International Road Dynamics Inc.
TSX : IRD

International Road Dynamics Inc.

October 14, 2010 14:05 ET

IRD Announces Continuing Strong Third Quarter Fiscal 2010 Results

SASKATOON, SASKATCHEWAN--(Marketwire - Oct. 14, 2010) -

International Road Dynamics Inc. (TSX:IRD), the world's largest provider of Weigh-In-Motion systems and solutions for the global Intelligent Transportation Systems (ITS) market, today announced solid results for the three and nine months ended August 31, 2010.

Q3 2010 HIGHLIGHTS:

  • Strong growth in key data collection, recurring maintenance and high margin product sales
  • Gross margin strengthens to 32.8%
  • EBITDA increases 44.1% from previous year
  • EPS improves to $0.05 per share from $0.03 per share last year
  • Total long-term financial liabilities reduced

Sales for the third quarter of fiscal 2010 were $13.3 million compared to $13.6 million for the same period last year. The Company experienced strong growth in its key data collection systems, recurring maintenance contracts revenues and high margin product sales, offset by a decrease in commercial vehicle systems sales compared to the same quarter last year when significantly higher than usual installations were delivered, as well as reduced toll system revenues and in-vehicle system sales. For the first nine months of fiscal 2010, sales were $33.7 million compared to $36.2 million for the same nine month period last year. The decline was primarily due to a slow start to the year and the Canadian dollar strengthening against the U.S. dollar which resulted in a decrease in the Canadian dollar value of the Company's U.S. dollar-denominated sales of approximately $3.0 million through the first nine months of fiscal 2010 compared to the prior year.

Offshore sales in the third quarter and the first nine months of fiscal 2010 were $4.2 million and $11.6 million, respectively, compared to $5.8 million and $16.0 million for the same periods last year. The decreases were primarily due to higher than normal revenues from toll systems in India and significant product and weigh station deliveries in Latin America and Asia in the prior year periods as well as the impact of a stronger Canadian dollar. Management expects offshore revenues to increase from the current level during the remainder of fiscal 2010. Sales in the United States in the third quarter of fiscal 2010 were $7.3 million compared to $6.8 million in the prior year's third quarter. The increase is due primarily to higher project revenue in the current year quarter. For the first nine months of fiscal 2010, sales in the U.S. were $16.3 million compared to $17.3 million for the same period last year. The decline was primarily due to the stronger Canadian dollar. Management expects revenues from the U.S. market to increase through the remainder of the current fiscal year. In Canada, sales improved significantly to $1.9 million in the quarter compared to $0.9 million for the same period last year, and nearly doubled to $5.8 million for the first nine months of fiscal 2010 compared to $3.0 million for the same period last year. The significant increase in Canadian sales was primarily due to higher commercial vehicle system project deliveries.

"Our markets remain strong, and we continue to benefit from the significant efforts over the last few years to successfully diversify our revenues both by product type and geography," stated Terry Bergan, President and CEO. "Since the Company's founding more than thirty years ago, we have leveraged our strong technology base and proprietary products to move into a number of growing markets while expanding our presence around the world. Today, IRD has among the largest installed base in a number of our product areas, and we look to build on this strong market presence in the years to come."

Gross margin as a percentage of sales improved significantly to 32.8% in the third quarter compared to 27.5% in the prior year and to 30.2% for the first nine months of fiscal 2010 compared to 29.1% for the same nine month period in the prior year. The improvement in gross margin in the current year was due to a sales mix that included an increase in the proportion of higher margin proprietary systems and products.

