International Road Dynamics Inc.
TSX : IRD

International Road Dynamics Inc.

June 24, 2005 14:09 ET

IRD Announces Second Profitable Quarter in 2005: New Canadian Contracts Result in Solid Order Book

SASKATOON, SASKATCHEWAN--(CCNMatthews - June 24, 2005) - International Road Dynamics Inc. (TSX:IRD) announced today solid results for the three and six months ended May 31, 2005 and the awarding of a number of new Canadian contracts.

HIGHLIGHTS:

- Sales increase 14% due to gains in offshore and domestic markets

- Second consecutive profitable quarter in 2005

- New Canadian contracts boost order book by $1.9 million

Sales increased 14% in the second quarter of fiscal 2005 to $8.6 million compared to $7.5 million last year. For the six months ended May 31, 2005, sales rose 11% to $15.8 million from $14.2 million in fiscal 2004. Canadian orders increased significantly in the quarter and year-to-date periods as a result of IRD's continuing product and market diversification efforts.

Gross margin in the second quarter of fiscal 2005 improved to 32.8% of sales compared to 29.6% last year. For the first six months of fiscal 2005 gross margin increased to 31.6% from 24.3% last year. The improvement in profitability was due to an increased percentage of higher margin system and product sales in fiscal 2005 as well as the positive impact of moving the manufacturing of certain PAT equipment from Europe to the Company's facilities in Canada over the last year. In addition, certain low margin contracts acquired through the PAT transaction that had negatively impacted gross margins in fiscal 2004 are now completed.

Administrative and marketing expenses increased marginally in fiscal 2005 due to the Company's successful efforts to grow sales in its overseas markets.

As a result of the increased sales, improved gross margins and ongoing cost control initiatives, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $942,266 in the second quarter, a solid improvement over the $183,352 in fiscal 2004. For the six months ended May 31, 2005 EBITDA was $1,274,990 compared to a negative EBITDA of $155,122 for the first six months of last year.

Net income was $440,314 or $0.03 per common share in the second quarter compared to a net loss of $61,135 or $0.00 per common share in the prior year. For the six months ended May 31, 2005 net income was $528,788 or $0.04 per share compared to a net loss of $355,137 or $(0.03) per common share in fiscal 2004.

The Company's balance sheet remained strong at the end of the quarter with working capital of $8.0 million and shareholders equity of $13.4 million or $0.97 per share. The Company generated cash from operations of $3,209,844 through the first six months of fiscal 2005, after changes in non-cash working capital items, compared to $155,042 last year.

The Company also announced today that it had been awarded a number of contracts for its industry-leading Weigh-In-Motion systems and truck weight station systems in Saskatchewan, British Columbia and Nova Scotia for a total value of approximately $1.9 million. During the second quarter of fiscal 2005 the Company was awarded a $1.4 million contract to supply and install two automated weigh stations in the Province of New Brunswick, and three contracts to supply its patented iTOLL toll collection and weigh-in-motion systems in India valued at $1.9 million. As a result of these new business wins, the Company's book of confirmed orders stood at $19.2 million as at June 10, 2005.

"We are very pleased to have generated another profitable quarter in fiscal 2005, and expect further gains through the balance of the year as we continue to capitalize on our presence as one of the world's leading providers of Intelligent Transportation Systems solutions," commented Mr. Terry Bergan, President and CEO. "We also remain optimistic that the U.S. Federal Government will approve a new transportation budget this year that will significantly increase our sales in our core North American markets going forward."



