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REGINA, SASKATCHEWAN--(Marketwired - Mar 15, 2016) - Information Services Corporation (TSX:ISV) ("ISC" or the "Company") today reported on the Company's financial results for the fourth quarter and year ended December 31, 2015.
Fourth Quarter 2015 Highlights
Full-Year 2015 Highlights
Financial Position as at December 31, 2015
Commenting on the Company's annual results, Jeff Stusek, President and CEO stated, "As expected, the slowing of the economy in 2015, especially in the real estate sector, had a direct impact on total revenue. Despite this, we achieved a healthy EBITDA margin and also delivered service levels that exceeded our Master Service Agreement requirements with the Government of Saskatchewan." Stusek continued, "We also successfully acquired ESC Corporate Services Ltd., which diversified our revenue stream and expanded our presence beyond Saskatchewan. All in all, I'm very pleased with our performance in 2015. Going forward, we will continue to execute on our strategy to deliver shareholder value."
Change in Segment Reporting
In previous reporting, ISC has presented its operational and financial performance based on one segment, encompassing all of the three registries it operates on behalf of the Government of Saskatchewan. With the acquisition of ESC Corporate Services Ltd. ("ESC") in the fourth quarter of 2015, ISC now operates in two reportable segments defined by their primary type of service offering, namely Registries and Services. The balance of our corporate activities and shared services functions are reported as Corporate. We feel this more accurately reflects the portfolio of services ISC provides after the acquisition of ESC.
The Registries segment involves the provision of registry and information services and solutions to governments and private sector organizations. Currently, ISC provides registry and information services to the Province of Saskatchewan and is the exclusive provider of the Land Registry, the Personal Property Registry and the Corporate Registry in Saskatchewan.
The Services segment includes the services provided by ESC, such as search and registration services, Know-Your-Customer services, as well as corporate supplies and accessories.
For more details on the segments, please refer to the Segment Information section in the MD&A for the fourth quarter and year ended December 31, 2015.
Management's Discussion of ISC's Summary of Fourth Quarter and Year End 2015 Financial Results
(thousands of CAD dollars; except earnings per share and where noted)
|Revenue - Registries|
|Personal Property Registry||2,407||2,338||9,981||9,870|
|Revenue - Services||3,166||-||3,166||-|
|Revenue - Other||152||350||167||355|
|EBITDA margin1 (% of revenue)||36.3||%||35.6||%||36.2||%||37.6||%|
|Adjusted EBITDA margin1||38.2||%||35.7||%||38.8||%||39.2||%|
|Net income and total comprehensive income||$||4,567||$||4,014||$||15,917||$||18,360|
|Earnings per share (basic)2||$||0.26||$||0.23||$||0.91||$||1.05|
|Free cash flow2||$||6,689||$||5,866||$||21,489||$||23,914|
2015 Results of Operations
Currently, the majority of the Company's revenue is linked to registry transaction volumes and values which are driven by economic conditions in Saskatchewan. The remaining portion of our revenue is linked to the overall economic conditions in Ontario and Quebec. At present, the Company expects the 2016 Saskatchewan economy to be similar to 2015, while a slowing economy is anticipated for the central Canadian market. As a result, ISC expects its consolidated EBITDA margin for fiscal 2016 to be in the range of 32.0 to 34.0 per cent.
The key drivers of expenses will continue to be wages, salaries and information technology costs. The Company will continue to manage its costs prudently while balancing re-investment in the business in order to maintain or improve the customer experience.
Management expects capital expenditures in 2016 to be in the range of $5.0 million to $6.0 million, funded from operating cash flow. These expenditures are projected to include the completion of the renewal and enhancement of our Corporate Registry technology, enhancement and upgrades to core technology components and enterprise systems, and general office improvements.
In 2015, the Saskatchewan economy was challenged as the province's energy sector coped with lower oil prices, as well as general softness in other resource-based sectors.
As indicated earlier, the Company currently presumes that the 2016 Saskatchewan economy will be similar to 2015. According to several external forecasts, Saskatchewan's real GDP growth is expected to be near zero after a weak 2015. Concerns exist related to commodity prices such as oil and potash. There may be a negative impact on registry revenues if the economy continues to experience challenges in 2016.
