Stuart Olson Reports First Quarter Results

First quarter contract revenue up 21% and adjusted EBITDA up 42%
Declares 29th consecutive quarterly dividend of $0.12 per common share
Dividend payout ratio improves to 41%

CALGARYMay 2, 2018 /CNW/ – Stuart Olson Inc. (TSX: SOX, SOX.DB.A) (“Stuart Olson” or the “Company”) today announced first quarter 2018 financial results, and declared its 29th consecutive quarterly dividend of $0.12 per common share.

“2018 is off to a good start as we delivered meaningful year-over-year improvements in contract revenue, adjusted EBITDA, adjusted free cash flow and net earnings. We also maintained our strong balance sheet leverage and liquidity metrics and reported a healthy dividend payout ratio of 41.3%,” said David LeMay, President and CEO of Stuart Olson.

“All three of our operating groups continue to actively bid on a robust pipeline of projects, which includes recurring maintenance, repair and operations opportunities and planned federal, provincial and municipal infrastructure spending. We are building momentum and continue to expect meaningfully higher adjusted EBITDA in 2018 as our streamlined, integrated organization continues its focus on operational excellence and geographic and sector diversification,” added Mr. LeMay.


Three months ended March 31

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Mar. 31, 2018

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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”, “adjusted EBITDA”, “adjusted EBITDA margin”, “backlog”, “working capital”, “adjusted free cash flow”, “adjusted free cash flow per share”, “dividend payout ratio”, “additional borrowing capacity”, “available liquidity” and “net long-term indebtedness to adjusted EBITDA”, are not prescribed measures under IFRS. For a description of these measures, see the “Non-IFRS Measures” section in Stuart Olson’s March 31, 2018 Management’s Discussion & Analysis.


  • For the three months ended March 31, 2018, consolidated contract revenue increased by 20.8% to $265.9 million, from $220.1 million in Q1 2017.
    • Industrial Group revenue increased by 34.5% to $83.9 million in Q1 2018. This $21.5 million improvement primarily reflects higher activity levels in most of the group’s end-markets, including increased revenue from oil sands maintenance repair and operations (“MRO”) work and power sector projects. Organic growth initiatives also contributed to the year-over-year revenue increase.
    • The Buildings Group generated revenue of $125.2 million in Q1 2018, similar to the $126.1 million achieved in Q1 2017.
    • Commercial Systems Group revenue climbed 56.7% to a quarterly record of $66.3 million. This $24.0 million increase was achieved as the group continued to benefit from the significant project awards it secured in 2017, including meaningful revenue from the group’s new Ontario market.
  • First quarter adjusted EBITDA increased 42.1% to $8.1 million (adjusted EBITDA margin of 3.0%), from $5.7 million (adjusted EBITDA margin of 2.6%) in Q1 2017. The improvement in adjusted EBITDA reflects higher revenue, partially offset by increased costs related to investments in organic growth initiatives and an increase in share-based compensation expense as a result of the increase in the Company’s share price in 2018.
  • Net earnings increased to $1.6 million (diluted earnings per share of $0.06), from a net loss of $0.2 million (diluted loss per share of $0.01) in the first quarter of 2017. This gain was largely driven by the improvement in adjusted EBITDA, partially offset by increased tax expense associated with stronger financial results.
  • The Company’s net long-term indebtedness to adjusted EBITDA ratio was 1.8x as at March 31, 2018, well below the 3.2x recorded at March 31, 2017. The improvement reflects the significant increase in last twelve-month adjusted EBITDA, combined with the use of adjusted free cash flow and cash collected from working capital to repay indebtedness under the Company’s Revolver.
  • Stuart Olson ended the first quarter of 2018 with a cash balance of $32.0 million and additional borrowing capacity of approximately $122.3 million, providing the Company with combined available liquidity of $154.3 million. This is similar to the combined available liquidity of $153.9 million as at December 31, 2017, which included $31.7 million of cash and $122.2 million of additional borrowing capacity.
  • Adjusted free cash flow grew to $5.6 million ($0.20 per share) in Q1 2018, from $3.7 million ($0.14 per share) in the same quarter last year. Higher year-over-year adjusted EBITDA, reduced capital expenditures and lower tax payments were the key factors in this $1.9 million ($0.06 per share) improvement. The positive impact of these factors was partially offset by a prior-year benefit, which did not repeat at the same scale in the first quarter of 2018. The benefit relates to a change in provisions due to ordinary warranty costs recognized on two large projects that reached substantial completion in Q1 2017.
  • The Company’s dividend payout ratio improved to 41.3% as at March 31, 2018.
  • Backlog of $1.6 billion as at March 31, 2018 consisted of approximately 79.3% low-risk contracts, including 43.5% construction management work and 35.8% cost-plus arrangements. Tendered (hard-bid) work represented approximately 18.7% and design build contracts 2.0% of the backlog.
    • Subsequent to quarter-end, Stuart Olson announced it was awarded approximately $125.0 million in new contracts. The Buildings Group was awarded a project to construct a large agricultural facility in Western Canada, as well as a strategic win for the group to widen a highway in British Columbia. The Industrial Group was awarded several insulation and electrical projects in the petrochemical, oil sands and power sectors. The Company will add approximately $100.0 million of these awards to backlog in the second quarter of 2018, with the balance having been added in the first quarter.
  • On May 2, 2018, the Board of Directors declared a quarterly common share dividend of $0.12 per share. The dividend is designated as an eligible dividend under the Income Tax Act (Canada) and is payable July 17, 2018 to shareholders of record on June 29, 2018.
    • Since the introduction of a quarterly dividend in June 2011Stuart Olson has consistently paid $0.12 per share for 29 consecutive quarters. Including the dividend declared today, this represents $3.48 per share or $89.5 million returned to shareholders.
  • During the quarter, Stuart Olson was recognized as one of Alberta’s Top 70 Employers in 2018 for the second consecutive year.


