Q3 2024 Stantec Inc Earnings Call

November 8, 2024

Okay.

Yeah.

Operator: Welcome to Stantec's third quarter 2024 results webcast and conference call.

Welcome to scan textbook quarter 2024 results webcast and conference call, leading the call today are Gordon Johnson, President and Chief Executive Officer Officer, and Peter Campbell, Executive Vice President and Chief Financial Officer.

Operator: Leading the call today are Gordon Johnston, President and Chief Executive Officer, Officer and Vito Culmone, Executive Vice President and Chief Financial Officer.

Operator: Stantec invites those dialing in to view the slides presentation, which is available in the investor section at stantec.com. Today's call is also webcast. Please be advised that if you have dialed in while also viewing the webcast, you should re-compute as there is a delay between the call and the webcast.

Goodbye to those dialing in to view the slide presentation, which is available in the investors section Atlantic Dot Com. Today's call is also webcast. Please be advised that if you have dialed in but also viewing the webcast you shouldn't your computer as there is a delay between the call and the webcast.

Operator: All information provided during this conference call is subject to forward-looking statements, qualifications set out on slide 2, detailed in Stantec's Management Discussion Analysis, and incorporated and 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.

All information provided during this conference call is subject to forward looking statement qualification set out on slide two detailed Atlantic management discussion and analysis.

Fourth grade in full for the purposes of today's call unless otherwise noted dollar amounts discussed in today's call are expecting Canadian dollars and are generally rounded with that I'm pleased to turn the call over to Mr. Korte Johnston.

Gordon Johnston: With that, I'm pleased to turn the call over to Mr. Gordon Johnston.

Gordon Johnston: Good morning, and thank you for joining us today. I'm happy to report very solid third quarter results as we deliver another record quarter. We continue to see strong demand in all of our geographies and across our business operating units. climate change, aging infrastructure, industry shifts, reshoring of production, and incremental and breakthrough technologies all continue to drive this demand. We achieved record net revenue of $1.5 billion, up almost 16% compared to Q3 2023. This was generated with 6.5% organic and almost 8% acquisition growth. We delivered solid organic growth in each of our key geographies, and we had organic growth in each of our business operating units, with the exception of energy and resource management.

Speaker Change: Good morning, and thank you for joining us today.

Speaker Change: Happy to report very solid third quarter results as we delivered another record quarter.

Speaker Change: We continue to see strong demand in all of our geographies and across our business operating units.

Speaker Change: Climate change aging infrastructure industry shifts restarting production and incremental and breakthrough technologies all continue to drive this demand.

Speaker Change: We achieved record net revenue of $1 5 billion up almost 16% compared to Q3 2023.

Speaker Change: This was generated was six 5% organic and almost 8% acquisition growth.

Speaker Change: We delivered solid organic growth in each of our key geographies and we had organic growth in each of our business operating units with the exception of energy and resources.

Gordon Johnston: Our water and buildings businesses both realize double-digit organic growth. As a result of solid project execution, Adjusted EBITDA for the quarter rose to $275 billion, up almost 14%, with a very healthy margin of 18%, and we delivered Adjusted EPS of $1.30, also up 14%.

Speaker Change: Our water and buildings businesses, both realized double digit organic growth.

Speaker Change: As a result of solid project execution adjusted EBITDA for the quarter rose to $275 million up almost 14% with a very healthy margin of 18% and we delivered adjusted EPS of $1 37 is also up 14%.

Gordon Johnston: In addition to our record results, I want to highlight a recent accolade that Stantec received. Newsweek recently released their list of Canada's most responsible companies for 2025. I'm very pleased to announce that Stantec was ranked at number one for our commitment to climate, social welfare, and responsible governance. Over 700 of Canada's largest private and public companies were evaluated on over 30 key performance indicators. Those results were coupled with a corporate social responsibility reputation survey of over 4,000 Canadian consumers. The final rankings list included only 150 companies, where Stantec achieved the highest score and was the only firm in the rankings to achieve a score of 100 related to governance.

Speaker Change: In addition to our record results I want to highlight a recent accolades <unk> received.

Speaker Change: Newsweek recently released their list of Canada's most responsible companies for 2025.

Speaker Change: I am very pleased to announce that Stan Tech was ranked number one for our commitment to climate, social welfare and responsible governance.

Speaker Change: Over 700, Canada's largest private and public companies were evaluated at over 30 key performance indicators in.

Speaker Change: And those results were coupled with a corporate social responsibility reputation survey of over 4000 Canadian consumers.

Speaker Change: The final rankings list included only 150 companies, where <unk> achieved the highest score and was the only firm in the rankings to achieve a score of 100 related to governance.

Gordon Johnston: We're honored to be recognized by organizations like Newsweek for our leadership and sustainability and for making a positive impact on society.

We're honored to be recognized by organizations like Newsweek for our leadership in sustainability and for making a positive impact on society.

