GDI Integrated Facility Services Inc. Releases its Financial Results for the Third Quarter Ended September 30, 2022

Posted on: November 09, 2022
  • Q3 2022 revenue of $563 million – an increase of $155 million, or 38%, over Q3 2021.
  • Q3 2022 Adjusted EBITDA1 of $40 million – an increase of $7 million, or 21%, over Q3 2021.
  • Q3 2022 net income of $11 million or $0.45 per share compared with $9 million or $0.41 per share in the third quarter of 2021.

LASALLE, QC, Nov. 9, 2022 /CNW/ – GDI Integrated Facility Services Inc. (“GDI” or the “Company“) (TSX: GDI) is pleased to announce its financial results for its third quarter ended September 30, 2022.

For the three-month period ended September 30, 2022:

  • Revenue was $563 million, an increase of $155 million, or 38%, over the third quarter of 2021, which is mainly the result of growth from acquisitions of 30% and organic growth of 7%.
  • Adjusted EBITDA1 amounted to $40 million, an increase of $7 million, or 21%, over the third quarter of 2021.
  • Net income was $11 million or $0.45 per share compared to $9 million or $0.41 per share in Q3 2021.

For the third quarters of 2022 and 2021, the business segments performed as follows:

(in millions of

Canadian dollars)

Janitorial Canada

Janitorial USA

Technical Services

Complementary Services

Consolidated

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Revenue

142

132

174

86

230

179

24

15

563

408

Organic Growth (Decline)

7 %

(3 %)

(2 %)

8 %

12 %

11 %

33 %

(36 %)

7 %

3 %

Adjusted EBITDA1

17

18

12

8

15

11

1

(1)

40

33

Adjusted EBITDA Margin1

12 %

14 %

7 %

9 %

7 %

6 %

4 %

(7 %)

7 %

8 %


For the nine-month period ended September 30, 2022:

  • Revenue reached $1.584 billion, an increase of $420 million, or 36%, over the corresponding period of 2021, which is mainly the result of growth from acquisitions of 28% and organic growth of 7%.
  • Adjusted EBITDA1 amounted to $112 million, an increase of $13 million, or 13%, over the corresponding period of 2021.
  • Net income was $27 million or $1.16 per share compared to $36 million or $1.59 per share in the corresponding period of 2021.

For the first three quarters of 2022 and 2021, the business segments performed as follows:

(in millions of

Canadian dollars)

Janitorial Canada

Janitorial USA

Technical Services

Complementary Services

Consolidated

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Revenue

428

392

502

241

602

495

74

47

1,584

1,164

Organic Growth (Decline)

9 %

0 %

7 %

5 %

6 %

10 %

25 %

(28 %)

7 %

3 %

Adjusted EBITDA1

55

59

37

23

30

27

2

112

99

Adjusted EBITDA Margin1

13 %

15 %

7 %

10 %

5 %

5 %

3 %

0 %

7 %

9 %


GDI’s Janitorial Canada segment had a strong quarter, recording $142 million in revenue representing an organic growth of 7%, while delivering $17 million in Adjusted EBITDA1, a decrease of $1 million compared to Q3 2021. GDI’s Janitorial USA segment also performed well in Q3 2022, recording revenue of $174 million representing organic decline of 2%, which was principally caused by an expected year-over-year reduction in COVID-related services at IH Services, Inc. (“IH Services”) which was acquired on December 31, 2021. The Janitorial USA segment recorded Adjusted EBITDA1 of $12 million in Q3 2021, representing an increase of 50% over Q3 2021, the growth being primarily attributable to the acquisition of IH Services. In line with expectations, Adjusted EBITDA margins1 in both Janitorial segments declined as a lower amount of COVID-19 related services were provided in the quarter compared to the prior year and contractual recurring revenues increased.

