Saskatoon SK, July 15, 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 in the three and six months ended May 31, 2015.
SECOND QUARTER 2015 HIGHLIGHTS:
"We continued to capitalize on increased demand in our key market segments during the second quarter of fiscal 2015 with solid gains in revenues and profitability," commented Terry Bergan, President and CEO. "Looking ahead, we believe our business will continue to grow as governments and the private sector realize the significant benefits of implementing ITS systems. In addition, over the longer term, we believe our patented products and technologies will become integral to the deployment of the Automated Highway System and future evolution of autonomous and connected vehicles, a key platform for improving transportation systems efficiency and safety."
For the three and six months ended May 31, 2015, consolidated revenue increased 12.2% and 8.1%, respectively, compared to the same prior year periods due primarily to continued growth in the Company's Canada, United States, Latin America and Mexico markets, as well as an increase in the value of the U.S. dollar.
Revenue in the Company's Canada and United States segment increased 9.7% and 10.5% for the three and six months ended May 31, 2015, respectively, compared to the same prior-year periods primarily due to increases in project and service activities and the increase in the U.S. dollar. For the remainder of fiscal 2015 the Company expects business volumes to continue to increase in this business segment based on the current level of in-house orders. The Company also expects product sales growth through the remainder of fiscal 2015 based on a number of identifiable near term opportunities.
Latin America and Mexico segment revenue increased by 61.8% in the second quarter of fiscal 2015 and 4.1% for the year to date period compared to the same prior-year periods due primarily to the timing of delivery on open project and service contracts, offset by a decline in product revenues in fiscal 2015 due to the timing of customer orders. For the balance of 2015 the Company expects further revenue growthin this segment due to the completion of existing projects and identified new project opportunities. 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.
India segment revenue has decreased in fiscal 2015 reflecting the Company's decision to reduce the level of business activity in this geographic segment. Despite the revenue decline, gross margins increased to 38% of revenues for the six months ended May 31, 2015 compared to 21% of revenues in the same prior-year period as current project and service revenues delivered improved profitability. For the balance of 2015, the Company expects only limited revenue activity in India as it remains committed to accepting only revenue opportunities with acceptable gross margins and payment terms.
Gross margin in the second quarter and first six months of fiscal 2015 increased 21.3% and 17.0%, respectively, compared to the comparable prior-year periods due primarily to higher margins on certain projects in the current year and positive variances in product mix across the Company's markets. As a percentage of revenue, gross margin increased to 33.9% and 32.4% for the three and six months ended May 31, 2015, from 31.3% and 29.9%, respectively, in the comparable prior-year periods.
Administrative and marketing expenses and net research and development expense have increased in fiscal 2015 as the Company continues to allocate increased resources to accelerate near term business opportunities and advance the development and introduction of new products to the market.
The increase in total interest costs in fiscal 2015 reflects higher borrowing levels in the Canada and United States and Latin America and Mexico segments, offset by a reduction in India interest costs due to the payout of the India segment bank loan in December 2014.
The Company recorded foreign exchange losses of $205,589 (2014 - $82,999) in the second quarter of fiscal 2015 and $94,721 (2014 - earnings of $284,541) through the first six months of the fiscal year due in part to a net reduction in accrued embedded derivate gains recorded in prior periods. The Company continues its strategy of reducing its exposure to U.S. currency volatility by maintaining a portion of its bank indebtedness in U.S. funds.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three and six months ended May 31, 2015, were $765,290 and $1,017,280 respectively compared to $563,768 and $1,053,858 in the comparable prior-year periods. Higher revenues and gross margin in fiscal 2015 were offset by foreign exchange losses and higher administrative, marketing and R&D expenses due to increased resources directed at capitalizing on future business opportunities. Net earnings increased to $337,449 ($0.02 per common share) in the second quarter of fiscal 2015 from $185,491 ($0.01 per common share) in fiscal 2014. For the first six months of fiscal 2015, net earnings were $294,127 ($0.02 per common share) compared to $401,284 ($0.03 per common share) in the prior year.
The Company's financial position remained solid at May 31, 2015 with working capital of $10.0 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.