Altus Group Income Fund
TSX : AIF.UN

Altus Group Income Fund

November 09, 2006 13:59 ET

Altus Group Income Fund Announces Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 9, 2006) - Altus Group Income Fund (TSX:AIF.UN) today announced its financial results (unaudited) for the third quarter ended September 30, 2006.

Q3 Performance Highlights:

- Grew revenue 20% over Q2 2006

- Generated distributable cash of $4.8 million

- Launched key IT initiatives to strengthen the Altus service offerings

"Altus has been a strong growth story, both organically and through acquisitions, since our IPO in 2005," said Gary Yeoman, CEO of Altus Group Income Fund. "After closing 4 acquisitions last quarter, our focus in the third quarter was the integration and streamlining of our systems and operations. As the provider with the broadest service offering in the professional real estate consulting industry, our knowledge, advice and expertise are being sought by a growing number of Canadian and international clients. The Fund and our unitholders have benefited from our leadership position and will continue to do so."

These third quarter results are the first since Altus' IPO in May 2005 for which comparative information from the prior year's quarter is available in full. Given the significant impact of acquisitions, comparisons reference the reported financial results, including acquisitions, and the financial results of Altus' three original service offerings (referred to as "Core Group" for purposes of discussing financial results) eliminating the impact of the acquisitions.

Revenue for the nine months ended September 30, 2006 was $66.4 million, up 41% overall and up 12% for the Core Group versus the same period in 2005. Revenue for the third quarter compared to last year's third quarter increased by 73% to $26.7 million and was up 12% for the Core Group. Revenue this quarter grew 20% from the second quarter of 2006, which reflects the impact of a full quarter with four acquisitions.

Salaries and benefits were $51.9 million for the nine months and $21.0 million for the third quarter, 72% higher than last year's third quarter, reflecting the growing staff, which now numbers 724. Other operating expenses were up 94% over the third quarter of 2005 as a result of the larger size of the Fund's operations. However, for Altus' Core Group, operating costs were 10% lower for the quarter versus last year and 28% lower than they were in the second quarter of 2006, reflecting the streamlining of operations that management is implementing throughout the organization.

EBITDA for the third quarter rose 58%, to $5.7 million, over the comparable period last year, and 16% over the second quarter of 2006, reflecting the full quarterly impact of the four acquisitions in the second quarter. Third quarter EBITDA for the Core Group increased 14% year-over-year and 4% from the second quarter of 2006. EBITDA was $14.4 million for nine months ended September 30, 2006. EBITDA represents revenue less salaries, benefits and general and administrative costs but before deductions for interest, taxes, depreciation and amortization.

Net earnings for the third quarter were $1.4 million, unchanged versus last year on a per unit basis at 13 cents per unit, both basic and diluted, Year-to-date, net earnings were $4.2 million, or 46 cents per unit, basic and diluted.

Altus generated distributable cash of $4.8 million in the third quarter, compared with $3.3 million one year ago, available to both the Fund's Units and the LP Class B exchangeable partnership units. Declared distributions were 30 cents per Unit for the quarter, for a payout ratio of 94.5%. For the first 9 months of this year distributable cash was $12.6 million and the Fund has distributed 87.9 cents per Unit.

During the quarter, Altus began to see the benefits from its investments in information technology. The Research, Valuation and Advisory business, for example, introduced a new sales database. This database represents one of the most complete sources of real estate market information available in Canada today, strengthening the firm's ability to deliver accurate valuations and reliable advisory services in a cost effective and timely manner.

The third quarter also saw the initial implementation of an enhanced Capital Expense Control (CEC) System for Altus' Cost Consulting practice. CEC enables property managers and owners to efficiently control and model capital expenditures by allowing them to monitor property conditions for buildings anywhere in Canada; benchmark capital and operating costs; and, access all reports and lease information for any building in a portfolio of properties.

