E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 1 CIBC 23rd Annual Western Institutional Investor Conference January 29, 2020
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 2 Cautionary Note Regarding Forward-Looking Statements Certain statements contained in this presentation constitute forward-looking information and statements within the meaning of applicable securities law (collectively, " forward-looking statements "). Forward-looking statements in this presentation include, but are not limited to: our financial targets (including our annual net revenue growth, adjusted EBITDA, and net income targets; employee count; and ROIC target), our expectations regarding organizational reshaping, our anticipated business and geographical mix, our expectations regarding economic and industry trends in the sectors and regions in which we operate, our acquisition strategy, our capital deployment strategy, and our overall growth strategy. These statements describe management’s expectations as of December 3, 2019 and are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that this information may not be appropriate for other purposes. Stantec does not undertake any obligations to publicly update or revise any forward-looking statements except as required by law. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. Readers are cautioned not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates, or intentions expressed in these forward-looking statements. Risk factors include, but are not limited to, the risk of an economic downturn, decreased spending in the private and/or public sectors, changing market conditions for Stantec’s services, and the risk that Stantec fails to capitalize on its strategic initiatives. Investors and the public should carefully consider these factors, other uncertainties, and potential events, as well as the inherent uncertainty of forward-looking statements when relying on these statements to make decisions about our company. For more information about how other material risk factors could affect our results, please refer to the Risk Factor section in our 2018 Annual Report incorporated herein by reference. Readers can access our Annual Report online by visiting EDGAR on the SEC website at sec.gov or by visiting the CSA website at sedar.com or on Stantec’s website at stantec.com. In determining our forward-looking statements, we consider material factors including assumptions about the performance of the Canadian, US, and global economies in 2020 and beyond and their effect on our business. These key factors and assumptions are outlined thoroughly in our press release dated December 3, 2019. Unless otherwise indicated, all amounts expressed in Canadian dollars.
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 3 S TA N TE C A T A G L A N C E 400 STN CDN $4.4B (2) TSX & NYSE Market Cap Locations Worldwide 22,000 CDN $3.6B 65 YEARS Employees Globally Annual Net Revenue (1) Of Uninterrupted Profitability (1) Q3 19 TTM (2) As of January 23, 2020
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 4 W H E R E W E A R E Distribution of Net Revenue 18% $3.6B 52% Q3 19 TTM 30% Global Canada United States
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 5 W H A T W E D O De sign & E ngine e r ing Se r vic e s F or e ve r ything fr om small loc al pr oje c ts to ic onic me ga pr oje c ts Busine ss Ope r ating Units INFRASTRUCTURE BUILDINGS WATER ENVIRONMENTAL ENERGY & SERVICES RESOURCES $1,036M $805M $731M $551M $524M (Q3 19 TTM Net Revenue)
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 6 B U S I N E S S O P E R A T I N G U N I T Infrastructure Bridges Transit & Rail Community Development Roadways Private Public Net revenue by region YTD Organic growth Q3 19 YTD Global 20.1% 12.6% Gross revenue 28% * Canada United States 10.3% 6.0% Net revenue *As an approximate percentage of Q3 2019 YTD net revenue
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 7 B U S I N E S S O P E R A T I N G U N I T Buildings Science & Technology Airports & Aviation Civic Education Industrial Healthcare Commercial Private Public Net revenue by region YTD Organic growth Q3 19 YTD Global 2.6% 0.9% Gross revenue 22% * Canada United States 4.5% 1.8% Net revenue *As an approximate percentage of Q3 2019 YTD net revenue
