International Road Dynamics Inc (IRD), the world’s largest provider of weigh-in-motion systems and solutions for the global intelligent transportation systems (ITS) market, today announced strong results for the three and six months ended 31 May 2009.
Second quarter highlights
- Sales up 26% on strong growth in US and offshore markets
- Operating and overhead costs reduce as percentage of sales
- EBITDA rises to $400,761 compared with a loss of $203,450 last year
- Net earnings of $0.01 per share compared with a loss of $0.03 per share in prior year period
Sales for the second quarter of fiscal 2009 increased 26.1% to $11.6m compared with $9.2m for the same period last year. For the first half of fiscal 2009, sales were up 40.1% to $22.6m compared with $16.2m for the same period last year. The company generated increased sales across all of its geographic regions and the majority of its product lines through the first half of the fiscal year.
Offshore sales continued to grow in the quarter, rising 71.4% to $5.9m compared with $3.4m for the same period last year, due primarily to increased revenues from toll systems in India and significant product and weigh station deliveries in Latin America and Asia.
For the first six months of fiscal 2009, offshore sales were $10.2m, an 82.6% increase over the same period in the prior year. Second quarter 2009 sales in the US increased to $5m from $4.8m in the prior year due to higher revenue from maintenance contracts, as well as increased weigh station systems and product sales.
For the first half of the fiscal year, sales in the US were up 20.3% to $10.4m. In Canada, sales were down marginally to $0.8m in the quarter compared with $1m last year. For the six months ended 31 May 2009, Canadian sales increased to $2m compared with $1.9m for the same six-month period last year, due primarily to Virtual Weigh Station project deliveries during the first quarter of the year as well as slightly higher maintenance revenues.
The company generated increased sales in the majority of its product lines in the period compared with last year, including commercial vehicle systems, toll systems, maintenance contracts and product sales, and expects to see continued growth through the balance of the year. The company’s backlog of confirmed orders increased by 27% over the second quarter of 2008, with the majority scheduled for delivery during the current fiscal year.
“We are very pleased with the growth in our offshore business as our subsidiaries in South America and India displayed very strong gains in revenues during the quarter and first half of fiscal 2009,” said Randy Hanson, executive vice president and COO.
“Looking ahead, we are confident our offshore business will continue to grow as we increase our presence in both current and new markets. Over time we will be transferring certain manufacturing and engineering capabilities to these offshore subsidiaries to capitalise on lower costs and enhanced efficiencies.”
Gross margin as a percentage of sales increased to 28% in the quarter compared with 27.7% in the prior year. For the first six months of fiscal 2009 gross margin improved to 30% compared with 29.5% for the same period last year. The increases are due primarily to the higher sales levels and the weakening of the Canadian dollar against the US dollar.
While administrative and marketing expenses increased in dollar terms compared with last year, as a percentage of sales these costs decreased to 22% in the second quarter and 21.2% in the first six months of fiscal 2009 compared with 25.9% and 26.8% respectively in the prior year periods.
Research and development costs were 1.1% of sales in the second quarter of fiscal 2009 compared with 2.0% in the prior year, and 1.2% for the first six months of the year compared with 2.0% for the same period in fiscal 2008. Amortisation expense decreased in fiscal 2009; interest expense also decreased as the company capitalised on the current lower interest rate environment.
With the higher sales and improved gross margins, earnings before interest, taxes, depreciation and amortization (EBITDA) increased significantly to $0.4m in the second quarter of fiscal 2009 compared with a loss of $0.2m in the same prior year period. For the first half of the year, EBITDA grew to $1.2m, compared with a loss of $0.1m for the first half of fiscal 2008.
With the higher sales levels, enhanced gross margin, and improved cost structure, the company generated net earnings, including foreign exchange losses, of $121,639 or $0.01 per common share in the second quarter of fiscal 2009 compared with a net loss of $499,119 or ($0.03) per share for comparable prior-year period. For the first six months of fiscal 2009, net earnings, including foreign exchange losses, were $368,864 or $0.03 per share compared with a net loss of $729,993 or ($0.05) per share for the same six month period in fiscal 2008.
“Our profitability in fiscal 2009 has been impacted by the significant increase in non-cash mark-to-market foreign exchange losses related to our assets, liabilities, revenues and expenses denominated in foreign currencies. With the substantial growth we are experiencing in our offshore businesses, we will be examining strategies to mitigate these factors in the quarters ahead,” said Mel Karakochuk, vice president of finance and CFO.
The company’s balance sheet remained strong as at 31 May 2009. Working capital remained largely unchanged at $4.1m compared with $4.2m as of 30 November 2008, while cashflow from operating activities grew to $3.7m through the first six months of fiscal 2009 compared with a use of cash of $0.7m in the same period last year. Capital expenditures for the first six months of fiscal 2009 were $0.2m compared with $0.3m in the prior year.
Over the last three years, IRD has leveraged its strong reputation in the North American marketplace to enhance and grow its global presence through wholly and partially owned operations in China, Mexico, India and Chile.
“Following a very strong start to the new year, we were pleased to have generated such strong growth in both revenues and net earnings in the second quarter of fiscal 2009,” said Terry Bergan, president and CEO.
“Over the long term, we expect our performance will continue to improve as our continuing efforts to enhance operating efficiencies and reduce costs, combined with our strong reputation in domestic North American markets and our growing presence in offshore regions where enhanced transportation infrastructure remains a priority, result in higher sales and increased profitability.”
