Slide 1: Q4 & Year End 2019 Earnings Presentation
Q4 & YEAR END 2019 Q4 & Year End 2019 Earnings Presentation Joint Venture with Snøhetta Temple University – Charles Library Philadelphia, Pennsylvania, USA Photo credit: Michael Grimm 1
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains non-IFRS measures and forward-looking statements, including a discussion of our business targets, expectations, and outlook. We caution readers not to place undue Q4 & YEAR END 2019 reliance on our forward-looking statements since a number of factors c
Slide 3: Agenda
Agenda Q4 & YEAR END 2019 Gord Johnston Q4 & Year-end 2019 Overview Theresa Jang Financial Performance Gord Johnston Operational Highlights 3
Slide 4: Top global design firm that maximizes long-term, sustainable value
IN 2019 WE REDEFINED OUR VISION Top 10 global design firm that maximizes long-term, sustainable value Q4 & YEAR END 2019 Strengthened alignment Earnings growth Disciplined capital with shareholders through efficiency allocation • Introduced relative Total • Reshaping workforce initiative • Reduced l
Slide 5: 2019 Review
2019 Review 10.6% 4.4% 5.2% Net Revenue Growth Organic Net Acquisition Net Q4 & YEAR END 2019 Revenue Growth Revenue Growth $2.02 11.0% 8.8% Adjusted Basic and Diluted EPS Adjusted Diluted Return on from Continuing Operations EPS Growth Invested Capital 5
Slide 6: Q4 2019 Overview
Q4 2019 Overview 7.8% growth in net revenue driven by: 5.3% organic growth in all business operating units $4.3 B United States 2% backlog increase 2.8% acquisition growth mainly focused in Buildings gross revenue Canada from end of 2018 backlog Global 8.2% increase in gross margin reflecting contin
Slide 7: Financial Performance
Q4 & YEAR END 2019 Financial Performance International Ave Pedestrian Realm Calgary, Alberta, Canada 7
Slide 8: Adoption of IFRS 16
Adoption of IFRS 16 Q4 19 2019 Q4 19 excluding Increase 2019 excluding Increase (millions of Canadian dollars except where noted) as reported IFRS 16 (decrease) as reported IFRS 16 (decrease) Impact on income statement items Administrative and marketing expenses 348.5 385.7 (37.2) 1,433.6 1,576.6 (1
Slide 9: Q4 & FY 2019 Results
Q4 & FY 2019 Results Q4 19 Q4 18 FY 2019 FY 2018 (In millions of Canadian dollars, % of Net % of Net % of Net % of Net except per share amounts and percentages) $ Revenue $ Revenue $ Revenue $ Revenue Gross revenue 1,210.2 134.3 1,083.9 129.7 4,827.3 130.1 4,283.8 127.7 Q4 & YEAR END 2019 Net revenu
Slide 10: 2019 Results Versus Guidance
2019 Results Versus Guidance Expressed as a percent of net revenue & revised for IFRS 16 54.1% Gross Margin 49.0% 50.0% 51.0% 52.0% 53.0% 54.0% 55.0% 56.0% 57.0% 58.0% 59.0% 38.6% Q4 & YEAR END 2019 Admin & Marketing 33.0% 34.0% 35.0% 36.0% 37.0% 38.0% 39.0% 40.0% 41.0% 42.0% 43.0% 15.5% Adjusted EB
Slide 11: Liquidity and Capital Resources
Liquidity and Capital Resources Cash Flow Sources and Uses of Cash from Continuing Operations (millions of Canadian FY FY FY 450 FY 2019 FY 2018 dollars) 2019 2019 2018 400 Inflow excluding Q4 & YEAR END 2019 350 (Outflow) as reported IFRS 16 as reported 300 Operating 449.9 333.2 205.2 250 200 Inves
Slide 12: Leverage
Leverage Net Debt to Adjusted EBITDA As reported excluding IFRS 16 Internal guideline 1.0x to 2.0x 1.5x to 2.5x Q4 & YEAR END 2019 December 31, 2019 1.1x (1) 1.5x (1) Net debt/adjusted EBITDA is a non-IFRS measure discussed in the Definition section of our 2019 Annual Report. 12
Slide 13: 2020 targets and guidance
2020 targets and guidance Targets: Adjusted EBITDA(1) 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% (% of net revenue) Adjusted Net Income(1) Q4 & YEAR END 2019 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% (% of net revenue) Return on Invested Capital 4.0% 5.0% 6.0% 7
Slide 14: Operational Highlights
Q4 & YEAR END 2019 Operational Highlights Inova Mather Proton Therapy Center Fairfax, VA, USA 14
