OTTAWA, Nov. 21, 2013 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch") (TSXV: INX) today announced its operating and financial results for the quarter ended September 30, 2013.
Revenue for the third quarter was $3,323,330, which was 20% higher than revenue of $2,763,145 in the same quarter in 2012. Net income before taxes for the third quarter were $505,307 compared to $353,915 reported in the same quarter in 2013 - a 43% increase. Additional revenue from the new GCS product line and an increase in the gross margin were the main contributors to the higher income. The higher income was attained even with the Company keeping Product Development and Marketing spending at its higher than previous year's levels. G&A expenses were also higher with additional expenses related to the acquisition of GCS Field Research ("FR") in Q2 2013.
Gross Margin increased to 55% in the third quarter compared to 53% for the same quarter in 2012. Company-defined adjusted EBITDA increased to $679,000 for the third quarter, compared to an EBITDA of $468,000 for the same quarter in 2012. The improvement in Gross Margin resulted from a concerted effort over the past two years to return our margins to historical levels.
"We are pleased to report the highest quarterly revenues, quarterly net income and quarterly EBITDA in the Company's history. Q3 is historically our best quarter. Over the past several quarters the Company has focused on developing and enhancing its product lines and operational processes with significant investments in software. The Company will continue to invest in product development and marketing because we expect significant changes in our current markets with historical customers dropping off older programs and moving to newer solutions. We expect at least 25% churn in our revenues and anticipate that our investment in new technologies will replace the lost revenue in fiscal year 2014. As previously reported, the acquisition of FR on April 1, 2013 opened important new compliance markets for the Company. We expect the compliance market to expand with increasing government regulation in food, education, pharmaceutical and financial services. The acquisition, integration and transition of FR into In-Touch was relatively seamless," said Michael Gaffney, CEO & Executive Chairman.
"In July 2013 the Company announced that I would become the Executive Chairman of In-Touch and a succession planning strategy where I would step down as CEO in November 2013. As previously announced, effective November 21, 2013 Cameron Watt, currently Vice President & General Manager, has been promoted to President & CEO. Cameron joined the company just over two years ago and was fully immersed in several acquisition and new revenue growth projects. We are very fortunate to have someone of Cameron's caliber and knowledge of In-Touch stepping in to become the new CEO. We have come a long way in the last nine years by taking the Company from near bankruptcy to a significant player in the mobile and services data capture markets. It is with great personal satisfaction that I am handing the reins to Mr. Watt, said Gaffney.
Mr. Gaffney, in the new Executive Chairman role, will focus on acquisitions, corporate strategy, new product initiatives, investor relations and technology carve-outs. The Company believes that it has significant unleveraged technology assets and Mr. Gaffney will search for ways to increase shareholder value by creatively utilizing these assets - either inside the Company or other monetizing structure or event. The Company anticipates announcing a new external initiative that will leverage some of these assets in the near future.
|Consolidated Statements of Operations||Q3 2013||Q3 2012|
|Cost of services||1,504,163||1,285,024|
|Total operating expenses||1,326,813||1,118,000|
|Earnings from operating activities||492,354||360,121|
|Change in fair value of contingent consideration||31,406||(945)|
|Net earnings before income taxes||$||505,307||$||340,894|
|Income tax recovery (expense)||(152,599)||19,813|
|Current income tax||0||(6,792)|
|Net earnings and comprehensive income||$||352,708||$||353,915|
|Basic earnings per share||$||0.02||$||0.02|
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.
The TSX Venture Exchange has not reviewed the foregoing and has neither approved or disapproved the contents of this press release.
SOURCE: In-Touch Survey Systems Ltd.
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