- 9.3% Organic growth
- 11% Net revenue increase
- 15.6% Adjusted EBITDA1 margin
- 2022 net revenue guidance increased to $473 million
TORONTO, May 05, 2022 (GLOBE NEWSWIRE) -- IBI Group Inc. (“IBI” or the “Company”), a globally integrated design and technology firm, today announced its financial and operating results for the three months ended March 31, 2022. Select financial and operational information is outlined below and should be read with IBI’s consolidated financial statements (“Financial Statements”) and management’s discussion and analysis (“MD&A”) as of March 31, 2022, which are available on SEDAR at www.sedar.com and on IBI’s website at www.ibigroup.com. Unless otherwise indicated, all references to Adjusted EBITDA in this release means Adjusted EBITDA net of IFRS 16 impacts.
Select First Quarter 2022 Highlights:
- Net revenue increased 11% to $120.8 million in Q1 2022, compared to $108.9 million for the same period in 2021, with organic growth of9.3% or $9.9 million.
- With a strong start to 2022, the Company is pleased to raise full year net revenue guidance to $473 million, a 3.5% increase from the prior guidance of $457 million, reflecting the impact of acquisitions coupled with ongoing organic growth.
- Adjusted EBITDA1 grew to $18.9 million (or 15.6% of net revenue) in Q1 2022, reflecting an increase of 15% over the $16.4 million (or 15.0% of net revenue) generated in the same period in 2021, and a 27% increase over Q4 2021.
- Diluted earnings per share totaled $0.21 in the first quarter, a 91% increase over $0.11 per share for the same period in 2021 and a 75% increase over the previous quarter.
- Net debt to Adjusted EBITDA1,2 multiple was 0.6 times at the end of the quarter, slightly higher than year-end 2021 as net debt increased due to the cash cost of funding acquisitions completed in the quarter along with the share buyback program.
- Backlog increased by 13% to $661 million (17 months) relative to Q1 2021 and was 6% ahead of year-end 2021.
- Recurring software support and maintenance billing to clients totaled $6.0 million in Q1 2022, an increase of 13% and 19% relative to the $5.3 million and $5.1 million in Q1 2021 and Q4 2021, respectively. The majority of the increase is attributable to organic growth in recurring revenue services along with contributions from the Telenium acquisition which closed in late 2021.
- Days sales outstanding (“DSO”) at quarter end totaled 57 days and was six days, or 10%, lower than Q1 2021, three days higher than year-end 2021, and in line with IBI’s expectations for collections going forward.
- At the end of the quarter, IBI closed the acquisition of Florida-based RLC Architects (“RLC”), expanding the Company’s US presence, particularly in logistics and supply chain services and Florida’s residential building segment.
- IBI’s new strategic direction will be introduced at the AGM with a full showcase of the Company’s Strategic Plan to be held September 22, 2022 at an in-person event hosted in IBI’s Sandbox, which will facilitate a rich and fulsome strategic update while enabling the Company to showcase its business units, people and projects.