The Technical Services segment recorded revenue of $230 million or growth of 28% over Q3 2021, of which 15% was generated from acquisitions and 12% was organic growth. The segment recorded Adjusted EBITDA1 of $15 million compared to $11 million in Q3 2021, representing an Adjusted EBITDA margin1 of 7%. The Technical Services Segment is now operating at normal seasonal capacity levels after being weighted down by supply chain challenges at the beginning of the year.

Finally, GDI’s Complementary Services segment recorded revenues of $24 million and Adjusted EBITDA1 of $1 million compared to revenue of $15 million and Adjusted EBITDA1 of ($1) million in Q3 2021.  This segment also recorded organic growth of 33% in Q3 2022, the majority of which was due GDI’s integrated facility services business unit (“GDI IFS”) which was launched at the beginning of 2022.

“GDI delivered another solid quarter of consecutive growth in both revenue and Adjusted EBITDA1,” stated Claude Bigras, President & CEO of GDI. “Both of our Janitorial segments performed well. As expected, we have been seeing a pullback in COVID related services as the threat of the virus dissipates, but we are continuing to deliver strong results as we support our clients as buildings reoccupy and tenants in the commercial office sector roll out bespoke back to work plans for their staff. The IH Services acquisition is continuing to exceed our expectations. Our teams are working well together and are at an advanced stage of sharing client relationships and best practices. During Q3 we welcomed Cascadian Building Maintenance Ltd. to the GDI family, more than doubling our presence in the Greater Seattle area and moving to what we believe is the number two player by size in that market. Our Technical Services segment delivered a record quarter with Adjusted EBITDA1 of $15 million and an Adjusted EBITDAmargin1 of 7%. The supply chain challenges it faced earlier in the year are now resolved and the business is operating on all cylinders, and we continue to carry a record backlog. Our Complementary Services segment had a respectable quarter. The outlook for our products manufacturing and distribution business is positive as occupancy rates rise and our new GDI integrated facility services business is executing well on its two inaugural contracts and is actively pursuing more. Finally, the human resource information system (“HRIS”) project that we announced earlier this year is proceeding as planned with an expected launch on January 1, 2023, in our US business units, with the Canadian business units to follow in the first half of 2023. The new HRIS will enable all of our business segments to more effectively manage our labour force. During Q3 we recorded one-time costs of approximately $2 million in relation to the HRIS project implementation, in line with our estimate.”

“Year-to-date, GDI generated over $1.5 billion in revenue and $112 million in Adjusted EBITDA1. All our business segments are performing well and the outlook for each is positive. Our balance sheet is strong, our leverage ratio for bank covenant purposes is well within our comfort zone at less than 2,5x, and our ability to deliver on our strategic growth objectives remains intact. I would like to thank all of the team members who make up the GDI family for their hard work and dedication and look forward to a strong finish to 2022.” 

ABOUT GDI

GDI is a leading integrated commercial facility services provider which offers a range of services in Canada and the United States to owners and managers of a variety of facility types including office buildings, educational facilities, distribution centers, industrial facilities, healthcare establishments, stadiums and event venues, hotels, shopping centres, airports and other transportation facilities. GDI’s commercial facility services capabilities include commercial janitorial and building maintenance, the installation, maintenance and repair of HVAC-R, mechanical, electrical and building automation systems, as well as other complementary services such as janitorial products manufacturing and distribution. GDI’s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: GDI). Additional information on GDI can be found on its website at www.gdi.com.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward looking information may relate to GDI’s future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as “may”; “will”; “should”; “expect”; “plan”; “anticipate”; “believe”; “intend”; “estimate”; “predict”; “potential”; “continue”; “foresee”; “ensure” or other similar expressions concerning matters that are not historical facts. In particular, statements regarding GDI’s future operating results and economic performance, and its objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which GDI believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the Company, they may prove to be incorrect. It is impossible for GDI to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the “Risk Factors” section of the MD&A) that could cause actual results to differ materially from what GDI currently expects. Namely, these factors include risks pertaining to COVID-19 and related pandemic, unsuccessful implementation of the business strategy, inherent operating risks of acquisition activity, failure to integrate, decline in commercial real estate occupancy levels, increase in costs which cannot be passed on to customers, labour shortages, disruption in information technology systems and execution issues with strategic IT projects, increases in interest rates, deterioration in general economic conditions, increase in competition, influence of the principal shareholders, loss of key or long-term customers, public procurement laws and regulations, legal proceedings, reputational damage, labour disputes, goodwill and long-lived assets impairment charges, tax matters, dependence on key employees, participation in multi-employer pension plans, legislation or other governmental action, exchange rate fluctuations, disputes with franchisees, cybersecurity and data protection, data confidentiality, and public perception of our environmental footprint, many of which are beyond the Company’s control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Company is under no obligation and does not undertake to update or alter this information at any particular time, except as may be required by law.

