Information Services Corporation
Transcription
Information Services Corporation
FINAL TRANSCRIPT Information Services Corporation Corporate Update Event Date/Time: December 22, 2014 - 5:00 p.m. E.T. Length: 17 minutes FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update CORPORATE PARTICIPANTS Jonathan Hackshaw Information Services Corporation – Director, Investor Relations & Corporation Communications Jeff Stusek Information Services Corporation – President and Chief Executive Officer Shawn B. Peters Information Services Corporation – Vice President, Finance & Technology and Chief Financial Officer CONFERENCE CALL PARTICIPANTS Michael Urlocker GMP Securities – Analyst "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 2 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update PRESENTATION Operator Good afternoon, ladies and gentlemen, and welcome to Information Services Corporation Corporate Update conference call. At this time all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star, zero for operator assistance at any time. I would like to remind everyone that this call is being recorded on December 22, 2014. I would now like to turn the conference over to Mr. Jonathan Hackshaw. Please go ahead, Mr. Hackshaw. Jonathan Hackshaw – Director, Investor Relations & Corporate Communications, Information Services Corporation Thank you, Operator, and good afternoon everyone. Joining me today on the call are Jeff Stusek, President and CEO; and Shawn Peters, Vice President, Finance & Technology and Chief Financial Officer. Also in attendance on the call is Kathy Hillman-Weir, Vice President, Corporate Affairs and General Counsel. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 3 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Before we begin we would like to remind everyone that we will only be summarizing the key points of the transaction with OneMove. The news release issued earlier today is available on the ISC and the econveyance websites. We encourage you to review the new release in its entirely. I would also like to remind you that any statements made today that are not historical facts are considered to be forward-looking statements within the meaning of applicable securities laws, including but not limited to certain statements with respect to the expected closing date of the Asset Purchase Agreement, the future growth of econveyance, expected synergistic opportunities that may be available, accretion expectations, and expected gross opportunities including Saskatchewan. The statements made involve a number of risks and uncertainties that have been described in detail in the Company’s filings; in particular, in ISC’s Annual Information Form dated March 19, 2014, ISC’s unaudited and condensed, consolidated financial statements and notes, and in Management’s Discussion & Analysis for the period ended September 30, 2014. Those risks and uncertainties may cause actual results to differ materially from those stated. Today’s comments are made as of today’s date and will not be updated except as required under applicable securities legislation. All currency—all amounts related to the transaction discussed on today’s call are in Canadian dollars, and this call will be recorded and available on our website within 48 hours. I will now turn the call over to Jeff. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 4 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Jeff Stusek – President and Chief Executive Officer, Information Services Corporation Thank you Jonathan and welcome everyone. Earlier today we announced that we’ve entered in an Asset Purchase Agreement with OneMove Technologies and OneMove Solutions and related parties, which I will collectively refer to as OneMove, to acquire its electronic conveyance platform, econveyance™, for $10 million in cash, and I’m extremely pleased to have the opportunity to provide additional details. To begin with, a little about the platform we are purchasing. econveyance™ is an online solution that simplifies and expedites the process of buying and selling real property by connecting legal professionals, lenders, and insurers throughout the property transfer process. It is a subscription-based solution that offers a secure and efficient means of managing real estate, real property transactions. econveyance™ is currently available in British Columbia, Alberta, and most recently Ontario. As many of you know, a key benefit of transitioning our business from a Crown corporation to a publicly traded company was to have the freedom to grow the business beyond our mandate as a Crown. Since our successful IPO over a year ago, we’ve been prudently assessing a variety of opportunities for growth which we believe will add value to all our stakeholders. As I go through, you are going to see a very compelling, strategic rationale for this acquisition, one which provides a number of very significant benefits. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 5 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update This is the first strategic acquisition for ISC since its IPO. The acquisition immediately allows ISC to participate as an emerging player in the electronic conveyancing space. Secondly, this acquisition fits with one pillar of our strategy for growing our business, that is through the addition or development of products and services which complements our existing core business. Clearly the conveyance business is a natural and complementary fit to our existing land registry business. The transaction allows us to put our cash to work by acquiring an operating asset. This is a strategic first step for our organization that marks the start of the diversification of our revenue stream by entering a new yet complementary space that adds value to our traditional business of registry management. It also marks our expansion of our geographical footprint, particularly in Western Canada. Upon the successful closing of this transaction, we will have a presence in British Columbia, Alberta, Ontario, and Saskatchewan. We believe this is a compelling transaction for econveyance customers who will benefit from ISC’s scale and management expertise. And finally, it is a compelling transaction for ISC customers. We anticipate that econveyance™ will be launched in Saskatchewan in 2015. We believe that the legal sector here in Saskatchewan will benefit by being able to choose an online conveyancing solution through a long and trusted partner in ISC. