Stantec (TSX:STN) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
Stantec reported strong Q1 2026 financial performance with net revenue growth of 9.1% to $1.7 billion, driven by 3.6% organic and 7.2% acquisition growth.
The company highlighted significant growth in its water and energy sectors, with organic growth of over 14% and nearly 9%, respectively.
Stantec’s adjusted EBITDA increased by close to 14%, and adjusted EPS grew by almost 15% year over year.
The company reported a record contract backlog of $9 billion, representing a 13.2% increase year over year.
Stantec reaffirmed its 2026 financial targets, expecting net revenue growth in the range of 8.5% to 11.5% and adjusted EPS growth of 15% to 18%.
Management highlighted the company’s commitment to sustainability, with 68% of total revenue in alignment with the UN Sustainable Development Goals.
The company sees strong opportunities in the US and Canadian markets, driven by infrastructure projects and public sector investments.
Stantec is actively pursuing M&A opportunities while maintaining a disciplined approach to capital allocation.
Full Transcript
OPERATOR
Welcome to Stantec’s first quarter 2026 results, webcast and Conference Call Leading the call today are Gord Johnston, President and Chief Executive Officer, and Vito Cummone, Executive Vice President and Chief Financial Officer. Stantec invites those dialing in to view the slide presentation, which is available in the Investors section at Stantec. Today’s call is also being webcast. Please be advised that if you have dialed in while also viewing the webcast, you should mute your computer as there is a delay between the call and the webcast. All information provided during this conference call is subject to the forward looking Statements qualifications set out on slide 2, detailed in Stantec Management 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 Gord Johnston. Please go ahead, sir.
Gord Johnston (President and Chief Executive Officer)
Good morning everyone and thank you for joining us today. Our first quarter results reflect a solid start to the year, underpinned by continued strong execution and our diversified platform. We are well positioned to continue building momentum through the balance of the year. Macro trends across water, aging infrastructure, mission critical facilities and the energy transition continue to support strong long term demand for our services. While the operating environment remains dynamic, we remain focused on execution, prioritizing the right work and continually driving strong operational performance. In the first quarter we grew our net revenue to $1.7 billion, up over 9% compared to Q1 2025, driven by 3.6% organic and 7.2% acquisition growth. Organic growth was achieved in all of our regional operating units. Our water and energy and resources businesses achieved over 14% and almost 9% organic growth respectively. Adjusted EBITDA increased close to 14% year over year and our adjusted EBITDA margin increased to 16.9% a year over year increase of 70 basis points. Adjusted EPS grew almost 15% compared to Q1 2025. Looking at our results in each of our geographies in the first quarter, US net revenue increased 11% driven by 12.5% acquisition growth from Page and almost 3% organic growth. Our water business achieved double digit organic growth primarily due to activities on large wastewater treatment projects. In energy and resources, work on a major hydropower dam project contributed to solid organic growth and our infrastructure business continued to deliver growth through data center projects. In the North Central region, we’re seeing a number of our major clients consolidating work and awarding larger, more integrated programs to a smaller set of trusted providers like Stantec activity is beginning to ramp up across these programs and we expect this to continue throughout 2026. In Canada, first quarter net revenue grew just over 1% organically strong organic net revenue growth in our water business was driven by biosolids projects and continued momentum on wastewater projects. Robust organic net revenue growth was also achieved in both our energy and resources and buildings businesses through consistent progress on major industrial process projects and public sector investments primarily in civic markets respectively. While our infrastructure business experienced the wind down of certain transit and roadway projects in the quarter, we expect a ramp up of new projects to commence in Q2. Lastly, our global business delivered over 13% net revenue growth in the first quarter driven by almost 8% organic and 3% acquisition growth as well as positive foreign exchange impacts. Our industry leading water business delivered 15% 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 and we achieved double digit organic growth in our German infrastructure business due to continued momentum on a major public sector electrical transmission project and increased volume on transit and rail projects. Before handing the call over to Vito, I want to briefly highlight our 19th annual sustainability report which we released in April. Accomplishments from the report Approximately 5.5 billion or 68% of total revenue was generated from work aligned with the UN Sustainable Development Goals. We achieved operational carbon neutrality for the fourth consecutive year while continuing progress towards our Net Zero commitments under Canada’s Net Zero Challenge and we maintained an A CDP Climate Score for the eighth consecutive year reflecting sustained external recognition of our climate action efforts. Sustainability is a core driver of stantec’s strategy shaping the markets we serve, the projects we pursue and how we deliver work, all of which support long term growth. I’ll now turn the call over to Vito to review our first quarter financial results in more detail.
