Last close As at 05/08/2026
CAD50.97
▲ −0.03 (−0.06%)
Market capitalisation
CAD956m
Research: Industrials
Information Services Corporation’s (ISC’s) Q124 results highlight the strength of the underlying business, with topline and adjusted EBITDA growth of 15% and 34%, respectively, augmented by the sustained organic growth of the Services division and CPI fee adjustments. This progress was made less obvious at the statutory net income level by increases in interest costs and share-based compensation expenses of C$5.0m and C$5.8m, respectively. FY24 guidance has been reiterated, and we maintain our forecasts and valuation of C$40/share, implying 58% upside.
Written by
Information Services Corporation |
Strong underlying growth, guidance reiterated |
Q124 results |
Industrial support services |
10 May 2024 |
Share price performance
Business description
Next events
Analysts
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Information Services Corporation’s (ISC’s) Q124 results highlight the strength of the underlying business, with topline and adjusted EBITDA growth of 15% and 34%, respectively, augmented by the sustained organic growth of the Services division and CPI fee adjustments. This progress was made less obvious at the statutory net income level by increases in interest costs and share-based compensation expenses of C$5.0m and C$5.8m, respectively. FY24 guidance has been reiterated, and we maintain our forecasts and valuation of C$40/share, implying 58% upside.
Year end |
Revenue (C$m) |
EBITDA (C$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
189.9 |
64.4 |
46.5 |
1.95 |
0.92 |
13.1 |
3.6 |
12/23 |
214.5 |
72.9 |
39.2 |
1.65 |
0.92 |
15.5 |
3.6 |
12/24e |
242.0 |
85.5 |
46.5 |
1.89 |
0.92 |
13.6 |
3.6 |
12/25e |
258.1 |
90.4 |
51.7 |
2.10 |
0.92 |
12.2 |
3.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Strong underlying Q124 performance
Q124 revenue increased 15% to C$56.4m and adjusted EBITDA increased 34% to C$19.4m. Registry Operations benefited from incremental earnings from Saskatchewan Land Registry fee adjustments, which offset a plateau in transaction volumes, achieving adjusted EBITDA growth of 37% to C$15.2m. The Services division reported adjusted EBITDA of C$5.9m, in line with Q123 despite heightened customer acquisition, resulting from higher COGS from additional Regulatory Solutions revenue, and continued business investment. Technology Solutions enjoyed EBITDA of C$0.9m compared to a C$0.9m loss in Q123, reflecting contract momentum. Group statutory net income declined substantially by C$6.4m to C$0.4m, primarily due to a surge in share-based compensation expenses of C$5.8m, masking underlying net income growth of 26% to C$8.5m despite net interest costs rising by C$5m. Operating cash flow increased 82% to C$10.5m, primarily attributable to more favourable working capital movements.
Guidance reiterated, positive outlook
ISC maintains its FY24 revenue and adjusted EBITDA guidance of C$240–250m (Edison: C$242m) and C$83–91m (Edison: C$86m), with our projections signifying year-on-year increases of 13% and 17%, respectively. This anticipated growth is driven by robust organic expansion and ongoing customer acquisition efforts in the Services division. Furthermore, Registry Operations should benefit from a full-year contribution of introduced annual CPI fee adjustments from the MSA extension, which should somewhat offset the expected plateau in registry transaction volumes.
Valuation: Maintained DCF valuation of C$40/share
We maintain our forecasts and DCF valuation of C$40/share, implying 58% upside to the current share price. The stock trades at 13.6x FY24e P/E, representing a material discount not only to its own history but also to a selection of peers, despite its long-term, predictable cash flows bolstered by the MSA extension.
Information Services Corporation is a research client of Edison Investment Research Limited
Exhibit 1: Financial summary
C$m |
2020 |
2021 |
2022 |
2023 |
2024e |
2025e |
2026e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
136.7 |
169.4 |
189.9 |
214.5 |
242.0 |
258.1 |
272.0 |
Cost of Sales |
31.3 |
40.4 |
49.2 |
55.4 |
62.6 |
69.5 |
75.7 |
||
Gross Profit |
105.5 |
129.0 |
140.7 |
159.1 |
179.4 |
188.6 |
196.3 |
||
EBITDA |
|
|
49.2 |
67.8 |
64.4 |
72.9 |
85.5 |
90.4 |
93.8 |
Normalised operating profit |
|
|
36.5 |
54.0 |
49.7 |
52.4 |
59.5 |
63.6 |
66.4 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(2.6) |
