Interim Condensed Consolidated Statements of Financial |
Position(Unaudited) |
| June 30, 2022 December 31, 2021 |
| | $ | $ |
(In mil ions of Canadian dol ars) |
ASSETSCurrentCash and deposits |
| | | | | 169.2 | 193.9 |
Trade and other receivables | | | | | 900.2 | 823.7 |
Unbil ed receivables | | | | | 525.1 | 421.7 |
Contract assets | | | | | 80.9 | 70.2 |
Income taxes recoverable | | | | | 88.5 | 85.6 |
Prepaid expenses | | | | | 54.9 | 45.8 |
Other assets | | | | | 21.3 | 23.5 |
Total current assets | | | | | 1,840.1 | 1,664.4 |
Non-currentProperty and equipment |
| | | | | 227.5 | 233.7 |
Lease assets | | | | | 439.1 | 476.5 |
Goodwil | | | | | 2,232.7 | 2,184.3 |
Intangible assets | | | | | 345.6 | 373.3 |
Net employee defined benefit asset | | | | | 15.2 | 17.0 |
Deferred tax assets | | | | | 51.8 | 48.3 |
Other assets | | | | | 166.6 | 228.9 |
Total assets | | | | | 5,318.6 | 5,226.4 |
LIABILITIES AND EQUITYCurrentBank indebtedness |
| | | | | 43.2 | 7.2 |
Trade and other payables | | | | | 607.4 | 634.7 |
Lease liabilities | | | | | 112.9 | 123.9 |
Deferred revenue | | | | | 264.9 | 264.8 |
Income taxes payable | | | | | 18.8 | 26.6 |
Long-term debt | | | | | 40.9 | 51.0 |
Provisions | | | | | 81.1 | 36.7 |
Other liabilities | | | | | 27.5 | 34.5 |
Total current liabilities | | | | | 1,196.7 | 1,179.4 |
Non-currentLease liabilities |
| | | | | 502.3 | 545.0 |
Income taxes payable | | | | | 6.8 | 8.9 |
Long-term debt | | | | | 1,348.4 | 1,194.1 |
Provisions | | | | | 123.7 | 122.6 |
Net employee defined benefit liability | | | | | 48.7 | 58.7 |
Deferred tax liabilities | | | | | 59.1 | 77.5 |
Other liabilities | | | | | 24.9 | 38.0 |
Total liabilities | | | | | 3,310.6 | 3,224.2 |
Shareholders’ equityShare capital |
| | 980.8 | 972.4 |
Contributed surplus | | | | | 6.7 | 10.6 |
Retained earnings | | | | | 1,053.4 | 1,043.4 |
Accumulated other comprehensive loss | | | | | (33.3) | (24.7) |
Total shareholders’ equity | | | | | 2,007.6 | 2,001.7 |
Non-controlling interests | | | | | 0.4 | 0.5 |
Total liabilities and equity | | | | | 5,318.6 | 5,226.4 |
See accompanying notes |
| | | | | | | | F-1 | Stantec Inc. |
Interim Condensed Consolidated Statements of Income(Unaudited) |
| For the quarter ended | | For the two quarters ended |
| | June 30, | | June 30, |
| | 2022 | | | 2021 | 2022 | | 2021 |
| | | | | | | $ | $ | $ | | $ |
(In mil ions of Canadian dol ars, except per share amounts) |
Gross revenue | | 1,376.6 | | | | 1,134.0 | 2,690.5 | | | 2,223.2 |
Less subconsultant and other direct expenses | | 259.9 | | | | 225.7 | 523.7 | | 436.2 |
Net revenue | | 1,116.7 | | | | 908.3 | 2,166.8 | | | 1,787.0 |
Direct payrol costs | | | | | | | 13 | 514.0 | | | | 425.0 | 997.0 | | 837.3 |
Project margin | | 602.7 | | | | 483.3 | 1,169.8 | | | 949.7 |
Administrative and marketing expenses | | | | | | | 10,13 | 431.6 | | | | 341.3 | 857.7 | | 682.8 |
Depreciation of property and equipment | | 14.4 | | | 13.4 | 28.6 | | 26.6 |
Depreciation of lease assets | | 29.9 | | | 26.3 | 60.5 | | 53.2 |
Amortization of intangible assets | | 26.2 | | | 13.7 | 50.5 | | 27.0 |
Reversal of lease asset impairment | | (2.6) | | | (1.0) | (2.6) | | (2.6) |
Net interest expense | | | | | | | 7,15 | 15.4 | | | 10.6 | 27.8 | | 19.9 |
Other net finance expense | | 1.1 | | | 1.4 | 2.3 | | 2.6 |
Foreign exchange loss (gain) | | 1.0 | | | (0.3) | 2.8 | | 1.0 |
Other expense (income) | | | | | | | 14 | 6.3 | | | (5.2) | 4.0 | | (11.9) |
Income before income taxes | | 79.4 | | | 83.1 | 138.2 | | 151.1 |
Income taxesCurrent |
| | 26.9 | | | 22.2 | 46.6 | | 41.3 |
Deferred | | (8.2) | | | (2.3) | (13.9) | | (4.3) |
Total income taxes | | 18.7 | | | 19.9 | 32.7 | | 37.0 |
Net income for the period | | 60.7 | | | 63.2 | 105.5 | | 114.1 |
Weighted average number of shares outstanding - |
basic | 110,897,590 111,246,823 111,119,211 111,336,576 |
Weighted average number of shares outstanding - |
diluted | 111,054,142 111,735,116 111,287,552 111,779,412 |
Shares outstanding, end of the period | 110,730,097 111,005,773 110,730,097 111,005,773 |
Earnings per share, basic and diluted | | 0.55 | | | 0.57 | 0.95 | | 1.02 |
See accompanying notes |
| | | | | Stantec Inc. |
Interim Condensed Consolidated Statements |
of Comprehensive Income(Unaudited) |
| For the quarter ended | | For the two quarters ended |
| | June 30, | | June 30, |
| | 2022 | | | 2021 | 2022 | | 2021 |
| | | | | | | $ | $ | $ | | $ |
(In mil ions of Canadian dol ars) |
Net income for the period | | 60.7 | | | 63.2 | 105.5 | | 114.1 |
Other comprehensive income (loss) |
Items that may be reclassified to net income in |
subsequent periods: |
Exchange differences on translation of foreign |
operations | | 11.5 | | | (46.6) | (5.5) | | (75.7) |
Net unrealized loss on FVOCI financial assets | | | | | | | | 6 | (1.6) | | | (0.7) | (5.0) | | (1.3) |
Unrealized gain on interest rate and total return |
swaps | | | | | | | 1.0 | 0.8 | 1.9 | | 1.5 |
Other comprehensive income (loss) for the period, net of tax |
| | 10.9 | | | (46.5) | (8.6) | | (75.5) |
Total comprehensive income for the period, net of tax |
| | 71.6 | | | 16.7 | 96.9 | | 38.6 |
See accompanying notes |
| | | | | Stantec Inc. |
Interim Condensed Consolidated Statements of Shareholders’ |
Equity(Unaudited) |
| | | | | Accumulated |
| Shares | Share | Contributed | | | Other |
| Outstanding | Capital | Surplus | Retained | Comprehensive |
| (note 10) | (note 10) | | Earnings | Income (Loss) | | Total |
| | | | | | | | # | $ | | | | | | | $ | $ | $ | $ |
(In mil ions of Canadian dol ars, except shares) |
Balance, December 31, 2020 111,005,347 | | 932.2 | | | | | | | 12.9 | 958.6 | | 24.8 | 1,928.5 |
Net income | | | | | 114.1 | | | | | | | | 114.1 |
Other comprehensive loss | | | | | | (75.5) | (75.5) |
Total comprehensive income |
(loss) | | | | | 114.1 | | (75.5) | 38.6 |
Share options exercised for |
cash | | 939,908 | 30.7 | | | | | | | | | | 30.7 |
Share-based compensation | | | | | | | | | 3.0 | | | 3.0 |
Shares repurchased under |
Normal Course Issuer Bid | (939,482) | (8.1) | | | | | | | (0.1) | (42.5) | | | | | | | | (50.7) |
Fair value reclass of share |
options exercised | | | | | | | | | 5.2 | | | | | | | (5.2) | | | — |
Dividends declared | | | | | (36.7) | | | | | | | | (36.7) |
Balance, June 30, 2021 | 111,005,773 | 960.0 | | | | | | | 10.6 | 993.5 | | (50.7) | 1,913.4 |
