Re fine . Earnings Presentation Cautionar y State me nt This - PowerPoint PPT Presentation

Q1 2018 Re fine . Earnings Presentation

Cautionar y State me nt 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 future results to differ materially from the targets and expectations expressed. For a discussion of risk factors and non-IFRS measures, see our 2017 Annual Report and Q1 2018 MD&A, which are available on SEDAR, EDGAR, and stantec.com.

3 Agenda Gord Johnston Highlights Dan Lefaivre Financial Performance Gord Johnston Operational Highlights Outlook

4 Q1 2018 Highlights 4 th Consecutive quarter of Cost reductions overall gross and net Office consolidations Focused on 2018 organic revenue growth Improved utilization strategic plan ACQUISITION ACQUISITION Occam Engineers Inc. ESI Consulting Ltd.

5 Subse que nt E ve nts Initiated strategic review Construction Services Letter of Intent ACQUISITION Letter of Intent Traffic Design Group Cegertec Norwest Corporation Limited (TDG)

6 Financial Performance

7 Retained Earnings Consulting Construction IF RS 15 Services Services Consolidated (In millions of Canadian dollars) Contracts with multiple goods or services - (2.7) (2.7) $5.0 billion Change orders and claims (3.0) (2.1) (5.1) gross revenue backlog Liquidated damages - (18.0) (18.0) $3.8 billion Consulting Services Significant financing component 1.7 0.5 2.2 $1.2 billion Construction Services Deferred contract costs - (0.3) (0.3) Total opening retained earnings impact (1.3) (22.6) (23.9) IF RS 9 • New classification rules for financial assets and accounting rules for debt modifications • $2.7 million unrealized fair value loss on equity investments held for self-insured liabilities in Q1 18

8 Net Revenue by Reportable Segments & Business Operating Units Q1 18 Quarter Quarter Change Due Change Change Due % F inanc ial Ended Ended to Net Due to to Organic of Organic March 31, March 31, Total Acquisitions Foreign Growth Growth 2018 2017 Change (Divestitures) Exchange (Retraction) (Retraction) (In millions of Canadian dollars, except percentages) Re sults Consulting Services Canada 258.9 248.5 10.4 (0.3) n/a 10.7 4.3% United States 439.4 453.8 (14.4) 1.3 (19.9) 4.2 0.9% Global 110.5 102.5 8.0 0.3 1.2 6.5 6.3% Total Consulting Services 808.8 804.8 4.0 1.3 (18.7) 21.4 Percentage growth (retraction) 0.5% 0.2% (2.4%) 2.7% Construction Services 67.8 66.0 1.8 - 0.3 1.5 Percentage growth (retraction) 2.7% - 0.4% 2.3% Total 876.6 870.8 5.8 1.3 (18.4) 22.9 2.6% Consulting Services Buildings 183.9 187.9 (4.0) 10.5 (5.1) (9.4) (5.0%) Energy & Resources 116.9 98.0 18.9 (0.3) (2.3) 21.5 21.9% Environmental Services 110.5 111.3 (0.8) 0.8 (1.9) 0.3 0.3% Infrastructure 217.4 219.5 (2.1) - (6.7) 4.6 2.1% Water 180.1 188.1 (8.0) (9.7) (2.7) 4.4 2.3% Total Consulting Services 808.8 804.8 4.0 1.3 (18.7) 21.4 Percentage growth (retraction) 0.5% 0.2% (2.4%) 2.7%

9 Gross Margin by Business Operating Units Q1 18 Q1 18 Q1 17 F inanc ial Consulting Services 53.2% 55.1% Buildings Re sults 51.8% 53.3% Energy & Resources 56.7% 56.3% Environmental Services 54.2% 53.5% Infrastructure 56.5% 58.9% Water 55.5% 54.5% Consulting Services - Total 33.9% 25.1% Construction Services 52.2% 53.9% Consolidated

10 Q1 18 Q1 18 Q1 17 F inanc ial $ $ (In millions of Canadian dollars, except for percentages) Re sults Administrative and marketing expenses (1) 41.3% 43.3% Positively impacted by:  Occupancy costs  Integration costs & discretionary spending  Utilization (1) As a % of net revenue.

