Stantec (US:STN)2025-11-14 15:02Financial Data and Key Metrics Changes - Net revenue grew to CAD 1.7 billion in Q3 2025, an increase of almost 12% compared to Q3 2024, driven by organic and acquisition growth, each over 5% [3][8] - Adjusted EBITDA increased by close to 18% year over year, achieving a record margin of 19% [3][8] - Adjusted EPS grew by 17.7% to CAD 1.53 compared to Q3 2024 [9] - Year-to-date operating cash flows increased by 86% compared to 2024, from CAD 296 million to CAD 551 million [9] Business Line Data and Key Metrics Changes - The water business delivered almost 13% organic growth, while energy and resources achieved nearly 10% organic growth [3] - In the U.S., net revenue increased over 14% in Q3, driven by 4.6% organic growth and almost 9% acquisition growth [4] - The buildings business saw net revenue increase by more than 40% in Q3, attributed to the acquisition of Page and continued organic growth [4] Market Data and Key Metrics Changes - In Canada, net revenue grew 7.6% in Q3, driven entirely by organic growth, with double-digit growth in water and energy resources [5][6] - Global business delivered net revenue growth of almost 11% in Q3, achieving 5.5% organic and 2.8% acquisition growth [7] - The U.K. and Australia saw continued double-digit organic growth in the water business due to public sector investment [7] Company Strategy and Development Direction - The company maintains its net revenue growth guidance for the full year while increasing adjusted EBITDA margin outlook to 17.2%-17.5% [13] - The company is optimistic about growth in Canada and globally, supported by ongoing high levels of activity in water and infrastructure sectors [14] - The company aims to deliver net revenue of CAD 7.5 billion by the end of next year, reflecting its strategic plan for 2024 to 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed strong momentum going into 2026, with continued support in the water business and infrastructure investments in Canada [17][18] - There are concerns about slower procurement cycles in the U.S. but management remains optimistic about long-term demand drivers [29][32] - The company sees strong demand for defense-related infrastructure projects, although current exposure is limited [60][61] Other Important Information - The contract backlog stood at CAD 8.4 billion, an almost 15% increase year over year, representing approximately 13 months of work [11] - The integration of the Page acquisition is progressing well, with expected revenue synergies [51][52] Q&A Session Summary Question: Outlook for 2026 - Management indicated strong momentum going into 2026, with continued support in the water business and infrastructure investments in Canada [17][18] Question: Canadian Infrastructure Opportunities - Management highlighted solid organic growth in Canada, particularly in land development and water projects, with no slowdown expected [22][23] Question: Concerns about Economic Data - Management acknowledged some uncertainty in the U.S. market but emphasized strong long-term demand drivers [29][32] Question: M&A Pipeline Update - Management confirmed a robust M&A pipeline with ongoing discussions and a positive outlook for future acquisitions [35][36] Question: Margin Sustainability - Management expressed confidence in continued EBITDA margin expansion, driven by organic revenue activity [57][58] Question: Free Cash Flow Performance - Management noted strong free cash flow performance due to effective working capital management and collection efforts [63][64] Question: Data Center Activity - Management reported working on over 100 data centers, with expectations for growth in this area [82][83]