Balance, December 31, 2021 111,333,479 | | 972.4 | | | | | | | 10.6 | 1,043.4 | | (24.7) | 2,001.7 |
Net income | | | | | 105.5 | | | | | | | | 105.5 |
Other comprehensive loss | | | | | | (8.6) | (8.6) |
Total comprehensive income |
(loss) | | | | | 105.5 | | (8.6) | 96.9 |
Share options exercised for |
cash | | 482,294 | 15.4 | | | | | | | | | | 15.4 |
Share-based compensation | | | | | | | | | (1.2) | | | (1.2) |
Shares repurchased under |
Normal Course Issuer Bid | (1,085,676) | (9.6) | | | | | | | (0.1) | (55.6) | | | | | | | | (65.3) |
Fair value reclass of share |
options exercised | | | | | | | | | 2.6 | | | | | | | (2.6) | | | — |
Dividends declared | | | | | (39.9) | | | | | | | | (39.9) |
Balance, June 30, 2022 | 110,730,097 | 980.8 | | | | | | | 6.7 | 1,053.4 | | (33.3) | 2,007.6 |
See accompanying notes |
| | | F-4 | | | | Stantec Inc. |
Interim Condensed Consolidated Statements of Cash Flows(Unaudited) |
| For the quarter ended | | For the two quarters ended |
| | June 30, | | June 30, |
| 2022 | | | | 2021 | 2022 | | 2021 |
(In mil ions of Canadian dol ars) | | | | | | | $ | $ | $ | | $ |
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIESNet income |
| | 60.7 | | | | 63.2 | 105.5 | | 114.1 |
Add (deduct) items not affecting cash: |
Depreciation of property and equipment | | 14.4 | | | | 13.4 | 28.6 | | 26.6 |
Depreciation of lease assets | | 29.9 | | | | 26.3 | 60.5 | | 53.2 |
Reversal of lease asset impairment | | (2.6) | | | (1.0) | (2.6) | | (2.6) |
Amortization of intangible assets | | 26.2 | | | | 13.7 | 50.5 | | 27.0 |
Deferred income taxes | | (8.2) | | | (2.3) | (13.9) | | (4.3) |
Net loss (gain) on equity securities | | | | | | | 14 | 5.7 | | | (4.3) | 4.0 | | (9.4) |
Share-based compensation | | | | | | | 10 | 4.4 | | | 5.0 | 7.6 | | 17.4 |
Provisions | | | | | | | 8 | 13.4 | | | | 6.7 | 35.1 | | 13.4 |
Other non-cash items | | 4.2 | | | 17.9 | 4.4 | | 4.9 |
| | 148.1 | | | | 138.6 | 279.7 | | 240.3 |
Trade and other receivables | | (44.7) | | | | (61.2) | (41.1) | | 1.5 |
Unbil ed receivables | | (52.5) | | | | (15.2) | (111.9) | | (26.2) |
Contract assets | | (9.6) | | | (0.6) | (10.7) | | (0.4) |
Prepaid expenses | | 6.6 | | | 5.1 | (8.7) | | (5.1) |
Income taxes recoverable | | (15.7) | | | | (20.9) | (10.4) | | (18.4) |
Trade and other payables and other accruals | | (43.0) | | | | 30.3 | (97.2) | | (51.8) |
Deferred revenue | | 6.4 | | | 2.1 | 1.9 | | (6.0) |
| | (152.5) | | | | (60.4) | (278.1) | | (106.4) |
Net cash flows (used in) from operating activities | | (4.4) | | | 78.2 | 1.6 | | 133.9 |
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIESBusiness acquisitions, net of cash acquired |
| | | | | | | 4 | (47.6) | | | | (18.2) | (47.6) | | (35.0) |
Purchase of investments held for self-insured liabilities | | | | | | | 6 | (26.0) | | | | (13.3) | (43.1) | | (18.8) |
Proceeds from sale of investments held for self-insured |
liabilities | | | | | | | 6 | 48.3 | | | | 9.8 | 103.7 | | 16.4 |
Purchase of intangible assets | | (1.3) | | | (0.7) | (3.4) | | (2.0) |
Purchase of property and equipment | | (12.0) | | | | (9.8) | (22.8) | | (16.3) |
Other | | (1.4) | | | 1.9 | 1.6 | | 1.8 |
Net cash flows used in investing activities | | (40.0) | | | | (30.3) | (11.6) | | (53.9) |
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIESNet proceeds from revolving credit facility |
| | | | | | | 15 | 85.3 | | | | 10.0 | 153.3 | | 10.0 |
Repayment of notes payable and software financing |
obligations | | | | | | | 15 | (7.4) | | | (6.3) | (46.5) | | (39.2) |
Net proceeds from bank indebtedness | | | — | 43.2 | | — |
Net lease payments | | | | | | | 15 | (35.0) | | | | (32.3) | (71.8) | | (64.5) |
Repurchase of shares for cancel ation | | (36.7) | | | | (50.7) | (65.3) | | (50.7) |
Proceeds from exercise of share options | | 5.5 | | | 10.3 | 15.4 | | 30.7 |
Payment of dividends to shareholders | | | | | | | 10 | (20.0) | | | | (18.4) | (38.3) | | (35.6) |
Net cash flows from (used in) financing activities | | 14.3 | | | | (87.4) | (10.0) | | (149.3) |
Foreign exchange gain (loss) on cash held in foreign currency |
| | 7.1 | | | (9.5) | 2.5 | | (15.0) |
Net decrease in cash and cash equivalents | | (23.0) | | | | (49.0) | (17.5) | | (84.3) |
Cash and cash equivalents, beginning of the period | | 192.2 | | | | 249.5 | 186.7 | | 284.8 |
Cash and cash equivalents, end of the period | | 169.2 | | | | 200.5 | 169.2 | | 200.5 |
See accompanying notes |
| | | | | | | F-5 | Stantec Inc. |
Notes to the Unaudited Interim CondensedConsolidated Financial Statements |
1. Corporate InformationThe interim condensed consolidated financial statements (consolidated financial statements) of Stantec Inc., its subsidiaries, and its structured entities (the Company) for the two quarters ended June 30, 2022, were authorized for issuance in accordance with a resolution of the Company’s Audit and Risk Committee on August 10, 2022. The Company was incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares are traded on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the symbol STN. The Company’s registered office is located at Suite 400, 10220 - 103 Avenue, Edmonton, Alberta. The Company is domiciled in Canada. |
The Company is a provider of comprehensive professional services in the area of infrastructure and facilities for clients in the public and private sectors. The Company’s services include engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics, from initial project concept and planning through to design, construction administration, commissioning, maintenance, decommissioning, and remediation. |
2. Basis of PreparationThese consolidated financial statements for the two quarters ended June 30, 2022 were prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. These consolidated financial statements do not include al information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Company’s December 31, 2021 annual consolidated financial statements. These consolidated financial statements are presented in Canadian dol ars and al values are rounded to the nearest mil ion ($000,000), except where otherwise indicated. |
The accounting policies applied when preparing the Company’s consolidated financial statements are consistent with those fol owed when preparing the annual consolidated financial statements for the year ended December 31, 2021 except as described in note 3. |
