05/25/2012 11:24 EDT | Updated 07/25/2012 05:12 EDT

Garda profiting from Montreal student protests as special events boost security

MONTREAL - Garda World Security Corp. says it is profiting from student protests on the streets of Montreal as customers request more help in securing their summer events.

"Naturally, when there's unrest somewhere — the Egyptian election or some disruption here in Quebec or a labour disruption somewhere — unfortunately it's usually good for business," chief executive Stephan Cretier said Friday.

The usually outspoken businessman declined to specify what kind of increased security private clients are demanding, or how much extra revenue is being generated.

"It's positive," he said in an interview, adding that the summer season is always busy providing security for special events like the Formula 1 auto race or the International Jazz Festival, both set to take place next month.

"The summer season is always a very busy season for us, plus there's unrest now, so naturally some private clients are asking for more security."

Garda claims to be Canada's largest provider of security for large events, with about 15 per cent market share.

Clients also include Indy car races, the Calgary Stampede, a variety of events in Toronto's Dundas Square and LPGA tournaments.

Although Montreal police have been busy quelling nightly protests, Cretier said Garda hasn't been called upon to help offset some of their work.

While the Montreal-based company is seeing some increased security needs at home, its security business in the Middle East and Northern Africa is surging from heightened oil and gas exploration in Iraq and the development of diplomatic sectors in Afghanistan.

Revenue from emerging markets grew by 85 per cent to $36 million in the first quarter, Garda reported Friday.

Garda said it remains on track to more than double its international security business to $200 million of annual revenues by the end of 2012.

Business in Libya has picked up in the last few months. Garda won a contract to protect the British embassy in Tripoli and is seeing large energy companies restarting operations that were abandoned during the civil war.

"It's not a big market today but it has the feel of a market that could do well and we've got a very, very solid operation."

The growth in international revenues allowed Garda (TSX:GW) to easily beat analyst expectations as it reported its best-ever first-quarter results.

The security firm said its net profit in the three months ended April 30 was $6.3 million, up 39 per cent from $4.5 million in the same year-earlier period.

The earnings amounted to 20 cents per share for the most recent period, up from 14 cents per share last year.

Revenue totalled $320.5 million, up from $286 million.

Two analysts polled by Thomson Reuters had expected earnings of 16 cents per share on $302 million of revenue.

Cretier acknowledged that the company's weakened performance since 2008 has tested the patience of shareholders, including himself who owns close to 25 per cent of the business.

"But Garda is back, back stronger and wiser than ever," he told analysts during a conference call.

U.S. revenues increased 8.8 per cent to $128.5 million, while Canada was up 5.2 per cent to $156 million.

The Canadian security business contributed $135.8 million in revenues, with $20.3 million coming from cash logistics. Canadian security excluding airport operations was up 17 per cent.

Reduced airport revenues from the Canadian Airport Transportation Security Authority trimmed overall revenues by about 12 per cent. That was offset by the acquisition of the Aeroguard airport screening contract and increased security contracts in Alberta's energy sector.

Garda provides passenger screeners at 27 Canadian airports, including Toronto's Pearson International Airport, and security in Alberta's oilsands.

Meanwhile, Cretier said it is meeting with companies interested in purchasing its cargo flight service Ameriflight, added from the 2007 acquisition of ATI.

The air service was founded to transport money and cheques but now mainly services courier companies like FedEx, DHL and UPS. It contributes about $18 million a year on $85 million of revenues.

Vincent Perri of Laurentian Bank Securities said the results were "slightly positive."

"Overall, results reflect better than expected top line growth and profitability," he wrote in a research note.

The company has 45,000 employees and provides security, cash logistics and global risk consulting to clients in North America, Europe, Latin America, Africa, Asia and the Middle East.

On the Toronto Stock Exchange, Garda's shares gained 75 cents, or 10.26 per cent, at $8.06 in afternoon trading.