International Road Dynamics, the world’s largest provider of weigh-in-motion systems and solutions for the global intelligent transportation systems (ITS) market, today announced results for the three months ended February 28, 2010.
Q1 2010 highlights:
- Recurring service and maintenance revenues rise 9.1%
- Canadian sales rise 17.1%
- Data collection revenues more than double over prior year
- Expectations for solid growth through balance of year
Sales for the first quarter of fiscal 2010 were $8.5 million compared to $11.0 million for the same period last year. The decline in sales for the current year period was primarily due to significant one-time project and product revenues occurring in the prior year’s first quarter.
Offshore sales in the first quarter were $3.2 million compared to $4.3 million for the same period last year. The decrease was primarily due to higher than normal revenues from toll systems in India and significant product and weigh station deliveries in Latin America and Asia in the prior year period. Management expects offshore revenues to increase from the current level during the remainder of fiscal 2010. Sales in the United States in the first quarter of fiscal 2010 were $3.9 million compared to .5.4 million in the prior year’s first quarter. The decline was due to lower revenues from weigh station systems, in-vehicle systems and product sales in the current year, however, management expects revenues from the US market to improve through the remainder of the current fiscal year. In Canada, sales improved to $1.4 million in the quarter compared to $1.2 million for the same period last year, due primarily to the timing of order deliveries.
The company generated increased revenues from maintenance contracts, data collection and toll systems compared to the first quarter of the previous year. The company’s recurring service and maintenance revenues grew 9.1% in the first quarter of 2010 and represented 29.9% of total revenues for the quarter.
“The first quarter is historically our weakest period due to weather and seasonal impacts,” stated Terry Bergan, president and CEO. “Looking ahead to the balance of the year, we are confident our strong presence in growing global markets, combined with a higher backlog of confirmed orders than at the same time last year, will result in improved performance for the remainder of the fiscal year.”
Approximately 65% of the company’s sales in the first quarter of 2010 are denominated in US dollars. During the first quarter of 2010 the average exchange rate of the US dollar to the Canadian dollar was 14.7% lower than in the first quarter of 2009, which resulted in a decrease in the Canadian dollar value of the company’s US dollar-denominated sales of approximately $0.9 million. This impact is partially offset by the corresponding lower value of US dollar denominated expenses.
Gross margin as a percentage of sales was 28.2% in the first quarter compared to 32.2% in the prior year. In addition to the impact of the change in value of the US dollar, the lower gross margin results from a sales mix that includes a lower proportion of higher margin products in the current quarter and lower total revenues available to cover fixed costs of operations.
Administrative and marketing expenses
Administrative and marketing expenses decreased 5.7% in the first quarter to $2.1 million compared to $2.2 million in last year’s first quarter. As a percentage of sales, administrative and marketing expenses increased to 24.7% in 2010 compared to 20.3% in the prior year, due primarily to the reduced sales in the current year period. Research and development costs were 1.3% of sales in the first quarter of fiscal 2010, consistent with the same period last year. Interest expense was lower in the first quarter of fiscal 2010 due to a reduced level of debt as well as the Company benefiting from the current low interest rate environment.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) were $136 thousand in the first quarter of fiscal 2010 compared to $816 thousand in the same prior year period. The net loss was $(181) thousand or $(0.01) per common share in the first quarter of fiscal 2010 compared to net earnings of $247 thousand or $0.02 per share for the same period last year.
The company’s balance sheet remained strong as at 28 February 2010 with working capital increasing to $7.9 million compared to $4.5 million as at 28 February 2009. As at 28 February 2010, the company was in compliance with all bank covenants and expects to remain in compliance for the remainder of the year. During the period the company arranged an additional credit facility of US$1.1 million, guaranteed by Export Development Canada, to support working capital requirements for the company’s subsidiary in India.
“We are very encouraged by the growth in our applied service provider business and service and maintenance revenues in the quarter. We expect these high quality, recurring and stable revenues will continue to increase through the balance of the year and going forward,” Mr Bergan concluded.