Q 1 2 0 2 0 Q1 2020 Earnings Presentation May 7, 2020 Joint Venture with Snøhetta Temple University – Charles Library Philadelphia, Pennsylvania, USA Photo credit: Michael Grimm 1
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 Q 1 2 0 2 0 actual future results to differ materially from the targets and expectations expressed. For a discussion of risk factors and non-IFRS measures, see our Q1 2020 Management’s Discussion and Analysis and Financial Statements which are available on SEDAR, EDGAR, and stantec.com. 2
Agenda Gord Johnston Opening Remarks Q1 Operational Performance Theresa Jang Q1 2020 Financial Performance Q 1 2 0 2 0 Gord Johnston COVID-19 Key Drivers Theresa Jang Guidance & Liquidity Discussion Gord Johnston Concluding Remarks 3
Values-Based Response to COVID-19 We put people first We are better together We do what is right We are driven to achieve Culture of safety Moved people home Responding to Innovate and changing workloads commercialize solutions Serving Q 1 2 0 2 0 our clients Pandemic response Adapting to IT and business New product offerings plan continuity systems client needs Safeguarding shareholder value Enhanced services Significantly reduced Teams remain discretionary spending Protecting the health strongly connected of our people Keeping our people and communities safe while remaining connected and delivering innovative solutions to our clients’ challenges 4
Net Revenue - Organic Growth Across All Geographies 5.7% Net revenue growth driven by: 4.2% organic growth and Q 1 2 0 2 0 UNITED STATES CANADA GLOBAL 1.4% acquisition growth 600 Q1 20 Q1 19 500 ($ millions) 400 3.7% 300 Increase in gross margin 200 100 0 Organic 5.7% 1.8% 4.0% growth Q1 net $509M $276M $170M revenue 5
Net Revenue - Organic Growth Across All Businesses Q 1 2 0 2 0 INFRASTRUCTURE BUILDINGS WATER ENVIRONMENTAL ENERGY & SERVICES RESOURCES 300 Q1 20 Q1 19 200 ($ millions) 100 0 Organic 1.5% 1.0% 5.7% 6.3% 10.5% growth Q1 net $261M $219M $194M $137M $145M revenue 6
United States 5.7% organic growth in Q1 • Driven by: • Water with the commencement of several large projects and continuation of existing programs • Buildings with robust activity from Industrial, Commercial, Retail, and Q 1 2 0 2 0 Civic sectors Martin County, Florida Substation • Mining as a major project ramped up Lake Mary, Florida • Environmental Services and Power & Gross & Net Revenue Q1 20 Dams as renewable, hydropower, and $800 dam projects advanced Net revenue growth 6.6% ($ millions) $600 • Partially offset by: $400 Organic net revenue growth 5.7% • Infrastructure due to localized $509 $477 challenges on certain community $200 Backlog ($ millions) $2,875 development projects $0 Q1 20 Q1 19 Gross Revenue Net Revenue 7
Canada 1.8% organic growth in Q1 • Driven by: • Environmental Services and Oil & Gas due to Trans Mountain Expansion Pipeline ramp up • Transportation which benefitted from light-rail transit projects in Montreal, Q 1 2 0 2 0 Edmonton, and Ontario University of Manitoba Museum Phase II • Partially offset by: Winnipeg, MB, Canada • Retraction in Community Gross & Net Revenue Q1 20 Development and Water on slower $800 economic activity in certain regions Net revenue growth 1.8% ($ millions) $600 • Retraction in Buildings as projects wound down in the Commercial, $400 Organic net revenue growth 1.8% Health Care, and Airport sectors $200 $276 $271 Backlog ($ millions) $1,089 $0 Q1 20 Q1 19 Gross Revenue Net Revenue 8
Global 4.0% organic growth in Q1 • Driven by: • Strong performance in the UK Infrastructure business from improved market conditions • Ramp up of water projects in the Middle East, Australia, and New Q 1 2 0 2 0 Zealand markets while remaining steady in the UK Center Parcs, Longford Forest University of Manitoba Museum Phase II County Longford, Ireland Winnipeg, MB, Canada • Partially offset by: Gross & Net Revenue Q1 20 • Large project wind-downs in Power & $800 Dams Net revenue growth 9.4% ($ millions) $600 • Lower level of activity in our European Environmental Services $400 Organic net revenue growth 4.0% business $200 Backlog ($ millions) $762 $170 $156 $0 Q1 20 Q1 19 Gross Revenue Net Revenue 9
Backlog at March 31, 2020 11% Growth from Dec. 31, 2019 $4.7 B 5.9% Q 1 2 0 2 0 gross revenue Organic growth from Dec. 31, 2019 backlog 12 Months of work United States Canada Global 10
