Canada's Engineering Firms Designing Impressive Shareholder Returns

Infrastructure & Construction
Canadas Engineering Firms: Designing Impressive

Shareholder Returns
Jamil Murji, CFA (Associate)
jamil.murji@raymondjames.ca
604.659.8261
Theoni Pilarinos, CFA (Associate)
theoni.pilarinos@raymondjames.ca
604.659.8234
Greg Jackson (Associate)
greg.jackson@raymondjames.ca
604.659.8262
Frederic Bastien, CFA
frederic.bastien@raymondjames.ca
604.659.8232
Ben Cherniavsky
ben.cherniavsky@raymondjames.ca
604.659.8244
RAYMOND JAMES

Canada Research
Published by Raymond James Ltd

Please read domestic and foreign disclosure/risk information beginning on page 44 and Analyst Certification on page 45.
Raymond James Ltd. | 2200 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Industrial
May 3, 2011
Industry Report
Frederic Bastien CFA | 604.659.8232 | frederic.bastien@raymondjames.ca
Ben Cherniavsky | 604.659.8244 | ben.cherniavsky@raymondjames.ca
Jamil Murji CFA (Associate) | 604.659.8261 | jamil.murji@raymondjames.ca
Theoni Pilarinos CFA (Associate) | 605.659.8234 | theoni.pilarinos@raymondjames.ca
Greg Jackson (Associate) | 604.659.8262 | greg.jackson@raymondjames.ca

Infrastructure & Construction
Canada`s Engineering Firms: Designing Impressive Shareholder Returns

In this report, we explore the fundamentals of the engineering and design industry and explain why the Canadian firms serving
itGenivar, IBI Group and Stantechave been great stocks to own over time. We also include SNC-Lavalin in our analysis
because of the influential position its engineering practice now commands globally, and the similarly impressive returns the
100-year old firm has achieved for its shareholders. What we will highlight in the following pages is our thesis that the design
businessor what is often referred to as the professional technical services industryboasts compelling investment attributes
and will continue to be positively influenced by powerful secular trends. We will also demonstrate the four firms comprising the
engineering sub-segment of our Infrastructure & Construction (I&C) coverage are best-in-class and suitable for a broad range of
investors.
A Business Blessed With Attractive (and Enduring) Investment Attributes. Genivar, IBI Group and Stantec boast a number of
characteristics that differentiate them from the other three I&C groups we cover (contractors, equipment dealers and
engineered products). They focus on a fee-for-service consulting model and typically shy away from construction risk (this is
where SNC-Lavalins model differs). Design firms also generate healthy margins that reflect their high value-add and tend to
have low capex requirements, enabling them to generate strong cash flows from operations. Finally, the nature of their services
and their positioning in all phases of a project life cycle facilitate the generation of stable and diversified revenue streams.
Strong Fundamentals Underpin this Sector. First there is a growing secular demand for public infrastructure. This was a key
premise behind our Nov-28-07 Nation Building reports investment thesis and one that continues to weigh in positively today.
Then there is the highly-fragmented U.S. market, which represents fertile acquisition grounds for the three design firms under
our coverage (especially in light of the strong Canadian currency). Lastly, there is a trend toward larger and more complex
projects, and the impact of tighter environmental regulations, both of which are boosting demand for design services.
High-Quality Companies; Near-term Headwinds. We believe the four Outperform-rated companies included herein boast solid
management teams, industry-leading positions and very sound business strategies. That said, we remain mindful of certain risks
and challenges each firm faces in the short term. Specifically, we expect: (i) the softer market conditions in the U.S. to continue
weighing down on both IBI Group and Stantec; (ii) the government of Trinidad and Tobagos quest to reform procurement
legislation to slow Genivars organic growth for one or two more quarters; and (iii) more headline risk to potentially emerge for
SNC-Lavalin in the Middle East and Northern Africa. These headwinds, combined with the lack of any very compelling valuation
discount on these stocks, explain why a Strong Buy rating is conspicuously absent from our recommendations for the group.
To Each His Own. None of this, however, should detract from our main message that Canada four engineering firms are
designed to deliver impressive shareholder returns over time. Moreover, each boasts unique traits that make it attractive for a
broad range of investors. Genivar, which we selected earlier this year as one Raymond James Best Picks for 2011, stands out as
the stock that offers the best combination of growth and income. What draws us to IBI Group are its proven partnership model
and industry-leading yield. We favour Stantec for its leadership position in P3s and latent leverage to a recovery in U.S. end-
market demand, and see SNC-Lavalin as the obvious choice for investors seeking exposure to global infrastructure markets.
Company Ticker Ticker Current Rating Target Price Total Return
Primary Secondary Price (6-12 months) To Target
Engineering
Genivar Inc. GNV-TSX C$30.10 2 C$33.00 15%
IBI Group Inc. IBG-TSX C$14.79 2 C$16.50 19%
SNC-Lavalin SNC-TSX C$56.53 2 C$63.00 13%
Stantec Inc STN-TSX STN-NYSE C$29.62 2 C$33.75 14%

Raymond James Ltd.
Canada Research | Page 2 of 52 Infrastructure & Construction

Table of Contents
Overview............................................................................................................................................. 3
Professional Technical Services 101 ................................................................................................... 6
The ABCs of Design Firms........................................................................................................ 7
How Projects are Administered............................................................................................... 8
Defining Features of Design Firms........................................................................................... 9
Key Industry Trends ............................................................................................................................ 12
1. Horizontal Integration: Many Innings Left.......................................................................... 12
2. Vertical Integration: More are Embracing the Integrated Approach.................................. 15
3. Projects are Growing Larger and More Complex ................................................................ 16
4. The Environment: A Good Business for Engineers ............................................................. 16
End Market Outlook ........................................................................................................................... 17
Buildings .................................................................................................................................. 18
Urban and Muncipal Infrastructure ........................................................................................ 20
Transportation......................................................................................................................... 20
Industrial and Power ............................................................................................................... 21
Environmental ......................................................................................................................... 21
Analyzing the Returns......................................................................................................................... 23
Return on Invested Capital (ROIC)........................................................................................... 23
EBITDA Margin ........................................................................................................................ 25
EBITDA Growth........................................................................................................................ 26
Revenue and EBITDA per Employee........................................................................................ 27
Working Capital Management (Day Sales Receivable)............................................................ 28
Company Profiles................................................................................................................................ 30
Risks .................................................................................................................................................... 41

Infrastructure & Construction Canada Research | Page 3 of 52
Overview
This report profiles the engineering and design sub-segment of our Infrastructure &
Construction (I&C) coverage universe in Canada. Namely, the list of public companies
that participate in this market include Genivar, IBI Group, and Stantec. Recognizing
some important distinctions in its fully-integrated business model, we have also
elected to include SNC-Lavalin in this report because of its close parallels to the pure
design firms mentioned above.
Our comprehensive analysis begins with a broad, high-level overview of what the
engineering and design business is all aboutor what we label Professional Technical
Services 101. We then identify and discuss what we believe to be the most important
industry trends currently underway before turning to a review of the key end markets
that the sector serves. Next, we introduce a peer group benchmarking exercise that
evaluates the historical performance of select financial ratios for the companies noted
above. We then provide a detailed review of our respective investment theses for
Genivar, IBI Group, SNC-Lavalin and Stantec, and close with a brief overview of some of
the largest independent players domiciled in Canada.
If asked to encapsulate all of the facts and opinions expressed in this comprehensive
report, we would reference Exhibit 1. Therein, it is strikingly evident that investing in
Canadas publicly-traded engineering and design firms has been a very lucrative
experience over the long-run. For example, since its IPO in 2006 Genivar has generated
a total return (dividends and share price appreciation) of 244%; IBI Groups five-year
return has been 87%; SNC-Lavalins has been 82%; and Stantecs has been 37%. Over a
ten-year period, the total return for the latter two companies has been 819% and 579%
respectively (10-year data are not available for Genivar or IBI Group).
Investing in the engineering and
design sector has been a very lucrative
exercise

Exhibit 1: Five-Year Total Returns for Canadas Engineering and Design Stocks
-50%
0%
50%
100%
150%
200%
250%
300%
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SNC STN IBG GNV

Source: Capital IQ, Raymond James Ltd.
Although the past tells us only very little about the future, our broad recommendation
to stay invested in this sector is significantly influenced by such impressive historical
results. Indeed, we believe it is more than mere coincidence that all four of our
engineering and design stocks have outperformed the index over such a challenging
period of time for the economy. Rather, we view this as indicative of the very strong
fundamentals that underpin this sector. At the macro level these include: (i) a growing
secular demand for public infrastructure; (ii) an increase in the outsourcing of
engineering practices from general industry to specialized firms; (iii) a tightening of
environment regulations and permitting processes; (iv) on-going horizontal and vertical
consolidation; and (v) a trend towards the construction of larger, more complex
projects.
Similarly, we believe that the microeconomics of this business are blessed with some
very attractive (and enduring) investment attributes including: (i) high gross margins
that reflect the value-added intellectual component of engineering and design
services; (ii) limited capital investment requirements that lead to strong free cash
generation; (iii) ample opportunity to cross-sell services and diversify revenue streams
into multiple end-markets and complete life-cycle solutions; (iv) disciplined
competitive dynamics; and (v) a general strategy (with some important exceptions, most
notably for SNC-Lavalin) of focusing on a fee-for-service model that limits exposure to
construction risks.
Favourable secular trends and good
business fundamentals
The positive influence that all the variables noted above have had on our universe of
engineering and design companies is visible not only in the long-term shareholder
returns, but also in the financial benchmarking analysis that we have included in this
report (see the section Analyzing the Returns). For example, Genivar, Stantec and SNC-
Lavalin have each consistently averaged an ROIC in the range of 10-13% over many
years, well over their respective cost of capital. Similarly, respectable EBITDA margins
have been maintained in the range of 13-20% for the pure design firms in Canada and
8-9% for SNC-Lavalin going back to 2006 and beyond. Meanwhile, the most recent full
cycle EBITDA growth (i.e. over a trough to peak period in the economy) compounded at
a rate ranging from 23% (Stantec) to 55% (Genivar) for the group.
To the extent that all of the aforementioned macro and micro forces are expected to
remain intact (and in some cases accelerate), we believe that our coverage universe of
engineering and design firms can continue to generate impressive financial results for
the foreseeable future. That is largely why we currently rate all four of these stocks
Outperform. At the same time, we remain mindful of the numerous risks and challenges
that continue to weigh on this industry. As expounded upon in this report, these
include: (i) the governments increasing fiscal restraint; (ii) the depressed state of
private non-industrial construction markets; and (iii) the lofty valuations of independent
target firms that have made acquisitions more expensive. These headwinds, combined
with the lack of any very compelling EV/EBITDA discount on the stocks we cover, have
taken some of the sizzle away from our sector call and investment thesis at this point
in time. As a result, a Strong Buy rating is conspicuously absent from our current
recommendations for the group.
should positively influence
Genivar, IBI Group, Stantec and
SNC-Lavalin for years to come
None of this, however, should detract from our main message that the engineering and
design firms in Canada represent an attractive buy and hold opportunity for investors
seeking healthy long-term returns with relatively low-risk. Accordingly, we expect all
four firms in our coverage universe to perform well over the next 12 months and
beyond, with Genivar standing out as the one stock that was selected for Raymond
James Ltd.s 2011 Best Picks list in the Dec-7-10 report.
Our investment thesis for each of these companies can be summarized as follows:
Genivar. In the short five years it has operated as a publicly-traded entity, Genivar
has completed 51 acquisitions, grown its employee base from 1,150 to over 4,500,
and generated a total return of 244% for its shareholders. Much of this growth was
facilitated by the firms entrepreneurial and decentralized approach, which
empowers partners to focus on what they do bestwin business and drive revenue
synergies. There is reason to expect more of the same as the firm shifts its focus to
global diversification and aims to add new fields of expertise, including architectural
design, energy and mining. At the same, we expect the firms outsized position in
Canada to help drive organic growth at an annual rate of 5-10% for many years to
come (notwithstanding some recent short-term headwinds from the Trinidad &
Tobago operations). This, combined with Genivars healthy dividend, leads us to
believe the stock offers one of the Canadian I&C sectors most enticing combination
of growth and income.
IBI Group. Income-oriented investors will be well-served buying shares of IBI Group,
in our opinion. We feel the firm is well positioned to capitalize on: (i) an impending
recovery in private sector spending; (ii) the continued growth in private financing
initiatives; and (iii) an increasing concentration of ownership and management of
real estate portfolios. But what draws us to IBI Group is its proven partnership
model; today the firms leadership team comprises approximately 80 Directors and
Associate Directors who collectively own 46% of the firms common shares. We
believe this is one of the most powerful ways to align the interests of all IBI
stakeholders. Other considerations supporting our constructive stance on the stock
include the firms world-class architectural practice and its strengthened position in
social infrastructure.
SNC-Lavalin. We find it difficult to poke holes in SNC-Lavalins integrated business
model. The Montreal-based firm has over the past ten years developed into a global
engineering and construction (E&C) juggernaut as well as an active participant in
the ownership, operation and maintenance of infrastructure assets. Simply put, no
other firm comes even close to matching the breadth and scope of SNC-Lavalins
operations in Canada, where the company is developing massive power and civil
construction projects a mari usque ad mare. Globally, the company is a go-to name
for mining and metallurgy projectsas recent services contract wins from Vale, Rio
Tinto and BHP Billiton can attestand also boasts one of the leading foreign E&C
presences in emerging countries. Recent events in Libya show that investing in SNC-
Lavalin is not without risks, but we know from experience (and the firms 10-year
average ROE of 19%) that management will adapt, innovate and continue to drive
shareholder value higher.
Stantec. Over the past decade, Stantec has evolved from a small, regional player
into one of North Americas largest design firms. Its ability to generate this type of
self-funded growth (mainly through acquisitions) while maintaining healthy levels of
profitability, respectable ROIC, and conservative financial leverage has earned
management a laudable reputation among investors. Stantecs growing scale has
also provided it with an increasingly diversified revenue stream, lucrative cross-
selling opportunities, and an expanding expertise in the P3 market. The depressed
state of the U.S. construction markets, the related depreciation of the U.S. dollar, a
deceleration of acquisition activity, and simply the law of large numbers have all
conspired to slow the companys growth rate more recently. Nevertheless, we
remain positive on the stock because of its reasonable valuation along with the
firms formidable position in the more robust Canadian market (especially in the
West), its strong economic fundamentals, its opportunity to continue consolidating
the market, and its latent leverage to an eventual recovery in end market demand.
Professional Technical Services 101
Genivar, IBI Group and Stantec compete in the broadly defined professional technical
services field. Participants in this industry offer comprehensive consulting services
(which range from conceptual planning and design to engineering and project
management) to customers in the infrastructure and facilities market. Because these
entities have traditionally centered their activities on the front-end of projects, they are
commonly referred to as design firms. That description isnt stopping a growing number
of companies from adopting a holistic, long-term view to meeting client needs by
rounding out their offering with services such and maintenance and decommissioning
(see Exhibit 2).

Exhibit 2: Project Lifecycle
Project Lifecycle Phase Role of Professional Technical Services Firms
- Explore project concept
- Decide type of project (fixed price, cost plus)
- Determine delivery method (design-bid-build, design-build, PPP, etc.)
- Feasibility study
- Schematic design and specifications
- Draft contract
- Project management
- Surveying
- Resident engineering services
- Facilities and infrastructure management
- Facilities operations
- Performance engineering
- Solutions and recommendations for taking facilities out of active service
Decommissioning
Maintenance
Design
Pre-project Planning
Construction

Source: Stantec Inc., Raymond James Ltd.

