Stantec, Inc. Q1 FY2025 earnings call

• Stantec had a strong start to 2025 with net revenue of $1.6 billion, up 13.3% YOY, underpinned by 5.9% organic and 3.2% acquisition growth. Adjusted EBITDA grew over 19% with a margin of 16.2% and adjusted EPS grew 29% Y/Y.
• Two strategic acquisitions in Q1: Page, a 1,400-person architecture and engineering firm in U.S., and Ryan Hanley, a 150-person engineering and environmental consultancy in Ireland.
• Backlog reached a new all-time record of $7.9 billion, representing ~12 months of work. Major projects won include a $1.1 billion upgrade at Irving Pulp & Paper mill, Dundas Bus Rapid Transit project, and PFAS treatment system in Vancouver.

In the U.S., Q1 net revenues increased by 9.7%, with 2.4% organic growth, driven by Health Care, Industrial, Science & Technology in Buildings; Energy Transition, Mining, Infrastructure in Environmental Services; and Transit, Rail, Railway design in Infrastructure. In Canada, net revenue grew by 15% largely underpinned by 12.2% organic growth, with Water, Energy & Resources, Infrastructure, and Buildings all seeing double-digit or high single-digit organic growth. The Global business delivered 20.3% growth in net revenue with 7.5% organic growth and 9.4% acquisition growth, with the Water business having over 20% organic growth in U.K., New Zealand, Australia and Energy & Resources having double-digit organic growth in Chile and Peru.

• Net revenue growth expected 7%-10% for 2025.
• EBITDA margin range 16.7%-17.3%.
• Adjusted EPS growth range 16%-19%.
• Maintaining outlook pending closure of Page acquisition.

• Market uncertainty driven by tariffs, policy shifts, regulatory changes.
• Integration challenges with acquisitions, such as language and GAAP differences in ZETCON integration.

Q: Benoit Poirier on U.S. organic growth and guidance A: Gord Johnston and Vito Culmone discuss U.S. organic growth being from a lower comp base last year but confidence in mid-to-high single-digit growth by year-end, and guidance maintained pending Page acquisition closure Q: Chris Murray on U.S. government business and ZETCON integration A: Gord Johnston talks about U.S. government business seeing normal procurement cadence and ZETCON integration taking slower pace due to language and GAAP issues Q: Krista Friesen on M&A and near-term growth areas A: Gord Johnston and Vito Culmone discuss M&A opportunities at both small and larger firm sizes and growth areas in water, infrastructure, environmental, and Energy & Resources Q: Michael Tupholme on M&A, Energy & Resources, and margin A: Gord Johnston and Vito Culmone discuss M&A not impacted by macro uncertainty, Energy & Resources seeing strong organic growth, and margin improvement from project execution and cost management Q: Maxim Sytchev on Canadian/Australian elections and U.K. AMP8 A: Gord Johnston and Vito Culmone discuss positive infrastructure spending outlooks in Canada, Australia, and U.K., with U.K. AMP8 program ramping up as expected Q: Devin Dodge on data centers and energy investments A: Gord Johnston talks about data centers not being material to Stantec's exposure and positive energy investment inquiries in Western Canada Q: Jonathan Goldman on margin, M&A sellers, and U.S. infrastructure A: Vito Culmone and Gord Johnston discuss margin improvement being a result of execution and M&A sellers not being hesitant, and U.S. infrastructure discussions slowing but expected to pick up later in the year