News

28Feb, 11

IRD Announces Fourth Quarter and Year End Fiscal 2010 Results

Saskatoon, SK  February 28, 2011 - International Road Dynamics Inc. (TSX: IRD), the world’s largest provider of Weigh-In-Motion systems and solutions for the global Intelligent Transportation Systems (ITS) market, today announced results for the three months and year ended November 30, 2010.

Sales for the fourth quarter of fiscal 2010 were $10.7 million compared to $12.8 million for the same period last year. For the year ended November 30, 2010 sales were $44.5 million compared to $49.0 million last year. Solid gains in sales of data collection systems and recurring maintenance contracts during the year were offset by reduced revenues from commercial vehicle, toll and in-vehicle systems as well as product sales. There were also a number of significant system and product sales in fiscal 2009, including a substantial commercial vehicle sale in Mexico and toll system deliveries in India, while delays were encountered during fiscal 2010 for the delivery of orders in India, as well as in Chile due to the earthquake earlier in the year. In addition, the strengthening of the Canadian dollar against the U.S. dollar resulted in a decrease in the Canadian dollar value of the Company’s U.S. dollar-denominated sales of approximately $3.3 million in fiscal 2010 compared to the prior year. 

Offshore sales in the fourth quarter and year ended November 30, 2010 were $4.0 million and $15.6 million, respectively, compared to $4.0 million and $20.0 million for the same periods last year. While fourth quarter fiscal 2010 revenues were consistent with the prior year, the decline for the year ended November 30, 2010 was primarily due to higher than normal revenues from toll systems in India and significant product and weigh station deliveries in Latin America and Asia in the prior year as well as the impact of a stronger Canadian dollar. Management expects offshore revenues to increase from the current level during fiscal 2011 and beyond.

Sales in the United States in the fourth quarter of fiscal 2010 were $4.8 million compared to $7.6 million in the prior year’s fourth quarter. For fiscal 2010 sales in the U.S. were $21.1 million compared to $24.8 million in the prior year. The decline was primarily due to the stronger Canadian dollar. As the U.S. economy improves and government expenditure on highway and roadway infrastructure grows, management expects revenues from the U.S. market to increase above 2010 levels in fiscal 2011 and the longer term.

In Canada, sales rose to $1.9 million in the fourth quarter of fiscal 2010 compared to $1.2 million for the same period last year, and to $7.8 million for the year ended November 30, 2010 compared to $4.2 million for fiscal 2009. The significant increase in Canadian sales was primarily due to higher commercial vehicle system project deliveries. Management expects sales in Canada in fiscal 2011 will be modestly lower in fiscal 2011 but will continue to grow over the longer term.

“While we were generally satisfied with our results in fiscal 2010, we expect to see solid growth over the longer term as our markets remain strong and we benefit from the success we have demonstrated in expanding our business both geographically and through the introduction of new products and services,” stated Terry Bergan, President and CEO. “We are very encouraged by the continuing growth in our recurring maintenance business and the value-added services we are providing to our customers. This growth is consistent with our objective to become an Application Service Provider for data collection and in-vehicle and maintenance contracts, strategies that will significantly enhance the quality of our revenues and deepen long-term relationships with our clients.”

Gross margin as a percentage of sales was 24.5% in the fourth quarter compared to 29.6% in the prior year. For the year ended November 30, 2010 gross margin was 28.8% compared to 29.2% in fiscal 2009. Gross margin in fiscal 2010 was impacted by an inventory write-down in the Company’s Chilean subsidiary, a sales mix that included a lower proportion of higher margin proprietary systems and products, and lower total revenues available to cover fixed operating costs.  

Administrative and marketing expenses in the fourth quarter and year ended November 30, 2010 were consistent with the same periods in the prior year. Due to the lower sales levels in fiscal 2010, as a percentage of sales administrative and marketing expenses were higher at 24.1% and 22.5% for the three months and year ended November 30, 2010 respectively compared to 20.3% and 20.5% respectively in the prior year periods. Net research and development costs were 2.9% of sales in the fourth quarter and 1.7% of sales for fiscal 2010, compared to 1.1% and 1.2% for the same periods of the previous year. Interest expense was consistent in the fourth quarter of fiscal 2010 compared to the prior year and declined for the year ended November 30, 2010 due to a reduced level of debt as well as the Company benefiting from the current low interest rate environment.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were a loss of $(0.03) million in the fourth quarter of fiscal 2010 compared to earnings of $1.1 million in the same prior year period. For the year ended November 30, 2010, EBITDA was $2.3 million compared to $3.4 million last year. The decrease in EBITDA in fiscal 2010 is primarily due to the lower gross margin. The Company incurred a net loss of $(0.3) million or $(0.03) per common share in the fourth quarter of fiscal 2010 compared to net earnings of $0.4 million or $0.03 per share for the same period last year. For the year ended November 30, 2010, net earnings were $0.4 million or $0.03 per common share compared to $1.3 million or $0.09 per common share in the prior year.

