Stantec announces first quarter 2012 results and dividend

EDMONTON, ALBERTA--(Marketwire -05/10/12)- Stantec (STN.TO) (STN)

  Today, Stantec announced solid first quarter 2012 results, with several key items to highlight -- Gross revenue increased 7.4% to C$439.1 million in Q1 12 from C$408.7 million in Q1 11. -- EBITDA increased 3.0% to C$47.4 million in Q1 12 from C$46.0 million in Q1 11. -- Net income increased 4.6% to C$24.9 million in Q1 12 from C$23.8 million in Q1 11. -- Diluted earnings per share increased 5.8% to C$0.55 in Q1 12 from C$0.52 in Q1 11. -- The Company declared a quarterly dividend of C$0.15 per share, payable on July 19, 2012 to shareholders of record on June 29, 2012, reflecting the Company's confidence in its continued ability to grow revenue, complete strategic acquisitions, and execute effectively while providing enhanced shareholder returns.

"We began 2012 on a positive note, and despite the continuing challenges of the business environment, we achieved a third consecutive quarter of organic growth" says Bob Gomes, Stantec president and chief executive officer. "We remained focused on the disciplined execution of our long-term strategy, and thanks to the continued hard work of our staff and support of our clients, we achieved increased revenue and earnings during the first quarter."

Stantec's revenue growth in Q1 12 was solid compared to Q1 11; gross revenue increased 7.4% to C$439.1 million from C$408.7 million, and EBITDA increased 3.0% to C$47.4 million from C$46.0 million. The Company's net income for Q1 12 increased 4.6% to C$24.9 million from C$23.8 million in Q1 11, and diluted earnings per share increased 5.8% to C$0.55 in Q1 12 from C$0.52 in Q1 11. Net income was positively impacted by organic revenue growth and from acquisitions completed in 2011, and by a decrease in administrative and marketing expenses as a percentage of net revenue, partially offset by a slight reduction in gross margin.

Focus on Cross-Selling and Client Relationships

Illustrating its ability to cross-sell multidisciplinary services, Stantec's Buildings group was selected to provide multidisciplinary services on a new 102-bed senior care facility on a site adjacent to the Powell River General Hospital in Powell River, British Columbia. This facility will be designed to LEED® Gold standards. Stantec also focused on its diversification strategy, including opportunities to expand its water service offerings to the industrial sector, including tailings pond treatment, flood control, water reuse, and water resource management. For example, Stantec was selected to provide design review services for a selenium removal water treatment facility at Teck Coal mining operations in southeastern British Columbia.

Contributing to its objectives for growth and consistency of results, Stantec continues to foster long-term relationships with existing clients and build relationships with new clients. For example, the Company secured work with a new client, Twin Metals Minnesota, LLC. Stantec's scope of work includes mine planning and design as part of a prefeasibility study being undertaken by the client for an underground copper, nickel, and platinum metals mine in northeastern Minnesota. Stantec's Transportation group continued to secure projects with repeat clients due to strong relationships and past performance. For example, the Company secured various planning services and work on traffic and revenue forecasting for bridges and tunnels for the Metropolitan Transportation Authority in New York.

Additional Company Activity

Subsequent to the end of the quarter, Stantec signed a letter of intent to acquire transportation consulting firm ABMB Engineers. Based in Baton Rouge, Louisiana, this 130-person firm also has offices in Jackson, Vicksburg, and Madison, Mississippi; and New Orleans, Louisiana. The transaction is expected to close in May. Stantec also signed a letter of intent to acquire the assets of 35-person architecture and interior design firm PHB Group, based in St. John's, Newfoundland. The transaction is also expected to close in May.

In addition, the Company declared a quarterly dividend of C$0.15 per share, payable on July 19, 2012 to shareholders of record on June 29, 2012, reflecting the Company's financial strength and confidence in its ability to continue to grow revenue, complete strategic acquisitions, and generate cash flow from operations while providing enhanced shareholder returns.

Conference Call and Company Information

Stantec's first quarter conference call, being held today at 2:00 PM MDT (4:00 PM EDT), will be broadcast live and archived in the Investors section of Financial analysts who wish to participate in the earnings conference call are invited to call 1-800-820-0231 and provide the confirmation code 8013004 to the first available operator.

Stantec's Annual Meeting of Shareholders will be held today at 10:30AM MDT (12:30 PM EDT) at the Art Gallery of Alberta in Edmonton, Alberta, 2 Sir Winston Churchill Square.

