EGD secures $42.5m

Its system is solar-powered, electrified, and sold on a subscription basis
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Thursday, September 8, 2011

COLUMBIA, S.C.—Electric Guard Dog, based here, a manufacturer and installer of a solar-powered perimeter security system that is electrified and monitored by a central station, announced this week that it secured a new $42.5 million credit facility with CapitalSource.

The new facility represents a $12.4 million increase to its existing credit facility. CapitalSource managing director Will Schmidt said EGD has “found a way to build significant RMR by providing perimeter protection, an area that has usually been sold outright by systems integrators.”

“This facility will give them additional capacity to grow. We refinanced the subordinated debt,” Schmidt said. “That will make the balance sheet more effective and lower their overall cost of borrowing.”

With a 14-percent organic annual growth rate since 2007, EGD expects to have 2011 revenues of about $18 million, according to CEO Jack DeMao. “That’s virtually all commercial RMR, at approximately $1.5 million per month.”

EGD’s customers—which include UPS, FedEx, major shipping companies and equipment rental companies—typically have valuable assets stored outside.

Founded in 1973 by Bill Mullis, EGD originally provided real guard dogs. In 1991, Mullis developed the first EGD fence to protect his business, which DeMao said had been “repeatedly broken into despite the fact that there were 70 guard dogs on site.”

The fact that the system is solar-powered is popular today because it’s green, DeMao said, but it was developed so the system would function when the power went out. “We began in the Southeast, where power outages are pretty common, and the bad guys really celebrate a storm,” he said. Criminals know that most electric fences can be compromised during a power outage, and know that battery back-up only lasts so long, he said.

 Today the non-lethal fence can integrate with perimeter intrusion, video surveillance and interior intrusion products.

EGD provides 24/7 technical support, by phone and on site, for the life of the contract. It will take care of the repair and maintenance of the system and it also covers liability for its customers.

Typically, EGD installs its own panels and communications networks along with the fence, “but increasingly, the bigger national customers want us to integrate our system with their video and intrusion system,” he said.

The company has just under 80 employees. It has 30 technicians and 10 installation crews (the installers are independent contractors “but they primarily work for us” DeMao said), located across the country.

 “This is a heavy-duty security solution. It’s not normally the first choice,” he said. Customers come to EGD when simpler solutions—barbed wire, extra lighting, cameras—have not been effective. “We tend to be in the toughest areas with the toughest crime issues.”

Many of its customers have seen vandalism rates drop significantly, and attrition rates are low. DeMao says that the system itself is a deterrent to crime. “Our customers say that we are the number one theft deterrent service in the U.S.”