The preparation of these consolidated financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue, and expenses. The significant judgments made by management when applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Company’s December 31, 2021 annual consolidated financial statements, which included considerations for the impacts of the continuing COVID-19 pandemic and new variants. The COVID-19 pandemic has had adverse financial impacts on the global economy and financial markets. The war in Ukraine has also contributed to increased global economic and financial volatility; however, there has been no significant impact on the Company's results and management continues to monitor for any potential impacts on the operations and financial position of the Company. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| F-7 | Stantec Inc. |
3. Recent Accounting Pronouncements and Changes to Accounting PoliciesIn May 2020, the IASB issued Onerous Contracts — Cost of Fulfil ing a Contract (Amendments to IAS 37). Theamendments clarify that both incremental costs and an al ocation of other costs that relate directly to fulfil ing the contract should be included in assessing whether a contract is onerous. The amendments are effective January 1, 2022. The amendment did not have a material impact on the Company's consolidated financial statements. |
Future adoptionsThe standards, amendments, and interpretations issued before 2022 but not yet adopted by the Company have been disclosed in note 6 of the Company’s December 31, 2021 annual consolidated financial statements. The Company is currently considering the impact of adopting these standards, amendments, and interpretations on its consolidated financial statements. |
4. Business Acquisition |
On April 1, 2022, the Company purchased the assets of Barton Wil more LLP and al the shares of Barton Wil moreHoldings Limited (col ectively Barton Wil more) for cash consideration and notes payable. Barton Wil more is a 300-person firm based in the United Kingdom. The firm provides planning and design services for both public and privateclients across al development sectors, with specific expertise in the residential space. This addition furtherstrengthened the Company’s Infrastructure operations in the Global cash-generating unit. |
Details of the consideration transferred and the fair value of the identifiable assets and liabilities acquired at the date of acquisition, including measurement period adjustments for prior acquisitions, are as fol ows: |
| | Total |
| Notes | $ |
Cash consideration | | | | 49.7 |
Notes payable | 7 | 26.3 |
Consideration | | | | 76.0 |
Cash consideration | | | | 49.7 |
Cash acquired | | | | 2.1 |
Net cash paid | | | | 47.6 |
Assets and liabilities acquiredCash |
| | | | 2.1 |
Non-cash working capital |
Trade receivables | | | | 11.8 |
Unbil ed receivables | | | | 4.2 |
Trade and other payables | | | | (5.5) |
Other non-cash working capital | | | | (3.1) |
Intangible assets | | | | 12.8 |
Deferred tax assets (net) | | | | 9.8 |
Provisions | 8 | (6.3) |
Other | | | | 1.6 |
Total identifiable net assets at fair value | | | | 27.4 |
Goodwill arising on acquisitions | | | | 48.6 |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | F-8 | Stantec Inc. |
Trade receivables and unbil ed receivables are recognized at fair value at the time of acquisition, and their fair value approximated their net carrying value. |
Goodwil consists of the value of expected synergies arising from an acquisition, the expertise and reputation of the assembled workforce acquired, and the geographic location of the acquiree. There were no goodwil and intangible assets deductible for income tax purposes. |
At June 30, 2022, provisions for claims outstanding relating to al prior acquisitions were $11.8, based on theirexpected probable outcome (note 8). Certain of these claims are indemnified by the acquiree (note 6). |
Gross revenue earned from Barton Wil more since the acquisition date is $7.8. |
Fair value of net assets for current and prior year acquisitions |
The preliminary fair values of the net assets recognized in the Company’s consolidated financial statements were based on management’s best estimates of the acquired identifiable assets and liabilities at the acquisition dates. Management finalized the fair value assessments of assets and liabilities purchased from Engenium and Cox McLean during the quarter. For Driven by Values, Cardno Limited, and Barton Wil more, management is waiting for vendor's closing financial statements, agreement of purchase adjustments, or other outstanding information. Once the outstanding information is received, reviews are completed, and approvals are obtained, the valuation of acquired assets and liabilities wil be finalized. |
Measurement period adjustments related to prior acquisitions decreased goodwil by $3.5, including an increase of $12.9 in deferred tax assets and a decrease of $9.4 in other net assets. |
5. Trade and Other Receivables |
| June 30, 2022 | December 31, 2021 |
| | | Note | $ | $ |
Trade receivables, net of expected credit losses of $2.0 |
(2021 – $2.0) | | | | | | | 830.7 | 787.9 |
Holdbacks, current | | | | | | | 28.9 | 28.6 |
Other | | | 8 | 40.6 | 7.2 |
Trade and other receivables | | | | | | | 900.2 | 823.7 |
The aging analysis of gross trade receivables is as fol ows: |
| | | | | | | Total | 1–30 | 31–60 | 61–90 | 91–120 | | | 121+ |
| | | | | | | $ | $ | $ | $ | $ | | | $ |
June 30, 2022 | | | | | | | | | | 832.7 | 496.4 | 176.5 | | | | | | | 61.3 | 37.5 | | | 61.0 |
December 31, 2021 | | | | | | | | | | 789.9 | 467.8 | 181.1 | | | | | | | 56.3 | 30.6 | | | 54.1 |
Information about the Company’s exposure to credit risks for trade and other receivables is included in note 12. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | | | | | F-9 | Stantec Inc. |
6. Other Assets |
| June 30, 2022 | December 31, 2021 |
| | | $ | $ |
Financial assets |
Investments held for self-insured liabilities | | | 129.6 | 198.3 |
Holdbacks on long-term contracts | | | | | | 28.4 | 23.6 |
Other | | | | | | 15.7 | 15.5 |
Non-financial assets |
Investments in joint ventures and associates | | | | | | 6.8 | 7.4 |
Other | | | | | | 7.4 | 7.6 |
| | | | | | 187.9 | 252.4 |
Less current portion - financial | | | | | | 19.2 | 21.4 |
Less current portion - non-financial | | | | | | 2.1 | 2.1 |
Long-term portion | | | | | | 166.6 | 228.9 |
