Morning, ladies and gentlemen, and welcome to the ISC Fourth Quarter 2018 Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. I would now like to introduce your host for the conference today, Mr. Jonathan Hackshaw, Director, Investor Relations and Capital Markets.
Sir, you may begin.
Thank you, Bridget, and good morning, ladies and gentlemen. Welcome to ISC's call for the year ended December 31, 2018. With me today are Jeff Stusick, President and CEO and Sean Peters, Executive Vice President and Chief Financial Officer. Jeff will provide some opening comments followed by a review of operational and financial results for the year ended December 31, 2018 by Sean. Jeff will then make some closing remarks before we open up the call for our question and answer session.
Before we begin, we would like to remind everyone that we will only be summarizing results today. ISC's audited consolidated financial statements and management's discussion and analysis for the period ended December 31, 2018, have been filed on SEDAR and are also available on the Investors section of our website under Financial Reports. We encourage you to review those reports in their entirety. 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. The statements may involve a number of risks and uncertainties that are described in detail in the company's SEDAR filings, in particular in ISC's annual information form dated March 20, 2019 and ISC's audited consolidated financial statements and notes and management's discussion and analysis for the year ended December 31, 2018.
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. Today's conference call is being broadcast live over the Internet and will be archived for replay shortly after the call on the Investors section of our website. With that, I'd now like to hand the call over to Jeff.
Thank you, Jonathan. Good morning to everyone joining us for today's call. Overall, 2018 was a strong year for ISC. Revenue was up 27.3% year over year, and the company recorded $119,100,000 of revenue for the year compared to $93,600,000 in 2017. EBITDA was also up 19.5% year over year, coming in at $35,900,000 for 2018 compared to $30,000,000 in the prior period.
The primary driver of our growth in 2018 came from our services segment, largely through the acquisition of ABS Systems Incorporated at the end of 2017. With the integration of ABS now complete, we expect to continue to compete effectively in the Know Your Customer and Collateral Management Services space, while increasing our market share over the course of 2019. While our Registry Operations segment has felt the effects of the economy, notably increases in interest rates and the introduction of new mortgage rules, it yet again delivered solid results while generating strong free cash flow. At the start of 2018, we expanded our lines of business from 2 to 3 with the introduction of the Technology Solutions segment, which now complements our Registry Operations and Services segment. The diversification of our business over the last 3 years has allowed us to offset the economic impact to our Registry Operations segment and still deliver top and bottom line growth.
Turning to our Technology Solutions segment. 2018 was a successful year with a number of new business wins announced in the Q1 of 2018. As this segment's business model evolves, we expect to realize additional revenue from this segment in 2019 with a focus on profitability. With that, I'd like to now ask Sean to summarize our financial and operating performance for the year ended December 31, 2018.
Thank you, Jeff, and good morning, everyone. I'll provide you with some of the highlights of our full year on a consolidated basis and then provide some further commentary about each of our reporting segments and their performance for the reporting period. On a consolidated basis, revenue for the Q4 grew by 31.5% compared to the prior year to 31,000,000 dollars For the full year, revenue was up by 27.3 percent to $119,100,000 compared to $93,600,000 last year. Our services segment, following the acquisition of AVS Systems Inc. At the end of 2017, was the main driver of our revenue growth.
EBITDA, which is earnings before interest, taxes, depreciation and amortization expense, grew by 14.8 percent to $7,800,000 for the quarter, which resulted in an EBITDA margin of 33.2% compared to 32.2% in the Q4 of 2017. EBITDA for the full year was $30,000,000 compared to $29,500,000 in the same period last year, with an EBITDA margin of 32.1 percent compared to 33.4 percent for 2017. Adjusted EBITDA for the 4th quarter was 7,500,000 dollars compared to $7,800,000 in the same quarter last year, with an EBITDA margin of 24.3% compared to 33.2% last year. Our EBITDA margin was down as expected as a result of the lower margin profile of our collateral management product line following the acquisition of ABS. For the full year, EBITDA was $35,900,000 compared to $30,000,000 in 20.17, an increase of 19.5 percent, while our EBITDA margin was 30.1% compared to 32.1% in 2017, again as expected following the acquisition of ABS.