Financial Highlights
(in thousands of Canadian dollars except per share amounts or where otherwise indicated)
| | THREE MONTHS ENDED
MARCH 31 | THREE MONTHS ENDED
DECEMBER 31 |
| | | 2022 | | | 2021 | | % Change | | | 2021 | | % Change | |
| Number of working days | | 62 | | | 62 | | | | 63 | | |
| | | | | | |
| Gross revenue | | 140,454 | | $132,932 | | 6% | | $145,872 | | -4% | |
| Less: Subconsultants and direct costs | | 19,698 | | $24,030 | | -18% | | $33,096 | | -40% | |
| Net revenue | $120,756 | | $108,902 | | 11% | | $112,776 | | 7% | |
| | | | | | |
| Net income | $7,966 | | $4,297 | | 85% | | $4,473 | | 78% | |
| | | | | | |
| Basic earnings per share | $ 0.21 | | $0.11 | | 91% | | $0.12 | | 75% | |
| Diluted earnings per share | $0.21 | | $0.11 | | 91% | | $0.12 | | 75% | |
| | | | | | |
| Cash flows provided by (used in) operating activities | ($262 | ) | $12,008 | | -102% | | $20,624 | | nmf | |
| | | | | | |
| Recurring Billings | $6,020 | | $5,327 | | 13% | | $5,076 | | 19% | |
| Days Sales Outstanding | | 57 | | | 63 | | -10% | | | 54 | | 6% | |
| Backlog ($ millions) | $661 | | | 586 | | 13% | | $623 | | 6% | |
| Backlog (months) | | 17 | | | 17 | | 0% | | | 17 | | 0% | |
| | | | | | |
| Net Debt1 | $30,968 | | $52,605 | | -41% | | $22,190 | | 40% | |
| Net Debt1 / Adj. EBITDA Ratio1,2 | | 0.6x | | | 1.1x | | -49% | | | 0.4x | | 50% | |
| | | | | | |
| Net Revenue | | | | | |
| Intelligence | | 20,969 | | | 19,891 | | 5% | | $20,820 | | 1% | |
| Buildings | | 61,957 | | | 53,292 | | 16% | | $56,045 | | 11% | |
| Infrastructure | | 37,365 | | | 35,242 | | 6% | | $35,540 | | 5% | |
| Corporate | | 465 | | | 477 | | -2% | | $371 | | 25% | |
| Total | | 120,756 | | | 108,902 | | 11% | | $112,776 | | 7% | |
| | | | | | |
| Adjusted EBITDA1 net of IFRS 16 impacts | | | | | |
| Intelligence | | 4,232 | | | 4,463 | | -5% | | $4,556 | | -7% | |
| Buildings | | 14,187 | | | 10,850 | | 31% | | $10,465 | | 36% | |
| Infrastructure | | 5,179 | | | 5,290 | | -2% | | $4,588 | | 13% | |
| Corporate | | -4,713 | | | -4,234 | | -11% | | | $-4,705 | | 0% | |
| Total | | 18,885 | | | 16,369 | | 15% | | $14,904 | | 27% | |
| | | | | | |
| Adjusted EBITDA1 net of IFRS 16 impacts as a % of Net Revenue | | | | | |
| Intelligence | | 20% | | | 22% | | -10% | | | 22% | | -10% | |
| Buildings | | 23% | | | 20% | | 12% | | | 19% | | 21% | |
| Infrastructure | | 14% | | | 15% | | -8% | | | 13% | | 7% | |
| Corporate | | 0% | | | 0% | | - | | | 0% | | - | |
| Total | | 15.6% | | | 15.0% | | 4.0% | | | 13.2% | | 18.5% | |
Notes:
1 Recurring billings, net debt, net debt to Adjusted EBITDA ratio, and Adjusted EBITDA are non-IFRS measures. Refer to the “Non-IFRS Measures” section of this press release and “Definition of Non-IFRS Measures" in the MD&A for more information on each measure and a reconciliation of Adjusted EBITDA to Net Income. Since these measures are not standard measures under IFRS, they may not be comparable to similar measures reported by other entities.
2 Adjusted EBITDA for bank covenant purposes.
2022 Off to a Strong Start
During the first quarter of 2022, IBI continued to build on the momentum generated in 2021 with all three business sectors – Intelligence, Buildings and Infrastructure – contributing to an 11% increase in net revenue year over year while the Company successfully generated 9.3% organic growth.
The Company’s Adjusted EBITDA1 net of IFRS 16 impacts totaled $18.9 million, or 15.6% of net revenue, an increase of 15% compared to Q1 2021 and 27% over Q4 2021. Diluted earnings per share increased by 91% to $0.21 in the quarter, and the Company’s backlog further increased by 13% to $661 million (17 months) relative to the same period in 2021 and was 6% higher than at year-end 2021.
