Slide 1: Q2 2020 Earnings Presentation
Q2 2020 Q2 2020 Earnings Presentation August 6, 2020 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 reliance on our forward-looking statements since a number of factors could cause Q2 2020
Slide 3: Agenda
Agenda Gord Johnston Opening Remarks Q2 Operational Performance Theresa Jang Q2 2020 Financial Performance Q2 2020 Gord Johnston 2020 Outlook Concluding Remarks 3
Slide 4: Solid Q2 results
Solid Q2 results 4% Growth in Q2 Adjusted Diluted EPS $4.7 B Q2 2020 gross revenue backlog United States Canada Global Long-term strategy of delivering value through diversified business model 12 Months of work 4
Slide 5: Solid net revenue generation in Q2
Solid net revenue generation in Q2 Q2 Net revenue stable year-over-year at: $951M Q2 2020 UNITED STATES CANAD A GLOBAL 600 Q2 20 Q2 19 2.1% organic retraction 500 400 ($ millions) 300 200 100 0 Organic growth (retraction) 2.3% (6.8)% (7.4)% Q2 net revenue $532M $261M $158M 5
Slide 6: Business line diversity bolsters Stantec's resiliency
Business line diversity bolsters Stantec’s resiliency Q2 2020 INFRASTRUCTURE BUILDINGS WATER ENVIRONM ENTAL ENERGY & 300 SERVICES RESOURCES Q2 20 Q2 19 200 ($ millions) 100 0 Organic growth (retraction) (1.7)% (8.7)% 3.4% (3.7)% 2.0% Q2 net revenue $272M $202M $201M $141M $135M 6
Slide 7: United States
United States 2.3% organic growth in Q2 • Driven by: • Water, Mining, and Power with the commencement of several large projects and continuation of existing programs • New federal Environmental Services Q2 2020 projects that more than offset pandemic-related slowdowns Martin County, Florida Substati
Slide 8: Canada
Canada 6.8% organic retraction in Q2 • Driven by: • Slowed economic growth amplified by the COVID-19 pandemic • Buildings and Community Development particularly affected • Environmental Services impacted by Q2 2020 project slowdowns in field work University of Manitoba Museum Phase II Winnipeg, MB,
Slide 9: Global
Global 7.4% organic retraction in Q2 • Driven by: • Project slowdowns from COVID-19 • Most pronounced in Buildings and European Environmental Services • Pandemic-related mine closures in Latin America Q2 2020 • Partially offset by: Center Parcs, University LongfordMuseum of Manitoba Forest Phase II
Slide 10: Q2 2020 Financial Performance
Q2 2020 Q2 2020 Financial Performance International Ave Pedestrian Realm Calgary, Alberta, Canada 10
Slide 11: Q2 2020 results
Q2 2020 results Net revenue & organic growth (retraction) ($ millions, %) 7.4% 5.3% 4.2% 2.3% (2.1)% Q2 20 Q2 19 Change % Year- (In millions of Canadian dollars, % of Net % of Net over-year except per share amounts and percentages) $ Revenue $ Revenue change Net revenue $954 $953 $955 $951 951.1 100
Slide 12: Balance sheet strength
Balance sheet strength Net debt to adjusted EBITDA(1) (TTM) Net debt to adjusted EBITDA(1) 2 1.0x at June 30, 2020 1.5 1 0.5 Target range 1.0 - 2.0x Q2 2020 0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Days sales outstanding 95 Days sales outstanding 90 85 82 days at June 30, 2020 80 Target 75 90 days 70 Q2 19 Q
Slide 13: Liquidity and capital allocation
Liquidity and capital allocation Free cash flow(1) ($ millions) (Comparisons to Q2 2019) • 83% improvement in free cash flow (1) $204 $210 • >50% decrease in capital expenditures $115 $94 ($85) • >$330 million in undrawn credit capacity Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 2020 Cash flow from continuing
Slide 14: 2020 Outlook
Q2 2020 2020 Outlook Inova Mather Proton Therapy Center Fairfax, VA, USA 14
Slide 15: 2020 Net revenue outlook
2020 Net revenue outlook % of Net Geographic Revenue Key Drivers Region (YTD) ▼ Nominal revenue contraction in Q3 20 relative to Q2 20 is expected across all businesses 55% except Water, with a slightly more pronounced decline in Q4 20 due to the seasonal slowdown ▲ Expect continuing benefit of US/C
Slide 16: 2020 Outlook
2020 Outlook Net Revenue and Adjusted Earnings • Full-year 2020 net revenue expected to be comparable to 2019 • Adjusted net income and adjusted diluted EPS comparable to 2019 • 55% of adjusted earnings in Q2 and Q3, and 45% in Q1 and Q4 Leverage Q2 2020 • Net debt to adjusted EBITDA expected to be
Slide 17: Continuing to execute our strategy
Continuing to execute our strategy People • Our people’s health and safety comes first as we begin our phased office remobilization • Integrity of workforce is being preserved to work through record backlog and to position Stantec for economic recovery Excellence Q2 2020 • Continued focus on project
Slide 18: Q2 2020 Q&A
Q2 2020 Q&A Lyu-Chuan - Shin Sei Green Waterway Taichung City, Taiwan 18