Our net income for the quarter was 3,200,000 or $0.18 per basic and diluted share, a decrease of $15,600,000 compared to the Q4 of 2017 when net income was $18,800,000 or $1.07 per basic and diluted share. Net income for 2018 was $18,700,000 or $1.07 per basic and $1.06 per diluted share compared to net income of 27,800,000 dollars or $1.59 per basic and $1.58 per diluted share in 2017. For both the Q4 and full year, there was a decrease year over year in net income because of our gain on the sale of our ownership interest in Dyer and Durham Corporation in the Q4 of 2017. Free cash flow for the quarter was $5,400,000 compared to $2,800,000 in Q4 of 2017. And for the year ended December 31, 2018, free cash flow was $25,200,000 compared to $22,900,000 in 20 17, up 9.7%.
On November 6, 2018, we entered into an amended and restated credit agreement and now have up to $80,000,000 in credit available under our new facilities. During the Q4, we also finalized a new 5 year service agreement with our information technology service provider. Finalizing this agreement provides stability to our operations, while updated terms provide us with more flexibility in information technology cost management. In our registry operations segment, revenue was $70,300,000 for the year, a decrease of 6.2% compared to 2017. Revenue for the land registry decreased 8.7 percent to $50,000,000 for the year due to a slower real estate market in Saskatchewan.
The volume of regular land transfers, mortgage registrations and title searches declined by 4.9%, 10.7% and 7.5%, respectively, compared to 2017. As we mentioned throughout 2018, new mortgage qualification guidelines introduced in January 2018, along with increases in interest rates since July of 2017, have impacted volume and revenue in 2018. We anticipate these factors will continue to influence the property market in the near term, particularly if further increases to interest rates occur in 2019. High value property registration revenue was also lower in 2018 when compared to a record revenue of $5,600,000 in 2017. Each high value registration generated revenue of $10,000 or more and revenue from these types of registrations was $3,900,000 for 2018, down by $1,700,000 versus 2017.
Revenue for the personal property registry was steady year over year at $10,200,000 compared to 2017. Registration revenue for this registry decreased by 3.7% in 2018 compared to 2017. This was offset by increased search and maintenance revenue in 2018, up 12.3% and 23.5%, respectively, as a result of pricing changes made to search transactions in July of 2018. Revenue for the corporate registry for the year was also steady at $10,000,000 compared to 2017. Registration, search and maintenance revenue in the corporate registry declined by 2.5%, 0.2% and 0.6%, respectively, compared to 2017.
This revenue decline was a product of lower transaction volumes. Registration, search and maintenance volume declined by 1.8%, 0.4% and 3.5%, respectively, as compared to 2017. More specifically, revenue from the filing of annual returns and renewals declined by 3.8% in 20 28 compared to 2017. Revenue from the incorporation and registration of new business entities dropped by 2.3% compared to 2017. Looking at the full year's results in our registry operations segment, the impact of economic conditions, including increases in interest rates and changes to the mortgage qualification rules are evident.
However, this line of business remains a strong free cash flow contributor and even under the challenging economic conditions has performed extremely well. Turning to our services segment, revenue for the year ended was $42,400,000 up 27,400,000 dollars compared to $14,900,000 in 2017. The increase in revenue year over year was a result of new revenue of $26,400,000 from our collateral management product line following the acquisition of AVS, along with organic growth within existing lines. In our legal support services, revenue increased through organic growth by 2.2% year over year to 8,800,000 Revenue from this area of our services segment consists of nationwide searches and registration services as well as corporate supplies provided to legal professionals. Our financial support services grew from $6,300,000 in 2017 to $33,600,000 in 2018 because of the addition of AVS, the onboarding and ramping up of new customers and organic growth.
Finally, the 1st full year of our newest segment, Technology Solutions, saw revenue of $21,200,000 for the year ended December 31, 2018, compared to $20,400,000 for the same period in 2017. As Jeff touched on, during the year, we announced the signing of solution delivery and implementation agreements with a number of jurisdictions. Revenue from external third parties increased year to date due to the achievement of initial contract milestones associated with agreements entered into during the year. This revenue is expected to continue to grow as the company achieves performance related milestones identified in the contracts. Internal related party revenue provided year to date decreased due to a reduction in our cost to provide the services as a result of the savings associated with the termination of our DXC Technology Company contract in 2017.
For the year ended December 31, 2018, our consolidated expenses were $96,700,000 an increase of 34.9 percent compared to $71,700,000 for the same period in 2017. A summary of our changes in our expenses is as follows. Our wages and salaries were 37,800,000 dollars up $5,000,000 for the year ended December 31, 2018, compared to the same period in 2017. The increase was due to annual wages and salary increases and standardization of salary and incentive programs across the business, additional wages and salaries in our Services segment following the acquisition of AVS in December 2017, and additional wages and salaries in our Technology Solutions segment following successful contract awards. Our cost of goods sold was $25,100,000 for the year ended 2018, an increase of $20,900,000 compared to 2017, due to the nature of our expanded collateral management product line in our Services segment, which has a higher cost of goods sold.
