Stantec posts revenues of $1.36 billion in Q2 on back of consulting services

14 August 2018 Authored by Consulting.ca

Canadian engineering consultancy released its second quarter 2018 results last week. The company’s consulting services division spurred on growth, while its construction services division was more of a financial drag.

Founded in 1954, Edmonton-based Stantec is one of the world’s largest design and engineering consultancies, offering services in architecture, interior design, engineering, environmental science, and project management. The firm had gross revenues of $5.14 billion in 2017, and employs over 22,000 people across over 400 offices worldwide.

Stantec recently released its second quarter 2018 results: gross revenues grew 3% from Q2 2017, reaching $1.36 billion, while net revenues grew 2.2% to $908 million. Growth was driven by the firm’s Consulting Services business, which realized 4.5% organic net revenue growth over Q2 2017. The Energy & Resources business operating unit saw especially explosive gains, achieving 32.4% net organic growth.

Consulting Services - Canada outperformed its US counterpart, posting 6.9% organic net revenue growth in comparison to the US division’s 3.3% growth. Meanwhile, Consulting Services - Global had 3.3% net organic revenue growth, mostly due to new projects in the Water and Mining units.Stantec posts revenues of $1.36 billion in Q2 on back of consulting servicesHowever, delays and performance issues in legacy waste-to-energy projects in the UK and legacy hard-bid (locked-in prices on public contracts) and design-build projects in the US negatively impacted results in the Construction Services business. As such, Stantec had negative revenues of $16.3 million on UK waste-to-energy projects, $5.4 million on a US design-build contract, and $3 million on legacy US hard-bid projects.

Stantec had vastly expanded its UK operations with the 2016 acquisition of MWH Global, which employed thousands of British staff. The firm’s UK footprint was further expanded with the purchase of environmental advisory specialist ESI Consulting earlier this year.

In April, Stantec announced a strategic review of its Construction Services business, wherein it will look at different strategies to optimize the value of the business.

“Our Consulting Services business continues to perform well. We’re focusing on our long-term strategy, meeting targets, growing organically, and reducing costs,” commented Stantec president and chief executive officer, Gord Johnston. “Though we believe that our core Construction Services business is solid, several legacy projects continued to negatively impact results.”

“We have placed a hold on hard-bid projects outside our area of expertise, we are winding down our exposure to the UK waste-to-energy market, and we continue to make positive progress on our strategic review.”

During Q2 2018, Stantec made three notable acquisitions. The consultancy acquired New Zealand-based Traffic Design Group, a transportation engineering firm, Alberta-based energy firm Norwest Corporation, and Quebec-based engineering consultancy Cegertec.

Electricity in Nepal

In other Stantec news, the firm was recently selected as lead electricity transmission project consultant in a $630 million infrastructure project tasked with improving the supply of electricity to millions of consumers in Nepal. US government agency the Millennium Challenge Corporation (MCC) will provide $500 million for the project, while the Government of Nepal will foot $130 million. The project will aim to construct 300 km of transmission lines and three new substations.

Stantec will plan, design, and supervise the construction of the critical energy project. The project will be led by Stantec’s Washington, DC-based International Development Group (IDG), with support from the firm’s Canada-based Power group – which has deep experience with specialized high-voltage transmission lines and substations.

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