(1.2) |
(2.0) |
(4.1) |
(2.0) |
(2.0) |
(2.0) |
||
Share-based payments |
(3.0) |
(6.0) |
(1.5) |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
||
Impairment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(0.2) |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
30.7 |
46.8 |
46.2 |
48.0 |
57.2 |
61.4 |
64.1 |
||
Net Interest |
(2.0) |
(2.7) |
(3.2) |
(13.2) |
(13.0) |
(12.0) |
(10.7) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
34.4 |
51.4 |
46.5 |
39.2 |
46.5 |
51.7 |
55.7 |
Profit Before Tax (reported) |
|
|
28.6 |
44.1 |
43.0 |
34.8 |
44.2 |
49.4 |
53.4 |
Reported tax |
(7.8) |
(12.0) |
(12.2) |
(9.7) |
(12.4) |
(13.8) |
(15.0) |
||
Profit After Tax (norm) |
26.6 |
39.4 |
34.2 |
29.4 |
34.1 |
37.8 |
40.7 |
||
Profit After Tax (reported) |
20.8 |
32.1 |
30.8 |
25.0 |
31.8 |
35.6 |
38.5 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
0.7 |
(1.0) |
(0.0) |
0.2 |
0.2 |
0.2 |
0.2 |
||
Net income (normalised) |
26.6 |
39.4 |
34.2 |
29.4 |
34.1 |
37.8 |
40.7 |
||
Net income (reported) |
20.8 |
32.1 |
30.8 |
25.0 |
31.8 |
35.6 |
38.5 |
||
Average Number of Shares Outstanding (m) |
18 |
18 |
18 |
18 |
18 |
18 |
18 |
||
EPS - basic normalised (C$) |
|
|
1.52 |
2.25 |
1.95 |
1.65 |
1.89 |
2.10 |
2.26 |
EPS - normalised fully diluted (C$) |
|
|
1.51 |
2.18 |
1.91 |
1.63 |
1.89 |
2.10 |
2.26 |
EPS - basic reported (C$) |
|
|
1.19 |
1.83 |
1.75 |
1.41 |
1.77 |
1.98 |
2.14 |
DPS (C$) |
0.80 |
0.83 |
0.92 |
0.92 |
0.92 |
0.92 |
0.92 |
||
Revenue growth (%) |
2.8 |
23.9 |
12.1 |
13.0 |
12.8 |
6.6 |
5.4 |
||
Gross Margin (%) |
77.1 |
76.2 |
74.1 |
74.2 |
74.1 |
73.1 |
72.2 |
||
EBITDA Margin (%) |
36.0 |
40.0 |
33.9 |
34.0 |
35.3 |
35.0 |
34.5 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
186.0 |
176.1 |
226.2 |
488.0 |
464.4 |
440.2 |
415.3 |
Intangible Assets |
70.0 |
61.1 |
89.0 |
351.8 |
328.5 |
304.6 |
280.0 |
||
Tangible Assets |
2.2 |
1.4 |
1.8 |
2.1 |
1.8 |
1.5 |
1.2 |
||
Investments & other |
113.9 |
113.6 |
135.4 |
134.1 |
134.1 |
134.1 |
134.1 |
||
Current Assets |
|
|
55.4 |
56.4 |
57.2 |
48.3 |
52.0 |
53.3 |
54.4 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
17.0 |
12.8 |
14.9 |
15.7 |
19.4 |
20.6 |
21.8 |
||
Cash & cash equivalents |
33.9 |
40.1 |
34.5 |
24.2 |
24.2 |
24.2 |
24.2 |
||
Other |
4.4 |
3.6 |
7.8 |
8.5 |
8.5 |
8.5 |
8.5 |
||
Current Liabilities |
|
|
27.3 |
36.9 |
39.6 |
63.5 |
70.9 |
73.8 |
76.3 |
Creditors |
21.9 |
26.5 |
33.9 |
36.1 |
43.6 |
46.5 |
49.0 |
||
Tax and social security |
1.2 |
7.0 |
0.7 |
1.0 |
1.0 |
1.0 |
1.0 |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
4.2 |
3.4 |
5.0 |
26.4 |
26.3 |
26.3 |
26.3 |
||
Long Term Liabilities |
|
|
93.0 |
57.9 |
88.2 |
304.0 |
261.3 |
216.3 |
167.8 |
Long term borrowings |
76.3 |
41.0 |
66.0 |
177.3 |
164.0 |
149.5 |
131.5 |
||
Other long term liabilities |
16.6 |
16.9 |
22.2 |
126.7 |
97.3 |
66.8 |
36.3 |
||
Net Assets |
|
|
121.1 |
137.7 |
155.6 |
168.8 |
184.3 |
203.4 |
225.6 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
121.1 |
137.7 |
155.6 |
168.8 |
184.3 |
203.4 |
225.6 |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
49.2 |
67.8 |
64.4 |
72.9 |
85.5 |
90.4 |
93.8 |
||
Working capital |
3.5 |
14.2 |
(3.8) |
(1.2) |
3.7 |
1.6 |
1.4 |
||
Exceptional & other |
(5.6) |
(7.2) |
(3.5) |
(4.4) |
(2.3) |
(2.3) |
(2.3) |
||
Tax |
(7.8) |
(12.0) |
(12.2) |
(9.7) |
(12.4) |
(13.8) |
(15.0) |
||
Other |
1.6 |
(1.6) |
(1.3) |
(0.7) |
(0.6) |
(0.6) |
(0.6) |
||
Net operating cash flow |
|
|
41.0 |
61.2 |
43.5 |
56.8 |
74.0 |
75.3 |
77.4 |
Capex |
(1.2) |
(2.2) |
(1.5) |
(155.8) |
(30.9) |
(30.9) |
(30.9) |
||
Acquisitions/disposals |
(70.2) |
1.7 |
(54.7) |
(0.2) |
0.0 |
0.0 |
0.0 |
||
Net interest |
(1.6) |
(2.8) |
(2.8) |
(7.4) |
(11.0) |
(11.2) |
(9.8) |
||
Equity financing |
(1.9) |
(2.0) |
(2.1) |
(2.4) |
(2.4) |
(2.4) |
(2.4) |
||
Dividends |
(14.0) |
(14.0) |
(16.2) |
(16.4) |
(16.4) |
(16.4) |
(16.4) |
||
Other |
0.0 |
(0.4) |
3.4 |
5.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(47.9) |
41.6 |
(30.3) |
(120.4) |
13.3 |
14.5 |
18.0 |
||
Opening net debt/(cash) |
|
|
(5.7) |
42.4 |
0.9 |
31.6 |
153.1 |
139.8 |
125.3 |
FX |
(0.2) |
(0.4) |
0.2 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.3 |
(0.6) |
(1.1) |
(0.1) |
0.0 |
0.1 |
||
Closing net debt/(cash) |
|
|
42.4 |
0.9 |
31.6 |
153.1 |
139.8 |
125.3 |
107.3 |
Source: Information Services Corporation accounts, Edison Investment Research
|
|
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