Financial Data and Key Metrics Changes - Stantec reported net revenue of CAD 1.6 billion for Q2 2025, an increase of 6.9% year-over-year, primarily driven by 4.8% organic growth [6][12] - Adjusted EBITDA grew by 15% with an enhanced margin of 17.8%, reflecting a 120 basis point increase compared to the previous year [6][12] - Adjusted EPS increased over 21% to CAD 1.36 compared to Q2 2024 [6][12] Business Line Data and Key Metrics Changes - The Energy and Resources business delivered high single-digit organic growth, while the Water segment achieved 12.4% organic growth [6][12] - The U.S. net revenue increased by 5.7%, supported by organic growth of 4.4%, with strong demand in mission critical, science and technology, and civic sectors [7][8] - In Canada, net revenue grew by 6.2%, driven by over 30% organic growth in water and double-digit growth in energy and resources [9][10] Market Data and Key Metrics Changes - Global business delivered net revenue growth of 10.5% in Q2, with 4.3% organic and 3.6% acquisition growth [10] - The UK, Australia, and New Zealand saw double-digit organic growth in the water business due to public sector investment [11] - The U.S. organic backlog increased by 9.8% year-over-year, indicating strong demand in water, energy, and data centers [17][29] Company Strategy and Development Direction - Stantec closed the acquisition of Page, enhancing its buildings business and services in key growth sectors [3][4] - The company aims to achieve net revenue growth of 10% to 12% for 2025, up from previous guidance of 7% to 10% [21] - Stantec is focused on operational excellence and project execution, with a strong pipeline for future acquisitions [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about accelerating organic growth in the U.S. for the second half of the year, despite some caution in the private sector [28][30] - The company anticipates continued strong demand driven by macro trends such as aging infrastructure and energy security [24][54] - Management noted that while some challenges remain, they expect to see improvements in project execution and operational performance [80] Other Important Information - Stantec's contract backlog stood at CAD 7.9 billion, reflecting approximately twelve months of work, with year-over-year growth of almost 10% [16][17] - The company has increased its adjusted EBITDA margin guidance to 17% to 17.4%, up from 16.7% to 17.3% [23] - Recent financing transactions included the issuance of CAD 425 million senior unsecured notes and an increase in the unsecured revolver credit facility to CAD 1.2 billion [15] Q&A Session Summary Question: Insights on U.S. Customers' Sentiment - Management noted some initial caution in the private sector but expects organic growth to accelerate in the second half of the year, particularly in water and energy sectors [28][30] Question: Update on Acquisition Integration - Integration of Ryan Hanley and Cosgrove is progressing well, with Page's integration planned for completion by the end of the year [32][33] Question: Margin Guidance Details - Management highlighted strong project margins and lower admin and marketing costs as contributors to the increased EBITDA margin guidance [38][40] Question: Drivers of Water Business Growth - Continued strength in water treatment and wastewater projects, along with the ramp-up of AMP8, are driving organic growth in the water segment [41][44] Question: Long-term U.S. Market Outlook - Management remains optimistic about the U.S. market, citing significant infrastructure spending opportunities and a strong backlog [50][54] Question: Impact of Interest Rates on Spending - Management indicated that while interest rates may influence spending, the overall outlook remains positive with strong demand across various sectors [95] Question: Update on M&A Landscape - The M&A environment is becoming increasingly active, with expectations for more assets to come to market in the near future [91] Question: Risks of Slower Growth Environment - Management has not observed any pricing pressure despite slower organic growth, maintaining strong project margins [112]