Within the design industry, there is considerable diversity among companies. Some
choose to specialize in one or two specific disciplines while others (generally the larger
ones) strive to offer complete life-cycle solutions. The one common thread is that all
design firms focus on a fee-for-service consulting model and typically shy away from
construction risk. This low-risk strategy used by Genivar, IBI Group and Stantec differs
from the integrated approach SNC-Lavalin has employed successfully for years and that
many global construction firms are moving towards. There are pros and cons to each
business approach, all of which will be expounded upon below. But first we wish to
delineate the professions that this report includes in its definition of design firms.
Professional technical services firms
focus on a fee-based model and
typically shy away from construction
risk
The ABCs of Design Firms
We have structured this report to include the following practices: architecture, design,
urban planning, engineering and surveying. Architecture can be loosely defined as the
art and science of designing buildings and other physical structures. The discipline
employs licensed professionals who spend hours blending functional, technical, social
and aesthetic considerations into their drawings. On many projects, architects are also
called upon to prepare detailed bid documents, hire the engineers and general
contractors, and administer the construction contract on behalf of the project owner. In
contrast, designers are non-designated (no pun intended), less technical and generally
handle only a subset of an architects responsibilities.
Architects blend functional, social and
aesthetic considerations into their
drawings
Interior designers, for example, apply their skills to achieve built environments that are
functional and aesthetically attractive, support user safety and enhance the quality of
life of the occupants. Urban planning extends beyond the architectural practice (and
physical buildings) to include activities supporting the continued welfare of people
land use management, the design of transportation and communication networks, and
the protection and enhancement of the natural environment. To the extent
architectural, planning and design activities often overlap, it is common to see
companies offer these related services under one roof. IBI Group and Stantec are two
such firms.
While architects, designers and planners are generally viewed as the artists responsible
for the functionality, look and ambience of a building, engineers use math and science
to make it all work. Civil engineers ensure buildings are strong and stable enough to
resist all appropriate structural loads; mechanical engineers handle the ever so critical
HVAC and plumbing systems; and electrical engineers are responsible for all
communications, lighting, wiring, power and control systems. It is worth highlighting,
however, that these building engineers represent only a portion of all practicing
engineers today. Countless others specialize in other fields of the infrastructure and
construction sector (such as transportation, power and utilities, water treatment and
distribution, mining and energy) and in unrelated industries.
while engineers use math and
science to make it all work
We have opted to include geophysical surveying and mapping in this report for obvious
reasons. Because the profession focuses on locating and measuring the extent of
subsurface resources, it exerts significant influence on sectors that are of strategic
importance to SNC-Lavalin, Genivar and Stantecoil, gas, mining and metallurgy
especially at this point in the cycle. However, for the sake of keeping the scope of this
report manageable, we exclude any other technical services professions from our
discussion.
Combined, these five consulting industries form a vital and growing part of the Canadian
economy, accounting for roughly two percent of GDP. According to Statistics Canadas
most recent survey, design firm operating revenues rose at an impressive compound
annual growth rate (CAGR) of 11.7% to $27 billion between 2004 and 2009, with
engineers making up the lions share of this market (see Exhibit 3). We attribute much of
the industry growth in Canada to three secular trends. Firstly, competitive and cost
pressures have compelled entities ranging from large oil and gas companies to real
estate developers and crown corporations to focus operations on their core
competencies. As a result, such organizations began outsourcing their engineering
needs, the implementation of their capital expenditure programs and other non-core
projects to consulting firms. Secondly, all levels of government took decisive steps in the
mid 2000s to bridge the countrys infrastructure gap by significantly boosting
investments. This was the fundamental premise behind our Nov-28-07 Nation Building
reports investment thesis and one that continues to weigh in positively on the I&C
sector and all design firms (even despite our governments recent belt-tightening).
Lastly, professional technical services firms are seeing increased business from
With annual revenues of $27 billion,
design firms form a vital part of the
Canadian economy

environmental compliance and permitting as regulations continue to dictate the
progression of an infrastructure project be it a greenfield job or a brownfield
redevelopment.

Exhibit 3: Canadian Design Firm Operating Revenues

75%
12%
13%
2004 Market Size = $16 billion
80%
8%
12%
2009 Market Size = $27 billion
Engineering Architecture, design and landscaping Surveying and mapping

Source: Statistics Canada, Raymond James Ltd.

In the United States, the economy may be softer, but the demand for design services is
still outpacing overall GDP growth. Over the five-year period ending 2009, we estimate
that the industry expanded at a CAGR of 8.0% to US$252 billion, compared to an
average of 2.9% for the U.S. economy. We believe the decentralization of government
engineering arms and stricter environmental regulations have similarly influenced the
sectors growth, as have technological advances and the increased complexity of
projects undertaken nowadays. To the extent the American Society of Civil Engineers
gives Americas infrastructure a grade of D and estimates a five-year investment need
of $2.2 trillion, there is the potential for many more years of above-GDP growth rates
for design firms south of the border (www.infrastructurereportcard.org). However, we
believe this will depend largely on the countrys willingness to adopt innovative ways to
finance infrastructure projects (including public-private partnerships, or P3s) as well as
its ability to raise taxes as a means of tackling the federal and state deficits that loom
over the economy.
The U.S. design industry witnessed a
CAGR of 8.0% between 2004 and 2009,
versus 11.7% for the Canadian sector

How Projects are Administered
On a typical Design-Bid-Build project, which many in the construction industry refer to
as conventional delivery, the architect and its design team are the owners agents (and
represent its interests). While this relationship still holds true for much public and
private sector work performed today, the advent of the P3 and design-build (DB) models
over the past decade has altered the traditional pecking order for large-scale
infrastructure projects. Under these alternative delivery methods, the owner awards the
design-build mandate to a general contractor or a construction joint venture, which in
turn hires consulting firms to carry out the design and engineering. Because P3s are
structured over terms that generally last between 25 and 30 years, they also force said
firms to place greater consideration on the assets operation and maintenance phases.
Although DB projects are diminishing the influence design firms have traditionally held
on the tendering process, they often bring additional opportunities for such firms. Thats
because a public owner sometimes chooses to engage a team of professionals, often
referred to as the owners engineer, to advise and represent its interest over the length
of the DB contract.

Defining Features of Design Firms
Professional technical services firms sell knowledge and solutions. As such, their most
valuable assets are the employees on their payroll. To attract and keep these
individuals, design firms must develop a healthy corporate culture that fosters a strong
entrepreneurial, can-do spirit, and offer opportunities to work on challenging projects
with some of the most talented people in the industry. They must also take the
necessary steps to groom the next generation of professionals through various training
and leadership programs, and incentivize all employees to row in the same direction. To
this end, all three design firms under our research coverage require their senior
management to own an equity position in their firm and offer up-and-comers long-term
stock-based compensation. These incentives, we believe, go a long way in building a
significant accumulated knowledge base, continuity in the firms relationships with their
clients and business stability.
Human capital is the largest and most
important asset of a design firm
Design firms boast a number of characteristics that differentiate them from the other
three I&C groups we cover (see Exhibit 4). Broadly speaking, they tend to boast
relatively healthy margins that not only reflect their high value-add, but also their
critical role in the industry value chain. They are well-diversified and have low capex
requirements, but generally lack scalability. Equipment distributors similarly have
limited fixed capital investments, but do operate with considerable working capital
requirements. This group is exposed to attractive parts and service opportunities and
tends to perform best during the later stages of the cycle. Engineered product
manufacturers have comparatively high fixed capital requirements, which in turn
provide significant operating leverage. The defining characteristics of the contractor
segment are lower margins and a rather high degree of cyclicality (and scalability). The
amount of fixed capital investments for these companies depends on the degree to
which they chose to 'self-perform' construction activities.
Relative to other I&C segments, design
firms generate higher margins and
have lower capex requirements, but
generally lack scalability
Exhibit 4: Infrastructure and Construction Value Chain
Design
Surveying and mapping
Preliminary plans
Detailed engineering
Value engineering
Process engineering
Equipment selection
Equipment design
Programming
Construction
Site preparation
Site construction
Site supervision
Site inspection
Procurement
Scheduling
Quality control
Cost control
Planning
Master plans
Feasibility studies
Strategic planning
Project development
Financial analysis
Functional programming
Technical programming
Operation &
Maintenance
Commissioning
Training
Start-up
Maintenance programs
Materials and
Engineered Products
ADF Group, Canam Group,
Armtec Infrastructure
GLV, ZCL Composites
Russel Metals
Equipment
Finning
Cervus Equipment
Rocky Mountain
Ritchie Brothers
Strongco, Toromont
Wajax
Engineering
Genivar
IBI Group
Stantec
SNC-Lavalin
Contractors
Aecon Group
Bird Construction
Churchill Corp.
North American Energy Partners
SNC-Lavalin

Source: Raymond James Ltd.

If we focus our analysis on the technical consulting firms specifically, we find that the
nature of their services facilitates the generation of stable and diversified revenue
streams. This level of diversification stems from their positioning in all phases of the
infrastructure and facilities project life cycle, and can be often enhanced further through
geographical expansion and/or the pursuit of complementary practice areas. To drive
this point home, we note that the seven engineering consulting firms included in our
I&C comparable valuations table were able to grow EBITDA at an average annual rate of
12% over the two-year period ending Dec-31-10, compared to respective declines of 6%
and 15% for two groups comprised of global integrated firms and North American
contractors (we provide more detail in the Analyzing the Returns section). Additionally,
while we track and document the large jobs our engineering and architectural names
secure, this analysis merely captures the tip of the iceberg; the bread and butter for
these firms actually comes from a myriad of projects each performs for its clients every
single working day, and which are typically small in both size and scope (e.g., feasibility
studies, conceptual drawings and environmental impact assessments). For proof
consider that IBI Group, Genivar and Stantec handled roughly 10,000, 15,000 and 25,000
active projects, respectively, in 2010 with none deriving more than 3% of their top-line
from any single project. This steady flow of work, in our view, also helps explain the
relative resilience of design firms in recessionary timeswhen clients prefer to plan
projects in anticipation of better times ahead.
Professional services firms work on a
large number of small projects in
various sectors, which helps explain
their resilience in recessionary times
Architects and engineers, like other consultants and professionals, charge a fee for their
service. The fees are structured depending on the type of project undertaken, the scope
of work to be performed, and whether the contract was competitively tendered or sole-
sourced (read: negotiated). In situations when the scope of services and schedule can be
clearly defined, a lump-sum or fixed-fee arrangement is generally favoured. Examples of
this are an architectural firm executing a contract for a percentage of a buildings
construction cost, or a municipality hiring a civil engineering firm to perform a
transportation study for a set amount. However, in instances when either the scope or
the schedule of services cannot be reasonably defined, as is often the case on industrial
projects, a time-and-materials or hourly agreement is recommended.
Design firms agree to fixed-fee arrangements based on an estimate of the costs a
specific project will entail. They will tend to favour such contracts over those based on
hourly rates to the extent they generally result in higher-margin, more profitable jobs.
But every so often some unforeseen difficulties can force staff to work additional hours
on a particular assignment, rendering it less profitable than anticipated. It is worth
stressing, however, that these cost overruns are usually immaterial to the consultants
bottom-line (especially when considering the multitude of projects over which they are
spread), and pale in comparison to the losses contractors and even integrated firms can
suffer on large hard-bid jobs. This latter point was most clearly driven home two months
ago when Aecon Group warned about a $55 million loss suffered on Suncors Firebag 3
Central Plant Facilities (CPF) project. Even best-in-class SNC-Lavalin was inadvertently
caught by surprise in 2007 when the bankruptcy of a key supplier derailed its Goreway
thermal power project for several quarters. From these examples, it is clear one key
advantage to the design firms fee-based strategy is that it limits their liability; the
flipside is that it prevents them from offering fully packaged, in-house solutions.
Cost overruns are rare and usually
immaterial to a design firms bottom-
line

...but can wreck a contractors
fortunes

Each consulting firm employs a unique mix of professional, technical and administrative
support staff with differing levels of experience, expertise and responsibility. As a rule of
thumb, when preparing their budgets, most firms typically commit 70-80% of available
staff time to billable projects, with the remaining 20-30% made available for business
development efforts, R&D projects, training and professional development. Also, since
there is a limit to how much revenue they can extract from the average professional,
design firms are best served to expand headcount when reporting over nine months
worth of backlog (conversely they should downsize when the backlog falls below six
months). To provide the basis for continued organic growth, and to offset the lack of
scalability inherent in their fee-for-service business model, Genviar, IBI Group and
Stantec have all been active acquirers; in the section that follows we explain why we
expect they will remain so.

Key Industry Trends
Demand for the services design firms offer is innately linked to the business cycle. It
rises during economic upswings as the ability of private and public sector clients to
make investments improves, and typically declines when the outlook for corporate
profits becomes less certain. The degree to which fee volumes soften will invariably
depend on the governments ability to continue funding infrastructure projects or,
failing this, their willingness to embrace Keynesian economics. Recent history shows the
federal and provincial governments in Canada did just that following the 2008 credit
crisis, whereas their U.S. counterparts were largely ineffective with their pump priming
efforts. We believe this helps explain in part why Canadian-centric Genivar has been
able to expand its business while other technical consulting firms with U.S. exposure
struggled to grow organically (though there were also other factors at play behind
Genivars healthy performance). But over and beyond these macro forces, we see four
underlying themes combining to drive continued growth for the professional technical
services firms under our coverage. These include:

1. Horizontal Integration: Many Innings Left
The consolidation of engineering and design firms is much like the consolidation that
occurred in the accounting industry. In the 1950s most public accountants operated
locally as sole-proprietorships or single-office partnerships. But as travel and
telecommunication improvements in the 1960s and 1970s made it easier to expand
business beyond local confines, accounting firms started following their clients abroad.
Many established satellite offices from the ground up, but soon found it simpler and
more efficient to partner with established companies sharing complementary client lists
and similar values of service quality and professionalism. From this emerged a multitude
of national firms and ultimately, through cross-border consolidation, the Big 4 (Deloitte,
PricewaterhouseCoopers, Ernst & Young and KPMG). Today these accounting firms: (i)
audit 98% of the more than 1,500 largest U.S. public companies on recordaccording
to United States Government Accountability Office; (ii) boast an expanded offering of
management consulting, corporate finance, risk and tax services, and (iii) are major
developers of talent within the financial services industry. While the Big 4 dominate the
audit market and are orders of magnitude larger than their next largest competitors,
they still leave some room for smaller entrepreneurial firms to thrive in specific niches
or regions.
Although no other profession has experienced to date a structural evolution emulating
that of the accounting industry, we believe design firms appear to be following a similar
path. In 2010, Stantec continued to march toward its goal of becoming a top 10 global
design firm with ten acquisitions, Genivar outlined plans to double in size over three
years, IBI Group snapped up the United Kingdoms largest architectural practice
specializing in social infrastructure (Nightingale Associates) and SNC-Lavalin added
Colombias biggest oil and gas engineering firm to its services offering. Notably, all of
this was unfolding as industry giants Aecom Technology Corp. and Tetra Tech were
gobbling up medium-sized firms across Canada including EBA, RSW and BPR.
With all this consolidation activity, investors may be justified in asking: How long can
this possibly last? For quite some time, we believe. The ten largest U.S. design firms
generated combined revenues of US$34 billion in 2010, giving them a mere 13% share
of the professional technical services market (see Exhibit 5). Of these participants even
the largest, Aecom, had just 2% market share. This leaves the U.S. industry with nearly
400 firms generating annual fees ranging from US$25-500 million, and thousands of
smaller ones focusing on specialized sectors (see Exhibit 6). The design and consulting
world may not be as fragmented as it used to, but we believe there are many innings
left in the consolidation theme.
The ten biggest U.S. design firms make
up only 13% of the market
Exhibit 5: Top U.S. Design Firms in 2010
Ranking Company Type of Firm 2010 Revenue (million) Market Share
1 Aecom Technology Corp. Engineer-Architect $5,920 2.3%
2 URS Corp Engineer, Architect, Contractor $5,039 2.0%
3 Jacobs Engineer, Architect, Contractor $4,748 1.9%
4 CH2M Hill Engineer-Contractor $3,603 1.4%
5 Flour Corp. Engineer-Contractor $3,128 1.2%
6 Amec Engineer-Contractor $2,456 1.0%
7 Tetra Tech Inc. Engineer $2,456 1.0%
8 Bechtel Engineer $2,210 0.9%
9 KBR Engineer-Contractor $2,170 0.9%
10 Parsons Brinckerhoff Inc. Engineer-Contractor $2,010 0.8%
$33,740 13.4%
25 Stantec Inc. Engineer, Architect, Planner $578 0.2%

Source: ENR Sourcebook, Raymond James Ltd.

Exhibit 6: Top U.S. Design Firms, 2002 & 2010
..but the total number
of firms in the industry is
very large.
0
50
100
150
200
250
300
350
More than $1
bi l l i on
$500 mi l l i on to
$1 bi l l i on
$250 mi l l i on to
$500 mi l l i on
$100 mi l l i on to
$250 mi l l i on
$50 mi l l i on to
$100 mi l l i on
$25 mi l l i on to
$50 mi l l i on
Less than $25
mi l l i on
2002 2010
In 2002, there were just 17 U.S.
Design firms with revenue greater
than US$500 million. in 2010 there
were 27.
..but the total number of
firms in the industry is very
large.
1000's

Source: ENR Sourcebook, Raymond James Ltd.

