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

Re fine .

Q1 2018 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 4th

Consecutive quarter of

• verall gross and net
• rganic revenue growth

Focused on 2018 strategic plan ACQUISITION ESI Consulting Ltd. ACQUISITION Occam Engineers Inc. Cost reductions Office consolidations Improved utilization

5

Subse que nt E ve nts

Letter of Intent Norwest Corporation ACQUISITION Traffic Design Group Limited (TDG) Letter of Intent Cegertec Initiated strategic review Construction Services

6

Financial Performance

7

IF RS 15

Retained Earnings

(In millions of Canadian dollars)

Consulting Services Construction Services Consolidated Contracts with multiple goods or services

• (2.7)

(2.7) Change orders and claims (3.0) (2.1) (5.1) Liquidated damages

• (18.0)

(18.0) Significant financing component 1.7 0.5 2.2 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

$5.0 billion gross revenue backlog

$3.8 billion Consulting Services $1.2 billion Construction Services

8

Q1 18 F inanc ial Re sults

(In millions of Canadian dollars, except percentages)

Quarter Ended March 31, 2018 Quarter Ended March 31, 2017 Total Change Change Due to Net Acquisitions (Divestitures) Change Due to Foreign Exchange Change Due to Organic Growth (Retraction) %

• f Organic

Growth (Retraction) 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%

Net Revenue by Reportable Segments & Business Operating Units

9

Q1 18 F inanc ial Re sults

Q1 18 Q1 17 Consulting Services Buildings 53.2% 55.1% Energy & Resources 51.8% 53.3% Environmental Services 56.7% 56.3% Infrastructure 54.2% 53.5% Water 56.5% 58.9% Consulting Services - Total 54.5% 55.5% Construction Services 25.1% 33.9% Consolidated 52.2% 53.9%

Gross Margin by Business Operating Units

10

Q1 18 F inanc ial Re sults

Q1 18 $ Q1 17 $

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.

(In millions of Canadian dollars, except for percentages)

11

Q1 18 $ Q1 17 $

Gross revenue 1,281.7 1,276.3 Net revenue 876.6 870.8 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

Q1 18 F inanc ial Re sults

(1) Non-IFRS measure defined in our 2017 Annual Report.

(In millions of Canadian dollars, except for per share amounts)

12

Q1 18 F inanc ial Re sults

13

F ir st Quar te r Pr

• gr

e ss on 2018 Annual T ar ge ts

Consulting Se r vic e s Constr uc tion Se r vic e s T

• tal

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 expenses as a % of net revenue 41% to 43% 42.6% 25% to 27% 25.7% 41% to 43% 41.3% 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 (note 2) EBITDA is a non-IFRS measure (discussed in the Definition section of our 2017 Annual Report)

Met or performed better than target Did not meet target

14

Ope r ational Highlights

15

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

Ca na da

C O N S U L T I N G S E R V I C E S

Q1 18

Organic gross revenue growth

7.9%

Organic net revenue growth

4.3%

$0 $50 $100 $150 $200 $250 $300 $350 Q1 17 Q1 18 Gross Revenue Net Revenue

millions (C$)

Vancouver Convention Centre Vancouver, British Columbia

16

Growth in Environmental Services Increased activity in private and public sector projects Organic growth in Mining New projects in WaterPower & Dams

Q1 18

Organic gross revenue growth

0.9%

Organic net revenue growth

0.9%

$0 $100 $200 $300 $400 $500 $600 $700 Q1 17 Q1 18 Gross Revenue Net Revenue

millions (C$)

Unite d Sta te s

Stantec Arlington Virginia Office Arlington, Virginia

C O N S U L T I N G S E R V I C E S

17

Organic growth driven by Mining in Latin America and Water in the Middle East Consistent revenue from UK AMP6

Q1 18

Organic gross revenue growth

3.6%

Organic net revenue growth

6.3%

$0 $20 $40 $60 $80 $100 $120 $140 $160 Q1 17 Q1 18 Gross Revenue Net Revenue

millions (C$)

Globa l

Dubai Mall UAE Dubai, United Arab Emirates

C O N S U L T I N G S E R V I C E S

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

Constr uc tion Se r vic e s

$0 $50 $100 $150 $200 $250 $300 Q1 17 Q1 18 Gross Revenue Net Revenue

millions (C$) Q1 18

Organic gross revenue retraction

(3.7% )

Organic net revenue growth

2.3% Transportation Construction Fort Saskatchewan, Alberta

19

$5.0 billion gross revenue backlog

Re c e nt pr

• je c t wins

Delivering the concept design for raising the Warragamba Dam west of Sydney, Australia, to improve flood mitigation in the downstream community 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 Designing the Hampstead Bypass and US 17 highway improvements in North Carolina Providing engineering services for the $1.9B Long Island Rail road rail modernization project 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)

$3.8 billion Consulting Services $1.2 billion Construction Services

20

2018 Outlook Canada United States Global

Federal and provincial increased infrastructure spending Modest improvement in energy and resources sector Moderate slow down in housing market Economic growth

Overall

Federal and state increased infrastructure spending Growth in non-residential construction Growth in housing market Economic growth resulting from tax reform New opportunities for APD Long-term target of 15% gross revenue CAGR Organic gross revenue growth in the low- to mid-single digits Strong backlog and client relationships Expand global footprint into new markets

21

2017 Sustainability Report

Now available on stantec.com

22

Q&A