The Company’s balance sheet remained solid at November 30, 2010 with working capital at $4.0 million, a current ratio of 1.2 times and a debt to equity ratio of 64%. As at November 30, 2010 the Company was not in compliance with the fixed charge coverage covenant on its credit facilities with Royal Bank of Canada, and as a result total amounts owing under these credit facilities were included in the current portion of long-term debt.  Royal Bank of Canada has acknowledged the default and has given the Company until November 30, 2011 to remedy the default. The Company believes that it will be in compliance with all covenants throughout the 2011 fiscal year.

As at November 30, 2010 the amount outstanding on the purchase price for the Company’s subsidiary in China, Xuzhou-PAT Control Technologies Limited (XPCT), of $1.0 million plus accrued interest was in dispute. In an agreement dated February 15, 2011 the Company agreed to pay $700,000 in full settlement of the vendor loan of $1.0 million and accrued interest of $220,000 and to discontinue all claims against the vendor relating to the acquisition of XPCT.    

“Looking ahead, we are confident that our long-term prospects for growth in revenues and profitability are very bright. Highway and roadway infrastructure remains the backbone of economic growth in both developed and developing countries, and our presence as a global leader in the provision of leading-edge ITS solutions positions us strongly to capitalize on this growing market. In addition, our expansion into private sector markets such as commercial vehicle systems and in-vehicle systems bodes well for further incremental revenue growth as global economies continue to recover,” Mr. Bergan concluded.

Financial Highlights (financial statements are available on the Company’s web site www.irdinc.com )

                                                                       

 

 

Three Months

Year

Period ended November 30,

2010

2009

2010

2009

 

(in 000’s except per share amounts)

 

 

 

 

 

Sales

$ 10,735

$ 12,794

$ 44,475

$ 49,018

 

EBITDA

(30)

1,127

2,300

3,378

 

Net Earnings (Loss)

(335)

337

450

1,265

 

Net Earnings (Loss) per Common Share - Basic

$ (0.03)

$ 0.03

$ 0.03

$ 0.09

 

Total Assets

 

 

 39,185

 41,171

 

Total Long-Term Financial Liabilities

 

 

 6,328

 7,671

 

Working Capital

 

 

 3,988

 8,242

 

Shareholders’ Equity per Share

 

 

$ 1.34

$ 1.32

 

Common Shares Outstanding

 

 

13,998

13,998

 

                 

 

As used herein, "EBITDA" means earnings before interest, income taxes, depreciation, and amortization, and includes gains or losses from foreign exchange and earnings or losses from the Company’s equity investments. EBITDA is not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). Management believes that EBITDA is a useful supplemental measure to net earnings (loss), 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 (loss) determined in accordance with GAAP 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.  The following is a reconciliation of EBITDA to net earnings:    

 

Three Months

Year

Period Ended November 30,

2010

2009

2010

2009

(in $000’s)

 

 

 

 

EBITDA

(30)

 1,127

 2,300

 3,378

Amortization Expense

     (286)

(230)

(964)

(1,003)

Interest Expense

    (185)

(179)

(685)

(742)

Income Tax Expense

166

(341)

(201)

(368)

Net Earnings (Loss)

(335)

377

450

1,265

 

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.

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.

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The Company’s shares trade on the Toronto Stock Exchange under the symbol IRD.

FOR MORE INFORMATION PLEASE CONTACT:
Terry Bergan
President & CEO
Phone: (306) 653-6600
U.S. (303) 355-5998

Francine Senecal-Lepage
Investor Relations
Phone: (306) 653-6603
Fax: (306) 653-1454
Email: irdir@irdinc.com

IRD is listed on the TSX - trading symbol - IRD
www.irdinc.com

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