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In The Boardroom With...

Joseph Grillo
Founder and CEO

ACRE Thank you for joining us today, Joe. Before discussing recent developments at ACRE in more detail, please tell us about your background and may we have a brief corporate history?

Joe Grillo: I've been in the industry for more than 30 years, specifically in the electronic security and identification industries where I've been active in growing, acquiring and restructuring businesses. The market has provided me with the opportunity to be involved with technology innovation, customer acquisition and engagement, and developing market and channel strategies. It's been a rewarding sector for me because it has enabled me to build great relationships, products and businesses over the course of my career. 

I formed ACRE in 2012, seeing an opportunity in the still fragmented marketplace to build an independent company focused on integrating related security technologies. Today, the components and systems provided by ACRE’s family of companies, sold through traditional distribution channel partners, help secure the highest valued assets of its end-user clientele, including both public and private sector entities, large and small. ACRE acquired the Schlage SMS business from Ingersoll Rand in 2012 and rebranded it under the Vanderbilt moniker. This deal was followed by the 2013 acquisition of Mercury Security. In 2015, Vanderbilt purchased the Security Products Division of Siemens AG, and in 2016, acquired both Access Control Technology (ACT) in Ireland and ComNet. Today, ACRE employs more than 325 employees in more than 15 countries, and is a leading provider of access control, intrusion and video related products and solutions. We understand that the ACRE Portfolio currently includes Vanderbilt and ComNet. Please give us a brief profile of each brand and the solutions they deliver in their target markets? Any new solutions at either brand you want to talk about?

Joe Grillo: Vanderbilt is a global provider of state-of-the-art security systems in the market segments of access control, burglar or intrusion alarm, and video, with a portfolio that comprises more than 2,000 products. It currently supplies and supports in excess of 9,000 customers across the globe. Vanderbilt designs, manufactures and distributes security technology systems that make environments in organizations of all sizes safe, secure and easy to maintain. This is complemented by agile and flexible services. Through organic growth and targeted acquisitions, Vanderbilt is the largest independent business of its kind in the industry. Our primary markets for the Vanderbilt brand include healthcare and hospitals, K-12 and higher education campuses, retail, corporate and enterprise businesses, banking, transportation, manufacturing, and leisure and tourism.

ComNet is a global manufacturer of audio, video, data and Ethernet communication products. The product line consists of fiber optic video, data and audio transmission products as well as a broad fiber optic, wireless and copper media Ethernet product line. Its solutions are designed from the start to set the standard for transmission products in the markets ComNet competes in, including the security, intelligent transportation system (ITS), and power transmission markets. ComNet's engineering base consists of some of the best and brightest in the industry, and the company's reach across the United States and Europe allows ACRE to be a huge differentiator in providing end-to-end solutions to markets well beyond security. What are the market drivers for each company? Care to comment on the unique value proposition Vanderbilt and ComNet deliver to your customers?

Joe Grillo: ComNet started out as a cost-effective hardened fiber optic transmission product manufacturer, but as the security and intelligent transportation systems markets evolved and became more network-based, ComNet had the foresight to shift toward that trend and changed its focus to more Ethernet-based solutions. One of the things that drew ACRE to ComNet was its ability to see market trends on the horizon and implement a strategic vision to encompass these changes in its solutions. For example, before 2012, they saw a need for distance-extending copper, so they added that to their offerings to meet the need. Similarly, the market demand for more wireless Ethernet capabilties helped drive the company to introduce NetWave in 2013 to meet that need. Fiber optic, electrical and wireless are still the only way of transmitting Ethernet, video, data and audio signals, and ComNet was the first to offer all three solutions from a single manufacturer. They are also a leader in providing products that protect against cyber attacks of an enterprise’s network through the security system.

In Europe, Vanderbilt's market centers around intrusion and access control, which has been a consistent driver for our business in the region. In the United States, Vanderbilt product lines are more oriented towards access control and video management, and recently we introduced the cloud-based ACT365 solution that has been so popular across Europe into the fold. It has opened a number of doors to our customers and met the need for end users looking for a dedicated security solution that doesn't require large-scale investments in costly IT infrastructure. Regarding Vanderbilt, congratulations on the recent “win” with a Swiss retail chain with more than 2,200 shops. Care to elaborate?

