OTTAWA, Canada November 27, 2014 – In-Touch Survey Systems Ltd. (“In-Touch”) (TSXV: INX) today announced its operating and financial results for the quarter ended September 30, 2014.
Revenue for the third quarter was $2,327,773 which was 30% lower than revenue of $3,327,773 in the same quarter in 2013. Revenues from the EDC segment decreased 32% from $3,233,951 in Q3 2013 to $2,204,004 for the same quarter in 2014. IMS division revenue increased 44% from $89,379 in Q3 2013 to $123,769 in Q3 2014. The Company previously announced that it expected account losses to begin impacting comparisons starting with Q2 2014 and these revenue losses are within Management’s expectations.
Net earnings before income taxes for the third quarter decreased to $56,572 compared to a net earnings of $505,307 reported in the same quarter in 2013. Year to date earnings before income taxes increased from $122,273 in 2013 to $186,482 in 2014. Gross Margin increased to 57% in the third quarter compared to 55% for the same quarter in 2013.
Company-defined adjusted EBITDA increased to approximately $754,000 for year-to-date 2014, compared to an EBITDA of approximately $664,000 for year-to-date 2013. Because of improved margins EBITDA is expected to remain positive throughout 2014.
“As anticipated, Q3 is where we felt the largest revenue impact of the year over year account losses. We expect this trend to remain through Q4, 2014 although the revenue impact is not expected to be as severe. We remain pleased with the year over year performance in profits and increasing gross margins that we have been able to achieve despite the expected decline in revenue,” said Cameron Watt, President and Chief Executive Officer.
“We expect additional pressure on net income in Q4 as we continue to increase our investment in product development, sales and marketing. We are anticipating that we will finish 2014 very close to our original expectations and in a good position to seize growth opportunities in 2015. We have already seen two significant events in Q4 which are setting the stage for growth in 2015. First, Dodoname Inc. launched its product (dodoname.com) and second, In-Touch launched its first SaaS product, OpsMatrix (opsmatrix.com). We are also in the process of reorienting the organization to ensure we can capture these and additional opportunities throughout 2015,” said Watt.
| Consolidated Statements of Operations | Q3 2014 | Q3 2013 |
|---|---|---|
| Revenue | $2,327,773 | $3,323,330 |
| Cost of services | 1,005,769 | 1,504,163 |
| Gross profit | 1,322,004 | 1,819,167 |
| Total operating expenses | 1,172,127 | 1,326,813 |
| Earnings from operating activities | 149,877 | 492,354 |
| Finance costs | (13,196) | (18,453) |
| Gain on fair value of contingent consideration | - | 31,406 |
| Share of loss from investments accounted for using the equity method | (80,109) | - |
| Net earnings before income taxes | $ 56,572 | $ 505,307 |
Certain statements included in this news release contain forward looking statements, which by their nature are necessarily subject to risks and uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements reflect the Company’s current views with respect to future events, and are based on information currently available to the Company and on hypotheses which it considers to be reasonable; however, management warns the reader that hypotheses relative to future events which are beyond the control of management could prove to be false, given that they are subject to certain risks and uncertainties.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For more information please contact:
George Pretli
Controller
gpretli@intouchinsight.com
613-270-7916