Stantec Q3 Earnings Call Highlights

Key Points

• Stantec raised its 2026 outlook after Q3 net revenue increased 9.4% to about CAD 1.9 billion and adjusted EPS rose 23.5% to CAD 1.89. It now expects an 18.3%–18.5% adjusted EBITDA margin and 17%–19% adjusted EPS growth.
• Demand and backlog remained strong: water delivered double-digit organic growth, U.S. projects advanced as funding became available, and companywide backlog grew nearly 12% year over year to CAD 9.2 billion—about 13 months of work.
• Claims provisions reached approximately CAD 260 million for alleged design deficiencies across multiple sites; Stantec said insurance policies were available to cover the recognized provisions. The company also repurchased CAD 350 million of shares in the first nine months and cited disciplined acquisitions as its top capital allocation priority.

Stantec NYSE: STN raised its 2026 profitability outlook after reporting higher third-quarter revenue and earnings, as delayed U.S. projects moved forward and demand remained strong across its water business.

Net revenue rose 9.4% from a year earlier to approximately CAD 1.9 billion, while adjusted earnings per share climbed 23.5% to CAD 1.89. Adjusted EBITDA increased 16.6% to CAD 377 million, and the adjusted EBITDA margin expanded 120 basis points to 20.2%.

President and CEO Susan Reisbord, speaking on her first earnings call as chief executive, said Stantec achieved organic growth in every region and business. Water posted double-digit organic growth, while the company benefited from project execution and restraint in discretionary spending.

Unless otherwise noted, dollar amounts are in Canadian dollars.

Higher Margin and Earnings Outlook

Stantec now expects a full-year adjusted EBITDA margin of 18.3% to 18.5%, up from its previous forecast of 17.8% to 18.3%. It also raised its adjusted EPS growth outlook to 17% to 19%, from 15% to 18%, and narrowed its net revenue growth forecast to 9% to 11%, from 8.5% to 11.5%.

Chief Financial Officer Vito Culmone said the company’s year-to-date adjusted EBITDA margin was 18.7%, approximately 100 basis points above the prior-year period. Improved employee utilization, lower occupancy and discretionary costs, and greater use of global delivery centers contributed to the improvement, he said.

Third-quarter project margin rose to 55% of net revenue, helped by favorable project recoveries. Culmone said unusually large recoveries added approximately 50 basis points to project margin in the quarter and that a range of 54% to 54.5% was more appropriate going forward.

For the first nine months of 2026, net revenue rose 10% to $5.3 billion, adjusted EBITDA increased 15.9% to $997 million, and adjusted EPS grew 19.3% to $4.83.

U.S. Projects Advance as Backlog Grows

U.S. net revenue increased nearly 11% in the quarter, including approximately 5% organic growth. Reisbord said delays experienced during the first half of the year were largely resolved as funding became accessible and projects advanced.

She said demand remained strong in water, including services related to advanced manufacturing and water scarcity. Environmental services also benefited from work in oil and gas, power and energy, and mission-critical markets.

Some large federally funded coastal protection programs in the Southeast had seen slower movement of funding, Reisbord said, but the delays generally pushed projects back rather than causing cancellations. She said it was too early to assess the effect of the U.S. midterm elections, while noting that transportation has historically drawn bipartisan support.

In Canada, organic net revenue growth was 4.1%, supported by water and energy and resources. Growth was partly offset by infrastructure, where some transit and roadway projects continued to wind down. Global net revenue grew 11%, including 7.5% organic growth, as U.K. water work and energy and resources activity contributed.

Companywide backlog reached $9.2 billion at September 30, up nearly 12% from a year earlier and equivalent to approximately 13 months of work. Organic backlog growth was nearly 10%, including more than 18% in Canada and almost 14% in global operations, Reisbord said.

Reisbord pointed to potential Canadian infrastructure and natural resource projects as a source of future opportunity, but cautioned that the timing and pace of growth would depend on when large projects begin. She also said data centers account for approximately 2% to 3% of Stantec’s net revenue, with activity growing across the U.S., Canada and Europe.

Claims Provision and Capital Allocation

Asked about an increase in provisions, Culmone said it reflected alleged related design deficiencies across multiple sites. Claims provisions stood at approximately $260 million at the end of the quarter, he said.

Culmone said the claims were insured in aggregate and that sufficient insurance policies were available to cover the recognized provisions. He said there was no profit-and-loss effect because the company recognized an offsetting liability and receivable until the provision is settled.

Cash flow from operations rose by $76 million year over year to $392 million in the third quarter. Stantec repurchased 3.4 million shares for $350 million during the first nine months of the year, representing approximately 3% of shares outstanding. Its net debt-to-adjusted EBITDA ratio was 1.2 times at quarter-end.

Culmone said disciplined acquisitions remain Stantec’s top capital allocation priority and that its acquisition pipeline was robust. The company plans to present its next three-year strategic plan at an investor day on December 8.

About Stantec (NYSE:STN)

Stantec is a global professional services firm that provides engineering, architecture, environmental consulting, and related services. Its work supports the planning, design, and delivery of projects in areas including water, transportation, buildings, energy, and community development. Founded in Edmonton, Alberta, in 1954 as D.R. Stanley Associates, the company later adopted the Stantec name. It is headquartered in Edmonton and serves public- and private-sector clients across North America and in international markets.

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