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Stantec reports first quarter 2015 results and dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - May 14, 2015) - Today, Stantec (STN)(STN) announced solid first quarter 2015 results, with several key items to highlight:

  • Gross revenue increased 23.0% to C$705.7 million in Q1 15 from C$573.9 million in Q1 14

  • Net income increased 13.4% to C$38 million in Q1 15 from C$33.5 million in Q1 14

  • Diluted earnings per share increased 11.1% to C$0.40 in Q1 15 from C$0.36 in Q1 14

  • Stantec declared and paid a cash dividend of C$0.105 per share to shareholders of record on March 31, 2015, an increase of 13.5% from 2014

  • Stantec closed two acquisitions: the Canadian engineering assets of Dessau Inc., based in Montreal, Quebec; and Sparling, Inc., based in Seattle, Washington

Stantec's gross revenue grew organically by 1.7% in the quarter and net revenue grew organically by 2.1% when compared to Q1 14. The Company's growth in the first quarter is primarily a result of increased activity in its Buildings and Infrastructure business operating units, which was partly offset by a retraction in its Energy & Resources business operating unit. The Company's US operations experienced strong organic gross revenue growth; however, organic gross revenue in its Canadian and International operations retracted.

"With a strong business model - one that is able to capitalize on opportunities in many different market cycles - and an expanded depth and reach of services, we continue to achieve solid performance, even when areas of our Company have been significantly impacted by lower commodity prices," says Bob Gomes, Stantec president and chief executive officer. "Our results speak to the efforts of our employees who deliver their best on every project, every time."

Designing with Community in Mind

Stantec's diversified business model again demonstrated its effectiveness in Q1 15 with positive results in its Buildings and Infrastructure business operating units. The Buildings business operating unit experienced growth in all its regions and sectors, particularly in Healthcare and Education. For example, during the quarter, Stantec secured the planning, management, and engineering work for the construction of a new 237,000-square-foot (22,018-square-metre) interdisciplinary research lab for the Yale Science Building at Yale University in New Haven, Connecticut.

In Stantec's Energy & Resources business operating unit, the Company experienced a decline in organic revenue, due largely to the decline in oil prices and corresponding market conditions in Q1 15 compared to strong growth conditions in Q1 14. Stantec's Mining sector achieved growth with ongoing significant projects and the extended scope of certain other projects. One such project secured during the quarter is the additional work scope for its existing Service Shaft Operation and Maintenance Start-up Support project at the Grasberg Block Cave Mine in Papua, Indonesia.

All sectors in Stantec's Infrastructure business operating unit experienced organic gross revenue growth in Q1 15 compared to Q1 14. The Community Development sector achieved strong organic revenue growth in both Canada and the United States. In this sector, the Company is well positioned to continue to capitalize on opportunities with an ongoing demand for housing, a recovery in urban development and design markets, as well as an increase in mixed-use commercial projects.

In Stantec's Transportation sector, the Company's reputation and presence in a rebounding US economy, together with stable infrastructure spending, have led to increased organic growth opportunities. A recent project Stantec has undertaken is the design services for the reconstruction of the I-4 in Volusia County, Florida, beginning at the St. John's River Bridge and continuing 10.2 miles (16.4 kilometres) to the east of the SR 472 interchange.

In Stantec's Water sector, the Company's expertise in water management, signified by several key projects, is driving demand for its services related to aging infrastructure rehabilitation and regulatory requirements. One recent award is the full-scale retrofit of the City of Barrie wastewater treatment plant with Membrane Bioreactor (MBR) technology in Ontario. This will be the largest full-retrofit MBR project in Canada and the largest for cold weather application in North America.

Strategic Growth

During the quarter, Stantec closed the acquisitions of the Canadian engineering assets of Dessau Inc., based in Montreal, Quebec; and Sparling, Inc., based in Seattle, Washington, as part of its clearly defined and well-executed acquisition strategy. These two acquisitions build on the eight companies Stantec acquired in 2014 and further strengthen the Company's diversity of services and community reach.

