The following is a summary of the Stantec Inc. (STN) Q1 2024 Earnings Call Transcript:
Financial Performance:
Stantec reported record net revenue for Q1 2024 with a 12% increase, composed of 7% organic and 6% acquisition growth.
Gross revenue and net revenue stood at $1.7 billion and $1.4 billion respectively.
Adjusted EBITDA increased to $212 million alongside a 15.5% margin leading to a 23% increase in the adjusted EPS of $0.90.
Diluted EPS increased by 19% to $0.70, while the adjusted counterpart increased by 23% to $0.90.
Maintaining a DSO at 79 days, the company stayed below the target of 80 days.
Net debt to adjusted EBITDA ratio was 1.5x, reflecting funding for ZETCON and Morrison Hershfield acquisitions.
The U.S. business experienced a 14% increase in net revenue.
Business Progress:
Stantec closed acquisitions of ZETCON and Morrison Hershfield, the companies grew by over 5% organically since.
A significant acquisition was made of Hydrock, a firm specialising in integrated engineering design and sustainability consultancy.
The backlog reached a record $7 billion at quarter end.
Major project wins included a design build project worth $175 million for Arlington County, $186 million agreement with BC Hydro and Power Authority and $595 million wastewater system upgrade collaboration in Sydney, Australia.
Their Infrastructure business experienced growth due to the release of about 40% of IIJA funds.
Stantec announced three M&A deals, and projects an acceleration in their investment in cloud infrastructure due to increased demand.
Expansion of operations in the U.K. through Hydrock acquisition was completed.
The company aims to double its manpower in integrated delivery centers from 1,000 to 2,000 in the next three years.
Stantec plans expansion into the Nordics, and is improving project margins by relying more on in-house resources rather than subcontractors.
An increase in opportunities, particularly in the transportation sector, is observed due to the IIJA funding.
More details: Stantec IR
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