TORONTO, March 10, 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 and twelve months ended December 31, 2021. 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 December 31, 2021, which are available on SEDAR at www.sedar.com and on IBI’s website at www.ibigroup.com.
Select Full Year and Fourth Quarter Highlights:
- Net revenue of $444.5 million increased by 13% in 2021 with 7.5% organic growth and exceeded the Company’s most recent guidance of $435 million by 2%, while Q4 net revenue grew 14% with 9.6% organic growth. For 2022, net revenue is forecast at$457 million.
- Adjusted EBITDA1 net of IFRS 16 impacts was $68.0 million (15.3% of net revenue) in 2021 and $14.9 million (or 13.2% of net revenue) in Q4. Margins in Q4 and full year 2021 were reduced by approximately 1% as IBI incurred costs on some large projects during 2021 without recognizing the associated revenue in the year. In addition, IBI continued to make significant investments in new Intelligence products through the year.
- Full year diluted EPS of $0.66/sh ($0.12/sh in Q4) increased by 40%from the prior year, driven by growth primarily in the Buildings and Infrastructure segments, as well as the accretive bolt-on acquisitions completed during the year.
- Net debt to Adjusted EBITDA1,2 multiple was 0.4 times at year-end, continuing a trend of financial strengthening that has seen net debt reduced by 61% from year-end 2020. The Company remains well-positioned with a low-risk balance sheet that affords ample flexibility to pursue accretive acquisitions which contribute to IBI’s long-term growth strategy.
- Backlog increased by 8% to $623 million (17 months) relative to Q4 2020, with IBI continuing to observe robust demand for services across segments.
- Recurring software support and maintenance billing to clients remained largely stable throughout 2021 with $5.1 million in Q4 2021, and $20.6 million for the full-year.
- Several corporate and asset acquisitions were completed in 2021 which bolstered capabilities in key areas such as renewable energy, water, environmental consulting for First Nations and traveler information systems. These acquisitions are anticipated to enhance net revenue and Adjusted EBITDA1 going forward, while providing a multitude of opportunities to capture further cost and operating synergies across business lines.
- Days sales outstanding (“DSO”) at quarter and year-end totaled 54 days and was nine days lower than Q4 2020 and three days lower than Q3 2021, continuing the trend of managing collections and billings in a timely fashion.
Financial Highlights
(in thousands of Canadian dollars except per share amounts or where otherwise indicated)
| | THREE MONTHS ENDED | THREE MONTHS ENDED | TWELVE MONTHS ENDED |
| | DECEMBER 31, | SEPTEMBER 30, | DECEMBER 31, |
| | | 2021 | | | 2020 | | %
Change | | 2021 | | %
Change | | 2021 | | | 2020 | | %
Change |
| Number of working days | | 63 | | | 63 | | | | 63 | | | | 251 | | | 252 | | |
| | | | | | | | | |
| Gross revenue | $145,872 | | $135,641 | | 8% | | $136,350 | | 7% | | $556,510 | | $505,077 | | 10% | |
| Less: Subconsultants and direct costs | $33,096 | | $37,058 | | -11% | | $26,748 | | 24% | | $112,021 | | $111,867 | | 0% | |
| Net revenue | $112,776 | | $98,583 | | 14% | | $109,602 | | 3% | | $444,489 | | $393,210 | | 13% | |
| | | | | | | | | |
| Net income | $4,473 | | | ($929) | | - | | $8,176 | | -45% | | $25,247 | | $17,681 | | 43% | |
| | | | | | | | | |
| Basic earnings per share | $0.12 | | $(0.02) | | - | | $0.22 | | -45% | | $0.67 | | $0.47 | | 43% | |
| Diluted earnings per share | $0.12 | | $(0.02) | | - | | $0.21 | | -43% | | $0.66 | | $0.47 | | 40% | |
| | | | | | | | | |
| Cash flows provided by operating activities | $20,624 | | $20,762 | | -1% | | $18,066 | | 14% | | $65,571 | | $57,391 | | 14% | |
| | | | | | | | | |
| Recurring billings1 | $5,076 | | $5,300 | | -4% | | $5,200 | | -2% | | $20,635 | | $20,600 | | 0% | |
| Days Sales Outstanding1 | | 54 | | | 63 | | -14% | | | 57 | | -5% | | | 54 | | | 63 | | -14% | |
| Backlog ($ millions) | $623 | | | 578 | | 8% | | $596 | | 5% | | $623 | | | 578 | | 8% | |
| Backlog (months) | | 17 | | | 18 | | -6% | | | 17 | | 0% | | | 17 | | | 18 | | -6% | |
| | | | | | | | | |
| Net Debt1 | $22,190 | | $57,188 | | -61% | | $33,208 | | -33% | | $22,190 | | $57,188 | | -61% | |
