Saskatoon SK, October 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 its results for the three and nine months ended August 31, 2014.
FISCAL 2014 HIGHLIGHTS:
“We continue to build our presence in our targeted North American and international markets,” commented Terry Bergan, President and CEO. “Looking ahead, our confirmed order backlog continues to increase.”
Revenue in the third quarter of fiscal 2014 was stable at $11.9 million compared to $12.0 million for the same quarter last year as the Company generated solid performance across the majority of its market segments and geographic regions. For the nine months ended August 31, 2014 revenue rose 8.7% to $33.8 million from $31.1 million last year.
Revenue in the Company’s Canada and United States region was stable at $10.1 million compared to the same prior year period. For the nine months ended August 31, 2014 revenue was up 13.2% due to solid performance in projects and product sales. The increase in the value of the U.S. dollar accounted for approximately $0.4 million and $1.6 million of the revenue growth in the third quarter and first nine months of fiscal 2014, respectively. For the balance of fiscal 2014, 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 subsidiary in Chile, increased 2.0% in the third quarter of fiscal 2014 compared to the same quarter last year due primarily to increases in project activity and product sales. For the nine months ended August 31, 2014 revenue in this segment rose 15.8% as project and product sales revenue increases were offset by a decline in service revenue as a major service contract renewal expected earlier in the year was delayed until late in the third quarter. For the balance of fiscal 2014 the Company expects revenue growth arising from 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.
South Asia revenue has declined significantly in fiscal 2014 reflecting limited business activities in the region. For the balance of fiscal 2014, the Company is diligently seeking out acceptable revenue generating opportunities including project and product sales across a wider range of industries. In the interim, the Company remains focused on the completion of existing projects and maintaining its service revenue.
Overall gross margin as a percentage of revenue in the third quarter of 2014 increased to 32.4% compared to 31.9% in the third quarter of the prior year. For the nine months ended August 31, 2014 gross margin as a percentage of revenue was 30.8% compared to 32.7% last year. Gross margin as a percentage of revenue is subject to variance due to changes in product mix, currency volatility and competitive factors.
For the three months ended August 31, 2014 the Company reported a net loss of $109,068 from its 50% interest in XPCT in China compared to net earnings of $293,953 in the same quarter last year due to a delay in deliveries in its wire harness operations. For the first nine months of fiscal 2014 XPCT reported net earnings of $164,924 compared to $503,662 last year. For the balance of fiscal 2014, the Company expects improved performance based on near term market opportunities. XPCT continues its local product development projects which are expected to lead to future market opportunities.
Administrative and marketing expenses have increased in fiscal 2014 compared to the prior year due primarily to higher selling and office support costs to support growth as well as higher professional fees. Net R&D expense has declined in fiscal 2014 as certain resources have been reallocated to direct project support efforts. 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 compared to the prior year due to reduced borrowing levels and lower interest rates realized by the Company’s new banking relationships.
For the third quarter of both fiscal 2014 and 2013 earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $1.2 million. For the nine months ended August 31, 2014 EBITDA was $2.2 million compared to $1.9 million last year.
The Company generated net earnings of $505,573, or $0.03 per common share, in the third quarter of 2014 compared to $534,025, or $0.04 per common share, in last year’s third quarter. For the nine months ended August 31, 2014 net earnings were $906,857, or $0.06 per common share, up from $770,607, or $0.05 per common share, last year.
The Company’s financial position remained solid at August 31, 2014 with working capital of $7.8 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 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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