Gordon Johnston: Now I'll turn to our results in each of our geographies. Our U.S. business continues to perform well, delivering a 9% increase in net revenue from the third quarter, including 5.6% organic and approximately 2% acquisition growth. The public and private investments that we're seeing in the U.S. allowed all of our business operating units to achieve solid organic growth. Significant transit, rail and roadway, and residential development projects contributed to double-digit organic growth and infrastructure. Water capitalized on continued robust public sector and industrial demands, as well as large-scale water security projects. Our buildings business saw continued strong demand across most subsectors, including healthcare, industrial, and science and technology.

Speaker Change: Now I'll turn to our results in each of our geographies.

Our U S business continues to perform well.

Living a 9% increase in net revenue from the third quarter, including five 6% organic and approximately 2% and acquisition growth.

Speaker Change: The public and private investments that we're seeing in the U S allowed all of our business operating units to achieve solid organic growth.

Speaker Change: Significant transit rail and road weight and residential development projects contributed to double digit organic growth in infrastructure.

Speaker Change: Water capitalize on continued robust public sector and industrial demands as well as large scale water security projects.

Speaker Change: Our buildings business saw continued strong demand across most sub sectors, including healthcare industrial and science and technology.

Gordon Johnston: In Canada, we grew our net revenue by almost 18%, with 9% organic growth and 8.5% acquisition growth. Each of our infrastructure, buildings, and water businesses experience double-digit organic growth. Our infrastructure team saw a significant ramp-up in work related to major roadway projects in western Canada, transit and rail projects in eastern Canada, and land development projects in Alberta. Our buildings business performed extremely well as they continued their leading work in health care. Civic and Educational. And our water business continues to outperform, working on major wastewater projects across the country. The ramp-up of a major power-intensive industrial project this quarter helped our Canadian energy and resources business return to growth.

Speaker Change: In Canada.

Speaker Change: We grew our net revenue by almost 18%.

Speaker Change: With 9% organic growth and eight 5% acquisition growth.

Speaker Change: Each of our infrastructure buildings and water businesses experienced double digit organic growth.

Speaker Change: Our infrastructure team saw significant ramp up in work related to major rubric projects in Western Canada trended.

Transit and rail projects in Eastern Canada, and land development projects in Alberta.

Speaker Change: Our buildings business performed extremely well.

Speaker Change: As they continued their leading work in healthcare.

Subic and education.

Speaker Change: And our water business continued to outperform.

We had a major wastewater projects across the country.

Speaker Change: The ramp up of a major power intensive industrial project. This quarter helped our Canadian energy and resources business returned to growth.

Gordon Johnston: Our global operations generated over 30% growth in net revenue, reflecting 22% acquisition and close to 6% organic growth. Our industry-leading water business saw strong organic growth across the UK, New Zealand, and Australia through long-term framework agreements and public sector investment in water infrastructure. buildings achieved 16% organic growth as we continue to ramp up on the cancer center in Dubai and on the four billion pound battery cell manufacturing facility in the UK. and our environmental services business continue to see strong organic growth from energy transition projects in Europe. Our Global Energy and Resources business, particularly in mining, saw a slight retraction again this quarter, offsetting growth in the U.S.

Speaker Change: Our global operations generated over 30% growth in net revenue.

Speaker Change: Select a 22% acquisition and close to 6% organic growth.

Speaker Change: Our industry, leading water business saw strong organic growth across the UK, New Zealand and Australia through long term framework agreements and public sector investment in water infrastructure.

Speaker Change: Buildings achieved 16% organic growth as we continued to ramp up on the cancer Center in Dubai and on the 4 billion pound battery cell manufacturing facility in the UK.

Speaker Change: And our environmental services business continued to see strong organic growth from energy transition projects in Europe.

Our global energy and resources business, particularly at mining saw a slight retraction again this quarter offsetting growth in the U S and Canada.

Gordon Johnston: and Canada.

Vito Culmone: Now I'll turn the call over to Vito to review our financial results in more detail.

Speaker Change: Now I will turn the call over to Vito to review our financial results in more detail.

Vito Culmone: Thank you, Gordon.

Vito: Thank you Gordon and good morning, everyone.

Vito Culmone: Good morning, everyone. The very strong results we delivered in Q3 continues our solid track record thus far for the 2024 fiscal year. Gross revenue in Q3 grew to $1.9 billion, up almost 14% year-over-year, and net revenue of $1.5 billion is up almost 16%. On a year-to-date basis, net revenue is approximately $4.4 billion, up almost 15% compared to last year at this time. As a percentage of net revenue, projects came in at 54.3 percent, a decrease of 50 basis points compared to Q3 of 2023, reflecting a minor shift in project mix and, as previously stated, project recoveries and change order approvals in 2023 that were higher than normal for a single quarter.

Vito: The very strong results, we delivered in Q3.

Vito: <unk>, our solid track record, thus far from the 2020 for fiscal year <unk>.

Vito: Gross revenue in Q3 grew to $1 9 billion.

Vito: Up almost 14% year over year and net revenue of one 5 billion is up almost 16%.

Vito: On a year to date basis net revenue was approximately $4 4 billion up almost 15% compared to last year at this time.

Vito: As a percentage of net revenue projects came in at 54, 3%.

Vito: A decrease of 50 basis points compared to Q3 of 2023.

Vito: Reflecting a minor shift in project mix and as previously stated.

Vito: <unk> recoveries in chart change order approvals in 2023 that were higher than normal for a single quarter.

