Stantec announces third quarter 2013 results and dividend

Marketwired

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Oct 31, 2013) - Today, Stantec (STN.TO)(STN) announced strong third quarter 2013 results, with several key items to highlight:

  • Gross revenue increased 21.3% to C$581.2 million in Q3 13 from Q3 12
  • Net income increased 34.6% to C$45.9 million in Q3 13 from Q3 12
  • Diluted earnings per share increased 32.4% to C$0.98 in Q3 13 from Q3 12
  • Sustained and strong organic growth at 10.1% in Q3 13 from Q3 12
  • Stantec unveiled its new brand, reinforcing the Company's promise to design with community in mind

"We have had an excellent quarter, leading to what should be a very good year," says Bob Gomes, Stantec president and chief executive officer. "Our focus on community, creativity, and client relationships has reinforced our strategy, resulting in positive performance for the Company."

Compared to Q3 12, Stantec's gross revenue increased by 21.3% to C$581.2 million from C$479.3 million, EBITDA increased 27.3% to C$77.8 million from C$61.1 million, net income increased 34.6% to C$45.9 million from C$34.1 million, and diluted earnings per share increased 32.4% to C$0.98 from C$0.74.

In Q3 13, Stantec's gross revenue grew organically by 10.1%. This growth-resulting from increased activity in the Company's Environment, Industrial, and Transportation practice areas, in addition to continued strength in the Canadian market-marks more than two years of sustained organic growth for Stantec.

Capitalizing on Market Opportunities

With strong client relationships in communities across Stantec's practice areas, an ability to adapt to changing trends and an increased depth of expertise, the Company is capitalizing on diverse market opportunities, including P3 and other alternative delivery projects. For example, in its Buildings practice area, Stantec recently secured a project in northern Canada to provide services to the Iqaluit International Airport Improvement project-the first P3 airport project in North America. The Company also secured the architecture, structural, mechanical, and electrical services for the Iqaluit Aquatics Centre, providing much-needed recreational space for the community.

Stantec's Environment and Industrial practice areas are benefiting from a very strong oil and gas sector. Enhanced capabilities in recent years and a national presence enable the Company to secure projects in a busy midstream oil and gas sector with a number of new projects under consideration and development. Bringing its expertise to these robust markets, Stantec is working on major export pipelines as they continue to emerge across Canada.

In Stantec's Transportation practice area, the Company continued to see strong organic growth resulting from its acquisition strategy and strengthened ability to pursue and secure a steady share of design-build and P3 projects. This includes working with the Los Angeles County Metropolitan Transportation Authority to manage the construction of the Westside Subway Transit Corridor-one of the most regionally significant infrastructure programs in southern California.

In the Company's Urban Land practice area, activity remains steady in Canada and continues to improve in the United States. Stantec is well positioned to leverage integrated services and strong relationships to capitalize on residential and nonresidential projects for its clients. For example, the Company secured the preliminary planning work and design master service agreement to evaluate airport land parcels at the Tampa International Airport, thereby supporting the development of amenities and the creation of unique shopping experiences for airport visitors.

Additional Company Activity

On September 10, 2013, Stantec launched a new brand and visual identity as part of its continuing evolution that spans nearly 60 years. This brand renewal articulates the Company's ongoing commitment to community, creativity, and client relationships. The new brand 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 its clients in various sectors across many regions.

On October 30, 2013, the Company declared a dividend of $0.165 per share, payable on January 16, 2014, to shareholders of record on December 31, 2013.

Conference Call and Company Information

Stantec's third-quarter conference call, to be held Thursday, October 31, 2013, 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 1919196 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 13,000 specialists working in over 200 locations. 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. 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.

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 2012 Financial Review. 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 4 of our Q3 13 unaudited interim consolidated financial statements.

Certain statements contained in this press 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. Forward-looking statements in this press release are identified by words such as "will," "continue," "strategy," "improve," "well-positioned," "secure," "pursue," and other similar expressions. 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 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 2012 Financial Review. 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 2012 Financial Review 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 2012 Financial Review free of charge from our Investor Contact noted below.

