Good day, and thank you for standing by. Welcome to the ISC Quarter One 2025 earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star one one on your telephone, and then you will hear an automated message advising your hand is raised. To withdraw your question, please press Star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jonathan Hackshaw, Senior Director of Investor Relations and Capital Markets. Please go ahead.
Thank you, Briana, and good morning to everyone joining us today. Welcome to ISC's Conference Call for the quarter ended March 31, 2025. On the call today are Shawn Peters, President and CEO, and Bob Antochow, Chief Financial Officer. This morning, Shawn will take you through some of the highlights of the quarter. Bob will then provide some comments on our financial and operating performance for the quarter before passing the call back over to Sean for some closing remarks. Before we begin, we would like to remind everyone that we will only be summarizing results today. The company's financial statements and MD&A have been filed on SEDAR+ and are available on our website. We encourage you to review those reports in their entirety.
I would 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. 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 laws. Today's conference call is being broadcast live over the internet and will be archived for replay shortly after the call on the investor section of our website. I would now like to turn the call over to Shawn.
Thank you, Jonathan, and good morning to everyone joining us for today's call. I'm pleased to report that our overall performance for the first quarter of 2025 was in line with our expectations. Our registry operations, which is underpinned by the strength of the Saskatchewan Registries Division, surpassed our performance in the prior year period. The main driver was increased volumes across the Saskatchewan Registries, and in particular, the Saskatchewan Land Titles Registries, which saw both increased volumes and higher residential resale prices, demonstrating the resilience of the local economy, coupled with a high demand for residential real estate and low inventory levels in Saskatchewan's two major cities. In services, as you know, the sudden ban on NOSI by the government of Ontario in June of 2024 presented an unexpected challenge.
We've talked before that there's no direct replacement for the NOSI service in Ontario, but our team has been working diligently to grow organically through our other products and services. In particular, the countercyclical nature and higher margin attributes of our Recovery Solutions division continues to play a significant role in that growth. This has been further supported by Regulatory Solutions, where fee adjustments in KYC and due diligence offerings have helped balance softer activity in our Collateral Management Solutions Business. The end result was a solid performance compared to Q1 of 2024, especially when taking the loss of the NOSI business into consideration. Wrapping up with our Technology Solutions segment, progress in this business is encouraging with respectable increases in top and bottom line metrics compared to the same quarter in 2024.
Our focus remains on delivering double-digit growth from this segment, as indicated in our outlook provided at the beginning of the year. Before I turn the call over to Bob to discuss some of the financial highlights in more detail, I'd summarize the quarter as another strong performance. The diversification and resiliency of our business has proven in the past and will continue to demonstrate in the future strong results, even in more uncertain macroeconomic backdrops. By remaining focused on our operations, our customers, and our organic growth, we're confident in our ability to deliver meaningful value and strong, compelling returns. I'll now turn the call over to Bob.
Thank you, Shawn, and good morning, everyone. As Shawn mentioned, 2025 has begun in line with our expectations, delivering strong performance across the business. Overall results are tracking as anticipated, driven by several key factors that I will now walk you through. Revenue was CAD 59.3 million for the quarter, an increase of 5% compared to the first quarter of 2024. Growth was driven by increased volumes across the Saskatchewan Registries Division of Registry Operations, combined with annual CPI pricing increases and new bank acts security registry revenue. This was partially offset by a decrease in services revenue as a result of the government of Ontario's unexpected ban on NOSI in June 2024, counterbalanced by strong growth in the higher margin recovery solutions division.
Net income was CAD 7.5 million, or CAD 0.40 per basic share and diluted share for the quarter, compared to CAD 0.4 million, or CAD 0.02 per basic and diluted share in the first quarter of 2024. The increase was due to lower share-based compensation, strong adjusted EBITDA results, and lower net finance expense. These were partially offset by increased income tax expense. Net cash flow provided by operating activities was CAD 5.8 million for the quarter, a decrease of CAD 4.7 million from CAD 10.5 million in the first quarter of 2024. The decrease was due to strong operating results being offset by a decrease in cash from net changes in non-cash working capital, primarily due to timing differences on trade and other receivables and accounts payable and accrued liabilities.
