- Strong operating results from across the business
- Launched goal to double the size of ISC by 2028
Capitalized terms that are used but not defined in this news release have the meaning ascribed to those terms in Management's Discussion & Analysis for the period ended
2024 First Quarter Highlights
- Revenue was
$56.4 million , an increase of 15 per cent compared to the first quarter of 2023. Growth was due to fee adjustments within the Saskatchewan Registries division made in the third quarter of 2023 pursuant to the Extension and annual CPI adjustments, customer and transaction growth in Services’ Regulatory Solutions division and the advancement of project work on existing and new solution definition and implementation contracts in Technology Solutions. - Net income was
$0.4 million or$0.02 per basic share and$0.02 per diluted share compared to$6.9 million or$0.39 per basic and$0.38 per diluted share in the first quarter of 2023. Strong operating results were offset by increased share-based compensation expense due to a rise in the Company’s share price during the quarter compared to a decrease in the prior year quarter, alongside increased interest expense and amortization associated with the Extension executed inJuly 2023 . - Net cash flow provided by operating activities was
$10.5 million for the quarter, an increase of$4.7 million or 82 per cent from$5.7 million in the first quarter of 2023. The increase in net cash flow was primarily due to an increase in cash from changes in non-cash working capital. - Adjusted net income was
$8.5 million or$0.47 per basic share and$0.47 per diluted share compared to$6.8 million or$0.38 per basic share and$0.37 per diluted share in the first quarter of 2023. The growth in adjusted net income reflects strong operating results offset by increased financing costs associated with the additional borrowings that were used to fund the Upfront Payment.
- Adjusted EBITDA was
$19.4 million for the quarter compared to$14.5 million in the first quarter of 2023. The increase is due to the impact of fee adjustments in Registry Operations’ Saskatchewan Registries division pursuant to the Extension Agreement and annual CPI adjustments. Technology Solutions adjusted EBITDA also grew compared to the prior year quarter due to increased revenue from existing and new solution definition and implementation contracts. Adjusted EBITDA margin was 34.5 per cent compared to 29.5 per cent in the first quarter of 2023 driven by pricing increases discussed above. - Adjusted free cash flow for the quarter was
$11.6 million , up 18 per cent compared to$9.9 million in the first quarter of 2023, due to stronger results in our operating segments. This was partially offset by an increase in costs associated with the Extension Agreement, including interest on the increased borrowings to fund the Upfront Payment and an increase in interest rates. - Voluntary prepayments of
$4.0 million were made towards ISC’s Credit Facility during the quarter demonstrating ISC’s plan to deleverage towards a long-term net leverage target of 2.0x – 2.5x. - On
February 5, 2024 , ISC announced the retirement ofKen Budzak , Executive Vice President of Registry Operations, effectiveMay 2024 . During this transition period, the Company is undertaking a process to fill the role. - On
March 8, 2024 ,Regulis S.A. (“Regulis”), a wholly owned subsidiary of ISC, launched the International Registry of Interests in Rolling Stock consistent with its contract under the Luxembourg Rail Protocol of theCape Town Convention which provides the exclusive right and obligation to develop, deliver and operate the International Registry of Interests in Rolling Stock for a period of 10 years from the date of go live. Pursuant to the Regulis Share Purchase Agreement executed in 2022, additional purchase consideration of €0.6 million (approximately$0.9 million CAD) was paid during the quarter.
Financial Position as at
- Cash of
$20.2 million compared to$24.2 million as ofMarch 31, 2023 . - Total debt of
$173.4 million compared to$177.3 million as ofDecember 31, 2023 .
Subsequent Events
- On
May 7, 2024 , the Board declared a quarterly cash dividend of$0.23 per Class A Share, payable on or beforeJuly 15, 2024 , to shareholders of record as ofJune 30, 2024 .
