Corporate Overview. company.isc.ca. March 13, 2018 TSX:ISV

Transcription

1 Corporate Overview March 13, 2018

2 ISC Forward-Looking Information Forward-Looking Information This presentation contains forward-looking information within the meaning of applicable Canadian securities legislation including, without limitation, those contained in the Outlook 2018 section hereof, and management s expectations, intentions and beliefs concerning the industries in which we operate, business strategy and strategic direction, growth opportunities, integration, contingent consideration, development and completion of projects, the competitive landscape, seasonality, our future financial position and results including expected revenue, EBITDA, and capital expenditures, and market trends. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the Company's plans or expectations include risks relating to changes in economic, market and business conditions, reliance on key customers, dependence on key projects and clients, securing new business and fixed-price contracts, identification of viable growth opportunities, implementation of our growth strategy, competition and other risks detailed from time to time in the filings made by the Company including those detailed in ISC s Annual Information Form dated March 13, 2018 and ISC s audited Consolidated Financial Statements and Notes and Management s Discussion and Analysis for the fourth quarter and year ended December 31, 2017, copies of which are filed on SEDAR at The forward-looking information in this release is made as of the date hereof and, except as required under applicable securities legislation, ISC assumes no obligation to update or revise such information to reflect new events or circumstances. 2

3 Our Business at a Glance 3

4 ISC Overview Overview Focus on growth. Leading provider of registry and information management services for public data and records. Offering solutions to manage, secure and administer information through our Registry and Services segments. Saskatchewan s exclusive provider of the Land Titles Registry, Land Surveys Directory, Personal Property Registry and Corporate Registry through ASD model. Registry technology solutions and expertise with registry implementations on 3 continents Financial highlights Revenue $93.6M EBITDA $30.0M EBITDA margin 32.1% FCF $22.9M Basic EPS $1.59 TSX: ISV Market cap $300.1M 52 week high $ week low $16.72 Dividend per share $0.80 Dividend yield 4.7% As at March 13, 2018 Corporate services and corporate accessories acquired AVS Systems Inc. in Dec

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6 ISC Our Business at a Glance Reportable Segments We operate in two reportable segments defined by their primary type of service offering. The balance of our corporate activities and shared services functions, including the services and functions provided by our subsidiary, ERS, are reported as Corporate. Registries: - Saskatchewan Land Registry (includes Land Titles Registry, Land Surveys Directory and Geomatics) - Saskatchewan Personal Property Registry - Saskatchewan Corporate Registry (includes Common Business Identifier and Business Registration Saskatchewan Program) - Saskatchewan Asbestos Registry Services: - ESC Search and Registration Services - ESC Know-Your-Customer Services - ESC Corporate Supplies and Accessories 6

7 ISC Our Business at a Glance Registries End-use customers: Individuals or businesses who directly benefit from ISC registries: - Individuals - Non-profit organizations - Business owners - Municipalities - Home builders - Financial institutions - Insurance companies - Car and equipment dealers Channel customers: Intermediaries who manage relationships with end users but are typically not the beneficiary of our registry services: - Law firms - Engineers - Surveyors - Agents (representing end-user customers) 7

8 ISC Our Business at a Glance Services Search & Registration: - Law firms - Lending, leasing and credit issuing businesses and institutions such as financial institutions and financial services companies Know-Your-Customer: - Financial institutions Corporate Supplies: - Legal professionals 8

9 ISC Our Business at a Glance Acquisition of AVS Transaction Highlights AVS Systems Inc. provides automation software technology services to serve lending, leasing, and credit issuing businesses and institutions in Canada. Cash payment of $25.0 million and the Company may pay up to $20.0 million in additional consideration, which is contingent on realization of future business. Accretive in 2019 on an earnings per share basis, providing ESC with access to new sources of recurring revenue. The transaction will be mildly dilutive on a reported earnings per share basis in 2018 due to certain purchase price accounting requirements but will be accretive on an adjusted earnings per share basis in 2018 when the effects of amortization of purchase price adjustments are excluded. On a cash flow per share basis, the transaction is immediately accretive in fiscal Fast growing business with a strong track record and a compound annual revenue growth of approximately 60 percent between 2012 and For the nine months ended September 30, 2017, AVS realized revenue of approximately $17.0 million and EBITDA of approximately $2.4 million. On a pro-forma consolidated basis, ISC would have had net revenue of approximately $87.0 million and EBITDA of approximately $24.5 million for the nine months ended September 30, Adds a robust technology platform which offers expansion and integration opportunities with registries and strategic partners in Canada and internationally. Expanding customer base and strategic partnerships with large financial institutions and companies in the financial service sector broadens existing market share. Further diversifies and enhances ISC s consolidated revenue profile, supporting the Company s growth strategy which includes the acquisition of companies with competencies or operations in our industry space. 9

