Saskatoon, SK October 12, 2012 - 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 in revenues and profitability for the three and nine months ended August 30, 2012. Effective December 1, 2011 the Company adopted and is reporting under International Financial Reporting Standards (“IFRS”). Please refer to the Company’s Management Discussion and Analysis and financial statements for the period for a comprehensive description of the changes arising from the transition.
THIRD QUARTER HIGHLIGHTS:
Revenues for the third quarter of fiscal 2012 were $11.1 million compared to $10.1 million for the same period last year. For the first nine months of fiscal 2012 revenues were $30.6 million, up from $29.8 million last year.
Revenues in the United States for the first nine months of fiscal 2012 rose 17% to $18.6 million from $15.9 million last year due primarily to a large commercial vehicle system delivery in the US southwest and improved business fundamentals in the US market arising from a recently-approved funding bill passed by the US Congress. Approximately 76% of the Company’s revenues in the first nine months of fiscal 2012 were denominated in US dollars. Management expects US revenues for the full 2012 fiscal year will be higher than those achieved in fiscal 2011. Revenues in Canada during nine months ended August 30, 2012 declined to $2.1 million from $2.7 million in the prior year primarily due to a reduction in product deliveries this year and a major delivery in fiscal 2011. Management believes revenues in Canada for fiscal 2012 will be lower than those realized in fiscal 2011. Offshore sales revenues for the first nine months of fiscal 2012 were $10.0 million compared to $11.2 million in the same period in fiscal 2011. The decline is primarily the result of lower off-the-shelf product deliveries to the Company’s subsidiary in China, reduced revenues experienced by the Company’s subsidiary in India, as well as significant system deliveries in Asia and Latin America during the first nine months of last year. The Company’s subsidiary in Chile continues to maintain its strong position in the Latin American market and, over the long term, the Company’s subsidiary in India remains well positioned to take advantage of opportunities afforded by the significant expansion in highway and toll systems in the Southeast Asia region. With recent project awards and product orders the Company expects that offshore revenues in fiscal 2012 will be higher than those achieved in fiscal 2011.
In late June 2012 the US Congress approved a fully-funded bill running through the end of fiscal 2014 titled "Moving Ahead for Progress in the 21rst Century (MAP21)". The bill reauthorizes the Federal-aid highway program at current funding levels plus inflation for two fiscal years. With the passing of this legislation, both short term and longer term transportation projects will be able to proceed given the availability of federal funding. A number of these projects may include ITS technology requirements wherein IRD offerings and solutions may apply and thus the passing of this legislation potentially provides IRD increased business potential in North American markets, depending on which specific projects are approved and funded. As a minimum, with the passing of this legislation, it is expected that current IRD US business levels will remain strong for the next two years.
“In addition to the significant benefits this new US bill will bring to our North American Intelligent Transportation Systems (ITS) business, we continue to make positive strides across all of our global platforms,” commented Randy Hanson, Executive Vice President and COO. “We are very encouraged by the progress we are seeing at IRDSA, our subsidiary in India, and expect to see improved performance at XPCT, our ITS products and service provider in China, going forward.”
Gross margin as a percentage of revenues improved significantly to 32.8% in the third quarter of fiscal 2012 from 28.5% in the same prior-year period, and to 30.0% for the first nine months of fiscal 2012 compared to 22.7% for the first nine months of fiscal 2011. The increase was due primarily to a return to more normal gross margin levels following significant project delays experienced by the Company’s subsidiary in India last year, and increased revenues from maintenance contracts and off-the-shelf product sales in the current fiscal year.
“We are very pleased to see the growth in our business generated so far this year, along with the increase in our profit margins and net income, and we look for continued progress through the balance of the year and into fiscal 2013,” stated Terry Bergan, President and CEO. “Looking ahead, we are confident fundamentals will remain strong in all of our markets, and we continue to examine opportunities to grow and extend our business around the world.”
Administrative and marketing expenses were stable at $7.7 million or 25.2% of revenues through the first nine months of fiscal 2012 compared to $7.5 million or 25.2% of revenues in the prior year. Net research and development costs were $0.8 million year-to-date in fiscal 2012, consistent with $0.7 million in the prior year. Interest expense declined in the first nine months of fiscal 2012 compared to the prior year period due primarily to reduced long-term debt resulting from the sale of the Company’s head office in the second quarter of fiscal 2011, partially offset by higher average balances in its line of credit in the current year.
The Company recorded a strong 62% increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to $0.8 million in the third quarter of fiscal 2012 from $0.5 million in the same prior-year period. For the first nine months of fiscal 2012 EBITDA was $1.0 million compared to a loss of $0.8 million for the same period in fiscal 2011. The increase in EBITDA is primarily due to the higher gross margin in the current year.
The Company generated net income of $0.4 million or $0.03 per common share in the third quarter of fiscal 2012 compared to $0.2 million or $0.01 per common share for the same period last year. For the first nine months of fiscal 2012 the Company generated net income of $0.1 million or $0.01 per common share compared to a net loss of $1.4 million or ($0.10) per common share last year.
The Company’s balance sheet remained solid at August 30, 2012 with working capital of $7.7 million compared to $9.4 million at the same time last year and a current ratio of 1.5 times. Cash flow from operating activities, after changes in non-cash working capital items, was $2.0 million through the first nine months of fiscal 2012 compared to a use of cash of $2.9 million in the prior year resulting in a debt to equity ratio of 36%.
Financial Highlights (financial statements are available on the Company’s web site 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 (loss) 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