Blog Coverage Stantec Sells its Software Business for $270 Million

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LONDON, UK / ACCESSWIRE / March 22, 2017 / Active Wall St. blog coverage looks at the headline from Stantec Inc. (NYSE: STN) as the global design firm announced on March 21, 2017, that it has signed an agreement for the sale of its Broomfield, Colorado-based Innovyze, a global provider of wet infrastructure business analytics software solutions designed to meet the technological needs of water/wastewater utilities, government agencies, and engineering organizations worldwide for USD$270 million to the EQT Mid-Market US fund. Innovyze became a part of the MWH acquisition which Stantec completed in 2016. Register with us now for your free membership and blog access at:

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One of Stantec’s competitors within the Business Services space, Alliance Data Systems Corp. (NYSE: ADS), is estimated to report earnings on April 20, 2017. AWS will be initiating a research report on Alliance Data Systems following the release of its next earnings results.

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“Innovyze is an impressive, growing business and we see this as an opportunity to continue working with them in servicing our clients while allowing both our companies to prosper with the best available resources,” said Bob Gomes, Stantec President and Chief Executive Officer.

In March 2016, Stantec acquired all of the issued and outstanding capital stock of MWH, its largest ever acquisition for a purchase price of approximately US$793 million. Subject to customary conditions and regulatory approvals, the Innovyze sale is expected to be closed in Q2 2017. The larger integration of the MWH business into Stantec’s operations continues, with North American divisions expected to be completed in Q2 2017 and successive parts within the next 18 months.

About Innovyze

Innovyze was established in 1996 as a subsidiary of MWH Global, Inc. to provide wet infrastructure business analytics software solutions. Since then, Innovyze has developed into a leading global provider of smart water infrastructure modeling and simulation software solutions designed to meet the technological needs of water/ wastewater utilities, government agencies and engineering organizations worldwide. As the largest pure-play water-focused software Company in the world, Innovyze offers the only suite of water-focused products that span the full infrastructure lifecycle, which are engineered for speed and reliability and backed by strong technical support.

“We have been passionately building significant global market presence and vanguard water and wastewater modeling and simulation technology since I founded the company over twenty years ago, and we excelled in superior customer care,” said Paul F. Boulos, Chairman, CEO and President of Innovyze.

EQT Mid Market stated that Innovyze’s management team, led by Paul Boulos, will continue to lead the Company following completion of the transaction, building on a long track record of success driving growth at Innovyze.

About EQT Mid Market Team

The EQT Mid Market team consists of around 60 Investment Advisory Professionals based in Amsterdam, Copenhagen, Frankfurt, Helsinki, Hong Kong, Munich, New York, Oslo, Shanghai, Singapore, Stockholm, and Zurich.

In close collaboration with EQT’s broad network of Industrial Advisors, the team seeks to identify potential control or co-control investments in medium-sized companies with attractive value creation potential. The typical equity investment opportunity ranges between EUR 40 million and EUR 75 million in Northern Europe and between EUR 40 million and EUR 100 million in Greater China and Southeast Asia.

The team only investigates investment opportunities where there is a clear potential to support the further development of the Company in question. Other investment themes of interest are cross-border expansion and ties between Europe and Asia. EQT’s expertise in supporting business development and growth as well as the internationalization expertise are often decisive factors for company owners when selecting EQT as partner or new owner.

Latest Earnings Results

On February 23, 2017, Stantec announced its earnings results where it noted that the Company had closed FY16 with a 49.5% increase in gross revenue on a y-o-y basis, primarily due to contributions from five strategic acquisitions completed in the year. The Company also achieved a 9.8% increase in EBITDA and a 15.5% increase in adjusted EBITDA year-over-year.

When comparing Q4 FY16 to Q4 FY15, gross revenue increased 74.7%. EBITDA increased 51.8%, and adjusted EBITDA increased 41.3% due to an increase in gross margin as a percentage of net revenue. Net income increased 16.2%; diluted earnings per share decreased 3.7%; and adjusted diluted earnings per share increased 2.9%.

On February 22, 2017, Stantec declared a cash dividend of $0.125 per share – an increase of 11.1% over last quarter – payable on April 13, 2017, to shareholders of record on March 31, 2017.

Stock Performance

At the close of trading session on Tuesday, March 21, 2017, Stantec’s stock price was slightly up 0.20% to end the day at $25.30. A total volume of 258.28 thousand shares were exchanged during the session, which was above the 3-month average volume of 16.25 thousand shares. The Company’s share price has gained 9.39% in the past twelve months and 0.20% on YTD basis. The stock currently has a market cap of $2.88 billion. Furthermore, shares of the Company are trading at a PE ratio of 29.08 and have a dividend yield of 1.51%.

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