Information Services Corp (TSE:ISV) racked up its eleventh consecutive quarter of profitability in the three months to the end of June.
The Saskatchewan-based business services provider, which administers registries, such as land titles, as well as corporate and personal property (e.g. vehicles) registries, and also maintains geographic databases, saw underlying earnings (EBITDA) improve to C$10.28mln from C$8.25mln the year before.
EBITDA as a proportion of revenue rose to 41.7% from 41.1% as total revenue rose sharply to C$24.67mln from C$20.05mln in the previous year, largely as a result of the company’s acquisition of ESC Corporate Services.
The company told investors that revenue from services, as opposed to its registries business, totalled C$3.61mln versus zero in the corresponding period of the previous year.
Revenue for all registries was C$20.5mln, up $0.5mln or 2.4% year-on-year.
Adjusted EBITDA, which excludes certain exceptional items, improve to C$11.13mln from the previous year’s C$8.41mln, pushing the adjusted EBITDA margin up to 45.1% from 41.9%.
Net income clocked in at C$6.58mln, versus C$4.97mln in the second quarter of the previous year, and diluted earnings per share surged to 37 cents from 28 cents.
The company ended the reporting period with C$35.2mln in cash, down from C$36.6mlm at the end of 2015, and has declared a quarterly cash dividend of 20 cents per class A limited voting share.
Commenting on the company’s record of sustained profitability, Jeff Stusek, president and chief executive officer of the company, said: “This consistency is a testament to the strength and stability of our business.
"As expected, our Services segment has diversified our business and has made a meaningful contribution to our consolidated revenue. Our predictability and stability as a company has been consistent and we will continue to focus on maintaining this while pursuing new opportunities," he added.
To a large extent, the company’s prospects are tied into the health of the Saskatchewan economy, though management has been successful in achieving some diversification and reducing its reliance on Saskatchewan.
Management said the expectation is still that the Saskatchewan economy in 2016 will perform pretty much on a par with 2015, and it looks like the Services segment will do much of the heavy lifting in terms of pushing the top line north.
Speaking to analysts in a conference call, Stusek noted: "Our Registries segment continues to perform well and in line with our expectations – in fact, we saw a slight uptick in revenue, year-over-year, across this segment."
"These results are a testament to the strength of our overall business in a tough economy and the value added by our Services segment," he added.
Stusek also highlighted a number of positive developments since the end of the reporting period, such as:
- the launch of the new online application for the Corporate Registry, providing a more convenient service to search, register and maintain corporate entities in Saskatchewan
- the ratification of a collective bargaining agreement with the SGEU union
Looking ahead to the rest of the year, Stusek reiterated to analysts that Saskatchewan's real gross sdomestic product growth in projected to be close to zero in 2016, so the expectation is that the performance of the registries business this year will mirror that of 2015.
"In our Services segment, we believe the growth of ESC’s core business to continue in specific categories relating to the financial services and legal sectors in both its core markets of 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. We also intend a continued focus on cost efficiencies to improve margins," Stusek said.
Shares in the company rose 23 cents to C$17.13 on Wednesday.
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