Financial Highlights (full statements attached)

------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months Six Months
------------------------------------------------------------------------
Period Ended May 31, 2005 2004 2005 2004
------------------------------------------------------------------------
(in $,000 except per share amounts)
Sales 8,648 7,553 15,815 14,217
EBITDA 942 183 1,275 (155)
Net Earnings (Loss) 440 (61) 529 (355)
Net Earnings (Loss)
per Common Share $ 0.03 $ 0.00 $ 0.04 $ (0.03)
Working Capital 7,975 8,117
Shareholders' Equity per Share $ 0.97 $ 0.97
Common Shares Outstanding 13,784 13,724
------------------------------------------------------------------------
------------------------------------------------------------------------


Certain statements in this discussion may include "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of International Road Dynamics Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this discussion, such statements use such words as "may", "will", "expect", "anticipate", "project", "believe", "plan", and other similar terminology. The risks and uncertainties are detailed from time to time in reports filed by the Corporation with the securities regulatory authorities in applicable provinces and territories of Canada. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of the Corporation to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

As used herein, "EBITDA" means earnings before interest, income taxes, depreciation, and amortization. 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 Corporation's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Corporation'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.

The Company's shares trade on the Toronto Stock Exchange under the symbol IRD.



INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Balance Sheets
May 31, 2005, with comparative figures for November 30, 2004
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
May 31 November 30
2005 2004
(as restated)
------------------------------------------------------------------------
Assets

Current assets:
Cash $ 488,104 $ 632,823
Accounts receivable 7,720,682 11,953,467
Inventory 6,136,928 5,191,353
Investment tax credits recoverable 475,000 474,000
Prepaid expenses and deposits 451,014 342,831
------------------------------------------------------------------------
15,271,728 18,594,474

Investment tax credit recoverable 3,117,000 2,900,000
Property, plant and equipment 4,597,722 4,576,853
Intangible assets 78,981 91,082
------------------------------------------------------------------------
$ 23,065,431 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current Liabilities:
Short-term loans $ 3,654,075 $ 6,294,275
Accounts payable and accrued liabilities 2,326,145 3,185,569
Current income taxes 80,138 114,862
Deferred revenue 160,000 199,000
Future income taxes 500,000 506,000
Current portion of long-term debt 576,000 578,700
------------------------------------------------------------------------
7,296,358 10,878,406

Long-term debt 1,244,589 1,530,185
Deferred revenue 442,521 319,606
Future income taxes 698,000 610,000
------------------------------------------------------------------------
9,681,468 13,338,197
------------------------------------------------------------------------
Shareholders' Equity:
Share capital (note 2) 11,813,021 11,782,058
Contributed surplus (note 2) 119,843 119,843
Retained earnings 1,451,099 922,311
------------------------------------------------------------------------
13,383,963 12,824,212
------------------------------------------------------------------------

$ 23,065,431 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Statement of Operations and Retained Earnings
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended May 31 Six months ended May 31
2005 2004 2005 2004
------------------------------------------------------------------------
Sales $8,648,343 $7,553,395 $15,815,300 $14,216,949

Cost of sales 5,811,530 5,391,934 10,811,381 10,757,039
------------------------------------------------------------------------
2,836,813 2,235,696 5,003,919 3,459,910

Administrative
and marketing
expenses 1,663,480 1,795,043 3,437,530 3,364,637
------------------------------------------------------------------------
1,173,333 330,200 1,566,389 95,273

Research and
development 212,242 310,256 349,752 558,069
------------------------------------------------------------------------
Earnings before
undernoted items 961,091 56,162 1,216,637 (462,796)
------------------------------------------------------------------------
Other expenses (income)
Foreign exchange
loss (gain) 18,825 (127,190) (58,353) (307,674)
Amortization 225,404 217,589 417,299 429,062
Interest on
short-term debt 63,120 48,525 157,090 115,031
Interest on
long-term debt 32,011 21,604 65,753 43,765
Interest and
other income (16,697) (15,397) (43,322) (35,142)
------------------------------------------------------------------------
322,663 145,131 538,467 245,042
------------------------------------------------------------------------
Earnings (loss)
before income
taxes 638,428 (88,969) 678,170 (707,838)

Provision for
income taxes
Current 47,114 42,166 67,382 72,299
Future (recovery) 151,000 (70,000) 82,000 (425,000)
------------------------------------------------------------------------
198,114 (27,834) 149,382 (352,701)

