Stantec (STN) Q3 2026 Earnings Call Transcript

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DATE

Friday, Nov. 13, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Susan Reisbord
• Executive Vice President and Chief Financial Officer - Vito Culmone

TAKEAWAYS

• Net Revenue -- $1.9 billion, representing a 9.4% increase driven by 5.3% organic growth and 2.6% acquisition growth.
• Adjusted EBITDA -- $377 million, representing a 16.6% increase resulting in an adjusted EBITDA margin expansion of 120 basis points to 20.2%.
• Adjusted EPS -- $1.89, representing a 23.5% increase compared to the prior year.
• Contract Backlog -- $9.2 billion, representing a 11.6% increase year over year and providing approximately 13 months of work visibility.
• US Net Revenue -- Increased 10.9% to nearly $1.1 billion, supported by 4.9% organic growth as project delays from the first half of the year were resolved.
• Canada Organic Net Revenue -- Increased 4.1%, driven by double-digit growth in the water and energy and resources sectors.
• Global Net Revenue -- Increased 11% in the third quarter, driven by 7.5% organic growth and contributions from the Niche acquisition in Australia.
• Project Margin -- 55%, representing a 60 basis point increase driven by solid project execution and favorable project recoveries.
• Administrative and Marketing Expenses -- 35.5% of net revenue, representing a 60 basis point decline compared to the prior year.
• Cash Flow from Operations -- $392 million, representing a $76 million increase compared to the third quarter of 2025.
• Share Repurchases -- $350 million year to date, representing approximately 3% of total shares outstanding through the buyback of 3.4 million common shares.
• Net Debt to Adjusted EBITDA Ratio -- 1.2, sitting at the lower end of the internal target range of 1 to 2.
• Full-Year Net Revenue Growth Guidance -- Narrowed to 9% to 11% from the previous range of 8.5% to 11.5%.
• Full-Year Adjusted EBITDA Margin Guidance -- Increased to a range of 18.3% to 18.5% from the previous range of 17.8% to 18.3%.
• Full-Year Adjusted EPS Growth Guidance -- Increased to a range of 17% to 19% from the previous range of 15% to 18%.
• Claims Provision -- $260 million, reflecting a series of related design deficiencies alleged against the company on multiple sites.
• Toronto Water Project -- $70 million, representing a new contract to design a facility capable of treating 600 million liters of water per day.
• UK Groundwater Modeling Framework -- £17.8 million, representing a new award from England’s Environment Agency.
• US Data Center Project -- Unspecified value, representing a new contract with a confidential technology company for a facility in Arizona.
• Utilization Improvement -- Roughly 2% year to date, representing increased efficiency in operational delivery.
• Data Center Revenue Contribution -- 2% to 3% of net revenue, representing consistent and growing demand from hyperscalers.

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RISKS

• Culmone stated, "The increase in the quarter really reflects a series of related design deficiencies on multiple sites that have been alleged against Stantec," noting these claims necessitated a $260 million provision.

SUMMARY

Stantec Inc. (NYSE:STN) reported third quarter results characterized by organic growth across all geographic regions and business units, supported by a significant expansion in adjusted EBITDA margins. Management reported that strong demand in the water and infrastructure sectors has driven the contract backlog to a record $9.2 billion. The company has raised its full-year profitability guidance, citing effective operational execution and disciplined management of administrative costs. Management stated that the integration of the Page acquisition has been successful, contributing to double-digit revenue growth in the buildings vertical. Capital allocation remains focused on strategic acquisitions, supplemented by an active share repurchase program that utilized $350 million year to date.

• Management reported that federal funding in the United States has begun to accelerate after delays in the first half of the year: Reisbord stated, "funding or accessibility to funding has also started to hit key projects and we see this continuing to accelerate."
• The company is leveraging global delivery centers to improve margins and handle increased project volumes: Reisbord noted that operational consistency across the global platform provides the flexibility to meet booming demand in specific markets.
• Strategic acquisitions remain the primary driver for long-term value creation: Culmone stated, "strategic acquisitions really do present the highest value creation opportunity for us going forward."
• Reisbord reported that the company's exposure to the data center market is growing through partnerships with hyperscalers on permitted projects in the United States, Canada, and Europe.
• Culmone indicated that the organic growth in the United States was driven by overall business strength rather than being primarily attributed to the Page acquisition.
• Management stated that the company followed the investment strategies of its clients in the energy sector instead of executing a strategic pivot.
• The company expects to unveil its next three-year strategic plan at an Investor Day scheduled for Dec. 8.

INDUSTRY GLOSSARY

• AMP 8: Asset Management Period 8, a five-year regulatory period for water companies in the United Kingdom.
• DSO: Days Sales Outstanding, a measure of the average number of days it takes a company to collect payment after a sale.
• IIJA: Infrastructure Investment and Jobs Act, a United States federal statute providing funding for infrastructure projects.
• NCIB: Normal Course Issuer Bid, a Canadian term for a company repurchasing its own shares through a stock exchange.
• Net Revenue: Gross revenue minus subconsultant and other direct expenses.
• Project Margin: Net revenue minus direct payroll costs.

Full Conference Call Transcript

Operator: Welcome to Stantec's third Quarter 2026 Results Webcast and Conference Call. Leading the call today are Susan Reisbord, President and Chief Executive Officer and Vito Culmone, 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.com. Today's call is also webcast. Please be advised that if you have dialed in while also viewing on your computer as there is a delay between the call and webcast. All information provided during this conference call is subject to the forward looking statements qualification set out on Slide 2. Detailed in Stantec Management's 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 will turn the call over to Susan Reisbord. Please go ahead.