Financial Performance - Net revenue increased to $1.6 billion, a 6.9% increase compared to Q2 2024[17] - Adjusted EBITDA increased to $284 million, a 15.0% increase compared to Q2 2024[17] - Adjusted EBITDA margin increased by 120 bps to 17.8%[17] - Adjusted EPS increased to $1.36, a 21.4% increase compared to Q2 2024[17] Revenue Breakdown - Net revenue from the US was $820 million in Q2 2025[20] - Net revenue from Canada was $394 million in Q2 2025, a 6.2% increase compared to Q2 2024[25] - Net revenue from Global operations was $383 million in Q2 2025, a 10.5% increase compared to Q2 2024[32] - Organic revenue growth was 4.8%[17] - Acquisition revenue growth was 0.8%[17] Acquisitions and Growth - Acquired Page, a 1,400-person US-based architecture and engineering firm[8] - Acquired Cosgroves, a 90-person firm in New Zealand[9] - Acquired Ryan Hanley, a 150-person engineering and environmental consultancy firm in Ireland[10] - Stantec team grows to over 34,000 with these acquisitions[11] Backlog - Backlog increased to $7.9 billion, a 9.9% year-over-year organic growth[53]

Core Insights - Stantec reported quarterly earnings of $0.98 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.82 per share a year ago [1] - The company posted revenues of $1.15 billion for the quarter ended June 2025, which was 2.42% below the Zacks Consensus Estimate, but up from $1.09 billion year-over-year [2] - Stantec shares have increased by approximately 39.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 9.6% [3] Earnings Outlook - The future performance of Stantec's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $1.11 on revenues of $1.26 billion, and for the current fiscal year, it is $3.87 on revenues of $4.77 billion [7] Industry Context - The Consulting Services industry, to which Stantec belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - Gross revenue for Q2 2025 reached CAD 1,964.3 million, a 3.9% increase from CAD 1,889.7 million in Q2 2024[2] - Net income for the period was CAD 135.4 million, up 62.7% compared to CAD 83.2 million in Q2 2024[3] - Earnings per share (basic and diluted) increased to CAD 1.19 in Q2 2025 from CAD 0.73 in Q2 2024, representing a 63.0% growth[2] - The company reported a project margin of CAD 864.7 million for Q2 2025, compared to CAD 811.7 million in Q2 2024, indicating a 6.5% increase[2] - For the two quarters ended June 30, 2025, net income reached CAD 235.5 million, up 46.8% from CAD 160.3 million in the prior year[5] - The total net revenue for the two quarters ended June 30, 2025, was $3,149.7 million, compared to $2,863.4 million for the same period in 2024, reflecting an increase of 10.0%[85] - The project margin for the two quarters ended June 30, 2025, was $1,708.2 million, compared to $1,554.2 million for the same period in 2024, indicating an increase of 9.9%[85] Assets and Liabilities - Total current assets rose to CAD 2,628.5 million as of June 30, 2025, compared to CAD 2,549.0 million at the end of 2024, marking a 3.1% increase[1] - Total liabilities decreased to CAD 3,928.7 million from CAD 4,011.0 million at the end of 2024, a reduction of 2.1%[1] - Total shareholders' equity increased to CAD 3,043.1 million as of June 30, 2025, up from CAD 2,945.1 million at the end of 2024, reflecting a growth of 3.3%[1] - The company's long-term debt increased to CAD 1,510.3 million as of June 30, 2025, compared to CAD 1,383.5 million at December 31, 2024[34] - The company reported a total of $2,114.1 million in liabilities arising from financing activities as of June 30, 2025, compared to $2,347.0 million as of June 30, 2024, showing a decrease of 9.9%[79] Cash Flow and Investments - Net cash flows from operating activities for the quarter were CAD 134.0 million, a significant increase from CAD 74.7 million in the same quarter of 2024[5] - The company reported a net cash flow used in investing activities of CAD 59.3 million for the quarter, compared to CAD 164.4 million in the same quarter of 2024[5] - The company raised CAD 422.9 million from the issuance of senior unsecured notes during the quarter[5] - Cash and cash equivalents at the end of the period were CAD 344.5 million, up from CAD 218.2 million at the end of the same quarter in 2024[5] - Business acquisitions net of cash acquired resulted in a cash outflow of CAD 36.8 