Vito Culmone: As Gord mentioned, we achieved a very solid adjusted EBITDA margin of 18% in Q3. Our year-to-date EBITDA margin now stands at 16.7%. and our adjusted diluted EPS in the quarter increased 14% year-over-year to $1.30. This increase reflects strong operational performance, along with the revaluation impacts of our long-term incentive program due to strong share price appreciation in the prior period.

Speaker Change: As Gordon mentioned, we achieved a very solid adjusted EBITDA margin of 18% in Q3 or.

Speaker Change: Our year to date EBITDA margin now stands at 16, 7%.

Speaker Change: And our adjusted diluted EPS in the quarter increased 14% year over year to $1 30.

Speaker Change: This increase reflects strong operational performance along with the reevaluation impacts of our long term incentive program due to strong share price depreciation in the prior period.

Vito Culmone: turning to our cash flow, liquidity and capital resource During the first nine months of the year, we generated very strong cash flows, achieving $296 million in operating cash flow. This reflects continued strong organic revenue growth, partially offset by an increased investment in networking capital in support of organic revenue growth. DSO at the end of the quarter stood at 80 days, which is within our target range. And as a reminder, DSO is typically a little higher in the third quarter as a result of the seasonal impact. Our net debt to adjusted EBITDA ratio at quarter end was 1.5 times, a reduction from 1.7 times at the end of Q2, which reflects the free cash flow we generated in the quarter.

Speaker Change: Turning to our cash flow liquidity and capital resources.

Speaker Change: During the first nine months of the year, we generated very strong cash flows achieving $296 million in operating cash flow.

Speaker Change: This reflects continued strong organic revenue growth, partially offset by an increased investment in net working capital in support of organic revenue growth.

Speaker Change: DSO at the end of the quarter stood at 80 days, which is within our target range and as a reminder, dsos typically a little higher in the third quarter as a result of the seasonal impacts.

Speaker Change: Our net debt to adjusted EBITDA ratio at quarter end was one five times a reduction from one seven times at the end of Q2, which reflects the free cash flow we generated in the quarter.

Vito Culmone: We continue to remain well within our target range of 1 to 2 times, and the balance sheet is in great shape.

Speaker Change: We continue to remain well within our target range of one to two times and the balance sheet is in great shape.

Vito Culmone: Lastly, one technical accounting matter I wanted to speak to briefly. Our Q3 financial statements reflect adjustments emanating from clarifying guidance that the IFRS Interpretations Committee issued in April of this year. This guidance relates to how deferred acquisition consideration should be treated when it may also be contingent on the seller's continuing employment. Note three of our Q3 financial statements fully summarizes the accounting impacts resulting from the updated guidance. However, in a nutshell, the adjustments aggregate to a non-cash charge, reducing goodwill by approximately $310 million, and a reduction in our retained earnings by approximately the same amount.

Speaker Change: Lastly, one technical accounting matter I wanted to speak to briefly.

Speaker Change: Our Q3 financial statements reflect adjustments emanating from clarifying guidance that the IRS interpretations Committee issued in April of this year.

Speaker Change: This guidance relates to how deferred acquisition consideration should be treated when it may also be contingent on the southern continuing unemployment.

Speaker Change: Note three of our Q3 financial statements fully summarized as the accounting impact, resulting from the updated guidance. However in a nutshell the adjustments aggregate to a non cash charge, reducing goodwill by approximately $310 million and a reduction and a reduction in our retained earnings by approximately the same amount.

Vito Culmone: I will highlight that this reduction was not in any way related to operating performance, but rather to how the terms of our past agreements were documented. And we do not anticipate future impacts from this updated interpretation.

Speaker Change: I will highlight that this reduction was not in any way related to operating performance, but rather to how the terms of our past agreements were documented.

Speaker Change: And we do not anticipate future impacts from this updated interpretation.

Vito Culmone: Before handing the call back to Gord, with this being my first earnings call here at Stantec, I just wanted to share how excited I am to be here. It's a true privilege to join you, Gord, my executive colleagues, a strong finance team, and the rest of Stantec's over 32,000 employees. In my short time here, it's abundantly obvious to me that Stantec has truly built something special, and with that comes significant value creation opportunities for years to come.

Before handing the call back to Gordon with this being my first earnings call here at Symantec I just wanted to share how excited I am to be here and it's a true privilege to join <unk> Board My executive colleagues, a strong finance team and the rest of 10th Centex over 32000 employees.

Speaker Change: In my short time here, it's abundantly obvious to me that <unk> has truly build something special and with that comes significant value creation opportunities for years to come.

Gordon Johnston: Gordon, I'll hand the call back to you.

Speaker Change: I'll now hand, the call back to you.

Gordon Johnston: Great thanks, Vito. At the end of the third quarter, our backlog reached a record-setting $7.3 billion. Since December 2023, this represents 9.5% acquisition and almost 5% organic growth, which was achieved across all of our regions.

Speaker Change: Great. Thank you.

At the end of the third quarter, our backlog reached a record setting seven 3 billion.

Speaker Change: Since December of 2023, this represents nine 5% acquisition and almost 5% organic growth, which was achieved across all of our regions.

