Stantec

Last modified by Asif Farooqui on 2022/09/30 05:38

Contents

Summary
Recent Developments
Financial Highlights
Company Overview
- Expertise
- Locations
References

Summary

Stantec is a global leader in sustainable engineering, architecture, and environmental consulting.
The company operating out of 400 offices around the world, its team of 25,000 employees.
Annual net revenue in 2021 of $3.6 billion was earned 29% in Canada, 50% in the United States and 21% from its Global operations.

Stantec (NYSE: STN, TSX: STN) is a global leader in sustainable engineering, architecture, and environmental consulting. Operating out of 400 offices around the world, its team of 25,000 connects its clients to the design expertise, technology, and innovation required to meet today's challenges and prepare for tomorrow's opportunities. Annual net revenue in 2021 of $3.6 billion was earned 29% in Canada, 50% in the United States and 21% from its Global operations.

Recent Developments

Stantec awarded US$16 million feasibility study for Resolution Copper¹

Stantec has been selected by Resolution Copper Mining LLC (Resolution Copper) to deliver a US$16 million feasibility study providing engineering and technical services for the Resolution Copper mine in Superior, Arizona. The proposed underground mine has the potential to be one of the largest producers of copper in North America—supplying up to 25% of US copper demand each year.

Stantec’s engineering services on this project include power distribution, material handling, shafts and hoisting systems, dewatering/pumping, communications, and more. Additionally, Stantec is evaluating the use of battery electric vehicles to help the mine meet its goal of zero carbon emissions.

Financial Highlights

June 30, 2022, Results

Stantec achieved adjusted diluted EPS of $0.83 in Q2 2022, a $0.21 per share or 33.9% increase from $0.62 in Q2 2021, reflecting strong net revenue growth, solid execution of its strategic growth initiatives, and focused project execution.²

Net revenue increased 22.9% or $208.4 million to $1.1 billion compared to Q2 2021, driven by 9.4% organic growth and 12.4% acquisition growth. Consistent with the first quarter of this year, every one of the regional and business operating units delivered organic growth, most notably in Global and in Water and Environmental Services where organic growth was in the double-digits.

Project margin increased $119.4 million or 24.7% to $602.7 million as a result of net revenue growth and solid project execution. As a percentage of net revenue, Stantec delivered a 54.0% project margin, an 80 basis point increase from Q2 2021.

Adjusted EBITDA increased $40.1 million or 27.4% to $186.7 million and achieved a margin of 16.7% compared to 16.1% in the prior period, resulting from strong performance across the business.

Net income decreased 4.0%, or $2.5 million, to $60.7 million, and diluted EPS decreased 3.5%, or $0.02, to $0.55. Acquisition-related expenses (namely integration, depreciation and amortization, and interest expenses), coupled with a net unrealized fair value loss associated with Stantec's equity investments held for self-insured liabilities, more than offset increased project margin and lower income tax expense.

Adjusted net income grew 33.0%, or $23.0 million, to $92.6 million, achieving 8.3% of net revenue compared to 7.7% in Q2 2021, and adjusted diluted EPS increased 33.9% to $0.83 from $0.62 in Q2 2021.

Contract backlog stands at $5.8 billion at June 30, 2022, a new record reflecting 13.0% organic growth from December 31, 2021. Like net revenue, organic backlog growth was achieved across all Stantec's regional and business operating units. US operations led with 14.8% organic backlog growth. Global's backlog exceeded $1 billion, a high-water mark, reflecting 13.4% organic growth. Infrastructure, Buildings, and Energy & Resources achieved double-digit organic backlog growth. Contract backlog represents approximately 14 months of work—an increase of one month from December 31, 2021.

Operating cash flows amounted to an outflow of $4.4 million compared to an inflow of $78.2 million in the prior period reflecting the expected disruptions from the Cardno integration, particularly the financial system migration. Cash outflow was also driven by the increased investment in net working capital to support organic revenue growth and an increase in days sales outstanding (DSO).

Days sales outstanding was 79 days, remaining within Stantec's expectations, and represents an increase of 4 days from 75 days at December 31, 2021.

Net debt to adjusted EBITDA (on a trailing twelve-month basis) at June 30, 2022 was 2.0x, remaining within Stantec's internal target range of 1.0x to 2.0x.

In Q2 2022, Stantec repurchased 625,019 common shares at a cost of $36.7 million under its normal course issuer bid.

On April 1, 2022, Stantec acquired Barton Willmore, the UK's leading planning and design consultancy firm. This acquisition added approximately 300 team members across the UK providing services for both public and private clients across all development sectors, which strategically complements Stantec's existing business in Infrastructure.

On August 10, 2022, the Board of Directors declared a dividend of $0.18 per share, payable on October 17, 2022, to shareholders of record on September 29, 2022.

Company Overview

Expertise

Buildings

The company's integrated design practice—encompassing architecture, buildings engineering, interior design, and more—keeps people at its heart, recognizing that its shared journey forward is shaped by the meaningful and responsive places the company design.³

Community Development

Working closely with the communities the company serve, the company create destinations that unlock vibrant economic centers, establish resilient communities, and make places that feel like home.

Energy

The company bring specialized industry experience that can save millions, cut waste, increase production, and improve safety. The company is working together with the industry and local communities to deliver long-term innovation with creative, custom, and cost-effective solutions.

Environment

The company's engineers, surveyors, and environmental design service experts lay the groundwork for infrastructure, energy, and building projects, and its approach to development forms wildlife habitats, restores wetlands, and builds active communities. The company can help you with nature based solutions, carbon capture, and other sustainability-focused goals.

Federal Government

The company's partnerships with North American federal clients have led to projects in the security, military, environmental consulting, transportation, buildings, and ports and terminals sectors—and more. The company's goal? To embrace sustainability and equity for its populations.

Mining, Minerals & Metals

The company take pride in providing innovative solutions that balance production goals with good stewardship, environmental sustainability, and regulatory requirements. Most importantly, the company consistently maintain its focus on safety and quality while delivering projects on-time and on-budget.

Transportation

The company focus on providing solutions that respect the community and local environment, from major expressway and rural roadway projects to bridge rehabilitations, transit systems, smart transportation, and airport design. The company design this way because Stantec has the same goals as everyone else—to get where The company is going, safely and efficiently.

Water

The company's One Water focus covers the management of fresh water, wastewater, stormwater, and groundwater as a collective resource. This can mean a lot of things, depending on where you are and your needs. The company's approach is different if you’re in a water-rich area with a deteriorating ecosystem or an arid environment where water is precious and sustaining reasonable growth with traditional strategies is the challenge. But its goal never changes—enabling thriving economies and industries, community vitality, and healthy ecosystems.