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Mace Security International Inc. Message Board

  • diva1865 diva1865 May 5, 2004 10:12 PM Flag

    SMART MONEY NEGATIVE ARTICLE

    that Smart Money article is very NEGATIVE

    Some excerpts:

    Despite declining profits and flat revenues, shares of Mace Security International (MACE) surged 80% to $5.92 Wednesday after the maker of pepper spray reported a 200% jump in sales at its tiny electronic-surveillance unit. The division, which supplies surveillance cameras and related items, accounts for just 9% of the company's overall revenue.

    "We've seen a lot of companies entering the security market, such as General Electric (GE) and a lot of multinationals.

    Though the numbers are far from GE-esque, Mace did manage to stay in the black for the first quarter. The Mount Laurel, N.J., company posted net income of $217,000, or two cents a share, down from $342,000, or three cents, a year earlier. Operating income slumped 28% to $705,000. Revenue inched up less than 1% to $12.7 million.

    Despite the hoopla surrounding its security products, Mace makes most of its money from the unglamorous business of operating car washes. The company owns 51 car washes and five truck washes in six states, which pulled in 89% of Mace's $49 million in sales during 2003. A 1999 acquisition got Mace into vehicle detailing. Revenue from the car washes fell by $687,000 year-over-year during the first quarter to $10.8, largely because of bad weather in the Northeast and Texas. Mace also sold or closed some locations, which eroded sales.

    Mace's security business is broken into two divisions: the aforementioned electronic-surveillance and consumer-defense products, such as pepper sprays and home alarm systems. Overall, first-quarter security sales jumped 72% year-over-year to $1.9 million. Revenue from electronic surveillance surged to $1.2 million from $400,000 a year ago; sales of consumer products were flat at $700,000.

    After Sept. 11, 2001, Mace made a concerted effort to boost its security offerings, most notably with the August 2002 acquisition of Micro-Tech, a manufacturer of cameras, digital video recorders and monitors.

    According to Shetty of Frost & Sullivan, the security industry has grown 13% over the past two years. He predicts compound annual growth of 10% to 12% over the next seven years. (THAT'S ALL???? GROWTH COMPANIES DO 50 to 200% YOY WHEN THEY ARE GROWING)

    While the increased demand for Mace's electronic-surveillance gadgets is significant, security still makes up a small percentage of total sales. And even as the electronic-surveillance unit blossomed, gross profit as a percentage of revenue remained flat year-over-year at 29%. The culprit could be the rising costs associated with expanding the business.

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