IBI Group Inc. Announces Second Quarter 2018 Financial Results

• Net revenue growth in Canada was 13.8% over the comparable quarter in 2017.
• EBITDA for the quarter was 9.8% of revenue.
• Revenue for the quarter is in line with same quarter results of 2017 at $93.1 million.
• The technology pivot advanced on a number of fronts, including the launch of the Smart City Sandbox, InForm by IBI Group and the acquisition of GreenOwl Mobile.

Toronto, ON / August 9, 2018 / – IBI Group Inc. (the “Company”) (TSX:IBG) today announced financial results for the three months ended June 30, 2018.

KEY EVENTS

• Net revenue growth in Canada was 13.8% over the comparable quarter in 2017.
• Adjusted EBITDA was $9.1 million (or 9.8% of revenue) for the quarter compared to $11.8 million (or 12.6% of revenue) for the same period in 2017.
• Cash flows used by operating activities for the quarter increased by $3.8 million to $5.0 million compared to $1.2 million for the same period in 2017.
• Net revenue for the quarter was $93.1 million compared to $93.3 million for the same period in 2017.
• This quarter, net income was $1.2 million compared to $4.9 million for the same period in 2017.
• Interest expense decreased to $2.3 million for the quarter compared to $2.5 million for the same period in 2017.
• Accelerated efforts to align revenues and costs in U.S. operations.
• At the AGM, IBI launched the Smart City Sandbox with key partners Ontario Power Generation (OPG), Pelmorex (the Weather Network), EllisDon and Slate REIT and technical partners, including Microsoft and the Ontario Centre of Excellence (OCE).
• During the quarter, the Company launched InForm by IBI Group, an asset management product suite designed to help clients manage assets, make informed maintenance and planning decisions, and ultimately reduce operational costs.
• In May, the Company purchased GreenOwl Mobile, which specializes in mobile applications.
• Launched several robotic processes to improve operational efficiencies

“EBITDA margins and revenues remained stable in the quarter. We experienced strong performance in our Canadian operations and our Intelligence sector remains robust and continues according to plan. Performance was weak in our U.S. Buildings and Infrastructure practices. Management is aligning costs and enhancing marketing efforts to reverse this trend. The pivot to becoming a technology driven design firm moved forward with two new products launched, the Smart City Sandbox becoming a reality and internal robotic process improvement. The acquisition of GreenOwl Mobile and the launch of our asset management product, InForm will support further growth and margin improvement. Finally, backlog remains robust at approximately 11.5 months,” said Scott Stewart, Chief Executive Officer of IBI Group Inc.

FINANCIAL HIGHLIGHTS

¹See “Definition of Non-IFRS Measures” defined in MD&A.

FINANCIAL OVERVIEW

The Company had net income of $1.2 million compared to $4.9 million for the same period in 2017, a decrease of 75.5%. This quarter as a result of changing market conditions, net income is inclusive of a pre-tax loss in fair value of other financial liabilities of $0.6 million and a loss in foreign exchange of $1.4 million as a result of the movement in the market value of the Canadian Dollar.

Basic and diluted earnings per share was $0.03 per share for the quarter, compared to $0.13 per share for the same period in 2017. The decrease was primarily due to a decrease in net income of $3.7 million, and a decrease in the weighted average number of common shares outstanding to 31,220,877 as of quarter end compared to 31,190,153 for the same period in 2017. The increase in common shares outstanding is a result of the exercise of deferred share units and stock options.

Adjusted EBITDA was $9.1 million (or 9.8% of revenue) this quarter compared to $11.8 million (or 12.6% of revenue) for the same period in 2017. During the quarter, adjusted EBITDA was impacted by the increase in cash outflows related to a lease of $0.5 million. The Company finalized its sub-lease agreement for one of its office spaces in 2017, at which point, an increase in rent expense was recognized as part of net earnings, but not included in adjusted EBITDA in 2017. The cash outflows related to the lease have the opposite effect, with no impact to net earnings but a reduction to adjusted EBITDA for the quarter.

Cash flows used in operating activities increased this quarter to $5.0 million compared to $1.2 million for the same period in 2017, which reflects an increase of $3.8 million.

OUTLOOK

Management is forecasting approximately $361 million in total net revenue for the year ended December 31, 2018. The Company currently has approximately $350 million of work that is committed and under contract for the next five years. The Company has approximately 11.5 months of backlog (calculated on the basis of the current pace of work that the Company has achieved during the 12 months ended June 30, 2018).

INVESTOR CONFERENCE CALL

The Company invites you to join its conference call on Friday, August 10, 2018 at 8:30 a.m. ET. A recording of the conference call will be available on IBI Group’s website within 24 hours following the call. An audio replay of the call will be available for 14 days following the call.

Conference Call Details:

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 Partnership 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) fixed-price contracts; (vi) the general state of the economy; (vii) risk of future legal proceedings against the Company; (viii) the international operations of the Company; (ix) reduction in the Company’s backlog; (x) fluctuations in interest rates; (xi) fluctuations in currency exchange rates; (xii) upfront risk of time invested in participating in consortia bidding on large projects and projects being contracted through private finance initiatives; (xiii) limits under the Company’s insurance   policies; (xiv) the Company’s reliance on distributions from its subsidiary entities and, as a result, its susceptibility to fluctuations in their performance; (xv) unpredictability and volatility in the price of Shares; (xvi) the degree to which the Company is leveraged and the effect of the restrictive and financial covenants in the Company’s credit facilities; (xvii) the possibility that the Company may issue additional Common Shares diluting existing Shareholders’ interests; (xviii) income tax matters. 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, 2018. 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 at August 9, 2018.

The factors used to develop revenue forecast in this news release include the total amount of work the Company has signed an agreement with its clients to complete, the timeline in which that work will be completed based on the current pace of work the Company achieved over the last 12 months and expects to achieve over the next 12 months. The Company updates these assumptions at each reporting period and adjusts its forward-looking information as necessary.

About IBI Group Inc.

IBI Group Inc. (TSX:IBG) is a globally integrated architecture, planning, engineering, and technology firm with over 2,500 professionals around the world. For more than 40 years, its dedicated professionals have helped clients create livable, sustainable, and advanced urban environments. IBI Group believes that cities must be designed with intelligent systems, sustainable buildings, efficient infrastructure, and a human touch. IBI Group is a lead partner of the Smart Cities Council North America. Follow on Twitter @ibigroup and Instagram @ibi_group.

SOURCE: IBI Group Inc.

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