Q 1 2 0 2 0 Q1 2020 Financial Performance International Ave Pedestrian Realm Calgary, Alberta, Canada 11
Q1 2020 Results Net Revenue & Organic Growth ($ millions, %) 7.4% 5.3% 4.2% Q1 20 Q1 19 Change 2.5% 2.3% % Year- (In millions of Canadian dollars, % of Net % of Net over-year except per share amounts and percentages ) $ Revenue $ Revenue change $954 $953 $955 Net revenue 955.2 100.0 904.1 100.0 5.7 $904 $901 Gross margin 488.5 54.0 3.7 506.7 53.0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Administrative and marketing expenses 367.3 38.5 357.1 39.5 2.9 Q 1 2 0 2 0 EBITDA from continuing operations (1) Adjusted EBITDA and Margin 118.6 12.4 132.2 14.6 (10.3) ($ millions, %) Net income from continuing operations 44.9 5.0 (34.3) 29.5 3.1 16.7% 15.8% 15.2% 14.6% 14.1% Diluted earnings per share (EPS) from $0.26 $0.40 (35.0) continuing operations Adjusted EBITDA from continuing operations (1) 139.7 14.6 127.1 14.1 9.9 Adjusted net income from continuing operations (1) 54.3 5.7 50.3 5.6 8.0 $159 $145 $143 $140 $127 Adjusted diluted EPS from continuing operations (1) $0.45 8.9 $0.49 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 (1) EBITDA, adjusted EBTIDA, adjusted net income, and adjusted diluted EPS are non-IFRS measures (discussed in the Definitions section of Stantec's 2019 Annual Report and Q1 2020 Management's Discussion and Analysis). 12
Balance Sheet Strength Net Debt to Adjusted EBITDA (1) (TTM) Net debt to adjusted EBITDA (1) 2.5 2 1.3x at March 31, 2020 1.5 1 Target Range 0.5 1.0 - 2.0x Q 1 2 0 2 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Days Sales Outstanding Days Sales Outstanding 95 90 86 days at March 31, 2020 85 80 Target 90 days 75 70 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 (1) Net debt to adjusted EBTIDA and days sales outstanding are non-IFRS measures. 13 (discussed in the Definitions section of Stantec's 2019 Annual Report and Q1 2020 Management's Discussion and Analysis).
Liquidity and Capital Allocation Free Cash Flow (1) ($ millions) (Comparisons to Q1 2019) • 38% improvement in free cash outflow (1) $204 $115 $94 • 59% decrease in capital expenditures ($85) ($138) • >$250 million in undrawn credit capacity Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q 1 2 0 2 0 Cash Flow from Continuing Operations Capital Returned to Shareholders (millions of Canadian dollars) Q1 20 Q1 19 ($ millions) Inflow (Outflow) Dividends Share buy backs Operating (45.4) (88.5) Investing (20.6) (98.2) $33 $17 Financing (24.2) 62.2 $12 $12 Net (90.2) (124.5) $16 $16 $17 $16 $15 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 (1) Free cash (out)flow is defined as operating cash flows less capital expenditures and net payment of lease obligations. 14
Q 1 2 0 2 0 2020 Outlook Inova Mather Proton Therapy Center Fairfax, VA, USA 15
Key Drivers by Business Operating Unit % of Net COVID-19 Business Revenue Key Drivers Impact Operating Unit (Q1 2020) ▲ Multi-year frameworks for water utilities in UK and AUS; acceleration of UK AMP contract awards Less 20% ▲ Likely to benefit if governments implement stimulus programs Water Impacted ▲ Investment drivers – climate change, water availability, sustainability. ▲ Majority of projects are continuing as “essential” aside from slowdown in community development 28% ▲ Likely to benefit if governments implement stimulus programs Infrastructure Q 1 2 0 2 0 Degree of Impact ▬ Investment drivers – state of good repair, urbanization, transportation, mass transit, etc. ▲ Actively assisting healthcare institutions and government agencies in addressing COVID-19 ▲ Post COVID-19 requirements for workplace, education and healthcare environments 23% Buildings ▼ Decrease in commercial and hospitality projects ▬ Investment drivers – healthcare, remote education / office working, connectivity ▲ Opportunities to develop greenfield sites will increase post COVID-19, renewable energy surge Environmental 14% ▼ Largely funded by private sector: energy & resource, industrial sector and land development Services ▬ Investment drivers – environmental stewardship as a public priority in most jurisdictions ▲ Midstream projects are continuing More Energy & 15% ▼ Upstream oil & gas projects delayed due to price of oil; <1% of Q1 net revenue Impacted Resources ▬ Investment drivers – commodity prices, climate change, energy transition, green policies Public sector revenue >50% | Variable fee revenue >50% 16
Recommend
More recommend