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 8 B U S I N E S S O P E R A T I N G U N I T Water Client Enterprise Systems Water Resources Water Treatment Stormwater & Wet Weather Flow Wastewater Treatment Private Public Conveyance Net revenue by region YTD Organic growth Q3 19 YTD Global 7.5% 6.4% Gross revenue 20% * * Canada United States 7.4% 2.6% Net revenue *As an approximate percentage of Q3 2019 YTD net revenue
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 9 B U S I N E S S O P E R A T I N G U N I T Environmental Services Transportation Mining Community Development Buildings Power Oil & Gas Private Public Water Net revenue by region YTD Organic growth Q3 19 YTD Global 17.6% 9.8% Gross revenue 15% * Canada United States 17.2% 13.1% Net revenue *As an approximate percentage of Q3 2019 YTD net revenue
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 10 B U S I N E S S O P E R A T I N G U N I T Energy & Resources WaterPower & Dams Mining Power Oil & Gas Private Public Net revenue by region YTD Organic growth Q3 19 YTD Global (3.7%) (0.7%) Gross revenue 14% * Canada United States (2.7%) (2.1%) Net revenue *As an approximate percentage of Q3 2019 YTD net revenue
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 11 O U R V I S I O N T o be a top 10 global de sign fir m that maximize s long-te r m, sustainable value Pure play Strong alignment Disciplined capital Earnings growth design focus with shareholders allocation Peace River Regional Reservoir
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 12 O U R O P P O R TU N I TY Ke y Mar ke t T r e nds US$24 Climate c hange , Ur banization, Ge opolitic s and br e akthr ough te c hnology Str ate gic Gr owth Oppor tunitie s Trillion TOTAL SPEND IN THE NEXT DECADE US$2 Trillion ADDRESSABLE ENGINEERING AND DESIGN SPEND COASTAL ECOSYSTEM SMART CITIES AND ENERGY 1) United Nations by 2030 RESILIENCE RESTORATION URBAN PLACES REMIX 2) Navigant Research by 2030 3) IEA by 2025 US$300B 1 US$9,000B 1 US$1,700B 2 US$13,040B 3
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 13 O U R S TR A TE G Y T o gr ow and dive r sify sustainably for the be ne fit of our c lie nts, e mploye e s and shar e holde r s. We will do this through Strong execution, efficient operations, and disciplined capital allocation while delivering a great client experience. We will measure our success through Strong earnings per share growth, improved returns on invested capital, balance sheet stability, employee engagement and client satisfaction.
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 14 Our 2022 T ar ge ts Ruwais Marina District, Rumais, Abu Dhabi, UAE ADJUSTED ADJUSTED RETURN ON NET REVENUE EBITDA MARGIN EARNINGS PER SHARE INVESTED CAPITAL >10% 16-17% >11% >10% CAGR OF NET REVENUE CAGR
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 15 Bhote Koshi Hydropower Project Bhoti Koshi River, Sindhulpalchok District, Nepal Capital Alloc ation
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 16 W E A R E D R IVEN Capital alloc ation str ate gy has e volve d TO ACHIEVE 25 - 30% Mor e than $500M Capital Returned to Shareholders DIVIDEND PAY OUT RATIO Re turne d to share ho lde rs sinc e 2010 61.3 >11% ($ millions) Share Repurchases 63.9 Dividends ADJUSTED EPS CAGR 55.5 46.1 74.7 >10% 43.3 38.3 33.6 29.8 4.9 20.6 18.2 14.4 11.1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 3-year plan RETURN ON INVESTED CAPITAL BY 2022 Dividend initiated Stock option program cancelled Significant Events TSR adopted as a long-term incentive plan metric Continued focus on disciplined capital allocation: Moderated growth CAGR; commitment to more rigorous pursuit of small & medium sized acquisitions
E X C E L L E N C E I N N O V A T I O N P E O P L E G R O W T H 17 Our c apital alloc ation philosophy F o c use d o n ac hie ving the be st risk adjuste d re turns Operating cash flow Our core Maintaining a strong Sustaining CapEx Base dividend commitments balance sheet Excess Cash Flow Competing capital Growth Share buyback for the best risk adjusted returns Organic and Acquisitions innovation EPS Growth
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