Information Services Corporation (TSX:ISV) recently reported its third quarter earnings that highlighted a mix of positive revenue growth, strategic achievements, and a commitment to financial stability through deleveraging, despite facing challenges in net income due to external factors. The company is a provider of registry and information management services, specializing in public data and records.
Over its history, the company has consistently added value to clients by offering solutions for the management, security, and administration of information across its Registry Operations, Services, and Technology Solutions segments.
Recently, ISC’s CEO Shawn Peters sat down with Proactive to discuss the key takeaways from its 3Q results. Here’s what we learned from Peters himself:
The company is coming off another strong quarter.
"The news for us in the quarter was really dominated by our 20-year extension to our master service agreement in the province of Saskatchewan, which extends our agreement out from 2033 to 2053. That’s 30 years of an exclusive license to provide the registry services on behalf of the province of Saskatchewan. This was the first quarter where we saw the impact of that with some fee adjustments and some of the investments we’re making in that registry technology."
Services segment continues to be a real driver for the company.
"We continue to see organic growth in our services. That’s largely driven by some of our customers in the banking industry and financial services industry and enhanced due diligence during these sorts of higher interest rate environments, as well as in our technology parts of our business. We're seeing a real return to procurement by some of the jurisdictions and that's playing out really well. We had an announcement post-quarter about a new contract with the state of Michigan. We're excited about that, as well as some other ones we see coming down the pipe."
Registry operations, a key component of ISC’s bottom line, remain strong.
"Saskatchewan has always been important to us. In 2023, in most jurisdictions, we're seeing some pullbacks because of the higher interest rate environment. But Saskatchewan is still performing well, sales are up for the last couple of months over last year. That plays well into our registry operations."
Interest rate trends will persist through the latter half of 2023.
"The impact of the higher interest rate environment on transactions has been acknowledged, and we meticulously factored it into our guidance and results, which, as evident, remain robust. We foresee this strength continuing into 2024. Additionally, in anticipation of a more challenging economic landscape, we've strategically positioned some of our businesses to be counter-cyclical. Specifically, our asset recovery segment, designed to thrive in tightening economic conditions, outperformed expectations this quarter, aligning with the anticipated economic shift."
The company’s focus is on sustaining growth.
"We haven't formally released any guidance, but our current emphasis remains on sustaining growth, with key initiatives planned for 2024. The recent Saskatchewan announcement has altered our debt and leverage profile, prompting a focused effort on deleveraging to a range of two to two and a half times. With a robust free cash flow business, we anticipate a strong deleveraging trajectory. Simultaneously, we are committed to fostering organic growth, building upon the positive trends observed in 2023, and anticipating the continuation of such growth with new announcements in 2024."
Quotes have been edited for style and clarity