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Stuart Olson Reports First Quarter Results

Added approximately $300 million to consolidated backlog
Reported a strong book-to-bill ratio of 1.36 to 1.00
Declared its 33rd consecutive quarterly dividend

CALGARY, May 8, 2019 /CNW/ - Stuart Olson Inc. (TSX: SOX, SOX.DB.A) ("Stuart Olson" or the "Company") today announced first quarter 2019 financial results, and declared its 33rd consecutive quarterly dividend.

"I am pleased to report that we delivered adjusted EBITDA of $8.1 million in the first quarter of 2019, together with a strong book-to-bill ratio of 1.36, all in an environment of increased competition and a spending slowdown across our key Western Canadian markets," said David LeMay, President and CEO of Stuart Olson.

"We anticipate that the near-term negative impacts of the mandatory Alberta oil production curtailment on capital spending by our integrated oil sands customers and the highly competitive market conditions will continue into the second quarter. For the second half of this year, we expect year-over-year increases in contract revenue and adjusted EBITDA as these headwinds start to subside, and our operating groups continue to actively bid on a significant pipeline of project opportunities," added Mr. LeMay.


Three months ended March 31

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Contract revenue



Contract income



Contract income margin



Adjusted EBITDA



Adjusted EBITDA margin



Net (loss) earnings



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Basic (loss) earnings per share



Diluted (loss) earnings per share



Dividends declared per share



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Mar. 31, 2019

Jan. 1, 2019

Dec. 31, 2018





Working capital




Long-term debt (excluding current portion)




Convertible debentures (excluding equity portion)




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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, 2019 Management's Discussion & Analysis ("MD&A").


  • Stuart Olson added approximately $300 million to its backlog in the first quarter of 2019, reflecting a book-to-bill ratio of 1.36 to 1.00. This resulted in a March 31, 2019 backlog of $1.6 billion, which includes a diverse mix of public, private and industrial projects from Ontario to British Columbia and is predominantly made up of low-risk contract arrangements. First quarter additions to backlog include approximately:

    • $120 million in awards to the Buildings Group, comprised of a number of public infrastructure and private projects, including a construction management contract for a new retirement residence in Alberta.
    • $100 million in awards to the Industrial Group, including a new master services agreement ("MSA") which expands the group's work for an existing customer in Ontario into three additional regions. The Industrial Group also secured two contract renewals for on-going maintenance services in Alberta and a new petrochemical maintenance MSA in Alberta for bundled services, including its new mechanical maintenance capabilities.
    • $80 million of Commercial Systems Group awards comprised of numerous projects, including work on an agricultural facility in Ontario, a public facility in Alberta and a multi-use residential tower in Saskatoon.

  • Stuart Olson generated first quarter consolidated revenue of $220.9 million, as compared to $265.9 million in Q1 2018. The year-over-year change reflects the impact of a colder-than-usual winter, changes in project mix and stage of completion with a greater proportion of Buildings Group projects in higher-margin, but lower-activity, completion phases, and lower Industrial Group revenue reflecting last year's completion of two large construction projects.

  • Despite lower revenues, first quarter adjusted EBITDA of $8.1 million was comparable to the $8.1 million achieved in the first quarter of 2018. Adjusted EBITDA margin also increased to 3.7% from 3.0% in 2018, reflecting strong margin performance from the Buildings Group as well as the impact of adopting IFRS 16, the new lease accounting standard.

  • Stuart Olson recorded a first quarter 2019 net loss of $2.5 million (diluted loss per share, or "EPS", of $0.09), as compared to net earnings of $1.6 million (diluted EPS of $0.06) in the first quarter of 2018. The year-over-year decrease reflects higher costs related to restructuring, investing and other one-time activities in Q1 2019.

  • Adjusted free cash flow was an outflow of $4.1 million ($0.15 per share) in the first quarter of 2019, as compared to an adjusted free cash inflow of $5.6 million ($0.20 per share) in Q1 2018. The year-over-year change primarily reflects lower net earnings, a project stage of completion-driven change in provisions, and an increase in interest payments due to a higher long-term debt balance in Q1 2019, combined with increases to the Canadian prime lending rate.

  • The Company's net long-term indebtedness to adjusted EBITDA ratio was 3.2x, or 3.0x on a pro forma basis inclusive of Tartan's LTM adjusted EBITDA as at March 31, 2019. This compares to 2.8x, or 2.6x on a pro forma basis inclusive of Tartan's LTM adjusted EBITDA as at December 31, 2018. This change reflects the draw on its Revolver to fund working capital requirements.

