ISV Information Services Corporation

REGINA, May 8, 2014 /CNW/ - Information Services Corporation (TSX:ISV) ("ISC" or "the Company"), Saskatchewan's exclusive provider of key registry information services, today reported on the Company's financial results for the first quarter ended March 31, 2014.

Highlights of ISC's Q1 2014 financial results

• Total revenue was $17.4 million for the three months ended March 31, 2014, an increase of $0.3 million or 1.9 per cent, compared to $17.1 million for the three months ended March 31, 2013.
  
  
• EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of 2014 was $5.0 million compared to $4.6 million in the first quarter of 2013, an increase of 8.3 per cent. ISC's EBITDA margin for the first quarter of 2014 was 28.6 per cent compared to 26.1 per cent in the first quarter of 2013.
  
  
• Adjusted EBITDA was $5.0 million for the quarter compared to $5.4 million in the same quarter last year, with ISC generating an Adjusted EBITDA margin of 28.6 per cent for the quarter compared to 31.6 per cent in the first quarter of 2013, reflecting adjustments for cost associated with the Initial Public Offering ("IPO") and discontinued operations.
  
  
• Net income for the three months ended March 31, 2014 was $2.8 million, or $0.16 per share. In the first quarter last year, net income was $3.0 million; however, for comparative purposes, it is important to note that ISC was not subject to tax for the first quarter in 2013. Excluding the first quarter's tax expense and discontinued operations, ISC generated an increase in income over the first quarter of 2013 of $0.5 million, or 14.2 per cent.

Commenting on the Company's quarterly results, Jeff Stusek, President and CEO stated, "I am pleased with the start we have made to the year. We delivered a solid performance and continue to maintain a healthy balance sheet. Our focus remains on ensuring the continuity of our business and progressively exploring various opportunities which will create added value for our customers as well as for our shareholders."

Management's Discussion of ISC's Summary Quarterly Financial Results

1. Revenue does not include the Vital Statistics Registry, which is reflected as a discontinued operation.
   
   
2. EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free cash flow are not recognized as a measure under IFRS and do not have a standardized meaning prescribed by IFRS.  See "Non-IFRS Measures" in Management's Discussion & Analysis for the first quarter ended March 31, 2014.
   
   
3. The calculation of earnings per share is based on net income after tax and the weighted average number of shares outstanding during the period.

• Revenue for Land Titles Registry, Land Surveys and Geomatics was $13.0 million for the three months ended March 31, 2014, an increase of $0.3 million, or 2.1 per cent, compared to the three months ended March 31, 2013. Revenue from the Land Titles Registry remained strong due to the increases in average prices of existing homes, which offset a decrease in ownership transfer volumes.
  
  
• Revenue for the Personal Property Registry (the "PPR") for the three months ended March 31, 2014 was $2.1 million, which is consistent with revenues for the same period in 2013. The main driver of revenue for this registry - personal property security registration set-ups - has shown a slight increase in volume and small decrease in revenue, as the price per registration is variable based on the nature and term of the security agreement.
  
  
• Revenue for the Corporate Registry for the three months ended March 31, 2014 was $2.3 million, a 2.6 per cent increase compared to the $2.2 million for the three months ended March 31, 2013. Volume and revenue across most activities in the Corporate Registry were higher for the quarter compared to the same period in 2013, with revenue from filing of annual returns leading the way with a 5.6 per cent increase, while incorporations revenue was up 2.8 per cent.
  
  
• Operating, general and administrative expenses were $12.4 million for the three months ended March 31, 2014 compared to $12.1 million for the three months ended March 31, 2013, an increase of $0.3 million or 2.2 per cent. The increase was due to information technology services costs and an increase in expenses to support the requirements of a publicly traded company.
  
  
• Depreciation and amortization decreased by $0.4 million for the three months ended March 31, 2014 compared to the same period of 2013. The decline in the first quarter as compared to the same period last year was due to certain projects reaching a fully amortized state in 2013.  In addition, there was less investment in new projects as the Company continues to evaluate its new projects to ensure they support long-term objectives.
  
  
• Net income and total comprehensive income for the three months ended March 31, 2014 was $2.8 million, or $0.16 per share, compared to $3.0 million for the same period in 2013. The decrease is primarily a result of income tax expense being recorded in the first quarter of 2014 with ISC becoming a taxable entity effective June 27, 2013.
  
  
• Adjusted EBITDA totalled $5.0 million for the three months ended March 31, 2014 compared to $5.4 million for the same period in 2013 as a result of adjustments made to 2013 for one-time expenses associated with the IPO and for the net loss from discontinued operations.
  
  
• As of March 31, 2014, the Company held cash of $24.7 million and had long-term debt of approximately $9.9 million.

