Press Releases

  • Tuesday, August 5, 2008
    GENIVAR Income Fund Announces Second Quarter Results: Net Earnings Up by 156%

    MONTREAL, Aug. 5 - GENIVAR Income Fund (the "Fund") announced today its financial and operating results (unaudited) for the second quarter of 2008. These results cover the period from March 30, 2008 to June 28, 2008.

    Highlights

    • For the second quarter of 2008, revenues were $97.3 million, up from $63.8 million for the same period in 2007, representing an increase of 52.6%. Net revenues were $80.9 million, compared to $50.9 million, an increase of 59.0% from 2007 to 2008. Strong organic growth accounted for half of this increase.
    • Net earnings were $6.7 million for the second quarter, a 156.1% increase from the amount of $2.6 million achieved for the same period in 2007.
    • Earnings before non-controlling interest were $11.0 million or $0.52 per unit on a diluted basis for the second quarter, more than double the amount of $0.24 per unit on a diluted basis generated in the same quarter of 2007. EBITDA increased 82.0% from $9.6 million in the second quarter of 2007 to $17.5 million for the same period in 2008.
    • Cash flows from operating activities generated $8.0 million of cash. Adjusted distributable cash totalled $13.2 million, of which $5.3 million were distributed to unitholders, representing an adjusted payout ratio of 40.3%.
    • The Fund announced an increase of its annual distributions from $1.00 per unit to $1.50 per unit, or from $0.0833 to $0.125 per unit per month. This increase will be effective for the Fund's July distribution to be paid on August 15, 2008.
    • During the quarter, the Fund amended its credit facilities, increasing its operating line from $40.0 million to $80.0 million.
    • The Fund completed two acquisitions during the second quarter of 2008, adding approximately 70 employees in British Columbia and Quebec. The total workforce of the Fund, as at June 28, 2008, was more than 3,100 employees.
    • Subsequent to the end of the quarter, the Fund completed the acquisitions of Peterson Galloway, a British Columbia building firm, ZENIX Engineering, an Ontario building firm, and Solmers, a Quebec environmental engineering firm.
    • As of June 28, 2008, backlog increased slightly to $300.4 million up from $294.1 million as of March 29, 2008.

    "The Fund continued delivering on its business plan fuelled by a strong demand for our services in all our operating regions," said Pierre Shoiry, President and CEO of the Fund. "These excellent results are achieved through the commitment, passion and dedication of all of our employees," he added. "We believe that the fundamentals of the consulting engineering industry in Canada are solid and that the outlook is positive in the market segments in which we operate," concluded Pierre Shoiry.

    For the six months ended June 28, 2008, total revenues were $167.4 million, up 41.7% for the same period one year ago. Net revenues rose from $95.0 million to $141.0 million, a 48.4% increase, during the same period. Earnings before non-controlling interest totalled $18.7 million or $0.88 cents per unit compared to $9.1 million or $0.48 cents per unit for the same period in 2007, an increase of 105.5%. EBITDA was $29.3 million for the period from January 1, 2008, to June 28, 2008, an increase of 65.9% over the same period of last year.

    About GENIVAR

    GENIVAR is a leading Canadian engineering services firm, providing public and private sector clients with a full range of professional consulting services through all execution phases of a project, including planning, design, construction, and maintenance. Its clients are of varying sizes and fall into diverse market segments, including building, industrial and power, urban infrastructure, transportation, and environment. GENIVAR is one of the largest engineering services firms in Canada, in terms of number of employees, employing over 3,100 managers, professionals, technicians, technologists, and support staff, in over 75 offices in Canada and abroad. www.genivar.com

    
        RESULTS OF OPERATIONS
        ---------------------
    
                             ----------------------------------------------------
                                         3 months                  6 months
                             ----------------------------------------------------
                                     2008         2007         2008         2007
                             ----------------------------------------------------
                                  FOR THE      FOR THE      FOR THE      FOR THE
                                   PERIOD       PERIOD       PERIOD       PERIOD
                                     FROM         FROM         FROM         FROM
        IN THOUSANDS OF          MARCH 30      APRIL 1    JANUARY 1    JANUARY 1
         DOLLARS EXCEPT        TO JUNE 28   TO JUNE 30   TO JUNE 28   TO JUNE 30
         PER UNIT DATA         (UNAUDITED)  (UNAUDITED)  (UNAUDITED)  (UNAUDITED)
        -------------------------------------------------------------------------
        Revenues                 $ 97,348     $ 63,791     $167,435     $118,134
    
        Deduct:
         Sub-consultants
         and other direct
         expenses                $ 16,479     $ 12,932     $ 26,418     $ 23,107
    
        Net revenues             $ 80,869     $ 50,859     $141,017     $ 95,027
    
        Direct project
         costs                   $ 40,429     $ 26,281     $ 70,611     $ 49,373
        -------------------------------------------------------------------------
        Gross margin             $ 40,440     $ 24,578     $ 70,406     $ 45,654
    
        Marketing, general,
         and administrative
         expenses and
         others                  $ 22,977     $ 14,981     $ 41,065     $ 27,967
        -------------------------------------------------------------------------
        EBITDA                   $ 17,463     $  9,597     $ 29,341     $ 17,687
        -------------------------------------------------------------------------
        Interest                 $    592     $    452     $    713     $    747
    
        Depreciation
         of property, plant,
         and equipment           $  1,033     $    677     $  1,887     $  1,276
    
