Stantec Inc.
TSX : STN
NYSE : STN

Stantec Inc.

August 06, 2015 08:00 ET

Stantec reports second quarter 2015 results and dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Aug. 6, 2015) - (TSX:STN) (NYSE:STN)

Today, Stantec announced that it continued to perform well in the second quarter of 2015, with several key items to highlight:

  • Gross revenue increased 12.1% to C$710.3 million in Q2 15 from C$633.8 million in Q2 14
  • Both Stantec's Buildings and Infrastructure business operating units had strong organic revenue growth in Q2 15, partly offsetting a retraction in its Energy & Resources business operating unit
  • EBITDA increased 5.1% to C$82.2 million in Q2 15 from C$78.2 million in Q2 14
  • Net income decreased 2.7% to C$43.1 million in Q2 15 from C$44.3 million in Q2 14
  • Diluted earnings per share decreased 2.1% to C$0.46 in Q2 15 from C$0.47 in Q2 14
  • Stantec declared a cash dividend of C$0.105 per share to shareholders of record on September 30, 2015
  • Subsequent to the quarter, Stantec acquired 30-person VI Engineering, LLC, based in Houston, Texas

Stantec demonstrated strength in key areas in the second quarter of 2015, despite the challenging economic conditions in the oil and gas industry. The Company experienced strong revenue growth in its Buildings and Infrastructure business operating units, which partly offset the retraction in its Energy & Resources business operating unit.

"With both our Buildings and Infrastructure businesses demonstrating strong performance, our diverse business model is providing a solid foundation for managing our Company through the economic factors impacting the oil and gas industry," says Bob Gomes, Stantec president and chief executive officer. "We thank our talented staff for once again demonstrating their resourcefulness and their commitment to working with our clients to design with community in mind."

Designing with Community in Mind

Stantec's Buildings business operating unit achieved strong revenue growth in Q2 15. In the United States, gross revenue significantly increased due to acquisitions completed in 2014 and 2015. In Canada, Stantec benefited from strong activity in the healthcare market, continuing strength in its Education sector, and steady activity in its Commercial sector. For example, due to Dessau's well-recognized position in the Quebec market, during the quarter, Stantec secured work to provide the mechanical and electrical engineering services for building a mental health pavilion at Saint-Jérôme Regional Hospital and to expand the Montreal Sacré-Cœur Hospital to include an integrated tertiary trauma center.

The revenue retraction in Stantec's Oil & Gas sector results from the sharp decline in oil prices and corresponding market conditions year to date compared to the first two quarters of 2014. Environmental Services organic revenue in sectors that are non-resource related remained stable in Canada and achieved overall strong growth in the United States year to date in 2015, in contrast to the slow start in 2014 caused by harsh winter conditions.

Stantec's Infrastructure business operating unit achieved strong revenue growth in Q2 15. Its Community Development, Transportation, and Water sectors all experienced strong organic gross revenue growth year to date compared to 2014.

In Transportation, a rebounding US economy and Stantec's North American strategic market position led to increased organic growth opportunities. To illustrate, during the quarter, Stantec was selected as the independent engineer for the New Champlain Bridge Corridor design-build project in Montreal, Quebec.

Community Development achieved strong organic revenue growth in Q2 15 compared to Q2 14 in the United States and stable growth in Canada. In the United States, Stantec continued to secure major non-residential projects such as the design of streets, sidewalks, sewers, water mains, and streetscape and plaza areas to support the Coney Island redevelopment in Brooklyn, New York, in the area affected by Hurricane Sandy.

Strategic Growth

In July 2015, Stantec acquired certain assets and liabilities, and the business of VI Engineering, LLC, based in Houston, Texas. This 30-person firm's strong background in the design of high-voltage electrical substations, transmission and distribution lines, and electric power systems adds to Stantec's platform to better serve its clients across all of its regions.

Additional Company Activity

On August 5, 2015, the Company declared a cash dividend of C$0.105 per share, payable on October 15, 2015, to shareholders of record on September 30, 2015.