Gordon Johnston: Backlog traditionally declines in the third quarter, as we've burned through a significant amount of work. However, this year, despite our strong revenues, we've seen an increase in backlog sequentially from Q2, which really highlights the demand for our services. Our backlog represents approximately 12 months' work.

Speaker Change: Backlog traditionally declines in the third quarter as we burned through a significant amount of work.

Speaker Change: However, this year. Despite our strong revenues, we have seen an increase in backlog sequentially from Q2, which really highlights the demand for our services.

Speaker Change: Our backlog represents approximately 12 months work.

Gordon Johnston: Let me now highlight just some of the major projects we were awarded in Q3. First, I'll note that in the UK, we continue to secure our future workload related to AMPE in the regulated water business. During the quarter, we received a significant win with Northern Ireland Water to provide feasibility, design, and climate change services for the next regulatory cycle. In addition, we continue to secure additional APEC 8 frameworks across the UK, with significant contracts being won with both Thames Water and United Utilities over the last quarter. This brings the total number of amphibious frameworks secured across the UK and Ireland to over 20.

Speaker Change: Let me let me now highlight just some of the major projects we were awarded in Q3.

First I'll note that in the U K, we continue to secure our future workload related to Amp, Inc. In the regulated water business.

Speaker Change: During the quarter, we received a significant win was northern Ireland water to provide feasibility design and climate change services for the next regulatory cycle.

Speaker Change: In addition, we continued to secure additional amping eight frameworks across the U K with significant contracts being won with both Thames water and United utilities over the last quarter.

This brings the total number of Abbvie framework secured across the UK and Ireland, so over 2000 <unk>.

Gordon Johnston: strengthening our position as the leading water firm in the UK and securing our market share in regulated water.

Strengthening our position as a leading water for me in the U K and securing our market share in regulated water.

Gordon Johnston: Second, between community development and buildings, we've been awarded an MSA to assist a confidential data center client in selecting sites and providing design services for multiple data center campuses across Western Canada. In terms of scale, each site will equate to hundreds of megawatts. While data centers currently only account for 1 to 2% of our overall net revenue, it is one of the fastest growing areas within our buildings business. And given our strong expertise in the space, we see this business potentially tripling within just a couple of years.

Speaker Change: Second between community development and buildings, we've been awarded an MSA to assistant confidential data datacenter client and selecting sites.

Speaker Change: And providing dike design services for multiple data center campuses across Western Canada.

Speaker Change: In terms of scale each site will equate to hundreds of megawatts.

Speaker Change: While data centers currently only account for 1% to 2% of our overall net revenue. It is one of the fastest growing areas within our buildings business.

Speaker Change: And given our strong expertise in this space, we see this business potentially tripling within just a couple of years.

Gordon Johnston: Lastly, I'm pleased to highlight that we've just won our third master services agreement with WUMA Energy in Puerto Rico. This MSA is part of a Federal Emergency Management Agency-funded effort to continue to rebuild and strengthen the electrical grid in Puerto Rico following major hurricanes. We've done a lot of work with LUMO over the past few years, and over the next three years, this new MSA will allow Stantec's teams to continue engineering and grid reconstruction designs and upgrades to aging infrastructure, including multiple transmission lines, distribution feeders, and substations.

Lastly, I'm pleased to highlight that we just want our third Master services agreement with <unk> energy in Puerto Rico.

Speaker Change: This MSA as part of our Federal Emergency management agency funded effort to continue to rebuild and strengthen the electrical grid in Puerto Rico following major hurricanes.

Speaker Change: We've done a lot of work with newmont over the past few years and over the next three years. This new MSA will allow centex teams to continue engineering and grid reconstruction designs and upgrades to ageing infrastructure, including multiple transmission lines distribution feeders and substations.

Gordon Johnston: And now, turning to our guide. Based on our strong performance in Q3 and outlook for Q4, we're expecting 2024 to be another record-setting year. With that, we're raising certain targets in our guidance and narrowing some ranges further. We're increasing the bottom end of our net revenue range for the year to 14.5% to 15%, up from 12% to 15%. We remain confident with our expectations of organic net revenue growth being in the mid to high single digits and acquisition growth being in the high single digits. In addition, we continue to expect the U.S. and global regions to deliver organic growth in the mid to high single digits and Canada to be in the mid single digits.

Speaker Change: And now turning to our guidance.

Speaker Change: Based on our strong performance in Q3 and outlook for Q4, we're expecting 2024 to be another record setting year.

Speaker Change: With that we are raising certain targets and our guidance and narrowing some ranges.

Speaker Change: We're increasing the bottom end of our net revenue range for the year for the year for 2014, 5% to 15% up from 12% to 15%.

Speaker Change: We remain confident with our expectations of organic net revenue growth being in the mid to high single digits and acquisition growth being in the high single digits.

Speaker Change: In addition, we continue to expect the U S and global regions to deliver organic growth in the mid to high single digits and Canada to be in the mid single digits.

We maintain our target for adjusted EBITDA margin for the year to $16 five to 16, 9%.

Which reflects our continued confidence in solid project execution and operational performance.

