If Paul Douglas is getting twitchy about the ugly six-month-long slide in oil prices, he’s doing a superb job of hiding it.
Actually, the CEO of Edmonton-based PCL Construction seems rather sanguine at the moment, even as news headlines scream about more pain to come in Alberta’s increasingly nervous oilpatch.
Perhaps it’s because PCL posted the highest annual billings (revenues) in its storied century-long history in fiscal 2014, at nearly $8 billion.
Or perhaps it’s because the company’s swollen work backlog virtually guarantees that it will top its own record again in the coming year.
Or maybe it’s because PCL, the country’s largest builder, has just completed a stylish $22-million, 60, 000-square foot addition to its head office campus on the city’s south side, designed by local architects Manasc Isaac.
On the other hand, perhaps Douglas’s sunny mood reflects the fact that PCL’s corporate footprint is now so big that the state of Alberta’s energy-fired economy no longer determines the company’s fate.
“The nice thing is our diversity. Oil and gas is still a significant part of our work in Alberta, and Alberta still represents a significant part of our company, at about 20 per cent, ” he says.
“But low oil and gas prices tend to improve manufacturing growth in other areas that require cheap energy to grow. So it’s going to aid in the rebound we see happening in the U.S., and one would think in places like China as well, ” he argues.
That’s not to say Douglas isn’t monitoring oil prices closely. He is. But since many of PCL’s oilsands projects are of a long-term nature, the length of the oil price slump is likely more critical than the magnitude of the drop.
“We’ve been signing some fairly sizable contracts, so I don’t think it’s going to have a big impact on us in 2015. Our projections for new work and billings for 2015 are still strong, ” he says.
Besides, history shows that no one can predict oil prices with any accuracy. Just a couple of months ago, Douglas says almost every economist he talked to insisted oil would stabilize in the $85 to $90 US per barrel range.
“Despite all their research and analytics and everything, in just two months we’re down below $65. Now, everyone is saying prices will average around $65 for the next couple of years, ” he laughs.
“So I’ve learned not to lose sleep over anything I don’t control. I just make sure we’ve got an entrepreneurial organization that can read their markets, respond to their markets and capitalize on what’s available to them.”
PCL posted strong growth in all of its core markets in 2014 — civil, commercial and industrial — as annual billings jumped about $500 million (Cdn) from the $7.5 billion the company generated in 2013.
Net profits didn’t quite keep pace, but PCL’s earnings were still the fourth-highest in company history, he says. Western Canada and Ontario were both strong markets, but the U.S. was the real star.
“The U.S. is seeing a remarkable recovery from a new work acquisition perspective, ” he says. “Our backlog in the U.S. is good and healthy now, and it’s getting stronger and stronger all the time, ” as business investment picks up.
PCL’s broad portfolio of current projects includes everything from bridges and civic buildings to steam-assisted gravity drainage (SAGD) projects in the oilsands.
It also has an impressive portfolio of major recreational and commercial projects on the go, including Edmonton’s splashy new $480-million downtown arena project; the new $278-million Mosaic Stadium project in Regina; and the $120-million BMO Field expansion project in Toronto.
South of the border, PCL’s key projects include a makeover of the long-stalled American Dream megamall (formerly known as Xanadu) in New Jersey’s Meadowlands, which ran into financial problems under a previous developer in 2009.
It’s now being developed by the Ghermezian family’s Triple Five Corp., owners of West Edmonton Mall. Triple Five has obtained commitments from some of the biggest names in U.S. retailing as anchor tenants for the project, according to U.S. media reports, including Victoria’s Secret, The Gap, FAO Schwarz, Saks Fifth Avenue and Lord & Taylor.