WSP Global Inc.

WSP Global Inc.

November 11, 2008 10:04 ET

GENIVAR Income Fund announces strong third quarter results

    MONTREAL, Nov. 11  - GENIVAR Income Fund (the "Fund")
announced today its financial and operating results (unaudited) for the third
quarter of 2008. These results cover the period from June 29, 2008, to
September 27, 2008.Highlights

    - For the third quarter of 2008, revenues were $104.7 million, up from
      $68.5 million for the same period in 2007, representing an increase of
      52.7%. Net revenues were $85.8 million, compared to $53.6 million, an
      increase of 60.1% from 2007 to 2008. Strong organic growth accounted
      for 22.4% of this increase in net revenues, the remaining 37.7%
      resulting from acquisitions.

    - Municipal infrastructure and transportation projects generated 49.9% of
      net revenues during the third quarter and 45.6% of net revenues for the
      nine-month period ending September 27, 2008.

    - Net earnings were $8.3 million for the third quarter, a 93.0% increase
      from the amount of $4.3 million achieved for the same period in 2007.

    - Earnings before non-controlling interest were $13.7 million or $0.64
      per unit on a diluted basis for the third quarter, up from the amount
      of $0.38 per unit on a diluted basis generated in the same quarter of
      2007. EBITDA increased 68.3% from $11.7 million in the third quarter of
      2007 to $19.7 million for the same period in 2008. For the nine-month
      period ending September 27, 2008, EBITDA stood at $49.0 million, up
      66.9% from $29.4 million for the same period in 2007.

    - Cash flows from operating activities generated $8.9 million of cash.
      For the third quarter of 2008, adjusted distributable cash totalled
      $16.1 million, of which $8.0 million were distributed to unitholders,
      representing an adjusted payout ratio of 49.8%. For the 2008 nine-month
      period, adjusted distributable cash totalled $39.1 million, of which
      $18.7 million were distributed to unitholders, representing an adjusted
      payout ratio of 47.8%.

    - Subsequent to quarter end, on October 2, 2008, the Fund completed an
      equity financing with success. The Fund raised $50.0 million through a
      public offering of 1 391 650 units for gross proceeds of $35.0 million
      and a private placement by the non-controlling unitholder of 596 421
      units for additional gross proceeds of $15.0 million.

    - During the third quarter, the Fund completed the acquisitions of
      Peterson Galloway, a British Columbia building engineering firm, Zenix
      Engineering, an Ontario building engineering firm, Solmers, a Quebec
      environmental engineering firm, and Henderson Paddon &
      Associates/Oweson, an Ontario-based civil engineering and environmental
      consulting firm.

    - Subsequent to the end of the quarter, the Fund completed the
      acquisitions of two Quebec-based firms: Consultants GENIPLUS/Nageco, a
      68-year old municipal infrastructure, structural building and bridge
      firm, and Consumaj Estrie, a Sherbrooke-based environmental and
      municipal infrastructure firm.

    - As of September 27, 2008, backlog remained strong at $305.0 million."In spite of the current financial turbulence, the Fund remains committed
to the execution of its growth plan, said Pierre Shoiry, President and CEO of
the GENIVAR Income Fund. We have a healthy balance sheet, solid credit
facilities, and the pipeline for acquisitions is good," concluded Pierre
Shoiry.

    About GENIVAR

    GENIVAR is a leading Canadian engineering services firm providing private
and public sector clients with a comprehensive range of professional
consulting services through all execution phases of a project including
planning, design, construction and maintenance. The company's clients operate
in a wide variety of market segments, such as Building, Industrial and Power,
Municipal Infrastructure, Transportation and Environment. GENIVAR is one of
the largest engineering services firm in Canada with over 3,400 managers,
professionals, technicians and technologists and support staff in more than 80
offices in Canada and abroad. www.genivar.com.RESULTS OF OPERATIONS
    ---------------------
    ---------------------

