IBI announces highest quarterly revenue to date and enhanced 2011 third quarter earnings and increasing backlog:

  • Revenue at $84.3 million, the highest quarter of revenue to date; increase of $7.5 million +9.8% 
  • EBITDA1 at $12.9 million, highest quarterly EBITDA ever, increase of $1.3 million +11.2% and earnings per share of $0.2608
  • Distributable Cash1 of $8.3 million; increase of $0.5 million + 6.4%
  • Distributable Cash1 earned per share and unit of $0.4635 vs declared of $0.3229.  Payout ratio of 69.7%
  • Backlog has increased to equivalent level of work exceeding 9.5 months

TORONTO, Nov. 10, 2011 /CNW/ - IBI Group Inc (the "Company") (TSX: IBG) today announced its financial results for three months ended September 30, 2011, reported now for the third time under International Financial Reporting Standards ("IFRS").

Operating Highlights

The third quarter of 2011 results demonstrated the continued growth of the operating results of IBI Group as compared to the second quarter of 2011 and the third quarter of 2010.  The results of the third quarter of 2011 are based on 63 available working days which is consistent with an average quarter, compared with 63 workings for the third quarter of 2010, 63 working days for the second quarter of 2011 and 62 working days for the first quarter of 2011.  The highlights are:

  • Revenue at $84.3 million, the highest quarterly amount to date, was $7.5 million above the third quarter of 2010, up $2.0 million compared with the second quarter of 2011, and up $6.5 million compared with the first quarter of 2011 ($5.2 million with first quarter of 2011 "normalized" by one additional day to an average quarter of 63 days).
  • EBITDA1 of $12.9 million, highest quarterly EBITDA ever, was $1.3 million above the third quarter of 2010, up $0.2 million compared with the second quarter of 2011, and up $2.2 million compared with the first quarter of 2011 ($0.9 million with first quarter of 2011 normalized).
  • EBITDA1 as a percentage of revenue for the third quarter of 2011 was 15.3%, an increase of 0.1% to the third quarter of 2010, down 0.1% compared with the second quarter of 2011, and up 1.5% compared with the first quarter of 2011 (up 0.1% compared with first quarter of 2011 normalized).
  • Distributable cash1 of $8.3 million for the third quarter of 2011 compared with $7.8 million for the third quarter of 2010, an increase of $0.5 million. Distributable cash1 was up $0.8 million compared with the second quarter of 2011 and $2.3 million compared with the first quarter of 2011 ($1.0 million with first quarter of 2011 normalized).
  • Earnings per share ("EPS") for the third quarter of 2011 was $0.2608, compared with Adjusted Net Earnings1 per unit of $0.2677 for the third quarter of 2010, EPS of $0.2607 for the second quarter of 2011, and Adjusted Net Earnings1 per share of $0.2639 for the first quarter of 2011.
  • Progress had been made in reducing the working capital tied up from the peak of 195 days at the end of the second quarter 2010 down to 167 days at the end of the first quarter 2011. 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 186 days as at the end of the third quarter of 2011 from 177 days equivalent at the end of the second quarter 2011. The increase of the equivalent of 9 days in the third quarter of 2011 is the result of the start of numerous new projects, including large assignments, some of which have experienced delays (see "Major Projects"). July and August were poor months in performance of working capital tied up due to project delays and holidays.  September was a material improvement. October, which is part of the fourth quarter, was a further improvement.  At end of October, the number of equivalent working days reduced to 178.  The increase in accounts receivable is primarily in current and recent accounts. The increase in work in progress largely arises from an increase in numerous new projects. Management continues its commitment to strive to reduce the total working capital tied up measured in working days to 140 days.

Revenue Activity

Revenue for the third quarter of 2011 exceeded that of the second and 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 - Metropolitan Mass Transit System Ltd. (Tel Aviv), of IBI Group as the prime contractor for the design contract for the ten underground stations of the planned LRT Red Line.  The work on the contract was delayed some three months due to a legal challenge which has now been resolved and work is now underway.