Genivar, IBI Group, Stantec and SNC-Lavalin consider acquisitions to be an integral part
of their long-term strategy. There are several reasons for this. Acquisitions provide
design firms with an increasingly comprehensive range of engineering services to
promote and cross-sell. They help address the scalability issues engineers and
consultants face when targeting new opportunities and can unlock significant revenue
synergies (as the customer lists of the design practices are combined). Moreover, if
done right, they allow employees to enjoy greater career opportunitieseffecting a
powerful and attractive virtuous circle for these firms (see Exhibit 7).
Acquisitions offer engineering firms
an increasingly comprehensive range
of engineering services to promote
and cross-sell

Exhibit 7: Engineering Services Virtual Circle at Work
The firm adds capabilities across all three
parameters of the enterprise geography,
discipline and end marketmost predominantly
through acquisition
Satisfied clients in turn outsource more and more
engineering services to the firm, increasing demand
for new types of services
The firm gains a new client base to which it
can cross-sell services
The firm provides a full range of
professional consulting services to its
private and public sector clients
Potential
Partners
and
Targets
Private
and
Public
Clients
Professional
Technical
Services
Firms
1
3
4
2


No matter how attractive an avenue for growth it represents, it is our view that a firms
roll-up strategy will ultimately be influenced by its cash flow generating capacity as well
as its ability to tap external funds. Specifically, we estimatebased on the industrys
historical operating profit margin of 10%that design firms can afford to grow
strategically at an annual rate of 5-10%. Beyond this range, growth can only be
reasonably achieved with sufficient access to capital (either from the public markets or
through strategic partners). This puts private firms at a significant disadvantage to the
extent their internal funds are typically paid out to employees-owners or retained to
buy-out retiring shareholders. The silver lining for the smaller firms it that the industrys
ongoing consolidation is giving them a practical alternative to succession. As the old
adage goes, if you cant beat them, join them.
Another driving force behind the growth-through-acquisition model is that it can be a
highly accretive exercise. Private companies, depending on their size and focus, have
historically been acquired for multiples ranging from 3.0x to 7.0x trailing EBITDA. For the
larger design firms, this compares very favourably to the average EV/EBITDA multiple of
8.5x they have commanded from the Street over the past 15 years (see Exhibit 8).
and can be highly accretive
Exhibit 8: Engineering Services Historical EV/EBITDA Valuation

2x
3x
4x
5x
6x
7x
8x
9x
10x
11x
12x
1
Q
9
6
1
Q
9
7
1
Q
9
8
1
Q
9
9
1
Q
0
0
1
Q
0
1
1
Q
0
2
1
Q
0
3
1
Q
0
4
1
Q
0
5
1
Q
0
6
1
Q
0
7
1
Q
0
8
1
Q
0
9
1
Q
1
0
1
Q
1
1
TTM EV/EBITDA Average
Average: 8.5x
11.7x
5.1x
The engineering services industry has traded at an average
EV/EBITDA multiple of 8.5x over the past 15 years
1 standard
deviation
Private companies in the industry are
typically acquired for 3-7x EV/EBITDA

Source: Capital IQ, Raymond James Ltd.

2. Vertical Integration: More are Embracing the Integrated Approach
SNC-Lavalin was one of the very first engineering firms to package the professional
services that Genivar, IBI Group and Stantec deliver efficiently today with full-blown
construction services. In the late 1990s the company went a few steps further by
layering on investment financing and operations and maintenance (O&M) capabilities to
its engineering and construction offering. This was in keeping with the objective of
major infrastructure owners to integrate all key phases of the value chain to drive
efficiencies and reduce costs. To wit, SNC-Lavalins one-stop approach can take pressure
off the design, engineering and procurement activities, cut the risks of supply chain
conflicts and avoid the inefficiencies of managing too many supplier interfaces. It also
allows for more flexibility, as construction projects can be handled with varying risk
profiles and better coordinated with the work of designers. The integrated approach has
certainly pushed SNC-Lavalin to assume more risk, but it also has rewarded the firm with
a first-mover advantage over its industry peers and a significantly larger share of client
budgets.
There are advantages to integrating
all key phases of the I&C value
chain

and large contractors have caught
on to these
Big construction firms have caught on to the benefits of the integrated model, and are
now positioning themselves earlier in the project life-cycle. This is precisely what U.K.-
based Balfour Beatty did in 2009 when it acquired U.S. engineering stalwart Parsons
Brinckerhoff (PB) for US$626 million. The deal combined PBs well-established global
design practice with Balfour Beatty's large construction and investment businesses to
create a group with significantly enhanced capabilities. Based on this example, we
would be remiss to ignore some of the appeal IBI Groups global architectural practice
may have for players situated further down the I&C supply chain.

3. Projects are Growing Larger and More Complex
On a recent magazine cover, ReNew Canada coined the expression Infranormous to
describe the 100 largest infrastructure projects currently underway in Canada. We felt
this was appropriate since the average project on the list had ballooned in size from
$680 million in 2010 to $960 million in 2011. Due to their sheer size and the increased
complexity that tougher regulations and stricter standards have placed on owners, the
planning of such projects has been taken to a whole new level. Nowhere is this more
obvious than in the oil sands where a host of recently sanctioned projects are slowly
progressing through the planning and engineering phases. Producers reason its better
to spend more time planning things right in the very early stages of development, than
to cut corners and end up paying for it dearly at the end. These delays may drive the
contractors we follow up the wall, but they are music to the ears of engineers.
The trend toward larger and more
complex projects
Many Canadian public owners have embraced the use of the P3 model to undertake
large-scale infrastructure projects. But we note that the resulting growth has had mixed
implications on the design industry. For one, high barriers to entry effectively render the
P3 market impenetrable to smaller firms. They also require the designer to work for a
reduced fee early in the proposal and qualification stages of a project, with the promise
of much improved economics if the bid proves successful. Accordingly, firms must
efficiently manage staff utilization and carefully asses the proponents they team up with
to ensure the rewards for chasing P3 work more than justify all efforts put in and risks
assumed. There is obviously more upside for firms that maintain high securement ratios,
to the extent they can spread their costs across a greater number of successful bids. IBI
Group and Stantec appear to be doing a good job of it, judging from their recent
successes. Notably, the former company is lead architect on SNC-Lavalins Glen Campus
project in Montreal as well as the Womens College Hospital in Toronto; the latter is
handling all design services for two Carillion-led projects in Ontario, the new Forensic
Services and Coroner Complex and the Centre for Addiction and Mental Health.
has had mixed implications on the
engineering and design industry
We invite readers interested in learning more about P3s to refer to our comprehensive
Jun-11-08 report titled Under the Microscope; How P3s Change Industry Dynamics and
our Sep-30-10 update The P3 Model: An Enduring Feature of Canadas I&C Market for
more detail.

4. The Environment: A Good Business for Engineers
Long gone are the days when environmental matters were plainly ignored in the
execution phases of a project. Increased regulation and public awareness have,
together, propelled environmental considerations and permitting to the forefront of a
projects planning phase. In turn, demand for related consulting services and expert
advice has balloonedarguably making environmental engineering the hottest
subsector of the design and consulting industry. Since all new projects under
consideration now invariably have a green angle to them, most engineering firms see
the benefits of developing or acquiring expertise in this field. Stantec significantly
bolstered its expertise in the field in early 2009 when 1,700-employee strong Jacques
Whitford, an internationally recognized leader in environmental and earth sciences
solutions, joined the company. Largely as a result of this deal and the many tuck-ins it
has performed since, the firm today ranks as a top-tier firm in the North American water
sector.
but the impact of tighter
environmental regulations has been
universally favourable

End Market Outlook
Before turning our focus to the key market segments that professional technical services
firms target, we believe a brief analysis of the industrys macro drivers is warranted.
There are stark differences in the
fiscal state of Canadas ten
provinces, which biases our
research towards companies with a
strong foothold in the west
Activity in the design industry is dictated at least partially by the economic cycle. This
certainly rings true for private sector spending, which relies heavily on corporate profits,
the labour market, property vacancy rates and commodity prices. When private sector
activity dried up at the onset of the global credit crisis, the Canadian governments kept
the lights on in the construction sector by not only committing $21 billion in stimulus
money, but also accelerating the roll-out of large-scale projects earmarked under the
$33 billion Building Canada Plan. However, as mounting fiscal realities force certain
provinces to scale back their funding, we believe that a sustained economic recovery is
necessary to propel the I&C sector higher. We maintain the western Canadian provinces
will provide more ample and lucrative business opportunities than their counterparts to
the east and the south, ceteris paribus, thanks to their healthier fiscal position (see
Exhibit 9) and wealth of natural resources.

Exhibit 9: Projected Provincial Debt-to GDP Ratios (F2011)
17%
-6%
7%
26%
36%
48%
34%
40%
35% 35%
-10%
0%
10%
20%
30%
40%
50%
B.C. Alba Sask Man Ont Que NB NS PEI NFLD

Source: Conference Board of Canada, Globe and Mail

Canadian design firms serve a smorgasbord of industries (see Exhibit 10). This makes an
analysis of numerous end markets an important part of any outlook for the sector, and
we follow a wide range of macro indicators accordingly. In some cases, such as mining
and oil and gas, where our firm has established respected sector research, we largely
defer to our internal sources of expertise for our analysis. In other areas, such as
buildings, transportation or municipal infrastructure, we have established our own
practice of evaluating trends and monitoring key demand drivers. Either way, a
thorough review of all the end markets that the design and consulting universe serves
could constitute a separate report on its own. Therefore, in order to maintain a
manageable scope, we limit ourselves to providing a summary of the current demand
conditions in and future outlook for the five markets that are most relevant to design
and consulting firms we cover.
Exhibit 10: Sector Exposure of Canadian Designers and Engineers
Buidings
Urban and Municipal
Infrastructure
Transportation Industrial and Power Enivironmental
Dessau < 5%
exp Global 5-20%
Genivar 20-50%
Golder 50-75%
Hatch 75% +
IBI
Stantec
SNC-Lavalin

Source: ENR, Company Reports, Raymond James Ltd.

Buildings
Projects in this segment are carried out for both public and private sector clients and
run the gamut from courthouses, hospitals and universities to condos, office towers and
entertainment complexes. To gauge the prospects of the related components of this
industry in North Americaresidential, commercial, institutional and industrialwe
continuously monitor the monthly buildings permits data made available by both
Statistics Canada and the U.S. Census Bureau, the American Institute of Architects (AIA)
and the websites of all major P3 agencies.
Most large-scale social infrastructure projects north of the border have recently been
tendered under various P3 forms, and we expect this to continue for some time. In
healthcare alone, the list of projects includes the Oakville Hospital and the third phase
of the London Health Sciences Centre in Ontario, the Interior Heart and Surgical Centre
Project in British Columbia, and the Montreal University Hospital Centre (CHUM) in
Quebec. In Alberta, the government is expected to stick to the traditional procurement
approach to fund health facility projects in several medium-sized cities and rural
locations, including a massive hospital for Grande Prairie. However, if we look at the
general trend for institutional buildings intentions (see Exhibit 11), the data suggests a
drop in activity over the coming months and quarters, which is consistent with the more
cautious outlook we communicated in our Jan-14-10 report dubbed Life After Stimulus.
The outlook for privately-funded construction activity in Canada has brightened
considerably from 18-24 months ago, especially in the industrial sector, where key
commodity prices generally remain above investment threshold levels (despite the
recent volatility). According to many industry sources, the commercial building segment
in western Canada is also rebounding from trough levels as the surplus in office and
retail space is being worked off, but the last few months of data suggest the recovery
may be lumpy.
The outlook for privately-funded
construction activity has brightened
considerably in Canada...
Also key to the publicly-traded design firms we cover are the construction intentions for
multi-residential buildings and the related influence these have on urban land
development. We would be remiss to ignore their impact on IBI Group, in particular, to
the extent the firm has been instrumental in the planning and design of Toronto and
Vancouvers waterfronts. In this regard, the outlook for private condo developments
also appears to be on the mend.
Exhibit 11: Canadian Non-Residential and Residential Building Permits
Canadian Non-Residential Building Permits
0.0
0.5
1.0
1.5
2.0
F
e
b
-
0
6
M
a
y
-
0
6
A
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g
-
0
6
N
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v
-
0
6
F
e
b
-
0
7
M
a
y
-
0
7
A
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g
-
0
7
N
o
v
-
0
7
F
e
b
-
0
8
M
a
y
-
0
8
A
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g
-
0
8
N
o
v
-
0
8
F
e
b
-
0
9
M
a
y
-
0
9
A
u
g
-
0
9
N
o
v
-
0
9
F
e
b
-
1
0
M
a
y
-
1
0
A
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g
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e
r
m
i
t

V
a
l
u
e
s

(
$

b
i
l
l
i
o
n
)

Industrial Commercial Institutional

Canadian Building Permits
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
F
e
b
-
0
2
J
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n
-
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2
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c
t
-
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-
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n
-
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t
-
0
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F
e
b
-
0
4
J
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n
-
0
4
O
c
t
-
0
4
F
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b
-
0
5
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-
0
5
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t
-
0
5
F
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b
-
0
6
J
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n
-
0
6
O
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t
-
0
6
F
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b
-
0
7
J
u
n
-
0
7
O
c
t
-
0
7
F
e
b
-
0
8
J
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n
-
0
8
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t
-
0
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F
e
b
-
0
9
J
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n
-
0
9
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t
-
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9
F
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(
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Non-Residential Residential

Source: Statistics Canada, Raymond James Ltd.

Any concerns about the fiscal condition of certain Canadian provinces pale in
comparison to the problems that the U.S. federal government and many U.S. states
currently face. Simply put, we feel public-sector building work south of the 49th parallel
will continue to languish until the current debate in Congress over the deficit and the
budget gets resolved. The outlook for private construction activity is more favourable,
though we believe the restricted lending practices of the banks, excess housing supply
and a general lack of confidence in the economy will continue to present the industry
with near-term headwinds. All of these issues are evident in certain key industry metrics
that we track such as the building permits or the Architectural Billings Index. The latter
reflects a 9-12 month lag time between architecture billings and construction spending,
with any score above 50 indicating an increase in demand for design services (see
Exhibit 12). The corollary to this suboptimal environment, when combined with a strong
Canadian currency, is that the U.S. market should remain fertile acquisition grounds for
the Canadian-based designers for some time to come.
but economic conditions in the U.S.
remain suboptimal

This may prove fortuitous for the four
companies highlighted herein
Exhibit 12: U.S. Non-Residential and Residential Building Permits, Architectural Billings Index (ABI)
150
200
250
300
350
400
450
500
550
600
650
700
750
F
e
b
-
0
2
A
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g
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(
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Residential Non-residental
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
Architect's Billings Index (ABI)
12M Moving Average

Source: U.S. Census, The American Institute of Architects, Raymond James Ltd.

Urban and Municipal Infrastructure
Professional services provided in this area focus on a citys below- and above-ground
infrastructure. This results in a broadly-defined market that encompasses water
distribution and treatment, wastewater collection and treatment, land planning,
landscape architecture and transportation accessibility. New investments in this field
are generally driven by the cyclical housing market, population growth and urbanization;
in contrast the maintenance, operations and repair of existing infrastructure is generally
managed (unfortunately) on an as-needed basis. This chronic underinvestment has to
do with the fact that much of the funding commitment falls in the hands of local
municipalities, which have limited financial flexibility.
A more stable residential sector and fiscally stronger jurisdictions provide for a much
healthier outlook in Canada than in the U.S. Moreover, we view the nations aging water
infrastructure as the next logical candidate for the P3 model, and surmise that a pipeline
of related projects will build over the medium term. Globally, Frost & Sullivan pegs the
water market for design, consulting and construction at $126 billion. We highlight the
global water treatment and re-use segment for its explosive potential, as drinking water
shortages now affect roughly one-third of the worlds population.

