Stantec reports strong results for 2012 year-end and an increased dividend

Date : 02/21/2013 @ 9:00AM
Source : Marketwired
Stock : Stantec (STN)
Quote : 35.32  -0.06 (-0.17%) @ 4:15PM
Stantec Inc. share price Chart

Stantec reports strong results for 2012 year-end and an increased dividend

Stantec Inc. (TSX:STN)
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5 Years : From Nov 2012 to Nov 2017

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Today, Stantec announced strong results for 2012, with several key items to highlight

--  Gross revenue increased 11.9% year over year to C$1,882.9 million from
    C$1,683.4 million 
--  Net income increased 17.7% year over year to C$120.9 million from
    C$102.7 million and diluted earnings per share increased 17.3% to C$2.64
    from C$2.25, excluding the impact of a $90.0 million goodwill impairment
    charge in 2011 
--  The Company completed seven acquisitions, adding approximately 1,170
    staff and expanding its geographic reach 
--  The Company declared a quarterly dividend of $C0.165, an increase of 10%

"The year 2012 marked our 59th year of uninterrupted profitability at Stantec, demonstrating the results of effectively executing our strategy," says Bob Gomes, Stantec president and chief executive officer. "We achieved strong growth and exceeded our expectations for the year thanks to the excellence demonstrated by our employees in their commitment to the clients and communities they work with every day."

Stantec's revenue growth in Q4 12 was strong compared to Q4 11. Gross revenue increased 12.0% to C$483.9 million from C$432.0 million, and EBITDA increased 20.3% to C$56.3 million from C$46.8 million. Excluding the impact of a $90.0 million non-cash goodwill impairment charge in 2011, the Company's net income increased 28.0% to C$31.1 million from C$24.3 million, and diluted earnings per share increased 26.4% to C$0.67 from C$0.53. Net income during Q4 12 was positively impacted by an increase in gross revenue and an increase in gross margin as a percentage of net revenue from 55.1% in Q4 11 to 56.1% in Q4 12.

Focus on Executing on Strategy and Market Opportunities

In 2012, Stantec focused on executing its long-term strategy and capitalizing on market opportunities. Because of Stantec's depth and breadth of expertise, leveraging this focus resulted in securing projects with new and existing clients across geographic regions and practice areas.

Stantec strengthened its capacity in the mining, oil and gas, and power sectors through both organic growth and strategic acquisitions. This increased capacity led to securing work in Eagle Ford, Texas, providing construction management oversight and regulatory support to the gas industry, as well as working on a pipeline expansion project. Stantec continued to leverage client relationships and capitalize on its integrated presence across North America, resulting in multiple pipeline projects providing services such as overall technical coordination of environmental assessments and leading emergency response planning. Stantec also provided consulting services to two liquefied natural gas projects and associated port facilities.

Stantec's ability to develop strong, long-lasting client relationships meant new opportunities. This included work with the North Carolina Department of Transportation for a large multi-year project completing studies for proposed improvements to a section of NC 150 northeast of Charlotte, North Carolina. Strategic acquisitions also increased the Company's market presence, leading to significant new projects. For example, Stantec was selected for a design-build project in Louisville, Kentucky, where the Company will provide a cross-section of services, including roadway and bridge design, lighting, landscaping, permitting, and geotechnical engineering services for a new Ohio River bridge and system interchanges.

Stantec also continued to pursue market opportunities in both residential and nonresidential markets, particularly in areas where markets showed signs of recovery. This effort resulted in securing design work for the Lakewood Ranch Country Club East Golf Course community expansion in Sarasota, Florida. In addition, despite softening of some markets, Stantec continued to secure work in key sectors such as healthcare, including a project for the Cleveland Clinic in Cleveland, Ohio, to perform programming, architectural, and interior design services for a major expansion to the Taussig Cancer Institute.

Continued Growth

Stantec is well positioned for 2013 to take advantage of continued opportunities in Canada and an emerging recovery in US markets. The Company completed seven acquisitions in 2012-four of those in the fourth quarter-which expanded the depth and breadth of its expertise in the oil and gas industry, in particular in western Canada, and its transportation and urban development expertise in the United States. This continued growth reinforces the Company's goal of being a top 10 global design firm while also expanding its position in North America and strengthening its diverse service offerings and relationships with both local/regional and global/national clients.

Additional Company Activity

Today, Stantec's board of directors declared a quarterly dividend of C$0.165 per share, an increase of 10%. It is payable on April 18, 2013, to shareholders of record on March 29, 2013.

Stantec would like to recognize the contributions of former board member Mr. Robert Bradshaw. In the fourth quarter of 2012, Mr. Bradshaw stepped down from his position on Stantec's board of directors. He has been associated with the Company since 1993 and was part of the team that took the Company public in 1994. He was appointed chairman of the board from 1994 to 1998. During his time with Stantec, Mr. Bradshaw demonstrated exemplary dedication and leadership.