Speaker Change: With our increased expectations for net revenue growth. We now expect adjusted diluted EPS growth to be in the range of 16% to 18% up from 12% to 16% and our adjusted ROIC to be above 12%.

Gordon Johnston: 2024 is shaping up to be another record-setting year for Stantec, which puts us in a great position to continue to successfully execute on our 2024 to 2026 strategic plan. The demand fundamentals for our business remain strong, and I'm excited for what's to come in 2025 and beyond.

Speaker Change: 2024 is shaping up to be another record setting year for center, which puts us in a great position to continue to successfully execute on our 2024 to 2026 strategic plan.

Speaker Change: The demand fundamentals for our business remains strong and I'm excited for what's to come in 2025 and beyond.

Operator: And with that, I'll turn the call back to the operator for questions.

Speaker Change: And with that I'll turn the call back to the operator for questions operator.

Operator: Operator? Thank you.

Speaker Change: Thank you at this time, we will conduct a question answer session to ask a question you will need to press star one wondering if telephone and wait for your name to be enough.

Operator: At this time, we will conduct a question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Speaker Change: To withdraw your question. Please press star one again, please standby alloy composite Q&A roster.

Benoit Poirier: Our first question comes from the line of Benoit Poirier of Disjardins.

Our first question comes from the line of Ben Locke Korea Discharging. Your line is now open.

Benoit Poirier: Your line is now open. Yes, thank you very much. Good morning, everyone. Congrats for the results and welcome to the Stantec team, Vito.

Speaker Change: Yes. Thank you very much good morning, everyone. Congrats for the results and welcome to the <unk> team veto.

Speaker Change: Thank you Betty.

Speaker Change: Yes.

Speaker Change: In terms of organic growth, obviously very strong performance during the quarter, especially from water and building that reported the double digit.

Speaker Change: Any thoughts about the double digit sustainability for dose two segments and also if you could comment about energy and resources.

Gordon Johnston: And also if you could comment about the energy and resources, obviously you experienced some delays in the ramp up of new projects and the wind down of some projects late in 2023. So just wondering what we could expect in the coming quarter for this segment.

Speaker Change: Obviously, you experienced some delays in the ramp up of new projects and the wind down of some projects late in 2023. So just wondering what we could expect in the coming quarter for this segment. Thank you.

Gordon Johnston: Thank you. Yeah, thanks, Benoit. You know, for water and buildings, you know, we see really strong tailwinds for both of them. You know, certainly our water franchise, extremely busy here in Canada, the US, Australia, New Zealand with the framework agreements there. And as we've mentioned, we've now won over 20 AMBAE frameworks in the UK and Ireland. So very, very strong growth going forward for the next couple years there. You know, buildings is another interesting one for us. You know, we all look at the ABI index and 20 quarters of success of, you know, performance below 50, but yet for us, you can see, you know, the strong organic growth that we've had in buildings, you know, for the last couple of years, you know, 11, just a little over 11% year to date for us here now.

Speaker Change: Yes, Thanks Pamela.

For water and buildings.

Speaker Change: See really strong tailwind for both of them certainly our water franchise extremely busy here in Canada and the U S.

Speaker Change: Australia, New Zealand with with the framework agreements there and as we've mentioned we've now won over 20 and base frameworks in the UK and Ireland. So very very strong growth going forward for the next couple of years there.

Speaker Change: Buildings is another interesting one for US we all look at the the Abi index in 20 quarters of successive performance below 50, but again for US you can see the strong organic growth that we've had in buildings.

The last couple of years.

Speaker Change: Just a little over 11% year to date for US here now so we see good continued growth in the in the building section.

Gordon Johnston: So we see good continued growth in the building section.

Gordon Johnston: So to your comment on E&R, you're right. We've come off, you know, last year, you know, every quarter that we had in E&R in 2023 was, you know, pretty strong, particularly in the first part of the year. So, you know, we have seen some, so in Q3, Canada and the US, we both had some positive net revenue growth there, but it really was the global mining business that pulled things down a little bit. So I think what we see is that we're still confident that we're going to return to organic growth in E&R in Q4, just as an aside, the backlog in our energy and resources group is up about 9% year to date.

Speaker Change: To your comment on Anr Youre right, we've come off.

Speaker Change: Last year ever.

Speaker Change: Every quarter that we had in <unk> in 2023 was pretty strong, particularly in the first part of the year. So.

Speaker Change: We have seen some.

Speaker Change: So in Q3, Canada and the U S. We both had some some positive net revenue growth there, but it really was the global mining business that pulled things down a little bit. So I think what we see is that.

Speaker Change: We're still confident that we're going to return to organic growth in <unk> in Q4.

Speaker Change: Just as an aside the backlog in our energy and resources group is up about 9% year to date. So it really kind of supports that thesis of returning to backlog growth here in Q4, and certainly stronger performance going into 2025, yes, definitely an improving trend in Europe.

Gordon Johnston: So that really kind of supports that thesis of returning to backlog growth here in Q4 and certainly stronger performance going into 2025. Yeah, definitely an improving trend. Yeah.