Outlook

According to Bank of Montreal ("BMO") Capital Markets'¹ most recent economic forecast for Saskatchewan, the provincial economy is expected to post real gross domestic product  ("GDP") growth of 2.5 per cent growth in 2014. Royal Bank of Canada's Economics Research² projection for 2014 is currently 2.0 per cent.

Employment growth in Saskatchewan was up 3.4 per cent in 2013³ while average weekly earnings⁴ rose 3.5 per cent from January 2013 to January 2014. Manufacturing sales⁵ rose 10.3 percent to approximately $16.4 billion from January 2013 to January 2014.

Canada Mortgage and Housing Corporation ("CMHC") Housing Market Outlook⁶ currently forecasts a slight increase in existing home sales volumes in Saskatchewan for 2014. Average home resale prices are expected to increase marginally in 2014 by 2.4 per cent. While mortgage rates have begun to increase modestly, they are forecast to remain favorable in 2014, all of which has the potential to impact our Land Titles Registry.

Patterns of retail trade and new vehicle sales provide a useful metric for expected revenues in the PPR. From January to December 2013, retail trade⁷ in Saskatchewan grew 3.0 per cent. New vehicle sales⁸ increased 4.6 per cent from January to December 2013. While the first two months of 2014 saw new motor vehicle sales decrease by 8.6 per cent compared to the same period in 2013, Scotiabank⁹ is forecasting slight increases in annual motor vehicles sales for 2014 over 2013.

Consistent with the above economic forecasts, the Company maintains its outlook for 2014, expecting revenue to remain stable based on the moderate economic growth expectations for Saskatchewan. We also continue to anticipate a modest increase in operating, general and administrative expenses based on inflation as well as the costs associated with being a publicly traded company. Capital expenditures are expected to be between $8.0 million and $10.0 million and annual EBITDA margins in 2014 are expected to return to the normalized level of approximately 35 per cent.

Note to Readers:

This news release provides a general summary of Information Services Corporation's results for the first quarters ended March 31, 2013 and 2014.  Readers are encouraged to download the Company's complete financial disclosures. Links to ISC's financial statements and related notes and Management's Discussion and Analysis for the period are available on ISC's website in the Investor section of the site at http://isc.investorroom.com/index.php?s=63. All figures are in Canadian dollars unless otherwise noted.

Copies can also be obtained at www.sedar.com by searching Information Services Corporation's profile or by contacting Information Services Corporation at investor.relations@isc.ca

Conference Call And Webcast

The Company is hosting a conference call and webcast at 9:00 a.m. Saskatchewan Time; 11:00 a.m. Eastern Time on May 9, 2014 to discuss these results.  Dial-in numbers for the conference call are:

1-416-764-8688 or toll-free at 1-888-390-0546.

A live audiocast of the conference call is available at the following link: http://www.newswire.ca/en/webcast/detail/1338747/1479863

About ISC

ISC is a provider of registry and information services to the Province of Saskatchewan. The Company is the exclusive provider of the Land Titles Registry, Land Surveys Directory, Personal Property Registry and Corporate Registry in Saskatchewan, which are key supporters of economic activity in the province.

Cautionary Note Regarding Forward-Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian securities legislation, including certain assumptions with respect to the Saskatchewan economy, consumer confidence, interest rates, level of unemployment, inflation, real estate market in Saskatchewan, claim liabilities, income taxes, our ability to attract and retain skilled staff, employee future benefits, goodwill and intangibles are material factors in preparing forward-looking statements and management's expectations. 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 Annual Information Form, dated March 19, 2014, ISC's unaudited condensed Consolidated Financial Statements and Notes and Management's Discussion and Analysis for the quarter ended March 31, 2014 as well as other documents filed by ISC with Canadian securities regulators through SEDAR (www.sedar.com) from time to time. 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.

¹ BMO Capital Markets Economics - Provincial Economic Outlook - April 2014
² RBC Economics Provincial Outlook - March 2014
³ Statistics Canada CANSIM Table 282-0002: Labour force survey estimates (LFS), by sex and detailed age group, annual,province - April 2014
⁴ Statistics Canada CANSIM Table  281-0063: Employment and average weekly earnings including overtime (SEPH), seasonally adjusted, for all employees by industries classified using the NAICS, monthly (persons unless otherwise noted) - April 2014
⁵ Statistics Canada CANSIM Table 304-0015: Manufacturing Sales by (NAICS) and province - March 2014
⁶ CMHC Housing Market Outlook - Canadian Edition - First Quarter 2014
⁷ Statistics Canada CANSIM Table 080-0020: Retail trade, by province and territory (Monthly- Seasonally Adjusted)- April 2014
⁸ Statistics Canada CANSIM Table 079-0003: New motor vehicle sales, Canada, provinces and territories - April 2014
⁹ Scotiabank Global Economics - Global Forecast Update, March 26, 2014. 

SOURCE Information Services Corporation