Susan Reisbord: Good morning, everyone, and thank you for joining us today. This is my firstearnings callas CEO, and I want to begin by saying what an honor it is to lead this remarkable company. I step into this role with tremendous pride in the strength of our business, and, even more importantly, in the people behind it. Our performance is the result of the extraordinary work being done every day by our colleagues around the world. I am deeply grateful for their commitment and proud of what we continue to accomplish together. With that, let me turn to our third quarter results demonstrating the strength of Stantec's diversified platform and the continued benefits of disciplined execution across our business.

Net revenue increased 9.4% to approximately $1.9 billion supported by over 5% organic growth and nearly 3% acquisition growth. We achieved organic growth across every region, and every business unit. Our water business delivered double digit organic growth. Adjusted EBITDA increased almost 17% to $377 million and adjusted EBITDA margin expanded 120 basis points to 20.2%. Adjusted net income increased roughly 22% to $212 million and adjusted EPS grew almost 24% to $1.89 These results reflect broad based growth, solid project execution and continued discipline in managing our operations and discretionary spending. In the US, third quarter net revenue increased almost 11% with almost 5% organic growth and 4.4% acquisition growth.

The improvement in organic growth was consistent with our expectation as project delays experienced in the first half of the year were largely resolved and strong demand for our services drove projects forward. The Page acquisition helped drive double digit net revenue growth in buildings, given integration synergies and the strength in mission critical facilities. Water delivered solid growth from continued demand in water treatment, conveyance, and advanced manufacturing. Infrastructure benefited from continued demand for critical infrastructure and favorable transportation project recoveries. Environmental services saw strong demand across oil and gas, power and energy, and mission critical markets. Energy and resources benefited from work on a major hydropower dam. In Canada, third quarter organic net revenue growth was 4.1%.

Water delivered double digit organic growth, driven by bio solids projects and continued momentum in wastewater solutions. Energy and Resources generated double digit organic growth supported by increased activity and project recoveries in the quarter. Both buildings and environmental services delivered steady growth supported by public sector investment in civic markets and increased environmental planning activity and mining, respectively. This growth was partly offset by infrastructure where certain significant transit and roadway projects continued to wind down in line with project cycle timelines. Our global operations delivered 11% net revenue growth in the quarter driven primarily by strong organic growth of 7.5%, further supported by acquisition growth.

Water delivered robust double digit organic growth, led by increased delivery under long term UK framework programs. Energy and resources achieved double digit organic growth supported by increased activity across Latin America, and The UK as demand for copper mining and hydropower solutions continue to grow. Environmental services benefited from increased activity in The Netherlands, and the contribution from Niche, our recent acquisition in Australia. I will now turn the call over to Vito to review our third quarter financial results in more detail.

Vito Culmone FCPA: Thank you, Susan, and good morning, everyone. We are very pleased with our third quarter results. And they reflect solid operational execution and sustained demand across our diversified platform. Gross revenue was $2.4 billion and net revenue was $1.9 billion an increase of 9.4% compared to Q3 2025. Growth included 5.3% organic growth, 2.6% acquisition growth, and a 1.5% positive contribution from foreign exchange. Project margin increased 10.5% to just over $1 billion. As a percentage of our net revenue, project margin increased 60 basis points to 55%. Reflecting continued strong project execution and favorable project recoveries.

Adjusted EBITDA increased 16.6% to $377 million Our adjusted EBITDA margin increased 120 basis points to 20.2% driven by solid project margin and the continued decline of administrative and marketing expenses measured as a percentage of net revenue. Our adjusted net income increased 21.8% to $212 million or 11.4% of net revenue. And our adjusted EPS increased 23.5% to $1.89. On a year to date basis, our net revenue increased 10% to $5.3 billion adjusted EBITDA increased 15.9%, to $997 million and adjusted EPS increased 19.3% to $4.83.

In terms of our cash flow, liquidity, and capital resources, cash flow from operations was $392 million in the third quarter, an increase of $76 million compared with Q3 25, reflecting strong revenue growth, continued solid focus on collections, and lower payments. On a year to date basis, our cash flow from operations is $59 million Our strong free cash flow continues to give us meaningful flexibility During Q3, we amended our NCIB program, to increase the maximum number of shares available for repurchase to 5% of our total shares outstanding. And on a year to date basis, we have repurchased 3.4 million common shares $350 million. Representing approximately 3%. Of total shares outstanding.

Even with the significant deployment of cash to our stock buyback program, our net debt to adjusted EBITDA ratio at the end of Q3 was 1.2 times. Well within and to the lower end of our internal target range of 1x to 2x. Our capital allocation priorities remain unchanged, disciplined, accretive acquisitions remain our top priority, while our strong balance sheet and free cash flow profile provides flexibility to invest in growth, return capital to shareholders, and maintain a sustainable dividend. I will now hand the call back to Susan to discuss our backlog, some recent project wins and our outlook for 2020. Thanks, Vito.

Susan Reisbord: At September 30, our contract backlog stood at $9.2 billion an increase of almost 12% year over year which represents approximately 13 months of work. Backlog grew almost 10% organically year over year with organic growth across every region and business. Canada and Global delivered double digit organic backlog growth of over 18% and almost 14%, respectively. Buildings, water, and energy and resources each achieved double digit organic backlog growth. Taken together, our backlog demonstrates the breadth of demand across our business and provides good visibility into future activity. I will now highlight a few projects secured during the quarter that demonstrate the breadth of opportunities across our regions and businesses.

