Stantec (STN) Q2 2024 earnings summary

Executive summary

• Net revenue for Q2 2024 reached CAD 1.5 billion, up 16.8% year-over-year, driven by 8.8% acquisition and 7.1% organic growth, with double-digit organic growth in Water and Buildings.

• Adjusted EBITDA rose 14.5% to CAD 247 million, with a margin of 16.6%; adjusted diluted EPS increased 13% to CAD 1.12.

• Backlog reached an all-time high of $7.2 billion, up 13.4% since December 2023, representing 12 months of work.

• Major acquisitions (ZETCON, Morrison Hershfield, Hydrock) added over 2,500 employees and strengthened key business units.

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

Financial highlights

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

• Adjusted EBITDA margin was 16.6% (down 30 bps YoY); project margin increased by 10 bps to 54.4% of net revenue.

• Adjusted diluted EPS Q2: CAD 1.12 (+13.1%); YTD: CAD 2.02 (+17.4%).

• Operating cash flow for the first six months was CAD 137 million, double the prior year period.

• 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 organic growth in the mid to high single digits.

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

• Adjusted diluted EPS growth expected in the 12%-16% range; adjusted ROIC above 11%.

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

• Guidance excludes impact of share-based compensation revaluation and future acquisitions.