Organic growth in the third quarter of 2011 is $3.5 million, (4.5%) as compared with the third quarter of 2010, and equivalent as to the second quarter of 2011.  The percent of organic growth total year over year was 5.4%, above the 2.5% to 5% that IBI Group had anticipated for 2011.

Public sector work represented approximately 69% of the $84.3 million of revenue in the third quarter.

Strategic Program of Growth

In September 2011, IBI Group concluded arrangements for the merger/acquisition with Dull Olson Weekes Architects, Inc., ("DOWA"), with the professional practice of the IBI Group of Firms. The DOWA practice will continue as a member of the IBI Group of Firms with the hyphenated name DOWA-IBI Group. DOWA has established an outstanding reputation providing professional architectural services.  The practice is known for its high quality of design, technical competence, as well as social consciousness in its approach to sustainability and other societal values.  Focus of the work of the firm has been in educational facilities in the State of Oregon, centered in Portland. In addition, other work in social infrastructure and health and community facilities has been successfully undertaken as well.  The work of the firm has been recognized with projects undertaken in the State of Washington, as well as elsewhere in the United States, including some international projects.  The merger of this practice within the IBI Group of Firms will complement the existing practice of IBI Group in Northwest U.S. which to date has been primarily based in the transportation infrastructure sectors including intelligent systems and functional planning and design of transportation/transit facilities.  This combination of social infrastructure along with transportation infrastructure is providing IBI Group with a strong, sustainable base across the United States as IBI Group succeeds in its plan of establishing national practices in these broad areas. 

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 Group 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 IBI Group in education.  Bay-IBI will also provide the strategic platform for IBI Group for growth in State of Texas. New opportunities in the 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 focused on strategic growth in Canada from the IPO in 2004 through to the third quarter of 2008.  During that period of time, IBI Group acquired numerous firms of outstanding quality bringing the Canadian practice to a national leader in the areas of IBI's professional expertise.  This focus on Canada first for strategic growth, enabled the acquisition of many firms in a short period of time as the greatest strength of IBI Group managerial and professional leadership was Canadian based.  It was also financially efficient as the public entity within the IBI Group Partnership was a business income trust.  Now that IBI Group has reached a leadership position professionally within the Canadian market, the strategic focus of acquisitions is outside Canada.  Notwithstanding the focus shifting to attractive areas for IBI Group's practice outside Canada, IBI Group continues to consider  acquisitions/strategic alliances  that will enhance the IBI Group professional leadership further within Canada, for example, CSM in Fort McMurray and Cardinal Hardy Architects now Cardinal Hardy Beinhaker Architectes in Quebec.

IBI Group continues to consider the economy of the United States of America, (USA) as a primary area of activity over the longer term.  The USA continues to be the largest economy in the world.  As noted in the second quarter report, IBI Group activity in industrial buildings, (the reawakened automotive industry), in education facilities, (charter schools, high schools, community colleges and university buildings), in intelligent systems; (traffic management, traveller information), and transportation including transportation oriented development, continued to be productive areas of IBI Group activity during the recession from late 2008 to present. IBI Group made acquisitions/strategic alliances on a selective basis of a series of prominent firms in various regions of the USA with strength in the architecture of education facilities.  The most recent example is DOWA in the northwest of the USA in operating in Oregon and Washington State.  IBI Group will continue to pursue this strategy with respect to these professional areas as well as an enhanced focus going forward on the architecture of health care facilities.  In the context of the continuing under-performing economic environment in the USA, there are outstanding opportunities for acquisition/strategic alliances with outstanding professional firms.  The resources from these firms can also participate with IBI Group in work in Canada as well as other international markets as the economy of the USA recovers.

IBI Group is now more intensively engaged in pursuing strategic acquisitions/alliances in other international markets that include China, India, Eastern Europe, and South America, notably Brazil.  IBI Group has projects in all of these market areas and is increasing IBI Group personnel and presence in these markets through organic growth.  This organic growth then forms the base of integrating new firms within IBI Group through acquisition/strategic alliance.