____________________________

1      The terms “Adjusted EBITDA” and “Adjusted EBITDA Margin” do not have standardized definitions prescribed by International Financial Reporting Standards and therefore, may not be comparable to similar measures presented by other companies. “Adjusted EBITDA” is defined as operating income before depreciation and amortization, Canadian Emergency Wage Subsidy and related expenses, transaction, reorganization and other costs and share-based compensation. The Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenues. For more details and for a reconciliation of that measure to the most directly comparable IFRS measure, consult the “Operating and Financial Results” section of the Company’s Management Discussion & Analysis (MD&A).

 

Analyst Conference Call:

November 10, 2022 at 9:00 A.M. (ET)




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Confirmation Code: 3708260


September 30, 2022 unaudited condensed consolidated interim financial statements and accompanied Management & Discussion Analysis are filed on www.sedar.com.

 

GDI INTEGRATED FACILITY SERVICES INC.
Condensed Consolidated Interim Statements of Financial Position
(Unaudited) (In millions of Canadian dollars)


As at September 30,

2022

As at December 31,
2021

Assets






Current assets



Cash

15

24

Trade and other receivables and contract assets

521

431

Current tax assets

6

4

Inventories

45

34

Other financial assets

10

12

Prepaid expenses and other

10

9

Derivatives

3

Total current assets

610

514




Non-current assets



Other long-term assets

9

8

Derivatives

1

Property, plant and equipment

123

117

Deferred tax assets

1

1

Intangible assets

148

143

Goodwill

341

302

Total non-current assets

623

571




Total assets

1,233

1,085




Liabilities and Shareholders’ Equity






Current liabilities



Bank indebtedness

3

Trade and other payables

277

250

Provisions

28

28

Contract liabilities

27

43

Current tax liabilities

4

5

Current portion of long-term debt

40

28

Total current liabilities

376

357




Non-current liabilities



Long-term debt

388

299

Long-term payables

4

7

Deferred tax liabilities

36

31

Total non-current liabilities

428

337




Shareholders’ equity



Share capital

375

371

Retained earnings

40

13

Contributed surplus

6

6

Accumulated other comprehensive income

8

1

Total shareholders’ equity

429

391




Total liabilities and shareholders’ equity

1,233

1,085

 

GDI INTEGRATED FACILITY SERVICES INC.
Condensed Consolidated Interim Statements of Comprehensive Income
(Unaudited) (In millions of Canadian dollars, except for earnings per share)


Three-month periods

ended September 30,

Nine-month periods

ended September 30,


2022

2021

2022

2021






Revenues

563

408

1,584

1,164






Cost of services

453

326

1,263

911

Selling and administrative expenses

72

51

214

159

Transaction, reorganization and other costs

1

1

2

1

Canadian Emergency Wage Subsidy and related expenses

(1)

(13)