Net earnings (loss)
for the period 440,314 (61,135) 528,788 (355,137)

Retained earnings,
beginning of period
As previously
reported 1,010,785 1,665,236 1,042,154 1,959,238
Less stock based
compensation of
prior periods - (2,843) (119,843) (2,843)
------------------------------------------------------------------------
As restated 1,010,785 1,662,393 922,311 1,956,395
------------------------------------------------------------------------
Retained earnings,
end of period $1,451,099 $1,601,258 $1,451,099 $1,601,258
------------------------------------------------------------------------
------------------------------------------------------------------------

Earnings (loss)
per share - basic $ 0.03 $ 0.00 $ 0.04 $ (0.03)
- diluted $ 0.03 $ 0.00 $ 0.04 $ (0.03)
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Statement of Cash Flows
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended May 31 Six months ended May 31
2005 2004 2005 2004
------------------------------------------------------------------------

Cash provided by (used in):

Operations:
Net earnings (loss) $ 440,314 $ (61,135) $ 528,788 $ (355,137)
Items not involving
cash:
Amortization 225,404 217,589 417,299 429,062
Issue of common
shares for expenses 14,459 21,489 30,963 21,489
Deferred revenue 93,512 (97,311) 83,915 (196,703)
------------------------------------------------------------------------
773,689 80,632 1,060,965 (101,289)
Change in non-cash
working capital:
Accounts receivable (333,711) 994 4,232,785 1,672,183
Investment tax credits
recoverable (88,000) (270,000) (218,000) (470,000)
Inventory (394,784) (986,122) (945,575) (801,082)
Prepaid expenses
and deposits (131,514) (172,751) (108,183) (195,402)
Accounts payable and
accrued liabilities (683,801) 1,693,738 (859,424) 472,007
Provision for current
and future taxes 90,895 (102,681) 47,276 (421,375)
------------------------------------------------------------------------
(767,226) 243,810 3,209,844 155,042
------------------------------------------------------------------------

Financing:
Net short-term loans (289,200) (39,477) (2,640,200) (193,543)
Repayment of
long-term debt (144,235) (18,471) (288,296) (33,765)
Issue share capital - - - 164,787
------------------------------------------------------------------------
(433,435) (57,948) (2,928,496) (62,521)
------------------------------------------------------------------------

Investing:
Additions to property,
plant and equipment (269,277) (319,167) (426,067) (497,167)
Equity investment - (61,772) - (61,772)
------------------------------------------------------------------------
(269,277) (380,939) (426,067) (558,939)
------------------------------------------------------------------------
Decrease in cash (1,469,938) (195,077) (144,719) (466,418)

Cash, beginning
of period 1,958,042 650,602 632,823 921,943
------------------------------------------------------------------------
Cash, end of period $ 488,104 $ 455,525 $ 488,104 $ 455,525
------------------------------------------------------------------------
------------------------------------------------------------------------
Supplemental cash
flow disclosure:
Income taxes paid $ 114,337 $ 73,368 $ 114,337 $ 73,368
Interest paid $ 95,131 $ 70,129 $ 222,843 $ 158,796
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Notes to Consolidated Financial Statements
Period ended May 31, 2005
"Unaudited"


1. Significant accounting policies

These consolidated financial statements have been prepared in accordance with Canadaian Generally Accepted Accounting Principals and follow the same accounting policies and methods of application as, and should be read in conjunction with the most recent audited annual financial statements as of November 30, The consolidated balance sheet as at May 31, 2005, and the consolidated statements of operations and cash flow for the three and six months then ended have not been audited or reviewed, however management believes that all adjustments necessary to present fairly these financial statements have been included.

