Revenue for the three months ended September 30, 2006 was up $14.5
million (58.3%) to $39.5 million compared to $24.9 million for the three
months ended September 30, 2005. For the nine months ended September 30, 2006,
revenue was up $39.9 million (55.3%) to $112.0 million compared to
$72.1 million for the nine months ended September 30, 2005. These increases
over the prior year periods were the result of both strategic growth through
acquisitions and organic growth. Revenue from strategic growth through
acquisitions was approximately $10.8 million for three months ended September
30, 2006, of which approximately $1.0 million was the result of integration
and synergy with the ongoing IBI Group practice resulting in organic growth
within the acquired firms, and $31.9 million for the nine months ended
September 30, 2006, of which approximately $2.5 million was growth through
integration and synergy with the ongoing IBI Group practice resulting in
organic growth within the acquired firms. IBI Group achieved organic growth of
approximately $3.7 million (14.9%) for the three months ended September 30,
2006 and $8.0 million (11.1%) for the nine months ended September 30, 2006.
The combined organic growth of IBI Group and within the acquired firms was a
total of $4.7 million (18.9%) for the three months ended September 30, 2006
and $10.5 million (14.6%) for the nine months ended September 30, 2006. The
overall growth in activity was accomplished by a 51.0% increase in the average
number of staff from 775 during the nine months ended September 30, 2005 to
1,170 during the nine months ended September 30, 2006. The number of staff as
of September 30, 2006 was 1,282, up from 825 as of September 30, 2005. In
addition IBI Group’s standard billing rates increased by approximately 4%
compared with the nine months ended September 30, 2005 and the percentage of
time spent by IBI Group personnel on chargeable time projects increased
compared with the nine months ended September 30, 2005.
Net earnings before non-controlling interest of the Fund for the three
months ended September 30, 2006 were up $2.7 million (118.4%) to $4.9 million
compared with $2.3 million for the three months ended September 30, 2005. Net
earnings before non-controlling interest per Unit (on a fully-diluted basis)
for the three months ended September 30, 2006 were up $0.1379 (61.5%) to
$0.3621 compared with $0.2242 for the three months ended September 30, 2005.
For the nine months ended September 30, 2006, net earnings before
non-controlling interest were up $8.7 million (177.6%) to $13.6 million
compared with $4.9 million for the nine months ended September 30, 2005. Net
earnings before non-controlling interest per Unit (on a fully-diluted basis)
for the nine months ended September 30, 2006 were up $0.5819 (119.2%) to
$1.0699 compared with $0.4880 for the nine months ended September 30, 2005. As
a percentage of revenue, net earnings before non-controlling interest were
12.5% for the three months ended September 30, 2005, compared with 9.0% for
the three months ended September 30, 2005. For the nine months ended September
30, 2006, net earnings before non-controlling interest as a percentage of
revenue were 12.2% compared with 6.8% for the nine months ended September 30,
2005.
Earnings before interest, income taxes depreciation and amortization
(“EBITDA”) for the three months ended September 30, 2006 was $7.3 million, up
$3.6 million (96.3%) from $3.7 million for the three months ended September
30, 2005. For the nine months ended September 30, 2006, EBITDA was up $9.0
million (82.2%) to $19.9 million compared with $10.9 million for the nine
months ended September 30, 2005. As a percentage of revenue, EBITDA was 18.5%
for the three months ended September 30, 2006 compared with 14.9% for the
three months ended September 30, 2005. For the nine months ended September 30,
2006, EBITDA as a percentage of revenue was 17.8% compared with 15.2% for the
nine months ended September 30, 2005. The growth in revenue, together with the
relative reduction in salaries, fees and employee benefits as a percentage of
revenue, accounted for the increases in the percentages for both the three
month and nine month periods ended September 30, 2006 as compared to the prior
year periods.
Distributable Cash – During the three months ended September 30, 2006,
the Fund generated $5.9 million of distributable cash, up $2.9 million,
(97.2%) as compared with $3.0 million for the three months ended September 30,
2005. On a per Unit basis, based on the weighted average number of Units
outstanding, distributable cash was $0.4344 for the three months ended
September 30, 2006, compared with $0.2980 for the three months ended September
30, 2005. This represents a 45.8% increase in distributable cash per Unit over
the three months ended September 30, 2005 and a payout ratio of 70.2% for the
three months ended September 30, 2006. For the nine months ended September 30,
2006, the Fund generated $15.7 million of distributable cash, compared with
$8.9 million for the nine months ended September 30, 2005. Actual
distributions declared for the nine months ended September 30, 2006 were $11.5
million. In September 2006, the Fund increased the monthly distribution from
$0.10 to $0.105 per Unit.
Liquidity and Capital Resources – During the quarter ended September 30,
2006, the Fund’s bank indebtedness decreased by $6.1 million. The decrease was
the result of the receipt of $10 million in cash on the conversion of an
equivalent amount of operating debt into long-term debt. This was partially
offset by the payments made on the closings of the acquisitions completed
during the quarter ($2.1 million) and the continued build up of working
capital of DAA ($1.8 million) and the practices acquired during the quarter.
The growth in working capital resulting from the organic growth of IBI Group
has been funded through operating cash flow generated during the quarter.