Benoit Poirier: Okay, that's great caller. And just with respect to the margin, a little bit down versus a year ago, even if you normalize with LTIPS, I'm looking at the admin and marketing expenses, percentage was up slightly versus a year ago. Is it just a matter of LTIPS? Or is there more cost to support the strong bidding activity that you see out there? Benoit, you're absolutely right. As a percentage of NR23 admin was 37.5% this year versus 37.3%, so up a little bit. That does reflect some benefit, actually, we had. Last year, the share-based compensation would have been a headwind, again, because we had share price appreciation.

Speaker Change: Okay, that's great color and just with respect to the margin.

Speaker Change: It'll be down versus a year ago, even if you normalize with <unk> looking at admin and marketing expenses percentage was up slightly.

Speaker Change: Versus a year ago is it just a matter of Lcs or.

Speaker Change: There are more costs to support the strong bidding activities that you see out there.

Speaker Change: But no youre, absolutely right as a percentage of of NR Q3, Admin was 37, 5% this year versus 37, 3%, so up a little bit.

Speaker Change: It does reflect some benefit actually we had last year the share based compensation would have been a headwind.

Speaker Change: Because we had share price depreciation this year was fairly neutral so when you adjust for that.

Vito Culmone: This year was fairly neutral. So, when you adjust for that, you do have a bit more of an increase relative to what we're showing in the externals. And what that reflects really is labor, training and integration with respect to some of the acquisitions, which is normal, all within our expectations. We've got some slightly lower utilization as we move staff off over some major projects coming out of last year into this year. But all very much within our expectations. And we really are, as we look into Q4 and into 2025, pleased with the progress against that.

Speaker Change: You do have a bit more of a.

Speaker Change: The increase relative to what we're showing in the externals and what that reflects really is.

Speaker Change: Labor.

Training and integration with respect to some of the acquisitions and which is normal all within our expectations. We've got some slightly lower utilization as we move staff off over some major projects coming out of last year into this year.

Speaker Change: But all of them very much within our expectations and we really are as we look into Q4 and into 2025 pleased with the progress against that.

Benoit Poirier: That's a great caller. I'll pass it over.

Speaker Change: That's great color I'll pass it over thank you.

Thank you.

Speaker Change: Thank you one moment for our next question.

Jacob Bout: Our next question comes from Jacob Bout of CIBC. Your line is now open. Good morning. Yeah, looking for maybe your thoughts around the election results. I know the view seems to be the Trump administration would be supportive of the IAJ and CHIPS Act, but we could see some changes to the IRA program and USAID. You know, what are your thoughts and any adjustments that you think you'll have to make?

Speaker Change: Our next question comes from the line of Jacob bout CIBC. Your line is now open.

Jacob Bout: Good morning.

Jacob Bout: Yes looking for.

Jacob Bout: Maybe your thoughts around the election results.

Jacob Bout: I know the view seems to be the Trump administration will be supportive of a chip socs, but that we could see some changes to the eyrie program and USAID.

Jacob Bout: What are your thoughts and any adjustments.

Speaker Change: I think youll have to make.

Gordon Johnston: You know, I think as we were, we've been thinking over the last year or so, what a change in administration, either change or same administration in the U.S. might look like for our business and our industry overall, you know, I think in general, we feel, you know, pretty, pretty neutral about whichever firm was in there. We've, we've been around a long time, performed well under, you know, Republican presidents and Democratic presidents. So, you know, to your point, I think IAJ is good. I think chips and science is good. Even IRA, you know, the majority of that funding has been dispersed to Republican states.

Speaker Change: I think as we were we've been thinking over the last year or so.

Speaker Change: And the change in administration interchange, we're seeing the administration in the U S might look like for our business and our industry. Overall I think in general we feel pretty pretty neutral about whichever firm was in there. We've we've been around a long time performed well under Republican President and Democratic President So to your point I think.

Speaker Change: IAG is good I think chips in science is good even IRA the majority of that funding has been disbursed to Republican States. So will there be a pullback there.

Gordon Johnston: So, you know, will there be a pullback there? Hard, hard to say, Jacob, but, you know, if there, if President Trump might bring tariffs in, certainly that might bring some, some onshoring and manufacturing facilities back. And we've actually already had some manufacturing clients calling us asking about siting and design should, you know, should that occur.

Jacob Bout: To say Jacob but.

Jacob Bout: If there if president Trump might bring tariffs in certainly that might bring some some onshoring of manufacturing facilities back and we've actually already had some manufacturing clients, calling us asking about siding and design should should that occur. So we actually feel pretty positive about the the.

Gordon Johnston: So, you know, we actually feel pretty positive about the, the economic opportunities for us going forward.

Jacob Bout: Opportunities for us going forward.

Gordon Johnston: Okay, and then maybe just going back to the investor day that we had last December. You're talking in a 26 net revenue of $7.5 billion and EBITDA margins of 17 to 18%. Does that feel about right? I mean, you know, you're taking up your revenue guidance here, or at least a midpoint. Does it feel like it's a bit more on the conservative side? Or how do you think? I think we still feel really comfortable with that, Jacob. You know, recall that was 50% net revenue growth in a three-year period of time. And so, you know, we're performing well.

Speaker Change: Okay, and then maybe just going back to the Investor day that we had last December.

