Stantec (STN) Tops Q1 EPS by 10c, Revenues Beat

Stantec (NYSE: STN) reported Q1 EPS of $0.45, $0.10 better than the analyst estimate of $0.35. Revenue for the quarter came in at $904.1 million versus the consensus estimate of $693.81 million.

“Our solid first-quarter performance reflects our continued focus on organic and acquisition growth,” said Stantec president and chief executive officer Gord Johnston. “We are particularly pleased with the strong organic growth achieved in our global business, which demonstrates the value of our growing geographic reach and augments the diversity of our business mix.”

Effective January 1, 2019, Stantec adopted IFRS 16 Leases using the modified retrospective approach and did not restate comparative information.

Q1 2019 Highlights

After adoption of IFRS 16

• Adjusted net income of $50.3 million or $0.45 on a diluted per share basis, increases of 5.0% and 7.1%, respectively, compared to Q1 18.
• Net income of $44.9 million or $0.40 on a diluted per share basis, increases of 22.0% and 25.0%.
• Gross and net revenue of $1,151.5 million and $904.1 million, respectively, reflecting growth of 12.7% and 11.8%, with increases across all geographies.
• Organic net revenue growth of 2.5%, with growth in all geographies and business operating units, except Water, where growth was offset by the effect of a large recovery recognized in Q1 18.
• Acquisition net revenue growth of 6.6% compared to Q1 18, predominately from the recent global acquisitions of Peter Brett Associates and Wood & Grieve Engineers (WGE).
• Adjusted EBITDA of $127.1 million, representing 14.1% of net revenue.
• EBITDA of $132.2 million, representing 14.6% of net revenue.
• Contract backlog of $4.4 billion—a 5.6% increase from December 31, 2018—representing 12 months of work.
• Days sales outstanding (DSO) of 104 days (90 days including deferred revenue), an increase of one day from December 31, 2018. Reducing DSO continues to be a key focus for the Company.
• Net debt to adjusted EBITDA of 2.0x—at the upper end of the Company’s internal guideline of 1.0x to 2.0x (post-IFRS 16 adoption) due to typically lower cash flows in Q1, funding the WGE acquisition, opportunistic share repurchases, and the impact of only one month’s EBITDA contribution from WGE.
• On May 9, 2019, the Board of Directors declared a dividend of $0.145 per share, payable on July 15, 2019, to shareholders on record on June 28, 2019.

Excluding adoption of IFRS 16:

• Adjusted net income and diluted earnings per share (EPS)—no significant impact.
• Net income and diluted EPS—no significant impact.
• Adjusted EBITDA of $91.6 million—a 2.3% increase from Q1 18, representing 10.1% of net revenue.
• EBITDA of $96.7 million—an 11.3% increase from Q1 18, representing 10.7% of net revenue.
• Net debt to adjusted EBITDA of 2.67x.

For earnings history and earnings-related data on Stantec (STN) click here.

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