TORONTO, ON–(Marketwired – November 10, 2016) –
- Q3 2016 revenue increased by 5.2% over Q3 2015 to $88.2 million.
- Adjusted EBITDA increased to $10.2 million (or 11.6% of revenue) in Q3 2016, a $0.8 million or 8.5% increase compared to Q3 2015.
- The Company is reaffirming a forecast of $350 million in total revenue for the year ended December 31, 2016 and has approximately 8.8 months of backlog.
- Days sales outstanding decreased by 12 days compared to Q3 2015.
IBI Group Inc. (the “Company”) (TSX: IBG) today announced financial results for the three months ended September 30, 2016.
OPERATIONAL HIGHLIGHTS
- Revenue for the three months ended September 30, 2016 was $88.2 million compared to $83.8 million for the same period in 2015, which reflects an increase of $4.4 million or 5.2%.
- Adjusted EBITDA was $10.2 million (or 11.6% of revenue) for the three months ended September 30, 2016 compared to $9.4 million (or 11.3% of revenue) for the same period in 2015, which reflects an increase of $0.8 million or 8.5% as a result of stronger operating performance.
- Reaffirming a forecast of $350 million in total revenue for the year ended December 31, 2016.
- The Company currently has $415 million of work that is committed and under contract for the three years 2016 through 2018 and approximately 8.8 months of backlog.
- The days sales outstanding as at September 30, 2016 has decreased by 12 days compared to September 30, 2015 and from 85 days to 82 days since December 31, 2015.
- The Company issued 5.5% convertible unsecured subordinated debentures (principal $46 million, maturing on December 31, 2021). Subsequent to the quarter-end, net proceeds of $43.8 million upon issuance were used to fund the partial redemption of the 6.0% convertible debentures due June 30, 2018.
- During the quarter the company announced its intention to redeem $31.2 million of 7% convertible debentures which mature June 30, 2019 by issuing common shares. On October 31, 2016 the company completed this transaction by issuing 6,220,076 common shares.
- The Company made the required deposit toward the Sinking Fund for $3.25 million during the three months ended September 30, 2016. The total balance available for future debt payments is $11.75 million.
“We are pleased with the sustained and consistent strength we are seeing in our business. We currently have approximately $415 million of work that is committed and under contract through 2018 and our adjusted EBITDA margins continue to compare favourably with industry averages,” said Scott Stewart, Chief Executive Officer, IBI Group Inc. “Our sustained financial and operational performance enabled IBI to enhance our capital structure through the redemption of some of our outstanding debentures, funded through both through the issuance of common shares and by issuing new debentures that bear a lower interest rate,” continued Mr. Stewart.
FINANCIAL HIGHLIGHTS
(in thousands of Canadian dollars except for per share amounts)
| Three Months Ended September 30, 2016 (unaudited) | Three Months Ended September 30, 2015 (unaudited) | Nine Months Ended September 30, 2016 (unaudited) | Nine Months Ended September 30, 2015 (unaudited) | |||||||||
| Number of working days | 63 | 63 | 189 | 188 | ||||||||
| Revenue | $ | 88,211 | $ | 83,819 | $ | 267,299 | $ | 242,179 | ||||
| Net income / (loss) | $ | (4,728) | $ | 4,815 | $ | (4,101) | $ | 8,934 | ||||
| Cash flows provided by operating activities | $ | 13,895 | $ | 11,626 | $ | 13,601 | $ | 16,580 | ||||
| Basic and diluted earnings per share | $ | (0.15) | $ | 0.21 | $ | (0.13) | $ | 0.39 | ||||
| Adjusted EBITDA1 | $ | 10,220 | $ | 9,456 | $ | 31,767 | $ | 26,108 | ||||
| Adjusted EBITDA1 as a percentage of revenue | 11.6% | 11.3% | 11.9% | 10.8 | ||||||||
1See “Definition of Non-IFRS Measures” defined in MD&A
FINANCIAL OVERVIEW
Revenue for the three months ended September 30, 2016 was $88.2 million, an increase of $4.4 million or 5.2%, compared to the same period in 2015. The increase in revenue is due to growth in the United States and International operations, including continuing work on significant transit projects, which has been offset by reduced revenue from the UK caused by the decrease in value of the British pound.
For the three months ended September 30, 2016, the Company had a net loss of $4.7 million compared to net income of $4.8 million for the same period in 2015. Net loss for the three months ended September 30, 2016 is inclusive of accretion expense of $11.7 million, compared to $1.5 million accretion expense which was included in net income for same period in 2015. This increased accretion expense is the result of the Company’s decision to partially redeem $43.8 million of the 6.0% convertible debentures and $31.2 million of the 7.0% 2019 convertible debentures. At the original issuance of the convertible debentures, the debt component was recorded at the fair value of the debt instrument with the residual recorded as the value of the conversion option in equity. As a result of redeeming these convertible debentures prior to maturity, the Company recorded accelerated accretion expense, which represents the difference between the carrying value in the financial statements and the face value of the convertible debentures.
Adjusted EBITDA for the three months ended September 30, 2016 increased to $10.2 million from $9.4 million for the same period in 2015. The increase of $0.8 million is a result of stronger operating performance from a decrease in operating expenses and an increase in revenue generated from all geographical operations. Adjusted EBITDA was $31.8 million (or 11.9% of revenue) for the nine months ended September 30, 2016 compared to $26.1 million (or 10.8% of revenue) for the same period in 2015, which reflect an increase of $5.7 million or 21.8%.
Basic and diluted loss per share was $0.15 per share for the three months ended September 30, 2016, compared to earnings per share of $0.21 for the same period in 2015.
OUTLOOK
Management is forecasting approximately $350 million in total revenue for the year ended December 31, 2016. The Company currently has approximately $415 million of work that is committed and under contract for the three years 2016 through 2018. This committed workload is a material factor and assumption used to develop revenue forecasts. The Company continues to see an increase in committed work to be delivered in 2016 and has approximately 8.8 months of backlog (calculated on the basis of the current pace of work that the Company has achieved during the 12 months ended September 30, 2016).
INVESTOR CONFERENCE CALL
The Company invites you to join their conference call on Friday, November 11th, 2016 at 8:30 a.m. EDT. To participate in the conference call, please dial toll-free 1-800-672-5134 for North America and 1-303-223-4382 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 1-800-558-5253 and entering pass code 21817099 followed by the number sign on your telephone keypad.
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, 2015. 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 November 10, 2016.
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.
FOR FURTHER INFORMATION:
Stephen Taylor, CFO
IBI Group Inc.
55 St. Clair Avenue West
Toronto, ON M4V 2Y7
Tel: 416-596-1930
Media:
Riyaz Lalani
Bayfield Strategy, Inc.
416-907-9365
rlalani@bayfieldstrategy.com