Saskatoon SK, July 10, 2014 - 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 its results for the three and six months ended May 31, 2014.
“Overall we are pleased with our performance through the first six months of fiscal 2014 as we continue to generate solid growth in our key Canada and United States and Latin America regions,” commented Terry Bergan, President and CEO. “We are also pleased to see another quarter of positive contribution from our equity investment in China.”
Revenue in the second quarter of fiscal 2014 rose 3% to $11.6 million from $11.2 million for the same quarter last year. Solid growth was achieved in the Company’s Canada and United States markets partially offset by reduced activity in the Latin America and South Asia segments. For the six months ended May 31, 2014 revenue rose 15% to $21.9 million from $19.1 million last year.
Revenue in the Company’s Canada and United States segment rose 16% in the second quarter of fiscal 2014 compared to the same prior year period due primarily to significant increases in project revenue. For the six months ended May 31, 2014 revenue was up 23% due to solid performance in projects and product sales. The increase in the value of the U.S. dollar accounted for approximately $0.7 million and $1.2 million of the revenue growth in the second quarter and first six months of fiscal 2014, respectively. For the balance of fiscal 2014, the Company expects U.S. project and service business volumes and margins to exceed the prior year as in-house orders remain above target. The Company also expects continued product sales growth based on a number of identifiable near term opportunities although the timing of these orders may vary widely on a quarter to quarter basis depending on customer requirements.
Latin America revenue, originating primarily from the Company’s subsidiary in Chile, declined 24% in the second quarter of fiscal 2014 compared to the same quarter last year. This decrease was due to customer delays on certain significant weigh station projects and reduced service revenue while the Company awaits a major contract renewal expected in the third quarter of fiscal 2014. For the six months ended May 31, 2014 revenue in this segment rose 22% due to work performed on significant projects and increased product sales. For the balance of fiscal 2014 the Company expects continued revenue growth arising from the completion of existing projects and the renewal of service contracts. The Company also anticipates various new sales opportunities in the Latin America region leading to further growth and profitability.
South Asia revenue has declined significantly in fiscal 2014 reflecting limited business activities in the region due in part to the Federal elections and as active projects reach completion. For the balance of fiscal 2014, the Company is diligently seeking out acceptable project and product sales opportunities. With the Federal elections in India now complete, the Company remains hopeful that new project opportunities will develop, while recognizing it will still require some time before new contracts are awarded. In the interim, the Company remains committed to the pursuit of new product sales.
Overall gross margin as a percentage of revenue in the second quarter of 2014 was 31% compared to 33% in the second quarter of the prior year. For the six months ended May 31, 2014 gross margin as a percentage of revenue was 30% compared to 33% last year. Gross margin as a percentage of revenue is subject to some variance from quarter to quarter or year to year due to factors such as changes in product mix, currency volatility and competitive factors.
For the second quarter and first six months of fiscal 2014 the Company reported net earnings of $155,895 and $273,992, respectively, from its 50% equity investment in XPCT in China compared to $213,608 and $209,709, respectively, in the same prior year periods. The improved performance in fiscal 2014 is due to continued growth in XPCT’s wire harness business.
Administrative and marketing expenses increased compared to the prior year due primarily to higher selling and office support costs in its Canada and U.S. and Latin America operations to support growth in these regions, as well as higher professional fees incurred. Net R&D expense has declined in fiscal 2014 as certain resources have been reallocated to direct project support efforts. The Company maintains an active program of targeted R&D designed to accelerate the introduction of new products to market and enhance the functionality of existing products.
Interest costs were lower in 2014 compared to the prior year due to reduced borrowing levels and lower interest rates realized by the Company’s new banking relationships.
For the second quarter of fiscal 2014 earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $563,768 compared to $975,226 in the same quarter last year. For the six months ended May 31, 2014 EBITDA was $1,053,858 compared to $784,867 last year.
The Company generated net earnings of $185,491, or $0.01 per common share, in the second quarter of 2014 compared to $619,582, or $0.05 per common share, in last year’s second quarter. For the six months ended May 31, 2014 net earnings were $401,284, or $0.03 per common share, up from $236,582, or $0.02 per common share, last year.
The Company’s financial position remained solid at May 31, 2014 with working capital of $7.7 million compared to $7.6 million as at November 30, 2013.
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 earnings or losses from the Company’s equity 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 -