Saskatoon SK, April 13, 2015 - International Road Dynamics Inc. (TSX: IRD), one of the world’s leading providers of systems and solutions for the global Intelligent Transportation Systems (ITS) market, today announced solid growth for the three months ended February 28, 2015.
FIRST QUARTER 2015 HIGHLIGHTS:
“Following solid growth and improved profitability in fiscal 2014, progress continued in the first quarter of fiscal 2015 with higher revenues and a strengthening gross margin,” commented Terry Bergan, President and CEO. “Looking ahead, we believe the current environment of lower oil prices could positively impact our business due to increased use of highway and transportation infrastructure, while continued investment by governments and the private sector to facilitate economic growth, improve transportation systems efficiency, reduce emissions, and increase safety and productivity should drive further gains over the long term.”
For the three months ended February 28, 2015, consolidated revenue increased 3.6% to $10.7 million compared to the same quarter of the prior year due primarily to gains in the Company’s Canada and United States segment, as well as an increase in the value of the U.S. dollar. As this segment is currently the largest source of consolidated revenues for the Company, seasonal weather conditions in North America may impact installation work for the Company’s products. Thus the first quarter of a fiscal year is often the weakest compared to the balance of the year.
Revenue in the Company’s Canada and United States segment increased 11.7% in the first quarter of fiscal 2015 compared to the same quarter of the prior year primarily due to increases in project and service activities and an increase in the U.S. dollar which increased revenues by approximately $0.7 million. For the remainder of fiscal 2015 the Company expects increased project and service business volumes in this segment based on the current level of in-house orders. The Company also expects product sales growth in fiscal 2015 based on a number of identifiable near term opportunities.
Latin America and Mexico segment revenue declined in the first quarter of fiscal 2015 compared to the same quarter in the prior year due to a reduction in service and product revenues resulting from the timing of customer requirements. For the balance of 2015 the Company expects accelerated revenue growth in this segment due to the completion of existing projects, new project opportunities, and higher levels of service revenue in line with historical experience. The Company continues to identify various sales opportunities in the region that are expected to provide an increase in revenues over the near and medium term.
Revenue in the Company’s India segment increased by 15.7% in the first quarter of 2015 compared to the same quarter of the prior year reflecting the success of management’s initiatives to grow project and service contract business. For the balance of 2015, the Company remains committed to seeking only those acceptable revenue generating opportunities in the ITS markets that achieve acceptable gross margins while continuing to actively manage its costs.
Overall gross margin in the first quarter of fiscal 2015 increased 11.6% to $3.3 million from $2.9 million in the same quarter of the prior year. As a percentage of revenue, gross margin improved to 30.6% for the three months ended February 28, 2015 from 28.4% in the first quarter of the prior year. The improved profitability is due to higher margins on certain projects in the current year, a return to solid profitability in the Company’s India segment, and variances in product mix across the Company’s market segments.
The Company reported net earnings from its 50% interest in XPCT in China of $76,306 in the first quarter of fiscal 2015 compared to $118,097 in the same quarter of the prior year. The decline is primarily due to variability in the segment’s traffic business which fluctuates from quarter to quarter.
Net R&D expense increased in the first quarter of fiscal 2015 as the Company continued to allocate resources to development projects to advance the availability of new leading edge products to the market.
Interest costs were lower compared to the prior year due to the payout of the India segment bank loan in December 2014, partially offset by higher borrowing levels in Canada.
The Company recorded foreign exchange gains of $110,868 in the first quarter of fiscal 2015 compared to $367,540 in the same quarter of the prior year as the U.S. dollar continued to increase in value against the Canadian dollar and Chilean and Mexican pesos. The reduced level of currency gains is due in part to the Company’s strategy adopted in June 2014 of reducing its exposure to U.S. currency volatility by maintaining a portion of its bank indebtedness in U.S. funds.
For the three months ended February 28, 2015, earnings before interest, taxes, depreciation and amortization (EBITDA) were $251,990 compared to $490,090 in the first quarter of fiscal 2014. Higher revenues and gross margin in the period were offset by the lower foreign exchange gains discussed above, and higher administrative and marketing expenses due to increased resources directed at capitalizing on future business opportunities. As a result, the Company incurred a small net loss in the first quarter of fiscal 2015 of $43,322 ($0.00 per common share) compared to net earnings of $215,793 ($0.02 per common share) in the same quarter of the prior year.
The Company’s financial position remained solid at February 28, 2015 with working capital of $9.9 million, up from $9.5 million at November 30, 2014.
Financial Highlights (financial statements are available on the Company’s web site at www.irdinc.com)
Certain statements contained in this news release constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of future operating results and economic performance of the Company, are assumptions regarding projected revenue and expenses. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected. For more exhaustive information on these risks and uncertainties, please refer to our most recently filed annual information form, available at www.sedar.com. Forward-looking information contained in this report is based on management’s current estimates, expectations and projections, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to do so, we are under no obligation and do not undertake to update this information at any particular time unless required by applicable securities law.
As used herein, "EBITDA" means earnings before interest, income taxes, depreciation, and amortization, and includes gains or losses from foreign exchange and embedded derivatives and earnings or losses from the Company’s equity accounted investments. EBITDA is not a recognized measure under International Financial Reporting Standards ("IFRS"). Management believes that EBITDA is a useful supplemental measure to net earnings, as it provides investors with an indication of operating performance prior to debt service, capital expenditures and income taxes. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company’s performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company’s method of calculating EBITDA may differ from the methods by which other companies calculate EBITDA and, accordingly, EBITDA may not be comparable to measures used by other companies.
IRD is a highway traffic management technology company specializing in supplying products and systems to the global Intelligent Transportation Systems (ITS) industry. IRD is a North American company based in Saskatoon, Saskatchewan Canada with sales and service offices throughout the United States and overseas. Private corporations, transportation agencies and highway authorities around the world use IRD's products and advanced systems to manage and protect their highway infrastructures.
- 30 -