Amortization of intangible assets

6

5

19

15

Depreciation of property, plant and equipment

12

8

33

22

Operating income

19

18

53

69






Net finance expense

3

5

13

17

Income before income taxes

16

13

40

52






Income tax expense

5

4

13

16

Net income

11

9

27

36






Other comprehensive income





 Gains (losses) that are or may be reclassified to earnings:





Foreign currency translation differences for foreign operations

18

4

23

−  

Hedge of net investments in foreign operations, net of tax of nil

(15)

(2)

(19)

−  

Cash flow hedges, effective portion of changes in fair value, net of tax of nil and ($1) (nil and nil in 2021)

1

3

1


4

2

7

1






Total comprehensive income

15

11

34

37











Earnings per share:





Basic

0.45

0.41

1.16

1.59

Diluted

0.44

0.40

1.13

1.54








 

GDI INTEGRATED FACILITY SERVICES INC.
Condensed Consolidated Interim Statements of Changes in Equity
Nine-month periods ended September 30, 2022 and 2021
(Unaudited) (In millions of Canadian dollars, except for number of shares)


Share capital

Retained
earnings
(deficit)

 

Contributed
surplus

 

Accumulated
other
comprehensive
income

Total


Number

(in thousands
of shares)

Amount

Balance, January 1, 2021

22,780

364

(31)

6

339

Net income

36

36

Other comprehensive income

1

1

Total comprehensive income for the period

36

1

37

Transactions with owners of the Company:






Share-based compensation

1

1

Stock options exercised

325

7

(1)

6

Balance, September 30, 2021

23,105

371

5

6

1

383








Balance, January 1, 2022

23,121

371

13

6

1

391

Net income

27

27

Other comprehensive income

7

7

Total comprehensive income for the period

27

7

34

Transactions with owners of the Company:






Share-based compensation

1

1

Stock options exercised

185

5

(1)

4

Shares repurchased for cancellation

(12)

(1)

(1)

Balance, September 30, 2022

23,294

375

40

6

8

429

 

GDI INTEGRATED FACILITY SERVICES INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited) (In millions of Canadian dollars)

Nine-month periods ended September 30,


2022

2021




Cash flows from (used in) operating activities



Net income

27

36

Adjustments for:



Depreciation and amortization

52

37

Equity portion of share-based compensation

1

1

Net finance expense (note 8)

13

17

Income tax expense

13

16

Income taxes paid

(16)

(30)

Net changes in non-cash operating assets and liabilities

(75)

5

Net cash from operating activities

15

82




Cash flows from (used in) financing activities



Proceeds from issuance of long-term debt                                                              

169

117

Repayment of long-term debt

(108)

(112)

Payment of lease liabilities

(20)

(13)

Interest paid

(7)

(3)

Other

2

6

Net cash from (used in) financing activities

36

(5)




Cash flows from (used in) investing activities



Business acquisitions, net of cash acquired

(37)

(63)

Additions to property, plant and equipment

(15)

(10)

Additions to intangible assets

(5)

(2)

Other

1

Net cash used in investing activities

(57)

(74)




Net change in cash

(6)

3




Cash (bank indebtedness), beginning of period:



Cash

24

3

Bank indebtedness

(3)

(5)


21

(2)




Cash (bank indebtedness), end of period:



Cash

15

10

Bank indebtedness

(9)


15

1

 

GDI INTEGRATED FACILITY SERVICES INC.
Segmented information
Three-month and nine-month periods ended September 30, 2022 and 2021
(Unaudited) (In millions of Canadian dollars)





Three-month period ended September 30, 2022


Janitorial
Canada

Janitorial
USA

Technical
services

Complementary
services

Corporate and
eliminations

      Total








Recurring/contractual services

118

160

24

3

305

On-call services

14

14

64

92

Project

137

137

Manufacturing and distribution

17

17

Other revenues

7

5

12








Total external revenues

139

174

230

20

563

Inter-segment revenues

3

4

(7)

Revenues

142

174

230

24

(7)

563








Income (loss) before income taxes

13

7

7

(11)

