technology enhancing profitability€¦ · 05/05/2020 · investor presentation - march 2020 t s x...

TSX: IBG

Investor Presentation - March 2020

A S M A R T E R U R B A N F U T U R E

Technology Enhancing Profitability

May 2020

TSX: IBG


A S M A R T E R U R B A N F U T U R ET S X : I B G

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Forward-Looking Statements

This presentation includes certain statements, estimates and projections with respect to anticipated future performance that may constitute "forward-looking"

statements. Such forward-looking statements reflect current expectations and assumptions by the Company concerning anticipated results that may or may not prove

to be correct. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those in the forward-looking

statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed under "Risk Factors" in the Company's Annual

Information Form filed with the Canadian securities regulatory authorities. Investors should not place undue reliance on forward-looking statements as a prediction of

actual results. These forward-looking statements are made as of the date of this presentation.

Non-IFRS Measures

IBI Group reports its financial results in accordance with IFRS. However, in this presentation, the following non-IFRS measures are used by the Company: net

income from operating activities; net income from operating activities per share; adjusted EBITDA; adjusted EBITDA margin; free cash flow; backlog; net debt and

net debt to adjusted EBITDA ratio. Additional details for these non-IFRS measures and reference to the reconciliation to the most directly comparable IFRS measure,

where applicable, can be found in IBI’s MD&A for the year ended December 31, 2019, which is posted on IBI’s website at www.ibigroup.com, and filed with SEDAR at

www.sedar.com.

Management of the Company (“Management”) believes that these non-IFRS measures provide useful information to investors regarding the Company’s financial

condition and results of operations as they provide additional key metrics of its performance. These non-IFRS measures are not recognized under IFRS, do not have

standardized meaning prescribed under IFRS and may differ from similarly-named measures as reported by other issuers, and accordingly may not be comparable.

These measures should not be viewed as a substitute for the related financial information prepared in accordance with IFRS.

Note to Reader

Throughout this presentation, use of the term ‘Margin’ refers to percentage of net revenue.

Advisories

http://www.sedar.com/

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2,700+ Difference-

makers

60+ Offices

6Continents

7,000Active Projects

3 Core Sectors

of Expertise

Intelligence

Buildings

Infrastructure

• Globally-integrated design and

technology firm founded in 1974

• Specializing in providing architecture,

engineering, planning, systems and

technology services - no construction risk

• Technology-driven design firm -

Intelligence practice continues to grow and

expand margins

• A world leader in creating advanced urban

environments, with intelligent systems,

sustainable buildings and efficient infrastructure

ABOUT IBI GROUP

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CORE BUSINESS

• Design, plan and develop advanced urban systems in which people can live, work and play

• Leadership team comprised of select professional practice experts

• Diverse revenue streams derived from three integrated segments

INTELLIGENCE

INFRASTRUCTURE

BUILDINGS

Software • Systems Design • Systems

Integration • Operations • End-user Services

Architecture • Interior Design • Mechanical

Engineering Structural Engineering • Electrical

Engineering

Civil Engineering • Landscape Architecture

Planning • Transportation • Urban Design

21%Q1 2020 Revenue Contribution

51%

28%

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IBI Strategic Pivot to TechnologyNEW STRATEGIC PLAN UNVEILED SPRING 2018

Bold strategic plan to be a technology-driven design firm comprised of four streams:

1. Delivering better results, faster: Consolidated services, including design technology, quantum design and

project management, allowing IBI to integrate cutting-edge technologies from the earliest stages of design.

2. New revenue streams: Creating and harnessing new technologies and leveraging existing technologies to

create new recurring revenue streams

3. Disruptive technologies: Implementing emerging applications and using established technologies to

transform business and revenue models by adopting a “design-as-a-service” framework

4. Smart city ecosystem: Establishing relationships with leading innovators gives access to new technologies

while providing early-stage companies with key domain knowledge and a route to market.

