Stantec Inc.
TSX : STN
NYSE : STN

Stantec Inc.

August 06, 2009 09:09 ET

Stantec Announces Solid Second Quarter 2009 Results

EDMONTON, ALBERTA--(Marketwire - Aug. 6, 2009) - Stantec Inc. (TSX:STN) (NYSE:STN)

North American design firm Stantec announced second quarter 2009 results today with gross revenue increasing 13.0% to C$388.1 million and net revenue increasing 10.1% to C$318.1 million compared to the second quarter of 2008. Net income for the quarter was C$22.3 million, and diluted earnings per share were C$0.49.

"During the first six months of 2009, we have experienced challenging market conditions across North America. I'm pleased that our employees continue to deliver by managing the business effectively and efficiently, which is reflected in our results this quarter and year to date," says Bob Gomes, Stantec President & CEO.

The outlook through the rest of the year remains stable for Stantec. In the quarter, the firm began to see some smaller stimulus funded projects being awarded, but it does not expect to feel any significant effect of stimulus funding in the infrastructure market until the end of 2009 or early 2010. Stantec believes that infrastructure spending approved by the US and Canadian federal governments in the first quarter of 2009 will assist in maintaining its backlog and replace some projects that have been curtailed due to difficult economic conditions.

Key developments in the quarter included the following:

- Gross revenue increased 13.0% to C$388.1 million compared to C$343.3 million in the second quarter of 2008. Net revenue increased 10.1% to C$318.1 million from C$289.0 million, and net income was up 0.9% to C$22.3 million compared to C$22.1 million. Diluted earnings per share were C$0.49 in the second quarter of 2009 compared to C$0.48 in the same period last year, representing an increase of 2.1%.

- Year-to-date 2009 gross revenue increased 24.8% to C$792.9 million compared to C$635.1 million in the same period of 2008, and net revenue increased 21.6% to C$661.4 million from C$543.9 million. Net income increased 10.3% to C$43.0 million from C$39.0 million. Diluted earnings per share were up 10.6% to C$0.94 from C$0.85.

- During the second quarter Stantec announced it had renewed its normal course issuer bid pursuant to which it may purchase up to 2,273,722 of its common shares, representing approximately 5% of its issued and outstanding shares. Stantec also announced it was awarded a contract to design the rehabilitation of the West Roxbury Tunnel, a 12,500-foot-long, 84-inch-diameter rock tunnel running beneath Boston, Massachusetts.

- Also in the second quarter, Mr. David Emerson P.C. and Mr. Robert (Bob) Gomes, the new President & CEO of Stantec, were added to the board of directors.

- Complete Financial Statements, Notes to the Financial Statements, and Management's Discussion and Analysis will be filed on Sedar (www.sedar.com) and Edgar (www.sec.gov) on August 6 and are available to download free of charge from the Investors section on www.stantec.com. The documents are also available from Stantec.

Project activity in the quarter is a good reflection of how Stantec's diversification is helping the firm continue to succeed in a challenging market. For example, Stantec's Environment practice was awarded a contract with the City of Windsor, Ontario, to provide services for developing a combined sewer overflow treatment system, as part of its riverfront pollution control plan. This project award is a direct result of stimulus funding for infrastructure projects in Canada. In Victoria, British Columbia, the firm was chosen to provide program management, technical planning, and preliminary engineering services for the installation of the Capital Regional District (CRD)-Core Area Wastewater Treatment Program. This multiyear initiative is one of the largest wastewater treatment programs in the world and will provide secondary treatment facilities for the CRD core area communities by 2017.

In Los Angeles, Stantec's Transportation group is part of a team providing on-call project management, construction management, and staff assistance services to the Southern California Regional Rail Authority in support of new construction and rehabilitation projects for its Metrolink commuter rail system. The work will span five years and include more than a dozen large projects. In Philadelphia, Pennsylvania, the firm is working on systems for warning device replacement and improvement projects on trolley lines, and in Miami, Florida, Stantec was chosen to design and commission signal and communication systems for three new metrorail stations connecting passengers to the Miami Intermodal Center, a massive transportation hub being developed by the Florida Department of Transportation at Miami International Airport. Work also began on rehabilitating the signal system for the 38th Street Yard Leads Reconstruction Project in the Borough of Brooklyn for New York City transit.

In Nevada, Stantec's Urban Land group is working on a project for the Nevada Department of Transportation to design the landscaping and aesthetics for Interstate 15 South in Las Vegas. In California, work continues on Phase 1 of Walker Community Park for the City of Galt, for which the firm is providing landscape architecture, survey, and civil, electrical, and environmental engineering services.

Stantec's Buildings team has been hired to help the Bermuda Hospitals Board expand and redevelop the aging King Edward VII Memorial Hospital located in Hamilton, Bermuda. The firm is providing a full suite of integrated services-architecture; interior design; mechanical, electrical, and structural engineering; and sustainability consulting-for the project which is intended to be delivered through a public-private partnership. In addition, the firm was awarded a contract with the University of the Fraser Valley in British Columbia to provide integrated services in architecture, landscape architecture, interior design, and structural, mechanical, electrical, and civil engineering for the first phase of the relocation of its Chilliwack campus.

"Our performance to date in 2009 is a direct reflection of the stability of our business model and our employees' ability to react to and take advantage of the opportunities that exist in a changing market," adds Gomes.

The second quarter conference call, to be held today at 4:00 PM EDT (2:00 PM MDT), will be broadcast live and archived in the Investors section at www.stantec.com. Financial analysts who wish to participate in the earnings conference call are invited to call 866-321-8231and provide the confirmation code 8158548 to the first available operator.

