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Press release from Marketwire

Stantec Announces Second Quarter 2010 Results

Thursday, August 05, 2010

Stantec Announces Second Quarter 2010 Results09:16 EDT Thursday, August 05, 2010EDMONTON, ALBERTA--(Marketwire - Aug. 5, 2010) - Stantec Inc. (TSX:STN) (NYSE:STN) Stantec reports solid, consistent results for the second quarter of 2010. Gross revenue remained stable at $371.1 million. Net revenue was $303.8 million, net income was $22.7 million, and diluted earnings per share were $0.49."We are very happy with our progress in the first half of 2010, and we are on track with our expectations," says Bob Gomes, Stantec president and CEO. "During the second quarter, we saw increased activity in some of our markets, which enabled us to increase our staff levels to approximately 9,700 while continuing to manage our business effectively and achieve solid operating performance. We continue to see opportunities for both organic and acquisition growth in the second half of the year."Project activity during the quarter demonstrated Stantec's continuing ability to secure significant assignments in a still challenging marketplace. In the Buildings practice area, the Company secured a public-private partnership (P3) assignment with the Carillion Secure Solutions team chosen to develop a new Forensic Services and Coroner's Complex in Toronto, Ontario, for the Ontario Ministry of Community Safety and Correctional Services. This is the second P3 project the Company has secured with the Carillion consortium, following the Centre for Addiction and Mental Health project award in November 2009. In the Environment practice area, the Company secured large, long-term assignments in each of its three key sectors: geotechnical engineering, environmental permitting and remediation, and water and wastewater facility design. For example, Stantec was contracted, as part of a joint venture, to continue to provide geotechnical drilling, sampling, and design services for rebuilding the hurricane protection system in New Orleans, Louisiana, for the U.S. Army Corps of Engineers, New Orleans District. In the area of environmental assessment and permitting, Stantec obtained a contract to provide regulatory support services for a transmission line expansion for AltaLink in southern Alberta. And in the water and wastewater sector, Stantec is part of a team that is completing the detailed design of full-scale enhancements and upgrades to the Dublin Road Water Plant in Columbus, Ohio. New activity in the Transportation practice area was focused in the roadway, transit, and bridge sectors. Most notable in the roadway sector was the award of the Stoney Trail Southeast project in Calgary, Alberta, which is being delivered through a P3. Stoney Trail is Calgary's new ring road. Stantec's role on the project team is to design the roadworks and structures for the Highway 22X portion of the project, including approximately 11 kilometres (6.8 miles) of divided highway, four major interchanges, one freeway-to-freeway interchange, and 14 bridge structures and associated retaining walls, as well as drainage and lighting. Summary of activity in the quarter -- Gross revenue for the quarter was C$371.1 million, down 4.4% compared to C$388.1 million in the second quarter of 2009. Net revenue was down 4.5% to C$303.8 million compared to C$318.1 million. Net income was up 1.8% to C$22.7 million compared to C$22.3 million, and diluted earnings per share were C$0.49, unchanged when compared to the same time last year. -- Year-to-date gross revenue was C$742.7 million, net revenue was C$600.6 million, net income was C$36.4 million, and diluted earnings per share were C$0.79. -- During the quarter, Stantec renewed its normal course issuer bid with the Toronto Stock Exchange, which will allow for the repurchase of up to 5% of its outstanding shares. -- During the quarter, as part of a long-term financing strategy, Stantec filed a short-form shelf prospectus with all securities regulatory authorities in Canada and a corresponding base shelf registration statement with the U.S. Securities and Exchange Commission. Pursuant to the prospectus, the Company may issue up to C$300 million in common shares from time to time during a 25-month period effective May 6, 2010. -- During the quarter, Stantec acquired 25-person firm TetrES Consultants Inc., an environmental management consulting firm based in Winnipeg, Manitoba. So far in the third quarter, Stantec has completed the acquisition of three firms, including Industry and Energy Associates, LLC, a 55-person firm headquartered in Portland, Maine, that specializes in engineering and project management services for the energy market; WilsonMiller, Inc., a multidisciplinary planning, design, and engineering firm headquartered in Naples, Florida, with more than 265 employees and 10 offices throughout the state; and Natural Resources Consulting, Inc., a 60-person firm based in Cottage Grove, Wisconsin, that provides environmental permitting and compliance support services. With the completion of these acquisitions, Stantec's staff levels increased to more than 10,000. -- Complete