Building the Global Practice of IBI Group

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 social and economic systems worldwide.  While there are cultural differences, much of the physical aspects in the formation of cities; transportation and other infrastructure, buildings and 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.  IBI Group's 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 Group 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 reduction 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.

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.


Committed fee volume for the ensuing 12 months represents in excess of 9.5 months equivalent of work, based on the current pace of work that IBI Group has achieved during the first three quarters of 2011 and over 9 months based on the greater pace that IBI Group anticipates for the remainder of 2011. Backlog for Government and public institutional clients now represents approximately 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 Group has grown in numbers of people reflecting the growth and revenue and now comprises some 2,843 members of the firm as compared to 2,534 as at September 30, 2010, appropriately sized for the backlog.

With this growth in personnel and professional excellence, IBI Group 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 Group 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 Group as a significant participant in the design of physical aspects of urbanization across the world with IBI Group's global experience complemented by IBI Group's established physical and operating presence in communities throughout the world.

Investor Conference Call

The Company will hold a conference call on November 11, 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 1-800-954-0628 for local and toll-free North American access, or 1-212-231-2937 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 21538856 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 months
September 30,
    Three months
September 30,
    Nine months
September 30,
    Nine Months
September 30,
Revenue   $       84,265   $ 76,770   $       244,351   $       214,635
Expenses     71,383     65,130     208,052     183,784
Earnings before income taxes, interest and amortization
    12,882     11,640     36,299     30,851
Interest     3,547     2,816     10,095     7,493
Change in fair value and other finance costs (income)     356     20,541     479     (25,239)
Income taxes - current     1,503     2,089     4,703     3,648
Income taxes - deferred     (497)     (987)     1,733     (1,669)
Amortization of property and equipment and intangible assets     2,664     2,875     7,996     8,502
Foreign exchange loss (gain)     77     131     361     14
Acquisition-related costs     534     57     1,154     777
Net earnings before non-controlling interest   $       4,698   $       (15,882)   $       9,778   $       37,325
Non-controlling interest     1,311     -     2,729     -
Net earnings attributable to owners of the Company
(owners of the Fund in 2010)
  $     3,387   $       (15,882)   $    7,049   $       37,325
Distribution paid to unitholders     -     5,153     -     15,394
Distribution paid to exchangeable unitholders     -     1,979     -     6,029
Change in fair value of trust units     -     10,320     -     (30,466)
Change in fair value of exchangeable interest liability     -     4,021     -     (12,011)
Change in fair value of derivative liability embedded in convertible debentures     -     (800)     -     (3,878)
One time non-cash tax on conversion to a corporation     -     -     3,131     -
Proportion of earning attributable to Class B Partnership Units     -     (1,341)     (874)     (3,470)
Adjusted Net Earnings1   $       3,387   $    3,450   $    9,306   $       8,923
Basic net earnings per Share (units in 2010)2   $       0.2608   $       0.2677   $       0.7180   $       0.6955
Distributable Cash1                        
Cash flow from (used in) operating activities     1,623     3,319     (13,195)     3,975
Less: Capital expenditures     (775)     (515)     (1,972)     (1,840)
Standardized Distributable Cash1     848     2,804     (15,167)     2,135
Add (deduct):                        
  Change in non-cash operating working     4,965     2,607     29,914     14,644
  Deferred transaction costs     422     106     927     281
  Acquisition-related costs     534     57     1,154     777
  Current income tax expense     1,503     2,089     4,703     3,648
  Exchange (gain) loss     77     131     361     14
Distributable Cash1   $       8,349   $       7,794   $       21,892   $       21,499
Weighted average basic distributable cash per Share
(units in 2010)3
  $       0.4635   $       0.4352   $       1.2170   $       1.2039
Aggregate distributions declared   $       5,817   $       7,132   $       16,540   $       21,423
Payout ratio           69.7%           91.9%           75.6%           99.6%
(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".

(1)     See "Definition of Adjusted Net Earnings, EBITDA, Distributable Cash and 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

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IBI Group Inc.

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