Depreciation and amortization costs were $9,900,000 for the year ended December 31, 2018, compared to $7,500,000 in the same period in 2017. The increase is due to increased amortization in our services segment related to the ABS acquisition in 2017, somewhat offset by lower depreciation in our registry operations segment due to certain assets being fully depreciated. Information Technology costs were 8,500,000 dollars down $2,400,000 compared to 2017. The decrease in 2018 reflects savings associated with the termination of our technology services contract with DXC and bringing those resources in house. Professional and consulting services decreased for the year ended December 30 1, 2018 to $4,800,000 compared to $6,300,000 in 2017.
The decrease was due to less costs incurred for acquisition and integration activities in 2018. I would note that during the Q4, we changed the presentation of project initiative expenses to reclassify them according to their nature. For more details on this, please refer to the table on Page 36 of our MD and A. We believe the revised presentation aligns with our operation of the business and provides more relevant information to readers. Capital expenditures for the year ended December 31, 2018 were $2,800,000 compared to $2,000,000 for the same period in 2017.
The increase was due to continued effort on system development work across our segments and a financial system upgrade in our corporate area. With respect to our debt, as at December 31, 2018, the company had $20,000,000 of total debt outstanding compared to $21,600,000 at December 31, 2017. As mentioned previously, during the year, we also amended our credit facility and entered into a new amended and restated credit agreement with the aggregate amount available under the facilities now being 80,000,000 dollars Further details on our debt and our credit facilities can be found in our MD and A and financial statements. From a liquidity perspective, as at December 31, 2018, we held $28,700,000 in cash compared to $31,300,000 as at December 31, 2017. As at December 31, 2018, working capital was 15,000,000 dollars compared to $18,300,000 at December 31, 2017.
The decrease in working capital is a result of the contingent liability related to our ERS subsidiary moving from a non current to a current liability and due to increased contract liabilities within our Technology Services segment. Consolidated free cash flow for the year ended December 31, 2018 was $25,200,000 compared to 22,900,000
dollars for the
same period in 2017. The increase in 2018 was due to changes in working capital, driven by increased receivables as a result of the higher sales, higher taxes due to increased results and the full consumption of our loss carryforward pool and new contract assets related to our Technology Solutions segment. Finally, we also announced yesterday that our Board of Directors approved our quarterly cash dividend of $0.20 per share. The dividend will be payable on or before April 15, 2019, to shareholders of record as of March 31, 2019. I'll now turn the call back over to Jeff for some concluding remarks.
Thanks, Sean. Before we move to the Q and A session, I'd like to share a few thoughts with you about our outlook for 2019. We anticipate consolidated revenue growth to be driven by our Services segment through the continuing expansion of our collateral management product line, including further automation of the fulfillment of these services, thereby reducing our cost of delivery. Our registry operations segment is expected to remain a strong free cash flow contributor and a direct beneficiary of any future upswing in economic conditions in Saskatchewan. We will continue to monitor the economic conditions while always looking for greater operational efficiencies.
Should there be further increases to interest rates in 2019, this could place further downward pressure on transaction volumes. In Technology Solutions, as projects for contracts the company signed in 2018 continue to move into the implementation phase in 2019, ISC expects to begin to recognize increased revenue from those contracts. The key driver of expenses will continue to be wages and salaries, cost of goods sold and information technology costs as well as costs associated with the pursuit of new business opportunities. We also expect to spend between $2,000,000 $4,000,000 on business as usual capital expenditures. Taking the preceding outlook from 2019 into account, I'd like to reiterate our guidance issued in early February, where we expect revenue of between $129,000,000 $135,000,000 EBITDA between $31,000,000 $35,000,000 and an EBITDA margin of between 24% 27% in 2019.
To conclude, our focus remains on ensuring the stability of our business while strategies for growth, including accretive acquisitions. With that, I'll hand it back to Jonathan.
Thanks, Jeff. Bridget will now like to begin the question
Our first question comes from the line of Varun Choyo with CIBC. Your line is open.
Hello. Good morning, gentlemen.
Good morning. Good morning, Varun.
