ROHSTOFF INTERNATIONAL

12:45 | 09.11.2017
Stantec reports third quarter 2017 results with continued positive organic gross revenue growth in line with expectations

TSX, NYSE:STN
Highlights
Gross revenue increased 3.3% to $1.3 billion from Q3 16 to Q3 17

Overall organic gross revenue growth was 6.0% from Q3 16 to Q3 17

Strong organic gross revenue growth achieved in Energy & Resources
business operating unit (BOU): up 5.7% from Q3 16 to Q3 17

Organic gross revenue growth achieved in Buildings (3.0%),
Infrastructure (2.8%), and Environmental Services (2.0%) from Q3 16 to
Q3 17

EBITDA as a percentage of net revenue was 12.5% in Q3 17

Net income was $46.2 million in Q3 17

Diluted earnings per share (EPS) was $0.40 in Q3 17, and adjusted
diluted EPS was $0.54 in Q3 17
OverviewContinuing a trend that started earlier this year,
Stantec’s overall strength builds with organic growth in the third
quarter of 2017.

Stantec’s gross revenue rose 3.3% from approximately $1.26
billion in Q3 16 to $1.3 billion in Q3 17, driven by acquisitions
completed in 2016 and 2017 and overall organic gross revenue growth of
6.0% from Q3 16 to Q3 17; both Consulting Services and Construction
Services contributed to that growth. This builds on organic gross
revenue growth in Q2 17, which was up 4.5% over Q2 16. These results
were possible because of the Company’s diverse services and local
expertise in many locations across the globe.

Four of Stantec’s five BOUs experienced organic gross revenue growth
this quarter: Energy & Resources was up 5.7% due to growth in the
Company’s Mining and Power sectors; Buildings was up 3.0%, due to
continued activities on our Canadian healthcare projects; Infrastructure
was up 2.8%, mainly due to the Canadian Transportation sector; and
Environmental Services was up 2.0%, mainly due to higher than expected
project volumes in the Company’s Global operations.

Stantec’s Water BOU experienced organic revenue retraction of 3.0% due
to the completion of certain US projects and delays in project starts.
These factors—as well as unfavorable foreign exchange rates, lower gross
margins in Construction Services, a $3.8 million increase in the fair
value of the Company’s stock-based compensation, and impacts from the
hurricanes in Florida and Houston—led to decreases in some metrics in Q3
16 compared to Q3 17.

EBITDA as a percentage of net revenue was 12.5%; diluted earnings per
share (EPS) was $0.40; and adjusted diluted EPS was $0.54.

Net income was $49.3 million in Q3 16 and was $46.2 million in Q3
17. The change was mainly due to the factors noted previously, along
with a $3.6 million tax expense related to a corporate reorganization in
Q3 17, which makes the Company’s corporate tax and organizational
structures more efficient.
Financial Summary
 

 

 

 
Quarter Ended September 30
(In millions of Canadian dollars,except per share
amounts and %)
 
2017
 
2016
 
$Change
 
%Change

Gross revenue

1,299.2
 

1,257.3

 

41.9

 

3.3%

Adjusted EBITDA (note)

106.9

113.7

(6.8)

(6.0%)

Diluted earnings per share

0.40

0.43

(0.03)

(7.0%)

Adjusted diluted earnings pershare (note)

0.54

0.55

(0.01)

(1.8%)

Cash dividends declared percommon share

0.125

0.1125

0.0125

11.1%

 

 

 

 

 

 

 

 

 

note: adjusted EBITDA and adjusted diluted earnings per share
(EPS) are non-IFRS measures and are further discussed in the Definition
of Non-IFRS Measures in the Critical Accounting Estimates, Developments,
and Measures section (the Definitions section) of our 2016 Annual Report.Executive CommentaryAccording to Bob Gomes, president and
chief executive officer, Stantec met the challenges presented during the
third quarter: “Of most importance this quarter is that all of our
employees in the states affected by hurricanes are safe. We are heavily
involved in recovery efforts in Texas, Louisiana, and Florida,” Gomes
says. “While it’s too soon to say what our ultimate involvement in
rebuilding will be, it’s very likely a lot of work lies ahead. As for
this quarter’s financial results, the increases in gross revenue and
organic growth represent a continued positive trend in line with the
projections for performance we outlined earlier this year. We were very
happy with our Energy & Resources BOU, which had strong organic gross
revenue growth of 5.7% over the same quarter last year, driven mainly by
growth in our Power and Mining sectors—a welcome development. The end of
some large projects, delays in project start-ups in our water business,
and foreign exchange rates negatively affected some financial metrics,
but altogether, these results show that our diverse service offerings
and our global reach mitigates business headwinds and helps us achieve
consistent performance.”
Subsequent EventStantec declared and paid a cash dividend
of $0.1250 per share on October 12, 2017, to shareholders of record on
September 29, 2017. On November 8, 2017, Stantec declared a dividend of
$0.1250 per share, payable on January 11, 2018, to shareholders of
record on December 29, 2017.
Conference Call and Company InformationStantec’s third
quarter conference call—to be held Thursday, November 9, at 7:00 AM MST
(9:00 AM EST)—will be broadcast live and archived in the Investors
section of stantec.com.
Financial analysts wanting to participate in the earnings conference are
invited to call 1-866-233-4566 (Canada and United States) or 1-416-204-1042
(international) and provide the operator with confirmation
code 2252252.
About StantecWe’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 6 continents. We collaborate across
disciplines and industries to bring buildings, energy and resource,
environmental, water, and infrastructure projects to life. Our
work—engineering, architecture, interior design, landscape architecture,
surveying, environmental sciences, construction services, project
management, and project economics, from initial project concept and
planning through to design, construction, commissioning, maintenance,
decommissioning, and remediation—begins at the intersection of
community, creativity, and client relationships.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. Visit us at stantec.com
or find us on social media.Cautionary StatementsStantec’s EBITDA, 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 2016 Annual Report and the Company’s 2017 Third Quarter
Management’s Discussion and Analysis.Certain statements contained in this news release constitute
forward-looking statements. These statements include, but are not
limited to, anticipated tax and organizational efficiencies to be gained
by our corporate restructuring, and statements regarding anticipated
work associated with hurricane recovery efforts. 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, our ability to secure and complete work in a
competitive landscape, as well as global tax reform. 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 2016 Annual Report and the
2017 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, 2016 (which form our 2016 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 printed copy of the 2016 Annual Report
free of charge from our Investor Contact noted below.Consolidated Statements of Financial Position