| Net Debt1 / Adj. EBITDA1,2 ratio | | 0.4x | | | 1.3x | | -69% | | | 0.6x | | -33% | | | 0.4x | | | 1.3x | | -69% | |
| | | | | | | | | |
| Net Revenue | | | | | | | | |
| Intelligence | $20,820 | | $19,025 | | 9% | | $19,618 | | 6% | | $79,525 | | $79,460 | | 0% | |
| Buildings | $56,045 | | $50,769 | | 10% | | $54,603 | | 3% | | $220,462 | | $200,768 | | 10% | |
| Infrastructure | $35,540 | | $28,472 | | 25% | | $35,161 | | 1% | | $143,143 | | $112,147 | | 28% | |
| Corporate | $371 | | $317 | | 17% | | $220 | | 69% | | $ 1,359 | | $835 | | 63% | |
| Total | $112,776 | | $98,583 | | 14% | | $109,602 | | 3% | | $444,489 | | $393,210 | | 13% | |
| | | | | | | | | |
| Adjusted EBITDA1 net of IFRS 16 impacts | | | | | | | | |
| Intelligence | $4,556 | | $5,642 | | -19% | | $4,270 | | 7% | | $17,534 | | $18,545 | | -5% | |
| Buildings | $10,465 | | $10,618 | | -1% | | $9,303 | | 12% | | $42,900 | | $39,732 | | 8% | |
| Infrastructure | $4,588 | | $2,786 | | 65% | | $5,039 | | -9% | | $22,102 | | $14,860 | | 49% | |
| Corporate | $(4,705) | | | ($5,367) | | -12% | | $110 | | - | | | ($14,539) | | | ($12,111) | | 20% | |
| Total | $14,904 | | $13,679 | | 9% | | $18,722 | | -20% | | $ 67,997 | | $61,026 | | 11% | |
| | | | | | | | | |
| Adjusted EBITDA1 net of IFRS 16 impacts as a % of net revenue | | | | | | | | |
| Intelligence | | 22% | | | 30% | | -27% | | | 22% | | 0% | | | 22% | | | 23% | | -6% | |
| Buildings | | 19% | | | 21% | | -11% | | | 17% | | 12% | | | 20% | | | 20% | | -2% | |
| Infrastructure | | 13% | | | 10% | | 32% | | | 14% | | -7% | | | 15% | | | 13% | | 17% | |
| Corporate | | 0% | | | 0% | | - | | | 0% | | - | | | 0% | | | 0% | | - | |
| Total | | 13.2% | | | 13.9% | | -5 | % | | 17% | | -22% | | | 15.3% | | | 15.5% | | -1% | |
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.
2021 Year in Review
2021 was an exceptional year for IBI, with themes of economic re-opening and infrastructure renewal driving significant improvements across the Buildings and Infrastructure sectors. The Company realized a marked increase in net revenue from Infrastructure, which was up 28% year-over-year, while net revenue from Buildings grew 10% over 2020. In 2021, performance from the Intelligence sector remained stable relative to the previous year, which reflected ongoing impacts from COVID-19 and its variants, particularly in certain technology centres such as India, which was exacerbated by a weakening US dollar against the Canadian dollar. Into 2022, the Company anticipates building on continued momentum for its software products. With enhanced marketing efforts and the benefit of strategic acquisitions such as Telenium, IBI is well positioned to drive accelerated growth in Intelligence, which sets the stage for increased recurring software billings and improved margins going forward.
In a post-COVID recovery environment, supply chain disruptions have affected many businesses, particularly in the automotive sector, as project completion delays have become increasingly common. As a technology-driven design firm, IBI has not been directly affected by supply chain issues, but has experienced inflationary pressure in the labour market, consistent with many professional service firms. Salaries, fees and employee benefits for 2021 represented 71.7% of net revenue, compared to 70.8% in 2020, and these increases are not yet reflected in IBI’s incremental revenue from rate changes on projects. Despite being able to pass through some inflationary costs, IBI believes a true competitive advantage is gained due to the Company’s continued investment in productivity tools that enhance efficiencies.
“While supply-chain issues, along with wage and inflationary pressures, have impacted many of our clients and remain a top-of-mind concern for investors, IBI has largely been able to navigate these challenges. We plan to continue finding efficiencies, leveraging technology and using our geographically diverse workforce to maintain, and look to expand, EBITDA margins over time,” said Scott Stewart, Chief Executive Officer of IBI Group Inc. “Overall margins were reduced by approximately 1% in both Q4 and full year 2021, as IBI incurred costs on a few large projects through the year without recognizing the associated revenue in the same period.”