In Canada, our water team was selected by the city of Toronto to provide design and construction administration services for a $70 million treatment facility. The facility is designed to treat up to 600 million liters per day and will help reduce combined sewer overflows and improve regional water quality. In the US, our buildings team was selected by a confidential global technology company to design a data center facility in Arizona. Supporting continued demand for critical infrastructure. In Global, England's Environment Agency selected our team to support a new £17.8 million framework for groundwater modeling services across the country.

Looking to the remainder of the year, our strong year to date performance and continued favorable demand environment gives us confidence in our outlook for 2026. We have narrowed our expected net revenue growth range to 9% to 11%, from 8.5% to 11.5%. Reflecting our performance through the first 9 months of the year. At a regional level, we expect the improvement in organic growth that we saw in The U. S. And Canada during the third quarter to continue into Q4 and into 2027. In the US, our outlook continues to be supported by organic backlog growth across our business lines and healthy customer demand.

Funding, or accessibility to funding has also started to hit key projects and we see this continuing to accelerate. In Canada, our outlook remains robust, supported by continued public sector investment and demand across water and buildings. We are also encouraged by the significant momentum behind the government's major projects and initiatives in defense, energy, and infrastructure, and the more than 150 projects coming out of Canada's investment summit, many of which we have a line of sight to. We expect all of this will provide additional opportunities and support sustained growth in the years ahead. And in global, growth continues to be driven by robust water activity.

Including our long term asset management programs and frameworks as well as solid demand in energy and resources. Our year to date margin performance and continued discipline in managing operating costs have also allowed us to raise our profitability expectations. We now expect a record adjusted EBITDA margin of 18.3% to 18.5% compared to our previous guidance of 17.8% to 18.3%. And we increased our adjusted EPS growth to 17% to 19%, up from 15% to 18%. These improvements reflect strong project margins, effective operational execution, and continued discipline in managing administration and marketing costs. That includes the continued expansion of our global delivery center, optimization and consistency in our operational processes, and efficiencies from greater scale in key geographies.

Looking beyond this year, we remain very confident that our diverse business model, combined with strong market demand and operational excellence, will position us to continue delivering industry leading results. We are very excited about our future and look forward to unveiling our next 3-year strategic plan at Investor Day on December 8. Where we will outline our priorities, growth ambitions, and vision for Stantec's next chapter. We invite you to join us virtually for our live webcast. As we share our strategy for the future and the opportunities that will drive our continued success. A link to the webcast will be made available on our website in the coming weeks.

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 of Sabahat Khan from RBC Capital Markets. Your question please.

Sabahat Khan: Great. Thanks, and good morning. Maybe just starting with the top line, if you can just share some thoughts around what are the trends you are seeing in The US market and maybe more importantly, sort of the pipeline of opportunities as you get into 2027? I am not trying to get the guidance here, but just some color on how that market is trending. And then maybe any impact from the recent midterm elections that you might want to call out on the outlook? Thanks.

Susan Reisbord: You bet. Good morning, Sabahat. So with regard to The US market in particular, I think we shared with you last quarter that we were still confident in the market, that we had the backlog What the challenge was accessibility to that. And we were seeing what we thought were, like, projects finally breaking loose. Very large programs that seem to have gotten stuck, you know, money that was not accessible, etcetera. And so what I think you saw in the third quarter is exactly what we told you would see. And so, we are thrilled that feels like the US market is moving. And, from that perspective, I think we still see.

When you ask about what is moving, water is robust demand. So it is not just the normal bread and butter water that would have been in backlog years ago relative to water and waste but you are seeing demands for advanced manufacturing water scarcity, inundation issues. So the water business, really robust. Environmental services, we are starting to see that. You know, as we pivoted from permitting of renewables, let's say, 3 years ago or was all hands on deck in the environmental business, there is a big pivot so that what we have seen now, though, is the refocus into oil and gas power and energy, mission critical.

Our infrastructure business is interesting because what we are seeing is and this gets to your question about, like, the reauthorization act in the midterms. So while you know, we had the continuing resolution bill, and you. I think you are aware too that with regard to IIJA, funds were obligated. So we would always see a continued demand for, let's say, the next couple of years. But transportation, and I am confident about this, has always been a bipartisan concern. What happens with different administrations is kind of which states get the money. And so we are.

Dave been and continue work closely with clients about accessibility to the funds to help advance the infrastructure that we need across the business. So we see good tailwinds in The US across all the sectors. And with regard to the midterm elections, you know, it is kind of too early to tell. But, again, confident that transportation has consistently been a bipartisan issue.

Sabahat Khan: Great. And then on the margin side, good performance this quarter. The guidance has kicked up. Maybe if you can just give us some of the building blocks on the margin in terms of the full year contribution of sort of what is driving that, and what are some of the offsets you are seeing? Thanks.

Vito Culmone FCPA: Hi, Sabahat. You are absolutely right. Very pleased with our margins on a year to date basis now. Our adjusted EBITDA margins are 18.7%. About 100 basis points ahead of a year ago. And the starting Q3 really is just a continuation of you know, what we have seen year to date. Our admin and marketing costs as a percentage of our overall revenue continue to be favorable. On a year to date basis, 36.7%, 100 basis points lower than a year ago. In the quarter, 35.5 just about 60 basis points lower. And the drivers there really several drivers. 1 is improved utilization. The business continues to do really well there.