Commenting on ISC’s results,
Summary of 2024 First Quarter Consolidated Financial Results
| (thousands of CAD; except earnings per share, adjusted earnings per share and where noted) |
Three Months Ended |
Three Months Ended |
||
| Revenue | ||||
| Registry Operations | $26,268 | |||
| Services | 27,037 | 24,721 | ||
| Technology Solutions | 3,092 | 1,609 | ||
| Corporate and other | 3 | 12 | ||
| Total Revenue | $56,400 | |||
| Expenses | $49,819 | |||
| Adjusted EBITDA1 | $19,440 | |||
| Adjusted EBITDA margin1 | 34.5% | 29.5% | ||
| Net income | $423 | |||
| Adjusted net income1 | $8,498 | |||
| Earnings per share (basic) | $ 0.02 | |||
| Earnings per share (diluted) | $ 0.02 | |||
| Adjusted earnings per share (basic)1 | $ 0.47 | |||
| Adjusted earnings per share (diluted)1 | $ 0.47 | |||
| Adjusted free cash flow1 | $11,636 | |||
1Adjusted net income, adjusted earnings per share, basic, adjusted earnings per share, diluted, adjusted EBITDA, adjusted EBITDA margin and adjusted free cash flow are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and, therefore, they may not be comparable to similar measures reported by other companies; refer to section 8.8 “Non-IFRS financial measures” in the MD&A. Refer to section 2 “Consolidated Financial Analysis” in the MD&A for a reconciliation of adjusted net income and adjusted EBITDA to net income. Refer to section 6.1 “Cash flow” in the MD&A for a reconciliation of adjusted free cash flow to net cash flow provided by operating activities. See also a description of these non-IFRS measures and reconciliations of adjusted net income and adjusted EBITDA to net income and adjusted free cash flow to net cash flow provided by operating activities presented in the section of this news release titled “Non-IFRS Performance Measures”.
2024 First Quarter Results of Operations
- Total revenue was
$56.4 million , up 15 per cent compared to Q1 2023. - Registry Operations segment revenue was
$26.3 million , up compared to$22.8 million in Q1 2023:- Land Registry revenue was
$16.1 million , up compared to$12.5 million in Q1 2023. - Personal Property Registry revenue was
$2.8 million , up compared to the same prior year period. - Corporate Registry revenue was
$3.5 million , up compared to$3.3 million in Q1 2023. - Property Tax Assessment Services revenue was
$3.9 million , up compared to the same prior year period.
- Land Registry revenue was
- Services segment revenue was
$27.0 million , up compared to$24.7 million in Q1 2023:- Regulatory Solutions revenue was
$20.2 million , up compared to$17.8 million in Q1 2023. - Recovery Solutions revenue was
$3.3 million , up compared to$2.9 million in Q1 2023. - Corporate Solutions revenue was
$3.6 million , down compared to 4.0 million in Q1 2023.
- Regulatory Solutions revenue was
- Technology Solutions revenue from third parties was
$3.1 million , up from$1.6 million in Q1 2023. - Consolidated expenses (all segments) were
$49.8 million , up$11.2 million compared to$38.6 million in Q1 2023. - Net income was
$0.4 million or$0.02 per basic share and$0.02 per diluted share, down$6.5 million compared to$6.9 million or$0.39 per basic and$0.38 per diluted share for Q1 2023.
Outlook
The following section includes forward-looking information, including statements related to our strategy, future results, including revenue and adjusted EBITDA, segment performance, the industries in which we operate, economic activity, growth opportunities, investments, and business development opportunities. Refer to “Caution Regarding Forward-Looking Information” in Management’s Discussion & Analysis for the three months ended
The
In Registry Operations, we expect transactions in 2024 to be largely flat with revenue growth through a realization of a full year of fee adjustments, including those amended in
Services will continue to be a significant part of our organic growth, with a forecasted increase in transactions and number of customers. The current trend of enhanced due diligence in an environment of higher interest rates and increased regulatory oversight is expected to continue. Our Technology Solutions segment is also forecasted to see double-digit growth as we deliver on existing and new solutions delivery contracts in 2024.
The key drivers of expenses in adjusted EBITDA in 2024 are expected to be wages and salaries and cost of goods sold. Furthermore, as a result of the Extension Agreement, the Company will have additional operating costs associated with the enhancement of the Saskatchewan Registries and increased interest expense arising from additional borrowings in 2023, which are excluded from adjusted EBITDA.
Our capital expenditures are expected to increase because of the enhancement of the Saskatchewan Registries but will remain immaterial overall. As a result, the Company continues to expect to see robust free cash flow in 2024.
In light of the preceding, we maintain our annual guidance for 2024 with revenue to be within a range of
Note to Readers
The Board of Directors (“Board”) carries out its responsibility for review of this disclosure primarily through the Audit Committee, which is comprised exclusively of independent directors. The Audit Committee reviews and approves the fiscal year-end Management’s Discussion and Analysis (“MD&A”) and financial statements and recommends both to the
This news release provides a general summary of ISC’s results for the quarters ended
Copies can also be obtained SEDAR+ at www.sedarplus.ca by searching Information Services Corporation’s profile or by contacting
All figures are in Canadian dollars unless otherwise noted.
