Stantec (STN) Tops Q4 EPS by 5c, Revenues Beat

Stantec (NYSE: STN) reported Q4 EPS of $0.40, $0.05 better than the analyst estimate of $0.35. Revenue for the quarter came in at $1.08 billion versus the consensus estimate of $693.81 million.

“For Stantec, 2018 was a year of transition as we returned to our core business as a pure-play design consulting firm,” said Gord Johnston, Stantec’s president and chief executive officer. “Consulting Services’ strong financial performance achieved the 2018 targets we established at the start of the year, demonstrating our commitment and ability to deliver continued organic growth, achieve disciplined growth through our proven acquisition strategy, and operate effectively.”

Q4 18 Highlights

• Adjusted net income from continuing operations was $45.5 million, or $0.40 on a diluted per share basis, increasing 14.6% and 14.3% respectively, compared to Q4 17. This reflects solid financial performance from Stantec’s core Consulting Services business.
• Net revenue from continuing operations increased 11.4% in Q4 18 compared to Q4 17, supported by organic and acquisition growth.
• Organic net revenue from continuing operations increased 3.5% in Q4 18 compared to Q4 17, with growth in all regional segments and business operating units, with the exception of Buildings, which was neutral relative to Q4 17.
• Acquisition net revenue from continuing operations grew 6.0% in Q4 18 compared to Q4 17.
• Administrative and marketing expenses as a percentage of net revenue from continuing operations decreased from 46.8% in Q4 17 to 45.8% in Q4 18 (43.7% excluding unusual or non-recurring items) due to improved utilization, operational efficiencies, and reduced share-based compensation charges.
• Adjusted EBITDA grew 26.0% compared to Q4 17, representing 10.1% of Q4 18 net revenue from continuing operations.
• Net loss of $11.0 million, or $0.10 on a diluted per share basis, reflecting the impact of losses incurred from Construction Services and several unusual, non-recurring expenses.

2019 Outlook and Targets

“With the sale of Construction Services largely behind us, we’ve stepped into 2019 determined to continue to deliver shareholder value while providing solutions to support the success of our clients,” commented Gord Johnston. “We’ve worked hard to build a design practice that is diversified both by geography and business line, providing a stable base against potential volatility in any one region or sector. Our backlog is strong, and we are positioned to continue winning impactful work that will grow earnings.”

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

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