Stantec reports second quarter 2015 results and dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Aug. 6, 2015) - STN STN

Today, Stantec announced that it continued to perform well in the second quarter of 2015, with several key items to highlight:



-- Gross revenue increased 12.1% to C$710.3 million in Q2 15 from C$633.8
million in Q2 14
-- Both Stantec's Buildings and Infrastructure business operating units had
strong organic revenue growth in Q2 15, partly offsetting a retraction
in its Energy & Resources business operating unit
-- EBITDA increased 5.1% to C$82.2 million in Q2 15 from C$78.2 million in
Q2 14
-- Net income decreased 2.7% to C$43.1 million in Q2 15 from C$44.3 million
in Q2 14
-- Diluted earnings per share decreased 2.1% to C$0.46 in Q2 15 from C$0.47
in Q2 14
-- Stantec declared a cash dividend of C$0.105 per share to shareholders of
record on September 30, 2015
-- Subsequent to the quarter, Stantec acquired 30-person VI Engineering,
LLC, based in Houston, Texas



Stantec demonstrated strength in key areas in the second quarter of 2015, despite the challenging economic conditions in the oil and gas industry. The Company experienced strong revenue growth in its Buildings and Infrastructure business operating units, which partly offset the retraction in its Energy & Resources business operating unit.

"With both our Buildings and Infrastructure businesses demonstrating strong performance, our diverse business model is providing a solid foundation for managing our Company through the economic factors impacting the oil and gas industry," says Bob Gomes, Stantec president and chief executive officer. "We thank our talented staff for once again demonstrating their resourcefulness and their commitment to working with our clients to design with community in mind."

Designing with Community in Mind

Stantec's Buildings business operating unit achieved strong revenue growth in Q2 15. In the United States, gross revenue significantly increased due to acquisitions completed in 2014 and 2015. In Canada, Stantec benefited from strong activity in the healthcare market, continuing strength in its Education sector, and steady activity in its Commercial sector. For example, due to Dessau's well-recognized position in the Quebec market, during the quarter, Stantec secured work to provide the mechanical and electrical engineering services for building a mental health pavilion at Saint-Jerome Regional Hospital and to expand the Montreal Sacre-Coeur Hospital to include an integrated tertiary trauma center.

The revenue retraction in Stantec's Oil & Gas sector results from the sharp decline in oil prices and corresponding market conditions year to date compared to the first two quarters of 2014. Environmental Services organic revenue in sectors that are non-resource related remained stable in Canada and achieved overall strong growth in the United States year to date in 2015, in contrast to the slow start in 2014 caused by harsh winter conditions.

Stantec's Infrastructure business operating unit achieved strong revenue growth in Q2 15. Its Community Development, Transportation, and Water sectors all experienced strong organic gross revenue growth year to date compared to 2014.

In Transportation, a rebounding US economy and Stantec's North American strategic market position led to increased organic growth opportunities. To illustrate, during the quarter, Stantec was selected as the independent engineer for the New Champlain Bridge Corridor design-build project in Montreal, Quebec.

Community Development achieved strong organic revenue growth in Q2 15 compared to Q2 14 in the United States and stable growth in Canada. In the United States, Stantec continued to secure major non-residential projects such as the design of streets, sidewalks, sewers, water mains, and streetscape and plaza areas to support the Coney Island redevelopment in Brooklyn, New York, in the area affected by Hurricane Sandy.

Strategic Growth

In July 2015, Stantec acquired certain assets and liabilities, and the business of VI Engineering, LLC, based in Houston, Texas. This 30-person firm's strong background in the design of high-voltage electrical substations, transmission and distribution lines, and electric power systems adds to Stantec's platform to better serve its clients across all of its regions.

Additional Company Activity

On August 5, 2015, the Company declared a cash dividend of C$0.105 per share, payable on October 15, 2015, to shareholders of record on September 30, 2015.

Conference Call and Company Information

Stantec's second quarter conference call, to be held Thursday, August 6, 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 1-800-524-8950 and provide confirmation code 2173217 to the operator.