16

Net finance expense

1

2

3

Operating income (loss)

13

8

7

(9)

19

Depreciation and amortization

4

4

8

1

1

18

Transaction, reorganization and other costs

1

1

Share-based compensation (1)

2

2

Adjusted EBITDA

17

12

15

1

(5)

40








Total assets

475

334

360

17

47

1,233

Total liabilities

78

102

227

16

381

804

Additions to property, plant and equipment

4

5

12

2

1

24

Additions to intangible assets

4

1

5

Goodwill recorded on business acquisition

4

(1)

3









(1)       Includes stock option, performance share unit and restricted share unit plans.

 





Three-month period ended September 30, 2021


Janitorial
Canada

Janitorial
USA

Technical
services

Complementary
services

Corporate and
eliminations

      Total








Recurring/contractual services

104

77

21

202

On-call services

20

9

46

75

Project

112

112

Manufacturing and distribution

11

11

Other revenues

8

8








Total external revenues

132

86

179

11

408

Inter-segment revenues


4

(4)

Revenues

132

86

179

15

(4)

408








Income (loss) before income taxes

15

5

4

(2)

(9)

13

Net finance expense

1

1

3

5

Operating income (loss)

15

6

5

(2)

(6)

18

Depreciation and amortization

3

2

6

1

1

13

Canadian Emergency Wage Subsidy and related expenses

(1)

(1)

Transaction, reorganization and other costs

1

1

Share-based compensation (1)

2

2

Adjusted EBITDA

18

8

11

(1)

(3)

33








Total assets (2)

262

323

398

70

32

1,085

Total liabilities (2)

83

91

204

15

301

694

Additions to property, plant and equipment

2

1

7

11

1

22

Additions to intangible assets

5

1

1

7

Goodwill recorded on business acquisition

11

1

12

(1)       Includes stock option, performance share unit and restricted share unit plans.

(2)       As at December 31, 2021.

 

GDI INTEGRATED FACILITY SERVICES INC.
Segmented information
Three-month and nine-month periods ended September 30, 2022 and 2021
(Unaudited) (In millions of Canadian dollars)





Nine-month period ended September 30, 2022


Janitorial
Canada

Janitorial
USA

Technical
services

Complementary
services

Corporate and
eliminations

      Total








Recurring/contractual services

350

460

66

10

886

On-call services

49

41

173

2

265

Project

357

357

Manufacturing and distribution

48

48

Other revenues

21

1

5

1

28








Total external revenues

420

502

601

61

1,584

Inter-segment revenues

8

1

13

(22)

Revenues

428

502

602

74

(22)

1,584








Income (loss) before income taxes

45

19

4

(2)

(26)

40

Net finance expense

6

2

5

13

Operating income (loss)

45

25

6

(2)

(21)

53

Depreciation and amortization

10

12

23

4

3

52

Transaction, reorganization and other costs

1

1

2

Share-based compensation (1)

5

5

Adjusted EBITDA

55

37

30

2

(12)

112








Total assets

475

334

360

17

47

1,233

Total liabilities

78

102

227

16

381

804

Additions to property, plant and equipment

6

7

17

2

5

37

Additions to intangible assets

4

10

5

19

Goodwill recorded on business acquisition

4

23

27

(1)       Includes stock option, performance share unit and restricted share unit plans.

