Stantec Inc.

Stantec Inc.

February 23, 2017 06:45 ET

Stantec ends 2016 with 49.5% increase in gross revenue and announces 11% dividend increase

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Feb. 23, 2017) - Stantec (TSX:STN)(NYSE:STN) closed fiscal year 2016 with a 49.5% increase in gross revenue when compared to the end of 2015, primarily due to contributions from five strategic acquisitions completed in the year. The Company also achieved a 9.8% increase in EBITDA and a 15.5% increase in adjusted EBITDA year over year.

When comparing Q4 16 to Q4 15, gross revenue increased 74.7% mainly due to contributions from acquisitions completed in 2015 and 2016 and a 2.2% increase in organic revenue in the Infrastructure business operating unit. EBITDA increased 51.8%, and adjusted EBITDA increased 41.3% due to an increase in gross margin as a percentage of net revenue. Net income increased 16.2%; diluted earnings per share decreased 3.7%; and adjusted diluted earnings per share increased 2.9%.

Financial Summary
Year ended December 31, 2016 Quarter ended December 31, 2016
(In millions of Canadian dollars, except per share amounts and %) 2016 2015 % Change Q4 16 Q4 15 % Change
Gross revenue $4,300.1 $2,877.2 49.5 $1,240.8 $710.4 74.7
Net revenue $3,098.4 $2,373.7 30.5 $820.2 $567.4 44.6
EBITDA (1) $336.3 $306.3 9.8 $82.9 $54.6 51.8
Adjusted EBITDA (1) $352.3 $305.1 15.5 $83.8 $59.3 41.3
Net income $130.5 $156.4 (16.6) $29.4 $25.3 16.2
Diluted earnings per share $1.22 $1.65 (26.1) $0.26 $0.27 (3.7)
Adjusted diluted earnings per share (1) $1.69 $1.84 (8.2) $0.35 $0.34 2.9
Cash dividends declared per common share $0.45 $0.42 7.1 $0.1125 $0.1050 7.1
(1) EBITDA, adjusted EBITDA, and adjusted diluted earnings per share are non-IFRS measures as defined in the Cautionary Statements section of this news release.

Annual results were primarily impacted by the acquisition of MWH Global, Inc. (MWH), the completion of a common share offering, and the renegotiation of Stantec's credit facilities. Adjusted EBITDA for 2016 was affected by a decrease in gross margin as a percentage of net revenue. In addition, administrative and marketing expenses increased due to MWH-related acquisition costs, professional fees, integration-related administration labor expenses, severance costs, and retention and merit payments to retain key employees during integration periods following acquisitions. Net income and diluted earnings per share were impacted by increases in net interest expense, amortization of intangible assets, the number of shares outstanding, and a higher effective income tax rate.

The year 2016 was a history-making one for Stantec. In May, the Company completed its largest-ever acquisition--MWH. Complementing this were strategic acquisitions of four other companies: Bury Holdings, Inc.; VOA Associates, Inc.; Edwards & Zuck; and Architecture / Tkalcic Bengert. Each organization adds strength in key regions and sectors. In particular, the MWH acquisition greatly expands Stantec's global reach, adds construction to its service offerings, and strengthens the Company's work in infrastructure design, environmental services, and the water sector.

As of January 1, 2017, in recognition of MWH's well-respected water infrastructure business and Stantec's long history in the sector, Stantec created a new business operating unit: Water. "Water infrastructure design has been core to Stantec since we began. With the addition of MWH, we now offer top-tier design expertise to water clients around the world," says Stantec president and CEO, Bob Gomes. "Creating a separate business operating unit for Water provides a higher level of leadership and visibility and positions us well for growth."

Within Stantec's existing Consulting Services business operating units, growth in 2016 was most significant in Infrastructure, Environmental Services, and Buildings, largely due to contributions from acquisitions. Infrastructure saw a gross revenue increase of 58.8% when comparing 2016 to 2015. Gross revenue for the Environmental Services business operating unit increased 12.4% in 2016 compared to 2015. The Buildings business operating unit achieved a 6.9% increase in gross revenue. Gross revenue for Energy & Resources remained stable year over year and increased by 23.0% when comparing Q4 16 to Q4 15.

The Infrastructure business operating unit grew organically by 3.7% in 2016, partly offsetting the organic revenue retraction in the Energy & Resources, Environmental Services, and Buildings business operating units. Overall, in 2016, organic gross revenue retracted by 5.6%.

Construction Services earned $645.2 million in gross revenue since the MWH acquisition on May 6, 2016.


On February 22, 2017, Stantec declared a cash dividend of $0.125 per share--an increase of 11.1% over last quarter--payable on April 13, 2017, to shareholders of record on March 31, 2017.

Conference Call and Company Information

On Thursday, February 23, at 2:00 PM MST (4:00 PM EST), Stantec's 2016 fourth quarter and year end conference call and slideshow presentation will be broadcast live and archived in their entirety in the Investors section of Participants wishing to listen to the call via telephone can dial in toll-free at 1-866-222-0265 (Canada and the United States) or 416-642-5209 (international). Please provide the operator with confirmation code 8719872.