The Stantec board of directors is pleased to announce that on February 20, 2013, it passed a resolution appointing Donald Lowry of Edmonton, Alberta, to the board. This appointment will take effect May 8, 2013. Mr. Lowry is currently the president and chief executive officer of EPCOR Utilities Inc., and will be stepping down from this role later this year. He is also the non-executive chair of Capital Power Corporation and Canadian Oil Sands Ltd., and is a member of the board of directors of Hydrogenics Corporation. Mr. Lowry brings leadership and industry expertise to the Stantec board.

Conference Call and Company Information

Stantec's fourth quarter and year-end conference call, to be held Thursday, February 21, 2013, at 2:00 PM MST (4:00 PM EST), 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 confirmation code 8780489 to the operator.

Stantec's Annual Meeting of Shareholders will be held on May 9, 2013, at 10:30 AM MDT (12:30 PM EDT) at MacEwan University's Alberta College Campus in Edmonton, Alberta, 10050 MacDonald Drive.

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 12,000 employees operating out of more than 200 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 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 2012 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 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 on the SEC website at Our 2012 Financial Review is also available at the CSA website at, or at Alternatively, you may obtain a hard copy of the Financial Review free of charge upon request to our Investor Contact noted below.

One Team. Integrated Solutions.

         - Continued, Income Statement and Balance Sheet attached -         
                Consolidated Statements of Financial Position               
                                                 December 31    December 31 
                                                        2012           2011 
(In thousands of Canadian dollars)                         $              $ 
Cash and cash equivalents                             41,753         36,111 
Trade and other receivables                          355,955        310,669 
Unbilled revenue                                     150,523        133,881 
Income taxes recoverable                               3,811         16,800 
Prepaid expenses                                      14,336         13,908 
Other financial assets                                18,701         14,612 
Other assets                                           4,106          3,172 
Total current assets                                 589,185        529,153 
Property and equipment                               115,086        107,853 
Goodwill                                             566,784        509,028 
Intangible assets                                     85,748         72,047 
Investments in associates                              3,508          2,365 
Deferred tax assets                                   40,975         43,647 
Other financial assets                                63,565         61,606 
Other assets                                           3,791          1,657 
Total assets                                       1,468,642      1,327,356 
LIABILITIES AND EQUITY                                                      
Trade and other payables                             216,104        191,859 
Billings in excess of costs                           60,822         49,441 
Income taxes payable                                     159              - 
Current portion of long-term debt                     42,888         59,593 
Provisions                                            14,863         16,373 
Other financial liabilities                            1,672          5,042 
Other liabilities                                      8,650          5,208 
Total current liabilities                            345,158        327,516 
Long-term debt                                       256,408        236,601 
Provisions                                            36,959         42,076 
Deferred tax liabilities                              57,842         54,564 
Other financial liabilities                            2,342          2,257 
Other liabilities                                     42,778         37,191 
Total liabilities                                    741,487        700,205 
Shareholders' equity                                                        
Share capital                                        240,369        226,744 
Contributed surplus                                   14,291         14,906 
Retained earnings                                    491,251        397,847 
Accumulated other comprehensive loss                 (18,859)       (12,449)
Total equity attributable to equity holders of                              
 the Company                                         727,052        627,048 
Non-controlling interests                                103            103 
Total equity                                         727,155        627,151 
Total liabilities and equity                       1,468,642      1,327,356 
                     Consolidated Statements of Income                      
Years ended December 31                                 2012           2011 
(In thousands of Canadian dollars, except per                               
 share amounts)                                            $              $ 
Gross revenue                                      1,882,900      1,683,403 
Less subconsultant and other direct expenses         326,506        304,856 
Net revenue                                        1,556,394      1,378,547 
Direct payroll costs                                 700,853        615,136 
Gross margin                                         855,541        763,411 
Administrative and marketing expenses                633,171        565,164 
Depreciation of property and equipment                27,875         27,933 
Impairment of goodwill                                     -         90,000 
Amortization of intangible assets                     20,008         18,395 
Net interest expense                                   8,658          9,723 
Other net finance expense                              2,773          2,848 
Share of income from associates                       (1,765)          (793)
Foreign exchange loss                                    181            501 
Other expense (income)                                   147            (36)
Income before income taxes                           164,493         49,676 
Income taxes                                                                
Current                                               44,661         32,733 
Deferred                                              (1,070)         4,281 
Total income taxes                                    43,591         37,014 
Net income for the year                              120,902         12,662 
Earnings per share                                                          
Basic                                                   2.64           0.28 
Diluted                                                 2.64           0.28 

Contacts: Media Contact Sherry Brownlee Stantec Media Relations (780) Investor Contact Crystal Verbeek Stantec Investor Relations (780)

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