 





Nine-month period ended September 30, 2021


Janitorial
Canada

Janitorial
USA

Technical
services

Complementary
services

Corporate and
eliminations

      Total








Recurring/contractual services

298

214

60

572

On-call services

64

27

143

234

Project

291

291

Manufacturing and distribution

36

36

Other revenues

30

1

31








Total external revenues

392

241

495

36

1,164

Inter-segment revenues

11

(11)

Revenues

392

241

495

47

(11)

1,164








Income (loss) before income taxes

49

15

7

(2)

(17)

52

Net finance expense

3

2

12

17

Operating income

49

18

9

(2)

(5)

69

Depreciation and amortization

10

5

18

2

2

37

Canadian Emergency Wage Subsidy and related expenses

(13)

(13)

Transaction, reorganization and other costs

1

1

Share-based compensation (1)

5

5

Adjusted EBITDA

59

23

27

(10)

99








Total assets (2)

262

323

398

70

32

1,085

Total liabilities (2)

83

91

204

15

301

694

Additions to property, plant and equipment

4

2

19

12

4

41

Additions to intangible assets

23

2

2

27

Goodwill recorded on business acquisition

31

1

32

(1)       Includes stock option, performance share unit and restricted share unit plans.

(2)       As at December 31, 2021.

 

GDI INTEGRATED FACILITY SERVICES INC.
Business acquisitions
Nine-month periods ended September 30, 2022 and 2021
(Unaudited) (In millions of Canadian dollars)

Acquisition date

Company acquired

Location

Segment reporting

Purchase price allocation status

2022 Acquisitions

January 21, 2022

Gestion E.C.I. Inc. and its subsidiaries (“Énergère“)

Montreal,
Quebec

Technical

Services

Preliminary

March 1, 2022

M.T.I. Mechanical Trade Industries Ltd. and its subsidiary (“MTI“)

Markham,
Ontario

Technical

Services

Preliminary

September 1, 2022

Cascadian Building Maintenance, Ltd. (“Cascadian“)

Bellevue,
Washington

Janitorial
USA

Preliminary

2021 Acquisitions

January 1, 2021

The BPAC Group, Inc. and its subsidiaries (“BP“)

New York,
New York

Technical
Services

Completed

September 1, 2021

Enginuity, LLC (“Enginuity“)

Mechanicsburg,
Pennsylvania (4)

Technical
Services

Completed

September 15, 2021

Fuller Industries, LLC (“Fuller“)

Great Bend,
Kansas

Complementary
Services

Completed

December 31, 2021

IH Services, Inc. and its subsidiaries (“IH“)

Greenville,
South Carolina (5)

Janitorial
USA

Preliminary

 

GDI INTEGRATED FACILITY SERVICES INC.
Supplementary Quarterly Financial Information
Three-month periods
(Unaudited) (In millions of Canadian dollars, except per share data)

Three-month periods ended

(in millions of Canadian dollars, except per share data)(1)

September

2022

June

2022

March

2022

December

2021

Revenue

563

526

495

433

Operating income

19

17

18

15

Depreciation and amortization

18

18

16

15

Canadian Emergency Wage Subsidy and related expenses

Transaction, reorganization and other costs

1

1

2

Share-based compensation

2

1

2

2

Adjusted EBITDA

40

37

36

34

Net income for the period

11

10

7

7

Earnings per share





   Basic

0.45

0.40

0.30

0.30

   Diluted

0.44

0.40

0.30

0.29

Three-month periods ended

(in millions of Canadian dollars, except per share data)(1)

September

2021

June

2021

Mars
2021

December
2020

Revenue

408

372

384

365

Operating income

18

24

27

28

Depreciation and amortization

13

12

12

10

Canadian Emergency Wage Subsidy and related expenses

(1)

(5)

(7)

(9)

Transaction, reorganization and other costs

1

1

2

Share-based compensation

2

2

1

1

Adjusted EBITDA

33

33

34

32

Net income for the period

9

14

13

17

Earnings per share





   Basic

0.41

0.61

0.57

0.75

   Diluted

0.40

0.59

0.56

0.73









(1)

The differences between the quarters are mainly the results of business acquisitions, as well as seasonality in the Technical Services Segment. The net income for the three-month periods ended December 31, 2020, March 31, 2021, June 30, 2021 and September 30, 2021 were favourably impacted by the Canadian Emergency Wage Subsidy and related expenses.

 

SOURCE GDI Integrated Facility Services Inc.

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