Overall, our year to date improvement is you know, in utilization is roughly 2% plus. that is very substantial. And reductions in occupancy costs and discretionary costs. And when you are growing and you have reductions in those items or you are holding them at a rate lower than that, you get scale effect of that. So that is very significant. Our continued you know, penetration and strategic utilization of global delivery centers both in service of, obviously, our operations and in service of our back office. Just continued penetration there and highly strategic value to our clients as well. So really, really pleased in the margin. In project margins, you would have seen a particular pop this quarter.

We did have some project recoveries that contributed to that. Project recoveries are obviously a consistent aspect of our business that over the course of a year, I would say, you know, normalize. In the quarter, we saw some outsized recoveries, if you will, that, you know, probably pumped our project margins to 250 basis points or so. So I think when we look at project margins going forward, in that 54, 54 and a half range relative to the 55% we contributed here is probably more appropriate. But the trend in overall margins will continue as we move forward, and we are very pleased that just a shout out to the operations. Okay.

Sabahat Khan: Great. And then just 1 last on my part. There was an increase in provisions this quarter, I think. About $188 million. It notes that some of the. That amount is recoverable by insurance. Can you just talk about what that is and sort of that recovery process you have noted in there? Thanks.

Vito Culmone FCPA: Oh, the provisions. Okay. Sorry. Okay. I think you are referring to Note 9 in the financial statement. that is where we show continuity of our provisions. You are absolutely right. And including in that broader provision, you will see specifically claims provision. And, at the end of Q3, I am just flipping through the financials, that stood at roughly $260 million. And claims, as you know, are an ordinary part of our business. We constantly, excuse me, review our provisions in respect of possible deficiencies identified in the performance of past services And the increase in the quarter really reflects a series of related design deficiencies on multiple sites that have been alleged against Stantec.

So that is what is giving rise to the pop in the provision. These claims including these referenced in Q3 here, in aggregate are insured. And we have insured. We have sufficient insurance policies available to cover the provisions that have been recognized. And so there is no P&L effect. And, effectively, we recognize an offset. Offsetting liability and receivable until the provision is settled. So you will see the receivable, I believe, in Note 7, if I have got that accurately. So, yeah, that. that is what. that is about, Sabahat. Great. Thanks very much. Okay.

Operator: Thank you. And our next question comes from the line of Devin Dodge from BMO Capital Markets. Your question please.

Devin Dodge: Yes. Good morning. Thanks for taking my questions. So the first 1 I was going to ask is about Canada. Seemed like there was really strong order intake during Q3. Susan, I think you mentioned the backlog was up mid teens year over year. Just wondering if you could talk about where you are seeing the most demand strength in Canada and if the duration of that backlog has lengthened?

Susan Reisbord: You bet. Thanks, by the way. Thanks for calling in. We are really excited about the potential of the marketplace in Canada. We are seeing it as you mentioned, in our backlog, but we are also seeing it relative to the, you know, just the energy that is in Canada right now. I happen to be in Montreal right after Leaders Were In Halifax talking about the investment summit And with, you know, more than 150 projects representing $600 billion of capital investment, what we see is like, really, future forward infrastructure and natural resource projects in the chute. Now the good news about that 150 projects in.

Well, with more like 167 projects in particular is those are ones as we read through the, investment book, are ones that we have been on and or have had in our, you know, pipeline of opportunities that we have been tracking. So it is really exciting for us And I gotta tell you, the buzz in the room, was different than what I have seen where people are talking not just about if projects can happen, but how they will happen. And some of the consequences of them all at the same time and accessibility to funding. So when we look at the Canadian market, we are we feel very strongly about it.

And 1 of the areas that we feel especially we are seeing a lot of activity is in the North. You know, we have offices in Whitehorse and, Yellowknife. We have an office in Nunavut. As well as Alaska for that matter. And the activity that is happening in the North now is also really exciting.

Devin Dodge: Okay. Excellent. Thanks for that. Second question, just wondering if you could talk about what you are seeing in the data center sector. Look, I am assuming Canada is picking up here. But I was wondering if you have seen any meaningful changes in the U.S. market over the last few months in terms of project and RFP activity?

Susan Reisbord: Yep. I would like to provide a little context for that. With regard to data centers in particular, our exposure, our like, part of our net revenue is only about 2% to 3%. So at that level of work is been very consistent over the last few months, but growing. Quite frankly. Now 1 of the things that we do in that space is we work for the hyperscalers on projects right now that are already permitted. So we are seeing a lot of good, strong activity. Now there has been a lot of incoming when you think about RFP related work.

But we are very disciplined too in accepting work and going after work with key accounts and relative to work that we believe that we can get done. So we are seeing interesting, data center activity across all of The US. We are seeing it in Canada, and we are seeing it in, Europe.

Devin Dodge: Okay. Good to hear. Thank you. I will turn it over.

Operator: Thank you. And our next question comes from the line Chris Murray from ATB Cormark. Your question please.

Chris Murray: Yes. Thanks, folks. Good morning. Maybe turning back to Canada, just a couple of quick questions, You know, with not only the announcement of the 150 major projects, there was also the change in tax policy the mega deduction. Can you talk a little bit about how your discussions with clients are starting to maybe change, in terms of them putting projects that maybe we would not have thought of before. You know, normally, you folks are very involved in early stages of what these would look like. And in particular, I am kind of thinking about what that would look like for, say, the energy industry and chemicals industry.