Financial assets — other primarily includes indemnifications, sublease receivables, deposits, and the interest rate swap (note 12). Non-financial assets - other primarily includes transactions costs on long-term debt, and investment tax credits. |
Investments held for self-insured liabilities include government and corporate bonds that are classified as fair value through other comprehensive income (FVOCI) with unrealized gains (losses) recorded in other comprehensive income (loss). Investments also include equity securities that are classified as fair value through profit and loss with gains (losses) recorded in net income. During the first two quarters of 2022, the Company recorded a net loss on equity securities of $4.0 (June 30, 2021 – net gain of $10.4) (note 14) and an unrealized loss on bonds of $5.0 (June 30, 2021 – unrealized loss of $1.3). |
7. Long-Term Debt |
| June 30, 2022 | December 31, 2021 |
| | | | $ | $ |
Senior unsecured notes | | | | | | 298.4 | 298.2 |
Revolving credit facility | | | | | | 699.0 | 543.3 |
Term loan | | | | | | 308.5 | 307.9 |
Notes payable | | | | | | 56.1 | 64.7 |
Software financing obligations | | | | | | 27.3 | 31.0 |
| | | | | | 1,389.3 | 1,245.1 |
Less current portion | | | | | | 40.9 | 51.0 |
Long-term portion | | | | | | 1,348.4 | 1,194.1 |
Interest expense on the Company’s long-term debt for the first two quarters of 2022 was $18.5 (June 30, 2021 – $9.2). |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | Stantec Inc. |
Senior unsecured notesThe Company has $300.0 of senior unsecured notes (the notes) that mature on October 8, 2027. The notes bear interest at a fixed rate of 2.048% per annum. The notes rank pari passu with al other debt and future indebtedness of the Company. |
Revolving credit facilities and term loanThe Company has syndicated credit facilities, structured as a sustainability-linked loan, consisting of a senior revolving credit facility in the maximum amount of $800.0 and senior term loan of $310.0 in two tranches. Additional funds of $600.0 can be accessed subject to approval and under the same terms and conditions. The revolving credit facility and the term loan are unsecured, may be repaid from time to time at the option of the Company, and maturing at various dates before October 29, 2026. The average interest rate for the credit facilities at June 30, 2022, was 3.96% (December 31, 2021 – 2.15%). |
The Company is subject to restrictive covenants related to its credit facilities and senior unsecured notes, which are measured quarterly. These covenants are consistent with those disclosed in the Company’s annual consolidated financial statements for the year ended December 31, 2021. The Company was in compliance with these covenants as at and throughout the two quarters ended June 30, 2022. |
Notes payableNotes payable consists primarily of notes payable for acquisitions and mature at various dates from 2022 to 2025. The weighted average interest rate on the notes payable at June 30, 2022, was 1.22% (December 31, 2021 – 1.46%). |
Software financing obligationsThe Company has financing obligations for software, included in intangible assets, bearing interest at rates up to 3.39% (December 31, 2021 - up to 4.69%) and mature at various dates before October 2027. Software additions acquired through software financing obligations in the first two quarters of 2022, were $8.8 (December 31, 2021 - $44.4) and have been excluded from the consolidated statement of cash flows (note 15). |
Surety facilitiesThe Company has surety facilities related to Construction Services (which was sold in 2018), to accommodate the issuance of bonds for certain types of project work. At June 30, 2022, the Company had retained bonds of $36.1 (US$28.0) (December 31, 2021 – $65.5 (US$51.8)) in US funds under these surety facilities that wil expire on completion of the associated projects. The estimated completion dates of these projects are before December 2023. Although the Company remains obligated for these instruments, the purchaser of the Construction Services business has indemnified the Company for any obligations that may arise from these bonds. |
The Company also has $22.3 (December 31, 2021 - $10.1) in bonds for Consulting Services that wil expire on completion of the associated projects. The estimated completion dates of these projects are before October 2028. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| F-11 | Stantec Inc. |
8. Provisions |
| Self- |
| insured | | Lease | | Onerous |
| liabilities | Claims | | restoration | contracts | Total |
| $ | | | | | | $ | $ | $ | $ |
January 1, 2022 | | | | | | | | | | | 109.5 | 20.4 | 12.7 | | 16.7 | 159.3 |
Current period provisions | | | | | | | | | | | 16.2 | 44.9 | 0.7 | | | | | | 0.9 | 62.7 |
Acquisitions | | | | | | | | | | | — | — | 0.5 | | | | | | 5.8 | 6.3 |
Paid or otherwise settled | | | | | | | | | | | (14.0) | (5.2) | (0.6) | | (5.2) | (25.0) |
Impact of foreign exchange | | | | | | | | | | | 1.5 | 0.2 | (0.3) | | | | | | 0.1 | 1.5 |
| | | | | | | | | | | 113.2 | 60.3 | 13.0 | | 18.3 | 204.8 |
Less current portion | | | | | | | | | | | 11.6 | 57.5 | 2.9 | | | | | | 9.1 | 81.1 |
Long-term portion | | | | | | | | | | | 101.6 | 2.8 | 10.1 | | | | | | 9.2 | 123.7 |
Increases in provisions for claims were made during the first two quarters of 2022. The Company is in the process of finalizing settlement agreements for certain claims and insurance coverages were confirmed by the Company's third-party insurers. Corresponding insurance recoveries have been recorded in trade and other receivables. |
9. Other Liabilities |
| | | June 30, 2022 | | | | | | December 31, 2021 |
| | Note | | | $ | $ |
Cash-settled share-based compensation | | | | 10 | 39.6 | 62.0 |
Total return swaps | | | | 12 | 5.7 | 2.3 |
Other | | | | | 7.1 | 8.2 |
| | | | | 52.4 | 72.5 |
Less current portion | | | | | 27.5 | 34.5 |
Long-term portion | | | | | 24.9 | 38.0 |
10. Share Capital |
AuthorizedUnlimited |
| | | | | | | | | | | Common shares, with no par value |
Unlimited | | | | | | | | | | | Preferred shares issuable in series, with attributes designated by the board of directors |
