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Genivar Q3 profit increases 37 per cent $22.1 million on acquisition

MONTREAL – Engineering consulting firm Genivar says its net income attributable to shareholders surged 37 per cent to $22.1 million in the third quarter on higher revenues due to last year’s $442-million purchase of British-based WSP Group.

The Montreal-based company earned 41 cents per share for the period ended Sept. 28, compared with 36 cents per share or $16.1 million a year ago.

Excluding restructuring charges, Genivar’s adjusted profit was 45 cents per share, in line with analyst expectations.

Genivar (TSX:GNV) took a $3.1-million charge related to its 5.5 per cent reduction in staff in Quebec and Ontario.

Total revenues were $490.5 million, while net revenues excluding subconsultants and direct costs were $407.7 million, up nearly 27 per cent from $321.4 million a year earlier.

Organic revenues grew 5.5 per cent, mainly due to operations in Europe, the U.S. and the Middle East, offset by decreases in Canada.

The order backlog was $1.55 billion, up 14 per cent from last year.

“We are pleased with our performance, which continues to support our strategic acquisition of WSP. Our increase in revenues and margins is a testimony to the rationale for geographical diversification of our operations,” said president and CEO Pierre Shoiry.

Sara O’Brien of RBC Capital Markets said she expects Genivar will continue to grow through acquisitions but is concerned that it may issue equity, which would limit the shareholder benefits from such growth.

“We are encouraged by recovery signals in U.K. and U.S. markets. However, Canadian market organic decline remains a challenge in our view,” she wrote in a report.

The engineering consulting firm has 15,000 employees based in more than 300 offices across 35 countries.

On the Toronto Stock Exchange, Genivar’s shares were down 61 cents at $29.45 in late-day trading Wednesday.