million for the quarter, compared to CAD 123.7 million in the same quarter of 2024[5] Expenses and Costs - Administrative and marketing expenses for the quarter were CAD 598.3 million, slightly up from CAD 578.4 million in Q2 2024[2] - For the quarter ended June 30, 2025, total employee costs increased to $1,207.2 million, up from $1,122.0 million in the same quarter of 2024, representing a growth of 7.6%[75] - The Company recognized a total net interest expense of $21.2 million for the quarter ended June 30, 2025, down from $27.4 million in the same quarter of 2024, reflecting a reduction of 22.7%[76] - Share-based compensation increased to CAD 11.6 million for the quarter, compared to CAD 9.3 million in the same quarter of 2024[5] Acquisitions and Growth - The company acquired Ryan Hanley, an engineering and environmental consultancy, for a total consideration of CAD 58.3 million, enhancing its Water operations[22] - The acquisition of Cosgroves Group Limited was completed for CAD 58.3 million, strengthening the company's Buildings operations[23] - The company acquired Page for a purchase price of approximately $730 million, enhancing its capabilities in the architecture and engineering sector[92] Foreign Exchange and Other Comprehensive Income - The company experienced a foreign exchange loss of CAD 18.7 million on cash held in foreign currency during the quarter[5] - Other comprehensive loss for the period was CAD 105.9 million, compared to a gain of CAD 37.6 million in Q2 2024[3] - The company recorded exchange gains on translation of foreign operations of $89.9 million during the first two quarters of 2025, with $46.7 million related to goodwill[74] Shareholder Returns - The company declared dividends of CAD 51.4 million during the first half of 2025[4] - The company declared a dividend of $0.225 per share on August 13, 2025, payable on October 15, 2025[93] Credit Facilities and Risk Exposure - The average interest rate for credit facilities decreased to 4.25% as of June 30, 2025, down from 4.86% at December 31, 2024[39] - The unused capacity of the credit facilities at June 30, 2025, was $1,209.8 million, significantly higher than $563.2 million at December 31, 2024[70] - As of June 30, 2025, the Company's maximum credit risk exposure was $2,731.8 million, slightly up from $2,702.7 million at December 31, 2024[64]

Core Insights - Stantec reported strong financial results for Q2 2025, with net revenue reaching $1.6 billion, a 6.9% increase year-over-year, driven by 4.8% organic growth across all regions and business units [3][8][14] - The company has revised its 2025 guidance upward, expecting net revenue growth of 10% to 12%, adjusted EBITDA margin of 17% to 17.4%, and adjusted EPS growth of 18.5% to 21.5% [5][6][12] - Stantec's contract backlog increased to $7.9 billion, reflecting a 9.9% year-over-year growth, with notable organic growth contributions from all regional units [8][21] Financial Performance - Net revenue for Q2 2025 was $1.6 billion, up $103.4 million from Q2 2024, with organic growth of 4.8% [3][14] - Adjusted EBITDA rose 15.0% to $284.4 million, with an adjusted EBITDA margin of 17.8%, a 120 basis point increase from the previous year [3][14] - Diluted EPS increased by 63.0% to $1.19, while adjusted EPS grew 21.4% to $1.36 [3][14] Regional Performance - Canada achieved organic growth of 6.2%, the United States 4.4%, and Global operations 4.3% [3][20] - The Water segment saw significant organic growth of 12.4%, while Energy & Resources delivered 9.5% organic growth [3][14] Acquisitions and Strategic Moves - Stantec completed several acquisitions, including Ryan Hanley, Cosgroves, and Page, enhancing its capabilities in various sectors [4][8][14] - The acquisition of Page, a 1,400-person firm, is expected to strategically complement Stantec's Buildings business [8][14] Outlook and Guidance - The company has increased its guidance for 2025, reflecting strong year-to-date performance and the impact of recent acquisitions [5][6][12] - Adjusted net income is expected to exceed 8.8% of net revenue, with adjusted ROIC projected to be above 12.5% [12][14] Backlog and Cash Flow - Contract backlog reached $7.9 billion, indicating approximately 12 months of work, with 9% organic growth contributing to this increase [8][21] - Operating cash flows increased by 79.4% to $134.0 million, demonstrating solid operational performance and effective collection efforts [14][17]

