Stantec Inc · TSX:STN
Stantec — Q4 2018 Earnings Presentation
27 slides from Stantec's earnings presentation, 2019
Slide 1: Q4 & Year end 2018 Earnings Presentation
EVOKE DELIVER INSPIRE COLLABORATE SUSTAIN Q4 & Year end 2018 EVOLVE Earnings Presentation DESIGN ENHANCE LEAD INNOVATE PERFORM ENVISION ACHIEVE CREATE TRANSFORM
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 actual f
Slide 3: Agenda
Agenda Gord Johnston 2018 Highlights Theresa Jang Fourth Quarter and 2018 Financial Performance Gord Johnston Operational Highlights 2019 Outlook and Targets
Slide 4: 2018 Results Compared to Targets
4 2018 Results Compared to Targets Consulting Services 54.1% 42.3% 11.7% 53% 2 0 1 8 T AR G E T R AN G E 55% 41% 2 0 1 8 T AR G E T R AN G E 43% 11% 2 0 1 8 T AR G E T R AN G E 13% Gross margin as % of net revenue Administrative and marketing Adjusted EBITDA as % of net expenses as % of net revenue
Slide 5: 2018 Overview
5 2018 Overview 3.3% 7 42.3%* Nov 2, 2018 DIVESTITURE OF O R G AN I C N E T R E V E N U E G R O W T H S T R AT E G I C AC Q U I S I T I O N S O P E R AT I O N AL E F F E C T I V E N E S S CONSTRUCTION SERVICES Growth in all Canada Improvements in utilization Reflected as regional operating units Uni
Slide 6: Financial Performance
Financial Performance
Slide 7: Financial Results Presentation Changes: Construction Services
7 Financial Results Presentation Changes Construction Services As required under accounting rules: • presented as discontinued operations in current and comparative periods • reclassified certain ongoing corporate costs historically allocated to Construction Services • earnings and cashflows restate
Slide 8: Financial Results Presentation Changes: Continuing Operations
8 Financial Results Presentation Changes Continuing Operations Excludes unusual or non-recurring items that are not reflective of our Adjusted EBITDA underlying operations. Adjusted net income Adjusted EPS Adjusted net income and adjusted EPS continue to exclude amortization of acquired intangibles.
Slide 9: Q4 18 Financial Results
9 Q4 18 Continuing Operations – Consulting Services Financial Q4 18 Q4 17 Results $ $ (In millions of Canadian dollars, except per share amounts) Gross revenue 1,083.9 977.4 Net revenue 835.6 749.9 Gross margin 449.4 419.0 Administrative and marketing expenses 382.7 350.7 EBITDA from continuing oper
Slide 10: Q4 Adjusted EBITDA from Continuing Operations
10 Q4 18 Adjusted EBITDA from Continuing Operations Quarter Ended Financial December 31 (In millions of Canadian dollars) 2018 2017 Results Net income from continuing operations Add back: 21.2 15.6 Income taxes 2.6 23.0 Net interest expense 9.3 5.5 Depreciation and amortization 28.1 29.4 EBITDA from
Slide 11: 2018 Financial Results
11 2018 Continuing Operations – Consulting Services Financial 2018 2017 Results (In millions of Canadian dollars, except per share amounts) Gross revenue 4,283.8 $ 4,028.7 $ Net revenue 3,355.2 3,173.8 Gross margin 1,815.2 1,761.9 Administrative and marketing expenses 1,438.2 1,407.7 EBITDA from con
Slide 12: Liquidity and Capital Resources
12 Liquidity and Capital Resources Days sales outstanding 103 • Net of deferred revenue 88 Undrawn borrowing capacity $223M • Plus accordion $400M Net debt to EBITDA 2.42X Shares repurchased under NCIB 2.4M • Cost $76.7M • Average price per share $31.09 Strong balance sheet provides flexibility to c
Slide 13: Operational Highlights
Operational Highlights
Slide 14: Canada
14 C O N S U LT I N G S E RV I C E S Canada millions (C$) $350 $1,400 $300 $1,200 $250 $1,000 $200 $800 $150 $600 Gross Revenue $100 $400 $50 $200 Net Revenue $0 $0 Q4 17 Q4 18 2017 2018 Strong growth in Power and Oil & Gas sectors. Growth in Water driven by projects in western Canada. Opportunities
Slide 15: United States