10 ISC Our Business at a Glance Corporate Founded in 2002 Based in Ireland Acquired by ISC on Jan 23, 2017 Consulting Implementation & support Registry implementations on 3 continents *The balance of our corporate activities and shared services functions, including the services and functions provided by our subsidiary ERS, are reported as Corporate. 10

11 ISC Our Business at a Glance Revenue Model Registries TRANSACTION Searches Registrations Maintenance and related services * For a full list of our fees, go to SERVICE Online or in person / Customized Online or in person Online or in person / Customized REVENUE TYPE* Flat fees (standard searches, e.g. $11 per land title search) Value-based fees (0.3% of the value of the land title) Flat fees (other registries) Flat or negotiated fees Services TRANSACTION Search & Registration Know-Your-Customer Corporate Supplies & Accessories SERVICE Online or in person / Customized In person Online or in person / Customized REVENUE TYPE* Flat fees Flat fees Per unit fees * For a full list of our fees, go to 11

12 Financial Position 12

13 ISC Financial Position Financial Position Balance sheet remains strong with ability to fund growth opportunities. Continues to support dividend. $31.3 M Amount of cash on hand as at December 31, 2017 $14.0 M Amount of 2017 dividends paid to shareholders as at December 31, 2017 $22.9 M Free cash flow as at December 31, 2017 $21.6 M Total debt as at December 31,

14 ISC Financial Position Earnings Consolidated EBITDA 1 and consolidated adjusted EBITDA 1 for the year ended December 31 (CAD$ millions) EBITDA Adjusted EBITDA 1 EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and therefore, are not comparable to similar measures by other corporations. See section Non-IFRS Measures in the Management s Discussion & Analysis for the period ended December 31, The 2017 EBITDA figure does not include the gain from our sale of ownership in D&D. 14

15 ISC Financial Position Multiple Lines of Revenue Total revenue for the year ended December 31 (CAD$ millions) Other Land Surveys Directory Geomatics Services Corporate Registry Personal Property Registry Land Titles Registry 15

16 ISC Financial Position Revenue / EBITDA Consolidated revenue and EBITDA 1 for the year ended December 31 (CAD$ millions) Revenue EBITDA 1 EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and therefore, are not comparable to similar measures by other corporations. See section Non-IFRS Measures in the Management s Discussion & Analysis for the period ended December 31, The 2017 EBITDA figure does not include the gain from our sale of ownership in D&D. 16

17 ISC Financial Position Multiple Lines of Revenue Revenue 4 th Quarter 2017 $23.6 M Total revenue 33.2% EBITDA margin $1.07 EPS (basic share) *The balance of our corporate activities and shared services functions, including the services and functions provided by our subsidiary ERS, are reported as Corporate/Other. 17

18 ISC Financial Position 2017 Q4 and YE Financial Highlights Thousands of CAD dollars; except earnings per share and where noted Three Months Ended Dec 31, 2017 Three Months Ended Dec 31, 2016 Year Ended Dec 31, 2017 Year Ended Dec 31, 2016 Revenue $ 23,589 $ 21,201 $ 93,592 $ 88,375 Net income $ 18,774 $ 2,919 $ 27,789 $ 15,503 EBITDA 1 $ 7,842 $ 6,833 $ 30,015 $ 29,529 Adjusted EBITDA 1 $ 8,954 $ 7,336 $ 33,403 $ 33,454 EBITDA margin 1 (% of revenue) 33.2% 32.2% 32.1% 33.4% Adjusted EBITDA margin % 34.6% 35.7% 37.9% Free cash flow 1,3 $ 2,804 $ 4,084 $ 22,918 $ 19,993 Dividend declared per share $ 0.20 $ 0.20 $ 0.80 $ 0.80 Earnings per share 2 (basic) $ 1.07 $ 0.17 $ 1.59 $ 0.89 Earnings per share, (diluted) 2 $ 1.07 $ 0.17 $ 1.58 $ EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and therefore, are not comparable to similar measures reported by other corporations. Refer to section Non-IFRS Measures in the Management s Discussion & Analysis for the year ended December 31, The 2017 EBITDA figure does not include the gain from our sale of ownership in D&D. 2. We base the calculation of earnings per share on net income after tax and the weighted average number of shares outstanding during the period. 3. ISC has changed the recognition of current income taxes within the definition of free cash flow to equal the balance recognized on the statement of comprehensive income. Comparative figures for previous years have been updated accordingly. 18