(Unaudited)

 

 

 

September 30

December 31

2017

2016

(In thousands of Canadian dollars)
 
$
 

$

 
ASSETS

Current

Cash and cash equivalents

198,430

210,903

Cash in escrow

8,721

8,844

Trade and other receivables

802,454

806,417

Unbilled revenue

483,982

421,829

Income taxes recoverable

49,271

46,705

Prepaid expenses

53,392

62,253

Other financial assets

13,367

20,890

Other assets

 
5,610
 

4,679

 
Total current assets
1,615,227

1,582,520

Non-current

Property and equipment

208,042

213,931

Goodwill

1,547,766

1,828,061

Intangible assets

277,423

449,530

Investments in joint ventures and associates

10,279

9,220

Deferred tax assets

27,272

26,195

Other financial assets

180,349

160,056

Other assets

 
17,634
 

15,155

 
Total assets
 
3,883,992
 

4,284,668

 
LIABILITIES AND EQUITY

Current

Trade and other payables

666,177

718,197

Deferred revenue

187,402

201,766

Income taxes payable

5,634

1,795

Long-term debt

197,007

91,876

Provisions

28,732

36,011

Other financial liabilities

2,577

2,378

Other liabilities

 
23,418
 

20,795

 
Total current liabilities
1,110,947

1,072,818

Non-current

Long-term debt

612,953

928,586

Provisions

82,159

80,664

Net employee defined benefit liability

34,890

50,490

Deferred tax liabilities

65,987

79,592

Other financial liabilities

9,041

7,591

Other liabilities

 
82,931
 

88,427

 
Total liabilities
 
1,998,908
 

2,308,168

 
Shareholders’ equity

Share capital

875,580

871,822

Contributed surplus

20,681

18,736

Retained earnings

950,149

917,883

Accumulated other comprehensive income

 
35,359
 

167,287

 
Total shareholders’ equity
 
1,881,769
 

1,975,728

 
Non-controlling interests
 
3,315
 

772

 
Total liabilities and equity
 
3,883,992
 

4,284,668

Consolidated Statements of Income
 

(Unaudited)

 

 

 

 

For the quarter ended

For the three quarters ended

September 30

 

September 30

 

2017

2016

2017

2016

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

$

 
$
 

$

 
Gross revenue
1,299,181

1,257,313

3,894,122

3,059,338

Less subconsultant/subcontractor and other direct expenses

446,107

385,101

1,281,800

781,152

 

 

 

 

 

 

 

 

 

 
Net revenue
853,074

872,212

2,612,322

2,278,186

Direct payroll costs

 
395,411
 

399,139

 
1,209,972
 

1,049,068

 
Gross margin
457,663

473,073

1,402,350

1,229,118

Administrative and marketing expenses

351,655

358,255

1,102,644

971,562

Depreciation of property and equipment

13,765

13,794

41,239

36,398

Amortization of intangible assets

19,213

24,265

61,450

55,009

Net interest expense

6,413

7,667

20,225

21,598

Other net finance expense

3,047

1,991

6,597

5,643

Share of income from joint ventures and associates

(845)

(688)

(2,830)

(1,764)

Foreign exchange (income) loss

(415)

428

(252)

493

Gain on disposition of a subsidiary

(54,576)

Other income

 
(2,546)
 

(56)

 
(3,890)
 

(184)

 
Income before income taxes
 
67,376
 

67,417

 
231,743
 

140,363

 
Income taxes

Current

886

15,456

29,268

36,365

Current tax on disposition of subsidiary

124,053

Deferred

20,358

2,692

22,168

2,937

Deferred tax on disposition of subsidiary

 

 

 
(29,506)
 

 
Total income taxes
 
21,244
 

18,148

 
145,983
 

39,302

Net income for the period
 
46,132
 

49,269

 
85,760
 

101,061

 

Weighted average number of shares outstanding – basic

113,841,129

113,930,264

114,005,332

104,659,351

 

 

 

 

 

Weighted average number of shares outstanding – diluted

114,122,270

114,245,008

114,339,901

105,024,751

 

 

 

 

 

 

 

 

 

 

Shares outstanding, end of period

 
113,899,196
 

113,945,237

 
113,899,196
 

113,945,237

 
Earnings per share

Basic

 
0.41
 

0.43

 
0.75
 

0.97

Diluted

 
0.40
 

0.43

 
0.75
 

0.96

View source version on businesswire.com: http://www.businesswire.com/news/home/20171109005224/en/


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