Media Centre

News Releases

Stuart Olson Reports Third Quarter Results

Challenging Alberta economic conditions continue to impact oil sands spending and quarterly results
Restructuring into a leaner organization focused on operational excellence and superior customer service
Amended revolving credit facility to allow for further financial flexibility
Quarterly dividend suspended to support operations

CALGARY, Nov. 6, 2019 /CNW/ - Stuart Olson Inc. (TSX: SOX) ("Stuart Olson" or the "Company") today announced financial results for the third quarter and first nine months of 2019.

"While third quarter revenue increased year-over-year for each of our operating groups, margin from our Commercial Systems Group continued to improve and our longer-term sales funnel remains robust, our current business landscape remains challenging. To address the continued challenging market conditions, we are taking decisive actions that include a comprehensive restructuring into a leaner, more vertically integrated organization with direct lines of communication to operations and customers. We are confident this new organizational structure is an effective response to the capital spending slowdown by our oil sands customers and the impacts of working through the development phase of infrastructure projects," said David LeMay, President and CEO of Stuart Olson.

"This organizational structure combined with the completed refinancing of our convertible debentures, the recent amendment of our revolving credit facility and the decision to suspend the quarterly dividend, all provide our business a stronger foundation in which to operate. We continue to believe we are executing on the appropriate strategies, and I want to underscore that the actions we are taking today are a result of project deferral conditions and the decision to right size our business to better align with current market activity levels is an appropriate one," commented Mr. LeMay. "These actions support our ongoing diversification strategy, and we expect them to deliver long-term growth and value for stakeholders."


Three months ended

Nine months ended

September 30

September 30

$ millions, except percentages and per share amounts





Contract revenue





Contract income





Contract income margin





Adjusted EBITDA





Adjusted EBITDA margin





Net (loss) earnings





(Loss) earnings per share

Basic (loss) earnings per share





Diluted (loss) earnings per share





Adjusted free cash flow





Adjusted free cash flow per share





$ millions

Sep. 30,

Dec. 31,
2018 (3)




Working capital



Long-term debt (excluding current portion)



Convertible debentures (excluding equity portion) (1)(2)



Total assets




(1) The convertible debentures issued in 2014 are presented as a current liability of $79.9 million as at September 30, 2019 and as a current liability of $78.2 million as at December 31, 2018. Refer to Note 13 of the September 30, 2019 Condensed Consolidated Interim Financial Statements for further information.

(2) Outstanding convertible debentures, excluding the equity portion, declined to $65.7 million after repayment of the 2014 convertible debentures on October 23, 2019.

(3) Stuart Olson adopted IFRS 16 using the cumulative catch-up approach on January 1, 2019. Please refer to Note 3 of the September 30, 2019 Condensed Consolidated Interim Financial Statements and the first quarter 2019 MD&A for further information.


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", "adjusted free cash flow", "adjusted free cash flow per share" 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 September 30, 2019 Management's Discussion & Analysis ("MD&A").


  • As at September 30, 2019, backlog was $1.6 billion, similar to the balance as at December 31, 2018. The current backlog includes a mix of public, private and industrial projects from Ontario to British Columbia and is predominantly made up of low-risk contract arrangements.

  • Stuart Olson added more than $195.0 million to backlog in the third quarter of 2019, primarily reflecting a number of Buildings Group additions. These include $130.0 million of previously announced awards for the construction of a private sector light industrial facility, as well as a construction management award to build a new student residence at a post-secondary institution in Ontario.

  • The Company increased third quarter consolidated revenue to $243.1 million, from $223.7 million in Q3 2018. The 8.7% year-over-year increase reflects increased activity levels for all of Stuart Olson's business groups in the 2019 period, as recent project awards moved into higher activity phases of construction.

  • Stuart Olson recorded a third quarter 2019 net loss of $2.0 million (diluted loss per share of $0.07), as compared to net earnings of $3.9 million (diluted earnings per share of $0.12) in the third quarter of 2018. The Company's earnings results reflect a loss incurred on the closure of a small part of the Industrial Group business, the year-over-year change in adjusted EBITDA outlined below, restructuring costs recognized in Q3 2019, as well as higher revolving credit facility ("Revolver") interest costs associated with increases to the Revolver lending rate and an increase in the amount drawn on the Revolver in 2019.

  • Third quarter adjusted EBITDA was $11.1 million (adjusted EBITDA margin of 4.6%), as compared to $11.8 million (adjusted EBITDA margin of 5.3%) in the third quarter of 2018. These results primarily reflect last year's completion of major Industrial Group projects that contributed significant close-out margins in Q3 2018.

  • Adjusted free cash flow was an outflow of $2.4 million (outflow of $0.09 per share) in the third quarter of 2019, as compared to an adjusted free cash inflow of $10.2 million (inflow of $0.37 per share) in Q3 2018. The year-over-year change primarily reflects the combination of lower net earnings and higher taxes in the 2019 period due to a large refund received during the third quarter of 2018 that did not repeat in 2019.

  • As at September 30, 2019, the Company's net long-term indebtedness to adjusted EBITDA ratio was 4.0x. This compares to 2.8x, or 2.6x on a pro forma basis inclusive of Tartan's pre-acquisition last twelve months ("LTM") adjusted EBITDA, as at December 31, 2018. This change reflects a draw on the Revolver to fund operating and investing activities in 2019, combined with a reduction in LTM adjusted EBITDA.