Vito Cummone (Executive Vice President and Chief Financial Officer)
Thank you Gord and good morning everyone. As Gord noted, we achieved solid financial results in the first quarter. Sustained demand across a diverse multi sector platform combined with strong operational execution continues to support these strong Results. In the first quarter we achieved gross revenue of $2.1 billion and net revenue of $1.7 billion, an increase of 9.1% compared to Q1 of 2025. This growth was driven by 3.6% organic and 7.2% acquisition growth. Project margins as a percentage of our net revenue once again remained in line with our expectations at 54%. We achieved an adjusted EBITDA margin of 16.9% in the quarter, a 70 basis point increase compared to Q1 of 2025. The growth in margin was primarily due to lower admin and marketing expenses as a percentage of our net revenue and reflects ongoing disciplined management of our operations and our adjusted eps in the first quarter increased 14.7% to $1.33. Turning to our cash flow, liquidity and capital resources, during the first quarter our net operating cash outflows totaled $2.3 million. The first quarter is typically a seasonally lower quarter for cash flow generation. Further, the Q1 results reflect the expected transitory disruption associated with the financial migration of Page and the higher investment in working capital funding the elevated organic growth in our global region required Our DSO at the end of the first quarter was 74 days, an improvement of 3 days compared to Q1 of the prior year and below our internal target of 75 days. Our net debt to adjusted EBITDA ratio remained at 1.3 times and this is within our internal target range of one to two times and our balance sheet remains very strong, leaving us well positioned for future acquisition growth. I’ll now hand the call back over to Gord to discuss our backlog, our recent project wins and our outlook for 2026.
Gord Johnston (President and Chief Executive Officer)
Great. Thanks Vito. At the end of Q1 2026, our contract backlog reached a record of $9 billion, a 13.2% increase year over year representing approximately 13 months of work. Acquisitions completed in 2025 contributed to backlog growth of over 9%, primarily within our buildings business backlog grew 5.4% organically year over year. Most notable year over year organic growth was achieved in our global region which delivered double digit growth of 22%. We also saw strong backlog growth in our water and buildings businesses, both achieving nearly 10% organic growth. I’ll note that in the US we continue to see procurement cycle activity picking up as we delivered another quarter of consecutive organic backlog growth. When compared to Q4, 2025 backlog increased over 3% organically, which follows the 3% organic growth that we saw from Q3 to Q4 of last year. I’ll now highlight a few projects Stantec secured over the quarter. These wins help demonstrate the breadth of opportunities we’re capturing, varying in size, scope and complexity. Drawing upon extensive experience in advanced manufacturing, our buildings team was selected to provide design services during the construction phase of a multi billion dollar semiconductor manufacturing and research and development facility in Idaho. This project includes on site water treatment facilities and five ancillary support buildings. Our infrastructure team, as part of a joint venture, was selected to lead the Design of the first fully electric light rail system in Austin, Texas. This project includes a 10 mile, 15 station transit corridor where we will deliver full multidisciplinary design across tracks, stations, bridges, systems, utilities, drainage and streetscape improvements. In Chile, our Energy and Resources team was selected to provide oversight and quality review for a tailings management facility, reflecting our continued strength in supporting complex mining infrastructure projects. Our scope spans earthmoving, civil piping, geosynthetics and electromechanical systems, and our work will continue through construction and commissioning including tailings, pumps, water systems, piping and electrical components. As we look toward the remainder of the year, we are reaffirming our 2026 financial targets including net revenue growth which is expected to be in the range of 8.5 to 11.5%. With organic net revenue growth in the mid to high single digits driven by strong demand across all geographic reporting segments and business units. In the us organic growth is expected to accelerate, supported by the demand across all five of our business verticals. We are also encouraged by the growing demand in key areas such as data centers and defense as well as in advanced manufacturing. In Canada, we expect to see growth driven by public sector spending plans and continued demand in energy and resources. We continue to see good momentum in defense and other nation building efforts following the recent announcements by the Canadian government. While still in early stages, these programs are expected to contribute to growth well beyond 2026. Related to defence, Stantec has completed work on 16 national defence and Canadian Forces bases across Canada and is currently supporting projects that advance national sovereignty from coast to coast to coast and the Canadian Defence Review recently named STANTEC within its list of top 100 defence companies in 2026. Lastly, Global is expected to maintain strong organic net revenue growth driven by continued high level of activities in our water business under AMP8 and other framework agreements, strong demand in energy and resources and positive demand fundamentals across other global business units. With our continued focus on operational excellence, we expect our adjusted EBITDA margin will continue to expand to a record range of 17.6 to 18.2% and we expect to deliver 15 to 18% growth in adjusted EPS compared to 2025. I would note that these targets do not include any assumptions related to additional acquisitions. Given the unpredictable nature of the timing and size of such transactions on ma, we are starting to see more buyers in the market, particularly private equity. We remain active evaluating opportunities while maintaining our disciplined approach. We continue to see a healthy pipeline of firms coming to market. And we remain confident that MA represents the best use of our capital. As we close out the final year of our 2024-2026 strategic plan, we continue to be grounded in disciplined execution while preparing Stantec for what comes next. We are confident in our positioning and our ability to continue delivering strong performance and long term value for years to come. With that, let me turn the call over to the operator for questions.
OPERATOR
Operator Certainly. And our first question for today comes from the line. Frederick Bastian from Raymond James. Your question please.
Gord Johnston (President and Chief Executive Officer)
Good morning. Good morning. How are you? We’re doing good, thank you. Frederick, how are you?
Frederick Bastian (Equity Analyst)
Good, thanks guys. Listen, investors have come to expect Stantec to direct its next dollar of investment towards MA and Gord, you just said as much in your prepared remark. How do you think about share purchases …
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