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Press release from CNW Group

IBI announces highest quarterly revenue to date and enhanced 2011 second quarter earnings:

Friday, August 12, 2011

IBI announces highest quarterly revenue to date and enhanced 2011 second quarter earnings:17:00 EDT Friday, August 12, 2011Revenue at $82.3 million, the highest quarter of revenue to date; increase of $12.5 million +17.9%EBITDA1 at $12.7 million; increase of $2.9 million +29.6%Distributable Cash1 of $7.5 million; increase of $0.5 million + 7.1%Distributable Cash1 earned per share and unit of $0.4183 vs declared of $0.3231. Payout ratio of 77.3% and net income per share of $0.2607.TORONTO, Aug. 12, 2011 /CNW/ - IBI Group Inc  (the "Company") (TSX: IBG) today announced its financial results for three months ended June 30, 2011, reported now for the second time under International Financial Reporting Standards ("IFRS").Operating HighlightsThe second quarter of 2011 results demonstrated the continued firming of the operating results of IBI Group as compared to the second quarter of 2010 and the first quarter of 2011.  The results of the second quarter of 2011 and 2010 are based on 63 available working days, which is consistent with an average quarter, compared with 62 workings for the first quarter of 2011.  The one additional day to "normalize" the first quarter 2011 to an average quarter would have resulted in approximately $1.3 million of additional revenue in the first quarter of 2011.  The highlights are:Revenue at $82.3 million, the highest quarterly amount to date was $12.5 million above the second quarter of 2010, and up $4.5 million compared with the first quarter of 2011 ($3.2 million with first quarter of 2011 normalized).EBITDA1 of $12.7 million was $2.9 million above the second quarter of 2010, and up $2.0 million compared with the first quarter of 2011 ($0.7 million with first quarter of 2011 normalized).EBITDA1 as a percentage of revenue for the second quarter of 2011 was 15.4%, an increase of 1.4% to the second quarter of 2010 and up 1.6% when compared to the first quarter of 2011 at 13.8% (up 0.2% compared with first quarter of 2011 normalized).Distributable cash earned of $7.5 million was $0.5 million above second quarter of 2010, up $1.5 million when compared to first quarter of 2011 ($0.2 million with first quarter of 2011 normalized).Dividends and distributions paid were 77.3% of distributable cash earned1 compared to 101.6% for the second quarter of 2010 and 85.5% for the first quarter of 2011.Adjusted net earnings1 attributable to the Company of $3.4 million was $1.0 million higher than adjusted net earnings attributable to the Company for the second quarter of 2010 of $2.4 million, and up $0.7 million when compared to the $2.7 million previously reported 2010 second quarter results prepared under Pre-Changeover Accounting ("PCAS"), (prior to IFRS generally referred to as GAAP).The amount of working capital tied up in accounts receivable, work in process and deferred revenue measured in the equivalent numbers of working days increased to 177 days as at the end of the second quarter of 2011 from 167 days equivalent at end of first quarter of 2011. During the period of the recession, the working capital tied up rose from the equivalent of 180 working days in the fourth quarter of 2009 up to 195 days in second quarter of 2010. Significant progress has been made in reducing this working capital tied up with the reduction down to 175 days in fourth quarter of 2010, 167 days as at March 31, 2011. The increase of the equivalent of 10 days in the second quarter of 2011 is the result of the start of numerous new projects, including some large assignments. The increase in accounts receivable is primarily in current and recent accounts. The increase in work in progress largely arises from this increase in numerous new projects. Management continues to its commitment to strive to reduce the total working capital tied up measured in working days to 140 days.The basis of this firmer performance is discussed in paragraphs below._____________________________(1) See "Definition of Adjusted Net Earnings, EBITDA, Distributable Cash and Non-IFRS Measures"Revenue Activity Revenue for the second quarter of 2011 exceeded that of the first quarter of 2011, as well as the fourth quarter of 2010. Work is underway on a wide range of projects (approximately 5,500 active projects). Intensive efforts continue on major projects including the McGill Health Centre, Glasgow Southern General Hospital, Women's College Hospital in Toronto, and other health care facilities; highway tolling projects and traffic management projects worldwide; a large number of educational facilities; continued strength in housing developments in Canada and China; and some major transit and highway projects. In July, the Government of the State of Israel announced the selection by NTA, the Government Agency responsible for transit in the Tel Aviv Metropolitan Area of IBI Group as architectural and engineering designers for ten underground stations on the LRT Red Line.Organic growth in the second quarter of 2011 increased by $6.4 million (9.2%) as compared with the second quarter of 2010, and by $3.1 million (4.1%) as compared to the first quarter of 2011.  