“Our performance through the first quarter of 2022 clearly demonstrates IBI’s strengths across core business lines, and was highlighted by the Company 9.3% organic growth, coupled with meaningful increases in net revenue, Adjusted EBITDA, margins and net income, both year-over-year and quarter-over-quarter, while maintaining a healthy balance sheet with net debt to Adjusted EBITDA2 of 0.6 times at the end of the quarter,” said Scott Stewart, Chief Executive Officer of IBI Group. “Given these results, coupled with a $661 million, 17-month backlog and visibility into full bookings of our Buildings sector for the balance of the year, we are very pleased to increase our net revenue guidance by 3.5% to $473 million for 2022.”
IBI’s Buildings sector generated strong performance through the quarter relative to both the same period in 2021 and the previous quarter, as rising immigration continues to drive steady demand across Canada’s core urban centres. Within the Infrastructure sector, heavy investment into public transit infrastructure contributed to net revenue growth of 6% and 5% over Q1 2021 and the previous quarter and represents a pipeline of future projects across the country, including the opportunity for IBI to continue bidding on large-scale transit expansion projects. IBI’s Intelligence sector also grew net revenue by 5% relative to the same period in 2021, while increasing recurring billings to $6.0 million, a 13% increase over Q1 2021. As a result of timing delays on revenue recognition for certain Intelligence projects undertaken during the quarter, Adjusted EBITDA1 net of IFRS 16 impacts and associated margins trended lower, which IBI anticipates reversing through the balance of 2022.
“As a technology-driven design firm, IBI leverages our core Buildings and Infrastructure sectors to create channels to market for Intelligence by applying software systems and support, particularly in mobility areas such as tolling, traffic management and traveller information systems. We will continue to invest in Intelligence products, marketing and data monetization to accelerate growth, expand margins, and increase annual recurring revenue,” said Scott Stewart.
At quarter end, the Company’s net debt was $31.0 million, 41% lower than the same period in 2021, resulting in a net debt1 to Adjusted EBITDA1 multiple of 0.6 times compared to 1.1 times in Q1 2021. Net debt increased over year end 2021 due to increases in non-cash working capital, which totaled $14.2 million for the first quarter of 2022 compared to $4.3 million for the same period in 2021. IBI typically requires and utilizes more cash within the first half of the year, which is offset by the Company being a net generator of cash in the second half. It is not unusual to realize large collections trending during the latter of portion of Q4 while payouts to subcontractors occurs in the first quarter. In addition, a number of IBI’s computer software costs are prepaid in the first quarter of the year, which causes a larger cash outflow and an increase in prepaid and other assets.
The Company continued to pursue accretive acquisition opportunities during the first quarter, culminating in the successful acquisition of Florida-based RLC. Integrating RLC’s team contributes to IBI’s architectural expertise and also complements the Company’s Michigan engineering practice, as RLC provides IBI with an expanded reach into onshore manufacturing in the auto industry as well as industrial and supply chain business lines.
As previously announced, IBI bolstered its leadership group with several key appointments within the US division, further strengthening its ability to leverage the expected growth in US infrastructure investment. Todd Hoisington assumes the title of Director, USA, in charge of all Intelligence, Buildings and Infrastructure projects south of the border. Supporting Mr. Hoisington are Leslie Young, Director, Managing Principal, Ari Bose, Director US Sector Lead, and Susan Christensen, Director, Operations USA.
