Stantec Q1 Earnings Call Highlights
Stantec (NYSE:STN) reported higher first-quarter 2026 revenue, earnings and backlog, with management reaffirming its full-year targets and pointing to continued demand across water, infrastructure, energy transition, data centers and defense-related markets.
President and Chief Executive Officer Gord Johnston said the company’s first-quarter performance reflected “a solid start to the year,” supported by execution and its diversified platform. Net revenue rose to CAD 1.7 billion, up 9.1% from the first quarter of 2025, driven by 3.6% organic growth and 7.2% acquisition growth. Organic growth was achieved across all regional operating units.
Adjusted EBITDA increased close to 14% year over year, while adjusted EBITDA margin expanded 70 basis points to 16.9%. Adjusted earnings per share rose 14.7% to CAD 1.33.
Water, energy and global operations drive growth
Johnston said Stantec’s water business delivered more than 14% organic growth in the quarter, while energy and resources grew almost 9% organically. In the U.S., net revenue increased 11%, helped by 12.5% acquisition growth from Page and nearly 3% organic growth. The U.S. water business posted double-digit organic growth, driven primarily by large wastewater treatment projects. Energy and resources growth in the U.S. was supported by work on a major hydropower dam project, while infrastructure benefited from data center projects in the North Central region.
In Canada, net revenue grew just over 1% organically. Johnston said strength in water came from biosolids and wastewater projects, while energy and resources and buildings benefited from industrial process projects and public-sector civic investments. The company’s Canadian infrastructure business was affected by the wind-down of some transit and roadway projects, though management expects new projects to ramp up beginning in the second quarter.
Stantec’s global business delivered more than 13% net revenue growth, including almost 8% organic growth, 3% acquisition growth and positive foreign exchange impacts. The global water business grew 15% organically, supported by framework agreements and public-sector water infrastructure investments in the U.K., Australia and New Zealand. Johnston also cited new projects in Chile and Peru tied to mining demand for copper, as well as double-digit organic growth in German infrastructure from electrical transmission, transit and rail work.
Margins improve as administrative costs decline
Executive Vice President and Chief Financial Officer Vito Culmone said gross revenue totaled CAD 2.1 billion in the quarter, while project margins remained in line with expectations at 54% of net revenue. The adjusted EBITDA margin improvement was primarily due to lower administrative and marketing expenses as a percentage of net revenue.
During the question-and-answer portion of the call, Culmone said project margins were steady year over year and only slightly lower because of business mix, including faster growth in some global areas and water work under the U.K.’s AMP8 program. Administrative and marketing expenses were 38.3% of net revenue, just over 100 basis points lower than the prior-year period, helped by improved utilization and operating scale.
Operating cash outflows were CAD 2.3 million in the quarter. Culmone noted that the first quarter is typically seasonally lower for cash flow and said results reflected a transitory disruption from the financial migration of Page, as well as higher working capital investment tied to elevated organic growth in the global region. Days sales outstanding improved by three days year over year to 74 days, below Stantec’s internal target of 75 days. Net debt to adjusted EBITDA remained at 1.3 times, within the company’s internal target range of 1 to 2 times.
Backlog reaches CAD 9 billion
Stantec ended the quarter with a record contract backlog of CAD 9 billion, up 13.2% year over year and representing about 13 months of work. Acquisitions completed in 2025 contributed more than 9% to backlog growth, primarily in the buildings business, while organic backlog growth was 5.4%.
Johnston said the global region delivered the strongest organic backlog growth at 22%, while water and buildings each grew backlog nearly 10% organically. In the U.S., the company recorded another quarter of sequential organic backlog growth, rising more than 3% from the fourth quarter of 2025 after a similar increase in the prior sequential period.
Project wins highlighted during the call included:
- A design services role during construction of a multi-billion-dollar semiconductor manufacturing and research and development facility in Idaho.
- A joint venture role leading design for the first fully electric light rail system in Austin, Texas, including a 10-mile, 15-station corridor.
- Oversight and quality review work for a tailings management facility in Chile, spanning civil, piping, geosynthetics and electromechanical systems.
2026 guidance reaffirmed
Stantec reaffirmed its 2026 financial targets, including net revenue growth of 8.5% to 11.5% and organic net revenue growth in the mid- to high-single-digit range. The company continues to expect adjusted EBITDA margin of 17.6% to 18.2% and adjusted EPS growth of 15% to 18% compared with 2025. Johnston said the targets do not include assumptions for additional acquisitions.
Management said U.S. organic growth is expected to accelerate, supported by demand across all five business verticals and areas such as data centers, defense and advanced manufacturing. In Canada, Stantec expects public-sector spending and demand in energy and resources to support growth, with Johnston also pointing to defense and “nation-building” initiatives. He said Stantec has completed work on 16 national defense and Canadian Forces bases across Canada and is supporting projects tied to national sovereignty.
Globally, Stantec expects continued growth from water activity under AMP8 and other framework agreements, demand in energy and resources, and positive demand fundamentals in other business units.
M, buybacks and emerging trends
On capital allocation, Culmone said Stantec continues to view strategic acquisitions as its highest value-creation opportunity, though stock buybacks remain a tool. He said current valuation levels make buybacks “increasingly hard to ignore,” but added that any repurchases under the company’s approved normal course issuer bid would not impede its M strategy.
Management said the acquisition pipeline remains healthy, though private equity buyers are becoming more active. Culmone noted valuation differences between private transactions and public market trading levels, particularly for power-related assets.
In response to analyst questions, Johnston said data center work is currently around 3% of Stantec’s business and could potentially double to 5% to 6%, though he said the company would not want too much exposure to one line of business. He also discussed the company’s use of artificial intelligence, including partnerships with clients on AI-enabled wastewater operations and digital twins, and said Stantec is seeing new service opportunities rather than current client pressure to reduce fees.
Johnston also said clients in Canada and the U.S. are increasingly bundling projects into larger programs, sometimes in the CAD 100 million to CAD 200 million range, compared with much smaller average project sizes. He said the trend can change the competitive landscape and provide some pricing power, while Stantec uses smaller projects to help manage utilization as larger programs ramp up and down.
About Stantec (NYSE:STN)
Stantec is a global design and consulting firm offering professional services in engineering, architecture, and environmental sciences. The company partners with public and private clients to deliver solutions spanning infrastructure, water, energy and resources, and community development. Through an integrated approach, Stantec manages projects from initial planning and conceptual design through construction and commissioning, focusing on sustainability and innovation.
The firm's service portfolio includes civil infrastructure design, building systems engineering, environmental assessments, and project management.
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