GENIVAR Income Fund Announces Second Quarter Results

MONTREAL, Aug. 10 /CNW Telbec/ - The GENIVAR Income Fund (the "Fund") announced today its financial and operating results (unaudited) for the second quarter of 2010. These results cover the period from April 4, 2010 to July 3, 2010.

    
    Highlights

    -   Revenues for the second quarter of 2010 increased by 20.0% to
        $144.1 million, up from $120.0 million for the same period in 2009.
        Net revenues were $118.8 million compared to $100.6 million,
        an increase of 18.1% from 2009 to 2010. Organic growth for the second
        quarter respectively accounted for 7.2% and 5.2% of the increase of
        revenues and net revenues, the remaining increase being generated by
        the acquisitions completed since the second quarter of 2009.

    -   Net earnings were $9.5 million or $0.52 per unit on a basic and
        diluted basis for the second quarter, a 23.2% increase from the
        amount of $7.7 million achieved for the same period in 2009.

    -   Earnings before non-controlling interest were $15.0 million for the
        second quarter of 2010. EBITDA increased by 14.9% from $19.5 million
        in the second quarter of 2009 to $22.4 million for the same period
        this year.

    -   For the second quarter of 2010, adjusted distributable cash totalled
        $19.6 million or $0.72 per unit, of which $10.2 million was
        distributed to unitholders, representing an adjusted payout ratio of
        52.1%.

    -   As at July 3, 2010, backlog stood at $398.6 million and represented
        8.3 months of upcoming work. Several new private sector mandates in
        the industrial, energy and buildings markets were awarded to the Fund
        in this second quarter while public sector work remained steady.

    -   The Fund added approximately 235 employees in the second quarter of
        2010 with 4 acquisitions; one of which Terrain Group Inc. provided
        GENIVAR with a platform of 5 offices in New Brunswick and Nova Scotia
        to grow its business in Atlantic Canada.

    -   On April 16, 2010, the Fund announced a plan of arrangement to
        convert from an Income Trust structure to a publicly-traded
        corporation on or about January 1, 2011. This plan of arrangement was
        approved by the unitholders of the Fund on May 27, 2010, as well as
        by the Superior Court of Quebec on June 14, 2010.
    

"The Fund continued to execute its consolidation strategy in Canada and we believe that the fundamentals of the consulting engineering industry in our country remain solid and that the outlook is positive in our market segments" said Pierre Shoiry, President and CEO of the Fund. "With the addition of Terrain Group Inc., we are now established in Atlantic Canada and in a position to serve our clients from coast to coast", he added. "First semester results for fiscal 2010 are robust which bode well for the full year", concluded Shoiry.

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

A conference call will be held on August 10, 2010 at 4:00 p.m. (Eastern Time) to discuss these results.

To participate in the conference call:

- Montreal region, dial 514-861-2909

- Canada and United States, dial 1-888-789-9572

Enter access code 7287206

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, 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

    
                         ----------------------------------------------------
                                   Second quarter             Year to date
                         ----------------------------------------------------
                                 2010         2009         2010         2009
                         ----------------------------------------------------
    IN THOUSANDS OF           FOR THE      FOR THE      FOR THE      FOR THE
     DOLLARS EXCEPT       PERIOD FROM  PERIOD FROM  PERIOD FROM  PERIOD FROM
     THE NUMBER OF            APRIL 4     MARCH 29    JANUARY 1    JANUARY 1
     UNITS AND PER          TO JULY 3   TO JUNE 27    TO JULY 3   TO JUNE 27
     UNIT DATA             (UNAUDITED)  (UNAUDITED)  (UNAUDITED)  (UNAUDITED)
    -------------------------------------------------------------------------
    Revenues                $ 144,109    $ 120,045    $ 270,070    $ 217,476

    Less: Subconsultants
     and other direct
     expenses                $ 25,295     $ 19,411     $ 43,444     $ 32,038

    Net revenues            $ 118,814    $ 100,634    $ 226,626    $ 185,438

    Direct project costs     $ 60,228     $ 50,212    $ 115,758     $ 92,606
    -------------------------------------------------------------------------
    Gross margin             $ 58,586     $ 50,422    $ 110,868     $ 92,832