Subsequent to the end of the quarter, the Federal Government announced proposed tax law changes that would affect income trusts. Altus management is reviewing the potential impact of these proposed changes, which would become effective in 2011. Management is confident that the inherent value of the real estate consulting business is not affected by the announcement. Altus will continue to execute its strategy of growing Canada's most complete professional real estate consultancy.

"For the remainder of 2006, our focus is integrating the four businesses which we acquired, and continuing to emphasize organic growth and synergistic cross-selling," said Gary Yeoman. "In 2007, management will continue to source potential strategic acquisitions, of both competitive and complementary businesses, to build on the Fund's leadership position in Canadian real estate advisory services."

Analyst Call Details

Altus Group Income Fund will hold an analyst conference call at 11:00 AM EST on November 10, 2006, to discuss these financial results and current industry conditions. Please dial 1-888-789-0150 or 416-695-6120 to access the call. You will be required to identify yourself and your organization. A recording of this call will be made available beginning at 1:00 PM EST. To access the recording, please call 1-888-509-0081 or 416-695-5275 (Passcode: 634209). The recording will also be available at www.altusgroupincomefund.com.

About Altus Group Income Fund

Altus Group Income Fund is the leading independent multidisciplinary provider of real estate consulting and advisory services in Canada. The company operates as: Altus Helyar Research, Valuation and Advisory; Altus InSite Market Information and Perspective; Altus Helyar Cost Consulting; Altus Derbyshire Realty Tax Consulting and All West Surveys Limited Partnership. Altus' clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords and participants in the oil and gas industry. The Fund's units trade on the Toronto Stock Exchange under the symbol AIF.un.

Non-GAAP Measures

The Fund uses non-GAAP measures that are generally used by Canadian open-ended income funds as indicators of financial performance. Readers are cautioned that they are not defined performance measures under GAAP and may differ from similar computations as reported by other similar entities and, accordingly, may not be comparable to distributable cash as reported by such entities. The Fund believes that these measures are useful supplemental measures that may assist investors in assessing an investment in units of the Fund ("Units"). Earnings Before Interest, Taxes, Depreciation and Amortization, ("EBITDA"), represents revenue less salaries, general administrative expenses but before interest, taxes, depreciation and amortization. Distributable Cash is defined as Cash from Operations adjusted for changes in non-cash operating capital, plus interest expense less amortization of financing costs to calculate EBITDA, less payments on account of interest, debt principal, capital expenditures and income taxes, and less contribution to any reserves that the Trustees of the Fund deem to be reasonable and necessary for the operation of the Fund. Payout Ratio is defined as the declared distributions to unitholders divided by distributable cash.

Forward-Looking Statements

Certain statements in this MD&A may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Fund and its subsidiary entities, including Altus Group Limited Partnership, Altus Group Limited and All West Surveys Limited Partnership, or the industry, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this MD&A, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Fund's publicly filed documents, including the Annual Information Form, Form 51-102F2, dated March 31, 2006 (which are available on SEDAR at www.sedar.com) and in this document under "Key Factors Affecting the Business". Those risks and uncertainties include: general state of the economy; dependence on residential market; dependence on oil & gas sector; risk of economic dependence; ability to maintain profitability and manage growth; possible acquisitions; reliance on and retention of professionals; competition; performance obligations and client satisfaction; fixed price and contingency engagements; revenue and cash flow volatility; seasonality and weather; collectibility of accounts receivable; possible future litigation; interest rate fluctuations; insurance limits; legislative and regulatory changes; operating risks; protection of intellectual property; appraisal mandates; restrictions on growth. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this MD&A. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A, and, except in accordance with applicable law, the Fund assumes no obligations to update or revise them to reflect new events or circumstances. Additionally, the Fund undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Fund, its financial or operating results, or its securities.

Contact Information

  • Altus Group Income Fund
    Gary Yeoman
    CEO
    (905) 953-9948
    or
    Altus Group Income Fund
    Dale Lawr
    CFO
    (905) 953-9948
    Website: www.altusgroupincomefund.com