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 6 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update This also supports our original commitment to Saskatchewan that we would develop or provide added value to our existing customer base where it made good financial and strategic sense. OneMove’s public disclosure about econveyance is limited since it was privatized in 2013. However, we’re excited about the potential of this service following the restructuring of the business which has—which was recently completed by current Management. Based on our due diligence, the initial results are positive and encouraging, and as such we believe that the timing for this acquisition is prudent and econveyance™ will only benefit from ISC’s financial strength and governance leadership. Furthermore, the opportunities for growth in existing markets and new markets such as Ontario and Saskatchewan makes the addition of econveyance to the ISC family a good fit for our customers. As well, there may be additional consideration to the vendor which is tied to the future performance of econveyance™ over the next 12 months. In terms of its current operations, OneMove is well established in its home market of BC with a 63 percent market share and it’s established a solid presence in Alberta, which was launched in 2011. Econveyance enjoys a 15 percent market share in that province. More recently, econveyance was launched in Ontario. We understand that the initial feedback has been positive and we’re excited about the potential there. It is ISC’s intention to set up a wholly owned subsidiary and to operate this business as a standalone company. The econveyance™ team will report to a board of directors made up of ISC "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 7 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update executives. OneMove currently has agreements in place with the various land registry authorities in BC, Alberta, and Ontario. We will seek consents to assign these key contracts as a condition of closing. I’m confident that we will be successful. Other conditions at closing include the transfer of OneMove’s employees to the subsidiary, no material adverse change in any of the purchased assets or OneMove’s business, and certain other customary closing conditions. OneMove’s CEO will not join the new subsidiary. This is a very exciting transaction for us, especially as it is our first since becoming a publicly traded company, and also because it’s very important to me, the executive Management team, and the Board that we fulfill the promises made at the time of the IPO with respect to executing on our plans for growth as they relate to our stakeholders. That concludes our prepared remarks. I will now turn the call back over to Jonathan. Jonathan Hackshaw – Director, Investor Relations & Corporate Communications, Information Services Corporation Thanks, Jeff. Operator, we’d now like to open up the call to questions. Q&A Operator "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 8 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Thank you. Ladies and gentlemen, should you have a question, please press star, followed by one on your touchtone phone. If you are using a speakerphone, please lift your handset before pressing any keys. One moment, please, for your first question. Your first question comes from Michael Urlocker from GMP Securities. Please go ahead. Michael Urlocker – Analyst, GMP Securities Thanks very much. Jeff, it’s very interesting to see the news. Thanks for hosting this call. I’m not sure I heard you correctly. Could you repeat what is your estimate of the market share this company has in BC? Jeff Stusek – President and Chief Executive Officer, Information Services Corporation Sixty-three percent, Michael. Michael Urlocker – Analyst, GMP Securities Okay, so that’s really quite substantial, and it’s new in Ontario; you must have some view that this company will continue to be successful as the product gets rolled out elsewhere, correct? Jeff Stusek – President and Chief Executive Officer, Information Services Corporation That would be the intent, yes. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 9 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Michael Urlocker – Analyst, GMP Securities Yes, and maybe if you could describe how much effort or development or customization is required for a new province to roll out this product. Jeff Stusek – President and Chief Executive Officer, Information Services Corporation Well, thanks for the questions, Michael. It’s hard for us to gauge right now. The product—the service has been launched in Ontario, a soft launch. I think it really depends on how aggressive the organization wants to be to go after market share. You know, the technology is fairly stable and has been invested in. We plan to do some what would be considered normal upgrades to the software in the near term in the hundred to 2,000—$100 to $2,000 range, and then it really depends on sales force, et cetera, on how aggressive we want to be in the marketplace. Michael Urlocker – Analyst, GMP Securities Mm-hmm. Shawn B. Peters – Vice President, Finance & Technology and Chief Financial Officer, Information Services Corporation And Michael, it’s Shawn; if I can jump in on that as well? Michael Urlocker – Analyst, GMP Securities "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 