Stuart Olson suspends dividend as tough environment in Alberta, oilsands continues
Stuart Olson Inc. reported its third quarter 2019 earnings after markets closed Nov. 6.
The Calgary-based contractor said it recorded $243.1 million in revenue for the three-month period ending Sept. 30, up from $223.7 million a year ago. Net earnings dipped in the red, however. Stuart Olson said it had a net loss of $2 million, or seven cents per share in Q3, compared with a $3.9 million, or 12 cents per share, gain in 2018.
“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,” David LeMay, the company’s president and CEO, said in a release.
Stuart Olson pointed to a slow market in Alberta and low spending in the oilsands as significant impediments to growth. It plans to take several steps, including suspending its quarterly dividend, to restructure into a “leaner” organization and counter the tough environment. The company says its new structure will be more vertically integrated with direct lines of communication open between operations and customers.
“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,” LeMay said. “These actions support our ongoing diversification strategy, and we expect them to deliver long-term growth and value for stakeholders.”
The company has also been working to diversify its business beyond Western Canada, and specifically Alberta, for several years.
Stuart Olson said it now expects its 2019 revenue to remain in line with 2018 and its adjusted EBITDA to be modestly lower. It had previously forecast increases in both areas.
As of Sept. 30, the company’s backlog of work stood at $1.63 billion. This compares to $1.58 billion at the end of Q3 2018.