Stantec reports second quarter 2017 results with overall 4.5% organic gross revenue growth

Ad blocking detected

Thank you for visiting We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Club
$299/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Stantec reports second quarter 2017 results with overall 4.5% organic gross revenue growth

EDMONTON, ALBERTA and NEW YORK, NEW YORK--(Marketwired - Aug. 9, 2017) - Stantec Inc. (TSX:STN)(NYSE:STN) -


  • Gross revenue increased 26% from approximately $1.05 billion to $1.3 billion from Q2 16 to Q2 17
  • Organic gross revenue grew 4.5% from Q2 16 to Q2 17
  • EBITDA increased from $73.7 million to $158.1 million from Q2 16 to Q2 17, and adjusted EBITDA grew by 22% or $18.9 million
  • Diluted EPS increased from $0.20 to $0.85 from Q2 16 to Q2 17, and adjusted diluted EPS grew by 38% from $0.37 to $0.51
  • Administrative and marketing expenses as a percentage of net revenue decreased from 43.9% to 42.3% from Q2 16 to Q2 17
  • Proceeds from the Innovyze sale were used to repay debt by $221.3 million, and the transaction reduced goodwill and intangible assets by $194.4 million and $95.1 million respectively


Through execution of its consistent strategy of supplying expertise to clients through local offices around the world, Stantec gross revenue rose 26% from approximately $1.05 billion in Q2 16 to $1.3 billion in Q2 17. From Q2 16 to Q2 17, EBITDA rose from $73.7 million to $158.1 million. EBITDA was positively impacted by a decrease in administrative and marketing expenses as a percentage of net revenue, from 43.9% in Q2 16 to 42.3% in Q2 17. Adjusted EBITDA grew by 22% to $103.5 million. Diluted earnings per share (EPS) increased from $0.20 to $0.85, and adjusted diluted EPS increased 38% from $0.37 to $0.51.

Financial Summary
For the period ended June 30
(In millions of Canadian dollars, except per share amounts and %)
2017 Q2
2016 Q2
Gross revenue 1,318.6 1,046.6 26.0%
EBITDA (note) 158.1 73.7 114.5%
Adjusted EBITDA (note) 103.5 84.6 22.3%
Net income 97.6 21.2 360.4%
Adjusted net income (note) 57.9 39.5 46.6%
Diluted earnings per share (EPS) 0.85 0.20 325.0%
Adjusted diluted EPS (note) 0.51 0.37 37.8%
Cash dividends declared per common share 0.1250 0.1125 11.1%
Note: EBITDA, adjusted EBITDA, adjusted net income, and adjusted diluted EPS are non-IFRS measures defined in the Critical Accounting Estimates, Developments, and Measures section of the Company's 2016 Annual Report and the Q2 17 Management's Discussion and Analysis.

Business Operating Unit and Geographic Results

Overall organic gross revenue growth of 4.5% was led by Stantec's Buildings business operating unit, which experienced organic gross revenue growth of 5.1% in Q2 17 compared to Q2 16. The Company attributes this growth to the mobilization of new project wins in Canada and new opportunities in the US Education sector. In Q2 17 compared to Q2 16, growth in the Canadian and US Transportation sectors helped lift Stantec's Infrastructure business operating unit to realize organic gross revenue growth of 4.6%; the Company's Water business operating unit experienced 4.1% organic gross revenue growth.

In Q2 17 compared to Q2 16, Stantec's Environmental Services business operating unit was stable, while organic revenue in the Energy & Resources business operating unit retracted 11.8%, a rate of retraction that slowed compared to 2016.

Executive Commentary

Bob Gomes, president and chief executive officer, noted that Stantec's second quarter results met executive expectations. "These results were in line with our expectations and establish the trend of recovery in 2017 that we outlined in the first quarter. Organic growth in the consulting business was good across most of our business operating units and all our geographies this quarter. Buildings experienced a strong quarter, with organic gross revenue growth of 5.1%. We also experienced good growth in Water and Infrastructure. Including Construction Services, we had overall organic growth of 4.5% in the second quarter of 2017. This growth demonstrates the continued success of our full integration acquisition strategy and our ability to win projects and execute work around the world across a diverse range of sectors."

Impact of Innovyze Sale

As projected last quarter, the Q2 17 sale of Innovyze (the water software business that was part of the acquisition of MWH Global) had a positive impact on earnings in the second quarter; sale proceeds were used to repay $221.3 million of the Company's revolving credit facility, reducing our interest payments. The sale of Innovyze also reduced goodwill and intangible assets by $194.4 million and $95.1 million respectively and reduced amortization of intangible assets by $1.2 million in Q2 17 compared to Q2 16.

