Stantec Inc.
TSX : STN
NYSE : STN

Stantec Inc.

February 27, 2014 09:00 ET

Stantec reports fourth quarter and year-end results for 2013 and increased dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Feb. 27, 2014) - (TSX:STN)(NYSE:STN) -

Today, Stantec announced strong results for 2013, with several key items to highlight:

  • Gross revenue increased 19.6% year over year to C$2,236.4 million from C$1,870.3 million
  • The Company achieved strong organic revenue growth of 8.8%, with momentum every quarter
  • Net income increased 20.8% year over year to C$146.2 million from C$121.0 million
  • Diluted earnings per share increased 18.9% to C$3.14 from C$2.64
  • Stantec strengthened its brand strategy and launched a new visual identity, reinforcing the Company's promise to design with community in mind
  • Stantec implemented its evolution to a more client-focused structure organized around business operating units and the end markets in which the Company operates
  • Stantec's board of directors declared an increase of 12% to its quarterly dividend, bringing it to C$0.185 per share

"We exceeded expectations in 2013 with strong growth that demonstrates our ability to capitalize on market opportunities," says Bob Gomes, Stantec president and chief executive officer. "These results are possible only because of our employees who deliver every day on our promise to design with community in mind."

Stantec achieved strong organic gross revenue growth of 8.8% in 2013 compared to 2012. By consistently executing its business strategy, the Company was able to capitalize on opportunities to increase project activity in the oil and gas, and transportation sectors. Stantec ended the year with 19.6% growth in gross revenue, an 18.1% increase in EBITDA, a 20.8% increase in net income, and an 18.9% increase in diluted earnings per share compared to 2012.

Stantec's revenue growth in Q4 13 was strong compared to Q4 12. Gross revenue increased 19.5% to C$575.3 million from C$481.4 million, and EBITDA increased 10.9% to C$62.3 million from C$56.2 million. Net income increased 14.8% to C$35.7 million from C$31.1 million, and the Company's diluted earnings per share increased 13.4% to C$0.76 from C$0.67 when comparing Q4 13 to Q4 12.

Designing with Community in Mind

With its focus on communities, creativity, and client relationships, Stantec collaborates across disciplines and industries to provide design solutions for buildings, energy and resource, and infrastructure projects. With more than 13,000 employees in over 200 locations bringing integrated solutions to communities, Stantec is able to capitalize on mature and emerging market opportunities.

A key area where Stantec saw the positive results of its integrated expertise in 2013 was in the energy and resource sectors. The Company's Environment and Industrial practices combined their strengths to respond to increased activity in large-scale projects in Canada's oil and gas sector. The desire to transport Canadian oil and gas products for export has generated opportunities for interprovincial pipelines and associated marine facilities. Robust activity also supported continual assessment, planning, and permitting work.

During the year, Stantec continued to benefit from long-term client relationships in Canada and the United States, resulting in increased opportunities for the Company in alternative project delivery models, such as design-build and P3s. For a recent project-resulting from Stantec's reputation with the US federal government and design-build contractors, the Company's local presence, and its expertise in the water business-Stantec was the lead engineer and architect for PCCP Constructors, a joint venture selected for a contract with the US Army Corps of Engineers, New Orleans District.

The integration of transportation acquisitions over the past two years increased Stantec's presence in local US markets, allowing the Company to secure more project opportunities. Positive results were evident when Stantec was awarded the Construction Management Services Contract for the Westside Subway Transit Corridor project in Los Angeles, California-one of the most regionally significant infrastructure programs and one of the largest transportation programs in the United States. Related to this project, the Company also secured the Construction Management Support Services Contract renewal with the Los Angeles County Metropolitan Transportation Authority for certain major capital projects.

Continued Growth

Acquisitions are a key component of Stantec's strategy, and broadening its capabilities and geographic coverage enables the Company to better serve its clients and achieve growth. Sourcing firms that align with the Company's culture and strategy, Stantec completed five acquisitions in 2013. Acquisitions completed in 2012 and 2013 contributed $180.6 million to the increase in the Company's gross revenue in 2013 compared to 2012.

In November, Stantec acquired two of these companies: Cambria Gordon Ltd., and JDA Architects Ltd. Both companies will enhance the Company's services and reach, with 25-person Cambria Gordon expanding its environmental services in northwest British Columbia, and 25-person JDA Architects complementing Stantec's existing presence in Atlantic Canada.

Subsequent to the end of the year, on January 24, 2014, Stantec acquired Williamsburg Environmental Group, Inc., and Cultural Resources, Inc. (WEG), which added approximately 115 staff to the Company. The addition of WEG will expand Stantec's environmental services practice in the US Mid-Atlantic.

Additional Company Activity

On February 26, 2014, the Company declared a dividend of $C0.185 per share, payable on April 17, 2014, to shareholders of record on March 28, 2014, an increase of 12% from last quarter.

In September, Stantec strengthened its brand strategy and launched a new visual identity to support the Company's ongoing commitment to community, creativity, and client relationships. The renewal supports Stantec's primary business objective of being a top 10 global design firm by reinforcing the Company's strategy to provide integrated services to clients in various sectors across many regions.

In 2013, Stantec began the process of realigning its internal structure to better serve clients. Effective January 1, 2014, the Company evolved from practice area units to focus on three business operating units: Buildings, Energy & Resources, and Infrastructure. The realignment allows Stantec to better support its clients, create stronger accountability for its leadership team, and better position the Company for future growth and success while maintaining the core elements of its strategy.