Common sharesThe Company has approval to repurchase up to 5,559,312 common shares and an Automatic Share Purchase Plan (ASPP) which al ows a broker, in its sole discretion and based on the parameters established by the Company, to purchase common shares for cancel ation under the Normal Course Issuer Bid (NCIB) at any time during predetermined trading blackout periods. During the first two quarters of 2022, 1,085,676 common shares were repurchased for cancel ation pursuant to the NCIB at a cost of $65.3 (June 30, 2021 - 939,482 shares were repurchased at a cost of $50.7). As at June 30, 2022 and December 31, 2021, no liability was recorded in the Company’s consolidated statements of financial position in connection with the ASPP. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | F-12 | | | | | | | | | | Stantec Inc. |
DividendsHolders of common shares are entitled to receive dividends when declared by the Company’s board of directors. The table below describes the dividends paid in 2022. |
| Dividend per Share | Paid |
Date Declared | | | Record Date | Payment Date | $ | $ |
November 3, 2021 | | | December 31, 2021 | January 18, 2022 | | | | | 0.165 | 18.3 |
February 23, 2022 | | | March 31, 2022 | April 18, 2022 | | | | | 0.180 | 20.0 |
May 11, 2022 | | | June 30, 2022 | July 15, 2022 | | | | | 0.180 | — |
At June 30, 2022, trade and other payables included $19.9 related to the dividends declared on May 11, 2022. |
Share-based payment transactions |
During the second quarter of 2022, the Company recognized a net share-based compensation expense of $4.4 (June 30, 2021 - $5.0) in administrative and marketing expenses in the consolidated statements of income, comprised of share-based compensation expense of $1.2 (June 30, 2021 - $5.0) and hedge impact of $3.2 (June 30, 2021 - nil) (note 12). |
During the first two quarters of 2022, the Company recognized a net share-based compensation expense of $7.6 (June 30, 2021 - $17.4), in administrative and marketing expenses in the consolidated statements of income, comprised of share-based compensation expense of $0.9 (June 30, 2021 - $17.4) and hedge impact of $6.7 (June 30, 2021 - nil) (note 12). Also, an adjustment of $1.2 (June 30, 2021 - $3.0) was included in contributed surplus for deferred tax impacts on share-based compensation. |
During the first two quarters of 2022, the Company granted 253,938 Preferred Share Units (PSUs) at a fair value of $14.5 (June 30, 2021 - 242,701 units for $14.0) and 145,884 Restricted Share Units (RSUs) at a fair value of $8.0 (June 30, 2021 - 124,599 units for $6.7), under the same terms, conditions, and vesting requirements as the units issued in 2021. Also, during the first two quarters of 2022, 318,058 PSUs were paid at a value of $15.2 (June 30, 2021 - 253,373 PSUs were paid at a value of $9.0) and 147,811 RSUs were paid at a value of $8.0 (June 30, 2021 - no payments were made for RSUs). |
At June 30, 2022, the accrued obligations for PSUs of $20.0 (December 31, 2021 - $32.5) and for RSUs of $7.7 (December 31, 2021 - $15.4), and the fair value of outstanding and vested Deferred Share Units (DSUs) of $11.9 (December 31, 2021 - $14.1) were recorded in other liabilities (note 9). |
11. Fair Value MeasurementsAl financial instruments carried at fair value are categorized into one of the fol owing: |
• | Level 1 – quoted market prices |
• | Level 2 – valuation techniques (market observable) |
• | Level 3 – valuation techniques (non-market observable) |
When forming estimates, the Company uses the most observable inputs available for valuation purposes. If a fair value measurement reflects inputs of different levels within the hierarchy, the financial instrument is categorized based on the lowest level of significant input. |
When determining fair value, the Company considers the principal or most advantageous market in which it would transact and the assumptions that market participants would use when pricing the asset or liability. The Company measures certain financial assets and liabilities at fair value on a recurring basis. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | | | F-13 | Stantec Inc. |
For financial instruments recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorizations at the end of each reporting period. |
In the first two quarters of 2022, no changes were made to the method of determining fair value and no transfers were made between levels of the hierarchy. |
The fol owing table summarizes the Company’s fair value hierarchy for those assets and liabilities measured and adjusted to fair value on a recurring basis at June 30, 2022: |
| Carrying |
| Amount | Level 1 | Level 2 | Level 3 |
| | | | | $ | $ | $ | $ |
AssetsInvestments held for self-insured liabilities |
| 6 | 129.6 | | | | | | — | 129.6 | | | | | | — |
Interest rate swap | | | | | 12 | 1.7 | — | 1.7 | | | | | | — |
LiabilitiesTotal return swaps |
| | | | | 9,12 | 5.7 | — | 5.7 | | | | | | — |
Investments held for self-insured liabilities consist of government and corporate bonds and equity securities. Fair value of bonds is determined using observable prices of debt with characteristics and maturities that are similar to the bonds being valued. Fair value of equities is determined using the reported net asset value per share of the investment funds. The funds derive their value from observable quoted prices of the equities owned that are traded in an active market. |
The fol owing table summarizes the Company’s fair value hierarchy for those liabilities that were not measured at fair value but are required to be disclosed at fair value on a recurring basis as at June 30, 2022: |
| Carrying |
| Amount | Level 1 | Level 2 | Level 3 |
| | | | | $ | $ | $ | $ |
Senior unsecured notes | 7 | 298.4 | | | | | | — | 259.6 | | | | | | — |
Notes payable | 7 | 56.1 | | | | | | — | 56.0 | | | | | | — |
The fair value of senior unsecured notes and notes payable is determined by calculating the present value of future payments using observable benchmark interest rates and credit spreads for debt with similar characteristics and maturities. |
12. Financial Instrumentsa) Derivative financial instruments |
Interest rate swapThe Company has an interest rate swap agreement to hedge the interest rate variability on Tranche C of the term loan with a notional amount of $160.0, maturing on June 27, 2023. For the first two quarters of 2022, the change in fair value of the interest rate swap, estimated using market rates at June 30, 2022, is an unrealized gain of $4.0 ($3.1 net of tax) (June 30, 2021 – unrealized gain of $2.0 ($1.5 net of tax)) recorded in other comprehensive income (loss) and in the statement of financial position as other assets or other liabilities. |