15 C O N S U LT I N G S E RV I C E S United States millions (C$) $700 $2,500 $600 $2,000 $500 $400 $1,500 $300 $1,000 Gross Revenue $200 $500 $100 Net Revenue $0 $0 Q4 17 Q4 18 2017 2018 Growth in Mining and WaterPower & Dams sectors due to improving commodity prices. Growth in Water in California a
Slide 16: Global
16 C O N S U LT I N G S E RV I C E S Global millions (C$) $250 $800 $700 $200 $600 $150 $500 $400 $100 $300 Gross Revenue $50 $200 $100 Net Revenue $0 $0 Q4 17 Q4 18 2017 2018 Growth in Environmental Services and Infrastructure. Growth in Latin American Mining sector. Growth in Water in Australia an
Slide 17: Recent project wins
17 Recent project wins • Core Area Wastewater Treatment Program, a $765-million wastewater treatment project in Victoria, British Columbia. • Reseau express metropolitain, an automated electric light-rail transit project—one of the most important public transit projects in Quebec. $4.2 billion • Lon
Slide 18: 2019 Outlook
18 2019 Outlook Overall Canada United States Global Organic gross revenue growth Slowing economic growth Solid consumer spending and Expand our global footprint and in the low- to mid-single digits because of volatile oil prices and business investment benefit from healthy GDP growth rising interest
Slide 19: 2019 Targets
19 2019 Targets Consulting Services 53% 2 0 1 9 T AR G E T R AN G E 55% 41% 2 0 1 9 T AR G E T R AN G E 43% Gross margin as % of net revenue Administrative and marketing expenses as % of net revenue 11% 2 0 1 9 T AR G E T R AN G E 13% At or above 5% 2 0 1 9 T AR G E T EBITDA as % of net revenue (1)
Slide 20: Acquisition Strategy
20 Acquisition Strategy
Slide 21: Q&A
21 Q&A Karahnjukar Hydroelectric Project Northeastern Iceland
Slide 22: Appendix: 2018 Quarterly Results
22 Appendix 2018 Year ended (In millions of Canadian dollars) Q4 18 Q3 18 Q2 18 Q1 18 Dec 31, 2018 Continuing operations Gross revenue 4,283.8 1,083.9 1,086.6 1,092.0 1,021.3 Less subconsultant and other direct expenses 928.6 248.3 239.1 228.7 212.5 Net revenue 3,355.2 835.6 847.5 863.3 808.8 Direct
Slide 23: Appendix: 2017 Quarterly Results
23 Appendix 2017 Year ended (In millions of Canadian dollars) Q4 17 Q3 17 Q2 17 Q1 17 Dec 31, 2017 Continuing operations Gross revenue 4,028.7 977.4 1,000.9 1,046.3 1,004.1 Less subconsultant and other direct expenses 854.9 227.5 213.4 214.6 199.4 Net revenue 3,173.8 749.9 787.5 831.7 804.7 Direct p
Slide 24: Reconciliation of Previously Reported Adjusted Measures
24 Appendix Reconciliation of Previously Reported Adjusted Measures 2018 2017 (In millions of Canadian dollars, except per share amounts) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Adjusted net income - continuing operations 51.2 62.0 47.9 39.7 57.1 58.4 41.5 Add back (deduct) after-tax: Corporate costs 2.8 2.4 3.2 5.9 (
Slide 25: Net and Gross Revenue by Reportable Segment
25 Appendix Net Revenue by Reportable Segment Gross Revenue by Reportable Segment Change Due Change Year Year Change Due Change to Net Due to Change Due % ended ended to Net Due to Change Due % (In millions of Canadian dollars, Total Acquisitions Foreign to Organic of Organic (In millions of Canadia
Slide 26: Net and Gross Revenue by Business Operating Unit
26 Appendix Net Revenue by Business Operating Unit Gross Revenue by Business Operating Unit Change Due Change Change Due % Change Due Change Change Due % to Net Due to to Organic of Organic to Net Due to to Organic of Organic (In millions of Canadian dollars, Total Acquisitions Foreign Growth Growth
Slide 27: Reconciliation of Non-IFRS Financial Measures
27 Appendix Reconciliation of Non-IFRS Financial Measures Year Ended Quarter Ended Year Ended Quarter Ended December 31 December 31 December 31 December 31 (In millions of Canadian dollars, except per share amounts) 2018 2017 2018 2017 (In millions of Canadian dollars, except per share amounts) 2018