The table below shows the impact of the Innovyze sale in the first and second quarters of 2017 and year to date:

Impact of Innovyze Transaction
(In millions of Canadian dollars except per share amounts) Q1 17   Q2 17   YTD  
Gross proceeds -   369.1   369.1  
Estimated working capital adjustments -   (15.3 ) (15.3 )
Transaction costs -   (16.9 ) (16.9 )
Net proceeds from sale -   336.9   336.9  
Net assets on close -   (282.3 ) (282.3 )
Pre-tax gain on disposal -   54.6   54.6  
Impact on Taxes, Net Income, and EPS            
Current tax provision -   (124.1 ) (124.1 )
Deferred taxes previously recorded on Innovyze net assets -   27.6   27.6  
Deferred taxes recorded on held for sale classification (90.4 ) 92.4   2.0  
Income taxes expense (90.4 ) (4.1 ) (94.5 )
Impact on net income (90.4 ) 50.5   (39.9 )
Impact on EPS - basic (0.79 ) 0.44   (0.35 )
Impact on EPS - diluted (0.79 ) 0.44   (0.35 )

Additional Company Activity

During the second quarter of 2017, Stantec completed the transition of projects and the financial integration of MWH Americas Consulting Services into the Company's enterprise management system. MWH Global should be fully integrated in 2018.

In Q2 17, Stantec acquired Seattle-based Inventrix Engineering Inc. (Inventrix), adding 22 employees to the Company and enhancing the Buildings business operating unit in the United States. Inventrix provides expertise in mechanical engineering.

Also in the quarter, Stantec repurchased 465,713 shares for a total value of $14.4 million at an average price of $30.94 per share through its Normal Course Issuer Bid.

On July 13, 2017, Stantec declared and paid a cash dividend of $0.1250 per share to shareholders of record on June 30, 2017. On August 8, 2017, the Company again declared a dividend of $0.1250 per share, payable on October 12, 2017, to shareholders of record as of September 29, 2017.

Subsequent Event

On July 28, 2017, Stantec acquired Denver-based RNL Facilities Corporation (RNL), adding approximately 130 employees to the Company's Buildings business operating unit. Along with Denver, RNL has offices in Phoenix, Los Angeles, Washington, DC, and Abu Dhabi. RNL provides expertise in architecture, interior design, urban design, and landscaping.

Executive Transition

During the second quarter, Stantec announced the retirement of president and chief executive officer, Bob Gomes, effective December 31, 2017, after almost nine years in that role. Bob will remain as a director on the Company's board. The board of directors chose Gord Johnston, executive vice president of Stantec's Infrastructure business operating unit, as the incoming president and chief executive officer. Gord Johnston has more than 30 years of industry leadership experience, including more than 20 years with Stantec. During his time at Stantec, Gord has taken on various roles, including business leader for the Water and Infrastructure business operating units, and has played an active role in helping guide the Company's strategic planning over the past nine years.

Conference Call and Company Information

Stantec's second quarter conference call—to be held Wednesday, August 9, at 7:00 AM MDT (9:00 AM EDT)—will be broadcast live and archived in the Investors section of Financial analysts wanting to participate in the earnings conference are invited to call 1-866-222-0265 (Canada and United States) or 1-416-640-5942 (international) and provide the operator with confirmation code 5088427.

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 approximately 22,000 employees working in over 400 locations across 6 continents. We collaborate across disciplines and industries to bring buildings, energy and resource, environmental, water, and infrastructure projects to life. Our work—engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, construction services, project management, and project economics, from initial project concept and planning through to design, construction, commissioning, maintenance, decommissioning, and remediation—begins at the intersection of community, creativity, and client relationships.

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. Visit us at or find us on social media.

Cautionary Statements

Stantec's EBITDA, adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share are non-IFRS measures. For a definition and explanation of non-IFRS measures, refer to the Critical Accounting Estimates, Developments, and Measures section of the Company's 2016 Annual Report and the Company's 2017 Second Quarter Management's Discussion and Analysis.

