Stantec Reports First Quarter 2016 Results and Dividend

With contributions from strategic acquisitions, strong organic performance in its Buildings and Infrastructure business operating units, and improving performance in its US operations, Stantec achieved good overall revenue growth in the first quarter of 2016. Results were negatively impacted by a decrease in gross margin and an increase in administrative and marketing expenses due to acquisition-related costs.

“Our growing presence in the United States and recent public support of infrastructure development benefited our Buildings and Infrastructure business operating units, which led our Company in revenue growth,” says Bob Gomes, Stantec president and chief executive officer. “And with the addition of recently acquired companies—including the significant MWH Global acquisition announcement—we look forward to expanding the breadth of our experience and delivering a broader range of services around the world.”

During the quarter, Stantec continued to execute its acquisition strategy by welcoming Austin, Texas-based Bury Inc. and by signing a definitive agreement to acquire Chicago, Illinois-based VOA Associates Inc. The companies will further strengthen Stantec’s presence in the United States regional operating unit, which achieved a 26.3% increase in gross revenue in Q1 16 over Q1 15. Subsequent to the quarter, Stantec acquired MWH Global, the 6,800-person Broomfield, Colorado-based world leader in water and infrastructure. This acquisition is the largest in Stantec’s history and will result in the Company’s water practice becoming one of the largest in the world. The addition of MWH Global expands Stantec’s presence into new geographies around the world and adds new top-tier global capabilities in dams and hydropower to the Company’s overall portfolio of services.

The MWH Global acquisition and recent federal government infrastructure spending announcements bode well for Stantec’s Infrastructure business operating unit, which achieved strong organic gross revenue growth of 8.6% when comparing Q1 16 to Q1 15. Growth was primarily due to opportunities in the Transportation sector. The rebounding US economy and Stantec’s strategic North American market position led to increased opportunities in major light rail transit, roadway, and bridge projects. For example, as part of the development of a new rail trail, Stantec was recently awarded the design services for the rehabilitation of two historic stone-arch bridges. The structures, each more than 150 years old, are part of the Twin Cities Rail Project, which will transform an abandoned rail corridor into a recreational trail connecting the cities of Leominster and Fitchburg in Massachusetts.

The Buildings business operating unit achieved organic revenue growth of 5.1% when compared to the same quarter last year. The majority of revenue was generated in the Education, Healthcare, and Commercial sectors. Stantec also created a Civic sector in response to the growing urbanization trend in cities across North America. Stantec has already secured work in this sector. The Company recently secured a master service agreement as architect of record for all of Cadillac Fairview Corporation’s major retail and office buildings throughout British Columbia and in other locations in western Canada.

By contrast, low commodity prices continue to impact the Energy & Resources and Environmental Services business operating units, which retracted quarter over quarter by 35.2% and 6.4% respectively. Throughout the decline in the oil and gas sector, Stantec effectively managed cost margins and maintained strong client relationships. The Company’s strong presence in the energy sector continued to result in project wins. Stantec was recently awarded civil, structural, and electrical engineering design services for the transmission infrastructure, substations, and underground collector systems associated with two 50-megawatt ground-mount solar farms in Ontario. The Company also recently won a project for the proposed Aurora liquefied natural gas export terminal off Digby Island, southwest of Prince Rupert, British Columbia. This project involves completing the marine geotechnical investigation to evaluate the soil and rock conditions for the marine offload facility and main ship-loading jetty.

Additional Company Activity
On May 11, 2016, Stantec declared a cash dividend of $0.1125 per share, payable on July 14, 2016, to shareholders of record on June 30, 2016.

Stantec recently published its 2015 Sustainability Report. Prepared in accordance with the internationally recognized Global Reporting Initiative’s G4 framework, the report shares Stantec’s ongoing commitment to social, environmental, and economic sustainability; addresses the Company’s sustainability performance for fiscal year 2015; and outlines its forward-looking plans for 2016. It also fulfills Stantec’s commitment to reporting on the United Nations Global Compact’s 10 principles of sustainability and corporate citizenship. The report is available at www.stantec.com/about-us/sustainability.html.

Conference Call and Company Information
Stantec’s first quarter conference call—to be held Thursday, May 12, at 2:00 PM MDT (4:00 PM EDT)—will be broadcast live and archived in the Investors section ofwww.stantec.com. Financial analysts wanting to participate in the earnings conference call are invited to call 1-800-499-4035 and provide the operator with confirmation code1458024.

Stantec’s Annual General Meeting of Shareholders will be held on Thursday, May 12, 2016, at 10:30 AM MDT (12:30 PM EDT) at Stantec Centre, 10160 – 112 Street NW, Edmonton, Alberta.

Stantec’s Investor Day will be held on June 2, 2016, in Boston, Massachusetts. Stantec executives will share their insight about the Company’s performance, strategy, and outlook with the financial community. The presentation will be recorded and archived in its entirety in the Investors section.

About Stantec
We’re active members of the communities we serve. That’s why at Stantec, we always design with community in mind. 

The Stantec community unites approximately 22,000 employees working in over 400 locations across six continents. We collaborate across disciplines and industries to bring buildings, energy and resource, environmental, and infrastructure projects to life. Our work—engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics, from initial project concept and planning through design, construction, and commissioning—begins at the intersection of community, creativity, and client relationships.

Our local strength, knowledge, and relationships, coupled with our world-class expertise, have allowed us to go anywhere to meet our clients’ needs in more creative and personalized ways. With a long-term commitment to the people and places we serve, Stantec has the unique ability to connect to projects on a personal level and advance the quality of life in communities across the globe. Stantec trades on the TSX and the NYSE under the symbol STN. 

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