Joe Grillo: The Coop Group has the most extensive retail network in Switzerland in both the food and non-food sector, employing more than 47,000 people and an annual turnover of CHF 19.2 billion. Across its business, the retail chain has implemented Vanderbilt SPC, an intrusion detection platform that allows customers to easily manage incoming alarms through the cloud from a mobile device, tablet or Web-based browser. The solution is built on a powerful communications platform that can be accessed via a cloud interface for end users, offering the ability to control doors, define permissions and provide additional flexibility and functionality that complements intrusion detection.

The Coop Group chose SPC because of the product's reliability, rapid alarm detection and its SES EN standard certification, which is the secure regional standard for Switzerland and the EU. SPC was also appealing because of its high levels of flexibility and scalability, allowing users to adapt the system to specific store requirements. Additionally, Coop uses other Vanderbilt solutions to protect the various sites, such as PDM infrared detectors with mirror optics, Seismic detectors, glass break detectors and magnetic contacts. Because of Vanderbilt's open-platform technology, it provides easy integration of external systems such as fog systems and building management to its internal security operations center. 

The Coop brand is an important Vanderbilt customer that wanted the ability to centrally manage their entire security platform from a single platform, boosting the safety and security of multiple locations. Coop also benefits from receiving real-time alerts that allow security leaders to effectively and efficiently respond to incidents as they occur. Not only does this create a proactive approach to security, but it also offers higher levels of situational awareness across the enterprise. Any other success stories at Vanderbilt you want to mention?

Joe Grillo: We've seen significant successes with several hundred system sales of our cloud-based ACT365 solution, which offers end users the opportunity to implement a robust security solution without having to invest heavily in IT infrastructure. Instead, the security oversight is shifted to that of a managed solution, which strengthens our relationships with our integrator partners and offers them an avenue for recurring monthly revenue (RMR). There is a large customer base in the small- to medium-sized business market that is looking for that level of access control and video management support. Additionally, the convergence of physical and logical worlds has transformed the market: these “managed” solutions are becoming the norm and cybersecurity is a common topic in the physical security realm. Technology has evolved and end users are demanding more integration between systems, such as access control and video management as well as the use of mobile devices. Regarding ComNet, the list of Project References is truly impressive with hundreds of “wins” throughout the USA, and it seems you have great traction in EMEA and APAC as well. Want to give us some additional color about ComNet’s niche?

Joe Grillo: While ComNet's product line is primarily designed and made in the United States, its reach is far wider than that, encompassing clients across Europe, the Middle East and APAC, which has been a big focus for ACRE's brands. ComNet's intelligent solutions are ideally suited to the complex transportation and communications markets that have defined these areas in recent years. Its main driver is the company's ability to deliver a high level of support for customers in specialized communications and networking solutions - all from a single source - which ensures interoperability between systems. ComNet is complementary to the technology offered by Vanderbilt, with the increasing focus on networked systems in the access control, intrusion, video and cloud-based line of business. Can we talk about emerging trends for a moment? What are you seeing in the security space regarding cloud & mobility solutions, for example?

Do you expect consolidation to continue….your thoughts, Joe?

Joe Grillo: The access control and intrusion market is still a fragmented landscape, so yes, I think consolidation will continue to make its impact on the industry. Like you mention, mobile credentialing seems to be a hot topic for the industry, along with the continued focus on cloud-based technologies. The demand for these solutions comes from customers wanting new levels of security and convenience while protecting critical data. With regards to mobile credentials, however, there's still a lot that needs to be done to develop this technology further, and as a result, many companies are choosing to implement hybrid solutions that offer mobile as an option. Another trend we will continue to see is a greater focus on integrated solutions; more video tied into access control, for example. We'll also see the increased use and installation of wireless locks to more doors as a means to reduce cost. 

The security industry has been and continues to be a steadily growing business. There are a couple of reasons why we experience steady growth. Security is more visible and in demand than it has ever been due to the simple fact that it has become more important than ever for organizations to ensure high levels of safety. Today, security leaders, such as the CSO, report to senior leadership and must demonstrate the value of investments that reduce risk — a far cry from the days in which security was siloed and viewed as a cost center. Investment in this market is also on the rise in nearly every market segment.

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