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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted strong backlog growth, robust performance in key sectors, and positive sentiment in the Q&A. Despite not raising guidance, management showed confidence in achieving targets. The absence of major negative concerns and the optimistic outlook across various markets suggest a positive sentiment. The lack of market cap information limits precise prediction, but overall indicators point to a positive stock reaction.
Net Revenue $1.6 billion, up 13.3% year-over-year, driven by 5.9% organic growth and 3.2% acquisition growth.
Gross Revenue $1.9 billion, up almost 12% year-over-year.
Adjusted EBITDA Margin 16.2%, an increase of 70 basis points year-over-year.
Adjusted EPS $1.16, an increase of 29% compared to Q1 2024.
Operating Cash Flow $101 million, up almost 136% year-over-year from $43 million.
Days Sales Outstanding (DSO) 77 days, consistent with internal target of 80 days or lower.
Net Debt to Adjusted EBITDA Ratio 1.1 times, a reduction from 1.2 times at the end of the previous calendar year.
Backlog $7.9 billion, up almost 13% year-over-year, with 7.5% organic growth.
Acquisition of Page: Stantec entered into a definitive agreement to purchase Page, a 1,400 person architecture and engineering firm headquartered in Washington, D.C., which delivered over US$300 million in net revenue last year.
Acquisition of Ryan Hanley: Stantec announced the acquisition of Ryan Hanley, a 150-person engineering and environmental consultancy firm in Ireland, expanding its presence in the country.
Net Revenue Growth: Stantec delivered net revenue of $1.6 billion, up 13.3% year-over-year, with 5.9% organic and 3.2% acquisition growth.
Adjusted EBITDA Growth: Adjusted EBITDA grew by over 19% with an enhanced margin of 16.2%.
Backlog Growth: Backlog reached a new all-time record of $7.9 billion, with 7.5% organic growth.
Operating Cash Flow: Operating cash flow increased almost 136% year-over-year from $43 million to $101 million.
Strategic Plan Progress: Stantec is tracking well against targets set out in its 2024 to 2026 strategic plan, including growth from M&A.
Market Positioning: Stantec is positioned to become the second largest architectural firm in North America and the largest integrated engineering and architecture firm.
Market Uncertainty: Despite heightened market uncertainty driven by tariffs, policy shifts, and regulatory changes, Stantec remains confident in achieving its outlook for the year.
Funding Gaps: The American Society for Civil Engineers estimates that an additional $9.1 trillion in funding is needed across all infrastructure categories to achieve a state of good repair, indicating a significant funding gap will remain over the next decade.
Regulatory Changes: The company acknowledges that changing government priorities may impact project funding and execution timelines.
Supply Chain Challenges: The company is aware of potential supply chain challenges that could arise from ongoing economic factors and regulatory changes.
Economic Factors: The company is navigating a dynamic market environment influenced by macro factors such as aging infrastructure and energy security, which could pose risks to project timelines and costs.
Acquisitions: Stantec entered into a definitive agreement to purchase Page, a 1,400 person architecture and engineering firm, expected to close in Q3 2025. This acquisition will deepen expertise in advanced manufacturing, data centers, and health care, making Stantec the second largest architectural firm in North America.
Strategic Plan Progress: Stantec is on track with its 2024 to 2026 strategic plan, having completed 5 acquisitions since the start of 2024, welcoming nearly 4,500 new employees.
M&A Pipeline: Stantec's M&A pipeline remains full, indicating ongoing growth through acquisitions.
Net Revenue Growth: Stantec maintains a net revenue growth outlook of 7% to 10% for 2025.
EBITDA Margin: Expected EBITDA margin in the range of 16.7% to 17.3% for 2025.
Adjusted EPS Growth: Projected adjusted EPS growth of 16% to 19% for 2025.
Revenue Target: Stantec aims for 50% growth in net revenues to $7.5 billion by the end of 2026.
Shareholder Return Plan: Stantec is committed to delivering sustained shareholder value through strategic acquisitions and operational excellence. The company has completed 5 acquisitions since the start of 2024, welcoming nearly 4,500 new employees, and aims for 50% growth in net revenues to $7.5 billion by the end of next year.
Share Buyback Program: None
Dividend Program: None
The earnings call summary and Q&A indicate a positive outlook with increased guidance on revenue, EBITDA margins, and EPS growth. The company is optimistic about organic growth, driven by strong demand in key sectors and regions. Despite some uncertainties, management's focus on strategic growth, robust M&A pipeline, and positive cash flow performance bolster confidence. However, lack of specific guidance on some metrics and reliance on external factors like government funding introduce minor uncertainties, keeping the sentiment from being 'strong positive.'
The earnings call reveals strong financial performance with raised EBITDA margin guidance, record backlog, and consistent organic growth in key markets like water. The integration of acquisitions is progressing well, and no negative impact is expected from Thames Water's issues. Despite some management opacity and reduced 2023 growth guidance, the overall sentiment is positive, supported by strategic M&A activity and optimism in U.S. growth. The lack of market cap data limits precise prediction, but the positive factors suggest a likely 2% to 8% stock price increase.
The earnings call highlighted strong backlog growth, robust performance in key sectors, and positive sentiment in the Q&A. Despite not raising guidance, management showed confidence in achieving targets. The absence of major negative concerns and the optimistic outlook across various markets suggest a positive sentiment. The lack of market cap information limits precise prediction, but overall indicators point to a positive stock reaction.
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