The percent of organic growth strongly exceeded the 2.5% to 5% IBI anticipated for 2011 as compared to 2010.  The increase in organic growth over a normalized first quarter 2011 to a 63 day average quarter would have been $1.9 million (2.4%).  IBI anticipates continued organic growth through 2011.Public sector work represented more than 69% of the $82.3 million of revenue in the second quarter.Strategic Program of Growth In June 2011, IBI Group concluded arrangements for the merger/acquisition with CRJA, Landscape Architects ("CRJA"), based in Boston, Massachusetts. CRJA will continue as a distinct entity within the IBI Group of Firms. CRJA has established a highly regarded recognised name in the practice of landscape architecture in the USA and worldwide, including numerous assignments at embassies of the Government of the USA throughout the world. The firm is known for its creative talent, technical expertise and consistency of professional services to its clients in realising successfully many landscape projects in educational campuses and building facilities in prestigious embassies, urban developments of mixed uses; and design of the public realm of streetscapes and public places of all kinds.  CRJA can now participate in projects of the IBI Group of Firms on this global basis, enhancing their reach in China and elsewhere and more effectively contribute in the USA through the network of IBI offices.In March 2011, IBI Group concluded arrangements for the merger/acquisition of Bay Architects Inc, ("Bay") in Southeast Texas, based in Houston.  Bay is an architectural firm that specializes in educational facilities, (schools and community colleges), along with other areas of architectural practice in civic, other institutional, retail, office and industrial facilities.  Bay-IBI is a further strategic component of the growing international practice of the IBI Group in education.  Bay-IBI will also provide the strategic platform for IBI Group for growth in the large and prosperous State of Texas.  New opportunities in transportation sector are now being pursued combining the transportation experience of IBI Group from California and elsewhere with the Texas presence of Bay-IBI.In January 2011, the merger of the practice of Cardinal Hardy Architectes, ("CHA") with Beinhaker Architects was completed. This practice continues as Cardinal Hardy Beinhaker Architects ("CHBA") affiliated with the IBI Group of firms.  In parallel, the merger of the Company Groupe Cardinal Hardy Inc. ("GCHI") directly within IBI Group was completed as well. CHBA is a full services architectural practice known for its outstanding design and technical work ranging from institutional projects in transportation, social infrastructure including building facilities in education and health, private development projects by leading developers in the Greater Montreal Region.  The firm is also expert with an outstanding portfolio of work in urban design and landscape architecture.  This merger and the ongoing integration is proceeding very effectively and has resulted in additional assignments secured from clientele of the previously separate firms.At the end of the fourth quarter of 2010, IBI Group completed the acquisition and merger of CSM Engineering Ltd. ("CSM"), based in Fort McMurray, Alberta.  CSM has been leading the civil engineering practice in the development of land and infrastructure in Fort McMurray, for over a decade. The acquisition is now enabling IBI Group and CSM to jointly continue the practice of civil engineering for land development and infrastructure in Fort McMurray and Northern Alberta.  The professional engineering team of CSM now being integrated within the IBI Group constitutes an experienced and broadly based professional team to serve the continuing community and infrastructure needs in Fort McMurray, arising from the continuing developments of the oil sands. CSM and IBI Group have collaborated on projects previously, and are doing work in joint venture currently for mutual clients.  The merger with IBI Group enables CSM to broaden and strengthen the talent and experience of CSM to undertake larger scale projects with more comprehensive services. It also opens broader horizons for the growth of the CSM professional team over the longer term within the IBI Group of Firms.During the second quarter of 2010, IBI Group completed the acquisition of Nightingale Architects Ltd ("Nightingale"). Nightingale is a leading architectural practice, specialising in facilities for health care and for education and science. The practice has been in existence for over twenty years and has grown steadily to its current complement of 230 members operating in six offices in the UK, as well as an office in South Africa.  Nightingale is a practice leader in social infrastructure in the UK, actively engaged in major building projects in that base of operation and other projects internationally including Eastern Europe, the Gulf, Australia and South Africa.  