Information Services Corporation Posts Strong Q2 Results

REGINA, Aug. 12, 2013 /CNW/ - Information Services Corporation (TSX:ISV) ("ISC" or "the Company") today announced solid financial results for the second quarter and six-months ending June 30, 2013.  This is ISC's first reporting period since the Company closed its initial public offering on July 9, 2013.  Highlights of ISC's financial results for both fiscal periods include:

Second Quarter ended June 30, 2013

• Revenues for the quarter were $21.7 million comparable to the same period last year when the Company generated $21.8 million;
  
  
• EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2013 was $8.1 million compared to $9.6 million for the second quarter of 2012; and,
  
  
• Adjusted EBITDA¹ grew to $10.8 million compared to $10.1 million earned in the second quarter last year.

Six Months ended June 30, 2013

• Revenues increased to $39.3 million compared to $39.0 million in the first six months of 2012;

• EBITDA for the first 6 months of 2013 was $12.7 million compared to $14.1 million generated in the same period a year ago; and
  
  
• Adjusted EBITDA¹ rose to $16.3 million, a 10.1% increase compared to the $14.8 million generated in the first 6 months of 2012.

"I am pleased with our financial results, particularly in light of the significant effort required by so many ISC employees over the past six months to execute the privatization of our Company and the subsequent initial public offering on July 9, 2013," President and Chief Executive Officer, Jeff Stusek said.  "This has been a very dynamic period for our Company.  We have successfully transferred Vital Statistics back to government, negotiated a 20-year exclusive Master Service Agreement with the Province of Saskatchewan and successfully completed our transition to becoming a publicly traded company.  At the same time, we remained focused on our operations delivering solid financial results and high levels of customer service."

¹ Adjusted EBITDA is defined as EBITDA before fees related to the Offering and including costs associated with being a public company, costs associated with administering the Master Service Agreement and normalization adjustments relating to the transfer of the Province's Vital Statistics Registry back to the Government of Saskatchewan.

Results from Operations

Revenues from the Land Registry, which includes Land Survey and Geomatics, contributed 75.5% of total revenues for the quarter compared to 75.9% for the second quarter of 2012.  Personal Property Registry revenues grew to 12.4% versus 11.6% during last year's second quarter.  Corporate Registry revenues declined slightly to 9.5% from 10.0% of total revenues in the second quarter of 2012.

Land Registry

Land revenues in the second quarter decreased slightly (0.9% quarter over quarter) to $16.4 million, primarily reflecting a decline in volumes that was offset by the steady increase in new housing prices during the period relative to the same quarter a year ago. Revenues for the six-month period were $29.2 million, an increase of 1.5% compared to the same period in 2012. Steady increases in new housing prices for the first six months of 2013 in Saskatchewan more than offset a reduction in land transfer transactions and mortgage registration volumes for the six-month period. The tightening of mortgage rules implemented by the Government of Canada last summer continues to impact potential home buyers across the country, especially first time buyers, leading to reduced volume.

Personal Property Registry

Revenue for the three-month period ended June 30, 2013 totaled $2.7 million, an increase of 6.5% from $2.5 million in the three months ended June 30, 2012.  Incentives from car manufacturers increased new vehicle sales, which in turn had a positive impact on the registry's revenue. The Personal Property Registry experienced growth in both volume and revenue at 5.9% and 6.5% respectively. For the first six months of 2013, revenues grew 6.4% to $4.8 million (from $4.5 million a year earlier) reflecting a 5.4% increase in search volumes and additional revenue associated the implementation of The Enforcement of Money Judgments Act, which came into effect May 28, 2012 and has resulted in an increase in compulsory discharge transactions.

Corporate Registry

Revenues for the second quarter ended June 30, 2013 were $2.1 million, a decrease of 5.8% over the second quarter of 2012 reflecting a decrease in incorporations, partially offset by an increase in the number of annual returns processed during the quarter.  For the first six months of 2013, revenues were $4.3 million compared to $4.6 million a year earlier. Revenue in the Corporate Registry has decreased as expected in the first half of 2013 due to implementation of The New West Partnership Trade Agreement in July 2012, which has resulted in lower registration volumes and name availability searches.

Operating, General and Administration Expenses

Operating, general and administration expenses for the second quarter were $13.6 million up $1.4 million from the previous year's second quarter of 2012.  This increase includes costs associated with the transfer of Vital Statistics and one-time IPO costs as well as a 3.4% increase in wages and salaries. Increases in wages and services were partially offset by a decrease in occupancy costs and professional services costs.

For the six-month period, operating, general and administration expenses were $26.6 million compared to $24.9 million for the six-month period ended June 30, 2013.  In addition to the one-time costs noted above, wages and salaries increased 2.7% and information technology services increased 2.4%.  These cost increases were partially offset by a decline in occupancy costs and other costs (such as financial and professional services, travel, advertising etc.) for the period.

