IBI Group Inc. announces Q4 and year end earnings

• $298.3 million revenue for year ended December 31, 2014
• $23.8 million adjusted EBITDA revenue for year ended December 31, 2014
• $26.9 million cash flow from operating activities for year ended December 31, 2014

TORONTO, March 20, 2015 /CNW/ - IBI Group Inc. (the "Company") (TSX: IBG) today announced financial results for the three months and year ended December 31, 2014.   

OPERATIONAL HIGHLIGHTS

• Cash flows from operating activities for the three months ended December 31, 2014 of $10.9 million and $26.9 million for the year ended December 31, 2014.
  
  
• Revenue for the three months ended December 31, 2014 of $75.0 million and revenue for the year ended December 31, 2014 of $298.3 million.
  
  
• Adjusted EBITDA¹ for the three months ended December 31, 2014 of $4.1 million and adjusted EBITDA¹ for the year ended December 31, 2014 of $23.8 million.
  
  
• Net loss for the three months ended December 31, 2014 of $6.9 million and net loss for the year ended December 31, 2014 of $3.2 million.
  
  
• Gain on extinguishment of 7% convertible debentures for the year ended December 31, 2014 of $18.7 million.

"In 2014, IBI Group emerged from a period of financial difficulty that required challenging yet important changes across the organization. Commitment to the recapitalization plan can be seen in the substantial improvements reflected on the balance sheet and in the confidence of our clients, partners, and security holders.  We are pleased with the 2014 results, we set financial goals for the year and we met or exceeded them all," said CEO Scott Stewart.

"The successful amendment to the 7% convertible debentures and renegotiation of the senior credit facility in Q2 2014 were significant milestones for the Company. As a result, sufficient operating capital is available to allow the Company to execute its business plan going forward."

"We thank our security holders for their patience and our employees for their commitment and enthusiasm. 2015 is an important year for IBI Group as we pursue opportunities for growth and renewal across our business," continued Mr. Stewart.

FINANCIAL HIGHLIGHTS
(in thousands of dollars except for per share amounts)

FINANCIAL OVERVIEW

Revenue from continuing operations for the year ended December 31, 2014 was $298.3 million, compared with $257.4 million for the same period in 2013 and $75.0 million for three months ended December 31, 2014 compared with $72.1 million for Q4 2013. The increase in revenue for the year is consistent with the forecasted increase in organic growth of 4%, as well as the decrease in the Work-In-Process (WIP) write-offs of $35.0 million over 2013.

Net loss from continuing operations for the three months ended December 31, 2014 decreased to $4.1 million from a loss of $92.2 million from the same period in 2013. Included in the quarter results was a charge of $2.5 million for deferred financing costs written off and $1.7 of accretion expense for the 7% convertible debenture. 

Net income from continuing operations for the year ended December 31, 2014 was $5.9 million compared to a loss from continuing operations of $209.9 million. The decrease is primarily attributable to write-offs in 2013 related to goodwill of $174.3 million, WIP of $35.0 million, and accounts receivable of $12.9 million, offset in 2014 by a gain on the extinguishment of 7% debentures of $18.7 million. Results for 2014 include an additional $2.7 million in interest paid to senior lenders due to higher rates.

Cash increased by $2.3 million in 2014. There has been a decrease in WIP since Q3 2014 of $1.9 million and $7.7 million since December 31, 2013. This reflects the Company's initiative to accelerate the process of issuing and collecting bills. The Company generated $26.9 million of cash from operations during the year and repaid $17.5 million from its credit facilities. The Company also invested $13.6 million in capital assets during 2014. 

RECAPITALIZATION HIGHLIGHTS

During the year ended December 31, 2014, the Company achieved the following:

1. Effective July 23, 2014, the Company extended the maturity date of $46 million 7% convertible debentures from December 31, 2014 to June 30, 2019, in which consent fee notes payable were issued to the Debenture holders.
   
   
2. Effective October 2, 2014, the Company concluded two divestment transactions, which were used to reduce debt.
   
   
3. Effective October 6, 2014, the Company signed a new banking agreement with its senior lenders that provides sufficient liquidity for the Company to execute its business plan. This agreement matures on March 31, 2016.
   
   
4. As at December 31, 2013, the Company had notes payable due to the former owners of acquired businesses of $5.4 million of which $0.8 million was paid during the year. The Company renegotiated the terms of the remaining balance of these notes payable in January 2015 to amend repayment terms with a maturity of June 30, 2016.