Overall, we anticipate transaction volumes in the Land Titles Registry for 2016 to be comparable to 2015. The Land Titles Registry continued to see a large number of high-value property registrations in 2015 and, while high value property registrations in 2013 through 2015 were higher than our long-term average of 5.3 per cent (2007-2014), we expect them to return towards a normalized level in 2016.
For the Personal Property Registry, Saskatchewan new motor vehicle sales are anticipated to be lower in 2016 compared to 2015 volumes according to Scotiabank.(1) Similarly, we expect key transaction volumes in the Personal Property Registry for 2016 will be on par with 2015.
For the Corporate Registry, steady growth of active business entities contributes to stabilized revenue of the maintenance portion of the Corporate Registry. New entity growth slowed in 2015 and this trend may continue into 2016. However, we expect key transaction volumes to be consistent with those seen in 2015.
As it relates to pricing, the Master Service Agreement and related Registry Operating Agreements specify the maximum fees allowed to be charged to the public for particular Core Registry Services. Generally, fees are adjustable on an annual basis using a formula tied to Saskatchewan CPI. ISC anticipates adjusting prices in 2016 as outlined in the Master Service Agreement.
|(1)||Scotiabank Global Economics - Global Forecast Update - January 5, 2016.|
In our Services segment, we expect the growth of its ESC's core business to continue in specific categories relating to the financial services and legal sectors in both its core markets of Ontario and Quebec.
The expectation is that the growing base of new customers, as well as new mandates from existing customers, will continue to support overall revenue growth. We expect a continued focus on cost efficiencies to improve margins.
We also anticipate continuing to diversify our customer base in both the legal and financial industry. Focusing on ESC's strengths in data access, transposition and analysis will provide customers and partners with timely and useful business-critical information. This supports effective practice management for law firms, as well as provides more effective use of data in meeting compliance challenges for financial institutions.
To address our growth agenda over the next few years, investment in human capital in our Services segment is expected to increase in 2016. This investment is expected to position us for future growth for 2017 and beyond.
Note to Readers
This news release provides a general summary of Information Services Corporation's results for the fourth quarters and years ended December 31, 2015 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.mwnewsroom.com/Financial-Reports-Filings/Financial-Reports.
All figures are in Canadian dollars unless otherwise noted.
Conference Call And Webcast
An investor conference call will be held on Wednesday, March 16, 2016 at 11:00 a.m. Eastern Time (9 a.m. Saskatchewan time) to discuss the results. Participants may join the call by dialing toll-free 1-866-225-0198 or 1-416-340-2216 for calls outside North America. Simultaneously, an audio webcast of the conference call will also be available at the following link http://isc.mwnewsroom.com/Events.
Media are invited to attend on a listen-only basis.
The webcast will be available for replay 24 hours after the event at http://isc.mwnewsroom.com/Events.
ISC is an experienced provider of registry and information services for government, individuals and private sector business. As the exclusive provider of the land titles, surveys, personal property and corporate registries for Saskatchewan, the Company maintains and operates these registries, 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 management's expectations and certain assumptions with respect to the registry services and products, its competitive landscape, economic conditions in Canada and in particular, Saskatchewan, real estate market in Saskatchewan, impact of prices for agricultural commodities, oil and potash, transaction volumes, statements regarding the future financial position or results of ISC, customer growth and diversification, investment in human capital, dividend expectations, creation of shareholder value, growth opportunities, capital and operating expectations, real gross domestic product, changes in high-value property registrations, changes in motor vehicle sales volume, slowed growth of active business entities, consolidated EBITDA margin, income taxes, our ability to attract and retain skilled staff, the compensation and benefits that will be paid or provided to employees and our level of customer service, as well as goodwill and intangibles are material factors in preparing forward-looking statements. In addition, the words "may", "will", "would", "should", "could", "expect", "plan", "intend", "trend", "indicate", "anticipate", "believe", "estimate", "predict", "project", "targets", "strive", "strategy", "continue", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases are intended to identify forward-looking statements. 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 15, 2016, ISC's Consolidated Financial Statements and Notes and Management's Discussion and Analysis for the year ended December 31, 2015 as well as other documents filed by ISC with Canadian securities regulators through SEDAR at 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.
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