                      -------------------------------------------------------
                                  3 months                    9 months
                      -------------------------------------------------------
                              2008          2007          2008          2007
                      -------------------------------------------------------
                           FOR THE       FOR THE       FOR THE       FOR THE
                            PERIOD        PERIOD        PERIOD        PERIOD
                              FROM          FROM          FROM          FROM
                           JUNE 29        JULY 1     JANUARY 1     JANUARY 1
    IN THOUSANDS OF             TO            TO            TO            TO
     DOLLARS EXCEPT   SEPTEMBER 27  SEPTEMBER 30  SEPTEMBER 27  SEPTEMBER 30
     PER UNIT DATA      (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
    -------------------------------------------------------------------------
    Revenues             $ 104,650     $  68,543     $ 272,085     $ 186,677

    Deduct:
     Subconsultants
     and other direct
     expenses            $  18,836     $  14,941     $  45,254     $  38,048

    Net revenues         $  85,814     $  53,602     $ 226,831     $ 148,629

    Direct project
     costs               $  42,022     $  27,369     $ 112,633     $  76,742
    -------------------------------------------------------------------------
    Gross margin         $  43,792     $  26,233     $ 114,198     $  71,887

    Marketing, general,
     and administrative
     expenses and
     others              $  24,122     $  14,548     $  65,187     $  42,515
    -------------------------------------------------------------------------
    EBITDA               $  19,670     $  11,685     $  49,011     $  29,372
    -------------------------------------------------------------------------
    Interest             $     778     $     746     $   1,491     $   1,493

    Depreciation of
     property, plant,
     and equipment       $   1,171     $     693     $   3,058     $   1,969

    Amortization of
     intangible assets   $   3,818     $   2,667     $  11,041     $   7,626
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interest            $  13,903     $   7,579     $  33,421     $  18,284

    Income taxes         $     205     $     176     $   1,084     $   1,442
    -------------------------------------------------------------------------
    Earnings before
     non-controlling
     interest            $  13,698     $   7,403     $  32,337     $  16,842

    Non-controlling
     interest            $   5,373     $   3,059     $  12,748     $   7,223
    -------------------------------------------------------------------------
    Net earnings         $   8,325     $   4,344     $  19,589     $   9,619

    Basic net earnings
     per unit            $    0.65     $    0.38     $    1.52     $    0.87

    Weighted average
     number of units    12,870,030    11,305,396    12,870,350    11,100,382

    Diluted net
     earnings per unit   $    0.64     $    0.38     $    1.51     $    0.88

    Diluted weighted
     average number
     of units           21,352,768    19,347,454    21,353,568    19,066,964
    -------------------------------------------------------------------------


    DISTRIBUTABLE CASH
    ------------------
    ------------------

                      -------------------------------------------------------
                                  3 months                    9 months
                      -------------------------------------------------------
                              2008          2007          2008          2007
                      -------------------------------------------------------
                           FOR THE       FOR THE       FOR THE       FOR THE
                            PERIOD        PERIOD        PERIOD        PERIOD
                              FROM          FROM          FROM          FROM
                           JUNE 29        JULY 1     JANUARY 1     JANUARY 1
    IN THOUSANDS OF             TO            TO            TO            TO
     DOLLARS EXCEPT   SEPTEMBER 27  SEPTEMBER 30  SEPTEMBER 27  SEPTEMBER 30
     PER UNIT DATA      (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
    -------------------------------------------------------------------------
    Cash flows from      $   8,908     $   6,400     $  24,253     $  12,066
     operating
     activities

    Capital
     expenditures paid  ($   2,084)   ($   1,616)   ($   6,690)   ($   6,610)

    Standardized
     distributable
     cash(1)             $   6,824     $   4,784     $  17,563     $   5,456
    Change in non-cash
     working capital
     items(2)            $   9,254     $   4,523     $  21,555     $  15,672
    Capital expenditures
     paid for
     non-recurring
     items(3)                    -     $     268             -     $   2,431
    Purchase of units
     in the market under
     the long-term
     incentive plan              -             -             -    ($     825)

    Adjusted
     distributable
     cash(1)(4)          $  16,078     $   9,575     $  39,118     $  22,734

    Adjusted
     distributable
     cash, per
     unit(1)(4)          $    0.75     $    0.45     $    1.83     $    1.06

    Payout ratio
      Standardized           117.4%        103.1%        106.4%        263.8%
      Adjusted                49.8%         51.5%         47.8%         63.3%
    -------------------------------------------------------------------------
    Distributions