Certain statements contained in this news release constitute forward-looking statements. These statements include, but are not limited to, the anticipated integration timeline for MWH Global. 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, our ability to successfully manage our integration program and respond to changing market conditions for Stantec's services. 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 about how other material risk factors could affect results, refer to the Risk Factors section and Cautionary Note Regarding Forward-Looking Statements in our 2016 Annual Report and the 2017 Second Quarter Management's Discussion and Analysis. Stantec's 40-F has been filed with the SEC, and you may obtain this document by visiting EDGAR on the SEC website at You may obtain our complete audited annual consolidated financial statements and associated Management's Discussion and Analysis for the year ended December 31, 2016 (which form our 2016 Annual Report) by visiting EDGAR on the SEC website at, on the CSA website at, or at Alternatively, you may obtain a printed copy of the 2016 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
  June 30   December 31  
  2017   2016  
(In thousands of Canadian dollars) $   $  
Cash and cash equivalents 203,529   210,903  
Cash in escrow 3,436   8,844  
Trade and other receivables 794,257   806,417  
Unbilled revenue 475,350   421,829  
Income taxes recoverable 51,152   46,705  
Prepaid expenses 57,803   62,253  
Other financial assets 17,513   20,890  
Other assets 5,223   4,679  
Total current assets 1,608,263   1,582,520  
Property and equipment 210,170   213,931  
Goodwill 1,581,812   1,828,061  
Intangible assets 300,110   449,530  
Investments in joint ventures and associates 9,722   9,220  
Deferred tax assets 28,332   26,195  
Other financial assets 166,236   160,056  
Other assets 15,383   15,155  
Total assets 3,920,028   4,284,668  
Trade and other payables 664,262   718,197  
Deferred revenue 209,751   201,766  
Income taxes payable 5,307   1,795  
Long-term debt 200,572   91,876  
Provisions 30,134   36,011  
Other financial liabilities 3,111   2,378  
Other liabilities 21,698   20,795  
Total current liabilities 1,134,835   1,072,818  
Long-term debt 601,161   928,586  
Provisions 83,208   80,664  
Net employee defined benefit liability 46,331   50,490  
Deferred tax liabilities 50,489   79,592  
Other financial liabilities 7,504   7,591  
Other liabilities 81,487   88,427  
Total liabilities 2,005,015   2,308,168  
Shareholders' equity        
Share capital 873,741   871,822  
Contributed surplus 19,736   18,736  
Retained earnings 918,255   917,883  
Accumulated other comprehensive income 100,100   167,287  
Total shareholders' equity 1,911,832   1,975,728  
Non-controlling interests 3,181   772  
Total liabilities and equity 3,920,028   4,284,668  
Consolidated Statements of Income
  For the quarter ended   For the two quarters ended  
  June 30   June 30  
(In thousands of Canadian dollars, except per share amounts) 2017
Gross revenue 1,318,681   1,046,642   2,594,941   1,802,025  
Less subconsultant/subcontractor and other direct expenses 427,194   269,316   829,656   396,051  
Net revenue 891,487   777,326   1,765,285   1,405,974  
Direct payroll costs 412,186   360,420   813,606   649,929  
Gross margin 479,301   416,906   951,679   756,045  
Administrative and marketing expenses 377,247   341,630   757,981   613,307  
Depreciation of property and equipment 13,568   12,547   27,474   22,604  
Amortization of intangible assets 18,727   19,941   42,237   30,744  
Net interest expense 6,204   10,843   13,812   13,931  
Other net finance expense 1,361   2,524   3,550   3,652  
Share of income from joint ventures and associates (1,252 ) (704 ) (1,985 ) (1,076 )
Foreign exchange (income) loss (1,053 ) (39 ) 163   65  
Gain on disposition of a subsidiary (54,576 ) -   (54,576 ) -  
Other income (557 ) (253 ) (1,344 ) (128 )
Income before income taxes 119,632   30,417   164,367   72,946  
Income taxes                
Current 18,857   6,868   28,382   20,909  
Current tax on disposition of subsidiary 124,053   -   124,053   -  
Deferred (967 ) 2,378   1,810   245  
Deferred tax on disposition of subsidiary (119,945 ) -   (29,506 ) -  
Total income taxes 21,998   9,246   124,739   21,154  
Net income for the period 97,634   21,171   39,628   51,792  
Weighted average number of shares outstanding - basic 114,045,875   106,207,939   114,087,887   100,049,233  
Weighted average number of shares outstanding - diluted 114,355,587   106,621,988   114,454,989   100,451,362  
Shares outstanding, end of period 113,816,504   113,907,017   113,816,504   113,907,017  
Earnings per share                
Basic 0.86   0.20   0.35   0.52  
Diluted 0.85   0.20   0.35   0.52  

Media Contact
Earl J. Woods
Stantec Media Relations

Investor Contact
Sonia Kirby
Stantec Investor Relations

Comment On!

Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to (via Easy Blurb).