Stantec announces third quarter 2014 results and dividend

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Nov. 6, 2014) - Today, Stantec STN STN announced positive third quarter 2014 results, with several key items to highlight:



-- Gross revenue increased 16.1% to C$674.7 million in Q3 14 from C$581.2
million in Q3 13
-- Net income increased 5.9% to C$48.6 million in Q3 14 from C$45.9 million
in Q3 13
-- Diluted earnings per share increased 5.1% to C$1.03 in Q3 14 from C$0.98
in Q3 13
-- Organic gross revenue growth in the United States increased 10.4% in Q3
14 compared to Q3 13
-- The Company's board of directors declared a two-for-one share split with
a payment date of November 14, 2014, to shareholders of record as of the
close of business on October 31, 2014
-- Stantec continued to strengthen its expertise and reach into local
communities by acquiring ADD, Inc., based in Boston, Massachusetts, and
Miami, Florida; and entering into agreements to acquire Penfield & Smith
Engineers, Inc., based in California, and the Canadian engineering
operations of Dessau Inc., based in Montreal, Quebec



Stantec's gross revenue grew organically by 5.9% in the quarter and 5.1% year to date. The Company's positive growth in the quarter is a result of increased activity in its Power, Transportation, Water, and Community Development sectors and its Buildings business operating unit. Stantec continued to experience organic gross revenue growth in all of its geographic regions in Q3 14 and year to date compared to the same periods in 2013.

"The diversity of our business model and our disciplined execution continue to result in an expanded market presence and significant wins across the Company," says Bob Gomes, Stantec president and chief executive officer. "With strengthened capacity to serve our clients and communities, we remain on course to achieve our long-term objectives."

Designing with Community in Mind

Stantec achieves its purpose of creating communities by offering its expertise and services across three business operating units: Buildings, Energy & Resources, and Infrastructure. In the quarter, Stantec demonstrated the effectiveness of its diversified business model with strong organic growth in Buildings and Infrastructure while Energy & Resources experienced a reduced pace of growth.

In Stantec's Buildings business operating unit, the Company's expertise in the Education sector has resulted in an increased number of projects in an improving US market. For example, during the quarter, Stantec secured a project to provide the programing, planning, architecture, and interior design services for the Academic Building for the University of Texas in Brownsville, Texas.

In its Energy & Resources business operating unit in the third quarter, Stantec saw strong growth in its Power sector in the United States due in part to the need to replace aging infrastructure such as substations and switchyards. In Canada-where Stantec is a top provider of strategic regulatory and environmental scoping for power projects-the Company continues to work on transmission and distribution projects, especially in western Canada.

In Stantec's Infrastructure business operating unit, all of its sectors throughout North America gained momentum in the third quarter. Due to Stantec's expertise in flood protection, including work on major projects, such as the PCCP Constructors joint venture project in New Orleans for the US Army Corps of Engineers, the Company is now securing additional significant projects across Canada and the United States. One example from the third quarter is the Springbank Off-stream Storage Protection project west of Calgary, Alberta-one of the largest flood mitigation projects in Alberta's history.

In Stantec's Transportation sector, strong client relationships, together with stable infrastructure spending, are resulting in new projects. In the third quarter, Stantec secured work on the Louisiana I-49 Connector, which is a 5.5-mile (8.9-kilometre) partly elevated six-lane highway that traverses urban Lafayette, Louisiana, from south of I-10 to the Lafayette Regional Airport.

Strategic Growth

Stantec closed the acquisition of ADD, Inc. in the quarter. ADD, Inc., a 210-person design firm based in Boston, Massachusetts, and Miami, Florida, focuses on architecture, interior design, planning, and branding services, primarily for multifamily housing, higher education, and corporate office clients.

Stantec continued executing its consistent, disciplined acquisition strategy by entering into an agreement to acquire the Canadian engineering operations of Montreal-based Dessau. This acquisition provides Stantec with the full capability to serve national clients across the country and positions Stantec in the top service providers in each community it serves. In this transaction, 1,300 Dessau staff from 20 offices throughout Quebec and 2 offices in Ontario will join Stantec. This acquisition is expected to close in Q1 15.

Subsequent to the quarter, Stantec closed the acquisition of Penfield & Smith Engineers, Inc., a 90-person civil engineering and land planning firm based in California.

Together, these acquisitions will contribute to strategically growing Stantec's presence in North America, helping to achieve the Company's business objective to be a top 10 global design firm.

Additional Company Activity

The Company's board of directors declared a two-for-one share split to be effected by way of a share dividend, reflecting the board's confidence in the long-term drivers for Stantec's business and the Company's ability to continue to achieve its strategic objectives. Shareholders of record as of the close of business on October 31, 2014, will be entitled to the share dividend on the payment date of November 14, 2014.

Stantec declared a cash dividend of $0.185 per share ($0.0925 per share after taking into consideration the two-for-one share split payable on November 14, 2014). The cash dividend is payable on January 15, 2015, to shareholders of record on December 31, 2014.

