Page 1

Stantec Stantec reports second quarter 2021 adjusted diluted earnings of $ 0.62 per share , a 19.2 % increase from the prior year , and increases 2021 earnings guidance EDMONTON , Alberta and NEW YORK , Aug. 04 , 2021 ( GLOBE NEWSWIRE ) -- Stantec ( TSX , NYSE : STN ) , a global leader in sustainable design and engineering , today reported its results for the three and six month periods ended June 30 , 2021. Unless otherwise indicated , financial figures are expressed in Canadian dollars , and comparisons are to the prior periods ended June 30 , 2020 . Stantec delivered another quarter of strong earnings , with the transition to revenue growth on a constant currency basis enhanced by solid project execution and operational performance . Based on the strength of its performance to date and confidence in the continued execution of its strategic plan , Stantec is raising earnings guidance for the year , with full year adjusted diluted earnings per share in comparison to 2020 now expected to achieve 4 % to 7 % growth compared to the previous guidance of low to mid - single digit ( 1 % to 5 % ) growth . " 2021 continues to unfold largely as we expected with strong organic growth in Canada and Global this quarter offsetting a slower start to the US turnaround . We see clear evidence of building momentum in all our key markets , particularly in the US where we have achieved 6.4 % organic backlog growth through the first half of this year . Beyond wins recorded in backlog , we have received award notifications for approximately $ 1.2 billion in gross revenue , more than half of which is in the US . While these notified awards can take months or longer to filter into our backlog , especially for large multi - year frameworks , their sheer magnitude gives us every reason to be confident in our outlook , " said Gord Johnston , President and CEO . " As our results continue to demonstrate , we are managing every aspect of our business to deliver organic revenue growth , increased earnings , and a strong balance sheet while continuing our disciplined pursuit of growth through acquisition . " Q2 2021 Highlights Q2 2021 adjusted diluted earnings per share increased 19.2 % to $ 0.62 . Revenue generation continues to strengthen as the world begins to emerge from the pandemic . Increased earnings were achieved through strong project execution , disciplined discretionary spending , the ongoing execution of the 2023 Real Estate Strategy , lower interest expenses , and reduced taxes . Lower interest expenses resulted from improved working capital management and the issuance of lower interest Senior Notes in October 2020 , while lower tax expense is attributed to the implementation of tax optimization strategies . Overall , margins have improved considerably on a quarter - over - quarter basis with a 1.1 % increase in adjusted EBITDA margin to 16.1 % and a 1.6 % increase in adjusted net income margin to 7.7 % . The Canadian dollar has strengthened considerably relative to the US dollar , with the average exchange rate shifting from $ 1.39 to $ 1.22 on a quarter - over - quarter basis ( $ 1.37 to $ 1.25 year to date ) . This has reduced Q2 net revenues by $ 60.9 million ( $ 90.5 million year to date ) . Stantec further estimates that the impact to adjusted EBITDA , adjusted net income and adjusted diluted EPS was approximately $ 8.2 million , $ 4.0 million and $ 0.04 , respectively ( approximately $ 11.6 million , $ 5.5 million , and $ 0.05 year to date ) . • Net revenue , on a constant currency basis , increased 2.2 % . This was driven by acquisitions and modest organic net revenue growth of 0.4 % without the impact of Stantec's descoped role on the Trans Mountain Expansion Project ( TMEP ) , reflecting very strong organic growth in Canada and Global , while the US recovery is off to a slower start . • Gross margin , as a percentage of revenue , increased 1.7 % from 51.5 % to 53.2 % , mainly due to strong project performance and shifts in project mix . • Adjusted EBITDA increased 2.9 % to $ 146.6 million , and adjusted EBITDA margin increased to 16.1 % . • Net income increased 20.2 % to $ 63.2 million and diluted EPS from continuing operations increased 21.3 % to $ 0.57 , mainly due to reductions in net interest , depreciation , administrative and marketing , and other expenses . • Adjusted net income increased 20.6 % to $ 69.6 million , representing 7.7 % of net revenue . • Contract backlog was $ 4.6 billion at June 30 , 2021 , a 4.3 % increase from December 31 , 2020 as a result of 6.0 % organic growth , 0.9 % acquired growth , offset by a -2.6 % foreign exchange impact . Organic backlog growth was achieved in the Buildings , Energy & Resources and Environmental Services business units . Both Energy & Resources and Environmental Services have achieved double - digit organic backlog growth of approximately 26 % since December 31 , 2020 , while Infrastructure and Water backlog remained relatively flat or retracted slightly . Contract backlog at June 30 , 2021 represents approximately 12 months of work . • Operating cash flows from continuing operations decreased 68.9 % to $ 78.2 million , reflecting the quarter - over - quarter change in revenues and corresponding cash receipts , including the effects of foreign exchange . As well , operating cash flows for the same period last year benefited from the deferral of income tax and other tax payments , which resulted from various pandemic relief programs . • Net debt to adjusted EBITDA ( on a trailing twelve - month basis ) at June 30 , 2021 was 0.9x , below the annual target range of 1.0x to 2.0x . • Days sales outstanding ( DSO ) was 76 days , an increase of one day from 75 days at December 31 , 2020 , and a six - day improvement from 82 days at June 30 , 2020 . • Consistent with its capital allocation strategy , Stantec repurchased 939,482 common shares under its normal course issuer bid ( NCIB ) during the quarter ( and year to date ) , for an aggregate price of $ 50.7 million .