The firm is an architect of choice of public agencies, as well as private development proponents/construction contractors for the delivery of health care facilities through private finance initiatives, public private partnerships and design build.  These major private companies, operating in the UK, are also similarly engaged in other world markets affording Nightingale the opportunity to provide architectural services for these clients for projects elsewhere.  The integration of the executive team of Nightingale is a strategic advancement in relation to three basic objectives of IBI Group: building the world platform of IBI Group; becoming a leader in world scale projects in health care and other areas of social infrastructure, and strengthening the business of IBI Group.  In fact, as we approach the end of the first year of working together, joint efforts and business development initiatives targeting professional work opportunities have yielded results in new joint work of Nightingale within the IBI group of Firms.During the first quarter of 2010, IBI Group completed the acquisition of MAAK Technologies Inc. ("MAAK").  This firm's expertise in water engineering and systems applications extends IBI Group's work in systems technology to the important area of water resources.  It also broadens the IBI Group practice geographically with further strengthening in the Caribbean.IBI Group continues to be committed to growth in the USA. Discussions are under way with a number of USA based firms in connection with potential acquisitions.  These acquisitions could add further skills and strengthen IBI Group's presence in major centres of population in the six urban regions of the USA.  IBI Group expects additional acquisitions to be concluded during 2011.  As IBI Group has noted previously, the firms being acquired may not achieve the levels of profitability of which they are capable within the current economic environment in the USA.  While this may dampen EBITDA and distributable cash as a percentage of net fee revenue in the short term and is of concern to the IBI Group, the firm continues to believe this is a sound strategic investment program which will realise significant results within an improved economic environment, strengthened with the international reach of the IBI Group within the next few years.  In fact, IBI Group is currently experiencing an increase in demand for its services in the USA market notably in the automotive sector related to plant refurbishments for production changes and expansion.IBI Group is also engaged in discussions with other firms for strategic relationships and acquisitions in international markets where IBI Group is currently active including; China, India, Eastern Europe, Brazil and Mexico.Building the Global Practice of IBI The program of strategic growth outlined above is directed to achieve the basic objective of IBI Group; to build a Global Professional Practice in the planning, design and development of the physical components of urbanization throughout the world.  Urbanization is one of the main driving forces in the social and economic systems worldwide.  While there are cultural differences, much of the physical aspects in the formation of the cities; the transportation and other infrastructure, the buildings and the public spaces for the accommodation of human activity are subject to the same professional and technical substance.  Accordingly, the expanding knowledge and experience of IBI Group is transferrable throughout these world markets.  The IBI Group core areas of activity in Urban Land, Building Facilities, Transportation Infrastructure, and Intelligent Systems are the primary elements of the physical development of such urban areas. IBI Group is building this broad based expertise that can address urbanization in metropolitan areas throughout the world. The IBI Group model is to operate as one integrated global firm that can deliver that expertise through local communities.  Accordingly, IBI Group is growing in its diversity of professional skills and in establishing physical presence in local offices throughout the world.IBI Group will continue in this long term strategy through both organic and strategic growth.  IBI continued to pursue this strategy through the recession that started in late 2008. During this time IBI Group continued to build a platform of world leading expertise in the design of health care facilities and in education facilities and intelligent systems, all the while addressing the shrinking back in housing facilities in the USA and other markets.  IBI Group's long term strategy will be consistently pursued but with adjustments necessary from time to time, as was the case during this recent recession with respect to housing. IBI Group will continue to pursue work directly on behalf of the owners in what is commonly termed, "conventional" method, in which architects, engineers and other professionals are engaged directly for the owners.  (The owners then subsequently engage directly construction contractors and suppliers).  IBI Group will also continue to grow in the new methods of delivery in Design Build and Private Finance Initiative (PFI), and/or Public Private Partnerships (P3).  