10 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Sure. Shawn B. Peters – Vice President, Finance & Technology and Chief Financial Officer, Information Services Corporation A couple of comments. So as you noted, it’s well established in BC; it’s launched in Alberta. The use of conveyance software in Alberta is not as—it’s not mandatory, first of all, which it is in BC which is why there’s a smaller market share there, but it’s continuing to grow fairly well. It’s about—each province is different in the forms that they use and the processes that they use so it’s somewhere between anywhere—you know, two to six months of sort of ramp up time to launch into a new province, and so it’s in BC and Alberta. They recently spent the six months doing the integration and all the development for Ontario so that one’s already ready to go, and as Jeff mentioned, there’s a soft launch. Moving it to Saskatchewan will, you know, require sort of that same sort of two to six months to get all the forms and processes ready so that it’s ready to use in Saskatchewan. Michael Urlocker – Analyst, GMP Securities Okay. Thank you. That’s helpful. And, you know, from what I gather just on the Internet this afternoon, OneMove was, you know, in a prior incarnation a publicly traded company and there was I guess some kind of a takeover effort by the fellow who’s now CEO. At the time when it was publicly traded we could see that frankly it was a very small company doing about, you know, if I had to guess, a "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 11 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update million and half in its last year as public company, a million and a half in revenue and losing money. I recognize it’s a private asset but can you offer some sense as to whether the new management team did fix the financial performance of the company to achieve something, you know, hopefully profitable or closer to breakeven. Shawn B. Peters – Vice President, Finance & Technology and Chief Financial Officer, Information Services Corporation Yes, we can. So as you noted, the current CEO took it private back in 2013 and over the course of the balance of 2013 and into early 2014 they focused fairly aggressively on sales and marketing, and so really rebranded, established the name and then in early to mid-spring of 2014 here they did a restructure in terms of really looking hard at the costs of the business and eliminating costs that they didn’t need. And so that has actually turned the company profitable in the last quarter, so the last three to four months have all been profitable, and so, you know, that’s what we looked at as well as the changes that they had made and were they good. Michael Urlocker – Analyst, GMP Securities Okay, and then lastly, you know, I don’t deal with conveyance myself. I’m not a real estate lawyer. I think I understand it has to do with the transfer, the electronic transfer of title on property. Can you just describe why this is of interest to ISC or how it fits in strategically, please? "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 12 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Jeff Stusek – President and Chief Executive Officer, Information Services Corporation Shawn, I’ll answer that question if you don’t mind. We see how it fits strategically—this is really a strategic investment and we see it fitting—it really is complementary to what we do. Michael, we talk about the ecosystem of the registries and really complementing the competencies that we bring to the table around managing information, as well as that connection with this customer like the legal institutions, the law offices and the like, as well as this really deep-rooted understanding of the registries themselves. So, you know, growth for ISC that I’ve talked about in the past could involve replication, i.e. running some other jurisdictions’ registries, but it also can be helping the firms that are working with those registries and not having ISC themselves—ourselves running them. And so, it’s really a strategic investment for us, and gets some geographical footprint as well as diversification of revenue as well. Michael Urlocker – Analyst, GMP Securities Okay, excellent. Thanks very much. Jeff Stusek – President and Chief Executive Officer, Information Services Corporation Thank you, Michael. Shawn B. Peters – Vice President, Finance & Technology and Chief Financial Officer, Information Services Corporation "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 13 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. » FINAL TRANSCRIPT December 22, 2014 – 5:00 p.m. E.T. Information Services Corporation Corporate Update Thanks, Michael. Operator Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star, followed by one. There are no further questions at this time. Please proceed, Mr. Hackshaw. Jonathan Hackshaw – Director, Investor Relations & Corporate Communications, Information Services Corporation Thank you, Operator, and thank you all for joining us on the call today. We’d like to take this opportunity to wish you a very merry Christmas and a prosperous New Year, and we look forward to speaking with you again when we report our 2014 year-end earnings. Have a good evening. Operator Ladies and gentlemen, this concludes your conference call today. We thank you for participating and ask that you please disconnect your lines. "Though CNW Group has used commercially reasonable efforts to produce this transcript, it does not represent or warrant that this transcript is error-free. CNW Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or result from any use made of this transcript or any error contained therein." 14 « Bien que CNW Telbec ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. CNW Telbec ne peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à l’utilisation de ce texte ou toute erreur qu’il contiendrait. »