May 14, 2009 / 1:50 PM / 9 years ago

UPDATE 2-Stantec profit, revenue rise, paced by acquisitions

* Profit C$0.45/shr vs C$0.37/shr in year-before quarter

* Revenue climbs 38.7 pct to C$404.8 mln

* Shares rise in Toronto and New York (Adds analyst’s comment, details, updates stock price)

OTTAWA, May 14 (Reuters) - Stantec Inc (STN.TO) reported a 22 percent rise in quarterly earnings on Thursday on the back of revenue growth across the Canadian engineering company’s environmental, transportation, buildings and industrial units.

Both sales and earnings at deal-hungry Stantec — which in January closed its biggest acquisition with the C$143 million ($122 million) takeover of environmental consultancy Jacques Whitford — beat market expectations.

Net income rose to C$20.6 million, or 45 Canadian cents a share, in the first quarter, from C$16.9 million, or 37 Canadian cents, a year earlier.

Revenue increased to C$404.8 million from C$291.8 million.

On average, analysts had expected earnings of 43 Canadian cents a share and revenue of C$370.5 million, according to Reuters Estimates.

“Revenue growth and margin expansion in the quarter indicate a strong start to 2009 despite tougher economic condition comparisons year over year,” RBC Capital Markets analyst Sara O’Brien said in a note.

“We expect earnings growth in 2009 will drive renewed interest in Stantec, particularly as the company’s strong free cash flow pays down its debt and opens opportunities for further large accretive acquisitions.”

Edmonton, Alberta-based Stantec, which closed six takeovers in 2008 and 10 in 2007, has been following a strategy of acquisition-fueled growth. At the end of 2008, it said it had met the goal it set 10 years ago to become a 10,000-member company with annual revenue of more than C$1 billion.

Stantec also said Robert Gomes will take over as chief executive from Tony Franceschini, who is retiring. Stantec announced in November that Gomes, previously a vice president at the company, would succeed Franceschini, who remains as director.

The company’s shares rose 1.5 percent, or 41 Canadian cents, to C$26.84 on the Toronto Stock Exchange on Thursday and added 51 cents to $22.89 in New York.

$1=$1.17 Canadian Reporting by Susan Taylor; Editing by Peter Galloway

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