    Marketing, general,
     and administrative
     expenses and others     $ 36,177     $ 30,915     $ 69,931     $ 56,600
    -------------------------------------------------------------------------
    EBITDA                   $ 22,409     $ 19,507     $ 40,937     $ 36,232
    -------------------------------------------------------------------------
    Interest                    $ 201        $ 567        $ 462        $ 886

    Depreciation of
     property, plant
     and equipment            $ 1,695      $ 1,571      $ 3,205      $ 2,969

    Amortization of
     intangible assets        $ 4,951      $ 3,961      $ 9,683      $ 8,104
    -------------------------------------------------------------------------
    Earnings before
     income taxes and
     non-controlling
     interest                $ 15,562     $ 13,408     $ 27,587     $ 24,273

    Income taxes                $ 548        $ 799      $ 1,547      $ 1,246
    -------------------------------------------------------------------------
    Earnings before
     non-controlling
     interest                $ 15,014     $ 12,609     $ 26,040     $ 23,027

    Non-controlling
     interest                 $ 5,557      $ 4,935      $ 9,234      $ 8,949
    -------------------------------------------------------------------------
    Net earnings              $ 9,457      $ 7,674     $ 16,806     $ 14,078

    Basic net earnings
     per unit                  $ 0.52       $ 0.54       $ 0.93       $ 0.99

    Weighted average
     number of units       18,103,589   14,276,730   18,103,589   14,276,900

    Diluted net earnings
     per unit                  $ 0.52       $ 0.54       $ 0.93       $ 0.99

    Diluted weighted
     average number
     of units              23,480,082   23,348,960   25,342,050   23,348,944
    -------------------------------------------------------------------------
    

DISTRIBUTABLE CASH

    
                         ----------------------------------------------------
                                   Second 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           APRIL 4     MARCH 29    JANUARY 1    JANUARY 1
     DOLLARS EXCEPT         TO JULY 3   TO JUNE 27    TO JULY 3   TO JUNE 27
     PER UNIT DATA         (UNAUDITED)  (UNAUDITED)  (UNAUDITED)  (UNAUDITED)
    -------------------------------------------------------------------------
    Cash flows from
     operating activities     $ 9,481        $ 991     $ 25,681     $ 14,041

    Capital expenditures
     paid                    ($ 2,864)    ($ 3,475)    ($ 7,314)    ($ 7,021)

    Standardized
     distributable cash       $ 6,617     ($ 2,484)    $ 18,367      $ 7,020

    Change in non-cash
     working capital
     items(1)                $ 12,396     $ 16,996     $ 13,598     $ 19,617

    Capital expenditures
     paid for UNISON
     project(2)                 $ 545            -      $ 1,617            -

    Adjusted
     distributable cash      $ 19,558     $ 14,512     $ 33,582     $ 26,637

    Adjusted
     distributable cash,
     per unit(3)               $ 0.72       $ 0.62       $ 1.24       $ 1.14

    Payout ratio

      Standardized              154.0%      (352.6%)      110.9%       249.5%

      Adjusted                   52.1%        60.4%        60.7%        65.8%
    -------------------------------------------------------------------------
    Distributions

    Fund's units
     distributions declared   $ 6,789      $ 5,360     $ 13,578     $ 10,720

    Class B Exchangeable
     LP Unit distributions
     declared                 $ 1,623      $ 1,623      $ 3,246      $ 3,246

    Class C Exchangeable
     LP Unit distributions
     declared                 $ 1,775      $ 1,775      $ 3,549      $ 3,550

    Distributions declared,
     all units               $ 10,187      $ 8,758     $ 20,373     $ 17,516

    Distributions declared,
     all units, per unit(4)    $ 0.38       $ 0.38       $ 0.75       $ 0.75
    -------------------------------------------------------------------------
    (1) 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.
    (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 weighted
        average 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 second 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 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.

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.

SOURCE GENIVAR Inc.

For further information: For further information: Pierre Shoiry, President and CEO, GENIVAR Income Fund, Tel.: 514-340-0046, ext. 5104; Marlene Casciaro, Director of Communications, GENIVAR Income Fund, Tel.: 514-340-0046, ext. 5184

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GENIVAR Inc.

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