IBI Group Inc.
TSX : IBG

IBI Group Inc.

May 10, 2017 16:00 ET

IBI Group Inc. Announces First Quarter 2017 Financial Results

- Q1 2017 revenue increased by 3.2% over Q1 2016 to $91.4 million.

- Adjusted EBITDA increased to $10.2 million (or 11.1% of revenue) in Q1 2017, a $1.0 million or 10.9% increase compared to Q1 2016.

- The Company is forecasting approximately $363 million in total revenue for the year ended December 31, 2017 and has approximately 9 months of backlog.

- Interest expense decreased to $2.7 million in Q1 2017 compared to $4.1 million for the same period in 2016.

TORONTO, ONTARIO--(Marketwired - May 10, 2017) - IBI Group Inc. (the "Company") (TSX:IBG) today announced financial results for the three months ended March 31, 2017.

OPERATIONAL HIGHLIGHTS

  • Revenue for the three months ended March 31, 2017 was $91.4 million compared to $88.6 million for the same period in 2016, which reflects an increase of $2.8 million or 3.2%.
  • Adjusted EBITDA increased to $10.2 million (or 11.1% of revenue) for the three months ended March 31, 2017 compared to $9.2 million (or 10.4% of revenue) for the same period in 2016, which reflects an increase of $1.0 million or 10.9% as a result of stronger operating performance.
  • Management is forecasting approximately $363 million in total revenue for the year ended December 31, 2017.
  • The Company currently has approximately 9 months of backlog.
  • Days sales outstanding remained unchanged at 80 days as at March 31, 2017 compared to December 31, 2016.
  • Cash flows provided by operating activities decreased to $2.2 million for the three months ended March 31, 2017 compared to $5.8 million for the same period in 2016, which reflects a decrease of $3.6 million or 62%.
  • The Company made the required deposit toward the Sinking Fund for $2.2 million during the three months ended March 31, 2017.
  • Interest expense decreased to $2.7 million for the three months ended March 31, 2017 compared to $4.1 million for the same period in 2016.

"The past several years has seen IBI undergo transformative changes; from the governance and leadership of the organization, to our financial standing and strengthened balance sheet, to the underlying business model of the company. I am pleased to say that IBI has achieved every milestone we set out 3 years ago with respect to our financial performance, financial leverage, and organization," said Scott Stewart, Chief Executive Officer, IBI Group Inc.

"Our adjusted EBITDA margins continue to compare favourably with industry averages," continued Mr. Stewart.

FINANCIAL HIGHLIGHTS

(in thousands of Canadian dollars except for per share amounts)

Three Months Ended
March 31,
2017
(unaudited)
2016
(unaudited)
Number of working days 63 62
Revenue $ 91,366 $ 88,645
Net income (loss) $ 3,918 $ (3,837 )
Cash flows provided by operating activities $ 2,198 $ 5,807
Basic and diluted earnings per share $ 0.10 $ (0.12 )
Adjusted EBITDA $ 10,160 $ 9,231
Adjusted EBITDA as a percentage of revenue 11.1 % 10.4 %

FINANCIAL OVERVIEW

Revenue for the three months ended March 31, 2017 was $91.4 million, an increase of $2.8 million or 3.2%, compared to the same period in 2016. The increase in revenue is due to growth in all geographical segments, including continuing work on significant transit projects.

For the three months ended March 31, 2017, the Company had net income of $3.9 million compared to a loss of $3.8 million for the same period in 2016. Net income for the three months ended March 31, 2017 is inclusive of foreign exchange gain of $0.1 million, compared to foreign exchange loss of $7.2 million which was included in net loss for the same period in 2016. The foreign exchange gain during the three months ended March 31, 2017 reflects the negative trend in the Canadian dollar currency, as the Canadian dollar weakened against the U.S. dollar and British pound compared to the same period in 2016.

Adjusted EBITDA for the three months ended March 31, 2017 increased to $10.2 million from $9.2 million for the same period in 2016. The increase of $1.0 million is a result of stronger operating performance.

Basic and diluted earnings per share was $0.10 per share for the three months ended March 31, 2017, compared to a basic and diluted loss per share of $0.12 for the same period in 2016.

OUTLOOK

Management is forecasting approximately $363 million in total revenue for the year ended December 31, 2017. The Company has approximately 9 months of backlog (calculated on the basis of the current pace of work that the Company has achieved during the 12 months ended March 31, 2017).

INVESTOR CONFERENCE CALL

The Company invites you to join their conference call on Thursday, May 11, 2017 at 8:30 a.m. EDT. To participate in the conference call, please dial toll-free 1-800-686-0149 for North America and 1-312-281-1206 for United States access.

A recording of the conference call will be available on our website within 24 hours following the call. As well, an audio replay of the call will be available for 14 days by dialing 1-800-633-8284 and entering pass code 21849361 followed by the number sign on your telephone keypad.