IBI Group's expanding relationships with world leading construction contractors and financiers of such work provides an alternate to delivery of facilities for public agencies who are lacking capital to invest in transport infrastructure and social infrastructure required for their societies.  This method has been effectively adopted in Canada, in Great Britain and other countries throughout the world.  IBI Group is well positioned to pursue this on a continuing basis where these methods are established, as well as to be one of the leaders in the markets that adapt these methods in other countries, as is anticipated will be the case in the USA.This Global Platform within one fully integrated firm, and with delivery of diversity of world experience in services, provides IBI Group the growth opportunities and dexterity to continue to succeed while facing the economic slowdowns and turmoil.Backlog Committed fee volume for the ensuing 12 months represents well over 9 months equivalent of work, based on the current pace of work that IBI Group has achieved during the first half of 2011 and over 9 months based on the greater pace that IBI Group anticipates for the second half of 2011. Backlog for Government and public institutional clients now represents more than 69% of total backlog.  Backlog is continuing to increase in building facility areas in health care, education, housing and now the industrial sector, in transportation terminals, transportation networks and intelligent systems.  IBI Group is increasingly receiving new mandates in the design stage of new private sector projects, as well as some of these now moving into design development and working drawings as projects proceed to sales.The scope of these efforts is validation of IBI Group's integrated operating model of providing comprehensive professional services to clients in Canada, the USA and in international markets resulting in the achievement of the highest quarterly revenue of the firm to date.IBI has grown in numbers of people reflecting the growth and revenue and now comprises some 2,764 members of the firm as compared to 2,547 as at June 30, 2010, appropriately sized for the backlog. With this growth in personnel and professional excellence, IBI increasingly is awarded leading professional and managerial roles for proponents and owners of development projects.  These include major projects in social infrastructure such as the McGill University Health Centre in Montreal; major transportation projects in transit facilities, as well as increasingly in the highway/road modes; the comprehensive provision of intelligent systems based on IBI software, integration of hardware, and the delivery of complete systems including ongoing operations; and now with a turn in certain private property markets, the leadership of major real property developments in Canada, Eastern Europe and Asia.  The progress of the firm in extending the excellence of its professional capability and the breadth and depth of resources provides an increasingly effective platform for IBI as a significant participant in the design of physical aspects of urbanization across the world with IBI's global experience complemented by IBI's established physical and operating presence in communities throughout the world.Subsequent Transactions: On July 29, 2011, the Company finalized its new 5 year $120 million credit facility with an $80 million accordion feature. This reflects the policy of the Company to use bank debt for operating purposes and for interim financing for acquisitions. Pursuant to this policy, the Company will replace bank debt with longer term debt at fixed interest rates including debt through bonds, convertible debentures and other instruments.The new facility has advantages to the Company including:Reduced interest cost;Greater flexibility in terms of guarantees and documentation required for non-material acquisitions;Reduced financial covenants;Reduced standby fee on the $120 million committed;Enhanced capacity for acquisitions, of an additional $80 million to a total of $200 million; andProviding for greater flexibility as the extended 5 year maturity date will extend past the December 31, 2014 due date of the $46 million convertible debentures.This new facility replaces the existing $150 million credit facility (the $10.0 million swing facility, the $80.0 million term facility and the $60.0 million revolver facility) which was to mature August 31, 2012.Investor Conference Call The Company will hold a conference call on Monday, August 15, 2011 at 8:30 a.m. Eastern Standard Time (EST). To participate in the conference call, please dial in before 8:30 a.m. EST to 800 659-2953 for local and toll-free North American access, or 1 416 359 3131 for international access.An audio replay of the call will be available for 14 days, by dialling 416-626-4100 for local and international access, or 1 800 558-5253 for toll-free North American access, passcode 21527992 followed by the number sign on your telephone keypad.Selected Consolidated Financial Information and Reconciliation of Non-IFRS Measures in thousands of dollars