Slide 15: Canada
Canada millions (C$) $400 $1,200 $300 $1,000 $800 $200 $600 Gross Revenue $400 Q4 & YEAR END 2019 $100 $200 Net Revenue $0 $0 Q4 19 Q4 18 2019 2018 Quarterly Highlights University of Manitoba Museum Phase II Continued organic growth in Environmental Winnipeg, MB, Canada Services and Transportation Q
Slide 16: United States
United States millions (C$) $700 $3,000 $600 $2,500 $500 $2,000 $400 $1,500 $300 Gross Revenue $1,000 $200 Q4 & YEAR END 2019 $100 $500 Net Revenue $0 $0 Q4 19 Q4 18 2019 2018 Quarterly Highlights Martin County, Florida Substation Continued growth in Transportation, Lake Mary, Florida Environmental
Slide 17: Global
Global millions (C$) $250 $1,000 $200 $800 $150 $600 $100 $400 Gross Revenue Q4 & YEAR END 2019 $50 $200 Net Revenue $0 $0 Q4 19 Q4 18 2019 2018 Quarterly Highlights Center Parcs, Longford Forest Slight organic retraction due to declining County Longford, Ireland commodity prices, project wind downs
Slide 18: Our Strategy
OUR STRATEGY To grow and diversify sustainably for the benefit of our clients, employees and shareholders. • We will do this through Q4 & YEAR END 2019 • Strong execution, efficient operations, and disciplined capital allocation while delivering a great client experience. • We will measure our succe
Slide 19: Q&A
Q4 & YEAR END 2019 Q&A Donner Summit Public Utility District (DSPUD) Treatment Alternatives and Facilities Plan Soda Springs, CA, USA 19
Slide 20: Consolidated Statement of Cash Flows
Stantec Inc. Consolidated Statement of Cash Flows Indirect Method (Unaudited) Years Ended December 31 2019 2018 (In millions of Canadian dollars) $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES FROM CONTINUING OPERATIONS Net income from continuing operations 194.4 171.3 Add (deduct) items not aff
Slide 21: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Year Ended Dec 31 Quarter Ended Dec 31 (In millio ns o f Canadian do llars, except per share amo unts) 2019 2018 2019 2018 Net income from continuing operations 194.4 171.3 42.4 21.2 Add back: Income taxes 71.1 55.0 17.9 2.6 Net interest expense 69.6 28.
Slide 22: IFRS Impact on Statement of Financial Position at January 1, 2019
IFRS 16 Impact on Statement of Financial Position at January 1, 2019 Increase IFRS 16 Before IFRS 16 (Decrease) (In millio ns o f Canadian do llars) $ $ $ Current assets Trade and other receivables 828.1 878.1 (50.0) Prepaid expenses 43.9 56.8 (12.9) Other assets 24.3 23.2 1.1 Non-current assets Lea
Slide 23: IFRS Impact on Statement of Income and Cash Flows
IFRS 16 Impact on Statement of Income - Continuing Year Ended Dec 31 Operations 2019 2019 Increase as Reported before IFRS 16 (Decrease) (In millio ns o f Canadian do llars) $ $ $ Impact on income statement items Administrative and marketing expenses 1,433.6 1,576.6 (143.0) Net interest expense 69.6
Slide 24: Gross Margin by Business Operating Unit
Gross Margin by Business Operating Unit Quarter Ended Quarter Ended Year Ended Year Ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2019 Dec 31, 2018 (In millions of Canadian dollars, except % of Net % of Net % of Net % of Net percentages) $ Revenue $ Revenue $ Revenue $ Revenue Buildings 108.0 54.5% 92.5 5
Slide 25: Gross Revenue by Business Operating Unit
Gross Revenue by Business Operating Unit Change Change Due % Due to to Organic of Organic (In millio ns o f Canadian do llars, Quarter Ended Quarter Ended Total Change Due to Foreign Growth Growth except percentages) Dec 31, 2019 Dec 31, 2018 Change Acquisitions Exchange (Retraction) (Retraction) Bu
Slide 26: Net Revenue by Business Operating Unit
Net Revenue by Business Operating Unit Change Due to Change Due % (In millio ns o f Canadian do llars, Quarter Ended Quarter Ended Total Change Due to Foreign to Organic of Organic except percentages) Dec 31, 2019 Dec 31, 2018 Change Acquisitions Exchange Growth Growth Buildings 198.0 172.1 25.9 23.