Saskatoon, SK, February 27, 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 solid growth for the three months and year ended November 30, 2013.
"After a slow start to the year, business in the majority of our geographic markets recovered strongly, resulting in three consecutive quarters of solid revenue growth in 2013, improved profit margins, and increased net earnings," commented Terry Bergan, President and CEO. "Our North and Latin American operations led our growth with 11.3% and 31.8% increases in revenue, respectively. We are also pleased to see a very solid and increased contribution from our 50% equity interest in our Chinese operation XPCT for the year."
Mr. Bergan continued: "Looking ahead, we believe our growth and improved profitability will continue, driven by strengthening demand for our product offerings in the majority of our markets, and we look for another year of solid performance in 2014."
Revenue in the fourth quarter of fiscal 2013 rose 14.7% to $12.6 million compared to $11.0 million for the same period last year. For the year ended November 30, 2013 revenue was $43.6 million compared to $41.6 million in 2012.
Revenue in the Company's Canada and United States markets rose 37.8% in the fourth quarter compared to the prior year as favourable economic conditions allowed a number of project orders to commence. For the year ended November 30, 2013 Canada and U.S. revenue rose 11.3% compared to fiscal 2012. Management believes that its North American business will grow over the near term due to a strong backlog of orders and existing funding for U.S. projects provided by MAP-21 legislation (Moving Ahead for Progress in the 21st Century). Furthermore, long-term U.S. federal funding initiatives to reduce regulatory burdens are in process. These initiatives focus on freight mobility and technology innovation to improve efficiency while protecting existing surface transportation infrastructure.
Latin American revenue, originating primarily from the Company's subsidiary in Chile, increased significantly to $2.1 million in the fourth quarter compared to $1.7 million last year, reflecting the Company's strong market presence and certain major weigh station projects currently underway. Revenue for the year ended November 30, 2013 was $7.2 million compared to $5.5 million in 2012. The Company continues to identify and add new sales opportunities in a number of countries in the Latin America region.
South Asian project revenue originating from the Company's subsidiary in India declined for the year reflecting the limited number of suitable new project opportunities, changes in project scope, and a general delay in project awards due to an impending election. As well, the Company has purposely been more selective in taking on new projects and customers with the intent of improving profitability. Management remains focused on realigning its operations in India and implementing programs to increase product sales across a wider range of industries.
Other offshore revenue, which include all other overseas sales originating from North America, declined in the fourth quarter and year ended November 30, 2013 due to a reduced number of sales opportunities during the year. Management expects international revenue will increase in 2014 due to stronger demand in Southeast Asian markets.
During the fourth quarter of 2013 the Company reported earnings of $381,737 from its 50% equity investment in XPCT in China compared to $380,750 in the same prior year period. For the year ended November 30, 2013 earnings from XPCT were $885,399 compared to $378,507 in 2012. The improved performance in fiscal 2013 is due to continued growth in the Company's wire harness business and positive earnings from its traffic business. The Company received dividends of $749,776 from XPCT in fiscal 2013.
Gross margin as a percentage of revenue in the fourth quarter was 27.9%, similar to the prior quarter. However, gross margin percentages for the year ended November 30, 2013 increased to 31.3%, up from 29.5% in 2012. The improved profitability is due primarily to a higher proportion of service revenue in fiscal 2013.
Administrative and marketing expenses increased compared to the prior year due primarily to higher selling and office support costs in its Latin America operations to support its growth in the region. Net R&D expense remained consistent with prior year spending. 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 higher due to increased borrowing levels and higher interest rates on the Company's credit lines. With the previously announced new banking arrangements effective January 2014, management expects to incur reduced interest costs on comparable levels of borrowings.
The Company continued its improved year-over-year quarterly performance as earnings before interest, taxes, depreciation and amortization ("EBITDA") increased to $0.8 million in the fourth quarter of 2013 compared to a loss of $0.3 million last year. For the year ended November 30, 2013 EBITDA rose to $2.8 million from $0.7 million last year.
The Company generated net earnings of $141,440 ($0.01 per share) in the fourth quarter of 2013 compared to a loss of $(747,550) (loss of $0.05 per share) last year. For the year ended November 30, 2013 net earnings rose significantly to $0.9 million ($0.07 per share) compared to a loss of $647,458 (loss of $0.05 per share) in 2012. Net income was negatively affected in 2013 by increased bad debt provisions of $731,973 compared to $381,301 in 2012 to reflect the Company's assessment of the collectability of certain customers in India. In addition, no income tax recovery has been recorded for the Company's Indian subsidiary on its losses due to the expectation that insufficient future earnings will be generated to offset current tax losses prior to expiry.
The Company's financial position remained solid at November 30, 2013 with working capital of $7.6 million compared to $7.0 million as at November 30, 2012. Cash flows from operating activities were $1.7 million for the year ended November 30, 2013, virtually the same as 2012, as higher net earnings were offset by higher investments in receivables, prepaid expenses and deposits, and pay down of accounts payable.
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 (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 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.
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The Company's shares trade on the Toronto Stock Exchange under the symbol IRD.
FOR MORE INFORMATION PLEASE CONTACT:
President & CEO
Phone: (306) 653-6600
U.S. (303) 355-5998
Phone: (306) 653-6603
Fax: (306) 653-1454
IRD is listed on the TSX - trading symbol - IRD