Stantec (STN) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 net revenue of CAD 1.5 billion (USD 1.5B), up 16.8% year-over-year, with strong organic and acquisition growth across all regions and business units.

• Backlog reached an all-time high of $7.2 billion, up 13.4% since December 2023, representing 12 months of work and reflecting robust demand and major project wins.

• Recognized for sustainability leadership, ranking #2 in Corporate Knights' Best 50 Canadian Corporate Citizens and #14 globally by TIME.

• Integration of recent acquisitions (ZETCON, Morrison Hershfield, Hydrock) progressing, supporting 2,700 new colleagues and future margin enhancement.

• Net income for Q2 was $84.6 million, down 3.9% due to a non-cash impairment charge and higher admin/marketing expenses.

Financial highlights

• Gross revenue grew to nearly CAD 1.9 billion (USD 1.89B), up 15% year-over-year; net revenue up 16.8%.

• Adjusted EBITDA rose 14.5% to CAD 247 million (USD 247.3M), with a margin of 16.6%.

• Adjusted diluted EPS increased 13.1% to CAD 1.12 (USD 1.12).

• Operating cash flow for the first six months was CAD 137 million; Q2 operating cash flows increased by $49.3 million to $80.3 million.

• Net debt to Adjusted EBITDA at 1.7x, within the 1-2x target range.

Outlook and guidance

• 2024 net revenue growth guidance raised to 12–15%, with mid to high single-digit organic growth expected.

• Adjusted EBITDA margin guidance narrowed to 16.5%-16.9%.

• Adjusted diluted EPS growth projected at 12%-16% for 2024; adjusted ROIC expected above 11%.

• Positive outlook for U.S. and global markets, supported by robust funding and strong demand in water and buildings.

• Margin expansion anticipated in 2025 as integration of acquisitions completes.