Business Sector Summary Highlights
Intelligence
Net revenue from IBI’s Intelligence sector totaled $21.0 million, reflecting an increase of 5% and 1% over the same period in 2021 and the previous quarter, respectively. Recurring billings also grew to $6.0 million, representing 13% and 19% increases over Q1 2021 and Q4 2021, respectively, supported by a December 2021 asset acquisition which bolstered IBI’s SaaS portfolio and enhanced the Company’s Travel-IQTM platform. Adjusted EBITDA1 from Intelligence totaled $4.2 million, or 20% of net revenue in the first quarter of 2022, lower than the Adjusted EBITDA1 margins of 22% in both Q1, 2021 and Q4, 2021. The Intelligence sector outperformed within IBI’s Canada East segment, and recorded results that were on target in the US, however declines in solutions across western Canada, Mexico and Greece were not fully offset. IBI will continue pursuing opportunities to generate new Intelligence revenue from areas such as data collection and leveraging channels to market initiated from the Buildings and Infrastructure segments. The Company remains committed to investing in Intelligence and expanding its marketing efforts in order to resume the previous organic growth trajectory and forecasts.
During the quarter, IBI successfully integrated data from Ecosystem Informatics Inc. (“ESI”) into our Smart City Platform, which can provide clients practical information needed to build resilient, connected, and smart cities of tomorrow. This further expands IBI’s reach to certain urban municipalities and businesses around the world, such as densely populated cities in India, who are committed to making changes for a cleaner, more sustainable future. Other notable wins from IBI’s Sandbox initiatives include consulting work secured for CurbIQ in California and Ohio, along with accelerating demand for the Company’s NSpace product as more people go back to work in shared spaces.
In late January, IBI was pleased to announce additional collaborative partnerships as a part of its Smart City Sandbox initiative with the addition of multinational law firm, Dentons. Dentons’ legal expertise in privacy, technical innovation and public policy is critical to advancing larger scale municipal infrastructure projects and will be a valuable contributor to advancing new products and solutions in urban environments.
Buildings
The Company’s Buildings sector continued to post very strong results for the first quarter of 2022, as net revenue grew to $62.0 million, an increase of 16% and 11% over Q1 2021 and Q4 2021, respectively. Adjusted EBITDA1 net of IFRS 16 was similarly strong at $14.2 million or 23% of net revenue, which was 31% and 36% higher than the same period in 2021 and the previous quarter, respectively. As the Buildings sector is fully booked for the year, IBI anticipates continued healthy performance despite indications of rising interest rates.
IBI’s acquisition of Florida-based RLC expands the Company’s leadership in “green design” along with enhanced application of industrial engineering to supply chains. RCL’s 32 years of client service in Florida provides a unique opportunity to develop sustainable projects in industrial, residential, commercial, education and interior architecture sectors in the southeastern US. Through RLC, IBI gains exposure to a new suite of global clients, projects and opportunities, while also affording the Company a solid entry into the growing residential market in South Florida.
Infrastructure
Performance from IBI’s Infrastructure sector remained healthy in Q1 2022, as net revenue totaled $37.4 million, an increase of 6% and 5% over Q1 2021 and Q4 2021, respectively, while Adjusted EBITDA1 net of IFRS 16 was $5.2 million, 2% less than Q1 2021 and 13% higher than the previous quarter. As a percentage of net revenue, Adjusted EBITDA1 for Infrastructure was 14%, down modestly from 15% realized in Q1 2021 and above the 13% generated in Q4 2021.
During the first quarter, IBI successfully secured its second significant, long-term basement flooding contract with the City of Toronto as part of the City’s Basement Flooding Protection Program. Under these sizeable contracts, the Company will provide design, contract administration, engineering, and construction inspection services in the northern Etobicoke district over the next five years. Given IBI’s water management and civil engineering expertise, the Company can deliver sustainable solutions to relieve pressure on the existing sewer and water system and reduce the risk of basement flooding.
2022 Guidance and Outlook
With acquisitions to impact IBI’s performance for the balance of 2022, along with further visibility into customer demand and a strong start to organic projects, IBI is pleased to announce an increase to its prior 2022 full year net revenue guidance. Revised guidance now reflects a forecast $473 million in net revenue for the year ended December 31, 2022, a 3.5% increase from the prior guidance of $457 million. With $661 million of work committed under contract for the next five years, and a 17-month backlog, the Company is well positioned to continue delivering meaningful growth and driving compelling returns for investors.