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IRD Announces Continued Growth in Third Quarter Fiscal 2013

SASKATOON, SASKATCHEWAN — (Marketwired) — 10/09/13 — International Road Dynamics Inc. (TSX: IRD), one of the world-s leading providers of systems and solutions for the global Intelligent Transportation Systems (ITS) market, today announced continued growth for the three and nine months ended August 31, 2013.

HIGHLIGHTS:

“A strengthening global economy is resulting in an improved outlook for the worldwide ITS industry and for IRD as investments in highway and roadway infrastructure and support systems are increasing in our key markets,” commented Terry Bergan, President and CEO. “In particular, we are seeing solid growth in our US markets as favourable economic conditions have permitted a number of large projects to commence, while our Latin American business continues to generate strong revenue increases as we enhance our presence in a number of current and new regions.”

Mr. Bergan continued: “We are also pleased to see another quarter of increasing profit margins due to a higher-margin sales mix and the continuing benefits of our cost control and production efficiency initiatives. We look for this progress to continue.”

Revenues in the third quarter of fiscal 2013 rose 8.0% to $12.0 million compared to $11.1 million for the same period last year. For the nine months ended August 31, 2013 revenues were $31.1 million compared to $30.6 million last year.

Revenues in the Company-s Canadian and United States markets rose 11.0% in the third quarter compared to the prior year as favourable economic conditions allowed a number of project orders to commence. For the nine months ended August 31, 2013 Canadian and U.S. revenues rose 2.5% compared to the prior year. Management continues to believe that its North American business will grow over the near term due to a growing backlog of orders.

Latin American revenues, originating from the Company-s subsidiary in Chile, increased 63.8% to $1.6 million in the quarter compared to last year reflecting the Company-s strong market presence and two major project deliveries in the region. Year to date revenues in Latin America have risen 36.5% to $5.1 million. The Company continues to identify and add new sales opportunities in a number of countries in the Latin America region.

South Asian revenues originating from the Company-s subsidiary in India declined in the quarter reflecting management-s decision to be more selective in the contracts entered into in this market. The Company remains focused on maintaining its recurring service operations and completing existing major projects while also working towards a realignment of its operations to increase product sales across a wider range of industries.

Other International revenues, which include all other overseas sales originating from North America, increased strongly in the third quarter, with year to date revenues up 9.0% over the prior year.

For the three months ended August 31, 2013 the Company reported improved earnings of $293,593 from its 50% equity investment in XPCT in China compared to $65,812 in the same prior year period. For the first nine months of 2013 earnings from XPCT were $503,662 compared to a loss of $2,243 in the prior year. The improved performance in fiscal 2013 is due to continued growth in the Company-s wire harness business and positive earnings from its traffic business. The Company received dividends of $491,601 from XPCT in the first quarter of the fiscal year.

Gross margin as a percentage of revenues is 32.7% year to date in fiscal 2013 compared to 30.0% in the prior year. The improved profitability in fiscal 2013 is due primarily to increased higher-margin service revenues and high margin project revenues this year.

Administrative and marketing expenses increased compared to the prior year due primarily to higher selling costs in its Latin America operations resulting in the higher sales revenues. Net research and development costs increased compared to the prior year, as the Company continues to develop new products and add to the functionality of existing products. Interest costs were higher due to increased borrowing levels and higher interest rates on the Company-s credit lines.

The Company continued to demonstrate a trend of improved year over year quarterly performance as earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased to $1.2 million in the third quarter of 2013 from $0.8 million in the same prior year period. For the nine months ended August 31, 2013 EBITDA rose 85.0% to $1.9 million from $1.0 million last year.

The Company generated net earnings of $534,025 ($0.04 per share) in the third quarter compared to $377,554 ($0.03 per share) last year. Net income in the third quarter of fiscal 2013 was negatively affected by additional losses in the Company-s Indian subsidiary arising from bad debt provisions. Due to uncertainty that sufficient future earnings will be generated in the Company-s Indian subsidiary to offset current tax losses prior to their expiry, no provision for income tax recovery has been recorded in this entity during fiscal 2013 as in prior years. For the first nine months of fiscal 2013 the Company reported net earnings of $770,607 ($0.05 per share) compared to $100,092 ($0.01 per share) in the prior year.

The Company-s balance sheet remained solid at August 31, 2013 with working capital of $7.8 million compared to $7.0 million as at November 30, 2012. Cash flows from operating activities rose by $2.0 million for the nine months ended August 31, 2013 compared to $1.4 million in the prior year period due primarily to the improved net earnings in the current year.

Financial Highlights (financial statements are available at )

Certain statements contained in this news release constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of future operating results and economic performance of the Company, are assumptions regarding projected revenue and expenses. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected. For more exhaustive information on these risks and uncertainties, please refer to our most recently filed annual information form, available at . Forward-looking information contained in this report is based on management-s current estimates, expectations and projections, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to do so, we are under no obligation and do not undertake to update this information at any particular time unless required by applicable securities law.

As used herein, “EBITDA” means earnings before interest, income taxes, depreciation, and amortization, and includes gains or losses from foreign exchange and earnings or losses from the Company-s equity investments. EBITDA is not a recognized measure under International Financial Reporting Standards (“IFRS”). Management believes that EBITDA is a useful supplemental measure to net earnings (loss), as it provides investors with an indication of operating performance prior to debt service, capital expenditures and income taxes. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company-s performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The

Company-s method of calculating EBITDA may differ from the methods by which other companies calculate EBITDA and, accordingly, EBITDA may not be comparable to measures used by other companies.

IRD is a highway traffic management technology company specializing in supplying products and systems to the global Intelligent Transportation Systems (ITS) industry. IRD is a North American company based in Saskatoon, Saskatchewan Canada with sales and service offices throughout the United States and overseas. Private corporations, transportation agencies and highway authorities around the world use IRD-s products and advanced systems to manage and protect their highway infrastructures.

The Company-s shares trade on the Toronto Stock Exchange under the symbol IRD.

Contacts:
International Road Dynamics Inc.
Terry Bergan
President & CEO
(306) 653-6600 or U.S. (303) 355-5998

International Road Dynamics Inc.
Francine Senecal-Lepage
Investor Relations
(306) 653-6603
(306) 653-1454 (FAX)
Email:
Website:

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