News Releases

27Feb, 17

IRD Announces Continued Record Results in Fiscal Year 2016

Saskatoon, SK - February 27, 2017 - 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 financial results for the fourth quarter and the year ended November 30, 2016.

FISCAL 2016 HIGHLIGHTS:

  • Revenues up 12.8% to $65.4 million on growth in key North American markets
  • Solid increase in gross margin to 33.2% from 30.4% last year
  • EBITDA rises 11.3% to $4.9 million
  • Net earnings increase 8.9% to $2.8 million or $0.19 per common share
  • Solid financial position with working capital of $14.6 million
  • Outlook for continued growth with strong confirmed order backlog and near-term business opportunities
  • Investor conference call to be held February 28, 2017 at 1.00 pm ET

“Fiscal 2016 was another record year for IRD as we capitalized on our strong market presence and reputation for quality and service to expand our business and generate increased earnings,” commented Terry Bergan, President and Chief Executive Officer.  “Looking ahead, we are confident we will continue to grow as demand for our innovative ITS products and solutions remains strong in our target markets around the world.”

“We were also pleased to see a more than 20% increase in our recurring service and maintenance revenues, enhancing the stability of our long-term cash flows and strengthening relationships with our key customers,” Mr. Bergan concluded.

SOLID OPERATING PERFORMANCE

For the fourth quarter and year ended November 30, 2016, consolidated revenue increased 4.3% and 12.8%, respectively, compared to the same prior year periods, reflecting the Company’s continued ability to complete an increasing number of project and service contracts and product sales. Changes in the value of the U.S. dollar compared to the prior year increased consolidated revenues by approximately $2.7 million for fiscal 2016.

Revenue in the Company’s Canada and United States segment for the fourth quarter and the year ended November 30, 2016 increased 6.9% and 19.6%, respectively, compared to the same prior year periods primarily due to an increase in contracted project and service revenues.The Company believes 2017 revenues in this segment will be consistent with, or higher than, the current year based on current backlog levels and identified near-term business opportunities.

Latin America and Mexico segment revenue declined for the fourth quarter and the year ended November 30, 2016 compared to the same respective prior year periods due to delays in scheduled delivery requirements on current projects. Gross margin for the fourth quarter and the year ended November 30, 2016 increased by 8.0% and 27.5%, respectively, due primarily to higher margin product sales. Management believes revenues for 2017 will increase due to the completion of existing projects and potential identified near-term contract opportunities.

The decline in India segment revenue reflects the Company’s decision to reduce the level of business activity in this region. The Company remains committed to accepting new business in this market only with acceptable profitability and payment terms.

Gross margin for the fourth quarter and year ended November 30, 2016 increased by 19.1% and 23.1%, respectively, compared to the same respective prior-year periods primarily due to the higher sales volumes. As a percentage of revenue, gross margin for the fourth quarter and the year ended November 30, 2016 increased to 35.1% and 33.2%, respectively, from 30.7% and 30.4% in the same periods last year, due to changes in product mix and increased margins on specific project activities. 

Administrative and marketing expenses for fiscal 2016 are largely consistent with the prior year. R&D expenses increased as the Company continues to allocate resources to accelerate near term business opportunities and to advance the development and introduction of new products to its markets such as VectorSense® and VI2M™. The increase reflects a reduction in accrued investment tax credits as less R&D expenses were considered as eligible scientific expenditures in 2016 as compared to the prior year.

Earnings before interest, income taxes, depreciation and amortization (EBITDA), including gains or losses from foreign exchange and derivatives and earnings or losses from the Company’s equity accounted investment were $1.1 million in fourth quarter 2016, consistent with the prior year period. For the year ended November 30, 2016 EBITDA rose to $4.9 million from $4.4 million in fiscal 2015.

The Company recorded foreign exchange losses in fiscal 2016 reflecting the year to date decline in the value of the U.S. dollar relative to the Canadian dollar and Chilean peso, which resulted in a reduction in the carrying value of U.S. dollar net assets. In addition, the Company recorded a loss on outstanding U.S. dollar forward sales contracts and a decrease in accrued embedded derivative gains related to the realization of U.S. revenues on open contracts within its Chilean and Mexican subsidiaries. The Company partially reduces its exposure to U.S. currency volatility by maintaining a portion of its bank indebtedness in U.S. funds and by hedging a portion of its future U.S. dollar cash flows.

The Company owns a 50% joint venture interest in Xuzhou-PAT Control Technologies Limited (XPCT), an ITS products and manufacturing service provider in China, and reported equity earnings of $432,836 for the year ended November 30, 2016 compared to $444,705 in the prior year. Fiscal 2015 equity earnings at XPCT included a $167,577 after-tax gain on the sale of land and a building.

Net earnings in the fourth quarter of fiscal 2016 were $0.5 million or $0.04 per common share compared to $0.8 million or $0.05 per common share in the prior year. For the year ended November 30, 2016 net earnings increased 8.9% to $2.8 million or $0.19 per common share compared to $2.5 million or $0.18 per common share in the prior year.

The Company generated cash from operations of $2.3 million through the year ended November 30, 2016 compared to $4.3 million in the prior year. Working capital increased to $14.6 million compared to $11.3 million at November 30, 2015.

INVESTOR CONFERENCE CALL

An investor conference call hosted by IRD’s management team to discuss the Company’s fiscal 2016 results will be held on Tuesday, February 28, 2017 at 1.00 pm ET. The telephone numbers to participate in the conference call are North America Toll Free: (866) 223-7781 and Local Toronto / International: (416) 340-2216. The telephone numbers to listen to the call after it is completed (Instant Replay) are North American Toll Free (800) 408-3053 or Local Toronto / International (905) 694-9451. The Passcode for the Instant Replay is 6153053#. A webcast of the call will also be archived on the Company’s web site at www.irdinc.com.

FINANCIAL HIGHLIGHTS

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 news release is based on management’s current estimates, expectations and projections, which management believes are reasonable as of February 24, 2017.  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.

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