Historically, you guys have had a very active involvement with that. But, I mean, the whole industry itself has been probably depressed for a decade. So just any thoughts around how you see the development progressing would be helpful.

Susan Reisbord: You bet. So we are seeing a lot of discussion about, again, about the projects that are possible to unlock here in Canada given the moment that we have. And the interest and I got to tell you, it is like the discussions have not been around directly with us about because there are tax policy changes. The discussions with us have been in and around accessibility to funds, getting the right funds on the project, and unlocking them. Now probably completely tied to tax policy as to where the funds can come from.

The other thing that has been a discussion is, again, some of these projects we have been working on are in and around for 10 years to some of them are more ready than others. And so I think that there is also discussion in and about important work that needs to be done, but also that early win because some of the planning that you are talking about, you know, with our environmental business in particular, we are all we are often in the upfront work. That some of that has been done or thought through, the relationships built that need to get them done.

So I would say that is the discussions we have is, like, how much of this how ready is this project to roll? How much has it been thought through already? Okay.

Chris Murray: Then just thinking about the balance of the business. I mean, Canada has been you know, fairly sleepy for the last few years, and certainly, your focus has been growing in The US and globally. With some of the change that we are seeing, does that change your outlook and thoughts about the scale that you have relatively in Canada versus the other parts of the world? And is there that you think from an acquisition perspective or an organic development perspective that you have to add back into Canada as the environment shifts?

Susan Reisbord: Yeah. You bet. Well, first thing is from my perspective, it does not feel to me that Canada's been sleepy. Based on the businesses that we are in and the work that we have been doing. Now looking at the investment strategy forward, you know, are there resources that are needed that might not have been needed if it was business as usual. Right? So, yeah, we are. We look. We always are looking because, you know, we are committed to organic growth, and we are committed to M&A growth when it is the right firm at the right time, and it is a good strategic fit.

Right firm at the right time does change when you have a backlog of work that is different than it has been. So, sure, we will. we would always look across the Canadian portfolio in the marketplace to see what could be there. Now the other thing that we-- and I have talked about this a bit in the last month or so, is we also look for additional operational consistency across the platform. Because this is 1 of those discussions, by the way, that we had in Montreal right after the investment summit. 1 of the concerns was, wow. All these projects coming online at the same time, what is that going to do to labor demand?

And wage inflation and then project cost inflation? And so the advantage I think, of being a. Having a global platform and having operational consistency is that you can provide resources when markets are booming. You can certainly grow, but you can also provide resources from a whole global platform. So, to answer your question, yeah, Canada, we see good tailwinds that suggest Canada will grow faster than it has in the past. And we are always looking for opportunities to augment our staff with the right M&A. I will leave it there. Thanks, folks. Thanks, Chris.

Operator: Thank you. And our next question comes from the line of Maxim Sytchev from NBCCM. Your question please.

Maxim Sytchev: Hi. Good morning. I wanted to touch on global growth, if I may, because I think the rate of growth slowed a little bit. And, I mean, I presume AMP 8 is continuing to ramp up pretty aggressively. So I am just wondering if you can maybe talk about sort of puts and takes in the bucket. Thanks.

Susan Reisbord: You bet. Hey, Maxim. Thanks for that question. Yes, we are like very happy as you well know, relative to the growth in our global business particularly the organic growth. And while AMP 8, particularly Scottish Water, by the way, has been growing and ramping up. We have seen really great opportunities as well in Latin America. With the mining related work. And we have seen the turn, which I think you would have seen too, in Australia, New Zealand. From a really depressed market. So we. We are seeing really good green shoots across our entire global platform.

Vito Culmone FCPA: And, Maxim, you are not helping me out. It set a high bar for the organization. They just 7.5 percent this quarter. And you are saying slowly that. I mean, I get it. Obviously, the year to date they are at 9.4%. I am chuckling because I can just see Katz sitting over in The UK saying, gosh. No. We are very, very pleased that I frankly, I think you will see an acceleration into Q4 and then into. As we move into 2020 7. So very, very healthy profile there for the global business. Yeah.

Maxim Sytchev: Yeah. No, rightfully so. And again, yes, just sort of second derivative. And then I was wondering if it is possible to get a bit more color on page integration, how that is going, you know, sort of maybe changes to go-to-market strategies, sort of from a combined coal perspective? Any color would be helpful. Thank you.

Susan Reisbord: Bet. I think the page integration has actually been a textbook integration. It was a unique opportunity 2 firms coming together and actually having the opportunity to work together in partnership before the acquisition happens. When you think about acquisitions and integration, some of the integration activities of getting to know each other and work together on major projects happened well before the ink, before the deal was inked. The integration of Page into Stantec has been remarkable. And as a matter of fact, John Page, who was a leader at Page, is now leading our, buildings vertical in North America. With a seamless team across the business. And so, that to me has been actually textbook integration.

And you are seeing it in the results of how the Buildings business is growing across The US. Thank you so much.

Operator: And our next question comes from the line of Michael Tupholme from TD Cowen. Your question please.

Michael Tupholme: Thank you. You talked earlier on the call about U. S. Organic growth in some of the drivers there. I know the Page acquisition has now been owned for a year and therefore would have been a contributor to the U. S. Organic growth in the quarter. I guess I am wondering if you can talk about the extent to which that now being included in inorganic growth was a driver in the quarter and sort of what that contributed?

