Saskatoon, SK April 14, 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 ended February 28, 2014.
Q1 FISCAL 2014 HIGHLIGHTS:
“After much improved performance in fiscal 2013, we were pleased to see the momentum continue in the first quarter of the new year with increased revenues and net income,” commented Terry Bergan, President and CEO. “We are generating solid growth in the majority of our target global markets and product lines, and look for this progress to continue through the rest of the year.”
Revenue in the first quarter of fiscal 2014 rose 32.2% to $10.3 million compared to $7.8 million for the same quarter last year. Solid growth was achieved in the Company’s Canada and United States and Latin America markets.
Revenue in the Company’s Canada and United States markets rose 33.9% in the first quarter of fiscal 2014 compared to the same prior year period due to significant increases in project and product revenue. The increase in the value of the U.S. dollar accounted for approximately $0.5 million of the revenue growth in the quarter. For the balance of fiscal 2014, the Company expects project and service business volumes to achieve levels comparable or better than the prior year due to the strength of in-house orders and existing federal government funding support for U.S. projects. The Company also expects further growth in product sales 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 commitments.
Latin American revenue, originating primarily from the Company’s subsidiary in Chile, increased a significant 66.0% in the first quarter of fiscal 2014 compared to the same quarter last year reflecting the Company’s strong market presence and certain major weigh station projects currently underway. The Company expects growth to continue in Latin America with the continuation of existing projects and the renewal of service agreements. In addition to the major Mexico contract received subsequent to the end of the quarter, the Company anticipates various new sales opportunities in the Latin America region leading to further growth and profitability.
South Asian revenues declined 68.3% in the first quarter of fiscal 2014 compared to last year’s first quarter, reflecting the current economic circumstances of the Company’s subsidiary in India. The Company remains committed to only accepting projects and customers that achieve acceptable and improved gross margins to return the Company to profitability. For the balance of fiscal 2014, the Company expects new project opportunities to develop following the Federal election in India scheduled for later in the year. In addition, the Company is continuing its pursuit of new product sales across a wider range of industries as it seeks to regain profitability in this segment.
During the first quarter of fiscal 2014 the Company reported net earnings of $118,097 from its 50% equity investment in XPCT in China compared to a loss of $3,899 in the same prior year period. The improved performance in fiscal 2014 is due to continued growth in the Company’s wire harness and traffic business.
Overall gross margin as a percentage of revenue in the first quarter of 2014 was 28.4%, up from the fourth quarter of fiscal 2013 but lower than the 32.8% in the first quarter of the prior year. The decline in gross margin compared to the prior year’s first quarter is primarily due to a change in product mix in the Company’s Canadian and U.S. operations and lower margins on certain projects due to competitive factors. Gross margin in the Company’s Latin American segment rose to 41.2% of revenues from 32.8% in last year’s first quarter.
Administrative and marketing expenses increased compared to the prior year due primarily to higher selling and office support costs in its Canada, U.S. and Latin America operations to support growth in the regions, and higher professional fees incurred. 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 lower in the first quarter of fiscal 2014 than the prior year’s first quarter due to reduced borrowing levels and lower interest rates realized by the Company’s new banking relationships.
The Company continued its improved year-over-year quarterly performance as earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased to $0.5 million in the first quarter of 2014 compared to a loss of $(0.2) million in the same quarter last year.
The Company generated net earnings of $215,793 or $0.02 per common share in the first quarter of 2014 compared to a loss of $(383,000) or loss of $(0.03) per common share in last year’s first quarter.
The Company’s financial position remained solid at February 28, 2014 with working capital of $8.1 million compared to $7.6 million as at November 30, 2013. Cash flows from operating activities were $0.5 million for the quarter ended February 28, 2014 compared to $1.7 million in the same quarter last year as higher net earnings were offset by higher investments in receivables, prepaid expenses and deposits, and reductions in accounts payable and accrued liabilities.
Financial Highlights (financial statements are available on the Company’s web site atwww.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.