Hi. So just a couple of questions here. Can you talk about like the sort of the pipeline of opportunity in your services division? Do you see more of it on the KYC side or on the collateral management side of the business?
Good question Varun, this is Jeff. I wouldn't quantify it as more or less. I think those opportunities, they're both in our wheelhouse. I wouldn't say it's an even split either, but not one over the other. I think the acquisition that we announced of Securefax in the last quarter, The addition of that in our services business will certainly enhance our Know Your Customer business for sure, and that was the primary objective, strategic objective of that acquisition.
Okay. And terms of like winning new businesses under the services umbrella, like how long does it take when you start talking to customers before they actually sign on to your solution?
Yes. I think it's very customer dependent, Varun. It can be very quick, a matter of days, and it can take a while depending on the relationship that they have with our competitors. And so it really depends. And so it depends on the magnitude and the volume of work they have and the relationship or where they are at from a sort of contractual basis.
So it's hard to predict, but we are very active in growing that business organically sort of a customer at a time.
Okay. And I guess turning on to this technology solutions business. In your prepared remarks, you mentioned that you expect additional revenue realization as you work reach milestones in these contracts. What's like sort of like the duration of these implementation contracts in your Technology Solutions business?
Yes, Varun, it's Sean. Most of the implementation contracts range between 12 18 months.
Okay. And what's the pipeline in that business? Like how is that looking?
Back to Jeff here. We have a really strong product in the RegSys product and we have a strong name and attached with ISC and our registry expertise. The wins that we announced in 2018 are a reflection of the sort of customer interest that's out there. We're really focused in 2019 to deliver on the products that we are the contracts that we announced in 2018. But that isn't stopping us from trying to continue to fill the funnel and talk to customers.
And our response from our potential customers continues to be positive as well. So I obviously can't speak specifically about the size and the types of opportunities, but we're confident in the business and we like the business and the business model.
Okay. And I guess switching gears, like how do you view like the U. S. Pipeline? And I know you said that you have like a beachhead into the the U.
S. Opportunity. How is that shaping up since last couple of quarters?
Yes. Obviously, we haven't announced anything in the more recent quarters, not because of anything particular. It's they're specific those that the opportunities in the United States are very specific around specific state needs and our UCC product. And so we'll continue to work with the states and continue to work with them. And as opportunities emerge, they're typically public processes that we'll participate in.
And we're confident with our Ohio and Missouri implementation that they're good sort of customer reference points for us with other states.
Okay. And just one final one for me. In new service agreement with your technology provider, should we expect like how does that affect your like margins or annual your CapEx spend on your technology like because you mentioned it's more of an agile cost effective agreement for the next 5 years. Can you talk a bit about that?
Yes. It probably won't have a significant impact on our CapEx. Our CapEx is already fairly low as we've started to transition services to more cloud based services. We still have more to do in that regard, but we think our 2 $1,000,000 to $4,000,000 in CapEx is going to be required across the business anyways. So I don't think you'll see a significant change in that.
Okay, great. Thanks a lot. And I'll pass the line.
Thanks, Arun.
And our next question is from Stephen Mayne with GMP Securities. Your line is open.
Thank you. Good morning.
Good morning, Stephen.
Just a question on the revenue guidance. So the guidance is unchanged from the guidance release Feb 4. Given that you'll be adding some revenues from the Secure Factor acquisition, Is that implying some softness in other segments of the business?
Stephen, it's Sean. Not necessarily. As we talked about, we do think that there's still challenges with our the registry operations business in Saskatchewan and we expect that will continue. But the SecureFact acquisition, as Jeff outlined, is helping to position us even stronger in the KYC space. But it's a fairly new product.
It's a new product for us and we'll be spending time with customers getting them to know that product. And so at this point, we've not changed our guidance. We think the range is sort of large enough to allow for the addition of SecureFacts this year. And if that changes throughout the year, we'd certainly revise guidance.
Right. Okay. Thanks. And just on the guidance for the EBITDA margins, are you able to provide any for adjusted EBITDA margin for 2019?
Typically, so last year we did disclose that. Typically our adjusted EBITDA margins are within a couple of percentage points of our EBITDA margin, just depending on what activities happen throughout the year. But generally, they would be just a couple of points higher than the EBITDA margin guidance that we gave.
Thank you. And I'm not showing any further questions. I'll now turn the call back over to Jonathan Hackshaw for closing remarks.
Thank you, Bridget. With no further questions, I'd like to thank everyone for joining us again on today's call and we look forward to speaking with you again in our next reporting period. Have a good day.