Construction/Building — November 1, 2012

Stantec announces strong third quarter 2012 results and dividend

EDMONTON, ALBERTA--(Marketwire - Nov. 1, 2012) - Today, Stantec (TSX:STN) (NYSE:STN) announced strong third quarter 2012 results, with several key items to highlight

  • Gross revenue increased 12.4% to C$483.7 million in Q3 12 from C$430.4 million in Q3 11.
  • Net income increased 18.0% to C$34.1 million in Q3 12 from C$28.9 million in Q3 11.
  • Diluted earnings per share increased 17.5% to C$0.74 in Q3 12 from C$0.63 in Q3 11.
  • The Company declared a quarterly dividend of C$0.15 per share, payable on January 17, 2013, to shareholders of record on December 31, 2012.

"Our positive results in the third quarter of 2012 speak to the strength of our business model where the diversity of our services allows us to take advantage of the changing market conditions," says Bob Gomes, Stantec president and chief executive officer. "With a strong team and a long-term commitment to the clients and communities we serve, we will continue to execute on our objectives for the remainder of the year."

Organic revenue growth was 6.1% in Q3 12 compared to Q3 11. This is the fifth consecutive quarter where Stantec has achieved positive organic revenue growth. The Company's results were positively impacted by an increase in revenue due to organic growth in the mining, oil and gas, and urban development sectors as well as acquisitions completed in 2011 and 2012.

Stantec results have shown positive momentum over the last few quarters. Compared to Q3 11, the Company's gross revenue increased 12.4% from C$430.4 million to C$483.7 million, EBITDA increased 14.2% from C$53.5 million to C$61.1 million and net income increased 18.0% from C$28.9 million to C$34.1 million. In addition, Stantec achieved record diluted earnings per share with an increase of 17.5% from C$0.63 to C$0.74.

Focus on Client Relationships and Market Opportunities

Stantec's focus on building strong client relationships and capitalizing on market opportunities together with its depth and breadth of expertise continues to result in securing new projects with new and existing clients. With demonstrated experience in the public-private partnership (P3) delivery model, the Company secured a project to design 12 new schools in Alberta. Implementing the P3 model for this project will accelerate work on the schools being built across Alberta, resulting in completion two years sooner than conventional project delivery methods would have provided.

Stantec remains well positioned to secure projects due to its strong local relationships along with those opportunities resulting from a more stringent regulatory environment. As an example of local relationships, the Company is working as part of a team on the expansion of the metro Vancouver Annacis Wastewater Treatment Plant upgrade, one of the largest wastewater treatment plants in Canada. Stantec also continues to secure work in the transit/rail sector. The Company was recently selected by the Dallas Area Rapid Transit to provide professional services and be responsible for managing the Trinity Railway Express Positive Train Control project. Positive train control is a US federal requirement mandated by the Federal Railroad Safety Improvement Act.

Stantec continues to secure projects in the US residential market. Stantec was recently awarded a project in Sarasota, Florida, to provide design services, from initial site planning through construction phase services, for 600 to 800 units to be built on 500 acres (202 hectares) added to the Country Club East Golf Course Community in Lakewood Ranch.

Continued Growth

In August, Stantec completed the acquisition of Calgary-based Cimarron Engineering Ltd., a 290-person engineering consulting company specializing in the development, design, installation, and integrity maintenance of oil and gas pipeline systems and station facilities. Cimarron also has a power division that specializes in the design of medium to high-voltage electrical systems for utility and oil and gas clients. This addition will enhance Stantec's oil and gas and power practices throughout North America.

Additional Company Activity

Stantec declared a quarterly dividend of C$0.15 per share, payable on January 17, 2013, to shareholders of record on December 31, 2012.

Conference Call and Company Information

Stantec's third quarter conference call, to be held Thursday, November 1, at 3:00 PM MDT (5:00 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 1-800-820-0231 and provide the confirmation code 1348295 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 at every stage, from the initial conceptualization and financial feasibility study to project completion and beyond. Our services are provided on projects around the world through approximately 12,000 employees operating out of more than 190 locations in North America and 4 locations internationally. Stantec is One Team providing Integrated Solutions.