11 Q1 18 Q1 17 Q1 18 $ $ (In millions of Canadian dollars, except for per share amounts) F inanc ial Gross revenue 1,281.7 1,276.3 Net revenue 876.6 870.8 Re sults Adjusted EBITDA (1) 90.4 89.9 Net income 36.8 (58.0) Adjusted net income (1) 47.8 45.8 Diluted EPS 0.32 (0.51) Adjusted diluted EPS (1) 0.42 0.40 Cash dividends declared per common share 0.1375 0.1250 (1) Non-IFRS measure defined in our 2017 Annual Report.

12 Q1 18 F inanc ial Re sults

13 F ir st Quar te r Pr ogr e ss on 2018 Annual T ar ge ts Consulting Se r vic e s Constr uc tion Se r vic e s T otal Target Results Target Results Target Results Gross margin as % of net revenue 53% to 55% 54.5% 30% to 33% 25.1% 52% to 54% 52.2% Administrative and marketing 41% to 43% 42.6% 25% to 27% 25.7% 41% to 43% 41.3% expenses as a % of net revenue EBITDA as a % of net revenue (note 1, 2) 11% to 13% 11.3% 7% to 9% (1.0%) 10% to 12% 10.3% Net income as a % of net revenue At or above 5% 4.2% (note 1) EBITDA as a percentage of net revenue is calculated as EBITDA, divided by net revenue Met or performed better than target (note 2) EBITDA is a non-IFRS measure (discussed in the Definition section of our 2017 Annual Report) Did not meet target

14 Ope r ational Highlights

15 C O N S U L T I N G S E R V I C E S Ca na da $350 millions (C$) $300 Q1 18 $250 Organic gross $200 7.9% revenue growth $150 $100 Gross Revenue Organic net 4.3% $50 revenue growth Net Revenue $0 Q1 17 Q1 18 Growth driven by private sector, especially Energy & Resources. Revenue growth in the healthcare industry in BC, Saskatchewan, and Ontario Won several projects in the midstream Oil and Gas business Growth in Infrastructure was driven by community development work Vancouver Convention Centre Vancouver, British Columbia

16 C O N S U L T I N G S E R V I C E S Unite d Sta te s $700 millions (C$) $600 Q1 18 $500 Organic gross $400 0.9% revenue growth $300 $200 Gross Revenue Organic net 0.9% $100 revenue growth Net Revenue $0 Q1 17 Q1 18 Growth in Environmental Services Increased activity in private and public sector projects Organic growth in Mining New projects in WaterPower & Dams Stantec Arlington Virginia Office Arlington, Virginia

17 C O N S U L T I N G S E R V I C E S Globa l $160 millions (C$) $140 Q1 18 $120 $100 Organic gross 3.6% revenue growth $80 $60 Gross Revenue $40 Organic net 6.3% revenue growth $20 Net Revenue $0 Q1 17 Q1 18 Organic growth driven by Mining in Latin America and Water in the Middle East Consistent revenue from UK AMP6 Dubai Mall UAE Dubai, United Arab Emirates

18 Constr uc tion Se r vic e s $300 millions (C$) Q1 18 $250 $200 Organic gross (3.7% ) revenue retraction $150 $100 Gross Revenue Organic net $50 2.3% revenue growth Net Revenue $0 Q1 17 Q1 18 Steady work on several major US water and wastewater treatment plant projects Ongoing construction activities for AMP6 Legacy project issues continue to impact UK operations Transportation Construction Fort Saskatchewan, Alberta

19 Delivering the concept design for raising the Warragamba Dam west of Sydney, Re c e nt Australia, to improve flood mitigation in the downstream community pr oje c t wins Providing engineering, geotechnical, surveying and other services for the Mid-Breton Sediment Diversion project, a key component of Louisiana’s master plan for a sustainable coast $5.0 billion gross revenue Designing the Hampstead Bypass and US 17 highway improvements in North Carolina backlog Providing engineering services for the $1.9B Long Island Rail road rail modernization $3.8 billion Consulting Services project $1.2 billion Construction Services Transforming tailings processing from Alberta Oil Sands for Titanium Corporation Serving as the Strategic Planning Partner for Yorkshire Water to support the AMP7 period (2020-2025)

20 2018 Outlook Canada United States Global Overall Federal and provincial Federal and state increased Economic growth Long-term target of 15% gross increased infrastructure infrastructure spending revenue CAGR Expand global footprint spending Growth in non-residential Organic gross revenue growth into new markets Modest improvement in construction in the low- to mid-single digits energy and resources sector Growth in housing market Strong backlog and client Moderate slow down relationships Economic growth resulting in housing market from tax reform New opportunities for APD

21 2017 Sustainability Report Now available on stantec.com

22 Q&A