 percent (compared with
2007 SDM 100 report), to $1.53 million.
- No. 28, General Security Inc., broke the $1 million mark in RMR in
2007.
- No. 31, Ackerman Security Systems, of Atlanta, was chosen as SDM’s
2007 Dealer of the Year.
How to Purchase the SDM 100 Directory
Wouldn’t it be useful to have more information
about each of the 100 firms ranked here? The 2008 SDM 100 Directory includes
contact names, mailing addresses, telephone numbers, Web site URLs, branch
office locations, product buyer names, installation data, revenue sources, and
more. The SDM 100 Directory comes in Microsoft Excel format. To order the SDM
100 Directory, contact Heidi Fusaro at (630) 694-4026 or by e-mail to fusaroh@bnpmedia.com.
A Guide to Reading the SDM 100
The 2008 SDM 100 ranks U.S. companies that
provide electronic security systems and services to both residential and
non-residential customers. This ranking is based on information provided to or,
in a few cases, estimated by SDM. Ranked companies were asked to submit either
an audited or reviewed financial statement, or a copy of their income tax
return showing total gross receipts for the stated period. A vast majority of
the firms ranked are privately held.
The main table, which begins on page 42, ranks 100 firms by their recurring
monthly revenue (RMR) of December 31, 2007. The firm with the highest RMR is
ranked as No. 1, and so on. For each of the 100 companies, the following information
is provided, from left to right:
- Current year rank, which is based on December 31, 2007 RMR. (If two firms have identical RMR, then the total
gross revenue for 2007 is the second determining factor used for ranking.)
- Company name, as used in the marketplace, and headquarters location.
- Amount of recurring monthly revenue (RMR) billed on December 31, 2007. An (est.) following the figure indicates it is an
SDM estimate.
- Number of subscribers (recurring-billable customers) that each firm counted
at year-end 2007.
- Amount of sales revenue from residential system installations in
2007.
- Amount of sales revenue from non-residential system installations in
2007.
- Total gross revenue in millions of dollars. This number represents
total revenue in calendar-year or (the company’s) fiscal-year 2007 from
security system sales/installation, service, leasing, and monitoring.
- Number of full-time employees.
- Number of business locations, including headquarters.
- n/a — not available, or not applicable
To find a firm by name, use the alphabetical index at left.
Questions about the SDM 100 must be sent in writing to: SDM Magazine, attention
Editor, BNP Media, 1050 IL Route 83, Suite 200, Bensenville, Ill. 60106.
Questions and comments also may be e-mailed to the Editor at
stepanekl@bnpmedia.com.
|