Total return swaps on share-based compensation unitsThe Company has total return swap (TRS) agreements to manage its exposure to changes in the fair value of the Company's shares for certain cash-settled share-based payment obligations. The notional amount of TRSs |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | | F-14 | Stantec Inc. |
designated as a cash flow hedge against the Company's RSUs is $22.4, maturing between 2023 and 2025. During the first two quarters of 2022, the change in the fair value of the TRSs is an unrealized loss of $1.5 ($1.2 net of tax) recognized in other comprehensive income (loss) and an unrealized loss of $6.7 ($5.1 net of tax) recognized in the consolidated statements of income, in administrative and marketing expenses. |
Nature and extent of risks The COVID-19 pandemic and the conflict in Ukraine, as described in note 2, have had adverse financial impacts on the global economy, but the Company has not seen a significant increase to its risk exposure. Management continues to closely monitor the impacts on the Company’s risk exposure and wil adjust its risk management approach as necessary. |
Credit riskAssets that subject the Company to credit risk consist primarily of cash and deposits, trade and other receivables, unbil ed receivables, contract assets, investments held for self-insured liabilities, holdbacks on long-term contracts, and other financial assets. The Company’s maximum amount of credit risk exposure is limited to the carrying amount of these assets, which at June 30, 2022, was $1,849.1 (December 31, 2021 – $1,746.9). |
The Company limits its exposure to credit risk by placing its cash and cash equivalents in high-quality credit institutions. Investments held for self-insured liabilities include corporate bonds and equity securities. The Company believes the risk associated with corporate bonds and equity securities is mitigated by the overal quality and mix of the Company’s investment portfolio. Substantial y al bonds held by the Company are investment grade, and none are past due. The Company monitors changes in credit risk by tracking published external credit ratings. |
The Company mitigates the risk associated with trade and other receivables, unbil ed receivables, contract assets, and holdbacks on long-term contracts by providing services to diverse clients in various industries and sectors of the economy. In addition, management reviews trade and other receivables past due on an ongoing basis to identify matters that could potential y delay the col ection of funds at an early stage. The Company does not concentrate its credit risk in any particular client, industry, or economic or geographic sector. |
The Company monitors trade receivables to an internal target of days of revenue in trade receivables. At June 30, 2022, the days of revenue in trade receivables were 57 days (December 31, 2021 – 59 days). |
Price riskThe Company’s investments held for self-insured liabilities are exposed to price risk arising from changes in the market values of the equity securities. This risk is mitigated because the portfolio of equity funds is monitored regularly and appropriately diversified. For the Company's investments held for self-insured liabilities, a 1% increaseor decrease in equity prices at June 30, 2022, would increase or decrease the Company’s net income by $1.0,respectively. |
The Company is also exposed to changes in its share price arising from its cash-settled share-based payments as the Company's obligation under these arrangements are based on the price of the Company's shares. The Company mitigates a portion of its exposure to this risk for its RSUs and DSUs by entering into TRSs. For PSUs, a 10% increase or decrease in the price of the Company's shares at June 30, 2022, would decrease or increase the Company’s net income by $0.8, respectively. |
Liquidity riskThe Company meets its liquidity needs through various sources, including cash generated from operations, issuing senior unsecured notes, borrowings from its $800.0 revolving credit facility, term loans, and the issuance of common shares. The unused capacity of the revolving credit facility at June 30, 2022, was $53.4 (December 31, 2021 – $243.7) and the Company also has access to additional funds of $600.0 under its credit facilities (note 7). The Company believes that it has sufficient resources to meet obligations associated with its financial liabilities. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| F-15 | Stantec Inc. |
Interest rate riskThe Company is subject to interest rate cash flow risk to the extent that its revolving credit facility and term loan arebased on floating interest rates. However, this risk has been partial y mitigated by the interest rate swap on tranche Cof the term loan. The Company is also subject to interest rate pricing risk to the extent that its investments held for self-insured liabilities include fixed-rate government and corporate bonds. A reasonably possible change in interest rates assumption was increased from 0.5% to 1% to reflect recent market interest rate increases. If the interest rate on the Company’s revolving credit facility and term loan balances at June 30, 2022, was 1% higher or lower, with al other variables held constant, net income would decrease or increase by $3.2, respectively. |
Foreign exchange riskForeign exchange risk is the risk that the fair value of the future cash flows of a financial instrument wil fluctuate because of changes in foreign exchange rates. Foreign exchange gains or losses in net income arise on the translation of foreign currency-denominated assets and liabilities (such as trade and other receivables, trade and other payables, and long-term debt) held in the Company's Canadian operations and foreign subsidiaries. The Company manages its exposure to foreign exchange fluctuations on these items by matching foreign currency assets with foreign currency liabilities and from time to time, through the use of foreign currency forward contracts. |
Foreign exchange fluctuations may also arise on the translation of the Company's US-based subsidiaries or other foreign subsidiaries, where the functional currency is different from the Canadian dol ar, and are recorded in other comprehensive income. |
13. Employee Costs |
| For the quarter ended | | For the two quarters ended |