2. Share capital:



(a) Share transactions:
Number $
of shares amount
--------------------------
Balance, November 30, 2004 13,747,614 11,782,058

Shares issued in exchange for expenses 36,603 30,963

--------------------------
13,784,217 11,813,021
--------------------------
--------------------------


(b) Options

Under the terms of a stock option plan approved by the shareholders in May, 1997 and amended in 1998, the Company is authorized to grant directors, officers, empoyees and others options to purchase common shares at prices based on the market price of shares as determined on the date of grant. At May 31, 2005, 1,213,165 (2004) - 988,165) options remain available to be granted. Stock options become exercisable at dates determined by the Compensation Committee of the Board of Directors.



At May 31, 2005 the following stock options to directors, officers,
employees and others were outstanding:

------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Exercise Number Weighted- Weighted- Number Weighted
Prices Outstanding Average Average Exercisable -Average
at May 31, Remaining Exercise at May 31, Exercise
2005 Contractual Price 2005 Price
Life (years)
------------------------------------------------------------------------

$ 0.95 - 1.16 40,000 0.63 $1.02 40,000 $1.02
$ 1.28 870,000 3.75 $1.28 - $ -
$ 1.30 - 1.60 50,000 0.40 $1.48 46,667 $1.49
------------------------------------------------------------------------
960,000 83,334
------------------------------------------------------------------------
------------------------------------------------------------------------


The Company has granted stock options to directors, officers, employees
and others as follows:

Number of Weighted Average
Common Shares Exercise Price
Issuable
------------------------------------------------------------------------
Outstanding, November 30, 2003 734,500 $ 1.35

Options granted 937,500 1.28
Options exercised (140,667) 1.17
Options expired and cancelled (556,333) 1.41
------------------------------------------------------------------------
Outstanding, November 30, 2004 975,000 $ 1.28

Options expired and cancelled (15,000) 1.28
------------------------------------------------------------------------

Outstanding, May 31, 2005 960,000 $ 1.28
------------------------------------------------------------------------
------------------------------------------------------------------------

Outstanding options expire between June 30, 2005 and February 28, 2009.


Effective December 1, 2002, the Company adopted new CICA Handbook Section 3870, "Stock-based Compensation and other Stock-based Payments". This section requires that a fair value based method of accounting be applied to direct awards of stock options to employees. This standard allowed the Company to continue its existing policy, the intrinsic value based method, of recording no compensation cost of the grant of stock options to employees. For each of the 2003 and 2004 fiscal years pro forma information was presented which reflects the difference between compensation costs recorded under the intrinsic based method and costs that would have been recorded under the fair value based method. The fair value of stock options issued in the 2004 year was estimated using the Black-Scholes option pricing model with assumptions of three year weighted average option life, expected forfeiture rate of 50%, 22% volatiltiy and risk-free rate of return of 2.31%.

For the year ended November 30, 2004, the effect on compensation cost of using this approach would be to increase the net loss by $117,000 and for the 2003 fiscal year to reduce net earnings by $2,843. In the 2005 fiscal year the Company has retroactively adopted the fair value based method of accounting for awards of employee stock options. Prior periods have not been restated and an adjustment has been made to the opening balance of retained earnings of the current period to reflect the cumulative effect of the change on prior periods.

3. Segmented Information

The Company operates in one industry segment, the Intelligent Transportation Systems industry, which involves the engineering, software development, manufacturing and integration of products and systems to highway departments and industry to improve the efficiency of traffic flows.



The Company had sales in the following geographic areas:

Three months ended May 31 Six months ended May 31
2005 2004 2005 2004
------------------------------------------------------------------------

Canada $ 1,906,673 $ 537,004 $ 2,820,720 $ 680,645
United States 4,657,670 4,357,066 8,205,086 8,809,165
Offshore 2,084,000 2,659,325 4,789,494 4,727,139
------------------------------------------------------------------------
$ 8,648,343 $ 7,553,395 $ 15,815,300 $ 14,216,949
------------------------------------------------------------------------
------------------------------------------------------------------------


4. Comparative Figures

Certain of the 2004 numbers have been reclassified to conform with the 2005 financial statement presentation.

Contact Information

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