Stantec Reports Q2 Revenue Growth, Record Margin and Higher EPS

Stantec (TSX: STN ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This content is powered APIs. 8 billion, up 12% year-over-year, driven by 4% organic and 7% acquisition growth, with notable contributions from its global regions and the Page acquisition.

7%, with adjusted EPS increasing over 18% compared to Q2 2025. 5% increase year-over-year, with the strongest growth in the global region, particularly in water infrastructure projects. Strategic initiatives included the acquisition of Niche in Australia to strengthen its environmental services business, and increased NCIB activity with plans to expand the program. S.

and Canada, and high single-digit growth globally. Management expressed confidence in their ability to deliver strong bottom-line results, maintaining their adjusted EPS target growth of 15% to 18% for the year. Gord Johnston announced his upcoming retirement as CEO, transitioning to Vice Chair of the Board, with Susan Risebord set to succeed him. Full Transcript OPERATOR Welcome to Stantec's second quarter 2026 results webcast and conference call.

Leading the call today are Gord Johnston, President and Chief Executive Officer, and Vito Carmoni, Executive Vice President and Chief Financial Officer. com. Today's call is also webcast. Please be advised that if you have dialed in while also viewing the webcast, you should mute your computer as there's a delay between the call and the webcast.

All information provided during this conference call is subject to the forward-looking statement qualifications set out on slide 2, detailed in Stantec's Management's Discussion and Analysis, and incorporated in full for the purposes of today's call. Unless otherwise noted, dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded. With that, I'll turn the call over to Mr. Gord Johnston.

Please go ahead, sir. Gord Johnston, President and CEO Good morning, everyone, and thank you for joining us today. Our second quarter financial results continue to showcase the strength of our business. Stantec's diversification across operating regions and across sectors has kept us on track to deliver on our financial targets for the year.

8 billion, up almost 12% compared to Q2 2025, driven by almost 4% organic and 7% acquisition growth. Organic growth was driven by double-digit growth of approximately 13% in our global region, and our industry-leading water business achieved close to 12% organic growth. 7%, a record for Q2, and this represents an increase of 90 basis points year over year. Adjusted EPS grew over 18% compared to Q2 2025.

S. net revenue increased almost 13%, driven by the acquisition and strong performance of Page. Underlying demand across our end markets remains very strong, supported by long-term investments in infrastructure, energy, transportation, water, and advanced manufacturing facilities. Our water business saw continued demand and work on large wastewater treatment projects.

In energy and resources, work on a major hydropower dam project drove organic growth, and our infrastructure business delivered growth through data center projects in our North Central region and benefited from favorable recoveries on a large transportation project, while organic growth was flat in the quarter, driven by some delays and the slower ramp-up on certain projects. We've already started to see positive signs of acceleration in Q3 and expect this trend to continue throughout the back half of this year. 4% organically. Double-digit organic net revenue growth in our water business was driven by biosolids projects and continued momentum on wastewater projects.

Robust net revenue growth was also achieved in both our buildings and environmental services businesses through public sector investment, primarily in our civic markets, and an increase in environmental planning in the mining industry, respectively. Our infrastructure business continued to experience a wind down of certain transit and roadway projects in accordance with anticipated project cycles. Lastly, our global business delivered over 18% net revenue growth in the second quarter, driven by almost 13% organic and over 2% acquisition growth, as well as positive foreign exchange impacts.

Our industry-leading water business delivered over 20% organic growth this quarter through long-term framework agreements and public sector investments in water infrastructure across the UK, Australia, and New Zealand. The ramp-up of new projects in Chile and Peru drove strong organic growth in energy and resources, as the growing need for energy transition solutions continues to drive demand in mining for copper.

On a year-to-date basis, our global operations also had modest growth in its infrastructure business, driven primarily by double-digit organic growth in Germany due to momentum on a major public sector electrical transmission project and increased volume on transit and rail projects. I'll now turn the call over to Vito to review our second quarter financial results in more detail. Vito Carmoni, Executive Vice President and Chief Financial Officer Thank you, Gord, and good morning, everyone. Strong operational execution supported by sustained demand across our diversified multi-sector and multi-regional platform continues to deliver solid financial results.

