Registry and information services provider Information Services Corp (TSE:ISV) saw first quarter underlying earnings rise more than a third despite relatively flat revenues from registry services.
Total revenue rose to C$19.6mln from C$16.0mln the year before, largely as a result of a first time contribution of C$3.3mln from ESC Corporate Services, the company it acquired in October of last year.
Earnings before interest, tax, depreciation and amortization (EBITDA) in the first quarter of 2016 rose to C$5.08mln from C$3.76mln in the same period of 2015, while adjusted EBITDA climbed to C$5.47mln from C$3.78mln.
The adjusted EBITDA margin improved to 27.9% from 23.6%.
Net income clocked in at C$2.20mln, up from C$1.72mln the year before, while free cash flow was an impressive C$3.3mln, which Jeff Stusek, president and chief executive of Information Services Corp (ISC) said was a reflection of the addition of recently acquired ESC and careful management of expenses.
Earnings per share rose to 13 cents from 10 cents last year.
Although it is beginning to diversify away from its home market of Saskatchewan, the company's revenue is still largely dependent on economic activity in the province, and this accounts for the slight dip in Land Registry revenue to C$11.50mln from C$11.70mln the year before.
Revenue from the Personal Property Registry rose to C$2.23mln from C$2.11mln, while the Corporate Registry weighed in with a C2.59mln contribution, up from C$2.20mln in the first quarter of last year.
At present, ISC expects the 2016 Saskatchewan economy to be similar to 2015, while moderate growth is anticipated for the central Canadian markets. As a result, ISC reiterates that its expected consolidated EBITDA margin for fiscal 2016 will be in the range of 32.0% to 34.0%.
According to several external forecasts, Saskatchewan's real gross domestic product growth is expected to be near zero after a weak 2015.
Away from the Registries side of the business, ISC expects its Services segment will see continued growth in ESC's core business, particularly in the financial services and legal sectors in Ontario and Quebec.
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 for the Services division, ISC said.
The company had cash of C$33.8mln and Total debt of C$24.2mln at the end of March. It has declared a quarterly dividend of 20 cents per class A share to be paid to shareholders who are on the registry at the end of June.
"The first quarter of 2016 was a solid start to the year for us. Both our Registries and Services segments performed well and made strong contributions to our results,” Stusek said.
“We will continue to stay the course while we look for ways to further diversify our revenue stream and generate long-term shareholder value," he added.
(An overview of ISC's business can be found here)