OUTLOOK

Management is forecasting approximately $308 million in total revenue for the year ended December 31, 2015. Over 80% of the revenue forecast for 2015, $264 million is under contract. The Company currently has $331 million of work that is committed and under contract for the next three years. This committed workload is a material factor and assumption used to develop revenue forecasts. The Company continues to see an increase in committed work to be delivered in 2015 with an overall backlog of approximately ten months.

Ongoing efforts are underway to improve the monitoring of financial results and to strengthen the billings and collections process. The Company continues to seek out opportunities to enhance profitability, identify synergies and implement cost management initiatives.

This guidance should be read in conjunction with the "Forward Looking Statements and Risk Factors" below and based on the factors and assumptions and is subject to the risks and uncertainties summarized in that section, which are more fully described in the Company's public disclosure documents.

Caution Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and its subsidiary entities, including IBI Group (collectively, the "Company"), or the industry in which they operate, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including those related to: (i) the Company's ability to maintain profitability and manage its growth; (ii) the Company's reliance on its key professionals; (iii) competition in the industry in which the Company operates; (iv) timely completion by the Company of projects and performance by the Company of its obligations; (v) reliance on fixed-price contracts; (vi) the general state of the economy; (vii) acquisitions by the Company; (viii) risk of future legal proceedings against the Company; (ix) the international operations of the Company; * reduction in the Company's backlog; (xi) fluctuations in interest rates; (xii) fluctuations in currency exchange rates; (xiii) potential undisclosed liabilities associated with acquisitions; (xiv) upfront risk of time invested in participating in consortia bidding on large projects; (xv) limits under the Company's insurance policies; (xvi) the Company's reliance on distributions from its subsidiary entities and, as a result, its susceptibility to fluctuations in the performance of the Company's subsidiary entities; (xvii) unpredictability and volatility of the price of Common Shares; (xviii) the degree to which the Company is leveraged may affect its operations; (xix) dividends are not guaranteed and will fluctuate with the Company's performance; (xx) the possibility that the Company may issue additional Common Shares diluting existing Shareholders' interests; (xxi) income tax matters; (xxii) approval of the recapitalization plan by the Company's lending syndicate which is required by March 31, 2015 and achieving the specified requirements per the amended agreement. These risk factors are discussed in detail under the heading "Risk Factors" in the Company's annual information form for the year ended December 31, 2013. New risk factors may arise from time to time and it is not possible for management of the Company to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance or achievements of the Company to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release.

The Company uses non-IFRS measures in this release. Please refer to the Management Discussion & Analysis filed for this quarter for definitions of the terms used.

Investor Conference Call

The Company will hold a conference call on March 20, 2015 at 8:30 a.m. (Toronto time). To participate in the conference call, please dial in before 8:30 a.m. (Toronto time) to 1- 800-895-8003 for local and toll-free North American access, or 1-212-231-2922 for international access.

An audio replay of the call will be available for 14 days by dialing 1-416-626-4100 for international access or 1-800-558-5253 for local and toll-free North American access, enter pass code 21762751 followed by the number sign on your telephone keypad.

About IBI Group Inc.:

The Company is a TSX listed corporation and its common shares trade under the symbol "IBG".

IBI Group is a globally integrated architecture, planning, engineering, and technology firm with over 2,300 professionals around the world. For more than 40 years, our dedicated professionals have helped clients create livable, sustainable, and advanced urban environments. We are one of the largest architecture firms in the world, and more than 300 of our staff architects, planners, designers and engineers are LEED accredited.

From high-rises to industrial buildings, schools to state-of-the-art hospitals, transit stations to highways, airports to toll systems, bike lanes to parks, we design every aspect of a truly integrated city for people to live, work, and play.

We organize our expertise into three areas:

1. Intelligence: systems designer, software development, systems integration
2. Buildings: building architecture, building engineering (mechanical, structural, electrical).
3. Infrastructure: planning, urban design, landscape architecture, transportation, and engineering.

Our collaborative and combined approach focuses not only on creating the best solutions today, but also creating the right solutions for tomorrow.

We believe cities must be designed with intelligent systems, sustainable buildings, efficient infrastructure, and a human touch.

IBI, defining the cities of tomorrow.

SOURCE IBI Group Inc.