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CORPORATE SNAPSHOT

IBI GROUP – TSX: IBG

Shares Outstanding (FD) 37.8MM

Insider Ownership 35.7%

Market Capitalization (@$4.11/sh) ~$155MM

Q1 2020 Key Financial Highlights:

Net Debt $84.6MM

Net Revenue $96.7MM

Earnings per Share (basic & FD) $0.15

Adjusted EBITDA $9.2MM

As a % of net revenue 9.5%

Net Debt / Adj. EBITDA Multiple 2.1x

Market Performance 2016 - Present

9.5%Q1 2020 Adjusted EBITDA Margin

35.7%Insider Ownership

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Investment ThesisPOISED FOR GROWTH DRIVEN BY TECHNOLOGY

Disrupting A&E Business Model

Revenue Growth & Margin Expansion

Growth Through Innovation

Delivering Consistent Returns

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COVID-19 ResponsePROTECTING STAKEHOLDERS & MITIGATING IMPACTS

• Rapid transition of 2,700-person global workforce to 100% remote working

• Enhanced Travel-IQ to connect truckers to essential touch points along transit routes, such as open service stations and

rest stops; updated advanced traffic management software for remote operations and implemented cashless payment

solutions for toll clients

• Developed a parametric capacity model using Quantum design for cities to determine when and where new healthcare

treatment centres should be built, including modeling staff and equipment requirements

• Global Healthcare practice established an 11-step process for implementing temporary healthcare facilities in as little as

4 weeks by converting stadiums, warehouses, and retail spaces into functional treatment facilities

• Using laser cutting and 3D-printing technology to meet demand for face shields and Personal Protective Equipment

(“PPE”) for healthcare providers in Canada, the UK, and the US

• Adjusted executive and board compensation, reducing CEO, senior leadership team and other managers’ salaries by

15%, 10% and 5%, respectively, and reduced annual board cash retainers by 10% and 15% for the Chairman

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Q1 2020 PERFORMANCE DASHBOARD*

$96.7MNet Revenue

2.1xNet Debt to

Adjusted EBITDA

vs 2.8x

3%

$486MBacklog as at

Mar 31, 2020

24%

9.5%Adjusted EBITDA

Margin

vs 11.5%

$9.2MAdjusted EBITDA

14%

*Q1/20 compared to Q1/19

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IntelligenceAT THE HEART OF OUR TRANSFORMATION TO A TECHNOLOGY-DRIVEN DESIGN FIRM

1 Excludes the impact of small dollar amounts being written-off arising from systems

improvement initiatives implemented during 2019. See 2019 MD&A for further details.

• Productivity tools and processes developed in-house

are unlocking growth in IBI’s traditional Buildings and

Infrastructure sectors

• Proven track record of delivering premium,

technology-driven solutions:

• Designing software, developing analytics tools, and

deploying traffic systems

• World-class software and systems

Gordie Howe International Bridge Mackinac Bridge

1

1

1

2019 Performance

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BuildingsRAISING THE IQ OF BUILT ENVIRONMENTS AROUND THE WORLD

• Embedding Intelligence to drive growth

• U.S. growth strategy in mixed-use and high-rise buildings

led by expertise of Toronto and Vancouver practices

• New design assignments secured in San Francisco, Los

Angeles and other U.S. cities

• Positioned to offer integrated design services to new

sectors, regions and clients

Square One District Phase 1 untitled Condo Development

2019 Performance

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InfrastructureCREATING VIBRANT, TECHNOLOGY-DRIVEN ENVIRONMENTS

• Land engineering, placemaking and transportation

services

• Private and public transportation projects

• Develop, deploy and manage transportation

services globally

• Current projects:

• Hurontario LRT

• Eglinton Crosstown LRT

• Edmonton LRT

• Tel Aviv Red LineHurontario LRT vivaNext BRT

2019 Performance

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Strong Performance Track Record

40%

19%

28%

7%6%

CanadaEast

CanadaWest

USA UK &Ireland

International

28.1%

50.7%

21.0%

Infrastructure

Buildings

Intelligence

Q1 2020 REGION & BUSINESS OVERVIEW

7.3%

12.1%

18.8%

Infrastructure

Buildings

Intelligence

Q1 2020 Net Revenue Contribution (%)1

Q1 2020 Operating Margin (%)1

Intelligence:

Nearing 20% Adjusted

EBITDA target by end of

2020

Q1 2020 Net Revenue by Region

1 Operating margin and net revenue contribution by division excludes allocation of corporate costs.

Intelligence:

Exceeded 20% revenue

target contribution in Q1/20

2

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Robust Q1 2020 GrowthSTRONGER Q1 NET REVENUE & ADJUSTED EBITDA OVER Q4/19