Adjusted net income was CAD 11.4 million, or CAD 0.62 per basic share and CAD 0.61 per diluted share, compared to CAD 8.5 million, or CAD 0.47 per basic share and diluted share in the first quarter of 2024. The increase reflects strong operating results across all operating segments and lower net finance expense. Adjusted EBITDA was CAD 21.8 million for the quarter, compared to CAD 19.4 million in the first quarter of 2024. The increase was due to contributions from the registry operations and services segments, as discussed previously. Adjusted EBITDA margin was 36.7% compared to 34.5% in the first quarter of 2024. This growth was driven by the same reasons noted for adjusted EBITDA. Adjusted free cash flow for the quarter was CAD 15.2 million, compared to CAD 11.6 million in the first quarter of 2024, due to stronger results in our operating segments, in addition to lower net finance expense. Now turning to expenses.
Expenses were down by CAD 5.3 million for the quarter compared to the same quarter last year. The decrease is largely due to decreases in wages and salaries, depreciation amortization, and cost of goods sold because of lower revenue in the regulatory and corporate solutions divisions and services. Sustaining capital expenditures, including registry enhancement capital, was CAD 1.9 million for the quarter, consistent with the first quarter of 2024. After all this, as at March 31st, 2025, we held CAD 16.8 million in cash compared to CAD 21 million as at December 31st, 2024, which is a reflection of our deleveraging plan following voluntary prepayments of CAD 1 million that were made towards the company's credit facility during the quarter. As you know, this is part of the company's plan to deleverage towards a long-term net leverage target of 2-2.5 times.
Before I turn the call back over to Shawn, I'd like to finish by highlighting that we also announced yesterday that our board of directors approved a quarterly cash dividend of CAD 0.23 per share. That dividend will be payable on or before July 15th, 2025, to shareholders of record as of March 31st, 2025. I'll now turn the call back over to Shawn for some concluding remarks.
Thanks, Bob. With another strong quarter behind us, as we look ahead, our guidance for 2025 reflects our continued confidence in the business, while at the same time keeping a watchful eye on the current macroeconomic climate and related uncertainty. We're therefore reiterating our guidance and continue to expect revenue to be within a range of CAD 257 million-CAD 267 million, and adjusted EBITDA to be in a range of CAD 89 million-CAD 97 million. Keeping with our historical performance, we also expect to see robust free cash flow in 2025, which will support our continued deleveraging to realize that long-term leverage target of 2-2.5 times. Finally, we want to acknowledge and thank our many shareholders for their continued support. We don't take that for granted. We've had and continue to have meaningful dialogue with all stakeholders as we look forward to the future success of the company.
We sift through the noise and the distractions and are attentive to constructive and impactful ways to continue to improve the business and the returns to our shareholders. We focus on what we can control. We treat our customers well. We treat our people well. Just as importantly, we run the business well. I'm excited about the opportunities ahead, and I want to thank each of you for being on that journey with us. With that, I'll now hand the call back over to Jonathan.
Thanks, Shawn. Briana, we'd now like to begin the question and answer session, please.
Perfect. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press Star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Scott Fletcher of CIBC. Your line is now open.
Hi, good morning, and thanks for taking the question. Services margin is very strong in the quarter, and you mentioned commissions on vehicle sales in the recovery business for a contributor there. Do those commissions flow right through to the bottom line? Can you share any color on how much that would have contributed in the quarter?
Yeah. Hi, Scott. Yeah, they flow through right to the bottom line. As we've discussed, they trend higher than the average margin for the services business. We do not disclose the actual percentage there, but they are, as we've talked, they are the higher margin within the divisions of the services segment.
Okay. Thanks. Then sticking with services, the MD&A mentioned that the fee increases on the KYC and due diligence solutions helped offset some of the NOSI ban reduction. Were those normal course fee adjustments, or do you have some additional pricing power in that business there that you're taking advantage of?
Yeah, Scott, as we've sort of discussed before, we've got contracts with a number of customers, and as those contracts expire, we negotiate then fee increases as part of normal course of business. That is what we're seeing come into play for this quarter. Yeah.
