WSP Global Inc.

WSP Global Inc.

November 09, 2010 03:23 ET

Third quarter yields solid results for GENIVAR Income Fund

MONTREAL, Nov. 9 - The GENIVAR Income Fund (the "Fund") announced today its financial and operating results (unaudited) for the third quarter of 2010. These results cover the period from July 4, 2010 to October 2, 2010.

Highlights

- For the third quarter of 2010, revenues rose to $155.7 million, up from
      $125.4 million, representing an increase of 24.1%. Net revenues were
      $124.3 million, compared to $101.2 million, an increase of 22.8% from
      2009 to 2010. Organic growth accounted for 7.4% of the increase in net
      revenues, the remaining 15.4% resulting from acquisitions.

    - Net earnings were $11.1 million or $0.61 per unit on a basic and
      diluted basis for the third quarter, up from $8.8 million or $0.62 per
      unit on a basic and diluted basis achieved for the same period in 2009,
      representing an increase of 25.8%.

    - Earnings before non-controlling interest were $17.1 million, up from
      $14.4 million in 2009. EBITDA increased to $24.3 million in the third
      quarter of 2010 from $21.4 million for the same period in 2009.

    - For the third quarter of 2010, adjusted distributable cash totalled
      $22.5 million, of which $10.2 million were distributed to unitholders,
      representing an adjusted payout ratio of 45.3%.

    - During the third quarter, the Fund completed the acquisition of Pryde
      Schropp McComb Inc. ("PSMI"), an Ontario-based firm specializing in
      engineering, project management, planning and software solutions for
      the aviation industry. PSMI has a staff of over 40 employees based in
      offices in Ontario and Alberta and provides services to airports across
      Canada and internationally.

    - As at October 2, 2010, the backlog remained stable and reached
      $401.7 million, compared to $398.6 million at the end of the second
      quarter.

    - Subsequent to quarter-end, the Fund entered into new syndicated credit
      facilities, expanding the limit to its credit facilities from
      $82.0 million at the end of the second quarter to $225.0 million and
      extending the maturity date to 2013.

"We are pleased with the robust performance of the Fund over the last nine months. We achieved it through the commitment, passion and dedication of all of our employees," said Pierre Shoiry, President and CEO of the Fund. "As a result of our recent debt financing, our solid balance sheet coupled with a healthy target pipeline, we are confident that we have positioned the firm to pursue its global diversification and growth objectives."

Conference call
    ---------------

A conference call will be held on November 9, 2010 at 4:00 p.m. (Eastern Time) to discuss these results.

To participate in the conference call:

- Montreal region, dial 514-861-2255.
    - Canada and United States, dial 1-866-696-5910.

Enter access code 2122571.

About GENIVAR

GENIVAR is a leading Canadian engineering services firm providing private and public-sector clients with a comprehensive range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Ranging in size and scope, GENIVAR's clients primarily operate in the building, industrial and energy, municipal infrastructure, transportation and environmental sectors. GENIVAR is one of Canada's largest engineering services firms based on number of employees, with more than 4,500 managers, professionals, technicians and technologists and support staff in more than 85 locations in Canada and internationally.

www.genivar.com

RESULTS OF OPERATIONS

-------------------------------------------------------
                             Third quarter               Year to date
                      -------------------------------------------------------
                              2010          2009          2010          2009
                      -------------------------------------------------------
                           FOR THE       FOR THE       FOR THE       FOR THE
    IN THOUSANDS OF    PERIOD FROM   PERIOD FROM   PERIOD FROM   PERIOD FROM
     DOLLARS EXCEPT      JULY 4 TO    JUNE 28 TO  JANUARY 1 TO  JANUARY 1 TO
     NUMBER OF UNITS     OCTOBER 2  SEPTEMBER 26     OCTOBER 2  SEPTEMBER 26
     AND PER UNIT DATA  (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
    -------------------------------------------------------------------------
    Revenues             $ 155,655     $ 125,426     $ 425,725     $ 342,902

    Less:
     Subconsultants
     and other direct
     expenses             $ 31,385      $ 24,245      $ 74,829      $ 56,283

    Net revenues         $ 124,270     $ 101,181     $ 350,896     $ 286,619

    Direct project
     costs                $ 61,182      $ 49,127     $ 176,940     $ 141,733
    -------------------------------------------------------------------------
    Gross margin          $ 63,088      $ 52,054     $ 173,956     $ 144,866

    Marketing,
     general, and
     administrative
     expenses and
     others               $ 38,824      $ 30,669     $ 108,755      $ 87,269
    -------------------------------------------------------------------------
    EBITDA                $ 24,264      $ 21,385      $ 65,201      $ 57,617
    -------------------------------------------------------------------------
    Interest                 $ 325         $ 626         $ 787       $ 1,512

    Depreciation of
     property, plant
     and equipment         $ 1,730       $ 1,642       $ 4,935       $ 4,611

    Amortization of
     intangible assets     $ 5,102       $ 4,213      $ 14,785      $ 12,317
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interest             $ 17,107      $ 14,904      $ 44,694      $ 39,177

    Income taxes              $ 29         $ 479       $ 1,576       $ 1,725
    -------------------------------------------------------------------------
    Earnings before
     non-controlling
     interest             $ 17,078      $ 14,425      $ 43,118      $ 37,452