Additional Company Activity

On May 13, 2015, the Company declared a cash dividend of $0.105 per share, payable on July 16, 2015, to shareholders of record on June 30, 2015.

Conference Call and Company Information

Stantec's first quarter conference call, to be held Thursday, May 14, 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 1-800-499-4035 and provide confirmation code 8757206 to the operator.

Stantec's Annual Meeting of Shareholders will be held on Thursday, May 14, 2015, at 10:30 AM MDT (12:30 PM EDT) at the Metropolitan Conference Centre, Lecture Theatre, 333 - 4th Avenue SW, Calgary, Alberta.

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 gross revenue and net revenue 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 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 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 2014 Annual Report. Stantec's 40-F has been filed with the SEC, and you may obtain this document by visiting EDGAR on the SEC website at www.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, 2014 (which form our 2014 Annual Report), by visiting EDGAR on the SEC website at www.sec.gov, 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

Consolidated Statements of Financial Position

(Unaudited)

March 31

December 31

2015

2014

(In thousands of Canadian dollars)

$

$

ASSETS

Current

Cash and deposits

27,418

153,704

Cash in escrow

6,000

-

Trade and other receivables

532,867

431,751

Unbilled revenue

244,128

192,310

Income taxes recoverable

16,241

11,171

Prepaid expenses

27,277

23,425

Other financial assets

30,928

31,526

Other assets

2,175

530

Total current assets

887,034

844,417

Non-current

Property and equipment

162,153

152,707

Goodwill

855,825

760,631

Intangible assets

130,535

97,243

Investments in joint ventures and associates

4,916

4,975

Deferred tax assets

65,695

58,801

Other financial assets

104,859

90,667

Other assets

933

1,029

Total assets

2,211,950

2,010,470

LIABILITIES AND SHAREHOLDERS' EQUITY

Current

Bank indebtedness

16,310

-

Trade and other payables

250,310

300,293

Billings in excess of costs

93,201

96,082

Current portion of long-term debt

67,714

53,172

Provisions

15,930

10,796

Other financial liabilities

4,520

2,773

Other liabilities

12,014

11,953

Total current liabilities

459,999

475,069

Non-current

Long-term debt

376,025

256,093

Provisions

57,056

51,596

Deferred tax liabilities

86,670

74,602

Other financial liabilities

2,533

2,547

Other liabilities

64,713

64,318

Total liabilities

1,046,996

924,225

Shareholders' equity

Share capital

278,808

276,698

Contributed surplus

14,388

13,490

Retained earnings

764,012

735,917

Accumulated other comprehensive income

107,746

60,140

Total shareholders' equity

1,164,954

1,086,245

Total liabilities and shareholders' equity

2,211,950

2,010,470

Consolidated Statements of Income

(Unaudited)

For the quarter ended

March 31

2015

2014

(In thousands of Canadian dollars, except per share amounts)

$

$

Gross revenue

705,723

573,893

Less subconsultant and other direct expenses

113,439

92,638

Net revenue

592,284

481,255

Direct payroll costs

265,133

219,622

Gross margin

327,151

261,633

Administrative and marketing expenses

251,458

199,912

Depreciation of property and equipment

10,842

8,824

Amortization of intangible assets

10,227

5,364

Net interest expense

2,666

1,525

Other net finance expense

838

658

Share of income from joint ventures and associates

(639

)

(805

)

Foreign exchange (gain) loss

(128

)

268

Other income

(468

)

(366

)

Income before income taxes

52,355

46,253

Income taxes

Current

14,101

10,326

Deferred

297

2,394

Total income taxes

14,398

12,720

Net income for the period

37,957

33,533

Weighted average number of shares outstanding - basic

93,864,528

93,245,088

Weighted average number of shares outstanding - diluted

94,503,760

94,294,704

Shares outstanding, end of the period

93,932,307

93,345,414

Earnings per share

Basic

0.40

0.36

Diluted

0.40

0.36

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