1Adjusted EBITDA as a percent of revenue

$91.7

$96.7

$60

$70

$80

$90

$100

Q4 2019 Q1 2020

Net Revenue in Millions

$6.8

$9.2

$0

$2

$4

$6

$8

$10

Q4 2019 Q1 2020

Adjusted EBITDA in Millions

7.4%1

9.5%1

• Quarterly results reflect continued strength in the U.S. operating segment, supported by stable contributions

from the Canadian operating segment

• Position as a technology-driven design firm expected to improve margins and provide a platform for growth

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Intelligence Practice Drives GrowthIMPROVING REVENUE WITH HEALTHY EBITDA MARGINS

$16.1 $16.8

$20.3

$0

$5

$10

$15

$20

$25

2018 2019 2020

Q1 Revenue in ($M)

For the quarter ended March 31:

• Continued strong performance and increasing contribution from IBI’s global Intelligence practice

• $5.3M billed to clients for recurring software support & maintenance services in Q1/20

• 21% of total net revenue represented by Intelligence

$0

$1

$2

$3

$4

2018 2019 2020

Q1 Adjusted EBITDA ($M)

17.0%1 16.4%1

18.8%1

(1Adjusted EBITDA as a percent of revenue)

20% Adjusted EBITDA

Target by end of 2020

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MARKET TRENDS & GROWTH DRIVERS

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Growing Cities and Tech HubsGLOBAL URBANIZATION MEANS INCREASED DEMAND FOR IBI’S BUILDING AND INFRASTRUCTURE SERVICES

GLOBAL CITIES

NEED NEW

BUILDINGS &

INFRASTRUCTURE

$69.1Tneeded in

infrastructure

spend

(2017-2035)

GROWTH

IS URBAN

2.5B people will move into global cities

over the next 30 years

>80% of global GDP

generated in cities

NEW

ECONOMY IS

URBAN

800Mmore houses

needed by end

of 21st century

$200Bgrowth in

healthcare

infrastructure

(2019-2024)

216-594Mglobal students in

higher education

projected to

double by 2040

*Software developers, programmers, computer support, database and systems, technology and engineering related, computer and information system managers. See Index on page 29 for sources.

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IBI Outlook + Growth Drivers

• ~$486MM of work committed and under contract for

the next five years1

• ~15 months of backlog

• Ongoing integration of technology throughout IBI

• Anticipate continued free cash flow generation to

invest in growth opportunities

MACRO TRENDS SUPPORT IBI’S POSITIVE OUTLOOK

Trends Supporting Future Growth

Urbanization

Infrastructure

Technology

1As at March 31, 2020

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TECHNOLOGY ENHANCING PROFITABILITY:

IBI’SFOUR STREAMS

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1. Delivering Better Results, FasterFOCUS ON PRODUCTIVITY ENHANCMENTS

• Integrating cutting-edge technologies from the earliest stages of

design

• Innovative BIMbot technology improves efficiencies

• Enables cross-disciplinary collaboration in the design stages

• Effectively processes data to detect potential conflicts between

underground utilities, streetscaping, transit signals and stormwater lines

• Recently completed a major portion of Metrolinx’s vivaNext bus rapid

transitway ahead of schedule due to our BIMbot software

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2. New Revenue StreamsSOFTWARE-AS-A-SERVICE SOLUTIONS DRIVE RECURRING REVENUE

Travel-IQ

• Signature white-label technology provides informed, real-time trip

planning to the public

• Helps to improve travel efficiency for transportation authorities by

encouraging travellers to avoid problem areas and informing necessary

road repairs.

InForm

• Cloud-based asset management tool serving building owners, corporate

facilities managers & transportation agencies

• Saves money by providing the tools needed to manage costs & operate

assets more efficiently

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3. Disruptive TechnologiesINCORPORATING EMERGING APPLICATIONS

• Adoption of a ‘design-as-a service’ framework is transforming

IBI’s business and revenue models

• Developed a proprietary computation modeling process called

IBI Quantum

• IBI Quantum was implemented in the design of a one-of-

a-kind residential building façade that serves as a visual

abstraction of music

• Thousands of design iterations generated

• Beats of a Pharell Williams song used to design a balcony

pattern mimicking the flow of the music

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4. Smart City EcosystemPARNTERING WITH LEADING INNOVATORS

