Interface Security Systems, one of SDM’s 2006 Dealer of the Year Honorees, has continued its growth despite Hurricanes Katrina and Rita.

Established 11 years ago, Interface Security Systems Holdings Inc. and the Greater Alarm Co., Earth City, Mo., has made a name for itself in the upper and lower Mississippi valley and in California, where Greater Alarm Co. was headquartered when it was acquired by Interface Security in 2004. The company also has business in Texas that it obtained when it acquired Hawk Security Systems in 2005.

Interface Security, one of SDM’s 2006 Dealer of the Year Honorees, has nearly doubled its total annual revenue since 2004 and ranked 12th in this year’s SDM 100 despite the disruption caused by Hurricanes Katrina and Rita.

“Katrina had a major effect on our New Orleans customer base, but when you weighed the effect measured against all our customers and the entire RMR base, it was a relatively small percentage,” estimates CEO Michael Shaw. “So we were able to work through it, as opposed to so many smaller dealers, who sustained such major customer losses they were unable to come back and recover.

“So our diversification in the 26 or so markets that we’re in gives us some insulation against an isolated event like Katrina or an earthquake in California,” Shaw emphasizes.

Shaw estimates 15,000 Interface Security customers in New Orleans and central and southern Mississippi were affected by Hurricanes Katrina and Rita, which he calls a “double whammy.”

Approximately 2,000 customers were lost permanently just in the New Orleans market because they lost their homes or businesses and have not returned to the area. Between Katrina and Rita, the company’s business was disrupted for approximately 30 days, Shaw estimates. Interface Security’s secure operations centers (SOCs) are located in Earth City, Mo. and Little Rock, Ark. The Little Rock facility does audio monitoring and serves as a backup.

The future plans for the company are to continue with its business model, which Shaw thinks has proven successful. Besides Greater Alarm and Hawk Security, Interface Security has acquired a number of smaller, regional companies. Its most recent acquisition was of a small local business named AlarmTec in Shreveport, La.

“Acquisitions have been a fairly large part of our growth,” Shaw emphasizes. “About 50 percent of our customers have been acquired through a series of acquisitions over the years, and 50 percent of our customers have been generated organically through our internal sales programs. If we can continue to sustain our average growth rate, within two or three years, we would be knocking on the door of the SDM Top 10 from a revenue perspective,” Shaw calculates.

Sidebar: At a Glance

SDM Dealer of the Year Honoree: Interface Security Systems, Earth City, Mo.
Number of Employees: 576
Revenue: $65.90 million in 2005

Recurring Revenue: $2.8 million (estimated for 2006)
Customers: 86,000 (estimated for 2006)