Stantec provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets at every stage, from the initial conceptualization and financial feasibility study to project completion and beyond. Our services are provided on projects around the world through approximately 11,000 employees operating out of more than 170 locations in North America and 4 locations internationally. Stantec is One Team providing Integrated Solutions.

Cautionary Statements

Stantec's EBITDA is a non-IFRS measure, and gross revenue, net revenue, and gross margin 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 2011 Financial Review.

This press release contains forward-looking statements concerning Stantec's future financial performance, future growth, and future acquisitions activities. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution readers of this press 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 transactions will not close 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 factors and other factors could affect our results, refer to the Risk Factors section and Caution Regarding Forward-Looking Statement in our 2011 Financial Review. You may obtain these documents by visiting EDGAR on the SEC website at or on the CSA website at

One Team. Integrated Solutions.

  Consolidated Statements of Financial Position (Unaudited) March 31 December 31 2012 2011 (In thousands of Canadian dollars) $ $ ---------------------------------------------------------------------------- ASSETS Current Cash and short-term deposits 14,354 36,111 Trade and other receivables 317,286 310,669 Unbilled revenue 150,886 133,881 Income taxes recoverable 13,571 16,800 Prepaid expenses 12,231 13,908 Other financial assets 12,558 14,612 Other assets 2,928 3,172 ---------------------------------------------------------------------------- Total current assets 523,814 529,153 Non-current Property and equipment 105,687 107,853 Goodwill 501,945 509,028 Intangible assets 77,429 72,047 Investments in associates 2,542 2,365 Deferred tax assets 43,367 43,647 Other financial assets 61,028 61,606 Other assets 1,501 1,657 ---------------------------------------------------------------------------- Total assets 1,317,313 1,327,356 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND EQUITY Current Bank indebtedness 6,081 - Trade and other payables 179,686 191,859 Billings in excess of costs 50,222 49,441 Current portion of long-term debt 31,671 59,593 Provisions 16,102 16,373 Other financial liabilities 2,938 5,042 Other liabilities 6,365 5,208 ---------------------------------------------------------------------------- Total current liabilities 293,065 327,516 Non-current Long-term debt 248,653 236,601 Provisions 40,056 42,076 Deferred tax liabilities 53,709 54,564 Other financial liabilities 2,384 2,257 Other liabilities 36,361 37,191 ---------------------------------------------------------------------------- Total liabilities 674,228 700,205 ---------------------------------------------------------------------------- Shareholders' equity Share capital 230,958 226,744 Contributed surplus 14,502 14,906 Retained earnings 415,891 397,847 Accumulated other comprehensive loss (18,369) (12,449) ---------------------------------------------------------------------------- Total equity attributable to equity holders of the Company 642,982 627,048 ---------------------------------------------------------------------------- Non-controlling interests 103 103 ---------------------------------------------------------------------------- Total equity 643,085 627,151 ---------------------------------------------------------------------------- Total liabilities and equity 1,317,313 1,327,356 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Consolidated Statements of Income (Unaudited) For the quarter ended March 31 ------------------------------ 2012 2011 (In thousands of Canadian dollars, except per share amounts) $ $ ---------------------------------------------------------------------------- Gross revenue 439,051 408,656 Less subconsultant and other direct expenses 68,171 71,864 ---------------------------------------------------------------------------- Net revenue 370,880 336,792 Direct payroll costs 169,159 148,894 ---------------------------------------------------------------------------- Gross margin 201,721 187,898 Administrative and marketing expenses 153,885 142,025 Depreciation of property and equipment 6,448 6,467 Amortization of intangible assets 4,671 4,684 Net interest expense 2,213 2,217 Other net finance expense 850 676 Share of income from associates (290) (187) Foreign exchange gain (279) (591) Other expense (income) 113 (35) ---------------------------------------------------------------------------- Income before income taxes 34,110 32,642 ---------------------------------------------------------------------------- Income Taxes Current 9,218 8,346 Deferred (8) 468 ---------------------------------------------------------------------------- Total income taxes 9,210 8,814 ---------------------------------------------------------------------------- Net income for the period 24,900 23,828 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of shares outstanding - basic 45,557,235 45,766,294 ---------------------------------------------------------------------------- Weighted average number of shares outstanding - diluted 45,557,235 45,942,231 ---------------------------------------------------------------------------- Shares outstanding, end of the period 45,717,418 45,732,852 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings per share Basic 0.55 0.52 ---------------------------------------------------------------------------- Diluted 0.55 0.52 ----------------------------------------------------------------------------