Mr. Shawn Peters reports

ISC REPORTS SOLID START TO 2024

Information Services Corp. has released on the company's financial results for the first quarter ended March 31, 2024.

Terms that are used but not defined in this news release have the meaning ascribed to those terms in management's discussion and analysis for the period ended March 31, 2024.

First quarter 2024 highlights:

• Revenue was $56.4-million, an increase of 15 per cent compared with the first quarter of 2023. Growth was due to fee adjustments within the Saskatchewan registries division made in the third quarter of 2023 pursuant to the extension and annual Consumer Price Index adjustments, customer and transaction growth in the regulatory solutions division, and the advancement of project work on existing and new solution definition and implementation contracts in technology solutions.
• Net income was $400,000 or two cents per basic share and two cents per diluted share compared with $6.9-million or 39 cents per basic share and 38 cents per diluted share in the first quarter of 2023. Strong operating results were offset by increased share-based compensation expense due to a rise in the company's share price during the quarter compared with a decrease in the prior-year quarter, alongside increased interest expense and amortization associated with the extension executed in July, 2023.
• Net cash flow provided by operating activities was $10.5-million for the quarter, an increase of $4.7-million or 82 per cent from $5.7-million in the first quarter of 2023. The increase in net cash flow was primarily due to an increase in cash from changes in non-cash working capital.
• Adjusted net income was $8.5-million or 47 cents per basic share and 47 cents per diluted share compared with $6.8-million or 38 cents per basic share and 37 cents per diluted share in the first quarter of 2023. The growth in adjusted net income reflects strong operating results offset by increased financing costs associated with the additional borrowings that were used to finance the upfront payment.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $19.4-million for the quarter compared with $14.5-million in the first quarter of 2023. The increase is due to the impact of fee adjustments in registry operations' Saskatchewan registries division pursuant to the extension agreement and annual CPI adjustments. Technology solutions adjusted EBITDA also grew compared with the prior-year quarter due to increased revenue from existing and new solution definition and implementation contracts. Adjusted EBITDA margin was 34.5 per cent compared with 29.5 per cent in the first quarter of 2023 driven by pricing increases discussed above.
• Adjusted free cash flow for the quarter was $11.6-million, up 18 per cent compared with $9.9-million in the first quarter of 2023, due to stronger results in its operating segments. This was partially offset by an increase in costs associated with the extension agreement, including interest on the increased borrowings to finance the upfront payment and an increase in interest rates.
• Voluntary prepayments of $4.0-million were made toward Information Services' credit facility during the quarter, demonstrating Information Services' plan to deleverage toward a long-term net leverage target of 2.0 times to 2.5 times.
• On Feb. 5, 2024, Information Services announced the retirement of Ken Budzak, executive vice-president of registry operations, effective May, 2024. During this transition period, the company is undertaking a process to fill the role.
• On March 8, 2024, Regulis SA, a wholly owned subsidiary of Information Services, launched the international registry of interests in rolling stock, consistent with its contract under the Luxembourg Rail Protocol of the Cape Town Convention, which provides the exclusive right and obligation to develop, deliver and operate the international registry of interests in rolling stock for a period of 10 years from the date of go live. Pursuant to the Regulis share purchase agreement executed in 2022, additional purchase consideration of 600,000 euros (or approximately $900,000) was paid during the quarter.

Financial position as at March 31, 2024:

• Cash of $20.2-million compared with $24.2-million as of March 31, 2023;
• Total debt of $173.4-million compared with $177.3-million as of Dec. 31, 2023.

Subsequent events:

• On May 7, 2024, the board declared a quarterly cash dividend of 23 cents per Class A share, payable on or before July 15, 2024, to shareholders of record as of June 30, 2024.

