AFA Protective buys in Philly

SYOSSET, N.Y.—In a deal that bumps the company's RMR to more than $2.5 million, AFA Protective Systems on June 1 acquired the alarm business assets of Sera Security of Southampton, Pa., in the Philadelphia metropolitan area.

“This is our entry into Philly,” Robert Kleinman, AFA Protective CEO, told Security Systems News.

The deal includes $50,000 in RMR. The majority of the accounts are commercial fire alarm accounts in the Philadelphia/Southern New Jersey area. The deal also includes maintenance and test-and-inspection services.

Coming along with the deal are “between 10 and 15 new employees,” Kleinman said.

AFA Protective is a super-regional with 18 offices spread along the East Coast and throughout the Southeast. The Southampton office is the 19th office, but will merge with AFA's Mt. Laurel, N.J. office. One of the two brick-and-mortar offices will be eliminated at some point in the next several months.

Kleinman said that AFA Protective, which is a public company, but with limited ownership, is coming off of two disappointing years (2010 and 2011), but that business is looking up.

“We noticed a serious uptick in sales starting in November of 2011 and we had a very good first quarter of 2011,” he said.

According to information provided to SSN, AFA Protective's net income for Q1 of 2012 was $455,000 ($2.96 per share) up from $147,000 ($.96 per share) for the same period of time in 2011. Cash flow from operations was up to $906,000 for Q1 2012 compared to $500,000 in 2011. Revenues for the quarter were $18,990,000 compared to $17,146,000 in 2011.

Kleinman is pleased that AFA's first quarter attrition was an extremely low 6.8 percent. He expects that number to remain well below the industry average for the rest of the year, but not quite that low.

Assuming an absence of “another reversal of the economy and or some adverse political intervention,” Kleinman anticipates good results for 2012.