Conference Call and Company Information

Stantec's fourth quarter and year-end conference call, to be held Thursday, February 27, 2014, at 2:00 PM MDT (4:00 PM EDT), will be broadcast live and archived in the Investors section of www.stantec.com. Interested parties who wish to participate in the earnings conference call are invited to call 1-800-820-0231 and provide confirmation code 7828397 to the operator.

Stantec's Annual and Special Meeting of Shareholders will be held on May 15, 2014, at 10:30 AM MDT (12:30 PM EDT) at MacEwan University's CN Theatre, Room 5-142, 10500 - 104 Avenue, in Edmonton, Alberta.

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 more than 13,000 employees working in over 200 locations. We collaborate across disciplines and industries to bring buildings, energy and resource, and infrastructure projects to life. Our work-professional consulting in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics-begins at the intersection of community, creativity, and client relationships.

Since 1954, our local strength, knowledge, and relationships, coupled with our world-class expertise, have allowed us to go anywhere to meet our clients' needs in more creative and personalized ways. 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.

Cautionary Statements

Stantec's EBITDA is a non-IFRS measure, and gross revenue and net revenue are additional IFRS measures. For a definition and explanation of non-IFRS measures and additional IFRS measures, refer to the Critical Accounting Estimates, Developments, and Measures section of the Company's 2013 Annual Report. Figures for 2012 have been restated for the adoption of IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements as further described in note 6 of our 2013 audited consolidated financial statements.

Certain statements contained in this news release constitute forward-looking statements. 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, disruptions in government funding, the risk that Stantec will not meet its growth or revenue targets, and the risk that the contemplated projects will not be completed when expected or at all. 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 on how other material risk factors could affect our results, refer to the Risk Factors section and Cautionary Note Regarding Forward-Looking Statements in our 2013 Annual Report. Stantec's 40-F has been filed with the SEC, and you may obtain this document by visiting EDGAR at the SEC website at www.sec.gov. Our 2013 Annual Report is also available at the CSA website at www.sedar.com or at www.stantec.com. Alternatively, you may obtain a hard copy of the 2013 Annual Report free of charge from our Investor Contact noted below.

Design with community in mind
Consolidated Statements of Financial Position
December 31 December 31 January 1
2013 2012* 2012*
(In thousands of Canadian dollars) $ $ $
ASSETS
Current
Cash and cash equivalents 143,030 40,708 34,898
Trade and other receivables 384,907 353,451 308,518
Unbilled revenue 143,894 148,908 133,434
Income taxes recoverable 8,792 3,840 16,825
Prepaid expenses 18,959 14,283 13,882
Other financial assets 21,418 17,670 13,833
Other assets 5,231 4,106 3,172
Total current assets 726,231 582,966 524,562
Non-current
Property and equipment 133,534 114,994 107,763
Goodwill 594,826 566,784 509,028
Intangible assets 78,857 85,748 72,047
Investments in joint ventures and associates 4,996 5,286 3,980
Deferred tax assets 45,383 40,975 43,639
Other financial assets 83,163 63,691 61,606
Other assets 1,188 3,791 1,657
Total assets 1,668,178 1,464,235 1,324,282
LIABILITIES AND EQUITY
Current
Trade and other payables 259,113 211,726 188,929
Billings in excess of costs 77,803 60,822 49,441
Income taxes payable 9,127 159 -
Current portion of long-term debt 37,130 42,888 59,593
Provisions 12,047 14,863 16,373
Other financial liabilities 1,927 1,672 5,042
Other liabilities 9,837 8,650 5,208
Total current liabilities 406,984 340,780 324,586
Non-current
Long-term debt 200,943 256,408 236,601
Provisions 49,539 36,959 42,076
Deferred tax liabilities 58,082 57,840 54,561
Other financial liabilities 2,041 2,342 2,257
Other liabilities 57,955 42,778 37,191
Total liabilities 775,544 737,107 697,272
Shareholders' equity
Share capital 262,573 240,369 226,744
Contributed surplus 12,369 14,291 14,906
Retained earnings 606,056 491,227 397,706
Accumulated other comprehensive income (loss) 11,636 (18,862 ) (12,449 )
Total equity attributable to equity holders of the Company 892,634 727,025 626,907
Non-controlling interests - 103 103
Total equity 892,634 727,128 627,010
Total liabilities and equity 1,668,178 1,464,235 1,324,282
* Figures for 2012 have been restated for the adoption of IFRS 10 and IFRS 11.
Consolidated Statements of Income
Years ended December 31 2013 2012*
(In thousands of Canadian dollars, except per share amounts) $ $
Gross revenue 2,236,410 1,870,259
Less subconsultant and other direct expenses 404,031 316,445
Net revenue 1,832,379 1,553,814
Direct payroll costs 829,926 699,657
Gross margin 1,002,453 854,157
Administrative and marketing expenses 746,138 632,086
Depreciation of property and equipment 32,389 27,849
Amortization of intangible assets 21,235 20,008
Net interest expense 8,620 8,681
Other net finance (income) expense (1,346 ) 2,773
Share of income from joint ventures and associates (2,276 ) (2,026 )
Foreign exchange (gain) loss (184 ) 181
Other (income) expense (1,035 ) 147
Income before income taxes 198,912 164,458
Income taxes
Current 60,141 44,516
Deferred (7,430 ) (1,077 )
Total income taxes 52,711 43,439
Net income for the year 146,201 121,019
Earnings per share
Basic 3.16 2.65
Diluted 3.14 2.64
* Figures for 2012 have been restated for the adoption of IFRS 10 and IFRS 11.

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