| | June 30, | | June 30, |
| | 2022 | | | 2021 | 2022 | | 2021 |
| | | | | | | Note | $ | $ | $ | | $ |
Wages, salaries, and benefits | | 815.5 | | | | 661.6 | 1,591.7 | | | 1,321.0 |
Pension costs | | 24.1 | | | 20.6 | 44.6 | | 39.1 |
Net share-based compensation | | | | | | | 10,12 | 4.4 | | | 5.0 | 7.6 | | 17.4 |
Total employee costs | | 844.0 | | | | 687.2 | 1,643.9 | | | 1,377.5 |
Direct labor | | 514.0 | | | | 425.0 | 997.0 | | 837.3 |
Indirect labor | | 330.0 | | | | 262.2 | 646.9 | | 540.2 |
Total employee costs | | 844.0 | | | | 687.2 | 1,643.9 | | | 1,377.5 |
Direct labor costs include salaries, wages, and related fringe benefits (including pension costs) for labor hours directly associated with the completion of projects. Bonuses, share-based compensation, termination payments, and salaries, wages, and related fringe benefits (including pension costs) for labor hours not directly associated with the completion of projects are included in indirect labor costs. Indirect labor costs are included in administrative and marketing expenses in the consolidated statements of income. Included in pension costs for the first two quarters of 2022 is $43.9 (June 30, 2021 – $38.3) related to defined contribution plans. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | | | | F-16 | Stantec Inc. |
14. Other Expense (Income) |
| For the quarter ended | | For the two quarters ended |
| | June 30, | | June 30, |
| | 2022 | | | 2021 | 2022 | | 2021 |
| | $ | $ | $ | | $ |
Realized gain on equity securities | | (6.8) | | | (0.5) | (14.5) | | (1.0) |
Unrealized loss (gain) on equity securities | | 12.5 | | | (4.3) | 18.5 | | (9.4) |
Share of loss (income) from joint ventures and |
associates and other | | 0.6 | | | (0.4) | — | | (1.5) |
Total other expense (income) | | 6.3 | | | (5.2) | 4.0 | | (11.9) |
15. Cash Flow Information A reconciliation of liabilities arising from financing activities for the two quarters ended June 30, 2022, is as fol ows: |
| | | | | | | | Revolving |
| | | | | | | Senior | Credit | Software |
| | | | | | | Unsecured | Facility and | Notes | | | Financing | Lease |
| | | | | | | Notes | Term Loan | Payable | | | | | | | | Obligations | Liabilities | | | Total |
| | | | | | | | $ | $ | | | | | | | | $ | $ | $ | | $ |
January 1, 2022 | | | | | | | | | | | 298.2 | 851.2 | 64.7 | 31.0 | 668.9 | | 1,914.0 |
Statement of cash flowsProceeds |
| | | | | | | | | | | — | 4,354.5 | — | — | 1.3 | | 4,355.8 |
Repayments or payments | | | | | | | | | | | — | (4,201.2) | (32.5) | | | (14.0) | (73.1) | | (4,320.8) |
Non-cash changesForeign exchange |
| | | | | | | | | | | — | 2.4 | (2.3) | — | (3.2) | | (3.1) |
Additions and modifications | | | | | | | | | | | — | — | 26.1 | 8.8 | 21.3 | | 56.2 |
Other | | | | | | | | | | | 0.2 | 0.6 | 0.1 | 1.5 | — | | 2.4 |
June 30, 2022 | | | | | | | | | | | 298.4 | 1,007.5 | 56.1 | 27.3 | 615.2 | | 2,004.5 |
A reconciliation of liabilities arising from financing activities for the two quarters ended June 30, 2021, is as fol ows: |
| | | | | | | | Revolving |
| | | | | | | Senior | Credit | Software |
| | | | | | | Unsecured | Facility and | Notes | | | Financing | Lease |
| | | | | | | Notes | Term Loan | Payable | | | | | | | | Obligations | Liabilities | | | Total |
| | | | | | | | $ | $ | | | | | | | | $ | $ | $ | | $ |
January 1, 2021 | | | | | | | | | | | 299.5 | 309.1 | 68.8 | 3.4 | 629.8 | | 1,310.6 |
Statement of cash flowsProceeds |
| | | | | | | | | | | — | | | | 27.0 | — | — | 1.9 | | 28.9 |
Repayments or payments | | | | | | | | | | | — | | | | (17.0) | (25.5) | | | (13.7) | (66.4) | | (122.6) |
Non-cash changesForeign exchange |
| | | | | | | | | | | — | — | (2.7) | (0.8) | (12.4) | | (15.9) |
Additions and modifications | | | | | | | | | | | — | — | 34.7 | 37.8 | 52.9 | | 125.4 |
Other | | | | | | | | | | | (1.4) | 0.3 | (1.4) | 0.1 | 0.1 | | (2.3) |
June 30, 2021 | | | | | | | | | | | 298.1 | 319.4 | 73.9 | 26.8 | 605.9 | | 1,324.1 |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| F-17 | | | | | Stantec Inc. |
For the quarter ended | | For the two quarters ended |
| June 30, | | June 30, |
| 2022 | | | 2021 | 2022 | | 2021 |
| $ | $ | $ | | $ |
| | | | | | Supplemental disclosureIncome taxes paid |
| 42.5 | | | 36.2 | 55.0 | | 51.3 |
| | | | | | Net interest paid | | 15.6 | | | 10.7 | 25.6 | | 17.6 |
| | | | | | Interest on lease liabilities during the second quarter of 2022 was $5.5 (June 30, 2021 - $5.9). Interest on lease liabilities during the first two quarters of 2022 was $11.3 (June 30, 2021 - $12.3). |
| | | | | | 16. Segmented InformationThe Company provides comprehensive professional services in the area of infrastructure and facilities throughout North America and global y. It considers the basis on which it is organized, including geographic areas, to identify its reportable segments. Operating segments of the Company are defined as components of the Company for which separate financial information is available and are evaluated regularly by the chief operating decision maker when al ocating resources and assessing performance. The chief operating decision maker is the CEO of the Company, and the Company’s operating segments are based on its regional geographic areas. |
| | | | | | The Company’s reportable segments are Canada, United States, and Global. These reportable segments provide professional consulting in engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics services in the area of infrastructure and facilities. |
| | | | | | Segment performance is evaluated by the CEO based on project margin and is measured consistently with project margin in the consolidated financial statements. Inter-segment revenues are eliminated on consolidation and reflected in the Adjustments and Eliminations column. Reconciliations of project margin to net income before taxes is included in the consolidated statements of income. |
| | | | | | Reportable segments |
For the quarter ended June 30, 2022 |
| | Adjustments |
| | | | | | | | United | Total | and |
| | | | | | | Canada | States | Global | | | | | | | | | Segments | Eliminations Consolidated |
| | | | | | | | $ | $ | $ | $ | $ | | $ |
| | | | | | Total gross revenue | 339.4 748.3 325.2 | 1,412.9 | (36.3) | | 1,376.6 |
| | | | | | Less inter-segment revenue | | 9.2 | 11.5 | 15.6 | | | | 36.3 | (36.3) | | — |
| | | | | | Gross revenue from external |