Stantec provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets in the infrastructure and facilities sector at every stage, from initial concept and financial feasibility to project completion and beyond. Our services are offered through approximately 10,000 employees operating out of more than 130 locations in North America. Stantec trades on the TSX and the NYSE under the symbol STN. Stantec is One Team providing Infinite Solutions.

Cautionary note regarding forward-looking statements

This press release contains information regarding "forward-looking statements". By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions, projections, and other forward-looking statements will not prove to be accurate. We caution readers of this press release not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates, or intentions expressed in these forward-looking statements.

These factors include, but are not limited to the risk that economic downturns could have a negative impact on our business as clients may curtail investment in infrastructure projects or may experience difficulty in paying for services performed. If we experience delays and/or defaults in customer payments we could suffer liquidity problems or be unable to recover our expenditures. Goodwill and other intangible assets acquired from our acquisitions represent substantial portions of our total assets. If our acquired businesses do not perform as expected, we may be required to write down the value of our goodwill and other intangible assets, which could have a material adverse effect on our earnings.

The preceding list of factors is not exhaustive. Investors and the public should carefully consider these factors, other uncertainties, and potential events as well as the inherent uncertainty of forward-looking statements when relying on these statements to make decisions with respect to our Company. The forward-looking statements contained herein represent our expectations as of July 31, 2009, and accordingly, are subject to change after such date. Except as may be required by law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.

For more information on how other material factors and other factors could affect our results, refer to the Risk Factors section in our 2008 Financial Review and the Caution Regarding Forward-Looking Statements in our Second Quarter 2009 Report. You may obtain these documents by visiting EDGAR on the SEC website at www.sec.gov or on the CSA website at www.sedar.com.



Consolidated Balance Sheets
(Unaudited)

June 30 December 31
2009 2008
(In thousands of Canadian dollars) $ $
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ASSETS
Current
Cash and cash equivalents 13,738 103,979
Cash held in escrow - 7,392
Accounts receivable, net of allowance for
doubtful accounts of $10,143 ($11,597 - 2008) 279,653 256,243
Costs and estimated earnings in excess of
billings 111,540 75,602
Income taxes recoverable 16,114 7,647
Prepaid expenses 10,918 8,094
Future income tax assets 19,168 15,265
Other assets 4,022 6,503
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Total current assets 455,153 480,725
Property and equipment 121,485 114,410
Goodwill 520,721 446,818
Intangible assets 60,435 45,989
Future income tax assets 20,834 20,786
Other assets 43,275 36,158
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Total assets 1,221,903 1,144,886
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 158,383 198,228
Billings in excess of costs and estimated
earnings 40,736 43,845
Income taxes payable - 9,920
Current portion of long-term debt 44,827 34,096
Future income tax liabilities 17,918 13,920
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Total current liabilities 261,864 300,009
Long-term debt 294,145 215,113
Future income tax liabilities 30,909 26,492
Other liabilities 67,145 64,297
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Total liabilities 654,063 605,911
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Non-controlling interest in subsidiaries 207 -
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Commitments, contingencies, and guarantees

Shareholders' equity
Share capital 219,495 218,757
Contributed surplus 12,247 10,458
Retained earnings 351,649 308,629
Accumulated other comprehensive (loss) income (15,758) 1,131
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Total shareholders' equity 567,633 538,975
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Total liabilities and shareholders' equity 1,221,903 1,144,886
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Consolidated Statements of Income
(Unaudited)

For the quarter ended For the two quarters ended
June 30 June 30
(In thousands of Canadian --------------------------------------------------
dollars, except share and 2009 2008 2009 2008
per share amounts) $ $ $ $
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INCOME
Gross revenue 388,121 343,327 792,921 635,130
Less subconsultant and
other direct expenses 70,061 54,268 131,571 91,212
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Net revenue 318,060 289,059 661,350 543,918
Direct payroll costs 141,319 127,485 291,163 242,092
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Gross margin 176,741 161,574 370,187 301,826
Administrative and
marketing expenses 131,301 118,033 279,363 225,002
Depreciation of property
and equipment 6,831 6,836 13,958 12,203
Amortization of
intangible assets 3,464 2,553 8,828 5,219
Net interest expense 3,008 2,011 6,438 3,513
Share of (income) loss
from associated
companies (568) 54 (842) 160
Foreign exchange losses 1,403 380 1,971 21
Other income (204) (400) (550) (630)
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Income before income
taxes 31,506 32,107 61,021 56,338
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Income taxes
Current 8,824 14,201 20,696 18,200
Future 323 (4,199) (2,695) (904)
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Total income taxes 9,147 10,002 18,001 17,296
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Net income for the
period 22,359 22,105 43,020 39,042
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Weighted average number
of shares outstanding
- basic 45,473,500 45,656,377 45,469,180 45,656,836
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Weighted average number
of shares outstanding
- diluted 45,875,464 46,122,311 45,882,267 46,187,313
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Shares outstanding, end
of the period 45,505,457 45,606,823 45,505,457 45,606,823
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Earnings per share
Basic 0.49 0.48 0.95 0.86
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Diluted 0.49 0.48 0.94 0.85
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Contact Information

  • Stantec Inc.
    Jay Averill
    Media Relations
    (780) 917-7441
    or
    Stantec Inc.
    Simon Stelfox
    Investor Relations
    (780) 917-7288
    Website: www.stantec.com