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Press release from Marketwire

Stantec Announces First Quarter 2010 Results

Thursday, May 13, 2010

Stantec Announces First Quarter 2010 Results09:17 EDT Thursday, May 13, 2010EDMONTON, ALBERTA--(Marketwire - May 13, 2010) - Stantec's (TSX:STN) (NYSE:STN) first quarter results indicate that the firm is continuing to achieve solid performance in a challenging global economy. In the quarter, the Company generated C$371.6 million in gross revenue and C$296.8 million in net revenue. Although revenues are down compared to the first quarter of 2009, first quarter 2010 revenues are up from the fourth quarter of 2009, and after nearly a year of declines in staff levels, the first quarter of 2010 saw an increase in hiring with a net gain of approximately 100 employees."We are beginning the year where we left off at the end of 2009, when we started to see the market stabilizing across North America," says Bob Gomes, Stantec president and CEO. "We made an enormous effort last year to continue to manage our business effectively through a tough economy, and that put us in a good position for the first quarter to capitalize on the opportunities presented, which meant winning a number of projects in key sectors and being able to put people back to work full time and hire additional staff in some areas."Some of the projects won in the quarter include a three-year assignment to provide complete engineering, procurement, and construction management services for the development of a new pump station and receiving station for transporting oil product from Fort Saskatchewan to the Kearl Oil Sands project in northern Alberta for Inter Pipeline Fund. In Saskatchewan, the firm was awarded a contract to provide engineering design and related services for developing the shaft and hoisting systems for BHP Billiton's Jansen potash mine project. In the Buildings practice area, Stantec secured a five-year multiple award task order contract to provide full architecture and buildings engineering services for various projects with the Los Angeles District of the U.S. Army Corps of Engineers. The task orders will include design-build projects, multidisciplinary maintenance and repair projects, and construction projects. In the Environment practice area, Stantec continues to see a growing need for combined sewer overflow reduction. For example, in Tacoma, Washington, the firm was chosen to provide support services for the municipal flow-monitoring project. Work will initially focus on incorporating the City's existing flow-monitoring network into program management and analysis software, providing technical support and training, and assisting with flow-monitoring site selection."I would like to thank our employees for their dedication over the past year, which marks my first as president and CEO of Stantec," adds Gomes. "Their hard work has helped us to successfully navigate a very tough market, and we are now on track to pursue our goal of becoming and remaining a top 10 global design firm."Summary of activity in the quarter- During the quarter the Company reorganized its corporate structure, which increased its income tax expense by $6.2 million, resulting in an effective tax rate of 51.1%. This reorganization was part of a long-term strategy to make our corporate tax structure more efficient. Excluding this one-time impact, net income for the first quarter would have been C$19.9 million compared to C$20.7 million for the first quarter of 2009, and diluted earnings per share would have been C$0.43 compared to C$0.45 for the same period last year.- Gross revenue for the quarter was C$371.6 million, and net revenue was C$296.8 million. After the one-time income tax impact, reported net income was C$13.7 million, and diluted earnings per share were C$0.30.- After the first quarter, Stantec filed a final short-form base shelf prospectus with applicable securities regulators in each of the provinces of Canada and filed a shelf registration statement in the United States on Form F-10. Pursuant to the prospectus, Stantec may issue up to $300 million in common shares from time to time during the 25 month period the prospectus is valid by way of one or more prospectus supplements.- During the quarter, Stantec acquired the assets of Project Control Group Inc., a 10-person firm that specializes in project implementation strategy, planning, and controls for complex projects. After the first quarter, Stantec acquired environmental management firm TetrES Consultants Inc. (TetrES), a 25-person firm in Winnipeg, Manitoba. TetrES specializes in infrastructure and master planning, environmental assessment, and management of strategic regulatory defense and expert testimony for the energy, government, mining, food-processing and petrochemical sectors.- Complete Financial Statements, Notes to the Financial Statements, and Management's Discussion and Analysis will be filed on Sedar (www.sedar.com) on May 13, 2010. In addition, these documents will be filed on Edgar (www.sec.gov) on the same date. Alternatively, the documents are available to download from the Investors section of www.stantec.com, or you may contact Stantec for copies free of charge.Stantec's Annual General Meeting of Shareholders is being held today (May 13, 2010) at 11:00 AM MDT (1:00 PM EDT) at The Sutton Place Hotel in Edmonton, Alberta, 10235 - 101 Street. The first quarter conference call, being held today at 2:00 PM MST (4:00 PM EST), will be broadcast live and archived in the Investors section at www.stantec.com. Financial analysts who wish to participate in the earnings conference call are invited to call 866-321-8231 and provide the confirmation code 3714517 to the first available operator.