| | | | | | customers | 330.2 736.8 309.6 | 1,376.6 | — | | 1,376.6 |
| | | | | | Less subconsultants and other direct |
| | | | | | expenses | | 38.6 170.9 | 50.4 | | | | 259.9 | — | | 259.9 |
| | | | | | Total net revenue | 291.6 565.9 259.2 | 1,116.7 | — | | 1,116.7 |
| | | | | | Project margin | 154.6 310.9 137.2 | 602.7 | — | | 602.7 |
| | | | | | Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
F-18 | | | | | Stantec Inc. |
For the quarter ended June 30, 2021 |
| | | | | Adjustments |
| | United | Total | | | and |
| Canada | States | Global | | | | Segments | Eliminations Consolidated |
| | $ | $ | | | | | | | $ | $ | | | $ | | $ |
| | | | | | | | | Total gross revenue | 321.4 599.4 240.6 | | 1,161.4 | | | (27.4) | | | | 1,134.0 |
| | | | | | | | | Less inter-segment revenue | | 8.5 | 8.0 | | | | | | | 10.9 | 27.4 | | | (27.4) | | — |
| | | | | | | | | Gross revenue from external |
| | | | | | | | | customers | 312.9 591.4 229.7 | | 1,134.0 | | | — | | | | 1,134.0 |
| | | | | | | | | Less subconsultants and other direct |
| | | | | | | | | expenses | | 34.9 146.4 | | | | | | 44.4 | 225.7 | | | — | | 225.7 |
| | | | | | | | | Total net revenue | 278.0 445.0 185.3 | | 908.3 | | | — | | 908.3 |
| | | | | | | | | Project margin | 149.3 236.5 | | | | | | 97.5 | 483.3 | | | — | | 483.3 |
For the two quarters ended June 30, 2022 |
| | | | | Adjustments |
| | United | Total | | | and |
| Canada | States | Global | | | | Segments | Eliminations Consolidated |
| | $ | $ | | | | | | | $ | $ | | | $ | | $ |
| | | | | | | | | Total gross revenue | 657.8 1,460.5 641.2 | | 2,759.5 | | | (69.0) | | | | 2,690.5 |
| | | | | | | | | Less inter-segment revenue | | 18.3 | 21.5 | | | | | | | 29.2 | 69.0 | | | (69.0) | | — |
| | | | | | | | | Gross revenue from external |
| | | | | | | | | customers | 639.5 1,439.0 612.0 | | 2,690.5 | | | — | | | | 2,690.5 |
| | | | | | | | | Less subconsultants and other direct |
| | | | | | | | | expenses | | 73.9 342.1 107.7 | | 523.7 | | | — | | 523.7 |
| | | | | | | | | Total net revenue | 565.6 1,096.9 504.3 | | 2,166.8 | | | — | | | | 2,166.8 |
| | | | | | | | | Project margin | 299.7 601.4 268.7 | | 1,169.8 | | | — | | | | 1,169.8 |
For the two quarters ended June 30, 2021 |
| | | | | Adjustments |
| | United | Total | | | and |
| Canada | States | Global | | | | Segments | Eliminations Consolidated |
| | $ | $ | | | | | | | $ | $ | | | $ | | $ |
| | | | | | | | | Total gross revenue | 621.3 1,194.7 462.0 | | 2,278.0 | | | (54.8) | | | | 2,223.2 |
| | | | | | | | | Less inter-segment revenue | | 15.9 | 14.6 | | | | | | | 24.3 | 54.8 | | | (54.8) | | — |
| | | | | | | | | Gross revenue from external |
| | | | | | | | | customers | 605.4 1,180.1 437.7 | | 2,223.2 | | | — | | | | 2,223.2 |
| | | | | | | | | Less subconsultants and other direct |
| | | | | | | | | expenses | | 71.3 280.4 | | | | | | 84.5 | 436.2 | | | — | | 436.2 |
| | | | | | | | | Total net revenue | 534.1 899.7 353.2 | | 1,787.0 | | | — | | | | 1,787.0 |
| | | | | | | | | Project margin | 285.9 479.0 184.8 | | 949.7 | | | — | | 949.7 |
| | | | | | | | | Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
F-19 | | | | | | | | Stantec Inc. |
The fol owing tables disclose the disaggregation of non-current assets by geographic area and revenue by geographic area and services: |
Geographic information |
| Non-Current Assets | Gross Revenue |
| | | | | For the quarter ended | | For the two quarters ended |
| June 30, | | December 31, | | | June 30, | | June 30, |
| 2022 | | | 2021 | | 2022 | 2021 | | | | | | 2022 | 2021 |
| | | $ | $ | | $ | $ | $ | $ |
Canada | | | | | | | | | | | 630.7 | | | 644.6 | 330.2 | 312.9 | | | | | | 639.5 | 605.4 |
United States | | | | | | | | | | | 1,866.2 | | | 1,880.0 | 736.8 | 591.4 | | | | | 1,439.0 | | 1,180.1 |
United Kingdom | | | | | | | | | | | 195.5 | | | 144.5 | 100.0 | 81.8 | | | | | | 193.0 | 165.5 |
Australia | | | | | | | | | | | 406.5 | | | 441.9 | 112.8 | 56.8 | | | | | | 226.3 | 94.3 |
Other global geographies | 146.0 | | | 156.8 | | 96.8 | 91.1 | | | | | | 192.7 | 177.9 |
| | | | | | | | | | | 3,244.9 | | | 3,267.8 | 1,376.6 | 1,134.0 | | | | | 2,690.5 | | 2,223.2 |
Non-current assets consist of property and equipment, lease assets, goodwil , and intangible assets. Geographic information is attributed to countries based on the location of the assets. Non-current assets at December 31, 2021 for Australia was restated from $325.6 to $441.9 and other global geographies from $273.1 to $156.8. An adjustment of $116.3 was made for certain assets in Australia that were previously grouped in other global geographies. |
Gross revenue is attributed to countries based on the location of the project. |
Gross revenue by services |
| | | | | For the quarter ended | | For the two quarters ended |
| | | | | | June 30, | | June 30, |
| | | | | 2022 | 2021 | | | | | | 2022 | 2021 |
| | | | | | $ | $ | $ | $ |
Infrastructure | | | | | | 387.0 | 321.5 | | | | | | 756.6 | 625.5 |
Water | | | | | | 283.2 | 246.2 | | | | | | 549.4 | 491.8 |
Buildings | | | | | | 245.6 | 225.5 | | | | | | 488.0 | 448.9 |
Environmental Services | | | | | | 301.0 | 193.8 | | | | | | 585.3 | 373.6 |
Energy & Resources | | | | | | 159.8 | 147.0 | | | | | | 311.2 | 283.4 |
Total gross revenue from external customers | | | | | | 1,376.6 | 1,134.0 | | | | | 2,690.5 | | 2,223.2 |
Performance wil fluctuate quarter to quarter. The first and fourth quarters historical y have lower revenue generation and project activity because of holidays and weather conditions in the northern hemisphere. Despite this quarterly fluctuation, the Company has concluded that it is not highly seasonal in accordance with IAS 34. The uncertain impacts of the COVID-19 pandemic also may result in changes to this pattern. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| | | | | F-20 | | | | | | Stantec Inc. |
CustomersThe Company has a large number of clients in various industries and sectors of the economy. No particular customer exceeds 10% of the Company’s gross revenue. |
17. Event after the Reporting Period |
DividendOn August 10, 2022, the Company declared a dividend of $0.18 per share, payable on October 17, 2022, to shareholders of record on September 29, 2022. |
Notes to the Unaudited Interim Condensed Consolidated Financial StatementsIn mil ions of Canadian dol ars except number of shares and per share dataJune 30, 2022 |
| F-21 | Stantec Inc. |