DEFINITION OF NON-IFRS MEASURES

Non-IFRS measures do not have a standardized meaning within IFRS and are therefore unlikely to be comparable to additional measures presented by other issuers. In commentary and tables within this document IFRS measures are presented along with non-IFRS measures. Where non-IFRS measures are used, there is a reconciliation to IFRS amounts provided. Any changes in the definition of non-IFRS are disclosed and quantified.

  1. ADJUSTED EBITDA

The Company believes that Adjusted EBITDA, defined below, is an important measure for investors to understand the Company's ability to generate cash to honour its obligations. Management of the Company believes that in addition to net income (loss), Adjusted EBITDA is a useful supplemental measure as it provides readers with an indication of cash available for debt service, capital expenditures, income taxes and dividends. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of the Company's performance or to cash flows from operating activities as a measure of liquidity and cash flows.

The Company defines Adjusted EBITDA in accordance with what is required in its lending agreements with its senior lenders.

References in this press release to Adjusted EBITDA are based on EBITDA adjusted for the following items:

  • Gain/loss arising from extraordinary, unusual or non-recurring items, such as debt extinguishments
  • Acquisition costs and deferred consideration revenue (i.e. restructuring costs, integration costs, compensation expenses, transaction fees and expenses)
  • Non-cash expenses (i.e. grant of stock options, restricted share units or Capital stock to employees as compensation)
  • Gain/Loss realized upon the disposal of capital property
  • Gain/loss on foreign exchange translation
  • Gain/loss on purchase or redemption of securities issued by that person or any subsidiary
  • Gain/loss on fair valuation of financial instruments
  • Amounts attributable to minority equity investments
  • Interest income

Adjusted EBITDA is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS, and the Company's method of calculating Adjusted EBITDA may differ from the methods used by other similar entities. Accordingly, Adjusted EBITDA may not be comparable to similar measures used by such entities.

  1. WORKING CAPITAL MEASURED IN NUMBER OF DAYS OF GROSS BILLINGS

Included in working capital of the Company are amounts reflecting project costs and sub-consultant expenses. The Company only reports its net fee volume as revenue, which would not include the billings for the recovery of these incurred costs. Therefore, to measure number of days outstanding of working capital, the gross billings, which include the billings for recovery of project expenses, would result in a more consistent calculation.

The information included is calculated based on working days on a twelve month trailing basis, measured as days outstanding on gross billings, which is estimated to be approximately 30% greater than net fee volume.

The Company believes that informing investors of its progress in managing its accounts receivable, work-in-process and deferred revenue is important for investors to anticipate cash flows from the business and to compare the Company with other businesses that operate in the same industry.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this news release 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 Company and its subsidiary entities, including IBI Group Partnership or the industry in which they operate, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward- looking statements involve a number of risks and uncertainties, including those related to: (i) the Company's ability to maintain profitability and manage its growth; (ii) the Company's reliance on its key professionals; (iii) competition in the industry in which the Company operates; (iv) timely completion by the Company of projects and performance by the Company of its obligations; (v) fixed-price contracts; (vi) the general state of the economy; (vii) risk of future legal proceedings against the Company; (viii) the international operations of the Company; (ix) reduction in the Company's backlog; (x) fluctuations in interest rates; (xi) fluctuations in currency exchange rates; (xii) upfront risk of time invested in participating in consortia bidding on large projects and projects being contracted through private finance initiatives; (xiii) limits under the Company's insurance policies; (xiv) the Company's reliance on distributions from its subsidiary entities and, as a result, its susceptibility to fluctuations in their performance; (xv) unpredictability and volatility in the price of Shares; (xvi) the degree to which the Company is leveraged and the effect of the restrictive and financial covenants in the Company's credit facilities; (xvii) the possibility that the Company may issue additional Common Shares diluting existing Shareholders' interests; (xviii) income tax matters.
These risk factors are discussed in detail under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2016. New risk factors may arise from time to time and it is not possible for management of the Company to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance or achievements of the Company to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Although the forward- looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as at May 9, 2017.

The factors used to develop revenue forecast in this news release include the total amount of work the Company has signed an agreement with its clients to complete, the timeline in which that work will be completed based on the current pace of work the Company achieved over the last 12 months and expects to achieve over the next 12 months. The Company updates these assumptions at each reporting period and adjusts its forward looking information as necessary.

ABOUT IBI GROUP INC.

IBI Group Inc. (TSX:IBG) is a globally integrated architecture, planning, engineering, and technology firm with over 2,500 professionals around the world. For more than 40 years, its dedicated professionals have helped clients create livable, sustainable, and advanced urban environments. IBI Group believes that cities must be designed with intelligent systems, sustainable buildings, efficient infrastructure, and a human touch.

SOURCE: IBI Group Inc.

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