Quarterly Revenue up 20.2%, EBITDA up 20.7%, Backlog of $2.1B
CALGARY, Aug. 6, 2014 /CNW/ -Stuart Olson Inc. (TSX: SOX, SOX.DB) ("Stuart Olson" or the "Company") today announced financial results for
the second quarter of 2014 and declared a quarterly dividend of $0.12
per common share.
||Three months ended||Six months ended|
||June 30||June 30|
|$millions, except percentages and per share amounts||2014||2013||2014||2013|
Contract income margin
Net earnings (loss)
Net loss per common share
Dividends declared per share
||Jun. 30, 2014||Dec. 31, 2013|
Long-term debt (excluding current portion)
Convertible debentures (excluding equity portion)(1)||
(1) The convertible debentures are presented as a current liability as
at June 30, 2014; whereas, they|
were presented as a non-current liability as at December 31, 2013.
(2) If the convertible debentures were excluded from working capital,
adjusted June 30, 2014 working|
capital would have been $119.8 million (December 31, 2013 - $84.9
These financial results are presented in conformance with International
Financial Reporting Standards ("IFRS"). All figures are in Canadian
dollars unless otherwise noted. Certain financial and operational
measures referred to in this press release, including "contract income
margin", "EBITDA", "EBITDA margin", "backlog", and "working capital",
are not prescribed measures under IFRS. For a description of these
measures, see the "Non-IFRS Measures" section in Stuart Olson's
Management's Discussion and Analysis.
Second Quarter ("Q2") 2014 Overview
On May 22, 2014
, the Company changed its name from The Churchill
to Stuart Olson Inc.
, reflecting a strategic shift to being
a fully integrated construction services company.
Backlog of $2,108.7 million
as at June 30, 2014
remains strong and is
essentially unchanged from backlog of $2,116.2 million
at December 31,
The backlog includes $237.2 million
of new contract awards and net
increases in project scope awarded during the quarter. Backlog is made
up primarily of lower-risk contracts including 63% construction
management work and 22% cost-plus arrangements. Tendered (hard-bid)
work represents approximately 15% of the backlog.
Second quarter consolidated contract revenue increased 20.2% to $334.0
, from $277.8 million
in the second quarter of 2013.
Buildings Group revenue increased by 33.9% to $161.7 million
a record backlog of work, increased commercial and institutional
activity in B.C., Alberta
, and continued growth within the
industrial buildings branch.
revenue increased by 2.7% to $118.9 million
increased activity levels in Alberta's
•Commercial Systems Group
revenue increased by 25.9% to $58.9 million
supported by the start-up of a number of significant projects in
Consolidated contract income increased 8.5% to $28.2 million
in Q2 2013; consolidated contract income margin declined to
8.4% from 9.4%. Not meeting internal performance targets on certain
industrial projects was the key factor in the margin
change, as the group gains experience in the large and promising market
for commercial building construction on industrial sites.
Second quarter EBITDA increased 20.7% to $11.1 million
, from $9.2
in Q2 2013. The year-over-year improvement reflects increased
revenue together with stable EBITDA margin performance.
Second quarter net earnings were $nil ($nil per share on a fully diluted
basis), compared to net earnings of $0.5 million
per share on a
fully diluted basis) in the second quarter of 2013. The decline in
earnings primarily reflects improved operating performance in Q2 2014
being offset by a one-time loss on equipment sold by the Industrial
during the quarter. Adjusted to exclude non-recurring asset
disposals, second quarter 2014 net earnings would have been $1.4
(diluted earnings per share of $0.06
), while adjusted second
quarter 2013 net earnings would remain unchanged at $0.5 million
(diluted earnings per share of $0.02
Board of Directors declared a second quarter dividend of
per common share. The dividend will be paid on October 15, 2014
to shareholders of record on September 30, 2014.
The Company has a
dividend reinvestment plan in place; details are available on Stuart
"We executed a key piece of our business strategy in the second quarter
with the introduction of our new corporate name and rebranding," said
, Stuart Olson's
CEO. "The Stuart Olson
name is a
well-recognized and respected brand in the construction industry and
helps to position and identify us more clearly as an integrated
construction services company. We now have a critical piece of the
foundation in place to begin capitalizing on and combining the
strengths of our various business groups as part of our "One Team with
One Vision" strategy.
"Financially and operationally, our second quarter 2014 results were in
line with our expectations. We achieved meaningful increases in revenue
and EBITDA, together with stable EBITDA margins," added Mr. LeMay
"Overall, our performance and project execution continue to strengthen
and with a very strong $2.1 billion
backlog in place, we are well
positioned for the balance of 2014 and beyond."