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 in the infrastructure and facilities sector at every stage, from initial concept and financial feasibility to project completion and beyond. Our services are offered through approximately 9,400 employees operating out of more than 130 locations in North America. Stantec trades on the TSX and the NYSE under the symbol STN. Stantec is One Team providing Infinite Solutions. Consolidated Balance Sheets (Unaudited) March 31 December 31 2010 2009 (In thousands of Canadian dollars) $ $ ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 16,907 14,690 Accounts receivable, net of allowance for doubtful accounts of $8,673 ($9,395 - 2009) 253,028 253,205 Costs and estimated earnings in excess of billings 96,775 95,794 Income taxes recoverable 18,433 12,144 Prepaid expenses 9,623 11,352 Future income tax assets 14,935 15,518 Other assets 2,680 6,550 ---------------------------------------------------------------------------- Total current assets 412,381 409,253 Property and equipment 104,322 108,256 Goodwill 457,657 468,814 Intangible assets 67,892 64,155 Future income tax assets 14,547 23,940 Other assets 51,722 49,127 ---------------------------------------------------------------------------- Total assets 1,108,521 1,123,545 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 143,397 167,175 Billings in excess of costs and estimated earnings 41,772 52,007 Current portion of long-term debt 42,799 35,428 Future income tax liabilities 13,783 15,643 Other liabilities 12,298 13,558 ---------------------------------------------------------------------------- Total current liabilities 254,049 283,811 Long-term debt 216,923 198,769 Future income tax liabilities 28,031 29,536 Other liabilities 61,417 63,849 ---------------------------------------------------------------------------- Total liabilities 560,420 575,965 ---------------------------------------------------------------------------- Non-controlling interest in subsidiaries 103 186 ---------------------------------------------------------------------------- Commitments, contingencies, and guarantees Shareholders' equity Share capital 222,403 221,983 Contributed surplus 13,148 12,606 Retained earnings 378,270 364,569 Accumulated other comprehensive loss (65,823) (51,764) ---------------------------------------------------------------------------- Total shareholders' equity 547,998 547,394 ---------------------------------------------------------------------------- Total liabilities and shareholders' equity 1,108,521 1,123,545 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Consolidated Statements of Income (Unaudited) For the quarter ended March 31 ------------------------ (In thousands of Canadian dollars, except 2010 2009 shares outstanding and per share amounts) $ $ ---------------------------------------------------------------------------- INCOME Gross revenue 371,561 404,800 Less subconsultant and other direct expenses 74,781 61,510 ---------------------------------------------------------------------------- Net revenue 296,780 343,290 Direct payroll costs 131,934 149,844 ---------------------------------------------------------------------------- Gross margin 164,846 193,446 Administrative and marketing expenses 125,129 148,062 Depreciation of property and equipment 5,480 6,315 Amortization of intangible assets 4,942 6,176 Net interest expense 1,680 3,430 Share of income from associated companies (578) (274) Foreign exchange losses 286 568 Other income (91) (346) ---------------------------------------------------------------------------- Income before income taxes 27,998 29,515 ---------------------------------------------------------------------------- Income taxes Current 8,167 11,872 Future 6,130 (3,018) ---------------------------------------------------------------------------- Total income taxes 14,297 8,854 ---------------------------------------------------------------------------- Net income for the period 13,701 20,661 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of shares outstanding - basic 45,731,255 45,457,908 ---------------------------------------------------------------------------- Weighted average number of shares outstanding - diluted 46,075,812 45,878,606 ---------------------------------------------------------------------------- Shares outstanding, end of the period 45,733,820 45,466,457 ---------------------------------------------------------------------------- Earnings per share Basic 0.30 0.45 ---------------------------------------------------------------------------- Diluted 0.30 0.45 ---------------------------------------------------------------------------- FOR FURTHER INFORMATION PLEASE CONTACT: Stantec Inc. - Media Contact Jay Averill Media Relations (780) 917-7441 jay.averill@stantec.com or Stantec Inc. - Investor Contact Simon Stelfox Investor Relations (604) 696-8338 simon.stelfox@stantec.com www.stantec.com