Speaker Change: Youre talking in 2006 net revenue of $7 5 billion in EBITDA margin, so that 17% to 18%.

Speaker Change: Does that feel about right.

Taking up your revenue guidance here.

Speaker Change: Or at least the midpoint.

Speaker Change: Does it feel like it's a bit more on the conservative side or how are you thinking about costs.

Speaker Change: I think we still feel really comfortable with that.

Jacob you recall that was 50% net revenue growth in the three year period of time and so we're performing well. This year, we see that continued performance, but we're not putting out any changes to that guidance at this point, yes, yes, Jacob on the margin side of things. Obviously, we are pleased with our year to date EBIT margin I think.

Gordon Johnston: This year, we see that continued performance. But yeah, we're not putting out any changes to that guidance at this point. Yeah.

Vito Culmone: Yeah, Jacob, on the margin side of things, obviously, we're pleased with our year-to-date EBITDA margin. I think we delivered a strong Q3 here, feel good about where we're tracking on a full-year basis. We'll obviously provide 2025 color here with our year-end results in February and feel very confident that we can step into that 17-18% range. And then we'll take it from there, quite frankly.

Speaker Change: We delivered a strong Q3 here feel good about where we're tracking on a full year basis, we'll obviously provide 2025 color here with our year end results in February.

Speaker Change: And feel very confident that we can step into that 17% to 18% range.

Speaker Change: And then we'll take it from there quite frankly, I think there is lots of opportunity.

Jacob Bout: I think there's lots of opportunity. Thanks a lot.

Speaker Change: Excellent. Thank you.

Operator: Thank you. We'll move on to our next question.

Speaker Change: Thank you for our next question.

Frederic Bernstein: Our next question comes from the line of Frederic Bernstein of Raymond James. Your line is now open. Good morning. I hope everyone's well. I just wanted to switch gears on M&A and Gord, wondering if your pipeline is as busy or healthy as it was 12 months ago?

Speaker Change: Our next question comes from the line of Patrick Bernstein of Raymond James Your line is now open.

Good morning, Alright, I hope everyone's well.

Speaker Change: Just wanted to switch gears on M&A and.

Speaker Change: Gordon wondering if your pipeline is as busy are healthy as it was 12 months ago.

Gordon Johnston: Yeah, yeah. Thanks, Frederic.

Speaker Change: Yes, Thanks, Patrick Great. Great question, we actually do see the pipeline of M&A very full not just here in Canada, and the United States, but also in different countries around the world.

Gordon Johnston: Great, great question. We actually do see the pipeline of M&A very full, not just here in Canada and the United States, but also in different countries around the world. And all sorts of different sizes from, you know, that sub-1000 firm size to, you know, some that are a little bit larger than that. So, you know, we feel really good about the overall pipeline. We're still feeling good about the competitive environment, as we would see out there in various processes. So no change to our M&A thoughts, no change to sort of what we're seeing out there in terms of competition or the amount of firms available.

Speaker Change: And all sorts of different sizes from.

Speaker Change: At sub 1000 firms size to some that are a little bit larger than that so we feel really good about the overall pipeline, we're still feeling good about the competitive environment as <unk> would see out there in various processes. So.

Speaker Change: No change to our M&A.

Speaker Change: Thoughts no change to sort of what we're seeing out there in terms of competition or the amount of firms available.

Gordon Johnston: Okay, and when you think about adding new building blocks, I guess you mentioned a number of regions, but is there a specific end market where you would like to bolster your presence? Yeah, you know, I think we still have some opportunities for some tuck-ins here in Canada. But as I look at the US, I absolutely see the opportunity to even double our size in the US. UK, you know, we still have great opportunity to expand there while we're dominant in water. We're not dominant in some of the other areas that we have, buildings, transportation, and so on.

Speaker Change: Okay, and then when you think about adding new building blocks and so I guess you mentioned a number of regions, but there is there a specific end market.

Speaker Change: You would like to bolster your presence.

Speaker Change: Yes, I think we still have some opportunities for some tuck ins here in Canada.

Speaker Change: But as I look at the U S.

Speaker Change: Absolutely see the opportunity to do even double our size in the U S.

Speaker Change: UK, we still have great opportunities to expand there while we're dominant in water where non dominant in some of the other areas that we have buildings transportation and so on we've spoken previously about the Nordics I still would be interested in doing the right deal up in the Nordics and we're looking down in Australia, New Zealand, a little bit as well, but but really focusing.

Gordon Johnston: You know, we've spoken previously about the Nordics. I still would be interested in doing the right deal up in the Nordics. And we're looking down in Australia and New Zealand a little bit as well. But really focusing on a little bit Canada, the US, UK, Nordics, and then a little bit down Australia and New Zealand.

Speaker Change: On little bit Canada, the U S.

U K Nordics, and then a little bit down Australia, New Zealand.

Vito Culmone: for me to chime in, you know, as the new guy, we've been on the road a little bit, and I do get questions around capital structure and our perspectives on M&A. And I just want to reiterate what Gordon has already articulated here. Historically, M&A has been one of the biggest sources of our value creation, and we continue to see significant opportunities. We remain disciplined. Balance sheet's in great shape. We continue to be here through Q4, and it's an early part of the year, but significant growth ahead of us through the M&A channel.