Group 1 - Stantec has shown strong year-to-date performance, returning approximately 39.4%, significantly outperforming the average gain of 0.6% in the Business Services sector [4] - The Zacks Consensus Estimate for Stantec's full-year earnings has increased by 3.4% over the past 90 days, indicating improved analyst sentiment and a stronger earnings outlook [4] - Stantec is currently ranked 2 (Buy) in the Zacks Rank system, which highlights stocks with characteristics likely to outperform the market in the near term [3] Group 2 - Stantec belongs to the Consulting Services industry, which has seen an average loss of 14.4% this year, further emphasizing Stantec's strong performance relative to its peers [6] - Coherent, another stock in the Business Services sector, has also outperformed with a year-to-date increase of 13.6% and a Zacks Rank of 1 (Strong Buy) [5] - The Technology Services industry, to which Coherent belongs, has gained 13.1% year-to-date, indicating a relatively better performance compared to the Consulting Services industry [6]

Core Viewpoint - Stantec (STN) has a strong track record of beating earnings estimates and is well-positioned for future earnings surprises, particularly with its upcoming quarterly report expected on August 13, 2025 [1][8]. Earnings Performance - In the most recent quarter, Stantec reported earnings of $0.79 per share, slightly below the expected $0.81, resulting in a surprise of 2.53% [2]. - For the previous quarter, Stantec exceeded expectations by reporting $0.79 per share against a consensus estimate of $0.69, achieving a surprise of 14.49% [2]. Earnings Estimates and Predictions - Stantec's earnings estimates have been trending higher, supported by its history of earnings surprises [5]. - The company currently has a positive Earnings ESP of +0.82%, indicating that analysts are optimistic about its earnings prospects [8]. - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a high likelihood of another earnings beat [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [7].

Core Insights - Unusual Machines (UMAC) and Stantec (STN) are both engineering-focused companies innovating in the infrastructure and industrial tech sectors [1] - This comparative analysis aims to assist investors in evaluating the current situation of these companies to identify potential stock opportunities [2] Unusual Machines (UMAC) - The U.S. drone market is expected to grow at a CAGR of 12.5% from 2024 to 2033, benefiting UMAC as demand for high-tech aerial systems increases [3] - UMAC reported a 59% year-over-year increase in revenue for Q1 2025, with a gross margin of 24% despite tariff impacts, indicating effective cost optimization [4] - Government initiatives, such as the Drones for America Act, position UMAC to gain from defense sector contracts, especially with a production facility set to deliver in September 2025 [5] - However, UMAC faced a net loss of $3.3 million and an operating cash outflow of $1.2 million in Q1 2025, raising concerns about achieving positive cash flow in the next four to six quarters [6] Stantec (STN) - STN is experiencing growth due to rising demand for infrastructure, water security, and climate-resilient solutions, driven by smart city initiatives and infrastructure investments [7] - In Q1 2025, STN achieved a 13.3% year-over-year growth in net revenues, with organic revenue growth of 5.9% in the U.S. [7] - STN's Canadian revenues grew by 15% year-over-year, supported by wastewater projects and industrial developments, while the U.K. water business saw a 20% revenue increase [8] - The company demonstrated strong margin expansion, with project margins increasing by 10 basis points and adjusted EBITDA margins improving by 70 basis points [9] Financial Estimates - The Zacks Consensus Estimate for UMAC's 2025 sales is $10.4 million, indicating an 86.5% year-over-year increase, with a projected loss of 36 cents per share [11] - For STN, the 2025 sales estimate is $4.8 billion, reflecting an 11.4% year-over-year growth, with earnings expected to be $3.86 per share, a 19.5% increase [13] Valuation Comparison - STN trades at a price-to-book ratio of 5.96X, while UMAC trades at 19.21X, indicating that STN offers a more attractive valuation despite both companies trading at premiums compared to historical valuations [10][14] - The analysis suggests that STN is a buy due to its strong global infrastructure business and margin performance, while UMAC is rated as a hold due to its high valuation [16]