• Leveraging like-minded partners to foster innovative new

products and solutions for urban environments

• Access to leading-edge innovation being developed within the

tech eco-environments

• Provide solutions to meet the practical needs of clients and an

important route to market for emerging companies

• Equity investment in SWTCH, focused on EV charging

• Asset purchase of Aspyr Engineering, leader in communication

technology solutions for healthcare, higher education and government

T E C H N O L O G Y P R O V I D E R

Collaborators:

Take a virtual tour of our

Smart City Sand Box

https://www.ibiviz.com/virtualsandbox/

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Investment ThesisPOISED FOR GROWTH DRIVEN BY TECHNOLOGY

Disrupting A&E Business ModelThrough new business models and services

Revenue Growth & Margin ExpansionFocus on urbanization and productivity enhancement

Growth Through InnovationApplying technology to open new markets

Delivering Consistent ReturnsA long history of proven performance

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Commitment to ESGRESPONSIBLE GROWTH IS EMBEDDED IN IBI’S STRATEGY & CORPORATE CULTURE

• Actively foster a culture that

promotes diversity,

inclusion, collaboration

and caring

• Empowering the team

through internal programs:

Leadership Engagement &

Development, Employee

Recognition, Professional

Mentoring & Global Women’s

Network

• Giving back to communities,

local charities and non-profit

organizations

SOCIAL

• Regular assessment of

competency and critical

skills to take our business

to the next level

• Engaged board of

directors; ability to guide &

champion IBI’s technology-

focused practice

• Formal Code of Conduct

& Ethics Policy, which all

employees and directors

are required to review and

sign

GOVERNANCE

• Plan and execute every

project to meet the highest

environmental standards

• Seek to incorporate

resilience in our design to

better manage potential

climate events

• Working through approval

processes to design the

largest solar farm in

western Canada with

expected capability to power

25,000 homes

ENVIRONMENTAL

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contacts

Technology

Enhancing

Profitability

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Management TeamEXPERIENCE MEETS VISION

Scott Stewart

Chief Executive Officer

Stephen Taylor Chief Financial Officer

Mansoor

KazerouniGlobal Director,

Buildings

David ThomPresident

Derek Sims

Global Director,

Intelligence

Carl ClaytonGlobal Director,

Infrastructure

OPTION 03

Deepak DardaGlobal Director,

Innovation

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Board of DirectorsSTRONG STEWARDS OF CAPITAL & A VOICE FOR SHAREHOLDERS

28

Dale RichmondIndependent Director,

Chair of the Board

Paula Sinclair

Independent Director ,Chair of the Audit Committee

Claudia KrywiakIndependent Director

Michael NobregaIndependent Director

John O. Reid

Independent Director

Scott StewartCEO, IBI Group

David ThomPresident, IBI Group

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Growth is Urban: “68% of the world population projected to live in urban areas by 2050, says UN” (United Nations: May 16,

2018) https://www.un.org/development/desa/en/news/population/2018-revision-of-world-urbanizationprospects.html

Global Cities Need New Buildings and Infrastructure // Infrastructure: O’Sullivan, Mike, “Experts: Urbanization Will Worsen Housing Crisis” (VOA: October 11,

2018) https://www.voanews.com/a/experts-urbanization-will-worsenhousing-crisis/4608846.html

Global Cities Need New Buildings and Infrastructure // Housing: Badger, Emily, “Why We Should be Worried About the Rapid Growth in Global Households” (City

Lab: February 14, 2014): https://www.citylab.com/equity/2014/02/ worlds-ticking-household-bomb/8389/

Global Cities Need New Buildings and Infrastructure // Healthcare: “Healthcare infrastructure market set to grow to $200billion in five years” (Building Better

Healthcare: December 11, 2018) https://www.buildingbetterhealthcare.

co.uk/news/articlepage/Healthcare_infrastructure_market_set_to_grow_to_200billion_in_five_years/149796

Global Cities Need New Buildings and Infrastructure // Education: “Study projects dramatic growth for global higher education through 2040” (ICEF Monitor: October

3, 2018) http://monitor.icef.com/2018/10/study-projects-dramaticgrowth-global-higher-education-2040/ The New Economy is Urban: “Urban Development” (The

World Bank: October 5, 2018) https://www.worldbank.org/ en/topic/urbandevelopment/overview#1

We Are Where the Growth Is: Global Tech Hubs Report (CB Insights: May 20, 2018) https://www.cbinsights.com/ research/report/global-tech-hubs/

Index

technology enhancing profitability€¦ · 05/05/2020 · investor presentation - march 2020 t s x...

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