As the business environment steadily improved during 2021, IBI continued to take a disciplined and balanced capital allocation approach to manage leverage, opportunistically utilize the share buyback program and undertake accretive acquisitions. By year end 2021, the Company’s net debt was reduced by $35.0 million, driving a net debt1 to Adjusted EBITDA1 multiple down 69% from 1.3 times at year-end 2020 to 0.4 times at year-end 2021. The Company’s syndicated credit facility was also renewed and extended to September 2025, with the addition of an accordion feature, further enhancing financial flexibility and supporting growth.
“IBI has continued to allocate free cash flow in a balanced and predictable fashion to ensure a strong capital structure, maximize our option value to pursue projects and acquisitions that are strategic, and translate those successes into real shareholder returns. We will continue to evaluate these core capital allocation options in a similar manner going forward,” added Scott Stewart.
On March 3, 2022, IBI announced the appointment of new U.S. leadership responsible for unified growth and integration across the Company’s core technology-driven competencies in the Intelligence, Buildings and Infrastructure sectors. With 25 offices across the country working on more than 1,400 active projects, IBI is well positioned to expand its urban environment and infrastructure design presence across the U.S. market, particularly given the government’s $1 trillion infrastructure bill and a renewed focus on North American manufacturing.
While generating profit and delivering returns for shareholders is a primary objective for all organizations, IBI recognizes these must be pursued in a responsible and ethical fashion, while adhering to strong environmental, social and governance (“ESG”) principles. The Company’s December 2021 acquisition of environmental remediation firm Teranis furthers this goal, in particular for projects serving and collaborating with Indigenous communities.
Business Sector Summary Highlights
Intelligence
IBI’s Intelligence sector generated net revenue of $79.5 million in 2021, a nominal increase over 2020, as growth was affected by several factors through the year. Intelligence net revenue was negatively impacted by $2.2 million or 2.8% relative to 2020 due to foreign exchange, while the effects of the global pandemic reduced net revenue by an estimated $1.2 million from the India office over a five-month period. A further $1.2 million reduction in net revenue was realized as a result of transitioning between large projects in IBI’s office in Greece.
With ongoing investments designed to drive organic growth in the Intelligence sector along with the accretive acquisitions made over the past two years, IBI anticipates returning to growth in this segment during 2022. The December 2021 asset purchase of Telenium Inc. enabled IBI to bolster its SaaS portfolio and increase go-forward recurring software billing to clients by an expected $600,000 to $700,000 on an annualized run-rate basis, while also enhancing the Company’s Travel-IQ™ platform. The Company will continue pursuing opportunities to generate new Intelligence revenue including from data collection, hosting firmwide ideation sessions, and leveraging projects and channels to market initiated from the Buildings and Infrastructure segments. IBI will intends to target Intelligence-focused acquisitions that are truly accretive by seeking out ventures that offer earlier-staged valuation multiples which can translate into attractive potential upside.
IBI’s expanding stable of SaaS products are marketed by an internal sales team and include Travel-IQ™, NSpace and the Intelligent Traffic Management System (“ITMS”), which generated real benefits during the fourth quarter. A new cloud-based configuration of the ITMS in India was completed in only four months, compared to an estimated 1.5 years that would be expected for an installation on premises. Further examples of the Company’s leadership in traffic management are evidenced by IBI’s five-year contract with JV Partner, Egis, to operate the Traffic Scotland National Control Centre and manage the Scottish Trunk road network, representing over 3,500 km of roads in Scotland. Leveraging expertise from across the Intelligence sector in the management of city operations and urban software as well as traffic management systems, enables IBI to provide solutions for clients that lead to more sustainable and resilient cities.
Buildings
IBI’s Buildings sector posted strong performance in 2021. The Company continued work as the lead architect for the Ford Motor Company’s Research & Engineering Center which will support increased innovation and collaboration at its Dearborn Campus. IBI has experienced an increase in work related to facility design as North America sees a resurgence in the manufacturing space, particularly in the automotive and electric vehicle (“EV”) sectors, where the Company plays a critical role in integrating technology throughout facility design. In 2021, IBI commenced work as part of a joint design-build team on a nearly 3 million square foot expansion of an existing facility which will result in the first greenfield, dedicated EV factory to be built in North America. Located in Arizona, this facility represents a major step in expanding the accessibility of more sustainable transportation.
The Company’s healthcare practice across the UK remained strong through 2021, driving net revenue in the region by over 9% relative to 2020, and offering a clear line of sight to continued work through 2022. Closer to home, IBI is also leading the design team for History, an exciting new entertainment venue project in Toronto’s Beaches neighbourhood. History features a collaboration between Live Nation and musical icon Drake to curate a premiere entertainment experience that will provide artists with a versatile and intimate destination to perform and connect with fans.