Administrative and marketing expenses in the third quarter of fiscal 2010 increased by 2.2% to $2.7 million compared to $2.6 million in the prior year's third quarter and for the first nine months of the current year were largely consistent with last year. As a percentage of sales, administrative and marketing expenses were 20.3% in the third quarter of fiscal 2010, consistent with the 19.5% in the prior year. For the first nine months of the current fiscal year, administrative and marketing expenses as a percentage of sales rose slightly to 22.0% compared to 20.5% for the same period last year, due primarily to the reduced sales in the current year period resulting from the stronger Canadian dollar. Research and development costs were 1.6% of sales in the third quarter and 1.3% of sales for the first nine months of fiscal 2010. Interest expense was consistent in the third quarter of the current fiscal year compared to last year and for the first nine months of fiscal 2010 was lower than the previous year due to a reduced level of debt as well as the Company benefiting from the current low interest rate environment.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.5 million in the third quarter of fiscal 2010 compared to $1.0 million in the same prior year period. For the nine months ended August 31, 2010, EBITDA was $2.3 million, in-line with the same period last year. The increases in EBITDA were primarily due to the improved gross margin in the third quarter as well as lower foreign exchange losses through the first nine months of fiscal 2010. Net earnings were $0.7 million or $0.05 per common share in the third quarter of fiscal 2010 compared to net earnings of $0.5 million or $0.03 per share for the same period last year. For the nine months ended August 31, 2010, net earnings were $0.8 million or $0.06 per common share compared to $0.9 million or $0.06 per common share in the comparable prior year period.

The Company's balance sheet remained strong as at August 31, 2010 with working capital at $8.6 million compared to $8.2 million as at November 30, 2009. As at August 31, 2010, the Company was in compliance with all bank covenants and expects to remain in compliance for the remainder of the year.

During the first nine months of fiscal 2010 the Company expanded its backlog of confirmed orders with new contracts in Hawaii, New Brunswick, Alaska, Washington, California, and Nova Scotia valued at approximately CDN $9.6 million, as well as a new Weigh-in-Motion and toll system contract in Mongolia.

"Looking ahead, we believe the economic recovery occurring in most developed and developing countries will generate an increased focus on transportation infrastructure and solutions that contribute to safer and more efficient highways and roadways. IRD is a global leader in providing unique and cost effective technologies to the Intelligent Transportation Systems marketplace, and we are confident this strong presence and reputation for quality will lead to further growth in the years ahead," Mr. Bergan concluded.

Financial Highlights (financial statements are available on the Company's web site www.irdinc.com )

    Three Months   Nine Months
 
Period ended August 31,   2010   2009   2010   2009
(in 000's except per share amounts)                
Sales $ 13,294 $ 13,587 $ 33,740 $ 36,224
EBITDA $ 1,491 $ 1,034 $ 2,330 $ 2,251
Net Earnings $ 708 $ 519 $ 785 $ 888
Total Assets $ 39,738 $ 40,819 $ 39,738 $ 40,819
Total Long-Term Financial Liabilities $ 6,546 $ 8,102 $ 6,546 $ 8,102
Working Capital         $ 8,628 $ 4,270
Shareholders' Equity per Share         $ 1.37 $ 1.28
Common Shares Outstanding           13,998   13,998

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 Canadian generally accepted accounting principles ("GAAP"). 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 GAAP 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.

The following is a reconciliation of EBITDA to net earnings:

    Three Months     Nine Months  
   
Period Ended August 31, 2010   2009   2010   2009  
(in $000's)                        
EBITDA $ 1,491   $ 1,034   $ 2,330   $ 2,251  
Amortization Expense   (241 )   (265 )   (677 )   (773 )
Interest Expense   (166 )   (163 )   (501 )   (563 )
Income Tax Expense   (376 )   (87 )   (367 )   (27 )
Net Earnings $ 708   $ 519   $ 785   $ 888  

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.

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.

IRD is listed on the TSX - trading symbol - IRD

Contact Information

  • International Road Dynamics Inc.
    Terry Bergan
    President & CEO
    (306) 653-6600
    U.S. (303) 355-5998
    or
    International Road Dynamics Inc.
    Francine Senecal-Lepage
    Investor Relations
    (306) 653-6603
    (306) 653-6609 (FAX)
    irdir@irdinc.com
    www.irdinc.com