DVS Diversified Security Solutions

Diversified Security Solutions Reports Record 2004 Revenues NEW YORK, Feb. 22 /PRNewswire-FirstCall/ -- Diversified Security Solutions Inc. (AMEX:DVS), a turnkey provider of technology-based integrated electronic security solutions, today announced results for the year and three months ended December 31, 2004. For the year ended December 31, 2004, revenues were a record $29.7 million, an increase of 63% over sales of $18.3 million in the same period a year ago. Earnings Before Interest and Taxes (EBIT) were $399 thousand compared with a loss of $5.0 million in 2003. Net income was $44 thousand, or $0.01 per share, compared with a net loss of $3.0 million, or net loss of $0.58 per share in the same period a year ago. For the fourth quarter ended December 31, 2004, revenues were a record $9.7 million, an increase of 64% compared with revenues of $5.9 million in the same period a year ago. EBIT totaled $405 thousand compared with a loss of $1.1 million in the fourth quarter of 2003. Fourth quarter net income was $87 thousand, or $0.02 per share, compared with a net income of $699 thousand, or $0.14 per share in the fourth quarter of 2003. At December 31, 2004, the company had cash and equivalents of $3.2 million, or $0.55 cash per share. During 2004, the company paid down $905 thousand in bank debt. Jim Henry, Chief Executive Officer of Diversified Security Solutions, said, "2004 revenues were the highest in the company's history. Our results are highlighted by a 63% increase in annual sales and a return to operating profitability after incurring a pre-tax loss of $5.0 million in 2003. We are pleased that revenues have grown in every division this year and we ended 2004 with a backlog of $20.5 million, an increase of $1.0 million over the end of our third quarter. "Our strong 2004 performance was driven by strong demand for our turnkey solutions as new and existing enterprise customers transition from analog to digital networks and address their continued concerns about today's security risks with greater investments in state-of-the-art security systems." Mr. Henry continued, "Our operational improvements underscore the leverage in our business and reflect our focus on achieving stronger overall margins. As we handled an increasing number of projects in 2004 we were able to improve the efficiency of our work force, generating greater labor utilization rates and improving our year-over-year gross margin with an increased head count. The economies of scale that we have built in 2004 are a solid base upon which to drive greater profitability in 2005. "Looking ahead, we are optimistic about the future. We are projecting revenues between $36 and $40 million in 2005 with a target operating margin of 5%. As a result, we expect to generate net income of $1.0 to $1.2 million, or $0.17 to $0.21 per share, in 2005. Our guidance is based on our strong backlog and our growing position as one of the leading security integrators. It is our belief that our long entrenched relationships with marquis customers continues to be our most valuable asset, driving new projects and customer references that fuel our organic growth. Consequently, we believe that we are well-positioned to benefit from the growth in next generation networks and the need for enterprises to protect their assets." The Company will host a conference call today at 1 p.m. EST. To listen to the call, dial (800) 322-0079 (Domestic), or (973) 935-2100 (International). The call will also be web cast on http://www.kcsa.com/. To listen, please go to the site approximately twenty minutes before the conference call is scheduled to begin to register as well as download and install any necessary audio software. The web cast will be archived for 30 days. About Diversified Security Solutions Diversified Security Solutions (AMEX:DVS) provides technology-based integrated electronic security systems, services and emergency preparedness consultation to commercial enterprises and government agencies. Diversified Security Solutions' integration business, Henry Bros. Electronics (HBE) has offices in New Jersey, California, Texas, and Arizona. For more information visit http://www.hbeonline.net/ or http://www.dssi-hq.com/ SAFE HARBOR STATEMENT: Certain statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained under the heading of risk factors listed in the Company's filings with the U.S. Securities and Exchange Commission. Diversified Security Solutions does not assume any obligation to update the forward-looking information. KCSA Todd Fromer / Erika Levy CONTACTS: (212) 896-1215 / (212) 896-1208 / DIVERSIFIED SECURITY SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS Twelve Months Ended Three Months Ended December 31, December 31, 2004 2003 2004 2003 Revenue $29,725,718 $18,261,065 $9,748,445 $5,940,805 Cost of Sales 22,305,632 14,908,700 7,140,117 4,801,928 Gross Profit 7,420,086 3,352,365 2,608,328 1,138,877 Operating Expenses: Selling General & Administrative Expenses 7,020,885 8,339,337 2,203,407 2,206,979 Operating Profit (Loss) 399,201 (4,986,972) 404,921 (1,068,102) Interest Income 12,624 10,326 6,589 1,334 Interest Expense (94,039) (106,464) (21,152) (25,627) Net Income (Loss) Before Tax 317,786 (5,083,110) 390,358 (1,092,395) Tax Provision (Benefit) For Income Tax 273,765 (2,126,008) 303,393 (1,790,918) Income (Loss) After Tax $44,021 $(2,957,102) $86,965 $698,523 Basic and Diluted Income (Loss) Per Common Share: Basic Profit (Loss) Per Common Share $0.01 $(0.58) $0.02 $0.14 Weighted Average Common Shares 5,411,964 5,121,877 5,739,398 5,130,540 Diluted Profit (Loss) Per Common Share: $0.01 $(0.58) $0.02 $0.14 Weighted Average Diluted Common Shares 5,411,964 5,121,877 5,739,398 5,130,540 DATASOURCE: Diversified Security Solutions Inc. CONTACT: Todd Fromer, +1-212-896-1215, , or Erika Levy, +1-212-896-1208, , both of KCSA, for Diversified Security Solutions Inc. Web site: http://www.kcsa.com/ http://www.hbeonline.net/ http://www.dssi-hq.com/

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