Vito Culmone FCPA: Yes. It actually flipped over into August 1. And think when you look at the Q4. The Q3 organic in The US, it was actually frankly less about Page. I mean, Page obviously contributes our Buildings Practice is very healthy. We continue to see that. Moving forward in a very, very strong way. When we think about the US in the quarter, there was strength across the board. There was a strength in water. There was strength in energy and good strength all the way across all of our entire portfolio and we expect that to continue. So the Q4. The Q3 pop in and not to not to suggest that. What was it in The US here?

4% organic 4.9% is a pop at definitely a trend improvement as we had articulated, was not exclusively all about Page. It was just the overall strength of the business. As Susan articulated and the backlog starting to unlock across the business. Okay.

Michael Tupholme: that is very helpful. Thank you. Then, obviously, very strong margin improvement in the quarter. And, Vito, you did highlight the project recoveries and the impact that, that would have had. But even outside of that, just overall margins were strong. I guess the question is just around pricing and the pricing environment. To what extent is that a factor in helping drive some of the margin improvement?

Vito Culmone FCPA: Yes. Well, and thank you for that. I mean, 120 basis points in the quarter even if you exclude those project recoveries that I described, very, very, very healthy and consistent with our sort of trajectory that we have delivered and what we know, we will talk more about it December 8 here with our investor day, what we think the business can do going forward. So very strong deliveries there. Pricing is reflected in, obviously, our project margin. I would describe pricing environment as quite balanced.

And, you know, when we think about how projects are developing, the value that we continue to add for our clients, the strategic nature of where we show up in the complexity of programs. I am not overly concerned about the pricing environment. I think as I look at this sector, and particularly where Stantec shows up, in these, you know, multibillion dollar programs, I think there is tremendous opportunity for us to I will say, extract or ask for appropriate return for the respect to our services. So my sense is everything's quite balanced at this point. Obviously, you are gonna have puts and takes in different markets, but Susan, anything from your end on pricing overall? No. No?

Yeah. Like, we get a lot of questions around AI and how's that affecting pricing. it is not at the end of the day at this point in time, and we do not expect it to be. Okay.

Michael Tupholme: Perfect. And then just 1 more here. So in the prepared remarks, it was suggested that acquisitions remains a top priority. You know, we saw the niche acquisition in the quarter, but you are obviously quite active with the buyback as well. And then. Then increase the NCIB. So I guess the question is just, you sort of run through your latest thoughts on capital allocation priorities at this time and what does the M&A pipeline look like as well? And what are you seeing in terms of valuations on the private side relative to public sector valuations?

Vito Culmone FCPA: Yeah. Fundamentally. And Susan, referenced it, I have referenced it in my prepared remarks, we continue to believe that strategic acquisitions really do present the highest value creation opportunity for us going forward. And the environment is actually. You are starting to see the environment unlock a little bit. The pipeline continues to be quite robust. Evaluations in the private sector and public nowhere near converged, but they are not widening. They are maybe starting to converge a little bit. The early days of that. So, no. We are quite active. We have got a great team looking at these things, and we would not be afraid, obviously, or prepared to, to dip our toe in the market.

The key for us, it is always been this. it is really about discipline. it is about patience, and it is about you know, not doing an acquisition for an acquisition's sake. Right? It has to hit all of our criteria, both quantitatively and qualitatively. I think as you look at our 2026 activity, it would manifest our discipline in that approach. Where, obviously, there was nothing there at the appropriate time for us. Or nothing significant, if you will, from a dollar's perspective, and we deployed flexibility with the share buyback. So I just love our position in that.

Because it all starts with a healthy free cash flow and as we as we look at our free cash flow, we are continue to be really pleased as we move forward in that, and it just gives us flexibility for capital allocation. Decisions along those lines. And, but we can. You know, we as I said, we continue to fundamentally believe that acquisitions present the highest value creation opportunity for us moving forward as an organization. K. Thank you. I will leave it there.

Operator: Thank you. And our next question comes from the line of Frederic Bastien from Raymond James. Your question please.

Frederic Bastien: Good morning. I would just like to build on my question around M&A. Can you comment on the competitive side? I think we have seen a lot of pressure from private equity firms in the past I. I would say 12 months, but I think it is much longer than that, and that is really driven valuations higher. We have seen interest rates move quite dramatically higher. Has that impacted in you know, what you are seeing right now, has that impacted the appetite for M&A on the, on the private equity side? Are you seeing competition perhaps coming off a bit Hi, Frederic.

Vito Culmone FCPA: Yeah. You know, I would say there is always puts and takes in that. And you know, the competitive side of things is always a consideration. But really, it is sort of a secondary consideration in most cases. You know, for us, it always comes back to what I was describing really, which is the qualitative and the quantitative and how does this work for us. And if it is compelling, then generally, the economics you know, work, and we can get ourselves there with a counterparty. But to answer your question specifically, I think in the current environment, if I compare it to maybe 2 years ago, I would say that you are absolutely correct.

I think you know, private equity is being more thoughtful. About these things. Obviously, you have seen the public valuations you know, come off their highs, and so that affects obviously private equity valuations as they think about exit strategies and whatnot. So I am pleased to see how things have trended in that regard.

Susan Reisbord: You know, the other thing that is interesting to that end, Vito, is, you know, we have just been at a several industry conferences. The majority of the firms being aggregated and the leadership teams there. So, like, it is interesting to watch that maturation where the culture of the firm. Like, when they are ready to go to a strategic that is where the culture of the firm really matters. And, again, I think it is secret sauce relative to what Stantec has to offer. We have a good reputation in the business as an employer and it. That really matters in discussions with potential acquisition targets. Just absolutely reaffirmed in the last 2 industry meetings this past month.