  • On September 20, 2019, Stuart Olson closed an investment agreement with Canso Investment Counsel Ltd. ("Canso"), pursuant to which Canso purchased $70.0 million aggregate principal amount of convertible unsecured subordinated debentures, with an interest rate of 7.0% per annum, conversion price of $4.87 per common share and a maturity date of September 20, 2024.
    • The conversion price per common share was established at 140% of the 30-day volume weighted average trading price calculated after the close of trading on August 1, 2019.
    • On October 23, 2019, the Company used the proceeds, together with available cash and a draw on the Revolver, to redeem and repay the previously outstanding $80.5 million convertible debentures originally issued in 2014.

  • During the quarter and subsequent to quarter-end, the Company secured two unanimously approved amendments to the Revolver that changed a number of terms. The amended agreements have been filed under Stuart Olson's profile on SEDAR. Material changes included:
    • On August 7, 2019, Stuart Olson secured amendments that include a provision that the required interest coverage ratio for each quarter end shall be not less than 2.00:1.00 until December 31, 2020, increasing to not less than 2.25:1.00 until March 31, 2021, and increasing to not less than 2.50:1.00 for each quarter thereafter. Previously, the interest coverage ratio could not be less than 3.00:1.00.
    • On November 6, 2019, the Company secured amendments that include improved access to liquidity via a change to the required debt to EBITDA covenant for each quarter end to be not greater than 4.25:1.00 until June 30, 2020, decreasing to not greater than 3.75:1.00 until September 30, 2020 and returning to not greater than 3.25:1.00 for each quarter thereafter. Previously, the debt to EBITDA ratio could not exceed 3.25:1.00. Additional material changes include a temporary increase in the ceiling on restructuring costs permitted to be added back in Revolver EBITDA to $10.0 million through September 30, 2020 (returning to $2.5 million for each quarter thereafter) and a reduction in the total size of the facilities to $125.0 million (from $175.0 million previously).

  • In order to improve financial flexibility in response to the negative impacts of oil sands customers capital spending slowdown, along with working through the development phase of infrastructure projects, the Company is taking decisive actions, including:
    • The Board of Directors ("Board") suspended the quarterly dividend on November 6, 2019.
    • The Company is implementing a comprehensive organizational restructuring to create a leaner, more vertically integrated organization with direct lines of communication to operations and customers.
    • On November 6, 2019, Stuart Olson announced Ian M. Reid's plans to retire early in order to create a reduced governance cost structure and support the Company's comprehensive restructuring initiatives. The resignation is effective January 2020. Mr. Reid joined the Board in 2007 and is the Chair of the Health, Safety and Environment Committee and member of the Corporate Governance & Nominating Committee and Human Resources & Compensation Committee. The Company does not expect to replace this Board position.

  • During the quarter and subsequent to quarter-end, changes to the management team included the following:
    • On September 9, 2019, Daryl Sands, Executive Vice President, Finance and Chief Financial Officer departed the Company. Dean Beacon was appointed as Interim Chief Financial Officer and a search is underway for a new Chief Financial Officer.
    • On October 18, 2019, Bob Myles left his position as Chief Operating Officer of the Industrial Group and David LeMay, Stuart Olson's President and Chief Executive Officer, assumed leadership duties for the Industrial Group.


Consolidated Outlook

  • For the 2019 fiscal year, Stuart Olson now expects consolidated contract revenue to be stable, adjusted EBITDA to be modestly lower and adjusted EBITDA margin to be slightly lower than 2018 results.

  • This updated outlook primarily reflects the heightened challenges affecting Alberta's oil sands operators, which include the impacts of the mandatory Alberta oil production curtailment policy and pipeline construction delays. These conditions are contributing to reduced capital spending and project announcement delays by the Company's integrated oil sands customers, including earlier than forecast site demobilization, as well as more competitive market conditions, which in turn, are creating negative near-term impacts for the Industrial Group. Further timing delays on some Building Group projects are also expected to have an impact on fourth quarter results. Please refer to the "Third Quarter 2019 Overview" section in this press release for a description of the comprehensive measures the Company is taking to respond to these challenges. These impacts are expected to be partially offset by reduced Corporate Group costs related to share-based compensation.

Industrial Group

  • Revenue from the Industrial Group is expected to be modestly lower, while adjusted EBITDA and adjusted EBITDA margin are expected to be significantly lower in the 2019 fiscal year as compared to 2018. The expected decline in adjusted EBITDA margin for the group is due primarily to the negative economic impacts to the group's oil sands customers identified above and last year's completion of certain major projects that contributed significant close-out margins to 2018 results, partially offset by an increase to adjusted EBITDA from the adoption of IFRS 16 and a full year of results contributed by the Tartan business.

Buildings Group

  • The Buildings Group anticipates stable adjusted EBITDA margin, paired with slightly lower revenue and adjusted EBITDA year-over-year, reflecting the timing delays outlined above.

Commercial Systems Group

  • Commercial Systems Group 2019 revenue is expected to be slightly higher than in 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 in 2019. The group's adjusted EBITDA results are also expected to benefit from the adoption of IFRS 16.

Corporate Group

  • Corporate Group adjusted EBITDA for 2019 is expected to be similar to 2018.


Stuart Olson will hold a conference call and webcast to discuss its 2019 third quarter results on Thursday, November 7, 2019 at 8:15 a.m. Mountain Time (10:15 a.m. Eastern Time). 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 Thursday, November 21, 2019 by dialing 1-888-390-0541 (Canada and USA) or 1-416-764-8677 (outside Canada and USA), pin 402730. 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 are listed on the Toronto Stock Exchange under the symbol "SOX".


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 future benefit of organizational restructuring; and


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:; Dean Beacon, Interim Chief Financial Officer, Stuart Olson Inc., (403) 685-7777, Email: