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Information Services continues to grow its services and tech segments after 'remarkable' 2020

Snapshot

The group manages and operates the Saskatchewan Land Registry on behalf of the government of Saskatchewan

ISC -

Quick facts: ISC

Price: 23 CAD

TSX:ISV
Market: TSX
Market Cap: $402.5 m
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  • Provides registry and information management services for public data and records
  • Multiple acquisitions have bolstered footprint and growth
  • Services and technology solutions segments gaining traction

What Information Services does:

Information Services Corp (TSE:ISV) provides registry and information management services for public data and records and is focused on sustaining the core registry business while pursuing new growth opportunities.

The Saskatchewan-based firm has a host of diversified, yet complementary revenue streams through its three business segments: Registry Operations, Services, and Technology Solutions.

Under its registry segment, the group manages and operates the Saskatchewan Land Registry on behalf of the government of Saskatchewan under a 20-year deal.

Its services business comes via subsidiary ESC Corporate Services Ltd, which delivers solutions uniting public record data, customer authentication, among others to support lending practices of clients with business across Canada.

The tech segment is delivered via wholly-owned subsidiary Enterprise Registry Solutions Limited (ERS), which offers RegSys that provides a transferable technology platform capable of serving a wide range of registry needs.

Information Services Corp has offices in eight Saskatchewan communities: Humboldt, Moose Jaw, North Battleford, Prince Albert, Regina, Saskatoon, Swift Current and Yorkton. The company works with both governments and private sector organizations seeking information management services.

How is it doing:

Looking back on 2020, Information Services Corp said its revenue for the full year is expected to exceed the consensus estimate of $135.7 million on strength in the Saskatchewan real estate market during the second half of the year, new customer acquisitions in its Services division, and the addition of its new Recovery Solutions segment. 

The company noted that it also anticipates its fourth-quarter and year-end earnings before interest, taxes, depreciation, and amortization (EBITDA) to be “strong” compared to consensus estimates of $11.3 million and $41.2 million, respectively, as it focuses on cost management combined with coronavirus (COVID-19) related reductions.

In addition, Information Services Corp said it is continuing to invest in the technology supporting its Services segment and its transition away from legacy platforms to optimize the customer experience through automation to reduce the cost of delivery. 

For its most recent financial reporting period - 3Q 2020 - the company banked revenue of $37.1 million, a 15% increase year-over-year. Net income came in at $5 million, up 51% from $3.3 million, in the same period of 2019. Its free cash flow for the quarter was $9.4 million, a $2.8 million increase from $6.6 million in 2019.

Information Services Corp attributed the boost to a combination of organic growth and the addition of Paragon Inc and its assets -- which the group, via its wholly-owned subsidiary ESC Corporate Services Ltd acquired in August 2020 for about C$70 million.

Paragon is a tech-enabled company that facilitates asset recovery on behalf of Canada's major banks. Asset recovery often takes the shape of identification, retrieval and disposition of movable assets like cars, boats, aircraft and other physical assets used as collateral in transactions. 

Inflection points:

  • More contract awards, deals
  • Ongoing growth in services, technology

What the boss says:

“There is no question that 2020 was a remarkable year for ISC even though we all faced challenges due to the global pandemic. Our Registry Operations business continues to be a strong free cash flow generator and world-leading example of how core public registries should be run,” Information Services Corp CEO Jeff Stusek said recently.

“Following the successful acquisition of the assets of Paragon in July, our Services business now offers a complete collateral management solution to our customers and became a major contributor to our free cash flow alongside Registry Operations, further strengthening the foundation of our consolidated business. Technology Solutions is continuing to gain traction as a key piece of our portfolio with the successful completion of implementations in several jurisdictions during the year.”

Contact the author: patrick@proactiveinvestors.com

Follow him on Twitter @PatrickMGraham

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on 6/11/20

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