Yeah. Well said.

Frederic Bastien: Thanks. And Susan, I guess you are you are taking the reins at a good time here. You may be saving some for next month, but I am gonna try anyway. As you look to put your own stamp on the business. As we look to put your own stamp on the business, where do you see the greatest opportunity to perhaps do things differently or double down on what has been done in the past?

Susan Reisbord: You bet. Thanks, Frederic. From my standpoint, you know, I have been asked are any of our strategic priorities changing? And they are not because they have been part of helping set the strategic priorities. So I still believe and am absolutely committed to our 5 verticals and building out our footprint. And again, both through organic growth and through M&A where it is it has to be a good, right, strategic fit. it is not to be big for big sake.

What I am very excited about is what I referred to a little bit earlier is the operational consistency because I think it gives you the flexibility to meet client needs and to have Catherine Schefer, our COO for Global, and Matt Page, our COO for North America, working together so closely to, again, advance. Like, we had operational consistency, but we can take it to the next level. I think it is a really strong opportunity for us to even operate with more discipline and, like, make more careers more interesting too because it gives you some interoperability to staff. So I am excited about all that.

The other thing that I would say is with the industry changing the way it is, like speed of the market, tailwinds that we have, you know, it is not the way. Like, where we are today, what leaders need is not the same as what leaders needed 5 or 10 years ago. And so we are also very committed to the leadership development, the financial acumen, the commercial acumen, building that broader inside the company. I guess it is-- I would think of it as a leadership readiness strategy across the whole organization, deeper and broader. So those are the big things. Thank you so much. See you next month. See you.

Operator: Thank you. And our next question comes from the line of Ian Gillies from Stifel. Your question please.

Ian Gillies: Hi, Ian. Hi. Susan, I am just curious, as you think about now being CEO, and this kind of falls on Frederic's question, Do you see any immediate need or. To change the organizational structure in any way to improve the efficiencies? Are you pretty happy with the way everything is? I am just curious on that front given it is such a people centric business.

Susan Reisbord: You bet. I am very happy with the way that we are structured from an organizational structure standpoint and very committed to the way we have run our business both in North America and in our global operations. So I am not looking for any significant org changes. Okay.

Ian Gillies: And maybe switching gears to Canada. If you go back many years ago, you always had a large press presence in oil patch in Western Canada. Looking like it is gonna be reasonably strong again, at least for the next number of years. Can you talk about your appetite to reenter that market? How big you might want it to be as an overall piece, and just some of your thoughts around getting back to doing perhaps a bit more oil and gas.

Susan Reisbord: You bet. There are a couple of things is that we still have a very significant presence in Western Canada, and absolutely committed to continued growth. I can tell you based on what is in our pipeline that growth is that the pipeline is very strong of opportunities in this space that are not just projects but projects with the right clients at the right margins. I am very like, feel very positively about our presence in Western Canada. The other thing I would say is we never left our oil and gas clients.

So, you know, from a standpoint of we have always served that market, we have key accounts in that market, and have been committed to that market. So it is not a pivot for us. it is a following our clients' investment strategies wherever they take us. Perfect. Thank you very much. I will hold off on any of the longer dated questions because I guess we will learn about them in a month. Thanks.

Operator: Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press Our next question comes from the line of Jonathan Goldman from Scotiabank. Your question please.

Jonathan Goldman: Hey, good morning, team, and thanks for taking my questions. Maybe just circling back to The US good morning. Maybe just circling back to The US, maybe in the quarter, did you observe any bifurcation in performance between different regions or states throughout the country?

Susan Reisbord: Thanks for that question. Hi, Jonathan. What I would say is that the answer is yes-ish. What we saw like, there is still. So there is major coastal protection work in the Southeast. You know, in their major projects. Some of that funding was still a little slower You know, like, as I had mentioned coming out of Q2, we started to see things start to open up. So that started to open up a little later than others. The West Coast is always a robust environment for us. Texas, Florida. So there. Am I seeing things sort of out of scale to the regular pace of business?

The only thing I would say that I have seen that was a little slower were the large federally funded coastal programs And not that they got canceled, it is just that, the movement of money was slower. Okay.

Jonathan Goldman: that is good color. And maybe speaking of the movement of money that been hearing from peers about a slower pace of project conversion from maybe award to disbursement and actual move forward. Has that project delivery time line extended, or has it kind of remained status quo, I guess, relative to last quarter or last year or maybe recently?

Susan Reisbord: Well, I would say we are we are actually starting to see things, like, pick up again. So when I would say that the delay in funding did not cause projects to cancel or they just moved to the right. So they did not get compressed either. They moved to the right, more than anything in my experience, over, like, the major projects that I have seen. So, you know, for some clients, if they have to hit certain season, there is a little bit of acceleration, but not anything market.

Jonathan Goldman: Okay. that is interesting and encouraging. I will get back in queue. Thank you.

Operator: And our next question comes from the line of Chris Friesen from CIBC. Your question please.

Krista Friesen: Hi. Good morning. Thanks for taking my questions. Maybe if I could just follow-up on the global region. Obviously, some strong growth there in The U. K and Latin America. You commented on how we are starting to continue to see that turnaround in Australia. Are we seeing growth on a quarter over quarter basis there? Or is it still maybe just kind of trending closer to the bottom? Thank you.