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 EBITDA is a non-IFRS measure and gross revenue is an additional IFRS measure. 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 client 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. You may obtain our 2014 Annual Report by visiting EDGAR on the SEC website at www.sec.gov or 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

- Continued, Consolidated Statements of Financial Position and Consolidated Statements of Income attached -



Consolidated Statements of Financial Position
(Unaudited)

June 30 December 31
2015 2014
(In thousands of Canadian dollars) $ $
----------------------------------------------------------------------------
ASSETS
Current
Cash and deposits 20,973 153,704
Cash in escrow 6,000 -
Trade and other receivables 553,069 431,751
Unbilled revenue 234,156 192,310
Income taxes recoverable 23,228 11,171
Prepaid expenses 25,983 23,425
Other financial assets 30,316 31,526
Other assets 545 530
----------------------------------------------------------------------------

Total current assets 894,270 844,417
Non-current
Property and equipment 157,028 152,707
Goodwill 856,066 760,631
Intangible assets 122,429 97,243
Investments in joint ventures and associates 5,141 4,975
Deferred tax assets 74,063 58,801
Other financial assets 108,241 90,667
Other assets 836 1,029
----------------------------------------------------------------------------

Total assets 2,218,074 2,010,470
============================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 3,677 -
Trade and other payables 289,493 300,293
Billings in excess of costs 84,854 96,082
Current portion of long-term debt 133,967 53,172
Provisions 14,501 10,796
Other financial liabilities 2,031 2,773
Other liabilities 11,953 11,953
----------------------------------------------------------------------------

Total current liabilities 540,476 475,069
Non-current
Long-term debt 259,266 256,093
Provisions 59,415 51,596
Deferred tax liabilities 92,610 74,602
Other financial liabilities 2,293 2,547
Other liabilities 66,543 64,318
----------------------------------------------------------------------------

Total liabilities 1,020,603 924,225
----------------------------------------------------------------------------

Shareholders' equity
Share capital 284,086 276,698
Contributed surplus 14,364 13,490
Retained earnings 797,294 735,917
Accumulated other comprehensive income 101,727 60,140
----------------------------------------------------------------------------

Total shareholders' equity 1,197,471 1,086,245
----------------------------------------------------------------------------

Total liabilities and shareholders' equity 2,218,074 2,010,470
============================================================================

Consolidated Statements of Income
(Unaudited)

For the quarter ended For the two quarters ended
June 30 June 30
----------------------------------------------------
2015 2014 2015 2014
(In thousands of
Canadian dollars,
except per share
amounts)
$ $ $ $
----------------------------------------------------------------------------

Gross revenue 710,254 633,819 1,415,977 1,207,712
Less subconsultant and
other direct expenses 116,336 103,568 229,775 196,206
----------------------------------------------------------------------------

Net revenue 593,918 530,251 1,186,202 1,011,506
Direct payroll costs 273,138 240,229 538,271 459,851
----------------------------------------------------------------------------

Gross margin 320,780 290,022 647,931 551,655
Administrative and
marketing expenses 244,968 211,803 496,426 411,715
Depreciation of property
and equipment 11,162 9,175 22,004 17,999
Amortization of
intangible assets 8,679 5,788 18,906 11,152
Net interest expense 2,863 2,172 5,529 3,697
Other net finance
expense 739 758 1,577 1,416
Share of income from
joint ventures and
associates (516) (581) (1,155) (1,386)
Foreign exchange loss
(gain) 94 (179) (34) 89
Other income (6,749) (24) (7,217) (390)
----------------------------------------------------------------------------

Income before income
taxes 59,540 61,110 111,895 107,363
----------------------------------------------------------------------------

Income taxes
Current 17,103 17,495 31,204 27,821
Deferred (730) (690) (433) 1,704
----------------------------------------------------------------------------

Total income taxes 16,373 16,805 30,771 29,525
----------------------------------------------------------------------------

Net income for the
period 43,167 44,305 81,124 77,838
============================================================================

Weighted average number
of shares outstanding -
basic 94,037,462 93,409,806 93,950,055 93,328,828
----------------------------------------------------------------------------

Weighted average number
of shares outstanding -
diluted 94,645,377 94,303,814 94,495,416 94,272,502
----------------------------------------------------------------------------

Shares outstanding, end
of the period 94,186,720 93,504,332 94,186,720 93,504,332
----------------------------------------------------------------------------

Earnings per share
Basic 0.46 0.47 0.86 0.83
----------------------------------------------------------------------------

Diluted 0.46 0.47 0.86 0.83
============================================================================



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

FOR FURTHER INFORMATION PLEASE CONTACT:
Media Contact
Sherry Brownlee
Stantec Media Relations
(780) 917-7264
sherry.brownlee@stantec.com


Investor Contact
Sonia Kirby
Stantec Investor Relations
(780) 616-2785
sonia.kirby@stantec.com