except for per Share and per Unit amounts and ratios    Three monthsended June 30,2011  Three monthsended June 30,2010  Six monthsended June 30,2011  Six Monthsended March 31,2010                  Revenue     $82,301  $69,790  $160,086  $137,865Expenses    69,632   60,021   136,669   118,654Earnings before income taxes, interest and amortization (EBITDA1)    12,669   9,769   23,417   19,211Interest    3,434   2,446   6,549   4,677 Change in fair value and other finance costs (income)    188   (8,407)   122     (45,780)Income taxes - current    1,548   1,209   3,200   1,559Income taxes - deferred    (263)   (333)   2,230   (682)Amortization of property and equipment and intangible assets    2,603   2,930   5,332   5,627Foreign exchange loss (gain)    66   (433)   284   (117)Acquisition-related costs    402   655   620   720Net earnings before non-controlling interest       $4,692  $11,702  $5,080  $53,207Non-controlling interest    1,310   -   1,418   -Net earnings attributable to owners of the Company (owners of the Fund in 2010)   $3,382  $11,702  $3,662  $53,207Distribution paid to Unitholders    -   5,130   -   10,241Distribution paid to exchangeable unitholders    -   2,040   -   4,050Change in fair value of trust units    -   (10,884)   -   (40,786)Change in fair value of exchangeable interest liability    -   (4,272)   -   (16,032)Change in fair value of derivative liability embedded inconvertible debentures    -   (400)   -   (3,078)One time non-cash tax on conversion to a corporation    -   -   3,131   -Proportion of earning attributable to Class B Partnership Units    -   (928)   (874)   (2,129)Adjusted Net Earnings1   $3,382  $2,388  $5,919  $5,473Basic net earnings per Share (units in 2010)2   $0.2607  $0.1862  $0.4571  $0.4276Distributable Cash1                         Cash flow from (used in) operating activities    (17,822)   5,611  $(14,817)   656Less: Capital expenditures    (607)   (865)   (1,197)   (1,325)Standardized Distributable Cash1    (18,429)   4,796  $(16,014)   (669)Add (deduct):                          Change in non-cash operating working    23,544   710   24,949   12,037  Deferred transaction costs    385   88   505   175  Acquisition-related costs    402   655   620   720  Current income tax expense    1,548   1,209   3,200   1,559  Exchange (gain) loss    66   (433)   284   (117)Distributable Cash1   $7,526  $7,025  $13,544  $13,705Weighted average basic distributable cash per Share(units in 2010)3    0.4183   0.3936   0.7535   0.7688Aggregate distributions declared   $5,814  $7,187  $10,723  $14,291Payout ratio    77.3%   101.6%   79.2%   104.0%(1) See "Definition of Adjusted Net Earnings, EBITDA, Distributable Cash and Non-IFRS Measures"(2)  Basic Adjusted Net Earnings per Share (Units in 2010) are calculated by including Common shares of the Company in 2011 and Units of Fund in 2010 which is a non-IFRS measure.(3)  Distributable cash per Share amounts (units in 2010) are calculated by including both the common shares of the Company and the Class B partnership units in the denominator in 2011 and the Units of the Fund and the Class B partnership units of the Fund in 2010 which is a non-IFRS measure.Definition of Adjusted Net Earnings, EBITDA, Distributable Cash and Non-IFRS Measures Adjusted Net Earnings is equal to the Net earnings for the period plus distributions treated as an expense and fair value adjustments on Trust Units and exchangeable interest liabilities.Distributable Cash does not have a standardized meaning prescribed by IFRS. The Company defines Distributable Cash as cash flow from operating activities before change in non-cash working capital and income taxes and after capital expenditures, income taxes paid, deferred transaction costs, acquisition-related costs and foreign exchange gains and losses.  A reconciliation of Distributable Cash to cash flow from operating activities has been provided in the MD&A under the heading "Selected Consolidated Financial Information and Reconciliation of Non-IFRS Measures".The Company's method of calculating distributable cash 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 Company believes that its distributable cash is a useful supplemental measure that may assist prospective investors in assessing the return on their investment in Units.References to "EBITDA" are to earnings before interest, income taxes, depreciation and amortization, deferred transaction costs, change in fair value of interest rate swap and acquisition-related cost. Management of the Company believes that in addition to net earnings, EBITDA is a useful supplemental measure as it provides readers with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. 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 EBITDA may differ from other issuers. Accordingly, EBITDA may not be comparable to similar measures used by other issuers. A reconciliation of net earnings with EBITDA has been provided in the MD&A under the heading "Selected Consolidated Financial Information and Reconciliation of Non-IFRS Measures". For further information: Tony Long IBI Group Inc. 230 Richmond Street West, 5th Floor Toronto, ON M5V 1V6 Tel: 416-596-1930