Stantec Q2 Earnings Call Highlights
Stantec (NYSE:STN) reported higher second-quarter revenue, earnings and margins, while raising its full-year adjusted EBITDA margin outlook as management cited resilient demand across its regional and business-line portfolio.
Net revenue rose 11.5% year over year to CAD 1.8 billion in the second quarter, supported by 3.7% organic growth and 7.1% acquisition growth. Gross revenue totaled CAD 2.2 billion. Adjusted EBITDA increased more than 17%, while the adjusted EBITDA margin expanded 90 basis points from a year earlier to a record second-quarter level of 18.7%.
Adjusted earnings per share increased 18.4% to CAD 1.61. Project margin as a percentage of net revenue rose 30 basis points to 54.5%.
“Strong operational execution, supported by sustained demand across our diversified multi-sector and multi-regional platform, continues to deliver solid financial results,” Executive Vice President and Chief Financial Officer Vito Culmone said.
Regional Growth Led by Global Operations
President and Chief Executive Officer Gord Johnston said the company’s geographic and sector diversification continued to support its financial targets. Organic growth was particularly strong in the global segment, which posted nearly 13% organic net revenue growth and more than 18% total net revenue growth, including acquisition and foreign-exchange effects.
Stantec’s water business delivered nearly 12% organic growth overall. In the global business, water posted more than 20% organic growth, driven by long-term framework agreements and public-sector water infrastructure investment in the United Kingdom, Australia and New Zealand.
Global energy and resources growth was aided by new projects in Chile and Peru, where demand for energy-transition solutions is supporting mining activity related to copper. Johnston said Germany’s infrastructure operations also benefited from a major public-sector electrical transmission project and transit and rail work.
During the question-and-answer session, Johnston said organic growth was broad-based across the global portfolio. He said the U.K. was producing roughly 15% organic growth, Germany was in the low-20% range, and Latin American operations were delivering more than 50% organic growth. Stantec is expanding hiring in Latin America, Germany and the U.K., as well as at its global delivery center in India.
U.S. net revenue increased nearly 13%, primarily reflecting the acquisition of Page and its ongoing performance. Organic growth in the U.S. was flat during the quarter, however, as some projects ended on schedule and certain newly awarded work ramped more slowly than expected.
Johnston said the issue was one of timing rather than demand. He cited a delayed U.S. Navy environmental program, a large electrical-utility project in the western U.S. and a public-transit project in the southern U.S. as examples of work that was slower to begin during the quarter but has since advanced. He also said Page will transition from being reported as acquisition growth to organic growth during the third and fourth quarters.
Canadian organic net revenue grew 2.4%. The company reported double-digit organic growth in water, supported by biosolids and wastewater projects, along with growth in buildings and environmental services. Infrastructure activity was affected by the anticipated wind-down of certain transit and roadway projects.
Backlog Reaches Record Level
Contract backlog at the end of the second quarter reached a record CAD 9.2 billion, up 17.5% from a year earlier and representing about 13 months of work. Backlog increased in each region, with the global segment posting nearly 25% year-over-year growth. Organic backlog growth was 7% year over year, while acquisitions completed in 2025 contributed nearly 8% to backlog growth.
Acquisition-related growth was concentrated primarily in the buildings business, where backlog increased more than 40%.
Among projects secured during the quarter, Stantec was selected to provide architecture, engineering and integrated design services for Meta’s CAD 13 billion data center in Sturgeon County, Alberta. Its water team was selected for preliminary design and evaluation services for the Drake Water Reclamation Facility in Fort Collins, Colorado, a 23-million-gallon-per-day wastewater treatment plant.
In Australia, the company was selected to provide engineering services for the Redcliffe Hospital redevelopment in Queensland. It also won a 10-year framework agreement with Western Australia’s Department of Housing and Works for engineering and building-related consulting services across non-residential social-infrastructure projects.
Outlook and Capital Allocation
Stantec maintained its outlook for 2026 net revenue growth of 8.5% to 11.5% and continued to target mid-single-digit organic net revenue growth overall. The company expects U.S. and Canadian organic growth in the mid-single-digit range and high-single-digit organic growth in the global business.
Management raised and narrowed its adjusted EBITDA margin outlook to 17.8% to 18.3%, while maintaining its target for adjusted EPS growth of 15% to 18%.
Culmone said the company expects some moderation in margin expansion during the second half as it adds employees to support anticipated growth. He also said Stantec is using digital tools, including artificial intelligence in bidding and proposal processes, as part of its operating strategy.
Cash flow from operations totaled CAD 116 million year to date. Days sales outstanding ended the quarter at 75 days, within the company’s internal target, though Culmone said it was near the upper end of that range.
Stantec acquired Niche, a 200-person engineering and environmental consulting firm in Australia, effective July 31. The acquisition is intended to strengthen environmental services in the region.
The company repurchased about 1.7 million common shares during the quarter, equal to 1.5% of outstanding shares, for approximately CAD 175 million under its normal course issuer bid. Net debt to adjusted EBITDA remained at 1.3 times, within Stantec’s internal target range of one to two times. Culmone said the company intends to seek Toronto Stock Exchange approval to increase the repurchase program’s limit to 5% from 2%.
Management said acquisitions remain its preferred source of long-term shareholder value creation, though it acknowledged a valuation gap between public and private markets. Johnston said the company’s acquisition strategy and priorities have not changed.
Johnston also said the call would be his final earnings call as chief executive. He will retire from the role effective Oct. 1 and transition to vice chair of Stantec’s board. Susan Reisbord is set to succeed him as CEO.
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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