Commenting on Information Services' results, Shawn Peters, president and chief executive officer, stated: "The first quarter of this year marked the beginning of a new phase of growth for ISC with the launch of our five-year growth plan. After 10 years of success, culminating with the signing of the extension agreement with the Province of Saskatchewan to 2053, it was important that we ensure that the next phase of growth is ambitious but realistic."

Mr. Peters continued: "Like most quarters, the company delivered strong operating results from across all our segments with revenue and adjusted EBITDA both up compared to the prior-year period. This represents a strong start to the year and to the next phase of our growth journey."

Outlook

The Bank of Canada has kept its key interest rate at 5.0 per cent since July, 2023. It expects this to continue to be a factor that will impact parts of its business, most notably the Saskatchewan land registry. However, the robustness and diversity of its business mean it is well positioned to deliver on its expectations for 2024 and beyond.

In registry operations, it expects transactions in 2024 to be largely flat with revenue growth through a realization of a full year of fee adjustments, including those amended in July, 2023, because of the extension agreement and regular annual CPI fee adjustments. The Saskatchewan real estate sector has seen challenges with inventory in the first quarter while consumers also continue to live with higher mortgage costs and higher costs of living driven by inflation. The company continues to monitor interest rates and other economic conditions which can impact real estate activity. The registry operations segment is anticipated to remain as a strong free cash flow and adjusted EBITDA contributor in 2024.

Services will continue to be a significant part of its organic growth, with a forecasted increase in transactions and number of customers. The current trend of enhanced due diligence in an environment of higher interest rates and increased regulatory oversight is expected to continue. The technology solutions segment is also forecasted to see double-digit growth as it delivers on existing and new solution delivery contracts in 2024.

The key drivers of expenses in adjusted EBITDA in 2024 are expected to be wages and salaries and cost of goods sold. Furthermore, as a result of the extension agreement, the company will have additional operating costs associated with the enhancement of the Saskatchewan registries and increased interest expense arising from additional borrowings in 2023, which are excluded from adjusted EBITDA.

Its capital expenditures are expected to increase because of the enhancement of the Saskatchewan registries but will remain immaterial over all. As a result, the company continues to expect to see robust free cash flow in 2024.

In light of the preceding, it maintains its annual guidance for 2024 with revenue to be within a range of $240.0-million to $250.0-million and adjusted EBITDA to be within a range of $83.0-million to $91.0-million.

Note to readers

The board of directors carries out its responsibility for review of this disclosure primarily through the audit committee, which is composed exclusively of independent directors. The audit committee reviews and approves the fiscal year-end management's discussion and analysis and financial statements, and recommends both to the board for approval. The interim financial statements and MD&A are reviewed and approved by the audit committee.

This news release provides a general summary of Information Services' results for the quarters ended March 31, 2024, and 2023. Readers are encouraged to download the company's complete financial disclosures. Links to Information Services' financial statements and related notes and MD&A for the period are available on its website in the investor relations section.

Copies can also be obtained on SEDAR+ by searching Information Services' profile or by contacting Information Services at investor.relations@isc.ca.

Conference call and webcast

The company will hold an investor conference call on Wednesday, May 8, 2024, at 11 a.m. ET, to discuss the results. Those joining the call on a listen-only basis are encouraged to join the live audio webcast, which will be available on the company's website. Participants who wish to ask a question on the live call may do so through the Information Services website or by registering through the following live call URL.

Once registered, participants will receive the dial-in numbers and their unique PIN number. When dialling in, participants will input their PIN and be placed into the call. The audio file with a replay of the webcast will be available about 24 hours after the event on the company's website. The company invites media to attend on a listen-only basis.

About Information Services Corp.

Headquartered in Canada, Information Services is a leading provider of registry and information management services for public data and records. Throughout its history, it has delivered value to its clients by providing solutions to manage, secure and administer information through its registry operations, services and technology solutions segments. Information Services is focused on sustaining its core business while pursuing new growth opportunities. The Class A shares of Information Services trade on the Toronto Stock Exchange under the symbol ISV.

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