19 ISC Outlook Outlook 2018 Revenue EBITDA Margin CapEx 2018 guidance Targeting between $124.0 and $130.0 million Targeting between 24.0% and 26.0% Targeting between $4.0 and $6.0 million Continued focus on sustaining our core business while pursuing new growth opportunities. 19

20 Growth 20

21 ISC Growth Market Trends Outsourcing Business Processes & Services Governments, legal firms and financial institutions are looking to find cost savings and focus on their core business without compromising service quality. Increased Regulatory & Compliance Requirements Improved workflows and automated processes help meet requirements and reduce potential business risk for clients. Emphasis on Reliability & Security of Information ISC has the know-how, processes, technology and proven experience to manage data authentication and security. Emerging Global Registry Market ISC continues to believe the global registry market is an emerging sector. 21

22 ISC Growth Supporting Growth Increased emphasis on technology solutions To complement existing Registry Operations and Services business Appointment of Executive Vice President, Technology Solutions Now have a team of 50+ technical resources with deep registry expertise An expanded leadership team To advance the business and future growth of the Company Includes new leadership in marketing and business development 22

23 Investment Proposition 24

24 ISC Investment Proposition Investment Proposition Strong Core Business - 20-year exclusive Master Service Agreement with Government of Saskatchewan, including data license - Understanding of Alternative Service Delivery model and needs of governments Emerging Diversification - Acquisition of ESC Corporate Services Ltd. & AVS Systems Inc. - Acquisition of Enterprise Registry Solutions Financial Position - Strong cash flow - Solid balance sheet 24

25 ISC Appendices Appendices 25

26 ISC Appendices TSX: ISV Shares Outstanding Listing Market Cap 52-Week High 52-Week Low Dividend History Contact As at March 13, million Class A Limited Voting Shares TSX: ISV $300.1 million $21.30 $16.72 $0.80 per share annually (paid quarterly) since 2013 Investor.relations@isc.ca or call toll free

27 ISC Appendices Appendix A: Ownership Top 5 Institutional Holders Institutional Shareholder % O/S Analyst Coverage Institution Analyst Cover initiated on Sentry Investments, Inc % QV Investors Inc. 8.98% Burgundy Asset Management 3.67% Mackenzie Financial Corporation 2.05% IG Investment Management 0.89% RBC Steve Arthur, CFA August 7, 2013 GMP Securities Justin Keywood, CFA February 3, 2014 CIBC Stephanie Price July 15, 2014 Ownership Distribution 31% 33% 36% Retail Investors Institutional Investors Government of Saskatchewan As at March 2,

28 ISC Appendices Appendix B: ISC Leadership Jeff Stusek President and Chief Executive Officer Shawn B. Peters Executive Vice-President and Chief Financial Officer Kathy E. Hillman-Weir, Q.C. Executive Vice-President, Chief Corporate Officer, General Counsel and Corporate Secretary Kenneth W. Budzak Executive Vice-President, Registry Operations Loren Cisyk Executive Vice-President, Technology Solutions Laurel Garven Vice-President, Business Strategy Catherine McLean Vice-President, People and Culture Chris Valentine President, ESC Corporate Services Dennis White Vice-President, Marketing and Business Development 28

29 ISC Appendices Appendix C: Board of Directors From left: Doug Emsley, Iraj Pourian, Scott Musgrave, Karyn Brooks, Tom Christiansen, Joel Teal, Tony Guglielmin, Michelle Ouellette, Q.C., Dion Tchorzewski 29

30 ISC Appendices Appendix D: 2017 Q4 Consolidated Revenue Thousands of CAD dollars Three Months Ended Dec 31, 2017 Three Months Ended Dec 31, 2016 Land Registry (Land Titles Registry, Land Surveys, and Geomatics) $ 13,762 $ 13,038 Personal Property Registry 2,294 2,273 Corporate Registry 2,468 2,254 Registries revenue $ 18,524 $ 17,565 Services revenue 4,035 3,427 Other revenue 1, Total revenue $ 23,589 $ 21,201 30