    Non-controlling
     interest              $ 5,978       $ 5,601      $ 15,212      $ 14,550
    -------------------------------------------------------------------------
    Net earnings          $ 11,100       $ 8,824      $ 27,906      $ 22,902

    Basic net earnings
     per unit               $ 0.61        $ 0.62        $ 1.54        $ 1.60

    Weighted average
     number of units    18,103,589    14,276,466    18,103,589    14,276,753

    Diluted weighted
     average of net
     earnings             $ 11,100      $ 14,439      $ 35,449      $ 37,473

    Diluted net
     earnings per unit      $ 0.61        $ 0.62        $ 1.54        $ 1.60

    Diluted weighted
     average number of
     units              18,103,589    23,351,903    22,946,778    23,352,088
    -------------------------------------------------------------------------

DISTRIBUTABLE CASH

-------------------------------------------------------
                             Third quarter               Year to date
                      -------------------------------------------------------
                              2010          2009          2010          2009
                      -------------------------------------------------------
                           FOR THE       FOR THE       FOR THE       FOR THE
                       PERIOD FROM   PERIOD FROM   PERIOD FROM   PERIOD FROM
    IN THOUSANDS OF      JULY 4 TO    JUNE 28 TO  JANUARY 1 TO  JANUARY 1 TO
     DOLLARS EXCEPT      OCTOBER 2  SEPTEMBER 26     OCTOBER 2  SEPTEMBER 26
     PER UNIT DATA      (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
    -------------------------------------------------------------------------
    Cash flows from
     operating
     activities              $ 134       $ 2,837      $ 25,815      $ 16,878

    Capital
     expenditures paid    ($ 1,571)     ($ 1,898)     ($ 8,885)     ($ 8,919)

    Standardized
     distributable
     cash                 ($ 1,437)        $ 939      $ 16,930       $ 7,959

    Change in non-cash
     working capital
     items(1)             $ 23,770      $ 17,235      $ 37,368      $ 36,852

    Capital
     expenditures
     paid for UNISON
     project(2)              $ 150             -       $ 1,767             -

    Adjusted
     distributable
     cash                 $ 22,483      $ 18,174      $ 56,065      $ 44,811

    Adjusted
     distributable
     cash, per unit(3)      $ 0.83        $ 0.78        $ 2.06        $ 1.92

    Payout ratio

      Standardized          (708.9%)       932.7%        180.5%       330.10%
      Adjusted                45.3%         48.2%         54.5%        58.60%
    -------------------------------------------------------------------------
    Distributions

    Fund's units
     distributions
     declared              $ 6,789       $ 5,361      $ 20,367      $ 16,081

    Class B
     Exchangeable LP
     Unit distributions
     declared              $ 1,624       $ 1,624       $ 4,870       $ 4,870

    Class C
     Exchangeable LP
     Unit distributions
     declared              $ 1,774       $ 1,773       $ 5,323       $ 5,323

    Distributions
     declared, all
     units                $ 10,187       $ 8,758      $ 30,560      $ 26,274

    Distributions
     declared, all
     units, per unit(4)     $ 0.38        $ 0.38        $ 1.13        $ 1.13
    -------------------------------------------------------------------------
    (1) Distributions are based on the 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.
    (2) The Fund is working towards the implementation of a new information
        management system called the UNISON project. Costs incurred for this
        project are non-recurrent and therefore are removed from the
        calculation of the Adjusted distributable cash.
    (3) Adjusted distributable cash per unit is calculated using the adjusted
        weighted average number of units, which represents the number of
        units receiving distributions.
    (4) Distributions declared per unit represent the monthly distributions
        declared. Distributions declared per unit, calculated using the
        adjusted weighted average number of units, were $0.38 per unit for
        the third quarter.

NON-GAAP MEASURES

The Fund uses Non-GAAP measures that are used by Canadian open-ended income funds as indicators of financial performance measures which are not recognized 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.

Non-GAAP measures used by the Fund are net revenues, EBITDA, distributable cash, adjusted weighted average number of units, ratio of funded debt to EBITDA and payout ratio.

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 the 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. Investors are cautioned that EBITDA should not be construed as an alternative to net earnings for the period (as determined in accordance with GAAP) as an indicator of the Fund's performance, or as an alternative to cash flows from operating, financing and investing activities as a measure of the Fund's liquidity and cash flows. The Fund's method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, the Fund's EBITDA may not be comparable to similar measures used by other issuers.

Distributable cash

The Fund views distributable cash as an operating performance measure and it is a non-GAAP measure generally used by Canadian income funds as an indicator of financial performance.

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.

Adjusted weighted average number of units

Adjusted weighted average number of units represents the weighted average number of unit receiving distributions.

Ratio of funded debt to EBITDA

Ratio of funded debt to EBITDA represents the consolidated aggregate of all interest bearing debt on consolidated EBITDA determined on the basis of the last four full completed quarters.

Payout ratio

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

Contact Information

  • Pierre Shoiry, President and CEO, GENIVAR Income Fund, Tel.: 514-340-0046, ext. 5104; Alexandre L'Heureux, Chief of Financial Operations, GENIVAR Income Fund, Tel.: 514-340-0046, ext. 5310