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ISC: THE INVESTMENT CASE

Information Services hails increased net income and revenue in strong set of 2017 numbers

Chief executive Jeff Stusek also noted the information management specialist made significant acquisitions last year.
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INVESTMENT OVERVIEW: ISV The Big Picture
ISC is in the business of information

Public data tech group Information Services Corp (TSE:ISV) shares nudged higher in Toronto as it hailed a strong 2017, which saw increased revenue, EBITDA (underlying earnings) and net income.

Chief executive Jeff Stusek also noted the information management specialist had last year made significant acquisitions, consistent with its strategy of acquiring companies with competencies or operations in its industry.

"Our subsidiaries ESC and ERS are delivering organic growth, while our Registries business continues to demonstrate its resilience in the face of economic challenge," he said.

The board has declared a quarterly cash dividend of 20 cents per Class A limited voting share to be paid on or before  April 15 this year to shareholders of record as of March 31.

The numbers...

In the year to end December, the firm posted net income of C$27.8mln, or C$1.58 per diluted share compared to C$15.5mln and C$0.88 per diluted share in 2016.

That was on revenues of C$93.6mln compared to C$88.4mln in 2016 - an increase of 5.9%.

EBITDA (earnings before interest, taxes, depreciation and amortisation) for the year came in at C$30mln compared to C$29.5mln in 2016, up 1.7%.

The EBITDA margin was 32.1% compared to 33.4% in 2016.

Notably, during the year, the firm completed three acquisitions - They are Enterprise Registry Solutions Ltd (ERS) in January, Alliance Online Solutions in June and AVS in December.

By way of comparison and to underline the firm's recent progress, net income in the fourth quarter came in at C$18.8mln, compared to C$2.9mln in the fourth quarter of 2016.

Revenue by segment for the year was registries: C$74.9mln , up 1.3%, with land registry revenue at $54.8mln, down 0.2% versus 2016.

The personal property registry  was stable at $10.0mln, up 0.1%compared to 2016, while the corporate registry revenue was $10.1mln, up 11.7% compared to 2016.

Services segment revenue was $14.9mln, up 9.2% compared to 2016.

Looking to 2018...

Looking ahead, the firm said the acquisition of automation software group AVS in December last year, with a high revenue, lower margin profile, changed ISC's consolidated revenue and EBITDA margin profile compared to previous years.

Because of that, ISC currently expects total revenue in 2018 of between C$124mln and C$130mln, with an EBITDA margin of between 24% and 26%.

Capital expenditures are now expected to be in the range between C$4mln and C$6mln, and will be funded through operating cash flow, the company added.

In general, ISV  added it expects the performance of its Registries segment in 2018 to be in line with that of 2017, despite recent changes to mortgage rules and an increase in overnight lending rates.

In the services segment, it expects to see further customer growth in the Financial Support Services revenue category, it added.

Shares in Toronto added 2.10% to C$17.51.

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