Conference Call and Company Information

Stantec's third quarter conference call, to be held Thursday, November 6, 2014, at 2:00 PM MST (4:00 PM EST), 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 1118781 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 14,000 employees working in over 230 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 gross revenue is an additional IFRS measure. For a definition and explanation of additional IFRS measures, refer to the Critical Accounting Estimates, Developments, and Measures section of the Company's 2013 Annual Report.

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 government funding, the risk that Stantec will not meet its growth or revenue targets, the risk that the projects contemplated in this news release will not be completed when expected or at all, and the risk that the Dessau acquisition does 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 risk factors could affect our results, refer to the Risk Factors section and Cautionary Note Regarding Forward-Looking Statements in our 2013 Annual Report. You may obtain our 2013 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 2013 Annual Report free of charge from our Investor Contact noted below.

Design with community in mind



Consolidated Statements of Financial Position
(Unaudited)

September 30 December 31
2014 2013
(In thousands of Canadian dollars) $ $
----------------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents 86,617 143,030
Trade and other receivables 429,640 384,907
Unbilled revenue 241,882 143,894
Income taxes recoverable 4,662 8,792
Prepaid expenses 21,581 18,959
Other financial assets 27,053 21,418
Other assets 1,532 5,231
----------------------------------------------------------------------------

Total current assets 812,967 726,231
Non-current
Property and equipment 153,018 133,534
Goodwill 727,042 594,826
Intangible assets 94,075 78,857
Investments in joint ventures and associates 5,072 4,996
Deferred tax assets 57,030 45,383
Other financial assets 95,651 83,163
Other assets 1,126 1,188
----------------------------------------------------------------------------

Total assets 1,945,981 1,668,178
============================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Trade and other payables 310,483 259,113
Billings in excess of costs 86,643 77,803
Income taxes payable - 9,127
Current portion of long-term debt 57,450 37,130
Provisions 11,989 12,047
Other financial liabilities 3,762 1,927
Other liabilities 11,275 9,837
----------------------------------------------------------------------------

Total current liabilities 481,602 406,984
Non-current
Long-term debt 239,281 200,943
Provisions 56,214 49,539
Deferred tax liabilities 67,395 58,082
Other financial liabilities 2,407 2,041
Other liabilities 65,645 57,955
----------------------------------------------------------------------------

Total liabilities 912,544 775,544
----------------------------------------------------------------------------

Shareholders' equity
Share capital 275,757 262,573
Contributed surplus 12,507 12,369
Retained earnings 706,530 606,056
Accumulated other comprehensive income 38,643 11,636
----------------------------------------------------------------------------

Total shareholders' equity 1,033,437 892,634
----------------------------------------------------------------------------

Total liabilities and shareholders' equity 1,945,981 1,668,178
============================================================================

Consolidated Statements of Income
(Unaudited)

For the three
For the quarter ended quarters ended
September 30 September 30
--------------------------------------------

(In thousands of Canadian
dollars, except per share 2014 2013 2014 2013
amounts) $ $ $ $
----------------------------------------------------------------------------

Gross revenue 674,685 581,166 1,882,397 1,661,097
Less subconsultant and other
direct expenses 130,529 96,409 326,735 280,039
----------------------------------------------------------------------------

Net revenue 544,156 484,757 1,555,662 1,381,058
Direct payroll costs 246,385 221,766 706,236 633,237
----------------------------------------------------------------------------

Gross margin 297,771 262,991 849,426 747,821
Administrative and marketing
expenses 213,741 185,616 625,456 548,753
Depreciation of property and
equipment 9,821 8,701 27,820 23,700
Amortization of intangible
assets 6,164 4,516 17,316 16,588
Net interest expense 2,393 2,117 6,090 6,683
Other net finance expense 827 785 2,243 2,134
Share of income from joint
ventures and associates (448) (866) (1,834) (1,435)
Foreign exchange gain (144) (485) (55) (161)
Other (income) expense (1,607) 86 (1,997) (282)
----------------------------------------------------------------------------

Income before income taxes 67,024 62,521 174,387 151,841
----------------------------------------------------------------------------

Income taxes
Current 22,306 17,597 50,127 44,828
Deferred (3,875) (1,038) (2,171) (3,527)
----------------------------------------------------------------------------

Total income taxes 18,431 16,559 47,956 41,301
----------------------------------------------------------------------------

Net income for the period 48,593 45,962 126,431 110,540
============================================================================

Weighted average number of
shares outstanding - basic 46,828,834 46,303,826 46,719,802 46,179,678
----------------------------------------------------------------------------

Weighted average number of
shares outstanding - diluted 47,283,829 46,713,589 47,136,130 46,477,674
----------------------------------------------------------------------------

Shares outstanding, end of the
period 46,894,088 46,363,214 46,894,088 46,363,214
============================================================================

Earnings per share
Basic 1.04 0.99 2.71 2.39
----------------------------------------------------------------------------

Diluted 1.03 0.98 2.68 2.38
============================================================================



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


Investor Contact
Crystal Verbeek
Stantec Investor Relations
(780) 969-3349
crystal.verbeek@stantec.com
www.stantec.com