As compared to fiscal 2017, Stuart Olson expects 2018 consolidated contract revenue to be modestly higher, and adjusted EBITDA to be meaningfully higher, based on the outlook for each of its business groups outlined below. Stuart Olson expects 2018 adjusted EBITDA margin to remain stable year-over-year.

  • Revenue and adjusted EBITDA from the Industrial Group are expected to be meaningfully higher in 2018 than in 2017, supported by increased activity in the oil sands as project owners complete increased scopes of maintenance and turnaround work. The group’s financial results are also expected to be supported by the completion of two large projects outside Alberta in the power and mining sectors. Industrial Group EBITDA margin is expected to remain stable year-over-year.
  • With a greater proportion of projects nearing completion in 2018 as compared to 2017, the Buildings Group anticipates modestly lower revenue year-over-year, paired with stable adjusted EBITDA and slightly higher adjusted EBITDA margin. The Buildings Group results as a whole will continue to be supported by predominantly public projects in multiple provinces, including the group’s growing activity in Ontario.
  • Commercial Systems Group revenue and adjusted EBITDA are expected to be significantly higher in 2018 as the group begins to see material benefits from the substantial number of project awards secured in 2017. The group’s adjusted EBITDA margin is expected to be slightly lower year-over-year, reflecting the group being in earlier stages of completion on a number of larger projects and a greater proportion of projects contracted on a lower risk cost-plus basis.


Stuart Olson will hold a conference call and webcast to discuss its 2018 first quarter results on Thursday, May 3, 2018 at 7:30 a.m. Mountain Time (9:30 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 the Company’s website at www.stuartolson.com. For those unable to listen during the live webcast, a replay will be available on the website shortly after the conclusion of the conference call for a period of 90 days. Financial analysts and institutional investors who wish to ask questions during the conference call are invited to call 1-888-390-0546 (Canada and USA) or 1-587-880-2171 (outside Canada and USA). For those unable to participate on the live call, a replay will be made available until Thursday, May 17, 2018 by dialing 1-888-390-0541 (Canada and USA) or 1-416-764-8677 (outside Canada and USA), pin 201053. The public is invited to listen to the live conference call, webcast or the replay.


Stuart Olson Inc. provides general contracting and electrical building systems contracting in the public and private construction markets as well as general contracting, electrical, mechanical and specialty trades, such as insulation, cladding and asbestos abatement, in the industrial construction and services market. The Company operates office locations and projects throughout Western CanadaOntario and the territories. Stuart Olson was recognized as one of Alberta’s Top 70 Employers in 2018 for the second consecutive year. Stuart Olson’s common shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols “SOX” and “SOX.DB.A”, respectively. www.stuartolson.com


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:

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”, “seek”, “continue”, “see”, “project”, “predict”, “propose”, “targeting”, “potential”, “could”, “might”, “grow”, “momentum” 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.

David LeMay, President and Chief Executive Officer, Stuart Olson Inc., (403) 685-7777, Email: inquiries@stuartolson.com; Daryl Sands, Executive Vice President and Chief Financial Officer, Stuart Olson Inc., (403) 685-7777, Email: inquiries@stuartolson.com, inquiries@churchill-cuq.com