At the mid-year point of 2026 we are firmly on track to deliver against all of our financial guidance metrics. 5% increase compared to Q2 of 2025. 1% acquisition growth, which primarily reflects strong results from our global region and from the Page acquisition, respectively. 5%.

7% in the quarter, a 90 basis point increase compared to Q2 of 2025. On a trailing 12-month basis, our adjusted EBITDA margin is 18%, an increase of 80 basis points compared to the prior trailing 12 months. The growth in margins continues to be driven by a methodical and disciplined approach to all aspects of our business. It all starts with a continued focus of execution and servicing of our client needs.

The work we do is of meaningful value across all of our sectors and regions, and our focus remains on enabling superior outcomes for our clients, all the while focusing on efficient management of our operations and the optimization of our discretionary spending. 61. Turning to our cash flow, liquidity, and capital resources, following the financial integration of Page in Q1, our operating cash flows in Q2 returned to a more normalized cadence, and on a year-to-date basis our cash flows from operations totaled $116 million. In terms of capital allocation, our strategy remains unchanged.

We believe that continued disciplined M&A remains our highest source of value creation for our shareholders, measured over a reasonable period of time. The pipeline remains robust notwithstanding certain short-term dislocation in valuation ranges between public and private entities. Given our proven track record of disciplined M&A, we expect the strategic expansion of our business to continue. And to that end, although perhaps on a smaller scale, we are happy to announce the acquisition of Niche, a 200-person engineering and environmental consultancy firm in Australia.

Niche helps strengthen our environmental services business in the region and supports our ability to help clients advance critical infrastructure and develop projects while protecting and restoring natural environments. This transaction closed effective July 31st. 5% of our outstanding shares, for an aggregate purchase price of approximately $175 million. 3 times, within our internal target range of 1 to 2 times.

And given our Q2 NCIB activity, it's prudent for us to have additional flexibility, and we intend to seek TSX approval to expand the program beyond the existing 2% limit. And finally, DSO at the end of the second quarter was 75 days, within our internal target. I'll now hand the call back to Gord to discuss our backlog, our recent project wins, and our outlook for 2026. Gord Johnston, President and CEO Great.

Thanks, Vito. 5% increase year over year, representing approximately 13 months of work. Year over year, our backlog has grown 7% organically. During the quarter, backlog grew in each of our regions, the most notable year-over-year growth coming from our global region, which delivered double-digit growth of almost 25%.

We also saw strong backlog growth in water, which delivered over 10% organic growth. Acquisitions completed in 2025 further contributed to backlog growth by almost 8%, primarily within our buildings business, which had over 40% growth. I'll now highlight a few projects Stantec secured during the quarter, showcasing the breadth of opportunities we're capturing across diverse markets, project sizes, and levels of complexity. Our buildings team was selected to provide architecture, engineering, and integrated design services for Meta's $13 billion data center in Sturgeon County, Alberta.

The project strengthens our data center capabilities while supporting the continued expansion of Alberta's critical digital infrastructure. Stantec's water team was selected to provide preliminary design and evaluation services for the Drake Water Reclamation Facility in Fort Collins, Colorado, a 23 million gallon per day wastewater treatment plant. The project will modernize critical headworks infrastructure, improving debris removal and treatment reliability while reducing impacts to downstream processes. Activity continues to ramp up in Australia for our buildings business, supported by increased investment in social infrastructure.

During the quarter, the team was selected to provide engineering services for the Redcliffe Hospital redevelopment in Queensland, further strengthening our position in the growing healthcare infrastructure market. The team was also selected by the Western Australia Department of Housing and Works for a 10-year framework to provide engineering and building-related consulting services for non-residential projects including education, healthcare, justice, and other social infrastructure.

