The acquisition of ESC Corporate Services by Information Services Corp (TSE:ISV), the Saskatchewan-based provider of registry services, continues to look a wise one.
ESC, which now forms Information Services Corp’s (ISC’s) Services segment, was largely responsible for the group’s third quarter revenue rising to C$22.9mln from C$19.7mln in the same period of 2015.
The Services segment’s contribution was C$3.3mln, up from zero the year before but down some C$300,000 on the second quarter of 2016.
ISC’s core Registries business saw its top line head south a little, to C$19.5mln, from C$19.7mln the previous year.
Net income and total comprehensive income for the three months ended September 30, 2016, was C$3.8mln, or C$0.22 per share, compared to C$4.7mln, or C$0.27 share for the same period in 2015.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the third quarter dipped to C$9.5mln from C$9.6mln a year earlier. The EBITDA margin fell to 41.5% from 48.6% a year earlier.
“Our Registries segment experiences moderate seasonality, primarily because Land Titles revenue fluctuates in line with real estate transaction activity in Saskatchewan. Typically, our second and third quarters generate higher revenue during the fiscal year when real estate activity is traditionally highest,” the company said.
“Our Services segment is sufficiently diversified with little seasonality to its revenue performance; however, some smaller categories of products or services can have some seasonal variation, slightly increasing during the second and fourth quarters,” it noted.
The company’s trading is closely hitched to economic conditions in Saskatchewan, which affect registry transactions and volumes, and to a lesser extent the economies of Ontario and Quebec.
The company continues to expect Saskatchewan’s gross domestic product, in real terms, to be much the same in 2016 as it was in 2015, while moderate growth is expected for the central Canadian markets.
As a result, ISC reiterated that its expected consolidated EBITDA margin for fiscal 2016 will be in the range of 32.0 to 34.0%.
“In our Services segment, we expect the growth of that 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, should continue to support overall revenue growth,” the company said.
The board of directors of ISC declared a quarterly cash dividend of 20 cents per Class A limited voting share.
ISC ended the reporting period with cash of C$38.3mln and total debt of C$23.4mln.
"This has been another steady quarter with continued resilience shown by our Registry business, which is supported strongly by our Services segment," said Jeff Stusek, president and chief executive officer of ISC.
"I have been pleased with our performance overall and as we move towards the end of the year, I expect that we are on course to meet our EBITDA guidance for 2016," he added.
Shares in ISC were off 48 cents at C$17.675 in early trading.