Construction activity in Western Canada's
commercial and institutional
markets is expected to continue at a healthy pace, supported by the
region's strong economy. Demand from the industrial construction market
remains robust, although competition levels continue to be high.
With a large backlog predominantly comprised of lower-risk construction
management and cost-plus contracts, the Company has strong revenue
visibility going forward. On a full-year basis, management anticipates
that 2014 revenue will be higher than 2013, while EBITDA margin is
expected to remain consistent with, or slightly lower than, the level
achieved in 2013.
outlook for its three business groups is as follows:
•The Building Group's
second half 2014 revenue should significantly
exceed comparative amounts for 2013. EBITDA margin is expected to
modestly improve in the second half of 2014 as a number of projects
move towards completion with risk contingencies converted into
Revenue from the Industrial Group
is expected to modestly exceed 2013
levels at slightly higher EBITDA margins compared to 2013.
•The Commercial Systems Group
anticipates year-over-year revenue growth
in 2014, along with marginally lower EBITDA margins as a result of
project mix and timing.
Going forward, the Company will continue to assess its assets to ensure
they align with the business strategy. This will include reviewing
acquisition opportunities, particularly those that support the
objective of becoming a self-performing general
Management continues to evaluate alternatives with respect to
refinancing our $86.3
convertible debentures that are due in June
There are several alternatives available to us and we are
confident in our ability to execute the refinancing in the near-term.
will hold a conference call and webcast to discuss its
second quarter 2014 results tomorrow, August 7, 2014
at 6:00 a.m.
Eastern). The webcast will be broadcast live
and will also be available for replay in the Presentations & Events
subsection under Investor Relations on our website at www.stuartolson.com
. Financial analysts and institutional investors who wish to ask
questions during the conference call are invited to call 1-888-390-0546
) or 1-587-880-2171 (outside Canada
). For those
unable to participate on the live call, a replay will be made available
until Thursday, August 28, 2014
, by dialing 1-888-390-0541 (Canada
) or 1-416-764-8677 (outside Canada
), pin 814970. The
public is invited to listen to the live conference call or the replay.
About Stuart Olson Inc.Stuart Olson Inc.
provides building construction, commercial and
industrial electrical contracting, earthmoving and industrial
insulation services to an array of public and private sector
clients. The Company operates office locations throughout British
. Stuart Olson
common shares and convertible debentures are listed on the Toronto
under the symbols "SOX" and "SOX.DB", respectively. www.stuartolson.comForward Looking Information
This press release contains certain statements that may constitute
forward-looking information within the meaning of applicable securities
laws. This forward-looking information includes, without limitation,
the statements within the section entitled "Outlook" pertaining to
expected industry growth, margin growth or maintenance, project risk,
revenue growth, project status, project fees and management's strategy
with respect to the repayment of the outstanding convertible
debentures. Often, but not always, forward-looking information can be
identified by the use of such words as "may", "will", "expect",
"believe", "plan", "intend", "estimate", "outlook", "forecast",
"should", "anticipate" and other similar terminology, including
statements concerning possible or assumed future results.
Forward-looking information is based on management's reasonable
assumptions, analysis and estimates in respect of its experience and
perception of trends, current economic conditions, government policies
and expected developments, as well as other material factors that it
considers to be relevant at the time of making such statements.
The forward-looking information in this press release is included solely
for the purpose of assisting investors in understanding the Company's
financial position and the results of its operations as at the date
hereof. By its nature, forward-looking information involves known and
unknown risks and uncertainties, which give rise to the possibility
that management's assumptions, analysis and estimates will be incorrect
and that the Company's anticipated results will not be achieved.
Although the Company believes that the statements with respect to
forward-looking information are reasonable and current, such statements
should not be interpreted as a guarantee of future performance or
results, and will not necessarily be an accurate indication of whether
or not such results will be achieved. Forward-looking information is
necessarily subject to a number of factors that may cause actual
results to differ materially from those results implied by the
expectations suggested by such information. Those factors include,
without limitation, the risks and uncertainties described in the
Company's Annual Information Form filed with the securities regulatory
authorities in Canada
under the Company's profile at www.sedar.com
Readers are encouraged to consider the foregoing risks and other
factors carefully when evaluating the forward-looking information and
are cautioned not to place undue reliance upon such information when
making investment decisions.
The forward-looking information in this press release is current to the
date hereof, and is subject to change following such date. While the
Company may elect to do so, unless required by applicable law, it
undertakes no obligation to update this information to reflect new
information or circumstances at any particular time.
SOURCE Stuart Olson Inc.