Saskatoon, SK – April 13, 2016 – 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 strong financial results for the three months ended February 29, 2016.
"Our strong financial performance continued in the first quarter of fiscal 2016, particularly in our North American business segment where infrastructure spending continues to increase," commented Terry Bergan, President and CEO. "We were also pleased to see our recurring service and maintenance business increase by a significant 74% in the quarter compared to the respective prior-year period, adding to the stability of our cash flows and the quality of our earnings."
"Looking ahead, we believe fiscal 2016 will be another solid year for IRD as our backlog of confirmed orders continues to grow and we see an increased number of new, near-term business opportunities. Over the longer term, we are in a strong position to capitalize on the positive fundamentals in the global ITS business as governments and the private sector continue to invest in systems and solutions to enhance highway and roadway infrastructure," Mr. Bergan concluded.
For the three months ended February 29, 2016, consolidated revenue increased 39.3% compared to the same prior year period. The significant growth in the quarter reflects the Company's continued success in the execution of an increased number of contracted projects and improved service revenues as well as an increase in the value of the U.S. dollar. The first quarter of the Company's fiscal year is typically its weakest due to weather-related issues in its North American markets.
Revenue in the Company's Canada and United States segment increased 58.7% for the three months ended February 29, 2016 compared to the respective prior-year period primarily due to an increase in contracted project revenues and higher service revenues. Changes in the value of the U.S. dollar increased revenues by approximately $1.6 million in the first quarter of fiscal 2016 compared to the same prior-year period.
Latin America and Mexico segment revenue declined 14.4% for the three months ended February 29, 2016 compared to the same prior-year period due primarily to delays in scheduled delivery requirements on current projects, partially offset by increases in service and product sales.
A decline in India segment revenue reflects the Company's decision to reduce the level of business activity in this region. Despite the revenue decline, segment gross margin as a percentage of revenue remained consistent with the prior year's first quarter reflecting the continued improved profitability of current project and service contracts compared to historical results.
Gross margin for the three months ended February 29, 2016 increased by 39.2% to $4.5 million compared to the same prior-year period due primarily to higher sales volumes. As a percentage of revenue, gross margin for the three months ended February 29, 2016 was consistent with the prior-year period.
Administrative and marketing expenses increased in fiscal 2016 compared to the prior-year period primarily due to increased sales costs consistent with higher levels of business activity. R&D costs increased as the Company continues to allocate resources to accelerate near term business opportunities and advance the development and introduction of new products to its markets.
The Company recorded foreign exchange losses of $212,344 (2014 - gain of $110,868) in the first quarter of fiscal 2016 primarily due to a decline in the value of the U.S. dollar relative to the Chilean peso which resulted in a reduction in the carrying value of U.S. dollar net assets in the Company's Chilean subsidiary. In addition, the Company recorded a decrease in accrued embedded derivative gains as U.S. revenues on open contracts within its Chilean and Mexican subsidiaries were realized. The Company continues its strategy of reducing its exposure to currency volatility by maintaining a portion of its bank indebtedness in U.S. funds.
The Company owns a 50% joint venture interest in Xuzhou-PAT Control Technologies Limited (XPCT), an ITS products and manufacturing service provider in China. XPCT reported increased earnings of $119,232 in the first quarter of fiscal 2016 compared to $76,306 in the first quarter of fiscal 2015.
Net earnings in the first quarter of fiscal 2016 were $456,800 or $0.03 per common share, up significantly from a loss of $43,322 or $(0.00) per common share in the comparative prior-year period.
Financial Highlights (financial statements are available on the Company's web site at www.irdinc.com)
This news release contains forward-looking statements about the Company, including its business operations, strategy and expected financial performance and conditions. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or contain words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "forecasts", or negative versions thereof and other similar expressions, or future or conditional future financial performance, on-going business strategies or prospects, and possible future action by the Company. Forward looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company, the general economic environment and ITS industry, business conditions in all geographic areas where the Company carries on business, interest and foreign exchange rates, changes in accounting policies and methods used to report financial condition, including uncertainties associated with critical accounting assumptions and estimates, the effect of applying future accounting changes, business competition, technological changes, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, and the Company's success in managing the foregoing risks. Readers are cautioned, to consider these and other factors carefully and not place undue reliance on forward-looking statements. Forward-looking information contained in this report is based on management's current estimates, expectations and projections, which management believes are reasonable as of April 12, 2016. However, actual future operating results and economic performance could differ materially from what is currently expected. While the Company may elect to, it is under no obligation and does not undertake to update any forward-looking statements at any particular time, unless required by applicable securities law. Additional information on the Company, including our most recently filed Annual Information Form can be found on SEDAR at www.sedar.com.
As used herein, "EBITDA" means earnings before interest, income taxes, depreciation and amortization, and includes gains or losses from foreign exchange and derivatives 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.
Additionally, as used herein, 'Shareholders' equity per share' means total shareholders' equity divided by the number of shares outstanding as at the reporting date. Shareholders' equity per share is not a recognized measure under IFRS however, management believes it is an important metric that shareholders use as an indicator of the Company's value relative to its stock price. The Company's method of calculating Shareholders' equity per share may differ from methods used by other companies and, accordingly, it 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.
The Company's shares trade on the Toronto Stock Exchange under the symbol IRD.
IRD is listed on the TSX - trading symbol - IRD