Transportation
This segment includes planning, surveying, design and project management services for
a variety of transportation projectsincluding highways, bridges, ports, airports, mass
transit facilities and traffic systems. Most clients represent public authorities, weighting
the sectors outlook heavily on spending budgets. However, as we have highlighted in
previous industry reports, larger-scale transportation projects are ideally suited for the
P3 model because: (i) the capital asset provision and the availability payments can be
tied to performance, and (ii) they necessitate significant operation and maintenance
requirements (see Exhibit 13). It is no wonder P3s are being contemplated for many big
ticket projects across Canada including the eastern extension of Torontos Highway 407,
the final leg of the Edmonton Ring Road and the reconstruction of Montreals crumbling
Turcot Interchange and Champlain Bridge.
Exhibit 13: Suitability of P3 Model for Various Infrastructure Project Types
Urban Government Major Water / Government Health Schools Post Facility
Highway owned service Rural Wastewater owned public Facilities Secondary Upgrades
delivery facility Highway buildings Institutions (brownfield)
Higher Lower
Suitability Suitability
Proven model Defined and Defined Defined and Specialized Building Limited Partial GoA Latent
Well defined stable funct. performance stable program and complexity economies of funding defects
requirements requirements criteria operating and functional Premature scale Technology Unforeseen
Stable long Defined and Stable long performance requirements obsolescence Premature change risks
term O&M stable program term O&M criteria One-off Technology obsolescence Specialized Limited deal
Innovation & requirements Low financial Utility type buildings change Size/bundling technology flow
economies of Stable long risk function Architectural / Jurisdictional Program Building
scale term O&M Government Jurisdictional design issues inconsistency complexity
Low financial Government payment issues competition Need GoA Jurisdictional Jurisdictional
risk payment stream (municipal) Long term payment issues issues
Government stream Expansion Need GoA performance guarantee Need GoA Need GoA
payment Lessons requirements payment criteria change Severance of payment payment
stream learned Limited guarantee Technology O&M guarantee guarantee
Deal flow innovation & Asset change Limited deal Severance of Limited deal
economies of ownership Severance of flow O&M flow
scale O&M Asset Limited deal Asset
Limited deal ownership flow ownership
flow Asset
ownership
Source: Alberta Infrastructure and Transportation, Raymond James Ltd.
South of the border, decreasing tax revenues and continued uncertainty about long-
term funding has stifled some planned transportation projects. A case in point is the
recent proposal from the House Budget Committee to reduce the mandatory budget
authority for all federal transportation programs by 30% to $41 billion for F2012. There
might be a silver lining to this, as the shortage of funding and the construction downturn
have many public agencies rethinking their approach to capital asset allocation and
evaluating alternative financing and procurement methods. But before we can count on
P3s to drive the U.S. transportation sector into recovery, lots of political hurdles need to
be cleared.

Industrial and Power
This segment encompasses various sectors including mining and metallurgy, oil and gas,
power generation and transmission, and manufacturing to name a few. The service
offering spans the entire project life-cycle, from planning, functional programming and
engineering to project management, construction support and decommissioning.
The industrial segment of the Canadian economy continues to demonstrate marked
resilience and growth. This is largely a function of strong commodity prices that support
elevated levels of related activity. The prevailing levels of capex in mining and energy
are particularly robust and, notwithstanding some recent volatility, are expected to
remain strong over the foreseeable future. Longer term our Raymond James Ltd. and
Raymond James & Associates energy and mining teams project oil, gold and copper
prices to settle at $125.00/bbl, US$1,100/oz and US$2.50/lb. We note that these
estimates, assuming they materialize, remain well above investment threshold levels
and should create favourable operating dynamics for the engineering firms that support
exploration and production (E&P) activities.
The industrial segment of the
Canadian economy continues to
show marked resilience and growth
In a sure sign that power demand is on the rise, various hydro-electrical power projects
were recently sanctioned across Canada. These include two SNC-led developmentsthe
Lower Churchill Project in Newfoundland and B.C.s Waneta Expansionas well as the
Lower Mattagami Complex in Northern Ontario. Although no material power gen
projects are slated for Alberta in the immediate term, the province is bulking up its
transmission infrastructure with investments totaling $14.5 billion over the next decade
(also a potential boon for SNC-Lavalins AltaLink). And while the demand outlook for
new nuclear reactors looks grim in the wake of the Fukushima Daiichi power plant crisis,
we believe more money will flow toward the refurbishment of older plants. Add to this
burgeoning wind and solar power industries and you have the recipe for many years of
growth for the engineering firms serving the power market, in our view.
while investments in power
generation and transmission assets
have been accelerating

Environmental
As discussed in the Key Industry Trends section, a regulatory push from pollution
cleanup to prevention has taken hold amid growing public awareness. This has left
engineering firms to handle ever increasing volumes of work ranging from impact
studies, permitting and compliance audits to hazardous waste remediation and air
pollution monitoring. Engineers are also spending more time on existing assets, as the
fear of retroactive environmental liability escalates among infrastructure owners. The
two high-profile industrial disasters in recent historyBPs Deepwater Horizon oils spill
and Fukushimas nuclear reactor leakmay also turn clients focus from solely
complying with regulations to more proactively managing the integrity of their assets.
Based on these, and to the extent environmental matters will increasingly dictate the
development and ongoing operation of infrastructure and facilities projects, it is easy for
us to envision a favourable outlook for the environmental engineering profession.

Exhibit 14: Sector Summary Table
Market Key Drivers Outlook
- Overall economic activity
- Building permits
- Municipal budgets
- Environmental regulations
- Drinking water shortages
- Overall economic activity
- Government financing for public works
- Global economic activity
- Commodity prices
- Corporate profits
Environmental - Regulation and public awareness Neutral to Positive
Buildings Neutral to Positive
Neutral
Positive Industrial and Power
Transportation
Municipal Infrastructure
Neutral


Analyzing the Returns
In this section of the report, we present a comparative analysis of certain financial
metrics we consider key to the design industry. The intent is to provide investors with
some insightful data about how each company we cover stacks up against other
industry bellwethers (Aecom Technology, AMEC, Arcadis and Tetra Tech), along with a
cursory overview of how professional technical services firms compare to other
subsectors of the I&C industry, most notably the integrated firms (please refer to
Appendix A for the list of companies comprising this group).
This analysis obviously involves some subjectivity in selecting what to measure and how
to measure it. It is also an imperfect exercise in that some of the companies we examine
have unique reporting segmentssuch as SNC-Lavalins Infrastructure Concession
Investments (ICI) divisionor operated under different capital structures until recently.
Here we specifically refer to Genivar and IBI Group, both of which converted from an
income fund structure to a corporate structure at the beginning of 2011. Our ability to
look back at and compare the historical performance of design firms is further limited by
the length of time they have operated as public entities. This is not a problem for
companies like Stantec and SNC-Lavalin, which have been public for many years. But for
IBI Group and Genivar, which first tapped equity markets in 2004 and 2006, respectively,
it is a consideration that cannot be overlooked.

Notwithstanding these complications, we believe a comparative analysis can still be
useful and telling. In particular, we like to look at it in the context of valuation. That is to
say, perhaps the companies with the best and most consistent financial performance
should command a premium multiple in the market, while those that have
underperformed deserve a discount. But this too becomes a subjective call because the
past can obviously tell us only so much about the future; we also, for reasons noted
above, have to be careful with how we interpret relative performance. With all of these
considerations in mind, we will briefly discuss each of the metrics that we have selected
for this analysis, why we selected them, how we define them, and what the numbers
tell us about the companies that we cover.

Return on Invested Capital (ROIC)
We believe that ROIC is a useful measure of a companys overall financial performance
and of a management teams ability to create shareholder value. This measure,
however, is open to various definitions and interpretations. For our purposes, we prefer
to measure ROIC using net operating income less adjusted taxes (NOPLAT) divided by
total invested capital. We also like to adjust the capital base for any goodwill
writedowns and ignore the related charge to EBIT. Specifically, in our methodology, we
define ROIC as follows:
We view ROIC as one of the best
measures of a management teams
ability to create shareholder value
EBIT less Adjusted Taxes + Changes in Deferred Taxes
Net Debt + Equity Capital

We have tax effected the operating profits of the two former incomes trusts using a
statutory rate of 34.5% over the 2005-2010 period, which helps to adjust for a more
accurate comparison with their corporate peers. We also elected to omit the addition of
changes in deferred taxes as we assume the tax rate adjustment accounts for GAAP and
income tax reporting mismatches. Ultimately, we will leave it up to the investor to
decide how to interpret these distortions and what to make of the whole income trust
debate (i.e. did it starve companies of capital for future growth?). But from our
perspective we offer the following observations about the data presented in Exhibit 15:
Generally speaking, all of the companies in this benchmarking analysis have
generated respectable ROIC metrics over both five and ten year periods. This
consistent ability to exceed the cost of capital reflects the attractive economics of
the engineering and design business and underscores our view that all four of the
firms that we profile in this report represent attractive buy-and-hold investment
opportunities.
Stantec has not only averaged the industrys highest ROIC over the medium and
long term, but also shown tremendous consistency over the years. This comes to us
as no surprise in light of the firms consistent profitability (to be illustrated next)
and assiduousness in funding growth mainly through internally generated funds.
Having said this, we would be remiss not to acknowledge that its ROIC (after
adjusting for asset write-downs) has tracked lower in recent years (2009 and
especially 2010). This, we believe, is a function of changes in project mix, intensified
competitive pressures, and the timing and pace of acquisitions.
Stantec has generated the industrys
highest ROIC over the medium and
long term
Genivars double-digit ROIC performance suggests to us that management has done
a good job deploying the $200 million of additional equity it has raised since the
IPO. We also attribute the solid results, in part, to the firms concentrated exposure
to the Canadian I&C markets, which have proven more resilient than many other
jurisdictions in the past three years.
IBI Group, on the other hand, has exhibited the lowest returns among the group.
We believe much of this has to do with the fact that as an architecture-heavy firm,
its past performance closely reflected the overall state of the commercial and multi-
residential (read: condominium) markets. Recent acquisitions in the civil and social
infrastructure markets should go a long way in alleviating some of the cyclicality
inherent in these private sector markets, and provide smother returns over time.
There has been a step change in SNC-Lavalins ROIC over the past few yearsan
impressive feat considering the improvement was achieved amid recessionary
times. We link this performance to a number of factorsincluding a maturing
staple of concession investments, the favourable allocation of resources toward
growth producing regions and strengthening project execution.

Exhibit 15: Peer Group Analysis of ROIC for Design Firms
ROIC 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 5-yr AVG 10-yr AVG
ENGINEERS
Genivar n.a. n.a. n.a. n.a. n.a. n.a. 8.5% 11.3% 10.0% 8.6% 9.6% 9.6%
IBI Group n.a. n.a. n.a. n.a. 5.2% 9.0% 8.3% 6.4% 4.5% 5.6% 6.8% 6.5%
Stantec 11.5% 13.5% 15.8% 14.0% 17.0% 14.9% 13.6% 14.1% 13.6% 11.5% 13.5% 13.9%
Aecom Technologies n.a. n.a. n.a. n.a. n.a. n.a. 18.6% 6.9% 7.2% 10.0% 10.7% 10.7%
AMEC 8.8% 2.6% 13.2% 6.4% 5.7% 12.5% 5.1% 15.7% 5.4% 18.7% 11.5% 9.4%
ARCADIS NV 11.6% 15.7% 12.1% 10.5% 17.1% 14.7% 12.9% 14.9% 12.9% 10.8% 13.2% 13.3%
Tetra Tech 8.0% 12.0% 12.2% 3.5% 4.1% 8.8% 7.8% 8.3% 15.6% 11.2% 10.3% 9.2%
Engineers - Average 10.0% 10.9% 13.3% 8.6% 9.8% 12.0% 10.7% 11.1% 9.9% 10.9% 10.8% 10.4%
SNC-Lavalin 5.5% 6.9% 7.2% 8.1% 8.6% 7.6% 4.1% 10.9% 13.9% 12.8% 9.9% 8.5%
Integrated Firms - Average 2.9% 12.3% 17.2% 11.1% 12.9% 10.3% 10.9% 10.3% 14.8% 11.2% 11.5% 11.0%

Source: Capital IQ, Company Documents, Raymond James Ltd.

EBITDA Margin
One notable disadvantage to using ROIC, in our view, is that it fails to reflect the
different policies design firms use for their purchase price allocations and to amortize
intangible assets. In other words, it does not provide a clear account of a firms cash
generating capabilities. For this reason, we feel it is important to look at the EBITDA
margin performance of the professional technical services firms under review (see
Exhibit 16). An analysis of EBITDA margins also provides us with a good read of firm
profitability. Our conclusions are as follows:
The Canadian companies we cover have sustained generally higher margins than
other well-known U.S. and international engineering firms. We believe this largely
reflects the benefits of industry consolidation and the less fragmented nature of the
market north of the 49th parallel. The level and consistency of these margins also
lends more support to our view that all three design firms and SNC-Lavalin are good
stocks to own for the long-term.
The benefits of industry consolidation
in Canada are reflected in higher
margins for the companies we cover
Genivar boasts the industrys highest EBITDA margins. There are two principal
reasons for this, in our opinion. Firstly, the salaries paid to Genivars top
management are less onerous than at other comparable firms because these
employee-owners receive a significant portion of their compensation in the form of
dividends (formerly distributions). Secondly, the firm commands a dominant share
of and is highly concentrated in Quebecs engineering services market, which we
believe yields its operations certain economies of scale. Our expectations are for
Genivars margins to shrink moderately in the years to come as the firm acquires
larger firms and transitions to a leadership-based model, but nonetheless remain at
elevated levels.
A proven partnership structure also helps IBI Group generate strong margins. But
we believe there is more to this; it is likely that the firms positioning at the very
front-end of the I&C value chain allows it to generate premium fees (that or its
status as one of the worlds top architectural practices).
We believe Stantecs stronghold on the Alberta market has been a major
contributor to the firms healthy and stable EBITDA margins, as has its design-heavy
focus. This is largely consistent with BD World Architectures most recent survey,
which ranks Stantec as the worlds top practice for non-architectural creative staff
(including technologists, engineers, planners, construction managers, landscape
architects, graphics specialists and designers).
Aecoms EBITDA margins are unusually low for a professional services firm. This has
to do with the firm deriving a material portion of its revenue from low-margin O&M
activities. The margins its professional technical services business has historically
commanded are approximately three to four points higher than the figures
displayed.

Exhibit 16: Peer Group Analysis of EBITDA Margins for Design Firms
EBITDA margin (%) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 5-yr AVG 10-yr AVG
ENGINEERS
Genivar 15.8% 13.1% 11.8% 14.9% 19.0% 20.3% 20.3% 21.4% 19.9% 18.0% 20.0% 17.4%
IBI Group 14.1% 14.6% 14.4% 15.1% 15.2% 18.6% 19.1% 19.2% 15.2% 14.7% 17.4% 16.0%
Stantec 12.5% 12.3% 13.3% 13.1% 14.3% 14.8% 13.5% 13.2% 12.9% 12.9% 13.5% 13.3%
Aecom Technologies n.a. n.a. 4.1% 4.8% 4.8% 3.9% 4.4% 5.3% 5.6% 6.1% 5.1% 4.9%
AMEC 5.0% 4.3% 5.3% 4.6% 5.5% 6.8% 7.8% 10.2% 10.8% 11.9% 9.5% 7.2%
ARCADIS NV 6.8% 7.2% 6.2% 5.0% 7.3% 7.6% 8.4% 8.8% 8.6% 8.5% 8.4% 7.4%
Tetra Tech 9.7% 11.6% 12.6% 7.1% 5.3% 8.6% 9.3% 10.0% 10.8% 10.8% 9.9% 9.6%
Engineers - Average 10.7% 10.5% 9.7% 9.2% 10.2% 11.5% 11.8% 12.6% 12.0% 11.9% 12.0% 10.8%
SNC 8.0% 6.2% 7.2% 7.8% 7.0% 6.5% 4.3% 8.8% 12.1% 13.9% 9.1% 8.2%
Integrated Firms - Average 7.6% 6.2% 5.8% 5.5% 5.9% 5.4% 5.6% 6.4% 7.6% 7.5% 6.5% 6.2%


EBITDA Growth
We have elected to use the designers CAGR for EBITDA as the best measure of growth.
We feel this is appropriate because it captures both revenue and margin performance
and, unlike net income, steers clear of potential distortions associated with the income
trust structure as well as the purchase price allocation and intangible amortization
policies highlighted above. We specifically reviewed three periods: 2003-2008, 2008-
2010, and 2000-2010. The first period provides us with insight into the performance of
the sector from the bottom to the top of the last cycle (i.e. through a period of robust
economic expansion); the second illustrates how each company managed the most
recent slowdown; and the last time-frame furnishes us with a very good measure of
long-term growth. Our analysis (presented in Exhibit 17) yields the following key
observations and conclusions:
In aggregate, the designers have not only grown at robust rates over the last five
and ten years, but also weathered the recession well. The integrated firms
comparatively suffered a drop in earnings over the past two years. This, we opine,
speaks to the stability of the engineering fee-based business model and the relative
ease with which publicly-traded companies can fuel growth with acquisitions.
On balance, the engineers have not
only grown at robust rates over the
last five and ten years, but also
weathered the recession well
Genivars five-year performance stands out from the pack, having increased EBITDA
at a pace that even leaves the second fastest growing company, Aecom, a distant
laggard. We attribute this strong performance to the healthy opportunities the
Canadian I&C industry has afforded the firm, the high level of cross-selling
management has been able to extract from acquired companies and the fact that
its growth has come from a low base (turning the smallest of deals into needle-
moving transactions). Although we fully expect Genivars growth to moderate in the
years to come, we feel these growth factors have yet to fully play out. For these
reasons, we believe the firm can continue to outpace its industry peers over the
next few years.
Genivars five-year performance has
been outstanding
Stantecs ten-year performance shows that engineering firms can grow at a very
healthy pace with minimal equity issuances Stantecs ten-year performance shows
that engineering firms can grow at a very healthy pace with minimal equity
issuances. However, its performance over the last two years highlights that design
firms are not completely immune from macro and industry forces. IBI Groups
return in that same period similarly demonstrates the challenges that many
architectural firms invariably faced as private sector activity nearly grounded to a
halt (making its five-year performance all the more remarkable).
SNC-Lavalins unique business model, exposure to resource-rich jurisdictions and
growing presence in emerging countries has facilitated tremendous growth rates
over the three periods evaluated. It is no wonder bouts of weakness in this world-
class firms stock price are generally short-lived.