Depreciation and amortization of $1.5 million for the quarter represented a 15.5% decrease relative to the same period in 2012.  For the six month period, depreciation and amortization decreased by 13.8% to $3.1 million for the six-month period relative to the prior year's period.  The reduction reflects the impact of certain assets being fully amortized.

Net income for the second quarter of 2013 was $6.7 million ($0.38 per share), compared to $7.9 million in the second quarter of 2012.  Net income for the six-month period ended June 30, 2013 was $9.7 million ($0.55 per share) compared to $10.5 million for the 6 months ended June 30, 2012.   Excluding one time costs associated with the transfer of Vital Statistics, and the one-time IPO costs, ISC's net income for the second quarter of 2013 would have been $9.3 million or $0.53 per share, up 11.6% compared to $8.3 million for the second quarter of 2012.  On a year-to-date basis, net income after adjustments would have been $13.3 million ($0.76 per share) for the first six months of 2013, compared to $11.3 million, an increase of 17.8%.

Outlook:

Based on the most recent public research, momentum in the real estate market across Saskatchewan is expected to continue in 2013 albeit at a lower rate than in 2012. CMHC Housing Market Outlook Canadian Edition Second Quarter 2013 currently forecasts a slight decrease in existing home sales volumes in Saskatchewan for 2013. However, average home sales prices are expected to increase marginally in 2013. Assuming interest rates remain low for 2013 this may also be a positive factor for the housing market.

Patterns of retail trade and new vehicle sales provide a useful metric for ISC's Personal Property Registry. In April 2013, retail trade in Saskatchewan grew 2.2% over the same period in 2012. New vehicle sales exhibited an increase of 4.6% from January to April 2013 over the same period in 2012. According to RBC Economics Research, retail sales (including new motor vehicle sales) in Saskatchewan are expected to grow 2.2% in 2013.

Commenting on the ISC's outlook, Jeff Stusek said, "I am confident in the long-term outlook for our Company and while there may be some economic downsides in the Province as a result of the potential change in global potash pricing, the fundamentals of the Saskatchewan economy remain solid in my view. ISC's core registries support this economic activity and are an essential service to the Province, its citizens and to businesses. At the same time, we recognize the importance of building a strong and focused strategic growth plan for our organization and our new shareholders. We have begun that work to ready our organization and strengthen our internal competencies in order to allow us to advance our product offering to existing and new customers within the province of Saskatchewan while seeking new and innovative solutions to grow beyond our provincial borders over time."

Note to Readers:

This press release provides a general summary of Information Services Corporation's results for the periods ended June 30, 2013 and 2012.  Readers are encouraged to download the company's complete financial disclosures. Links to ISC's financial statements, notes and Management's Discussion and Analysis for the period are available on ISC's website at www.isc.ca on the Investor site http://isc.investorroom.com/quarterly-reports.

Copies can also be obtained at www.sedar.com by searching Information Services Corporation profile or by contacting Information Services Corporation at [email protected].

Conference Call And Webcast

The Company is hosting a conference call and webcast at 10:00 a.m. MDT; 12:00 EDT on August 13, 2013 to discuss these results.  Dial-in numbers for the conference call are:
1-416-764-8688
1-888-390-0546 (toll-free)

A live audiocast of the conference call is available at the following link: http://www.newswire.ca/en/webcast/detail/1200639/1316611

Forward-looking Information: This release contains forward-looking information within the meaning of applicable Canadian securities legislation, including information with respect to anticipated levels of economic activity, the momentum in the real estate market across Saskatchewan, expected average home sales prices and land values in Saskatchewan, interest rates and expected retail sales (including new motor vehicle sales) in Saskatchewan. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking information. Although ISC believes the forward-looking information contained in this release is based upon reasonable assumptions, readers are cautioned not to place undue reliance on forward-looking information as it is inherently uncertain and no assurance can be given that the expectations reflected in such information will prove to be correct. Many factors and risks could cause our actual results to differ materially from those expressed or implied by forward-looking information including those detailed in ISC's Final Prospectus dated June 27, 2013, ISC's Unaudited Condensed Consolidated Financial Statements and Notes and Management's Discussion and Analysis for the six months ended June 30, 2013 as well as other documents filed by ISC with Canadian securities regulators through SEDAR (www.sedar.com) from time to time. You are cautioned not to place undue reliance on forward-looking information of ISC. Investors and others should carefully consider the above-noted factors and risks and other uncertainties and potential events. The forward-looking information in this release is made as of the date hereof and, except as required under applicable securities legislation, ISC assumes no obligation to update or revise such information to reflect new events or circumstances.

SOURCE: Information Services Corporation