Stantec Inc.
TSX : STN
NYSE : STN

Stantec Inc.

August 07, 2014 09:00 ET

Stantec reports solid second quarter 2014 results and dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Aug. 7, 2014) - Stantec Inc. (TSX:STN) (NYSE:STN)

Today, Stantec announced solid second quarter 2014 results, with several key items to highlight:

  • Gross revenue increased 11.8% to C$633.8 million in Q2 14 from C$566.7 million in Q2 13
  • Net income increased 22.4% to C$44.3 million in Q2 14 from C$36.2 million in Q2 13
  • Diluted earnings per share increased 20.5% to C$0.94 in Q2 14 from C$0.78 in Q2 13
  • The Company declared a quarterly dividend of C$0.185 per share
  • Stantec executed on its disciplined acquisition strategy by closing the acquisition of four firms in Q2 14: JBR Environmental Consultants, Inc.; Group Affiliates Inc. (SHW); Wiley Engineering, Inc.; and USKH Inc.

The Company's positive performance in the quarter and year to date is a result of sustained activity throughout the organization and organic growth in its Energy & Resources and Infrastructure business operating units. For the first half of the year, Stantec's gross revenue grew organically by 4.7%.

"As we move into the second half of the year, Stantec's performance continues to meet expectations and deliver solid results," says Bob Gomes, Stantec president and chief executive officer. "For this, we recognize our hardworking employees who continue to provide creative solutions that build strong, local communities."

Designing with Community in Mind

Stantec achieves its purpose of creating communities by offering its expertise and services across three business operating units: Buildings, Energy & Resources, and Infrastructure.

In Stantec's Buildings business operating unit, the Company's integrated services model, together with global recognition of its expertise, allows the Company to secure projects despite a slow recovery in this market. A notable project awarded to Stantec this quarter is to perform architecture and engineering design to support the build-out of an inspection and secondary packaging area for a drug manufacturer in the San Francisco Bay area in California.

In its Energy & Resources business operating unit, on a year-to-date basis, Stantec experienced growth in all of its sectors, primarily in Oil & Gas. Stantec continues to benefit from a reputation as a top integrated provider of midstream services-a market that remains very active in Canada and presents opportunities as it expands and evolves in the United States.

In Stantec's Infrastructure business operating unit, Stantec's reputation for project delivery expertise and its strengthened presence in the United States continue to provide opportunities in both the development of new infrastructure and the renewal of aging facilities and roadways. For example, in the quarter, Stantec secured work on the City of Atlanta's Raw Water Delivery System project where a tunnel, raw-water-filled quarry, and related facilities will provide operational flexibility to the city's existing transmission mains. This project will be one of the largest design-build tunnels ever designed in North America.

Strategic Growth

Stantec closed four acquisitions in Q2 14, successfully executing on its consistent, disciplined acquisition strategy with the addition of JBR Environmental Consultants, Inc.; Group Affiliates Inc. (SHW); Wiley Engineering, Inc.; and USKH Inc., adding over 580 employees in the quarter, and 1,140 employees to the Company year to date. Stantec is seeing the resulting growth from its acquisition strategy in both depth of services and market reach, particularly in the western United States, the Midwest and Mid-Atlantic states, and the resource-rich northern areas of North America. This growth further strengthens Stantec's capacity to deliver results with more than 14,000 employees in over 230 locations across North America and internationally.

Additional Company Activity

Subsequent to the quarter end, Stantec declared a dividend of $0.185 per share, payable on October 16, 2014, to shareholders of record on September 26, 2014.

Conference Call and Company Information

Stantec's second quarter conference call, to be held Thursday, August 7, 2014, 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 1-800-499-4035 and provide confirmation code 9703011 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 14,000 employees working in over 230 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 gross revenue is an additional IFRS measure. For a definition and explanation of additional IFRS measures, refer to the Critical Accounting Estimates, Developments, and Measures section of the Company's 2013 Annual Report.

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 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 2013 Annual Report. You may obtain our 2013 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 2013 Annual Report free of charge from our Investor Contact noted below.

Design with community in mind

Consolidated Statements of Financial Position
(Unaudited)
June 30 December 31
2014 2013
(In thousands of Canadian dollars)$ $
ASSETS
Current
Cash and cash equivalents117,736 143,030
Trade and other receivables413,124 384,907
Unbilled revenue217,060 143,894
Income taxes recoverable11,115 8,792
Prepaid expenses17,954 18,959
Other financial assets28,252 21,418
Other assets2,731 5,231
Total current assets807,972 726,231
Non-current
Property and equipment150,029 133,534
Goodwill688,051 594,826
Intangible assets92,515 78,857
Investments in joint ventures and associates4,616 4,996
Deferred tax assets48,459 45,383
Other financial assets89,834 83,163
Other assets1,222 1,188
Total assets1,882,698 1,668,178
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Trade and other payables243,615 259,113
Billings in excess of costs96,418 77,803
Income taxes payable- 9,127
Current portion of long-term debt52,587 37,130
Provisions11,535 12,047
Other financial liabilities2,207 1,927
Other liabilities10,431 9,837
Total current liabilities416,793 406,984
Non-current
Long-term debt322,907 200,943
Provisions52,692 49,539
Deferred tax liabilities64,902 58,082
Other financial liabilities2,224 2,041
Other liabilities59,387 57,955
Total liabilities918,905 775,544
Shareholders' equity
Share capital269,904 262,573
Contributed surplus12,776 12,369
Retained earnings666,613 606,056
Accumulated other comprehensive income14,500 11,636
Total Shareholders' equity963,793 892,634
Total liabilities and shareholders' equity1,882,698 1,668,178
Consolidated Statements of Income
(Unaudited)
For the quarter ended For the two quarters ended
June 30 June 30
(In thousands of Canadian dollars, except per share amounts)2014
$
2013
$
2014
$
2013
$
Gross revenue633,819 566,724 1,207,712 1,079,931
Less subconsultant and other direct expenses103,568 97,275 196,206 183,630
Net revenue530,251 469,449 1,011,506 896,301
Direct payroll costs240,229 214,946 459,851 411,471
Gross margin290,022 254,503 551,655 484,830
Administrative and marketing expenses211,803 187,749 411,715 363,137
Depreciation of property and equipment9,175 7,717 17,999 14,999
Amortization of intangible assets5,788 6,268 11,152 12,072
Net interest expense2,172 2,247 3,697 4,566
Other net finance expense758 751 1,416 1,349
Share of income from joint ventures and associates(581)(361)(1,386)(569)
Foreign exchange (gain) loss(179)218 89 324
Other income(24)(60)(390)(368)
Income before income taxes61,110 49,974 107,363 89,320
Income taxes
Current17,495 16,345 27,821 27,231
Deferred(690)(2,502)1,704 (2,489)
Total income taxes16,805 13,843 29,525 24,742
Net income for the period44,305 36,131 77,838 64,578
Weighted average number of shares outstanding - basic46,704,903 46,176,303 46,664,414 46,116,563
Weighted average number of shares outstanding - diluted47,151,907 46,479,367 47,136,251 46,414,325
Shares outstanding, end of the period46,752,166 46,216,049 46,752,166 46,216,049
Earnings per share
Basic0.95 0.78 1.67 1.40
Diluted0.94 0.78 1.65 1.39

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