Exhibit 17: Peer Group Analysis of EBITDA CAGR for Design Firms
2-yr CAGR 5-yr CAGR 10-yr CAGR
EBITDA (mln) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (2008-10) (2003-08) (2000-10)
ENGINEERS
Genivar 6.7 7.9 7.7 10.2 18.8 25.9 42.0 68.5 78.5 84.7 11.2% 54.9% n.m.
IBI Group n.a. 9.2 9.8 13.9 14.9 26.8 31.8 45.6 41.7 42.7 -3.3% 36.0% n.m.
Stantec 37.4 44.9 52.2 59.0 74.8 105.1 112.2 148.9 160.3 158.0 3.0% 23.3% 17.9%
Aecom Technologies n.a. n.a. 79.0 97.0 115.9 132.8 185.0 275.1 343.7 401.9 20.9% 28.3% n.m.
AMEC 130.8 102.9 176.3 161.9 118.2 108.6 137.6 200.3 204.8 264.1 14.8% 2.6% 8.3%
ARCADIS NV 54.3 58.9 52.1 45.0 72.7 94.2 126.0 153.3 154.3 169.6 5.2% 24.1% 12.3%
Tetra Tech 70.6 86.1 104.0 69.2 48.0 82.2 94.3 125.0 149.1 158.0 12.4% 3.8% 6.0%
Engineers - Average 9.2% 24.7% 11.1%
SNC 170.6 196.3 216.3 247.4 242.2 333.6 287.1 627.7 735.6 879.5 18.4% 23.7% 19.9%
Integrated Firms - Average 8.8% -7.9% 18.5%
* note, figures are in reported currencies


Revenue and EBITDA per Employee
As we have discussed earlier in this report, the principal assets of a design firm are its
people. They also represent the largest expense item on its P&L and are often a
bottleneck for growth and operating leverage. For these reasons, we have elected to
measure the contribution of the average employee to a firms top-line and EBITDA
compare among firms. We note the reported figures for Aecom, AMEC, Arcardis and
Tetra Tech have been converted into Canadian dollars to facilitate our analysis. Readers
are encouraged to treat both per head metrics jointly for a proper analysis, as a high
revenue-per-employee number means little if adequate profitability cannot be
achieved. Conversely, a high profitability-per-employee figure coupled with a low
revenue metric can be achieved if operating costs are effectively managed. Once again,
we must keep in mind that past results only tell us only so much about the future. With
that said, our analysis (shown in Exhibit 18) yields the following key observations and
conclusions:
IBI Group garners the highest EBITDA-per-employee among the seven consulting
firms under review. This should come as no surprise considering the advantages of
its partnership model discussed and the high proportion of architects included on
the firms payroll (architects book higher fees than engineers, which in turn charge
more than contractors, which earn more than operators, and so on).
IBI group generates the second
highest EBITDA-per-employee due to
its heavy focus on architecture
Genivar ranks lowest in terms of revenue-per-employee contribution because it
derives the bulk of its revenues from Canadian sources (where professional fees are
significantly lower than in the United States and Europe). However, for the reasons
explained earlier, the firm fares very well in terms of profitability.
According to our analysis, integrated firms exceeded the revenue-per-head and
EBITDA-per-head of the average design firm by factors of 2.2 to 1 and 1.3 to 1,
respectively, over the past five year. This makes sense to us since the integrateds
generally sub the high-volume, low-margin work to contractors.
SNC-Lavalins EBITDA-per-employee was the highest among nine integrated firms
we analyzed over the five- and ten-year periods ending Dec-31-10. This helps
explain why this firm has generally commanded a valuation premium over its peers.
A poor demand environment and greater competitive pressures compelled many
firms to cut staff and drop their professional fees during the recessionas reflected
in decreases in both revenue and profitability figures 2008 to 2009. Certain
companies were able to extract more revenue from their staff in 2010 as market
conditions slowly improved last year. This was the case for Genivar and AMEC.
Genivar and AMEC were able to
extract more revenue from their
staff in 2010 as market conditions
slowly improved

Exhibit 18: Peer Group Analysis of Revenue/Employee and EBITDA/Employee for Design Firms
Revenue/Employee (C$000's) 2006 2007 2008 2009 2010 5-yr AVG
ENGINEERS
Genivar 88.3 103.3 110.4 108.3 111.8 104.4
IBI Group 135.9 124.5 139.4 130.2 127.9 131.6
Stantec 124.8 120.1 135.3 138.1 122.6 128.2
Aecom Technologies 89.8 87.3 97.1 100.3 94.3 93.8
AMEC 176.7 167.2 166.5 149.9 159.8 164.0
ARCADIS NV 124.9 131.6 144.0 297.2 261.1 191.7
Tetra Tech 152.7 143.8 163.2 162.2 135.8 151.5
Engineers - Average 127.6 125.4 136.6 155.2 144.8 137.9
0
SNC 420.7 420.9 355.8 282.4 275.3 351.0
Integrated Firms - Average 285.7 270.2 368.1 313.6 279.4 303.4

EBITDA/Employee (C$000's) 2006 2007 2008 2009 2010 5-yr AVG
ENGINEERS
Genivar 17.9 21.0 23.6 21.5 20.2 20.8
IBI Group 25.3 23.7 26.7 19.8 18.8 22.9
Stantec 18.5 16.2 17.8 17.8 15.8 17.2
Aecom Technologies 6.0 6.2 7.8 8.6 9.1 7
AMEC 12.1 13.0 17.1 16.1 19.1 15.5
ARCADIS NV 14.8 16.0 20.6 35.2 30.2 23.4
Tetra Tech 13.1 13.4 16.4 17.5 14.7 15.0
Engineers - Average 15.4 15.
.5
7 18.6 19.5 18.3 17.5
SNC 27.3 17.9 31.4 34.0 38.3 29.8
Integrated Firms - Average 15.7 15.5 22.9 23.0 19.6 19.3
* Note: figures are converted from reported currency to Canadian Dollars


Working Capital Management (Day Sales Receivable)
Insofar as it can heavily influence free cash flows and, in turn, self-funded acquired
growth, efficient working capital management is critical to the long-term success of any
professional services firm. With no real inventories involved in the business this
effectively comes down to an equation of days payable minus days receivable. The
former, which consists mainly of payroll and fees paid to sub-contractors, is usually
more stable than the latter. There are basically two reasons for this: (i) projects that go
awry tend to create problems getting paid; and (ii) revenue mix can shift between the
public and private sectors and billings from the government generally take longer to
collect (as anyone who has ever been owed a tax refund can attest!). In Exhibit 19, we
present a comparison of days receivable ratios for each of the companies in our
engineering coverage universe. Our key observations are as follows:
IBI Group has the highest five-year average days receivable ratio of any firm that we
reviewed. Its ratio has also been in a consistent upward trend, prompting us to stay
on the sidelines at the end of 2009 and until recently. Although not visible in the
annual calculations shown in the table below, significant progress has been made
over the last few quarters to reduce the working capital tied up in IBI Groups
operations. But our analysis suggests there is room to further improve the
companys performance in this area, which is one of managements top strategic
priorities.
Genivars days sales outstanding ratio has also inched upward throughout the
recession. However, similarly to IBI Group, the firm made significant strides since
3Q10 in reducing this ratio within a more acceptable range. We expect that the
recent implementation of a corporate-wide business information system will
further facilitate this task.
Stantec has the lowest five-year days receivable average among the pure design
firms. Moreover, the trend showsin contrast to IBI Group and Genivara
relatively steady performance in this operational metric since 2005. We reckon that
this reflects the firms reputation for bidding on and being awarded high quality
projects as well as its heavy investment in world class IT systems about five years
ago.
Stantecs efficient working capital
management has allowed it to
flourish with minimal equity
issuances

Exhibit 19: Peer Group Analysis of Days Sales Outstanding
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 5-yr AVG 10-yr AVG
ENGINEERS
Genivar n.a. n.a. n.a. n.a. n.a. n.a. 112 109 119 130 118 n.a.
IBI Group n.a. n.a. n.a. n.a. 104 107 123 133 156 162 136 n.a.
Stantec 81 80 81 81 87 78 81 75 75 81 78 80
Aecom Technologies n.a. n.a. n.a. n.a. n.a. 155 152 151 161 169 158 n.a.
AMEC 131 131 129 172 303 291 126 103 106 93 144 158
ARCADIS NV 112 111 113 125 148 151 151 155 163 152 154 138
Tetra Tech 139 133 132 130 133 124 141 156 149 134 141 137
Engineers - Average 116 113 114 127 155 151 127 126 133 132 133 128
SNC-Lavalin 75 53 64 79 84 68 72 82 94 91 82 76
Integrated Firms - Average 92 74 69 76 77 67 66 55 55 60 60 68


Company Profiles

Genivar Inc.
GNV-TSX
Jamil Murji CFA (Associate)| 604.659.8261 | jamil.murji@raymondjames.ca

Engineered for Growth (Still)
Founded in 1959, Quebec-based Genivar is one of the leading engineering
services firms in Canada, providing an extensive range of professional consulting
services to public and private sector clients across all execution phases of a
project. The company completed its initial public offering in May 2006 as an
income trust, and subsequently converted to a corporation at the beginning of
2011. In the short five years it has operated as a publicly-traded entity, Genivar
has completed 51 acquisitions, grown its employee base from 1,150 to over
4,500, and generated a total return of 244% for its shareholders. In 2010
Genivar worked for more than 6,000 clients and on approximately 15,000
projects spanning five principal market segments: Buildings, Urban
Infrastructure, Industrial & Power, Transportation and Environment. The
company maintains over 85 offices across Canada and in the Caribbean.
Rating & Target
Outperform 2
Target Price (6-12 mos) C$33.00
Current Price (Apr-15-11) C$30.10
Total Return to Target 15%
52-Week Range C$24.56-34.55
Market Data
Market Capitalization (mln) C$783
Current Net Debt (mln) C$46
Enterprise Value (mln) C$829
Shares Outstanding (mln) 26.0
Average Daily Volume (000s) 53
Dividend/Yield C$1.50/5.0%
Key Financial Metrics
2010A 2011E 2012E
EPS (C$) $1.70 $2.05 $2.50
P/E 17.7x 14.7x 12.0x
EPS - 1Q $0.41 $0.36 $0.52
EPS - 2Q $0.52 $0.50 $0.64
EPS - 3Q $0.61 $0.62 $0.72
EPS - 4Q $0.16 $0.58 $0.62
Revenue (mln) $469 $572 $698
EBITDA (mln) $85 $110 $135
EV/EBITDA 9.8x 7.5x 6.1x
Net Debt/Equity 0.2
Net Debt/EBITDA 0.5
BVPS $12.67
Employees (mrq) 4,500
Revenue Breakdown (2010)
Quebec 49%
Ontario 29%
Western Canada 18%
Atlantic Region 1%
International 3%
Company Description
Source: Raymond James Ltd., Thomson One
Genivar is a leading engineering services firm in Canada
serving five principal market segments: Building, Urban
Infrastructure, Industrial and Power, Transportation and
Environment.
1 Year Price Chart - Publishing will paste

We recommend the purchase of Genivar common shares, as we believe they
offer one of the Canadian I&C sectors most enticing combinations of growth
and income. Key points to our analysis are as follows:

Going Global. Genivar has set out an aggressive plan to double in size over
the next three years. Although management still sees opportunities to
increase the firms presence in each Canadian province, international
growth is set to take center stage. New markets considered include
Australia, Latin America, French-speaking Africa and, naturally, the United
States. Genivar has notably spent the last 24 months mapping out the
markets south of the border, and has grown increasingly comfortable with
the related risk/reward potential.
Layering More Expertise. Genivar recently tapped the upstream oil and gas
infrastructure sector with the acquisition of Alberta-based Tundra
Engineering Associates in late 2010. Management also aspires to enter the
fields of architecture and power transmission, and better leverage its
leadership position in disciplines such as mining and transportation.
More Organic Growth on Tap. We expect the firms outsized position in
Quebec and rapidly growing presence throughout Canada to help drive
organic growth at an annual rate of 5-10% for many years to come
(notwithstanding some recent short-term headwinds from the Trinidad &
Tobago operations). Helping support these targets are a strong recurring
base of revenues from repeat clients, the cross-selling opportunities that
every Genivar acquisition offers, and improved private sector fundamentals.
Healthy Dividend Yield of 5.0%. Management is targeting a long-term
payout ratio of 50%, compared to the 53% our financial model is currently
producing for 2011. We anticipate the firm to grow into this ratio by 2012,
after which we could see it begin raising the dividend beyond the $1.50
annualized rate it currently pays.
More of the Same under Corporate Structure. Genivar recognizes that its
successes rest on its entrepreneurial and decentralized approach, which
under the former income trust structure had empowered partners to focus
on what they do best (win business) and drive revenue synergies. There is
reason to expect more of the same as the firm transitions from an
ownership to a leadership platform in 2011.

Reiterating Outperform Rating and $33.00 Target Price. The latter is based on
an EV/EBITDA multiple of 9.0x our current year estimates. This implies a
premium to the engineering services groups historical average multiple of 8.5x,
but one we feel is reasonable in light of Genivars industry leading margins,
strong balance sheet and healthy dividend yield. The stock currently trades at a
multiple of 7.5x our 2011 EBITDA forecast, implying good value relative to its
industry peers.

