Information Services Corporation (TSX:ISV) (ISC) has reported a 12% rise in third-quarter revenue as it benefitted from continued growth in customers and transactions in its Services division.
The company noted that Registry Operations also contributed to the revenue gains after fee increases were implemented in July 2023.
For the quarter ended September 30, 2023, ISC posted adjusted underlying earnings (EBITDA) of $19.2 million compared to $17 million in 2022 primarily due to a higher contribution from Registry Operations driven by the fee adjustments and the continued customer and transaction growth in Services.
This was partially offset by lower adjusted EBITDA in Technology Solutions and Corporate due to the timing of revenue recognition and continued investments in people and technology, ISC said in a statement.
Net income declined to $4.2 million, or $0.24 per share, from $7.8 million, or $0.44 per share. It said this was mainly due to increased interest rates and higher borrowings.
During the quarter, it reached an agreement with the Province of Saskatchewan to extend its exclusive master service agreement (MSA) until 2053, which required it to make an upfront cash payment of $150 million followed by five annual cash payments of $30 million starting in July 2024.
It ended the quarter with cash of $21.4 million and total debt of $187.2 million and said it is focused on continuing sustainable growth and rapidly deleveraging towards a long-term net leverage target of 2.0 times to 2.5 times.
“The big news of the quarter and year-to-date was our milestone announcement regarding the extension of the term of ISC’s exclusive Master Service Agreement with the Province of Saskatchewan to manage and operate the Saskatchewan Registries until 2053,” ISC president and CEO Shawn Peters commented.
“This extension has been an important priority for us and immediately enhanced the company’s scale and financial profile.”
Peters noted that both its Registry Operations and its Services division performed well in difficult economic conditions with Services proving once again to be the driver of organic growth.
“ISC continues to prove that it can produce sustained, positive performances regardless of economic conditions and although not currently recognized by the market, ISC’s fundamentals remain stronger than ever, especially with the extension completed and a solid plan to de-lever the balance sheet in the near-term,” Peters added.
Following the end of the quarter, the company highlighted a new US$3.2 million (C$4.5 million) five-year contract with the State of Michigan to be delivered through its Technology Solutions segment.
The contract includes the delivery of a modern, online Uniform Commercial Code System using the company’s RegSys platform to support service improvement and efficiencies for the State of Michigan.
Separately, ISC announced its board of directors has declared a quarterly dividend of $0.23 per Class A share, to be paid on or before January 15, 2024, to shareholders of record as of December 31, 2023.
Contact the author at stephen.gunnion@proactiveinvestors.com