As we look toward the remainder of the year, we continue to track to our 2026 financial targets, and with the continued solid progress to date, we are increasing and narrowing the range of adjusted EBITDA margin we expect to achieve. 5%, driven by strong acquisition growth from Page and organic growth across our operating regions. Overall, organic net revenue growth is now expected to be in the mid single digit range, driven by strong demand across all geographic reporting segments and business units. S.

we expect organic net revenue growth to be in the mid single digit range. We expect activity to accelerate in the second half of the year, supported by the demand across all five of our business verticals. We are encouraged by the increased activity and movement we started to see with large environmental projects ramping up, increased demand related to water and energy and resources, as well as growing demand in key areas such as advanced manufacturing and data centers. In Canada, we also now expect to achieve mid single digit organic growth supported by public sector spending plans and continued demand, particularly around water and buildings.

There's still a lot of momentum around defence and other nation-building projects which are still in the early stages. We expect these programs to contribute more fully in 2027 and beyond. Lastly, Global is expected to achieve high single-digit organic growth. The growth in Global is being driven by high levels of activity in our water business under AMP8 and other framework agreements, strong demand in energy and resources, particularly in Latin America, and positive demand fundamentals across other global business units.

With our strong margins year to date and continued focus on operational excellence, we are increasing our outlook for adjusted EBITDA margin. 3% for the year. Finally, we're maintaining our adjusted EPS target for the year of 15 to 18% growth, reflecting our confidence in delivering strong bottom-line results and long-term shareholder value. Before we open up the line for questions, I'd like to take a moment to acknowledge that this is my final earnings call as Stantec's President and CEO.

As announced in June, I'll be retiring from the role, effective October 1st, and transitioning to Vice Chair of Stantec's Board of Directors. It's been an incredible privilege to lead this company for the last eight and a half years and I'm very proud of what our teams have accomplished together. The underlying demand for our services is strong and our diversified, resilient, stable, and multi-sector platform positions us well to capture opportunities across the markets that we serve. I'm especially excited to be passing the torch to Susan Risebord.

Susan has a deep understanding of our business, our clients, and our people. Having worked closely with her, I have all the confidence in her capabilities, experience, and energy to lead Stantec into its next chapter. I'm looking forward to staying close to the company in my role as Vice Chair and supporting Susan and the team as they continue to execute on the opportunities ahead. Finally, I want to thank our employees, our clients, and all of our analysts and shareholders for their support over the years.

And with that, let me turn the call over to the operator for questions. OPERATOR Certainly. Ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again.

And our first question for today comes from Shahabat Khan from RBC Capital Markets. Your question please. Shahabat Khan, Analyst at RBC Capital Markets Great. Thanks, and good morning.

And before I get into the questions, I just want to congratulate you, Gord, on a great run here in your current seat and all the best with the next chapter. Gord Johnston, President and CEO Thanks so much, Sab. It's been an incredible privilege to lead the team over the last eight and a half years and I wouldn't have traded it for anything. Shahabat Khan, Analyst at RBC Capital Markets Great.

Just maybe, I guess starting with kind of the outlook for the back half of the year on the US segment, looks like you're pointing to mid single-digit organic growth. Just looking at the first half and, call it, low single-digit for the first half implies about a high single-digit organic for the back half of the year in the US. If you can maybe just detail out your sort of the building blocks and sort of confidence in that outlook on getting to that high single-digit range over the next couple of quarters. Gord Johnston, President and CEO Yeah, thanks, Saba, for the question.

So in the US specifically we see that this is not a demand issue, it's really more of a timing issue. For us here in Q2 we had a number of projects wrap up as per schedule and planned, and a number of projects that we've got awarded and got in backlog just were a bit slow getting out of the blocks and getting started. Now, subsequent to the quarter we've seen some good positive momentum in Q3, a number of these projects have kicked off and the field seasons are going and such.

So in addition to that momentum, as we look at the back half of the year, we're looking from a demand perspective — the sales funnel is strong, the soft backlog both trending really, really well — and also if you look at the organic backlog growth in the US, both year to date and year over year, both up and positive organic territory, further supporting that ramp-up and that momentum as we enter the second half of the year and particularly into 2027. One other thing just to call out is the Page acquisition, and we've talked about it in the prepared remarks and with others over the year.

Page is a fantastic company and they're performing exceptionally well, driving strong acquisition growth. As per our normal processes, when a company joins us for a year we report that growth as acquisition growth. But now in Q3, Page is flipping over — that will be reported as organic growth in Q3 and Q4 of the year.