IBI Group
IBG-TSX

Rating & Target
Outperform 2
52-Week Range C$12.16-15.94
Market Data
Market Capitalization (mln) C$315
Enterprise Value (mln) C$434
2010A 2011E 2012E
EPS (C$) $1.11 $1.20 $1.50
P/E 13.3x 12.3x 9.9x
EPS - 1Q $0.22 $0.24 $0.31
EPS - 2Q $0.21 $0.28 $0.36
EPS - 3Q $0.25 $0.32 $0.39
EPS - 4Q $0.43 $0.36 $0.43
Revenue (mln) $290 $334 $384
EBITDA (mln) $43 $53 $63
Net Debt/Equity 0.6
Net Debt/EBITDA 2.8
BVPS $7.76
Canada 62%
United States 25%
International 12%
Company Description
IBI provides planning, design, implementation and several
other consulting services spanning four main areas of
practice: urban land, building facilities, transportation
networks and systems technology.
Juicy Yield and Proven Partnership Model: A Winning Recipe
IBI Group is a leading provider of professional services focused on the physical
development of cities. The Toronto-based firm offers planning, design,
implementation and several other consulting services to a diverse base of public
and private sector clients. IBI Group participates in a plethora of projects
spanning four main areas of practice: urban land, building facilities,
transportation networks and systems technology. The company was founded in
1974, went public as an income trust at the end of 2004, and converted to a
corporate structure in early 2011. Since tapping the equity markets, IBI Group
has acquired and integrated 27 firms to bring its complement of professional
and support staff to 2,650. These individuals operate from 74 offices across
Canada and the United States, Europe, the Middle East, and Asia.
In our view, IBI Group is well positioned to capitalize on an impending recovery
in private sector spending, the continued growth in private financing initiatives
and outsourcing globally, as well as an increasing concentration of ownership
and management of real estate portfolios. We believe compelling elements to
the IBI Group story include:
World-Class Architectural Practice. With over 750 registered architects IBI
Group ranks as the sixth largest architecture practice globally, according to
BD World Architecture. The firm has leveraged this leadership position to
integrate the various disciplines relevant to providing comprehensive
services to its customersbecoming a one-stop shop for the development
of major urban projects. This helps explain why IBIs name has been
associated with the development of Toronto's entire waterfront and
Vancouvers high-rise buildings for the past 30 years. By replicating this
proven approach to other global markets, we believe IBI Group can achieve
similar successes.
Fully Aligned Partners. We highlight IBI Groups ability to develop and
retain senior management through a proven partnership model as the main
force behind its early success. Today, the firms leadership team comprises
approximately 80 Directors and Associate Directors who collectively own
46% of the firms common shares. IBI Group strongly encourages individuals
to prove their professional talent, managerial skills and commitment to
contributing to the firms growth as a basis of election to partnership. No
one gets a free passnot even the senior or founding members of the firms
acquired by IBI. All must earn their stripes. We believe this is one of the
most powerful ways to align the interests of all IBI Group stakeholders.
Strengthened Position in Social Infrastructure. IBI Groups June 2010
acquisition of Nightingale Architects, United Kingdoms largest designer of
health care facilities, bolstered the firms expertise in alternative project
delivery methods (read: P3s). We lauded this deal at the time to the extent:
(i) it expanded or extended the scope of IBI Groups activities in Europe, the
Gulf and Australia; (ii) complemented the firms already established
Canadian footprint to a tee, and (iii) it was financed with a relatively strong
Canadian dollar and consumed at or near the bottom of the cycle.
Industry-Leading Dividend. IBIs annual dividend of $1.10 per share
positions it as the highest yielding stock among its engineering and design
peers. This stems from the firms commitment to remaining a relatively
high distributor of cash earned (after its conversion to a corporate
structure) to fully align the interests (and the performance) of its partners
with those of the shareholders.

Reaffirming Outperform Rating; $16.50 Target Price. Our positive outlook
remains predicated on the continued progress in the firms operating and
financial metrics, improved industry fundamentals north and south of the
border and, of course, its yield dividend yield of 7.4%. Our target is based on an
EV/EBITDA multiple of 8.5x to our estimates for 2011, which matches the
engineering groups historical trading average.
SNC-Lavalin Group
SNC-TSX

Rating & Target
Outperform 2
52-Week Range C$41.59-63.23
Market Data
Market Capitalization (mln) C$8,618
Current Net Debt (mln) C$2,048
Enterprise Value (mln) C$10,666
2010A 2011E 2012E
EPS (C$) $2.87 $2.80 $3.30
P/E 19.7x 20.2x 17.2x
EPS - 1Q $0.47 $0.53 $0.70
EPS - 2Q $0.64 $0.67 $0.79
EPS - 3Q $0.84 $0.78 $0.89
EPS - 4Q $0.91 $0.82 $0.91
Revenue (mln) $6,315 $7,022 $7,770
EBITDA (mln) $879 $920 $1,031
Net Debt/Equity 1.2
Net Debt/EBITDA 2.3
BVPS $11.21
E&C Business
EPS $2.33 $2.30 $2.75
P/E 15.0x 15.2x 12.7x
EBITDA (mln) $551 $541 $625
Market Capitalization (mln) 5,317
Total Net Debt (mln) -940
Enterprise Value (mln) 4,377
Canada 54%
Africa 20%
Europe 7%
Middle East 6%
Latin America and Caribbean 6%
United States 3%
Asia 3%
Other 1%
Company Description
SNC-Lavalin is one of the worlds premier engineering and
construction firms and a major player in the ownership of
infrastructure and in the provision of operations and
maintenance services.
Bigger Is Better
Founded in 1911, Montreal-based SNC-Lavalin is one of the worlds premier
engineering and construction (E&C) firms. The company is also a major participant
in the ownership of infrastructure assets and in the provision of operations and
maintenance (O&M) services. Although SNC-Lavalin currently operates in over 100
countries, it still derives the bulk (54%) of its revenues from the Canadian market.
Grouped into seven reporting segmentsInfrastructure and Environment, Power,
Chemicals and Petroleum, Mining and Metallurgy, Operations and Maintenance,
Infrastructure Concession Investments and Other Industriesthe companys
activities generated $6.3 billion in revenue for 2010.

We encourage large-cap and growth oriented investors to buy shares of this well-
run, financially strong and globally diversified engineering firm. Key points to our
analysis are as follows:
Proven Business Model. SNC-Lavalin is a pioneer in infrastructure concession
investments, having made since the mid-1980s selective equity bets in many
industry verticalsincluding airports, bridges, power, mass transit systems,
roads and water. Today, its portfolio of investments extends from Canadas
largest healthcare facility, minutes away from the firms headquarters in
Montreal, to an open-pit mine in the far reaches of Madagascar. Importantly,
such a position of direct influence in a concession generally leads to a
comprehensive mandate that benefits all its activitiesServices, Packages and
O&M.
Canadas Infrastructure Giant. No other firm comes even close to matching
the breadth and scope of SNC-Lavalins operations in Canada. The engineering
firm is notably developing massive power and transmission projects a mari
usque ad mare, highways and public transit systems in Alberta, and a concert
hall in Quebec. These domestic projects not only combine for a large chunk of
SNC-Lavalins record backlog of $13.0 billion, but also provide a solid
foundation for future growth, in our view.
A Go-To Name For Mining and Metallurgy Projects. Over its illustrious 100-
year history SNC-Lavalin has carried out nearly 400 projects worldwide in the
fields of alumina, aluminum, copper, gold, nickel, steel and zinc. Most
recently, the firm secured key engineering procurement and construction
management (EPCM) services contracts from all three global mining giants
Vales S11D project in Brazil, Rio Tinto Alcans AP60 Phase I smelter project in
Quebec and BHP Billitons flagship Jansen project in Saskatchewan. Lest we
forget, SNC-Lavalin was also selected as lead engineer on Inmet Minings
multi-billion Cobre Panama copper. If these dont attest to the firms
established industry position and its strong prospect in mining and metallurgy,
we simply dont know what will.
Leading Foreign E&C Presence in Emerging Countries. Over the past years
SNC-Lavalin has established or significantly bolstered its presence in key
growth markets. In Brazil, for example, the company gained over 2000
professionals through the acquisitions of two firms (Minerconsult and
Marte) and teamed up with a third one (Alusa) to pursue construction
opportunities ahead of the 2014 FIFA World Cup and the 2016 Olympics.
We believe these deals reflect well on the companys ability to adapt to
change, innovate and continue driving shareholder value.
Libyan Headwinds. The company halted work on all its projects in Libya
after violence began spreading across the country in February. It is too
early to say what will eventually come out of these tense events, but we do
take some comfort in the fact that SNC-Lavalin's key projects in Libya are
essential to its people and prosperity, and should logically resume once the
political tensions abate. But this scenario was conservatively removed from
our forecasts following the release of the firms 4Q10 results.

Reaffirming Outperform Rating; $63.00 Target Price. We value the E&C
business at $41.29 per share using an EV/EBITDA multiple of 9.0x our 2011
estimates. While this multiple is slightly higher than the average of 8.5x a group
of integrated E&C firms have historically commanded from the Street, we
believe it is amply justified by the firms best-in-class status. To this we add
$21.65 per share to account for our estimate of SNCs concession investments.
Stantec Inc.
STN-TSX | STN-NYSE
Ben Cherniavsky | 604.659.8244 | ben.cherniavsky@raymondjames.ca
Theoni Pilarinos CFA (Associate)| 604.659.8234| theoni.pilarinos@raymondjames.ca
Greg Jackson (Associate)| 604.659.8234 | greg.jackson@raymondjames.ca

Rating & Target
Outperform 2
52-Week Range C$30.33-22.79
Market Data
Market Capitalization (mln) C$1,353
Enterprise Value (mln) C$1,607
2010A 2011E 2012E
EPS (C$) $2.07 $2.26 $2.70
P/E 14.3x 13.1x 11.0x
EPS - 1Q $0.43 $0.49 NA
EPS - 2Q $0.52 $0.57 NA
EPS - 3Q $0.57 $0.63 NA
EPS - 4Q $0.54 $0.57 NA
Revenue (mln) $1,513 $1,673 $1,948
EBITDA (mln) $158 $181 $213
Net Debt/Equity 0.4x
Net Debt/EBITDA 1.6x
BVPS (mrq, tangible) $13.69
Canada 57%
United States 40%
International 3%
Company Description
Stantec provides professional engineering and technical
consulting services to the infrastructure and facilities
industry and specializes in planning, design, construction,
maintenance, and decommission.
Steady as She Goes; Positioned to Capitalize on Gradual Recovery
Stantec provides professional engineering and technical consulting services to
the infrastructure and facilities industry and specializes in planning, design,
construction, maintenance and decommissioning. Currently, the company
employs approximately 10,500 individuals scattered across 160 offices globally.
Founded in 1954, the company is headquartered Edmonton, Alberta and trades
under the symbol STN on both the New York and Toronto Stock Exchange.

We continue to advise investors to buy Stantec shares. Although the depressed
nature of the U.S. construction markets suggests that Stantec story currently
lacks some near-term sizzle, we continue to recommend the stock. This
positive bias is based primarily on the companys impressive historical
performance (see Analyzing the Returns section), abundant acquisition
opportunities, diversified business model, and latent leverage to an eventual
recovery in end market demand. We also believe that the stock is attractively
valued at current levels. Hence, we rate Stantec Outperform with a $33.75
target price.

Key attributes of our investment thesis include:

Challenged End-Market Conditions Mitigated by Strong Operational
Management. Notwithstanding the economic slowdown experienced in
Stantecs key end-markets, the company has managed to deliver solid
financial results. EPS, for example, between 2007 (the peak of the economic
cycle) and 2010 grew at a compounded rate of 11% (EPS CAGR over the last
ten years is 17%). We believe this reflects the companys acquisitive growth
platform and managements relentless focus on operational performance.
For 2011, we expect construction activity in the U.S. to remain moderately
restrained due to the fiscal crisis, political gridlock, and persistent
challenges in the housing marketamong other factors. Meanwhile, in
Canada, we think the market outlook is better with robust P3 activity,
strong commodity prices, and generally better economic activity. Still, the
withdrawal of stimulus funding and widening deficits both federally and
provincially (especially in Ontario and Quebec) will pose some new
challenges for the construction services markets, in our view. Nonetheless,
we expect Stantec to continue navigating this environment deftly, as it has
been doing in the past two years.
Global Appetite for Acquisition Growth. Last Fall, Stantec made its first
foray into international waters via the acquisitions of Pennsylvania-based
Burt Hill Inc. (600 people) and San Francisco-based Anshen + Allen (200
people). In particular, we believe this development was encouraging in that
it (i) added four international firms (two in UAE, one in India and one in the
UK); (ii) improved the firms geographic reach in the U.S. northeast and
California, and (iii) bolstered Stantecs established architectural design
practice in the health care, education and science sectors (together these
three firms now boast nearly 2,000 architects, which ranks among North
Americas largest practice). Most importantly, however, the
aforementioned acquisitions mark the first steps towards Stantecs 2018
goal of generating 20% of its revenue from outside North America and have
taken the proverbial lid of the basket concerning Stantecs future
international acquisition growth.
Attractive Valuation. At current levels, Stantec is trading at a discount to
both its five and 10-year average P/E multiples, and its peers (see Appendix
A). Consequently, in our view, investors who purchase Stantecs shares will
be generously rewarded over the long run.

Reiterate Outperform rating; $33.75 target priceWe believe that Stantec is
well-positioned to capitalize on future growth prospects. We continue to
recommend the stock because of its attractive valuation, strong long-term
fundamentals, acquisition opportunities, diversified business model, and latent
leverage to an eventual recovery in end market demand. To arrive at our $33.75
target price, we apply a ~15.0x P/E multiple to our 2011 EPS estimate of $2.26.
This is consistent with the stocks 10-year P/E average.

Dessau Inc. (private)
www.dessau.com
Founded in 1957, Quebec-based Dessau is the fifth largest engineering and construction
firm in Canada and the 58th biggest worldwide. The companys integrated service
offering spans various fields including urban planning and landscape architecture,
engineering, geotechnical and materials engineering, project and construction
management, and operations. Dessau employs nearly 5,000 people, generates annual
revenues in excess of $650 million, and operates from offices in Canadas four largest
provinces and internationally. The company is very active in Latin America, where it
recently acquired a 350-employee firm specializing in the oil and gas sector. The
engineering firm, Compaa de Estudios e Interventoras Ltda, is based in Bogota,
Colombia.
2008A 2009A 2010A
Revenue (mln) $506 $600 $660
Employees 3,700 4,300 4,700
Canada 81%
International 19%
All figures in C$, unless otherwise noted.
Sources: Dessau, ENR, Raymond James Ltd.

Golder Associates (private)
www.golder.ca

From its inception over 50 years ago, Golder Associates has grown into a global leader in
ground engineering and environmental services. The firm services global clients which
span the world's major economic driversoil and gas, mining, manufacturing, power
and transportation. Golder operates from 160 offices across six continents and employs
a global staff of 7,000. The firm has worked on a remarkable range of international
projects, from roads through the jungles of Bolivia and along the coastal desert of
Oman, to port facilities in Brisbane Australia. In North America, the companys list of
projects is equally impressive. It includes Calgarys Olympic speedskating oval, massive
dams in British Columbia, uranium mines in Ontario and transportation tunnels in
Tennessee, to name a few.
2008A 2009A 2010A
Revenue (mln) $966 $894 $1,100
Employees 6,630 7,000
Canada 40%
Unites States 21%
Australasia 16%
Europe 13%
South America 5%
Africa 4%
Asia 1%
Sources: Golder, ENR, Raymond James Ltd.
Hatch Group (private)
www.hatch.ca

2008A 2009B 2010E
Revenue (mln) $1,355 $1,215 n/a
Employees 8,000
Canada 36%
International 64%
Sources: Hatch, ENR, Raymond James Ltd.
Hatch is an 8,000-employee firm with roots tracing back to 1955 and the construction
industry. In 1996, the company began an expansion program that saw it purchase
several aligned engineering companies. Today, Hatch provides consulting, operations
support, technologies, process design, and project and construction management
services to clients in three principal sectorsmining and metals, energy and
infrastructure. Hatch notably counts among its clients the movers and shakers of the
mining and metallurgy world, including Alcoa, BHP Billiton, Barrick Gold, Xstrata, Vale
and Rio Tinto. The firm operates from 65 offices on six continents.

exp Global (private)
www.exp.com

Formerly known as Trow Global, exp Global is a multi-disciplinary engineering and
consulting firm based in Brampton, Ontario. The firm has been in operation since 1957,
and today employs over 3,500 professionals whose projects span five distinct markets
globally. These include buildings, infrastructure, energy, industrial and earth,
environmental and sustainability. The firm has recently accelerated its roll-up strategy in
the U.S. with the help of General Atlantic, a Greenwich, CT based equity firm that
manages approximately $15 billion in capital. Key acquisitions include Chicago-based
Teng Affiliated and X-nth of Floridatwo firms that ranked No. 157 and No. 198,
respectively, on Engineering News Records list of top U.S. design firms for 2009-2010.
exp Global representative projects include highways in China, Algeria and British
Colombia, pipelines in North and South America, and various entertainment complexes
across the United States.
2008A 2009A 2010E
Revenue (mln) $348 $390 n/a
Employees 2,000 3,000 3,400
Canada 65%
International 35%
Sources: exp Global, ENR, Raymond James Ltd.

Focus Corporation (private)
www.focus.ca

Founded in 1977, Focus Corporation is a multidisciplinary firm providing a range of
engineering and geomatics services to the western Canadian energy, infrastructure, land
development and environmental sectors. September 2005 saw the firm recapitalize and
sell a material ownership interest to Denver-based KRG Capital Partners. Over the five
years that have elapsed since, Focus has grown its complement of professionals from
400 to roughly 1,400. Today, the company operates from offices in British Columbia,
Alberta, and Saskatchewan, and in select areas of the world.
2008A 2009A 2010E
Revenue (mln) n/a n/a ~$150
Employees 1,100
Revenue Breakdown
Canada n/a
International n/a
Sources: Focus Corporation, ENR, Raymond James Ltd.