Financial Statements, Notes to the Financial Statements, and Management's Discussion and Analysis will be filed on Sedar (www.sedar.com) on August 5, 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. The second 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 1-866-321-8231 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 10,000 employees operating out of more than 150 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) June 30 December 31 2010 2009 (In thousands of Canadian dollars) $ $ ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 30,800 14,690 Accounts receivable, net of allowance for doubtful accounts of $9,420 ($9,395 - 2009) 256,005 253,205 Costs and estimated earnings in excess of billings 108,480 95,794 Income taxes recoverable 23,385 12,144 Prepaid expenses 10,736 11,352 Future income tax assets 12,699 15,518 Other assets 3,412 6,550 ---------------------------------------------------------------------------- Total current assets 445,517 409,253 Property and equipment 106,363 108,256 Goodwill 475,756 468,814 Intangible assets 64,950 64,155 Future income tax assets 14,612 23,940 Other assets 46,940 49,127 ---------------------------------------------------------------------------- Total assets 1,154,138 1,123,545 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness 4,308 - Accounts payable and accrued liabilities 143,844 167,175 Billings in excess of costs and estimated earnings 37,521 52,007 Current portion of long-term debt 46,229 35,428 Future income tax liabilities 11,931 15,643 Other liabilities 12,301 13,558 ---------------------------------------------------------------------------- Total current liabilities 256,134 283,811 Long-term debt 216,894 198,769 Future income tax liabilities 30,797 29,536 Other liabilities 64,023 63,849 ---------------------------------------------------------------------------- Total liabilities 567,848 575,965 ---------------------------------------------------------------------------- Non-controlling interest in subsidiaries 103 186 ---------------------------------------------------------------------------- Commitments, contingencies, and guarantees Shareholders' equity Share capital 222,450 221,983 Contributed surplus 13,485 12,606 Retained earnings 397,115 364,569 Accumulated other comprehensive loss (46,863) (51,764) ---------------------------------------------------------------------------- Total shareholders' equity 586,187 547,394 ---------------------------------------------------------------------------- Total liabilities and shareholders' equity 1,154,138 1,123,545 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Consolidated Statements of Income (Unaudited) For the For the quarter ended two quarters ended June 30 June 30 ------------------------------------------------ (In thousands of Canadian dollars, except share and 2010 2009 2010 2009 per share amounts) $ $ $ $ ---------------------------------------------------------------------------- INCOME Gross revenue 371,168 388,121 742,729 792,921 Less subconsultant and other direct expenses 67,342 70,061 142,123 131,571 ---------------------------------------------------------------------------- Net revenue 303,826 318,060 600,606 661,350 Direct payroll costs 134,581 141,319 266,515 291,163 ---------------------------------------------------------------------------- Gross margin 169,245 176,741 334,091 370,187 Administrative and marketing expenses 124,934 131,301 250,063 279,363 Depreciation of property and equipment 5,766 6,045 11,246 12,360 Amortization of intangible assets 2,917 4,250 7,859 10,426 Impairment of intangible assets 1,772 - 1,772 - Net interest expense 2,329 3,008 4,009 6,438 Share of income from associated companies (635) (568) (1,213) (842) Foreign exchange losses 822 1,403 1,108 1,971 Other income (252) (204) (343) (550) ---------------------------------------------------------------------------- Income before income taxes 31,592 31,506 59,590 61,021 ---------------------------------------------------------------------------- Income taxes Current 6,555 8,824 14,722 20,696 Future 2,329 323 8,459 (2,695) ---------------------------------------------------------------------------- Total income taxes 8,884 9,147 23,181 18,001 ---------------------------------------------------------------------------- Net income for the period 22,708 22,359 36,409 43,020 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of shares outstanding - basic 45,727,380 45,473,500 45,726,090 45,469,180 ---------------------------------------------------------------------------- Weighted average number of shares outstanding - diluted 45,994,449 45,875,464 46,024,452 45,882,267 ---------------------------------------------------------------------------- Shares outstanding, end of the period 45,588,020 45,505,457 45,588,020 45,505,457 ---------------------------------------------------------------------------- Earnings per share Basic 0.50 0.49 0.80 0.95 ---------------------------------------------------------------------------- Diluted 0.49 0.49 0.79 0.94 ---------------------------------------------------------------------------- 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