All right. Thanks for taking the questions. Appreciate it.
Thanks, Scott.
Thank you. Our next question comes from Stephen Boland of Raymond James. Your line is now open.
I have to ask the awkward questions here. I mean, I know you said you just want to talk about the operations, but some of the comments from Planche will talk about the operations. You're not in a lawsuit here, so I'm kind of trying to figure out why you can't speak about or respond to some of the questions or the concerns that Planche always put out there and maybe some other shareholders at this point. Maybe you could just explain or even elaborate on some of the responses that you put out in the public. Here's your opportunity to kind of talk about this a little bit more.
Hi, Stephen. It's Shawn. Thanks for the question. I'll address that in a couple of ways. First of all, as you know, we talk to shareholders, potential shareholders, investors, analysts, even people where ISC just comes up on their screen all the time. In those conversations, we're always happy to entertain any comments or commentary or constructive comments that they might have on the business. This is no different. We sift through that, we look for things that are constructive and help, and we take those into account. I think to sort of state the obvious, if you're trying to cast shadow on a business, then you're going to try to take data and points and manipulate those into a way that suits the narrative. I think that's what you're seeing there.
We will respond the way we always do, which is we will run the business well. We will talk with our shareholders and address any comments or questions that they have and go from there. As far as the other public things, we have on record our public responses, and I think those stand on their own.
Okay. I know you're probably not going to ask or answer too much more, so I'll just leave it there. Thanks, guys.
Thanks, Stephen.
Thanks, Stephen.
Thank you. Our next question comes from Jesse Pytlak of Cormac Securities. Your line is now open.
Hey, good morning. Just with respect to the OBR-related attrition, was there some acceleration in that this quarter? Can you just maybe speak to how much longer you expect this to be a headwind?
We did, as you saw in our MD&A and our news release in the beginning of April, we did extend our contract with the OBR. As we go forward, we are adding new products, as we've mentioned before, to add value to those customers that are using our services. We've expanded the service offering in our systems to retain those customers, just providing more value-add to them. I don't know, Shawn, if you had anything to add there.
The only thing I'd add to that is that, I mean, it is going to be something that we'll probably talk about for a couple more quarters as that normalizes itself out. As Bob said, we're looking at ways to help counteract that revenue and look to add the new products and services. You'll probably hear us talk about it for a couple more quarters.
Okay. Maybe just moving over to working capital. I know, Bob, you touched on it briefly in your comments, but was there anything particularly unusual this quarter? Is there anything special about the first quarter that would contribute to such a big working capital build? As you think about the rest of the year, will there be further working capital investment, or will there be some release?
Yeah. The biggest part in that accounts payable, accounts liability change relates to our share-based compensation. Last year, at this time, we had a significant increase in the share price from December to March. This year, there was a decline with the share-based compensation items that are marked to market. That is the biggest component in there. Within accounts receivable was another big area of change. That relates as we complete contracts with customers, we are invoicing. What you are seeing there is an increase primarily related to the technology solutions business. On the share-based comp, it is a mark-to-market, so that is a non-cash mark-to-market. The accounts receivable is just as business operates, and we continue to progress on our business.
All right. Got it. Maybe just one last question. On the registry enhancement CapEx, can you just speak to maybe how far along you are in the process? When can this maybe start to tail off a little bit?
Yeah. Thanks for the question. I think we've always said that these projects are sort of 18-24-36 months. I think we'd be about sort of halfway through that now. Depending on, there's lots of factors that go into that because we are, of course, working with Saskatchewan as a jurisdiction and legislation and some of that. That's sort of a rough estimate of where we'd be.
Okay. That's helpful. That's all for me. I'll pass the line. Thank you.
Thanks, Jesse.
Thank you. One moment, please. Again, as a reminder to ask a question, you'll need to put Star one one on your telephone. I'm showing no further questions at this time. I would now like to turn it back to Jonathan Hackshaw for closing remarks.
Thanks very much, Briana. With that, we'd like to thank everybody for joining us on the call today, and we look forward to speaking with you again when we report our second quarter. Thanks very much, and have a great day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.