Associated Engineering (private)
www.ae.ca

2008A 2009A 2010E
Revenue ($mln) n/a n/a n/a
Employees 700
Revenue Breakdown
Canada n/a
International n/a
Sources: Associated Engineering, Raymond James Ltd.
Edmonton-based Associated Engineering is an employee-owned consulting engineering
firm specializing in the water, transportation, infrastructure and environmental sectors.
Its 700 employees offer to public and private sector clients services that range from
planning and feasibility studies to detailed design, construction, training, and
operational assistance. Associated Engineerings reach extends from urban centres
across Canada to small communities and rural areas abroad.

Appendix 1: Engineering Peer Group Comparables
Company Name Ticker Fx FY END
Market
Price
Shares O/S
(mln)
Market Cap
(mln)
Net Debt
(mln)
Ent. Value
(mln)
2010A 2011E 2012E 2010A 2011E 2012E
Net Debt/
Cap (%)
Price
/Book (x)
Div. Yield
(%)
RJL
Rating
ENGINEERING
AECOM TECHNOLOGIES CORP ACM.US USD SEP $26.77 118.7 $3,178 $785 $3,964 13.1 11.6 9.7 9.4 7.3 6.3 19.8 1.5 -- nc
AMEC AMEC.GB BPN DEC 11.96 331.9 3,969 -740 3,229 19.1 17.4 15.3 12.2 10.4 9.2 n.m. 0.0 2.5 nc
ARCADIS NV ARCAD.NL EUR DEC 17.45 67.7 1,181 208 1,389 15.2 13.5 12.0 8.5 7.8 7.2 15.0 2.9 2.7 nc
GENIVAR INC GNV.CA CAD DEC $30.10 26.0 $783 $46 $829 17.7 14.7 12.0 9.8 7.5 6.1 5.6 2.4 5.0 OP2
IBI GROUP IBG.CA CAD DEC $14.79 21.3 $315 $120 $434 13.3 12.3 9.9 10.2 8.1 6.9 27.6 1.9 7.4 OP2
STANTEC INC STN.CA CAD DEC $29.62 45.7 $1,353 $254 $1,607 14.3 13.1 11.0 10.2 8.9 7.5 15.8 2.2 -- OP2
TETRA TECH INC TTEK.US USD NOV $23.37 62.3 $1,456 $65 $1,521 18.8 16.8 14.8 9.6 7.9 7.3 4.3 1.9 -- nc
15.9 14.2 12.1 10.0 8.3 7.2
INTEGRATED ENGINEERING & CONSTRUCTION
CHICAGO BRIDGE & IRON CBI.US USD DEC $40.47 99.9 $4,043 ($345) $3,697 19.8 16.9 14.5 9.8 8.6 7.4 n.m. 3.8 -- nc
FLUOR CORP FLR.US USD DEC $67.45 176.8 $11,927 ($2,214) $9,713 n.m. 20.6 17.3 10.3 8.3 7.2 n.m. 1.8 0.7 nc
FOSTER WHEELER AG FWLT.US USD JAN $34.75 124.9 $4,341 ($886) $3,455 21.2 19.7 14.7 9.7 9.8 8.0 n.m. 6.3 -- nc
JACOBS ENGR GROUP INC JEC.US USD SEP $48.84 126.4 $6,173 ($957) $5,215 19.7 18.8 16.3 9.1 8.5 7.5 n.m. 2.2 -- nc
KBR INC KBR.US USD DEC $37.77 151.4 $5,717 ($682) $5,035 18.1 16.9 15.0 7.4 7.8 7.1 n.m. 2.5 0.6 nc
SHAW GROUP INC SHAW.US USD AUG $38.77 81.3 $3,153 ($542) $2,611 17.7 21.7 14.4 7.2 8.7 6.3 n.m. 2.1 -- nc
SNC-LAVALIN (E&C Business only) SNC.CA CAD DEC $56.53 152.5 $8,618 $2,048 $10,666 15.0 15.2 12.7 7.9 8.1 7.0 19.2 5.0 1.5 OP2
URS CORPORATION URS.US USD DEC $44.22 80.6 $3,565 $129 $3,695 12.5 12.1 11.1 5.5 4.9 4.7 3.5 0.9 -- nc
WORLEYPARSONS WOR.AU AUS DEC $31.69 241.3 $7,647 $534 $8,181 n.m. 24.6 19.6 15.8 14.9 12.2 6.5 4.2 2.4 nc
17.7 18.5 15.1 9.2 8.9 7.5
Notes:
1) Estimates for Genivar, IBI Group, SNC-Lavalin and Stantec are from Raymond James; all other estimates are consensus from Thomson One.
2) Net debt (cash) positions for Genivar, IBI Group and Stantec include balances of purchase price payable.
3) 2010 P/E calculations for Genivar and IBI Group assume earnings are tax effected.
4) P/E and EV/EBITDA calculations for SNC-Lavalin are for the engineering and construction business only; they exclude the company's Infrastructure Concession Investments, which we currently estimate at $21.65 per share.
5) IBI Groups two outstanding convertible debentures are treated as debt due to the anti-dilutive impact of the convertible rights.
P / E EV / EBITDA

Source: Thomson ONE, Capital IQ, Raymond James Ltd.

Risks
The success of an engineering firm hinges on its ability to attract and retain qualified
workers with adequate skills, experience, reputation and established client
relationships. As acquisitions are a key driver of growth for the engineering names
under coverage, some related risks include: (i) an inability to identify appropriate
acquisition targets at reasonable valuations; (ii) difficulties in integrating the acquired
businesses, resulting in a lack of anticipated synergies; and (iii) uncertainties associated
with acquisitions or mergers, leading to a loss of customers and/or key employees.
More general risks which could materially reduce anticipated profits include cost
overruns on a significant number of projects, potential liability claims and contract
disputes, unexpected project cancellations, and a damaged reputation due to client
dissatisfaction.

Company Citations
Company Name Ticker Exchange Currency Closing Price RJ Rating RJ Entity
ADF Group Inc. DRX TSX C$ 1.89 2 RJ LTD.
Aecom Technology Corp ACM NYSE NC
Aecon Group ARE TSX C$ 9.36 2 RJ LTD.
ALCOA, Inc. AA NYSE NC
Armtec Infrastructure Inc. ARF TSX C$ 15.98 3 RJ LTD.
Barrick Gold Corp. ABX TSX NC
BHP Billiton Ltd BHP NYSE NC
Bird Construction Inc. BDT TSX C$ 12.33 3 RJ LTD.
Canam Group CAM TSX C$ 8.25 2 RJ LTD.
Cervus Equipment Corp. CVL TSXV C$ 17.75 1 RJ LTD.
Finning International FTT TSX C$ 27.75 3 RJ LTD.
Genivar Inc. GNV TSX C$ 30.42 2 RJ LTD.
GLV Inc. GLV.A TSX C$ 0.00 1 RJ LTD.
IBI Group Inc. IBG TSX C$ 14.85 2 RJ LTD.
Inmet Mining Corporation IMN TSX C$ 66.40 UR RJ LTD.
North American Energy Partners NOA TSX C$ 10.76 1 RJ LTD.
Rio Tinto RIO NYSE NC
Ritchie Bros. Auctioneers RBA NYSE US$ 31.27 2 RJ LTD.
Rocky Mountain Dealerships Inc. RME TSX C$ 9.94 2 RJ LTD.
Russel Metals RUS TSX C$ 26.00 3 RJ LTD.
SNC-Lavalin SNC TSX C$ 57.24 2 RJ LTD.
Stantec Inc STN TSX C$ 29.82 2 RJ LTD.
Strongco Corp. SQP TSX C$ 5.20 2 RJ LTD.
Suncor Energy Inc SU TSX C$ 43.61 3 RJ LTD.
Tetra Tech TTEK NASDAQ NC
The Churchill Corp. CUQ TSX C$ 20.63 1 RJ LTD.
Toromont Industries TIH TSX C$ 32.97 2 RJ LTD.
Vale S.A. VALE NYSE NC
Wajax Corp. WJX TSX C$ 40.76 2 RJ LTD.
ZCL Composites ZCL TSX C$ 3.25 3 RJ LTD.

Notes: Prices are as of the most recent close on the indicated exchange and may not be in US$. See Disclosure section for
rating definitions. Stocks that do not trade on a U.S. national exchange may not be approved for sale in all U.S. states. NC=not
covered.
Important Investor Disclosures
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The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to
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Analyst Information
Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus
system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall
productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index
and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail
sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analysts efforts, v)
net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment
dealers.
Analyst Stock Holdings: Effective September 2002, Raymond James equity research analysts and associates or members of
their households are forbidden from investing in securities of companies covered by them. Analysts and associates are
permitted to hold long positions in the securities of companies they cover which were in place prior to September 2002 but
are only permitted to sell those positions five days after the rating has been lowered to Underperform. The Analyst and/or
Associate or a member of his/their household has a long position in the securities of Finning International. The Analyst
and/or Associate or a member of his/their household has a long position in the securities of Ritchie Bros. Auctioneers.
The Analyst and/or Associate or a member of his/their household has a long position in the securities of Toromont
Industries.
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No
part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
contained in this research report. In addition, said analyst has not received compensation from any subject company in the
last 12 months.
Ratings and Definitions
Raymond James Ltd. (Canada) definitions
Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the
S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and
outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to
perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of
funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX
Composite Index or its sector over the next six to twelve months and should be sold.
Raymond James & Associates (U.S.) definitions
Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next
six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at
least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform
the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain
MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and
expect a total return modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected
to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform
the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have
been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply
with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing
investment banking services to the company. The previous rating and price target are no longer in effect for this security
and should not be relied upon.
Raymond James Latin American rating definitions
Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months.
Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve
months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4)
Expected to underperform the underlying country index.
Raymond James European Equities rating definitions
Strong Buy (1) Absolute return expected to be at least 10% over the next 12 months and perceived best performer in the
sector universe. Buy (2) Absolute return expected to be at least 10% over the next 12 months. Fair Value (3) Stock
currently trades around its fair price and should perform in the range of -10% to +10% over the next 12 months. Sell (4)
Expected absolute drop in the share price of more than 10% in next 12 months.
Suitability Categories (SR)
For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of
potential risk factors for investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12-
month price targets are assigned only to stocks rated Strong Buy or Outperform.
Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal.
Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend,
and the potential for long-term price appreciation.
Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less
predictable earnings and acceptable, but possibly more leveraged balance sheets.
High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and
competitive issues, higher price volatility (beta), and risk of principal.
Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high
risk associated with success, and a substantial risk of principal.

Rating Distributions
Coverage Universe Rating Distribution Investment Banking Distribution
RJL RJA RJL RJA
Strong Buy and Outperform (Buy) 69% 53% 58% 23%
Market Perform (Hold) 30% 41% 33% 10%
Underperform (Sell) 1% 6% 0% 9%

Raymond James Relationship Disclosures
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services
from all companies under research coverage within the next three months.
Company Name Disclosure
Aecon Group Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to Aecon Group.
Raymond James Ltd. has provided investment banking services within the last 12 months
with respect to Aecon Group.
Raymond James Ltd. has provided non-investment banking securities-related services
within the last 12 months with respect to Aecon Group.
Raymond James Ltd. has received compensation for investment banking services within the
last 12 months with respect to Aecon Group.
Raymond James Ltd. has received compensation for services other than investment
banking within the last 12 months with respect to Aecon Group.
Armtec Infrastructure Inc. Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to Armtec Infrastructure Inc..
with respect to Armtec Infrastructure Inc..
last 12 months with respect to Armtec Infrastructure Inc..
Bird Construction Inc. Raymond James Ltd. has provided investment banking services within the last 12 months
with respect to Bird Construction Inc..
last 12 months with respect to Bird Construction Inc..
Canam Group Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to Canam Group.
with respect to Canam Group.
last 12 months with respect to Canam Group.
Finning International Raymond James Ltd. has provided non-investment banking securities-related services
within the last 12 months with respect to Finning International.
Raymond James Ltd. has received compensation for services other than investment
banking within the last 12 months with respect to Finning International.
Company Name Disclosure
GLV Inc. Raymond James Ltd. has received compensation for investment banking services within the
last 12 months with respect to GLV Inc..
IBI Group Inc. Raymond James Ltd. makes a market in the securities of IBI Group Inc..
Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to IBI Group Inc..
with respect to IBI Group Inc..
last 12 months with respect to IBI Group Inc..
Inmet Mining Corporation Raymond James Ltd. makes a market in the securities of Inmet Mining Corporation.
Within the last 12 months, Inmet Mining Corporation has paid for all or a material portion
of the travel costs associated with a site visit by the Analyst and/or Associate.
North American Energy
Partners
Within the last 12 months, North American Energy Partners has paid for all or a material
portion of the travel costs associated with a site visit by the Analyst and/or Associate.
Ritchie Bros. Auctioneers Raymond James Ltd. makes a market in the securities of Ritchie Bros. Auctioneers.
Rocky Mountain Dealerships
Inc.
Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to Rocky Mountain Dealerships Inc..
with respect to Rocky Mountain Dealerships Inc..
last 12 months with respect to Rocky Mountain Dealerships Inc..
The Churchill Corp. Raymond James Ltd. has managed or co-managed a public offering of securities within the
last 12 months with respect to The Churchill Corp..
with respect to The Churchill Corp..
last 12 months with respect to The Churchill Corp..
Toromont Industries Within the last 12 months, Toromont Industries has paid for all or a material portion of the
travel costs associated with a site visit by the Analyst and/or Associate.

Stock Charts, Target Prices, and Valuation Methodologies
Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of
qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall
attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among
other factors. These factors are subject to change depending on overall economic conditions or industry- or company-
specific occurrences.