Core Insights - Stantec (STN) is on a strong growth trajectory, with increasing backlog figures indicating high visibility into near-term revenue gains and multi-year momentum [2][7] Group 1: U.S. Market Performance - In the U.S., backlog increased by 12.6% to $4.8 billion, driven by anticipated new water projects starting in Q2 2025 and easing policy uncertainty [3][7] - Although first-quarter organic growth was modest at 2.4% due to project timing, management highlighted a pipeline ready to accelerate [3] Group 2: Canadian Market Dynamics - Canada's infrastructure initiatives in energy, housing, and healthcare are creating robust project pipelines, particularly in wastewater and high-intensity industrial segments [4] - Transit and airport-related projects are also gaining momentum, providing a solid growth runway for Stantec [4] Group 3: Global Market Opportunities - The Global segment shows promise with the U.K.'s AMP8 program launching with 75% more funding than the previous cycle, allowing Stantec to ramp up capacity [5] - Australia and New Zealand are steady performers in water due to framework agreements, while Germany's €500 billion infrastructure fund positions Stantec for broader market penetration [5] Group 4: Stock Performance and Valuation - Stantec has achieved a 42% year-to-date gain, significantly outperforming the industry's 3% decline, while U.S. peers have shown mixed results [6] - Stantec's forward 12-month Price/Earnings (P/E) ratio is 27.02, above its five-year median of 23.74, compared to Tetra Tech at 24.54 and AECOM at 20.17 [8] Group 5: Earnings Outlook - The Zacks Consensus Estimate for Stantec's 2025 earnings has been rising over the past 60 days, indicating positive market sentiment [10]

Core Insights - Stantec Inc. (STN) has achieved a 39% year-to-date gain, significantly outperforming the industry's 6% decline, while U.S. peers have shown mixed results [1][8] - The company is benefiting from strong global demand for infrastructure, water security, and climate-resilient solutions, supported by long-term trends such as climate change initiatives and increased infrastructure investments [3][4] Financial Performance - In Q1 2025, Stantec's net revenues grew by 13.3% year-over-year, with organic revenue increasing by 5.9% when excluding acquisitions and currency effects [4] - The U.S. market saw a 2.4% organic growth, while Canada experienced a 15% revenue increase year-over-year, with key contributions from wastewater projects and large industrial developments [5][4] - Globally, revenues rose by 20.3% year-over-year, with the U.K. water business growing over 20% and energy transition projects boosting results in Australia and New Zealand [5] Margin Expansion - Stantec demonstrated efficient growth with project margins improving by 10 basis points to 54.3% and adjusted EBITDA margins rising by 70 basis points to 16.2% in Q1 2025 [9][10] - Lower administrative and marketing expenses, along with a proactive hiring strategy, are expected to enhance workforce utilization and operating leverage in the future [10][11] Analyst Sentiment - There has been a notable increase in positive analyst sentiment, with five analysts raising their 2025 earnings estimates and another five upgrading projections for 2026 [12][16] - Earnings are projected to grow by 19.5% in 2025 and 12% in 2026, with revenue expectations lifted to an 11% increase in 2025 and a 10% gain in 2026 [12][14] Valuation Concerns - Stantec's forward P/E ratio stands at 26.74, above its five-year median of 22.56, raising concerns about its valuation compared to peers like Tetra Tech and AECOM [17] - The elevated valuation may limit upside potential unless the company delivers significant earnings outperformance [17][18]