Conference Call and Webcast
We will hold an investor conference call on
Once registered, participants will receive the dial-in numbers and their unique PIN number. When dialing in, participants will input their PIN and be placed into the call. The audio file with a replay of the webcast will be available about 24 hours after the event on our website at the link above. We invite media to attend on a listen-only basis.
About ISC
Headquartered in
Cautionary Note Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian securities laws including, without limitation, those contained in the “Outlook” section hereof and statements related to the industries in which we operate, growth opportunities and our future financial position and results of operations. 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. Important factors that could cause actual results to differ materially from the Company's plans or expectations include risks relating to changes in the condition of the economy, including those arising from public health concerns, reliance on key customers and licences, dependence on key projects and clients, securing new business and fixed-price contracts, identification of viable growth opportunities, implementation of our growth strategy, competition and other risks detailed from time to time in the filings made by the Company including those detailed in ISC’s Annual Information Form for the year ended
The forward-looking information in this release is made as of the date hereof and, except as required under applicable securities laws, ISC assumes no obligation to update or revise such information to reflect new events or circumstances.
Non-IFRS Performance Measures
Included within this news release are certain measures that have not been prepared in accordance with IFRS, such as adjusted net income, adjusted earnings per share, basic, adjusted earnings per share, diluted, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our financial performance from management’s perspective, to provide investors with supplemental measures of our operating performance and, thus, highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures.
Management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet future capital expenditure and working capital requirements.
Accordingly, these non-IFRS measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Such measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.
| Non-IFRS Performance Measure | Why we use it | How we calculate it | Most comparable IFRS financial measure | ||||
| Adjusted net income Adjusted earnings per share, basic Adjusted earnings per share, diluted |
|
Adjusted net income: Net income Add Share-based compensation expense, acquisitions, integration and other costs, effective interest component of interest expense, debt finance costs expensed to professional and consulting, amortization of the intangible asset related to extension of the MSA with the Province of Adjusted earnings per share, basic; Adjusted net income divided by weighted average number of common shares outstanding Adjusted earnings per share, diluted; Adjusted net income divided by diluted weighted average number of common shares outstanding |
Net income Earnings per share, basic Earnings per share, diluted |
||||
| EBITDA EBITDA Margin |
|
EBITDA: Net income add (remove) Depreciation and amortization, net finance expense, income tax expense EBITDA Margin: EBITDA divided by Total revenue |
Net income | ||||
| Adjusted EBITDA Adjusted EBITDA Margin |
|
Adjusted EBITDA: EBITDA add (remove) share-based compensation expense, acquisition, integration and other costs, gain/loss on disposal of assets if significant Adjusted EBITDA Margin: Adjusted EBITDA divided by Total revenue |
Net income | ||||
| Free Cash Flow |
|
Net cash flow provided by operating activities deduct (add) Net change in non-cash working capital, cash additions to property, plant and equipment, cash additions to intangible assets, interest received and paid as well as interest paid on lease obligations and principal repayments on lease obligations |
Net cash flow provided by operating activities |
||||
| Adjusted Free Cash Flow |
|
Free Cash Flow deduct (add) Share-based compensation expense, acquisition, integration and other costs and registry enhancement capital expenditures |
Net cash flow provided by operating activities |
