Saskatoon SK, February 24, 2015 - 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 results for the three months and year ended November 30, 2014.
FISCAL 2014 HIGHLIGHTS:
"We generated solid profit in our business and strong revenue growth in our key North American and international markets in 2014," commented Terry Bergan, President and CEO. "Looking ahead, the business fundamentals appear positive in the majority of our markets, and with a rising backlog and growing pipeline of future opportunities, we look for another year of growth in 2015."
Net earnings in fiscal 2014 rose to $1,372,103 or $0.10 per common share, up from $912,047 or $0.07 per common share last year. In the fourth quarter of 2014 the Company generated an increase in net earnings to $465,246, or $0.03 per common share compared to $141,440 or $0.01 per common share in last year's fourth quarter.
For the year ended November 30, 2014, consolidated revenue increased 3.3% to $45.1 million compared to the prior fiscal year due to gains in the Company's Canada and United States and Latin America markets, as well as the significant increase in the value of the U.S. dollar. The increase in consolidated revenue in fiscal 2014 is despite the significant 48.7% decrease in South Asia revenue compared to the prior year as the Company continued its restructuring efforts and focus on profitable business opportunities, including project and product sales, across a wider range of industries.
Revenue in the Company's Canada and United States market increased 4.2% compared to the prior year primarily due to significant new product sales in the U.S. earlier in the fiscal year, and an increase in the U.S. dollar which increased revenues by approximately $2.2 million. Service revenues for the year declined marginally due to the timing of contract renewals. For 2015 the Company expects to sustain current project and service business volumes and margins as in-house orders remain above target. The Company also expects further 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 subsidiaries in Chile and Mexico, increased 13.0% for the year driven primarily by growth in project revenue. Service revenues declined slightly due to a short term delay in a major contract renewal. For 2015 the Company expects continued revenue growth due to the completion of existing projects and higher levels of service revenue. The Company is also pursuing various sales opportunities in the Latin America region that are expected to provide further business growth.
Consolidated revenue in the fourth quarter of fiscal 2014 declined compared to the fourth quarter of fiscal 2013 due to very strong project revenues in the Latin America segment of the Company's business in the final quarter of the prior fiscal year.
For the year ended November 30, 2014 gross margin as a percentage of revenue was 31.0%, consistent with the prior year. For the fourth quarter of fiscal 2014 gross margin as a percentage of revenue increased significantly to 31.8% from 27.9% in the fourth quarter of the prior year. Gross margin as a percentage of revenue is subject to variance due to changes in product mix, currency volatility and competitive factors.
The Company reported net earnings from its 50% interest in XPCT in China of $326,050 (2013: $885,399) in fiscal 2014. The decline in earnings in fiscal 2014 is primarily due to a downturn in the Company's traffic business in the region. For 2015 the Company expects improved performance based on near term market opportunities, particularly in the traffic sector, and the introduction of new products under local development.
Net R&D expense has increased in fiscal 2014 as certain resources were reallocated to focus on priority development projects. 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 due to the benefit of lower interest rates in the Company's current credit facilities and reduced borrowing levels.
For the year ended November 30, 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) were $2.8 million (2013: $2.8 million). For the fourth quarter of fiscal 2014 EBITDA was $0.6 million (2013: $0.8 million).
The Company's financial position remained solid at November 30, 2014 with working capital of $9.5 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 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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