Infrastructure
IBI’s Infrastructure sector improved significantly in 2021 relative to the previous year, posting 28% growth compared to 2020 and 25% growth in Q4 2021 compared to the same period in 2020. During the fourth quarter of 2021, IBI was awarded a contract from the City of Toronto to provide design, contract administration, engineering, and construction inspection services as part of the City’s Basement Flooding Protection Program (BFPP) in the northern Etobicoke district. Leveraging the water management and civil engineering expertise gained through the acquisition of Cole Engineering earlier in the year, IBI will help the City reduce the risk of basement flooding by providing sustainable solutions to relieve pressure on existing sewer and water systems.
Also in the fourth quarter, the Company closed the acquisition of Teranis, an environmental consulting firm focused on servicing First Nations communities in British Columbia, which further expands IBI’s environmental, remediation and risk assessment practices. By integrating Teranis, IBI can offer additional capacity to deliver responsible solutions to Indigenous communities across Canada, complementing the Company’s existing sustainability and environmental management business while further advancing its commitment to ESG.
ESG Initiatives
As part of IBI’s strong commitment to ESG, helping clients protect the environment and enhance business performance, the Company has taken a strategic equity position in privately-held Ecosystem Informatics Inc. (“ESI”). With its proprietary platform, ESI is focused on environmental monitoring, diagnostics and pollution abatement solutions, which aligns with IBI’s broader mission to take meaningful action against climate change by providing clients practical information needed to build resilient, connected, and smart cities of tomorrow. Through this relationship, ESI can expand its reach to urban municipalities and businesses around the world who are mandated to make changes for a cleaner, more sustainable future. The ESI equity position builds upon IBI’s previous investment in SWTCH, a Canadian market leader in EV charging and energy management solutions, and is a clear reflection of the Company’s unwavering commitment to improve the environment.
IBI has been at the forefront of environmental responsibility in the design of client projects for many years, and consistent with that approach, have formalized the execution and reporting of its ESG program. The Company has now implemented an innovative, software-driven data collection platform that will enable IBI to track and report on ESG topics in a more fulsome manner. Leveraging this software platform, IBI intends to launch an updated ESG report in the fall of 2022. This update will feature expanded information aggregated through the platform and will align with one or more established frameworks.
2022 Guidance and Outlook
Looking ahead, IBI is pleased to provide a forecast total net revenue projection of approximately $457 million for the year ended December 31, 2022, continuing profitable growth, with notable revenue potential emerging outside of North America. As at year-end 2021, IBI had $623 million of work committed and under contract for the next five years, an increase of 8% across the firm relative to the same period in 2020. This represents approximately 17 months of backlog (calculated on the basis of the current pace of work that the Company has achieved during the 12 months ended December 31, 2021).
Leveraging its strong financial position and free cash flow, IBI plans to continue allocating capital to the pursuit of accretive acquisitions and investing in new products and technologies that can enhance business efficiencies and support overall margins. IBI maintains an active program to review, consider and evaluate potential acquisition opportunities. Targets include smaller transactions within the technology sector that can be leveraged across IBI’s global markets, as well as opportunities in the traditional architecture, engineering and design segments focused on key sectors including transportation, water, wastewater, and the environment. Further, IBI will explore geographic expansion, looking to more vibrant market areas such as the southern United States.
During IBI’s upcoming Annual Shareholder Meeting to be held on May 6th, the Company intends to unveil an updated strategic plan designed to leverage technology for ongoing growth, improve efficiencies, expand recurring revenue, while creating superior and sustainable urban environments. More details will be provided closer to the date, and IBI encourages all interested stakeholders to attend.
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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.
Investor Conference Call & Webcast
The Company will host a conference call on Friday, March 11, 2022, at 8:30 a.m. ET to discuss the fourth quarter results. IBI’s Chief Executive Officer, Scott Stewart, and Chief Financial Officer, Stephen Taylor, will present IBI’s financial and operating results followed by a question and answer session.
To listen to the live webcast of the conference call, please enter the following URL into your web browser: https://produceredition.webcasts.com/starthere.jsp?ei=1525458&tp_key=76d4b679be.
Q4 2021 Conference Call Details:
Date: Friday, March 11th, 2022
Time: 8:30 a.m. ET
Dial In: North America: 1-888-390-0546
Dial In: Toronto Local / International: 416-764-8688
Replay: North America: 1-888-390-0541
Replay: Toronto Local / International: 416-764-8677
Replay Passcode: #325759
A recording of the conference call will be available within 24 hours following the call on the Company’s website. The conference call replay will be available until March 25th, 2022.