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