EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Nov. 10, 2016) - (TSX:STN)(NYSE:STN)
Stantec reported a strong 67.5% increase in gross revenue when comparing the third quarter of 2016 to the same period last year. The increase was mainly due to contributions from four strategic acquisitions completed year to date. In particular, the MWH Global, Inc. (MWH) acquisition added significantly to operating results.
Stantec's results were impacted by a slight decrease in gross margin because of the mix of projects and the lower-margin Construction Services business acquired from MWH. There were also downward pressures on fees in some sectors. Administrative and marketing expenses increased as a percentage of net revenue, mainly due to the positive impact of the fair value of share-based compensation in Q3 15, an increase in MWH-related integration activities in Q3 16, and an increase in administrative labor costs in Q3 16. Interest expense also increased, primarily due to an increase in Stantec's outstanding long-term debt resulting from the MWH acquisition.
|For the quarter ended September 30
(In millions of Canadian dollars, except for share amounts and %)
|Diluted earnings per share
|Adjusted diluted earnings per share (1)
|Cash dividends declared per common share
||Adjusted EBITDA and adjusted diluted earnings per share are non-IFRS measures as defined in the Cautionary Statements.
"We are pleased with our progress to date on the MWH integration. Our progress in our revenue and cost synergies are in line with our expectations, and we are excited about the continued opportunities we see for leveraging our combined capabilities," says Stantec president and CEO Bob Gomes. "Outside of the continued stress in our Environmental Services and Energy & Resources business because of the challenging resource economy, we are satisfied with our performance to date."
MWH added $497.2 million in gross revenue during the quarter and $792.4 million in gross revenue since May 6, 2016. While moving forward with integrating MWH employees and systems, Stantec acquired New York City-based Edwards & Zuck, a 120-person premier buildings engineering firm, in September. This addition will continue to strengthen Stantec's buildings work in the United States. After the quarter, Stantec signed a letter of intent to acquire Edmonton, Alberta-based Architecture / Tkalcic Bengert (Arch / TB), a 60-person architecture, interior design, creative services, urban planning, and technical consulting firm that will play a significant role in enhancing and supporting Stantec's buildings practice in the Company's Canada Prairies & Territories geography.
Within Stantec's four Consulting Services reportable segments, growth was most significant in the Infrastructure business operating unit, which saw a 70.5% increase in gross revenue when comparing Q3 16 to Q3 15 due to contributions from acquisitions. Organic gross revenue in Infrastructure was stable during the quarter. Although the Buildings, Energy & Resources, and Environmental Services business operating units also experienced gross revenue growth due to contributions from acquisitions, each business operating unit saw some retraction in organic gross revenue.
Gross revenue for Construction Services was $249.3 million in the quarter and $390.0 million since the MWH acquisition on May 6, 2016.
Marie-Lucie Morin appointed to Stantec Board of Directors
Effective November 9, 2016, Marie-Lucie Morin was appointed to Stantec's board of directors. Ms. Morin brings to the role 30 years' experience in Canadian federal public service. She was previously appointed National Security Advisor to the Prime Minister and Associate Secretary to the Cabinet and has served as Deputy Minister for International Trade and as Associate Deputy Minister of Foreign Affairs. Ms. Morin also has a wealth of experience serving on corporate and not-for-profit boards. She is a lawyer and a graduate of the Université de Sherbrooke in Quebec, Canada.
Additional Company Activity
On November 9, 2016, Stantec declared a cash dividend of $0.1125 per share, payable on January 12, 2017, to shareholders of record on December 30, 2016.
Conference Call and Company Information
Stantec's third quarter conference call--to be held Thursday, November 10, at 2:00 PM MST (4:00 PM EST)--will be broadcast live and archived in the Investors section of stantec.com. Financial analysts wanting to participate by phone are invited to call 1-800-524-8290 and provide the operator with confirmation code 8288565.
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 six continents. Our work-engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics, from initial project concept and planning through design, construction, and commissioning-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 stantec.com or find us on social media.
Stantec's 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 2015 Annual Report and the Company's 2016 Third Quarter Management's Discussion and Analysis.
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 the progress and benefit of the MWH acquisition and our expectation that the Edwards & Zuck and Architecture / Tkalcic Bengert acquisitions will strengthen our buildings practice. 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 about how other material risk factors could affect results, refer to the Risk Factors section and Cautionary Note Regarding Forward-Looking Statements in our 2015 Annual Report and the 2016 Third Quarter Management's Discussion and Analysis. Stantec's 40-F has been filed with the SEC, and you may obtain this document by visiting EDGAR on the SEC website at sec.gov. You may obtain our complete audited annual consolidated financial statements and associated Management's Discussion and Analysis for the year ended December 31, 2015 (which form our 2015 Annual Report) by visiting EDGAR on the SEC website at sec.gov, on the CSA website at sedar.com, or at stantec.com. Alternatively, you may obtain a hard copy of the 2015 Annual Report free of charge from our Investor Contact noted below.
|Design with community in mind |
|Consolidated Statements of Financial Position|
| (Unaudited) |
| ||September 30||December 31|
|(In thousands of Canadian dollars)||$||$|
|ASSETS|| || |
|Current|| || |
|Cash and deposits||143,521||67,342|
|Cash in escrow||9,313||8,646|
|Trade and other receivables||804,423||570,577|
|Income taxes recoverable||46,552||19,727|
|Other financial assets||18,505||26,722|
|Total current assets||1,587,491||951,392|
|Non-current|| || |
|Property and equipment||214,181||158,085|
|Investments in joint ventures and associates||8,396||4,467|
|Deferred tax assets||23,365||11,254|
|Other financial assets||154,123||111,479|
|LIABILITIES AND EQUITY|| || |
|Current|| || |
|Trade and other payables||656,227||352,199|
|Billings in excess of costs||197,159||109,159|
|Income taxes payable||2,394||-|
|Other financial liabilities||2,823||2,601|
|Total current liabilities||1,049,533||632,054|
|Non-current|| || |
|Net employee defined benefit liability||36,569||-|
|Deferred tax liabilities||54,371||21,256|
|Other financial liabilities||5,605||2,748|
|Shareholders' equity|| || |
|Accumulated other comprehensive income||141,568||165,629|
|Total shareholders' equity||1,929,359||1,323,260|
|Total liabilities and equity||4,208,031||2,341,879|
|Consolidated Statements of Income|
| ||For the quarter ended||For the three quarters ended|
| ||September 30||September 30|
(In thousands of Canadian dollars, except per share amounts)
|Less subconsultant/ subcontractor and other direct|
|Direct payroll costs||399,139||282,345||1,049,068||820,616|
|Administrative and marketing expenses||358,255||244,113||971,562||740,539|
|Depreciation of property and equipment||13,794||11,621||36,398||33,625|
|Amortization of intangible assets||24,265||10,185||55,009||29,091|
|Net interest expense||7,667||2,700||21,598||8,229|
|Other net finance expense||1,991||852||5,643||2,429|
|Share of income from joint ventures and associates||(688)||(468)||(1,764)||(1,623)|
|Foreign exchange loss (gain)||428||(297)||493||(331)|
|Other (income) expense||(56)||174||(184)||(7,043)|
|Income before income taxes||67,417||68,879||140,363||180,774|
|Income taxes|| || || || |
|Total income taxes||18,148||18,942||39,302||49,713|
|Net income for the period||49,269||49,937||101,061||131,061|
|Weighted average number of shares outstanding -|| || || || |
|Weighted average number of shares outstanding -|| || || || |
|Shares outstanding, end of the period||113,945,237||94,352,144||113,945,237||94,352,144|
|Earnings per share|| || || || |