The following presents a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to EBITDA to net income and a reconciliation of adjusted free cash flow to free cash flow to net cash flow from operating activities:
Reconciliation of Adjusted Net Income to Net Income
| Three Months Ended |
|||||||||||||||||||||||||
| Pre-tax | Tax1 | After-tax | |||||||||||||||||||||||
| (thousands of CAD) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Adjusted net income | $ | 11,727 | $ | 9,501 | $ | (3,229 | ) | $ | (2,749 | ) | $ | 8,498 | $ | 6,752 | |||||||||||
| Add (subtract): | |||||||||||||||||||||||||
| Share-based compensation expense | (4,635 | ) | 1,190 | 1,251 | (321 | ) | (3,384 | ) | 869 | ||||||||||||||||
| Acquisition, integration and other costs | (1,450 | ) | (1,019 | ) | 392 | 275 | (1,058 | ) | (744 | ) | |||||||||||||||
| Effective interest component of interest expense | (65 | ) | (18 | ) | 18 | 5 | (47 | ) | (13 | ) | |||||||||||||||
| Interest on vendor concession liability | (2,599 | ) | - | 702 | - | (1,897 | ) | - | |||||||||||||||||
| Amortization of right to manage and operate the Saskatchewan Registries | (2,314 | ) | - | 625 | - | (1,689 | ) | - | |||||||||||||||||
| Net income | $ | 664 | $ | 9,654 | $ | (241 | ) | $ | (2,790 | ) | $ | 423 | $ | 6,864 | |||||||||||
| 1 Calculated at ISC's statutory tax rate of 27.0 per cent. | |||||||||||||||||||||||||
| Three Months Ended |
||||||||
| 2024 | 2023 |
|||||||
| Earnings per share, basic | $ | 0.02 | $ | 0.39 | ||||
| Earnings per share, diluted | 0.02 | 0.38 | ||||||
| Adjusted earnings per share, basic | 0.47 | 0.38 | ||||||
| Adjusted earnings per share, diluted | 0.47 | 0.37 | ||||||
| Weighted average # of shares | 18,021,225 | 17,701,498 | ||||||
| Weighted average # of diluted shares | 18,203,632 | 18,007,207 | ||||||
Reconciliation of Adjusted EBITDA to EBITDA to Net Income
| (thousands of CAD) | 2024 | 2023 | ||||||
| Adjusted EBITDA | $ | 19,440 | $ | 14,516 | ||||
| Add (subtract): | ||||||||
| Share-based compensation expense | (4,635 | ) | 1,190 | |||||
| Acquisition, integration and other costs | (1,450 | ) | (1,019 | ) | ||||
| EBITDA1 | $ | 13,355 | $ | 14,687 | ||||
| Add (subtract): | ||||||||
| Depreciation and amortization | (6,774 | ) | (4,128 | ) | ||||
| Net finance expense | (5,917 | ) | (905 | ) | ||||
| Income tax expense | (241 | ) | (2,790 | ) | ||||
| Net income | $ | 423 | $ | 6,864 | ||||
| EBITDA margin (% of revenue)1 | 23.7% | 29.9% | ||||||
| Adjusted EBITDA margin (% of revenue) | 34.5% | 29.5% | ||||||
1 EBITDA and EBITDA margin are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and therefore, they may not be comparable to similar measures reported by other companies; refer to Section 8.8 “Non-IFRS financial measures” for calculation of EBITDA and EBITDA margin.
Reconciliation of Adjusted Free Cash Flow to Free Cash Flow to Net Cash Flow Provided by Operating Activities
| Three Months Ended |
||||||||
| (thousands of CAD) | 2024 | 2023 | ||||||
| Adjusted free cash flow | $ | 11,636 | $ | 9,883 | ||||
| Add (subtract): | ||||||||
| Share-based compensation expense | (4,635 | ) | 1,190 | |||||
| Acquisition, integration and other costs | (1,450 | ) | (1,019 | ) | ||||
| Registry enhancement capital expenditures | (634 | ) | - | |||||
| Free cash flow1 | $ | 4,917 | $ | 10,054 | ||||
| Add (subtract): | ||||||||
| Cash additions to property, plant and equipment | 965 | 15 | ||||||
| Cash additions to intangible assets | 1,152 | 269 | ||||||
| Interest received | (249 | ) | (310 | ) | ||||
| Interest paid | 3,433 | 1,152 | ||||||
| Interest paid on lease obligations | 134 | 95 | ||||||
| Principal repayment on lease obligations | 695 | 593 | ||||||
| Net change in non-cash working capital2 | (579 | ) | (6,130 | ) | ||||
| Net cash flow provided by operating activities | $ | 10,468 | $ | 5,738 | ||||
1 Free cash flow is not recognized as a measure under IFRS and does not have a standardized meaning prescribed by IFRS and therefore, they may not be comparable to similar measures reported by other companies; refer to Section 8.8 “Non-IFRS financial measures”.
2 Refer to Note 17 to the Financial Statements for reconciliation.
Investor Contact
Senior Director, Investor Relations & Capital Markets
Toll Free: 1-855-341-8363 in
investor.relations@isc.ca
Media Contact
External Communications Specialist
Toll Free: 1-855-341-8363 in
corp.communications@isc.ca
Source: Information Services Corporation