Information Services Corp (TSE:ISV) cheered the market, revealing a solid finish to 2015, despite tougher market conditions.
The Saskatchewan-based registry and information services provider saw total revenue in the final quarter of last year rise to C$22.58mln from C$19.76mln in the same period of 2014, while underlying earnings, or EBITDA, advanced to C$8.19mln from C$7.04mln a year earlier.
The EBITDA margin hardened to 36.3% from 35.6% 12 months earlier.
For the year as a whole, EBITDA eased to C$28.3mln from C$30.2mln in 2014, as revenue dipped to C$78.32mln from C$80.46mln, reflecting a decline in economic activity in Saskatchewan, which is heavily dependent on an energy industry that is reeling from collapsing oil prices.
“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,” declared Jeff Stusek, president and chief executive officer of Information Services.
"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,” Stusek added.
The company ended the year with cash of C$36.6mln, up from C$33.6mln at the end of 2014, and total long-term debt of C$24.56mln.
Currently, the majority of the company's revenue is linked to registry transaction volumes and values, and these are driven by economic conditions in Saskatchewan. The remainder of its 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, the company expects its consolidated EBITDA margin for fiscal 2016 will be in the range of 32.0% to 34.0%.
Information Services Corp is currently budgeting for the Saskatchewan economy in 2016 to be on a par with 2015, with many forecasting bodies predicting zero economic growth this year for the province.
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, the company said.
“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% (2007-2014), we expect them to return towards a normalized level in 2016,” the company told investors.
For the Personal Property Registry, Saskatchewan new motor vehicle sales are anticipated to be lower in 2016 compared to 2015 volumes, according to Scotiabank. Similarly, Information Services expect key transaction volumes in the Personal Property Registry for 2016 will be little changed from 2015.
For the Corporate Registry, steady growth of active business entities contributes to stabilized revenue of the maintenance portion of the Corporate Registry, the company said.
New entity growth slowed in 2015 and this trend may continue into 2016, but the company said it expected key transaction volumes to be consistent with those seen in 2015.
In the Services part of the business, the growth of recently-acquired ESC's core business is tipped to continue in the areas of financial services and the legal sectors, where Information Services is keen to continue diversifying its customer base.
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. The company said it will continue to focus on cost efficiencies to improve margins.
“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,” the company said.
The board of directors has declared a quarterly cash dividend of 20 cents per Class A limited voting share.
Shares were up 2.5% at C14.19 in morning trading.