Tyco Security Financials - Here's How Big They Are

By: John Honovich, Published on Jun 17, 2014

Tyco is a major force in the security industry, generating about $10 billion USD annually as a hybrid integrator / product manufacturer.

And Tyco's CEO is excited about their performance, gushing, "I have seen a lot of turnaround over my career. But there has been a change, I’ve seen in North America security business in second to none." He also emphasized that "Global products revenue exceeded our expectations and the operating performance was very strong... I am very proud to see the positive results."

In this note, we examine why Tyco's CEO is so bullish and what the numbers are behind it.

**** ** * ***** force ** *** ******** industry, ********** ***** $** billion *** ******** ** a ****** ********** / product ************.

*** ****'* *** ** excited ***** ***** ***********, gushing, "I **** **** * lot ** ********** **** my ******. *** ***** has **** * ******, I’ve **** ** ***** America ******** ******** ** second ** ****." ** also ********** **** "****** ******** revenue ******** *** ************ and *** ********* *********** was **** ******... * ** very ***** ** *** the ******** *******."

** **** ****, ** examine *** ****'* *** is ** ******* *** what *** ******* *** behind **.

[***************]

Revenue ********* ********** ** ************

****'* ~$** ******* *** revenue ** ***** **** 3 ***** **********:

  • ~$* ******* *** ******* from ***** ******** ****** integration
  • ******** **** **** ~$* ******* USD ******* **** ***** system *********** ******** ******* of ***** *******
  • ~$*.* ******* *** ******* from ***** ******** ******** line (********* ***** ************, access *******, *********, ***.)

**** **** *** ******** more ******** ********** ** their ********.

No ** *** ******

*******, ****'* ****** ** quite *** *** *********** non ********.

**** **** ******* ***** 3% *** **** *% growth ****** ***** **********.

******,*** ** ****, ******* ******* *** up **** *.*%, ****** organic ****** *** *%.

*******, ** ***** *******, installation ******* ******** *% and ****** *** ********************** *%.

** ********, ******** ******** revenue *** ** *% overall, ****** ** *** only *% ***********, **** acquisitions, ************* ********.

But ****** *******

** *** ** ****'* CEO ** *****? ****** low ************?

****'* ***** ** ******* / ********, ** ************ ** *** ********'* call: "* **** * ********** at *** ******** *** ... that ** ***** ******* 15% ******** *** ***** CAGR **** *** ***** year ******."

*** ****'* ******* *** ******:

  • ** *** *********** ****, operating ******* *** ~**% both ** *** ******** and *** **** ** the *****
  • ** *** ************* ****, operating ******* *** ~**%

***** *** **** **** good *******. *** ***** Tyco ** ******* ** large, ** ** *** as ** **** **** to **** ***** ** share ** ** ***********. Rather, ********** ******* ** their *****, ****** ********* ****.

Contrasted ** ******** / ****** *********

*** ***** ** ******* over ******* ****** ***** explain *** **** ** less ********** ** ********** and **** ********** ** dropping ****** **** ******** and ****** *********. *** latter *** ****** ** take ***** **** ********** like **** *** **** to ***** * **** better ******* ** **** attractive ******* **** ********* like **** *** **** brand *** ******* ** place ** ******** *******.

Comments (9)

John,

take a look at the investor presentations of Tyco. There you can find a more granular sales breakdown...

In 2012, 55% of global products revenue were fire protection products, 25% security products (Intrusion, Video, Access Vontrol etc.) and 20% life safety products.

Thanks, I couldn't find anything more recent than September 2012 but it is helpful. Others, see Tyco Investor Day Presentation 2012.

Excerpts:

And here are 2 other excerpts from other presentations:

Tyco, a blessing for every fire alarm contractor.

Undisclosed B, as I have no experience on the fire side, can you elaborate?

I am presume you are being sarcastic but I don't know enough there to get it :)

Many of our customers come to use from Tyco specifically those who have Simplex Fire systems, because their prices are so high, often 5 or 6 times higher than ours (equipment, annual inspections and service calls). We can come in and provide higher quality service at a more reasonable price. Many Simplex systems are installed by subs that don’t really care about the work they’re doing. This of course isn’t to say that a simplex fire system isn’t a good system; it’s just how they deal with their customers and who ends up installing it. As a side note we typically install Bosch equipment so we’re not going cheap dirty.

My point is we get a lot of business because of them.

I can confirm that. Simplex makes a ton of profit on their fire systems, often because they're specified in big contracts and getting accepted equals can be difficult. They have a couple of semi unique features that helps lock them in.

But in my past we sold inspection and maintenance contracts and spare parts to Simplex dealers, and came in much, much cheaper than Simplex themselves.

In the sdm 100, tyco security lists gross revenue of 3.9B and rmr of 62m. How do these numbers square up? Is monitoring included in service? Does sdm excludes products and fire?

Good question.

My guess is that there are a few factors:

  • SDM 100 covers US only, the ~$10 billion figure includes Canada (and maybe Mexico)
  • Fire / Simplex Grinell is likely excluded from that number (which is a multi billion business in its own right)
  • There may be other integration businesses in life safety that are excluded
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