Stuart Olson Reports Second Quarter 2014 Results and Declares Quarterly Dividend

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 revenue 334.0 277.8 608.5 514.7
Contract income 28.2 26.0 53.5 48.1
Contract income margin 8.4% 9.4% 8.8% 9.3%
EBITDA 11.1 9.2 19.1 16.0
EBITDA margin 3.3% 3.3% 3.1% 3.1%
Net earnings (loss) 0.0 0.5 (0.7) (0.7)
Net loss per common share        
  Basic 0.00 0.02 (0.03) (0.03)
  Diluted 0.00 0.02 (0.03) (0.03)
Dividends declared per share 0.12 0.12 0.24 0.24
$millions     Jun. 30, 2014 Dec. 31, 2013
Backlog     2,108.7 2,116.2
Working capital(1)(2)     36.5 84.9
Long-term debt (excluding current portion)     77.4 50.3
Convertible debentures (excluding equity portion)(1)     83.3 81.9
Total assets     759.5 694.7

Notes:  (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 million).

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 Q2 2014 Management's Discussion and Analysis.

Second Quarter ("Q2") 2014 Overview

  • On May 22, 2014, the Company changed its name from The Churchill Corporation 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, 2013.
    • 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 million, from $277.8 million in the second quarter of 2013.
    • Buildings Group revenue increased by 33.9% to $161.7 million, reflecting a record backlog of work, increased commercial and institutional activity in B.C., Alberta and Manitoba, and continued growth within the Building Group's industrial buildings branch.
    • Industrial Group revenue increased by 2.7% to $118.9 million, reflecting increased activity levels in Alberta's oil sands.
    • Commercial Systems Group revenue increased by 25.9% to $58.9 million, supported by the start-up of a number of significant projects in British Columbia and Alberta.
  • Consolidated contract income increased 8.5% to $28.2 million from $26.0 million in Q2 2013; consolidated contract income margin declined to 8.4% from 9.4%. Not meeting internal performance targets on certain Buildings Group's 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 million 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 ($0.02 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 Group during the quarter. Adjusted to exclude non-recurring asset disposals, second quarter 2014 net earnings would have been $1.4 million (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).
  • Stuart Olson's Board of Directors declared a second quarter dividend of $0.12 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 Olson's website (

"We executed a key piece of our business strategy in the second quarter with the introduction of our new corporate name and rebranding," said David LeMay, 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.

Stuart Olson's 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 additional margin.
  • 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 Industrial Group's objective of becoming a self-performing general contractor.

Management continues to evaluate alternatives with respect to refinancing our $86.3 convertible debentures that are due in June 2015.  There are several alternatives available to us and we are confident in our ability to execute the refinancing in the near-term.

Stuart Olson will hold a conference call and webcast to discuss its second quarter 2014 results tomorrow, August 7, 2014 at 6:00 a.m. Mountain Time (8:00 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  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, August 28, 2014, by dialing 1-888-390-0541 (Canada and USA) or 1-416-764-8677 (outside Canada and USA), 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 Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stuart Olson common shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols "SOX" and "SOX.DB", respectively.

Forward 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  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.

For further information:

David LeMay
President and Chief Executive Officer
Stuart Olson Inc.
(403) 685-7777

Daryl Sands
Executive Vice President and Chief Financial Officer
Stuart Olson Inc.
(403) 685-7777


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