Conference Call and Company Information

Stantec's second quarter conference call, to be held Thursday, August 6, 2015, at 2:00 PM MDT (4:00 PM EDT), will be broadcast live and archived in the Investors section of www.stantec.com. Financial analysts who wish to participate in the earnings conference call are invited to call 1-800-524-8950 and provide confirmation code 2173217 to the operator.

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 15,000 employees working in over 250 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 is an additional IFRS measure. 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 2014 Annual Report. Diluted earnings per share for 2014 was adjusted from amounts previously reported for the two-for-one share split that occurred on November 14, 2014.

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 client funding, the risk that Stantec will not meet its growth or revenue targets, and the risk that the projects contemplated in this news release 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 2014 Annual Report. You may obtain our 2014 Annual Report by visiting EDGAR on the SEC website at www.sec.gov or on the CSA website at www.sedar.com, or at www.stantec.com. Alternatively, you may obtain a hard copy of the 2014 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
(Unaudited)
June 30December 31
20152014
(In thousands of Canadian dollars)$$
ASSETS
Current
Cash and deposits20,973153,704
Cash in escrow6,000-
Trade and other receivables553,069431,751
Unbilled revenue234,156192,310
Income taxes recoverable23,22811,171
Prepaid expenses25,98323,425
Other financial assets30,31631,526
Other assets545530
Total current assets894,270844,417
Non-current
Property and equipment157,028152,707
Goodwill856,066760,631
Intangible assets122,42997,243
Investments in joint ventures and associates5,1414,975
Deferred tax assets74,06358,801
Other financial assets108,24190,667
Other assets8361,029
Total assets2,218,0742,010,470
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness3,677-
Trade and other payables289,493300,293
Billings in excess of costs84,85496,082
Current portion of long-term debt133,96753,172
Provisions14,50110,796
Other financial liabilities2,0312,773
Other liabilities11,95311,953
Total current liabilities540,476475,069
Non-current
Long-term debt259,266256,093
Provisions59,41551,596
Deferred tax liabilities92,61074,602
Other financial liabilities2,2932,547
Other liabilities66,54364,318
Total liabilities1,020,603924,225
Shareholders' equity
Share capital284,086276,698
Contributed surplus14,36413,490
Retained earnings797,294735,917
Accumulated other comprehensive income101,72760,140
Total shareholders' equity1,197,4711,086,245
Total liabilities and shareholders' equity2,218,0742,010,470
Consolidated Statements of Income
(Unaudited)
For the quarter ended For the two quarters ended
June 30 June 30
2015 2014 2015 2014
(In thousands of Canadian dollars, except per share amounts)
$ $ $ $
Gross revenue710,254 633,819 1,415,977 1,207,712
Less subconsultant and other direct expenses116,336 103,568 229,775 196,206
Net revenue593,918 530,251 1,186,202 1,011,506
Direct payroll costs273,138 240,229 538,271 459,851
Gross margin320,780 290,022 647,931 551,655
Administrative and marketing expenses244,968 211,803 496,426 411,715
Depreciation of property and equipment11,162 9,175 22,004 17,999
Amortization of intangible assets8,679 5,788 18,906 11,152
Net interest expense2,863 2,172 5,529 3,697
Other net finance expense739 758 1,577 1,416
Share of income from joint ventures and associates(516
)
(581
)
(1,155
)
(1,386
)
Foreign exchange loss (gain)94 (179)(34)89
Other income(6,749)(24)(7,217)(390)
Income before income taxes59,540 61,110 111,895 107,363
Income taxes
Current17,103 17,495 31,204 27,821
Deferred(730)(690)(433)1,704
Total income taxes16,373 16,805 30,771 29,525
Net income for the period43,167 44,305 81,124 77,838
Weighted average number of shares outstanding - basic
94,037,462

93,409,806

93,950,055

93,328,828
Weighted average number of shares outstanding - diluted
94,645,377

94,303,814

94,495,416

94,272,502
Shares outstanding, end of the period94,186,720 93,504,332 94,186,720 93,504,332
Earnings per share
Basic0.46 0.47 0.86 0.83
Diluted0.46 0.47 0.86 0.83

Shares outstanding and earnings per share for 2014 have been adjusted for the November 14, 2014, two-for-one share split.

Contact Information