  • On May 8, 2019, the Board of Directors ("Board") declared a quarterly common share dividend of $0.06 per share. The dividend is designated as an eligible dividend under the Income Tax Act (Canada) and is payable July 16, 2019 to shareholders of record on June 28, 2019.

    • Since the introduction of the quarterly dividend in June 2011, Stuart Olson has paid a dividend for thirty-three consecutive quarters, including the dividend declared today. This represents $3.84 per share or $99.5 million in total, returned to shareholders.

  • On March 5, 2019, the Company negotiated amendments to its Revolver to: 1) temporarily increase the debt to EBITDA covenant to provide the optionality to use the Revolver to fully settle the repayment of its $80.5 million convertible debentures in 2019, 2) exclude certain non-cash interest costs from the calculation of its interest coverage ratio covenant, 3) minimize any adverse impacts to covenant calculations from the adoption of IFRS 16, and 4) exclude costs related to certain shareholder activities from the definition of EBITDA.

  • During the first quarter of 2019 Stuart Olson was recognized as one of Alberta's Top Employers for the third consecutive year.

  • Subsequent to quarter-end, Stuart Olson announced that the Board has selected David C. Filmon to succeed Albrecht Bellstedt as Chair following the Company's annual and special meeting of shareholders. Mr. Bellstedt is retiring from the role after over 10 years' service as Chair. Mr. Filmon is a current member of the Board and serves on the Audit and Human Resources and Compensation Committees. Mr. Filmon's appointment as Chair is subject to his election as a director by Stuart Olson's shareholders at the May 22, 2019 shareholders meeting.


Consolidated Outlook

  • Stuart Olson expects 2019 consolidated contract revenue and adjusted EBITDA to be meaningfully higher, and adjusted EBITDA margin to be stable compared to 2018, based on the outlooks for each of the operating groups below.

  • The Company's consolidated outlook has changed from its December 31, 2018 MD&A, primarily as a result of lower-than-expected award wins for its Industrial Group as a result of competitive market conditions and the continued near-term impacts on capital spending by its integrated oil sands customers as a result of the mandatory Alberta oil production curtailment policy.

Industrial Group

  • Revenue from the Industrial Group is expected to be significantly higher and adjusted EBITDA is expected to be meaningfully higher in the 2019 fiscal year as compared to 2018. This outlook reflects a robust pipeline of construction opportunities for the group, together with the addition of a full year of revenue and adjusted EBITDA contribution from the recently acquired Tartan business, as well as an increase to adjusted EBITDA from the adoption of IFRS 16. Adjusted EBITDA margin for the group is expected to be meaningfully lower year-over-year, reflecting last year's completion of major projects that contributed significant close-out margins to 2018 results.

Buildings Group

  • The Buildings Group anticipates significantly higher revenue and meaningfully higher adjusted EBITDA year-over-year on the basis of projects moving into higher-activity construction phases and the impact of IFRS 16, paired with a slight decline in adjusted EBITDA margin. This outlook reflects a robust pipeline of opportunities for the group in 2019, combined with a greater proportion of projects in higher-activity but lower-margin stages of completion in 2019.

Commercial Systems Group

  • Commercial Systems Group 2019 revenue is expected to be stable compared to 2018, while adjusted EBITDA and adjusted EBITDA margin are expected to be significantly higher as productivity challenges experienced in 2018 are not expected to repeat. The group's adjusted EBITDA results are also expected to benefit from the adoption of IFRS 16.

Corporate Group

  • Corporate Group adjusted EBITDA is expected to decline significantly in 2019 as compared to 2018. This impact relates to both a significant reduction in share-based compensation expense that occurred in 2018 as a result of a decrease in the Company's share price in the year, as well as an expected increase in 2019 incentive accruals relating to the anticipated improvement in operating performance. These effects will be partially offset by the impact of adopting IFRS 16.


Stuart Olson will hold a conference call and webcast to discuss its 2019 first quarter results on Thursday, May 9, 2019 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 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 Wednesday, March 20, 2019 by dialing 1-888-390-0541 (Canada and USA) or 1-416-764-8677 (outside Canada and USA), pin 202427. 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 Canada, Ontario and the territories. In 2019 Stuart Olson was recognized as one of Alberta's Top Employers for the third 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.


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 made under the section titled "2019 Outlook" including, without limitation, those relating to expectations regarding changes in:




Stuart Olson's backlog and the implication that such backlog will be converted into revenues;


expectations regarding changes in 2019 adjusted EBITDA and adjusted EBITDA margin;


economic conditions;


the outlook for each of Stuart Olson's operating groups


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