Stantec's Annual General Meeting of Shareholders will be held on Thursday, May 11, 2017, at 10:30 AM MDT (12:30 PM EDT) at Stantec Centre, 10160 - 112 Street NW, Edmonton, Alberta, Canada.

About Stantec

We're active members of the communities we serve. That's why at Stantec, we always design with community in mind.

The Stantec community unites approximately 22,000 employees working in over 400 locations across 6 continents. Our work--engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, construction services, project management, and project economics, from initial project concept and planning through to design, construction, commissioning, maintenance, decommissioning, and remediation--begins at the intersection of community, creativity, and client relationships. With a long-term commitment to the people and places we serve, Stantec has the unique ability to connect to projects on a personal level and advance the quality of life in communities across the globe. Stantec trades on the TSX and the NYSE under the symbol STN. Visit us at or find us on social media.

Cautionary Statements

Stantec's EBITDA, adjusted EBITDA, and adjusted diluted earnings per share are non-IFRS measures. For a definition and explanation of non-IFRS measures, refer to the Critical Accounting Estimates, Developments, and Measures section of the Company's 2016 Annual Report.

Certain statements contained in this news release constitute forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements regarding how strategic acquisitions completed in 2016 and a new business operating unit for Water position the Company for growth. Any such statements represent the views of management only as of the date hereof and are presented for the purpose of assisting the Company's shareholders in understanding Stantec's operations, objectives, priorities, and anticipated financial performance as at and for the periods ended on the dates presented and may not be appropriate for other purposes. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties.

We caution readers of this news release not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results to differ materially from the expectations expressed in these forward-looking statements. These factors include, but are not limited to, the risk of an economic downturn, changing market conditions for Stantec's services, and the risk that the acquisitions contemplated in this news release will not achieve anticipated results. 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.

For more information about how other material risk factors could affect results, refer to the Risk Factors section and Cautionary Note Regarding Forward-Looking Statements in our 2016 Annual Report. Stantec's 40-F has been filed with the SEC, and you may obtain this document by visiting EDGAR on the SEC website at You may obtain our complete audited annual consolidated financial statements and associated Management's Discussion and Analysis for the year ended December 31, 2016 (which form our 2016 Annual Report) by visiting EDGAR on the SEC website at, on the CSA website at, or at Alternatively, you may obtain a hard copy of the 2016 Annual Report free of charge from our Investor Contact noted below.

Design with community in mind

- Continued, Consolidated Statements of Financial Position and Consolidated Statements of Income attached -

Consolidated Statements of Financial Position
December 31 December 31
2016 2015
(In thousands of Canadian dollars) $ $
Cash and cash equivalents 210,903 67,342
Cash in escrow 8,844 8,646
Trade and other receivables 806,417 570,577
Unbilled revenue 421,829 228,970
Income taxes recoverable 46,705 19,727
Prepaid expenses 62,253 29,022
Other financial assets 20,890 26,722
Other assets 4,679 386
Total current assets 1,582,520 951,392
Property and equipment 213,931 158,085
Goodwill 1,828,061 966,480
Intangible assets 449,530 138,079
Investments in joint ventures and associates 9,220 4,467
Deferred tax assets 26,195 11,254
Other financial assets 160,056 111,479
Other assets 15,155 643
Total assets 4,284,668 2,341,879
Trade and other payables 718,197 352,199
Billings in excess of costs 201,766 109,159
Income taxes payable 1,795 -
Long-term debt 91,876 133,055
Provisions 36,011 22,878
Other financial liabilities 2,378 2,601
Other liabilities 20,795 12,162
Total current liabilities 1,072,818 632,054
Long-term debt 928,586 232,301
Provisions 80,664 62,572
Net employee defined benefit liability 50,490 -
Deferred tax liabilities 79,592 21,256
Other financial liabilities 7,591 2,748
Other liabilities 88,427 67,688
Total liabilities 2,308,168 1,018,619
Shareholders' equity
Share capital 871,822 289,118
Contributed surplus 18,736 15,788
Retained earnings 917,883 852,725
Accumulated other comprehensive income 167,287 165,629
Total shareholders' equity 1,975,728 1,323,260
Non-controlling interests 772 -
Total liabilities and equity 4,284,668 2,341,879
Consolidated Statements of Income
Years ended December 31
(In thousands of Canadian dollars, except per share amounts)
Gross revenue 4,300,130 2,877,245
Less subconsultant/subcontractor and other direct expenses 1,201,771 503,562
Net revenue 3,098,359 2,373,683
Direct payroll costs 1,422,058 1,081,088
Gross margin 1,676,301 1,292,595
Administrative and marketing expenses 1,335,098 988,571
Depreciation of property and equipment 51,172 45,880
Amortization of intangible assets 75,660 37,853
Net interest expense 28,648 10,929
Other net finance expense 6,356 3,308
Share of income from joint ventures and associates (2,406 ) (2,048 )
Foreign exchange loss (gain) 685 (273 )
Other expense (income) 272 (3,232 )
Income before income taxes 180,816 211,607
Income taxes
Current 37,705 61,527
Deferred 12,562 (6,298 )
Total income taxes 50,267 55,229
Net income for the year 130,549 156,378
Earnings per share
Basic 1.22 1.66
Diluted 1.22 1.65

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