Saskatoon SK, October 8, 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 continued strong growth in the three and nine months ended August 31, 2015.
FISCAL 2015 HIGHLIGHTS:
“With significant gains in revenues and profitability across all of our key business lines and geographic segments, we generated stellar results and achieved the highest single quarterly earnings in the Company’s history,” commented Terry Bergan, President and CEO. “Looking ahead, we are confident growth will continue as governments and the private sector invest in ITS solutions to enhance highway and roadway infrastructure. In addition, with recent contract wins in the US and other targeted markets, our backlog of confirmed orders continues to rise, and we expect further increases in the months ahead as we leverage our global presence and reputation for innovative and quality products and services.”
For the three and nine months ended August 31, 2015, consolidated revenue increased 51.9% and 23.6%, respectively, compared to the same prior year periods due primarily to the Company’s successful execution of an increased number of contracted projects, improved service revenues and growth in product sales into other international 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 53.0% and 26.2% for the three and nine months ended August 31, 2015, respectively, compared to the same prior-year periods primarily due to an increase in contracted project revenues, higher service revenues, and increased product sales into other international markets. For the fourth quarter of 2015, the Company expects continued revenue and profitability growth in project and service markets based on the significant increase in current orders on hand compared to last year. Results are subject to variability due to seasonal weather restrictions or changes in customer schedules.
Latin America and Mexico segment revenue increased 66.7% in the third quarter of fiscal 2015 and 21.9% year- to-date compared to the same prior-year periods due primarily to the significant increase in current projects and increased product sales growth, partially offset by a small decline in service revenues due to changes in customer requirements. For the balance of 2015 the Company expects further revenue growth arising from existing and new project and product sales identified in the region.
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 as a percentage of revenue increased to 46.8% of revenues for the nine months ended August 31, 2015 compared to 22.8% 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 activity in the India segment as it remains committed to accepting only revenue opportunities with acceptable gross margins and payment terms.
Gross margin in the third quarter and first nine months of fiscal 2015 increased 29.0% and 21.4%, respectively, compared to the prior-year periods due to the higher sales volumes across all market segments. As a percentage of revenue, gross margin decreased to 27.4% and 30.2% for the three and nine months ended August 31, 2015, from 32.4% and 30.8%, respectively, in the prior-year periods. The declines in gross margin as a percentage of revenue are due to variability in margins on projects currently underway and changes in product mix, partially offset by increases in the value of the US dollar compared to the prior year.
Administrative and marketing expenses increased in fiscal 2015 compared to the prior year primarily due to higher performance based compensation costs and increased sales costs related to higher levels of business activity. R&D costs have also increased 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 Company recorded foreign exchange gains of $686,870 (2014 - $405,120) in the third quarter of fiscal 2015 and $592,149 (2014 – $689,661) through the first nine months of the fiscal year due primarily to increased value of the U.S. dollar against the Canadian dollar and Chilean peso. The Company continues its strategy of reducing its exposure to 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 nine months ended August 31, 2015, increased to $2,188,393 and $3,205,673, respectively, compared to $1,157,278 and $2,211,136 in the comparable prior-year periods. Net earnings increased to $1,458,315 ($0.10 per common share) in the third quarter of fiscal 2015 from $505,573 ($0.03 per common share) in fiscal 2014. For the first nine months of fiscal 2015, net earnings were $1,752,442 ($0.12 per common share) compared to $906,857 ($0.06 per common share) in the prior year.
The Company’s financial position remained solid at August 31, 2015 with working capital of $10.5 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.