Consolidated Statements of Financial Position
(Unaudited)
September 30 December 31
2013 2012*
(In thousands of Canadian dollars) $ $
ASSETS
Current
Cash and cash equivalents 59,950 40,708
Trade and other receivables 399,668 353,451
Unbilled revenue 203,602 148,908
Income taxes recoverable 7,231 3,840
Prepaid expenses 19,020 14,283
Other financial assets 17,971 17,670
Other assets 5,256 4,106
Total current assets 712,698 582,966
Non-current
Property and equipment 133,997 114,994
Goodwill 580,742 566,784
Intangible assets 77,424 85,748
Investments in joint ventures and associates 4,133 5,286
Deferred tax assets 46,652 40,975
Other financial assets 69,151 63,691
Other assets 1,299 3,791
Total assets 1,626,096 1,464,235
LIABILITIES AND EQUITY
Current
Trade and other payables 266,254 211,726
Billings in excess of costs 75,162 60,822
Income taxes payable 4,366 159
Current portion of long-term debt 33,845 42,888
Provisions 15,637 14,863
Other financial liabilities 4,007 1,672
Other liabilities 9,329 8,650
Total current liabilities 408,600 340,780
Non-current
Long-term debt 209,460 256,408
Provisions 47,714 36,959
Deferred tax liabilities 62,277 57,840
Other financial liabilities 1,995 2,342
Other liabilities 54,143 42,778
Total liabilities 784,189 737,107
Shareholders' equity
Share capital 254,042 240,369
Contributed surplus 13,519 14,291
Retained earnings 578,079 491,227
Accumulated other comprehensive loss (3,733) (18,862)
Total equity attributable to equity holders of the Company 841,907 727,025
Non-controlling interests - 103
Total equity 841,907 727,128
Total liabilities and equity 1,626,096 1,464,235
* Figures for 2012 have been restated for the adoption of IFRS 10 and IFRS 11.
Consolidated Statements of Income
(Unaudited)
For the quarter ended For the three quarters ended
September 30 September 30
(In thousands of Canadian dollars,
except per share amounts)
2013
$
2012*
$

2013
$
2012*
$
Gross revenue 581,166 479,249 1,661,097 1,388,855
Less subconsultant and other direct expenses 96,409 81,882 280,039 225,158
Net revenue 484,757 397,367 1,381,058 1,163,697
Direct payroll costs 221,766 178,650 633,237 528,542
Gross margin 262,991 218,717 747,821 635,155
Administrative and marketing expenses 185,616 157,687 548,753 469,690
Depreciation of property and equipment 8,701 7,020 23,700 20,183
Amortization of intangible assets 4,516 5,090 16,588 14,676
Net interest expense 2,117 2,259 6,683 6,920
Other net finance expense 785 641 2,134 2,135
Share of income from joint ventures and associates (866) (672) (1,435) (1,679)
Foreign exchange (gain) loss (485) 104 (161) 133
Other expense (income) 86 (65) (282) 125
Income before income taxes 62,521 46,653 151,841 122,972
Income taxes
Current 17,597 9,271 44,828 28,544
Deferred (1,038) 3,285 (3,527) 4,555
Total income taxes 16,559 12,556 41,301 33,099
Net income for the period 45,962 34,097 110,540 89,873
Weighted average number of shares outstanding -
basic 46,303,826 45,788,734 46,179,678 45,694,805
Weighted average number of shares outstanding -
diluted 46,713,589 45,800,853 46,477,674 45,694,805
Shares outstanding, end of the period 46,363,214 45,879,748 46,363,214 45,879,748
Earnings per share
Basic 0.99 0.74 2.39 1.97
Diluted 0.98 0.74 2.38 1.97
* Figures for 2012 have been restated for the adoption of IFRS 10 and IFRS 11.
Contact:
Media Contact
Sherry Brownlee
Stantec Media Relations
(780) 917-7264
sherry.brownlee@stantec.com
Investor Contact
Crystal Verbeek
Stantec Investor Relations
(780) 969-3349
crystal.verbeek@stantec.com
www.stantec.com

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