Over the last few months, I have diverted my attention to analyzing and reading about infrastructure companies in Canada. As I have stated in a previous article, I believe infrastructure stocks will rise over the next decade because of the significant investments the federal government of Canada is making to improve infrastructure. The federal government has planned to invest $120 billion in nation wide infrastructure improvements ranging from new public transit systems to social and environmentally friendly projects. In some cities like Toronto, the infrastructure projects have already begun. The Toronto public transit system (Toronto Transit Commission, or TTC) has begun construction of expanding the subway system north of the city. The timing of this could not have been better for IBI Group.
IBI Group (OTCPK:IBIBF) is a global architecture, planning and engineering firm based in Toronto, Canada. IBI Group organizes their expertise into three groups: Intelligence, Buildings, and Infrastructure. Some of the projects IBI group has worked on include: planning and integrated design for the 2015 Pan Am games in Toronto, build traffic management system for the City of Vancouver and designed the Espalande building in downtown Toronto.
- Market Cap: $128.06 Million
- Forward P/E: 4.81
- Enterprise value/EBITDA: 7.08
In 2015, IBI group completed a three year turnaround plan. The goal of the turnaround plan was to reduce debt, generate more revenue, and position the company to take advantage of future growth opportunities. The turnaround was successful because, in 2015, the company grew adjusted EBITDA from $23.7 million to $34.4 million (A 45.1% increase). Total revenue for 2015 also increased to $327.1 million, a 9.7% increase for the previous year. Lastly the total debt was reduced by $25.2 million, a 13.3% decrease. 2015 also saw the first IBI roundtable meeting. The company will now host regular roundtable meeting with its senior members to discuss the future of the business and to lead the company to growth and success.
I believe the timing of the turnaround was perfect because the company, now has a stable balance sheet and it can take advantage of the vast federal infrastructure investment. The federal government will focus on improving and expanding the transit system in major Canadian cities. IBI group co-lead the design of the Eglington Subway expansion, a $4.7 billion dollar project in 2013/ 2014. IBI group has previously worked on public transit projects and their expertise will help them land more projects. As I mentioned above, The TTC Subway system is expanding.
IBI group completed a three year turnaround at the perfect time. The company reduced debt and increased revenue. IBI group can benefit from the massive federal infrastructure investment over the next decade. I believe IBI group will be awarded with public transit infrastructure projects due to their expertise in the field and previous projects.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.