SASKATOON, SASKATCHEWAN--(Marketwired - Jul 15, 2013) - International Road Dynamics Inc. (IRD.TO), one of the world's leading providers of systems and solutions for the global Intelligent Transportation Systems (ITS) market, today announced improved results for the three and six months ended May 31, 2013.
Q2 2013 HIGHLIGHTS:
- Net earnings of $619,582 for the second quarter continued a trend of improved year-over-year comparative quarterly financial performance
- Gross margin percentages increased for second consecutive quarter due to product mix
- An increase in recurring service revenues contributed to earnings and stability of cash flows
- XPCT investment in China generated significant earnings
- Subsidiary in Chile continued to grow generating an increased contribution to operating results
- Strong financial position maintained with positive working capital of $7.7 million
"We continued to capitalize on strengthening North American markets and our solid presence in Latin America," commented Terry Bergan, President and CEO. "Importantly, profit margins also strengthened due to higher margin sales and the benefits of our cost control and production efficiency initiatives. We look for this progress to continue going forward."
Revenues in the second quarter of fiscal 2013 rose 6.4% to $11.2 million compared to $10.6 million for the same period last year. Following a weaker first quarter of the year, revenues for the six months ended May 31, 2013 were $19.1 million compared to $19.5 million last year.
Revenues in the Company's Canadian and United States markets rose 13.2% in the second quarter compared to the same period in the prior year as favourable business conditions allowed a number of project orders to commence. Management continues to believe that its North American business will grow over the near term due to a recently-approved funding bill passed by the U.S. Congress and a growing backlog of orders.
Latin American revenues, originating from the Company's successful subsidiary in Chile, increased by 9.1% in the quarter compared to last year reflecting the Company's strong market presence and the commencement of a major project in Paraguay. The Company continues to identify and add new sales opportunities in a number of countries in the Latin America region.
South Asian revenues originating from the Company's subsidiary in India declined in the quarter reflecting management's decision to be more selective in the contracts entered into in this market. The Company remains focused on maintaining its recurring service operations and completing existing major projects by the end of the year while also realigning operating costs to match current business opportunities over the near term.
Other International revenues, which are primarily composed of product sales, declined in the quarter mainly due to delayed purchasing decisions across the Company's worldwide customer base. This segment of the Company's business is subject to wide variability on a quarter-to-quarter basis.
For the three months ended May 31, 2013 the Company reported improved earnings of $213,608 from its 50% equity investment in XPCT in China compared to $5,391 in the same prior year period arising from the continued success of its wiring harness business and positive earnings from its traffic business. The Company received dividends of $491,601 from XPCT through the first six months of the fiscal year.
Gross margin as a percentage of revenues improved significantly to 33.3% in the second quarter of fiscal 2013 from 30.0% in the same prior year period due primarily to increased higher-margin service revenues and product sales this year. For the first six months of fiscal 2013 gross margins strengthened to 33.1% of revenues from 28.4% last year.
Administrative and marketing expenses increased compared to the prior year due primarily to higher selling costs in its Latin America operations resulting in the higher sales revenues. However, as a percentage of revenue, administrative and marketing expenses remained consistent with the prior year. Net research and development costs increased due to accelerated technology development programs aimed at adding to the functionality of its products. Interest costs were higher due to increased borrowing levels and higher interest rates on the Company's credit lines.
The Company continued to demonstrate a trend of improved year-over-year quarterly performance as earnings before interest, taxes, depreciation and amortization ("EBITDA") increased to $975,226 in the second quarter of 2013 from $532,209 in the same prior year period. For the six months ended May 31, 2013 EBITDA was $784,867 compared to $209,703 last year.
The Company generated net earnings of $619,582 ($0.05 per share) in the second quarter, up from $235,457 ($0.02 per share) last year. For the first six months of fiscal 2013, net earnings were $236,582 ($0.02 per share) as compared to a net loss of $277,462 (net loss of $0.02 per share) in the prior year.
The Company's balance sheet remained solid at May 31, 2013 with working capital of $7.7 million. Cash flows from operating activities rose by $1.2 million for the six months ended May 31, 2013 compared to $0.9 million in the prior year period due primarily to improved net earnings and a reduction in accounts receivable and unbilled revenues.
Financial Highlights (financial statements are available at www.irdinc.com )
|Three Months||Six Months|
|Periods ended May 31||2013||2012||2013||2012|
|(in $000's except per share amounts)||$||$||$||$|
|Gross margin percentage of revenue (%)||33.3||%||30.0||%||33.1||%||28.4||%|
|Net earnings (loss)||620||235||237||(277||)|
|Net earnings (loss) per common share (basic)||0.05||0.02||0.02||(0.02||)|
|Shareholders' equity per share||1.22||1.20|
|Common shares outstanding||13,998||13,998|
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.
The Company's shares trade on the Toronto Stock Exchange under the symbol IRD.