Price Rating Change Target Price Change
Coverage Suspended Target Price and Rating Change Split Adjustment
$9.00
$11.00
$13.00
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
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IBI Group Inc. (IBG) 3 yr. Stock Performance IBI Group Inc. (IBG) 3 yr. Stock Performance
Date: April 29 2011
MO2$28.00 MO2$22.00
MO2$20.50
MO2$19.00 MO2$17.50
MP3$17.50
MP3$16.00
MP3$15.00
MO2$16.50
Analyst Recommendations & 12 Month Price Objective
SB1: Strong Buy MO2: Outperform
MP3: Market Perform MU4: Underperform
NR : Not Rated R: Restricted
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Nov-11-10 14.06 16.50 2
May-10-10 14.02 15.00 3
Mar-19-10 14.90 16.00 3
Dec-09-09 16.88 17.50 3
Nov-05-09 15.68 17.50 2
Mar-20-09 12.25 19.00 2
Nov-06-08 13.31 20.50 2
Oct-20-08 14.49 22.00 2
Jun-30-08 22.20 28.00 2
Valuation Methodology: We value IBI on a comparative basis to peer group historical multiples.
$23.00
$26.00
$29.00
$32.00
$35.00
$38.00
$41.00
$44.00
$47.00
$50.00
$53.00
$56.00
$59.00
$62.00
$65.00
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SNC-Lavalin (SNC) 3 yr. Stock Performance SNC-Lavalin (SNC) 3 yr. Stock Performance
Date: April 29 2011
MP3$65.00
MO2$65.00
MO2$54.00
SB1$48.00
SB1$42.00
MO2$42.00
MP3$44.00
MP3$47.00
MO2$55.00
MO2$58.00
MO2$64.00 MO2$67.00
MO2$63.00
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Mar-08-11 54.66 63.00 2
Feb-15-11 60.02 67.00 2
Nov-08-10 55.22 64.00 2
Jan-14-10 52.17 58.00 2
Nov-09-09 49.15 55.00 2
Jul-29-09 45.05 47.00 3
Jun-08-09 43.97 44.00 3
Apr-14-09 36.38 42.00 2
Mar-09-09 28.30 42.00 1
Oct-20-08 37.84 48.00 1
Sep-19-08 45.00 54.00 2
Jul-21-08 54.60 65.00 2
Jun-18-08 59.50 65.00 3
Valuation Methodology: We value SNC-Lavalins E&C business a comparative basis to peer group historical multiples.
To this we add the value of SNCs various concession investments, which we value using various methodologies.
Target Prices: The information below indicates target price and rating changes for the subject companies included in this
research.
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
$31.00
$33.00
$35.00
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(
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)
Genivar Inc. (GNV) 3 yr. Stock Performance Genivar Inc. (GNV) 3 yr. Stock Performance
Date: April 29 2011
SB1$32.00MO2$26.00 MO2$27.50 SB1$27.50
SB1$30.00
MO2$30.00 MO2$34.00 MO2$33.00
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Mar-17-11 30.33 33.00 2
Aug-11-10 26.88 34.00 2
Jan-14-10 27.24 30.00 2
Sep-03-09 24.85 30.00 1
Aug-12-09 24.20 27.50 1
May-13-09 25.09 27.50 2
Oct-20-08 20.00 26.00 2
Aug-06-08 26.00 32.00 1
Valuation Methodology: We value Genivar on a comparative basis to peer group historical multiples.
$9.00
$11.00
$13.00
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
M
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2
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0
8
M
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2
7
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0
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2
2
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1
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4
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2
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J
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9
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9
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6
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9
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6
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0
9
A
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3
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9
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1
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9
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1
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1
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6
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9
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1
3
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9
D
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1
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9
J
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8
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F
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5
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M
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5
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1
0
A
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0
2
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1
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A
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3
0
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1
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M
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-
1
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J
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2
5
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1
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J
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2
3
-
1
0
A
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2
0
-
1
0
S
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1
7
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O
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5
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2
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6
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2
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2
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1
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)
IBI Group Inc. (IBG) 3 yr. Stock Performance IBI Group Inc. (IBG) 3 yr. Stock Performance
Date: April 29 2011
MO2$28.00 MO2$22.00
MO2$20.50
MO2$19.00 MO2$17.50
MP3$17.50
MP3$16.00
MP3$15.00
MO2$16.50
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Nov-11-10 14.06 16.50 2
May-10-10 14.02 15.00 3
Mar-19-10 14.90 16.00 3
Dec-09-09 16.88 17.50 3
Nov-05-09 15.68 17.50 2
Mar-20-09 12.25 19.00 2
Nov-06-08 13.31 20.50 2
Oct-20-08 14.49 22.00 2
Jun-30-08 22.20 28.00 2
Valuation Methodology: We value IBI on a comparative basis to peer group historical multiples.
$23.00
$26.00
$29.00
$32.00
$35.00
$38.00
$41.00
$44.00
$47.00
$50.00
$53.00
$56.00
$59.00
$62.00
$65.00
$68.00
M
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2
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8
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2
2
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2
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6
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6
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3
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9
M
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1
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M
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1
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7
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SNC-Lavalin (SNC) 3 yr. Stock Performance SNC-Lavalin (SNC) 3 yr. Stock Performance
Date: April 29 2011
MP3$65.00
MO2$65.00
MO2$54.00
SB1$48.00
SB1$42.00
MO2$42.00
MP3$44.00
MP3$47.00
MO2$55.00
MO2$58.00
MO2$64.00 MO2$67.00
MO2$63.00
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Mar-08-11 54.66 63.00 2
Feb-15-11 60.02 67.00 2
Nov-08-10 55.22 64.00 2
Jan-14-10 52.17 58.00 2
Nov-09-09 49.15 55.00 2
Jul-29-09 45.05 47.00 3
Jun-08-09 43.97 44.00 3
Apr-14-09 36.38 42.00 2
Mar-09-09 28.30 42.00 1
Oct-20-08 37.84 48.00 1
Sep-19-08 45.00 54.00 2
Jul-21-08 54.60 65.00 2
Jun-18-08 59.50 65.00 3
Valuation Methodology: We value SNC-Lavalins E&C business a comparative basis to peer group historical multiples. To
this we add the value of SNCs various concession investments, which we value using various methodologies.
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
$30.00
$32.00
$34.00
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6
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3
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1
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Stantec Inc (STN) 3 yr. Stock Performance Stantec Inc (STN) 3 yr. Stock Performance
Date: April 29 2011
MO2$30.00
MP3$22.25
MP3$27.50
MP3$24.00 MO2$30.00 MO2$30.50MO2$29.00
MO2$30.50
MP3$30.50
MP3$29.00
MP3$27.00
MO2$28.00
MO2$33.00
MO2$33.75
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Sep-10-10 26.91 33.75 2
Aug-06-10 25.22 33.00 2
May-25-10 25.90 28.00 2
May-14-10 26.11 27.00 3
Feb-26-10 27.16 29.00 3
Jan-14-10 29.25 30.50 3
Nov-06-09 26.69 30.50 2
Oct-21-09 26.40 29.00 2
Aug-07-09 29.28 30.50 2
May-15-09 27.45 30.00 2
Feb-27-09 20.45 24.00 3
Dec-12-08 26.57 27.50 3
Oct-20-08 19.36 22.25 3
Sep-19-08 29.00 30.00 2
Valuation Methodology: We value Stantec on a comparative basis to historical P/E multiples.

Risk Factors
General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on
Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could
change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or
new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments
with respect to the management, financial condition or accounting policies or practices could alter the prospective
valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the
economy could alter investor confidence and investment prospects. International investments involve additional risks such
as currency fluctuations, differing financial accounting standards, and possible political and economic instability.
Risks - Stantec Inc.
Some of the specific risk factors that pertain to the projected 6-12 month stock price target for Stantec are as follows: a)
Stantecs current compensation policy does not guarantee the continued availability of qualified personnel; b) the company
derives a significant portion of its revenue in U.S. dollars, but at the same time reports its operating results in Canadian
dollars. As a result, fluctuations in the US$/C$ exchange rate may adversely affect the companys profitability; c) Stantec
has no assurance that it will not face intensified competition from international, national or regional competitors going
forward; d) the company carries an unusually high level of accounts receivable on its balance sheet and has no assurance
that outstanding accounts will be paid on a timely basis, if at all; e) Stantec may face difficulty accessing debt financing on
favourable terms from its current lender or other financial institutions, and f) changes in interest rates could adversely
impact Stantecs financial performance.
Risks - Genivar Income Fund
Some of the specific risk factors that pertain to the projected 6-12 month stock price target for Genivar are as follows: (i)
the Fund relies heavily on the skills, experience, reputation and commitment of its professionals; therefore it is imperative
for Genivar to attract and retain outstanding professionals; (ii) failure to acquire suitable engineering firms on satisfactory
terms could potentially curb the Funds growth prospects and negatively impact our financial forecasts; (iii) integration
issues may also surface and place significant demands on Genivars executives, diverting their attention from existing
activities; (iv) Genivar operates in a highly competitive industry, where numerous firms will often wrestle over the same
contract. It tends to butt heads with localized, niche players on small mandates and battle full service players with greater
financial resources on large projects; (v) Genivars operations are also linked to the overall business cycle and, more
specifically, to the wellbeing of the Quebec and Ontario economies; (vi) roughly half of the Funds top-line is derived from
fixed-price negotiated fee contracts, where the potential risks and rewards fall into the Genivar camp, and (vii) the Fund is
also exposed to various litigation, environmental, weather, safety and regulatory risks, which all have the potential to
negatively impact Genivars performance.
Risks - IBI Income Fund
Some of the specific risk factors that pertain to the projected 6-12 month stock price target for IBI are as follows: (i) the
Fund relies heavily on the skills, experience, reputation and commitment of its professionals. As such, it is imperative for IBI
to be able to attract and retain outstanding professionals; (ii) failure to acquire suitable architecture/engineering/design
firms on satisfactory terms could potentially curb the Funds growth prospects and negatively impact our financial
forecasts; (iii) integration issues may also surface and place significant demands on IBIs partners, diverting their attention
from existing activities; (iv) IBI operates in a highly competitive industry, where numerous firms will often wrestle over the
same contract. This intense competition may exert downward pressure on margins; (v) IBIs operations are also linked to
the overall business cycle and as a result, adverse economic conditions, cyclical trends and increases in interest rates could
all have a negative impact on the firms operating results; and (vi) its practice areas are, to a certain extent, dependent upon
the spending commitments outlined by the federal, provincial and municipal governments. Any or all of these risks may
adversely impact the Funds ability to maintain its current growth rate, market position and ultimately, its profitability.
Risks - SNC-Lavalin
Some of the specific risk factors that pertain to the projected 6-12 month stock price target for SNC-Lavalin are as follows:
(i) an inability to accurately estimate project costs as a result of both raw material and labour cost inflation-an issue
particularly relevant to projects with long time horizons; (ii) an inability to attract and retain qualified workers with
adequate skills, experience, reputation and established client relationships; (iii) work stoppages resulting from labour
strikes: (iv) the financial strength (or lack thereof) of suppliers and customers along the value chain may adversely impact a
companys ability to collect receivables, potentially leading to the recognition of bad debt expense; (v) quality of work
performed by the subcontractors; (vi) inclement weather; and (vii) financial penalties should a contract fail to be completed
according to contract specifications. As acquisitions are a key driver of growth for the company, some related risks include:
(i) an inability to identify appropriate acquisition targets at reasonable valuations; (ii) difficulties in integrating the acquired
businesses, resulting in a lack of anticipated synergies; and (iii) uncertainties associated with acquisitions or mergers,
leading to a loss of customers and/or key employees. More general risks which could materially reduce anticipated profits
include cost overruns on a significant number of projects, potential liability claims and contract disputes, unexpected
project cancellations, and a damaged reputation due to client dissatisfaction.
Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability
categories, is available at www.raymondjames.ca/researchdisclosures. Copies of research or Raymond James summary
policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or
Raymond James Financial Services office (please see raymondjames.com for office locations) or by calling 727-567-1000, toll
free 800-237-5643 or sending a written request to the Equity Research Library, Raymond James & Associates, Inc., Tower 3,
6
th
Floor, 880 Carillon Parkway, St. Petersburg, FL 33716.

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LAKSHMI THURAI (LONDON) 0.207.426.5632
NEIL WEBER 416.777.4931
CARMELA AVELLA (ASSISTANT) 416.777.4915
ORNELLA BURNS (ASSISTANT) 416.777.4928
VANCOUVER (1.800.667.2899)
S A COT TK
DOUG BE
INSON, CFA 604.659.8225
LL 604.659.8220
T M E (A ISTANT) 604.659.8228 ERRI C WAN SS
MONTREAL (514.350.4450 | 1.866.350.4455)
JOHN HART 514.350.4462
DAVID MAISLIN, CFA 514.350.4460
ELLIOTT SOIFER 514.350.4472
TANYA HATCHER (ASSISTANT) 514.350.4458
INSTITUTIONAL EQUITY TRADING
CO-HEAD OF TRADING
BOB MCDONALD, CFA 604.659.8222
ANDREW FOOTE, CFA 416.777.4924
TORONTO (CANADA 1.888.601.6105 | USA 1.800.290.4847)
PAM BANKS 416.777.4923
ANTHONY COX 416.777.4922
ROSS DAVIDSON 416.777.4981
OLIVER HERBST 416.777.4947
ANDY HERRMANN 416.777.4937
ERIC MUNRO, CFA 416.777.4983
JAMES SHIELDS 416.777.4941
BOB STANDING 416.777.4921
Peter MASON (Assistant) 416.777.7195
VANCOUVER (1.800.667.2899)
NAV CHEEMA 604.659.8224
FRASER JEFFERSON 604.659.8218
DEREK ORAM 604.659.8223
MONTREAL (514.350.4450 | 1.866.350.4455)
SEBASTIEN BENOIT 514.350.4466
JOE CLEMENT 514.350.4470
RETAIL RESEARCH & DISTRIBUTION
SAMANTHA BARRETT, CFA 604.659.8235
LAUREN CORSCADDEN (ASSISTANT) 604.659.8233
INSTITUTIONAL EQUITY OFFICES
Calgary
Suite 2500
707 8th Avenue SW
Calgary, AB T2P 1H5
403.509.0500
Montreal
Suite 1420
1002 Sherbrooke St W
Montreal, PQ H3A 3L6
514.350.4450
Toll Free: 1.866.350.4455
Vancouver
Suite 2200
925 West Georgia Street
Vancouver, BC V6C 3L2
604.659.8200
Toll Free: 1.800.667.2899
EQUITY RESEARCH
HEAD OF EQUITY RESEARCH
DARYL SWETLISHOFF, CFA 604.659.8246
DEB CHEETHAM (RESEARCH ASSISTANT) 604.659.8200
CONSUMER PRODUCTS & RETAIL
CONSUMER PRODUCTS & RETAIL
KENRIC TYGHE, MBA 416.777.7188
SARA KOHBODI (ASSOCIATE) 416.777.4916
ENERGY
OIL & GAS ENERGY SERVICES, HEAD OF ENERGY RESEARCH
ANDREW BRADFORD, CFA 403.509.0503
NICK HEFFERNAN (ASSOCIATE) 403.509.0511
BEN NOSAL (ASSOCIATE) 403.509.0534
BRANDI BUGERA (RESEARCH ASSISTANT) 403.509.0537
INTERNATIONAL OIL & GAS
RAFI KHOURI, B.SC, MBA 403.509.0560
CYNTHIA YEE (ASSOCIATE) 416.777.7175
OIL & GAS TRUSTS | OIL & GAS PRODUCERS
KRISTOPHER ZACK, CA, CFA 403.221.0414
GORDON STEPPAN (ASSOCIATE) 403.221.0411
OIL SANDS | OIL & GAS PRODUCERS
JUSTIN BOUCHARD, P.ENG. 403.509.0523
CHRISTOPHER COX (ASSOCIATE) 403.509.0562
OIL & GAS PRODUCERS
LUC MAGEAU, CFA 403.509.0505
MATTHEW STEVENSON (ASSOCIATE) 403.509.0518
INDUSTRIAL
INDUSTRIAL | AEROSPACE & AVIATION, HEAD OF INDUSTRIAL RESEARCH
BEN CHERNIAVSKY 604.659.8244
THEONI PILARINOS, CFA (ASSOCIATE) 604.659.8234
GREG JACKSON (ASSOCIATE) 604.659.8262
INFRASTRUCTURE & CONSTRUCTION
FREDERIC BASTIEN, CFA 604.659.8232
JAMIL MURJI, CFA (ASSOCIATE) 604.659.8261
TRANSPORTATION | AGRIBUSINESS & FOOD PRODUCTS
STEVE HANSEN, CMA, CFA 604.659.8208
ARASH YAZDANI, MBA (ASSOCIATE) 604.659.8280
MINING
BASE METALS & MINERALS
ADAM LOW, CFA 416.777.4943
PRECIOUS METALS
BRAD HUMPHREY 416.777.4917
GARY BASCHUK 416.777.7098
GRAHAM MORRISON (ASSOCIATE) 416.777.7189
PHIL RUSSO (ASSOCIATE) 416.777.7084
URANIUM & JUNIOR EXPLORATION
BART JAWORSKI, P.GEO. 604.659.8282
DAVID SADOWSKI (ASSOCIATE) 604.659.8255
FORESTRY
FORESTRY
DARYL SWETLISHOFF, CFA 604.659.8246
DAVID QUEZADA, CFA (ASSOCIATE) 604.659.8257
REAL ESTATE
REAL ESTATE & REITS
TRACY REYNOLDS (ASSOCIATE) 416.777.7042
TECHNOLOGY
TECHNOLOGY, ALTERNATIVE ENERGY & CLEAN TECH
STEVEN LI, CFA 416.777.4918
ANTHONY JIN, MBA, P.ENG (ASSOCIATE) 416.777.6414
EQUITY RESEARCH PUBLISHING
SENIOR SUPERVISORY ANALYST
HEATHER HERRON 403.509.0509
HEAD OF PUBLISHING
CYNTHIA LUI 604.659.8210
STEPHANIE CURAPOV (SUPERVISORY ANALYST | EDITOR) 416.777.4948
INDER GILL (RESEARCH EDITOR) 604.659.8202
KEVIN LAROSE (SUPERVISORY ANALYST | EDITOR) 416.777.7172
CHRISTINE MARTE (PUBLISHING ASSISTANT) 604.659.8200
ASHLEY RAMSAY (RESEARCH EDITOR) 604.659.8226

Toronto
Suite 5400, Scotia Plaza 40 King Street West
Toronto, ON M5H 3Y2
416.777.4900
Toll Free Canada: .888.601.6105
Toll Free USA: 1.800.290.4847
International Headquarters
The Raymond James Financial Center
880 Carillon Parkway
St.Petersburg, FL
USA 33716
727.567.1000

www.raymondjames.ca

Canada's Engineering Firms Designing Impressive Shareholder Returns

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Canadas Engineering Firms: Designing Impressive

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