Cautionary Statements

Stantec's EBITDA is a non-IFRS measure, and gross revenue and net revenue are additional IFRS measures. 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 2011 Financial Review.

This press release contains forward-looking statements concerning Stantec's future financial performance, future growth, and future acquisitions activities. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution readers of this press 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 and the risk that the contemplated transactions will 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 factors and other factors could affect our results, refer to the Risk Factors section and Caution Regarding Forward-Looking Statements in our 2011 Financial Review. You may obtain these documents by visiting EDGAR on the SEC website at www.sec.gov or on the CSA website at www.sedar.com.

One Team. Integrated Solutions.

Consolidated Statements of Financial Position
(Unaudited)
September 30 2012 December 31 2011
(In thousands of Canadian dollars) $ $
ASSETS
Current
Cash and short-term deposits 18,120 36,111
Trade and other receivables 361,891 310,669
Unbilled revenue 164,540 133,881
Income taxes recoverable 8,456 16,800
Prepaid expenses 14,345 13,908
Other financial assets 16,089 14,612
Other assets 4,402 3,172
Total current assets 587,843 529,153
Non-current
Property and equipment 107,351 107,853
Goodwill 550,526 509,028
Intangible assets 79,370 72,047
Investments in associates 3,065 2,365
Deferred tax assets 39,128 43,647
Other financial assets 62,026 61,606
Other assets 3,938 1,657
Total assets 1,433,247 1,327,356
LIABILITIES AND EQUITY
Current
Trade and other payables 225,077 191,859
Billings in excess of costs 55,122 49,441
Current portion of long-term debt 49,588 59,593
Provisions 14,804 16,373
Other financial liabilities 3,140 5,042
Other liabilities 6,847 5,208
Total current liabilities 354,578 327,516
Non-current
Long-term debt 245,158 236,601
Provisions 41,874 42,076
Deferred tax liabilities 56,534 54,564
Other financial liabilities 2,236 2,257
Other liabilities 38,141 37,191
Total liabilities 738,521 700,205
Shareholders' equity
Share capital 236,516 226,744
Contributed surplus 14,541 14,906
Retained earnings 467,015 397,847
Accumulated other comprehensive loss (23,449 ) (12,449 )
Total equity attributable to equity holders of the Company 694,623 627,048
Non-controlling interests 103 103
Total equity 694,726 627,151
Total liabilities and equity 1,433,247 1,327,356
Consolidated Statements of Income
(Unaudited)
For the quarter ended September 30 For the three quarters ended September 30
2012 2011 2012 2011
(In thousands of Canadian dollars, except per share amounts) $ $ $ $
Gross revenue 483,687 430,354 1,398,981 1,251,357
Less subconsultant and other direct expenses 85,559 79,156 233,363 221,010
Net revenue 398,128 351,198 1,165,618 1,030,347
Direct payroll costs 178,983 156,313 529,358 458,882
Gross margin 219,145 194,885 636,260 571,465
Administrative and marketing expenses 157,928 140,346 470,447 420,797
Depreciation of property and equipment 7,027 7,173 20,203 20,521
Amortization of intangible assets 5,090 4,150 14,676 13,481
Net interest expense 2,247 2,537 6,901 7,510
Other net finance expense 641 696 2,135 2,099
Share of income from associates (526 ) (104 ) (1,331 ) (452 )
Foreign exchange loss 106 482 133 90
Other (income) expense (65 ) - 125 (41 )
Income before income taxes 46,697 39,605 122,971 107,460
Income taxes
Current 9,324 8,946 28,640 25,979
Deferred 3,284 1,748 4,562 3,036
Total income taxes 12,608 10,694 33,202 29,015
Net income for the period 34,089 28,911 89,769 78,445
Weighted average number of shares outstanding - basic 45,788,734 45,662,087 45,694,805 45,703,009
Weighted average number of shares outstanding - diluted 45,800,853 45,726,931 45,694,805 45,812,925
Shares outstanding, end of the period 45,879,748 45,380,252 45,879,748 45,380,252
Earnings per share
Basic 0.74 0.63 1.96 1.72
Diluted 0.74 0.63 1.96 1.71

Contact Information

Stantec Inc.
Sherry Brownlee
Media Relations
(780) 917-7264
sherry.brownlee@stantec.com

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

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