        Amortization
         of intangible
         assets                  $  3,783     $  2,501     $  7,223     $  4,959
        -------------------------------------------------------------------------
        Earnings before
         income taxes and
         non-controlling
         interest                $ 12,055     $  5,967     $ 19,518     $ 10,705
    
        Income tax
         expense(1)              $  1,017     $  1,487     $    865     $  1,628
        -------------------------------------------------------------------------
        Earnings before
         non-controlling
         interest                $ 11,038     $  4,480     $ 18,653     $  9,077
    
        Non-controlling
         interest                $  4,372     $  1,877     $  7,389     $  3,802
        -------------------------------------------------------------------------
        Net earnings             $  6,666     $  2,603     $ 11,264     $  5,275
    
        Basic net earnings
         per unit                $   0.52     $   0.24     $   0.88     $   0.48
    
        Weighted average
         number of units       12,870,364   10,992,394   12,870,512   10,996,176
    
        Diluted net
         earnings per unit       $   0.52     $   0.24     $   0.88     $   0.48
    
        Diluted weighted
         average number
         of units              21,350,781   18,920,619   21,350,786   18,923,982
        -------------------------------------------------------------------------
        (1) See section "Results of operations - Income tax expense."
    
    
        DISTRIBUTABLE CASH
        ------------------
    
                             ----------------------------------------------------
                                         3 months                  6 months
                             ----------------------------------------------------
                                     2008         2007         2008         2007
                             ----------------------------------------------------
                                  FOR THE      FOR THE      FOR THE      FOR THE
                                   PERIOD       PERIOD       PERIOD       PERIOD
                                     FROM         FROM         FROM         FROM
        IN THOUSANDS OF          MARCH 30      APRIL 1    JANUARY 1    JANUARY 1
         DOLLARS EXCEPT        TO JUNE 28   TO JUNE 30   TO JUNE 28   TO JUNE 30
         PER UNIT DATA         (UNAUDITED)  (UNAUDITED)  (UNAUDITED)  (UNAUDITED)
        -------------------------------------------------------------------------
        Cash flows from
         operating
         activities              $  7,954     $  4,012     $ 15,345     $  5,666
    
        Capital
         expenditures paid      ($  2,676)   ($  2,389)   ($  4,606)   ($  4,994)
    
        Standardized
         distributable
         cash(1)                 $  5,278     $  1,623     $ 10,739     $    672
        Change in non-cash
         working capital
         items(2)                $  7,964     $  5,014     $ 12,301     $ 11,149
        Capital expenditures
         paid for
         non-recurring
         items(3)                       -     $    906            -     $  2,163
        Purchase of units
         in the market under
         the long-term
         incentive plan                 -       ($ 825)           -       ($ 825)
    
        Adjusted distributable
         cash (1)(4)             $ 13,242     $  6,718     $ 23,040     $ 13,159
    
        Adjusted
         distributable cash,
         per unit(1)(4)          $   0.62     $   0.35     $   1.08     $   0.69
    
        Payout ratio
          Standardized              101.2%       291.4%        99.5%     1,407.7%
          Adjusted                   40.3%        70.4%        46.4%        71.9%
        -------------------------------------------------------------------------
    
        Distributions
    
        Fund's units
         distributions           $  3,224     $  2,749     $  6,448     $  5,498
        Class B
         Non-subordinated
         Exchangeable
         LP unit
         distributions           $    934     $    799     $  1,868     $  1,598
        Class C Subordinated
         Exchangeable
         LP unit
         distributions           $  1,182     $  1,182     $  2,364     $  2,364
    
        Aggregate
         distributions,
         all units(4)            $  5,340     $  4,730     $ 10,680     $  9,460
    
        Aggregate
         distributions,
         all units,
         per unit(4)             $   0.25     $   0.25     $   0.50     $   0.50
        -------------------------------------------------------------------------
    
        (1) Calculation of the distributable cash included a withholding tax of
            $0.8 million for both the three- and six-month periods ended June
            28, 2008. This withholding tax should be included at the end of the
            year on the unitholders' T3 slip as a foreign income tax.
    
        (2) 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.
    
        (3) Non-recurring capital expenditures pertain to a construction project
            which had for objective to expand square footage of the main office
            in Quebec City.
    
        (4) Distributable cash and distributable cash per unit amounts are
            calculated for the combined interest of the Fund's units and
            Non-subordinated Exchangeable LP units and Subordinated Exchangeable
            LP units, which total 21,366,405 as at June 28, 2008 (18,927,381 at
            the same date in 2007). Number of units has not been adjusted to
            reflect units purchased in the market in connection with the long-
            term incentive plan since the distributions on these units continue
            to be declared and paid. As at August 4, 2008, the number of units is
            identical to what it was as at June 28, 2008.
    

    NON-GAAP MEASURES

    The Fund uses non-GAAP measures that are used by Canadian open-ended income funds as indicators of financial performance measures 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 of the Fund.

    Non-GAAP measures used by the Fund are net revenues, EBITDA, distributable cash and payout ratio. These measures are defined below.

    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 our 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. Therefore, EBITDA may not be comparable to similar measures presented by other issuers.

    Distributable cash

    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.

    Payout ratio

    Standardized payout ratio is defined as aggregate cash distributions divided by standardized distributable cash. Adjusted payout ratio is defined as aggregate cash distributions divided by adjusted distributable cash.

    Pierre Shoiry,
    President and CEO,
    GENIVAR Income Fund,
    (514) 340-0046, ext. 5104;
     
    Marlène Casciaro,
    Director of Communications,
    GENIVAR Income Fund,
    (514) 340-0046, ext. 5104