Vito Culmone FCPA: Yeah, Krista. We are starting to see growth, which is wonderful. I mean, obviously, you know, still other things relatively modest, if you will, but really pleased to. As to how that operations and that business is progressing. And, hi. Good morning, Krista.

Susan Reisbord: The other thing that I am excited about is the power sector demand that is happening in Australia. So we are seeing things that we had not seen before. You know, from the power business standpoint, it is expected to grow the transmission and distribution part of it anyway. From, let's say, $10 billion now to about $15 billion in 2030. When you see that kind of growth over that size of market, you actually feel it when you are there. So it is an exciting time.

Krista Friesen: Okay. Great. that is good to hear. And then maybe just on 1 of the earlier comments, Vito, I think you said you are not really seeing AI have an impact on pricing. But maybe just on the other side of it, are you able to implement AI? Are you seeing much in terms of productivity enhancements there? Thank you.

Susan Reisbord: Yeah. Hi, Krista. I will field that 1. We are seeing productivity enhancements relative. On a broad scale. You know, we do some pulse surveys on like, administrative tasks across the business. And we are implementing, like many people in our industry and others, for example, certain AI tools that can help you put proposals together faster. But relative to seeing sort of any material impacts to the business, I am not. it is-- we are still in early days. Thanks. Appreciate the color. I will jump back in the queue and see you next month. Thanks.

Operator: Thank you. And our next question is a follow-up from the line of Michael Tupholme from TD Cowen. Your question please.

Michael Tupholme: Yeah. Thank you. Just a quick follow-up. There were some slight restatements to your historical backlog details. Just wondering if you can explain what drove those changes.

Vito Culmone FCPA: Yeah. Hi, Michael. No. That was just an error. We had noted a small error in our in our reports there, and we corrected that. We identified that. We correct it, and we just wanted to be totally transparent and get all those 4 quarters cleaned up. Immaterial in the context of, obviously, backlog, but it reflects our. It reflects the updated and adjusted backlog as it stands. Okay. Understood. Thank you. Yeah.

Operator: Thank you. And our next question comes from the line of Benoit Poirier from Desjardins. Your question please.

Benoit Poirier: Yes. Good morning, everyone. Thanks for taking my question. And just on Canada, Susan, you mentioned that the growth will likely surpass what you have achieved in the past. Obviously, you called for low single digit to mid single digit this year. But when I look back at the last 4 years, you have been able to average quite impressive performance at 7.5 percent. So I am just wondering whether you are calling Canada to go above 7.5 or double digit territory on the back of all the nation building project, all the strong activity that you see across Canada?

Susan Reisbord: Good morning, Benoit. Well, what I would say is that I see the potential for a more robust growth market based on the projects that are being talked about. But it will actually take them coming online to deliver what you are talking about relative to, organic growth. So we are seeing, again, good green shoots about it, We are seeing a lot of, proposal activity. But as you can imagine, with the nation building projects as well as the projects identified in the investment summit, they are. Those are big projects that like, the liftoff can take a while. So, you know, it will.

I see it trending up whether it will hit that and or when it would hit that will depend on a lot of things. All landing at the right place.

Vito Culmone FCPA: Benoit, we will talk more about this again, you know, in DC here on December 8, but know, it is the beauty of our the portfolio and the breadth of our market. Right? Both geographically but across our sectors. Just real strong trade. Head tailwinds, excuse me, across our entire markets. And so when we think about what that could contribute to on a consolidated basis over a reasonable period of time here, it is it is reasonably attractive.

Benoit Poirier: Yeah. Just to come back on a previous question around oil and gas, you. You have been much. You had a much higher exposure at. In the old days. You have been quite good, diverse over time. What would be your exposure to oil and gas right now in terms of specific exposure?

Vito Culmone FCPA: Well, you are testing my was gonna say, I do not have exactly Yeah. That number. Do you have it, Vito? We will get that to you. it is it is actually in our listing there, in our material. But relatively small, I would say. 5% is what the team is sharing. it is 5% of what the team is sharing. Yeah. Thank you. Okay. Thank you very much.

Benoit Poirier: And maybe last question. Obviously, margin has been quite impressive with 120 bps of margin improvement. You have been calling this discussion around the project margins, some outsized recovery. So as we go forward, I am just wondering if project margin might come back down to more sustainable level of 54 to 54.5 how should we be thinking, let's say, for 2027? Would it be fair to expect, maybe somewhat of a tough compare or still improvement, but at more moderate pace? Let's say?

Vito Culmone FCPA: Yeah. I think the latter, Benoit. You know, overall, very there is a lot of initiatives. You know, the thing I am most excited about when we think about either project margins or bottom line EBITDA margins improvements, is, you know, processes and whatnot. there is so many things that go into it, But, ultimately, it is a lot of it drops to the bottom line. But just as importantly, if not more importantly, it really goes into us continuing to reinvest in our services for the benefit of our clients and the development of our people. And really perpetuates the long term health of this organization. You know, over the longer term and is it.

From a sustainable perspective and all aspects of that. But I think, you know, you will get our margin guidance as we move forward here, and we have telegraphed that pretty clearly in the past. Project margins is a key component of bottom-line margins, and so we will give you a little bit more color here in a month's time. Thank you very much, and congrats again. Thanks, Benoit.

Operator: Thank you. Thank you. This does conclude the question and answer session of today's program. I would like to hand the program back to management for any further remarks.

Susan Reisbord: Thank you, operator, and thanks for everyone joining the call this morning. If you have any follow-up questions, please reach out to Jess Nieukerk, our VP of Investor Relations. Thanks very much.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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