    Fund's units
     distributions       $   4,839     $   2,907     $  11,287     $   8,405

    Class B
     Non-subordinated
     Exchangeable
     LP Unit
     distributions       $   1,397     $     844     $   3,265     $   2,440

    Class C
     Subordinated
     Exchangeable
     LP Unit
     distributions       $   1,775     $   1,182     $   4,139     $   3,548

    Aggregate
     distributions,
     all units(4)        $   8,011     $   4,933     $  18,691     $  14,393

    Aggregate
     distributions,
     all units,
     per unit(4)         $    0.37     $    0.25     $    0.87     $    0.75
    -------------------------------------------------------------------------

    (1)  Calculation of the distributable cash included a withholding tax of
         $0.6 million for the three-month period and of $1.4 million for the
         nine-month period ended September 27, 2008.

    (2)  Distributions are based on actual historical and estimated future
         performance of the Fund on a full-year basis. Consequently, periodic
         fluctuations in non-cash working capital are not considered when
         evaluating the cash flows available for distribution.

    (3)  Non-recurring capital expenditures pertain to a construction project
         which had for objective to expand square footage of the main office
         in Quebec City.

    (4)  Distributable cash and distributable cash per unit amounts are
         calculated for the combined interest of the Fund's units and Non-
         subordinated Exchangeable Class B LP units and Subordinated
         Exchangeable Class C LP Units (for which Subordination End Date was
         June 30, 2008), which total 21,366,405 as at September 27, 2008
         (21,366,405 as at September 30, 2007). Number of units has not been
         adjusted to reflect units purchased in the market in connection with
         the long-term incentive plan since the distributions on these units
         continue to be declared and paid. As at November 10, 2008, the
         number of units is 23,354,476.NON-GAAP MEASURES

    The Fund uses non-GAAP measures that are used by Canadian open-ended
income funds as indicators of financial performance measures under GAAP and
may differ from similar computations as reported by other similar entities
and, accordingly, may not be comparable. The Fund believes these measures are
useful supplemental measures that may assist investors in assessing an
investment in units of the Fund.
    Non-GAAP measures used by the Fund are net revenues, EBITDA,
distributable cash, and payout ratio. These measures are defined below.

    Net revenues

    Net revenues are defined as revenues from consulting services less direct
costs for subconsultants and other direct expenses that are recoverable
directly from our clients. Net revenues are not a measure in accordance with
GAAP and do not have standardized meaning prescribed by GAAP. Therefore, net
revenues may not be comparable to similar measures presented by other issuers.
Investors are cautioned that net revenues should not be construed as an
alternative to revenues for the period (as determined in accordance with
GAAP), as an indicator of the Fund's performance.

    EBITDA

    EBITDA is defined as earnings before interest, tax, depreciation, and
amortization. EBITDA is not an earnings measure in accordance with GAAP and
does not have a standardized meaning prescribed by GAAP. Therefore, EBITDA may
not be comparable to similar measures presented by other issuers.

    Distributable cash

    Distributable cash is calculated in accordance with the recommendations
provided in CICA's publication "Standardized Distributable Cash in Income
Trusts and Other Flow-Through Entities." Standardized distributable cash is
defined as cash flows from operating activities as reported in the GAAP
financial statements, including the effects of changes in non-cash working
capital items and any operating cash flows provided from or used in
discontinued operations, less adjustments for:(a) total capital expenditures as reported in the GAAP financial
        statements; and
    (b) restrictions on distributions arising from compliance with financial
        covenants restrictive at the date of the calculation of standardized
        distributable cash and limitations arising from the existence of a
        minority interest in a subsidiary.The Fund also calculated an adjusted distributable cash, which is defined
as standardized distributable cash adjusted for entity-specific adjustment
items that management believes are appropriate for the determination of levels
of distributions.

    Payout ratio

    Standardized payout ratio is defined as aggregate cash distributions
divided by standardized distributable cash. Adjusted payout ratio is defined
as aggregate cash distributions divided by adjusted distributable cash.



Contact Information

  • Pierre Shoiry, President and Chief Executive
    Officer, GENIVAR Income Fund, (514) 340-0046, ext. 5104; Marlene Casciaro,
    Director of Communications, GENIVAR Income Fund, (514) 340-0046, ext. 5184