Speaker Change: Greg maybe just happy to temporary decline Bermuda chime in is that you guys did.

We've been on the road, a little bit and I do get questions around capital structure, and our perspectives on M&A and I just want to reiterate what God has already articulated here historically M&A has been one of the biggest sources of our value creation and we continue to see significant opportunities that will obviously remain disciplined balance sheets in great shape and continue to dig deeper.

Through Q4 into early part of the year.

Speaker Change: But.

Speaker Change: Significant growth ahead of us for best through the M&A channel.

Frederic Bernstein: Thank you both and welcome, Vito. Thank you.

Thank you both and welcome Peter.

Speaker Change: Thank you.

Speaker Change: Thank you for our next question.

Maxim Sytchev: Our next question comes from the line of Maxim Sytchev of MBS. Your line is now open. I was wondering if you could comment around the UK market in general. It feels like there's a bit of a turning of the page on kind of austerity dynamic. I'm curious to see if and how that could translate for your business in the job.

Our next question comes from the line of Mexicans to shift of MBS. Your line is now open.

Speaker Change: Okay.

Speaker Change: But I was wondering if potentially could comment.

Speaker Change: Round, the UK market in general it feels like there is.

Speaker Change: A bit of a turning of the page on kind of austerity dynamic I'm curious to see if and how that could translate to for your business in that geography.

Gordon Johnston: Yeah, thanks, Max. Certainly in the UK, you know, we've talked a lot about the ambate cycle, and certainly we're transitioning to that. It officially starts in April of 2025. The final ruling from OCWOD as to the size of the ambate program is expected here in December. But, you know, as we've talked about before, all indications are a 40 to a 50% increase in funding availability. You know, I mentioned that we've, you know, we've secured over 20 new, you know, renewals or new AMP frameworks there. So we've been, you know, growing by market share a little bit in addition to securing the existing.

Speaker Change: Yes, Thanks, Max certainly in the U K, we've talked a lot about the abbvie cycle.

Speaker Change: And certainly we're transitioning to that it officially starts in April of 2025, the final ruling from offline as to the size of the <unk> program is expected here in December but as we've talked about before all indications are up 40% to 50% increase in funding availability I mentioned that we've we've secured.

Speaker Change: Over 20.

Speaker Change: New renewals, our new App framework there so.

Speaker Change: Growing by a market share a little bit in addition to securing the existing so water is really really strong we've already taken some additional real estate space. There were hiring people, they're scaling up our Pune, India operation is already there for that.

Gordon Johnston: So water is really, really strong. We've already taken some additional real estate space there. We're hiring people there, scaling up our Pune India operations already there for that.

Gordon Johnston: You know, from a housing perspective, you know, the new labor government has talked about, you know, reducing some of the regulatory burden on the permitting side and getting more new houses built up to 1.5 million new houses. We've mentioned, I think, previously that we have a four-year master services agreement with Homes England to support that. So, you know, maybe it does feel like some of those things are all really positive tailwinds for us in the UK.

Speaker Change: From a housing perspective those.

Speaker Change: The new Labour government has talked about.

Speaker Change: Reducing some of the regulatory burden on the permitting side and getting more and more new houses built up to $1 5 million New houses. We've mentioned I think previously that we have a four year Master services agreement with homes, England to support that so.

Speaker Change: Maybe it does feel like some of those things are all really positive tailwind for us in the UK.

Maxim Sytchev: Thank you so much.

Speaker Change: Okay.

Maxim Sytchev: And then just shifting gears to, I think, in the past couple of quarters, you said that, you know, recent M&A, sort of in the short term is constraining the margins somewhat.

Speaker Change: Thanks, So much and then just shifting gears to I think in the past couple of quarters. He said that.

Recent M&A sort of in the short term is constraining the margins somewhat I was just wondering if you can maybe provide an update.

Vito Culmone: And I'm just wondering if you can maybe provide an update, you know, here, and potentially link it to, you know, some of the design center opportunity that, you know, could be coming through. Yeah.

Speaker Change: Here and potentially linked to some of the design center opportunity that could be.

Speaker Change: Coming through.

Thanks.

Vito Culmone: Yeah, Max, it's Vito here. You know, honestly, from an acquisitions perspective and the integration, we're very, very pleased with the floor that we're integrating at this point. We've got our normal sort of impact related to that, but nothing to call out. Really pleased with the margins, really pleased with how admin costs are performing as a percentage of NR. So really, I think it provides a bit of a tailwind as we move through Q4 into 2025, but nothing really abnormal relative to other acquisitions we've had to call out all in order.

Speaker Change: Yes, Max its Vito here.

Speaker Change: Honestly.

Speaker Change: From an acquisitions perspective, and the integration, we're very very pleased with the four that were.

Speaker Change: Integrating at this point, we've got our normal sort of impact related to that but nothing to call out.

Speaker Change: Really pleased with the margins really pleased with how admin costs are performing as a percentage of NR. So really I think it provides a bit of a tailwind as we move through Q4 and into.

Speaker Change: 2025, but nothing really abnormal relative to other acquisitions we've had.

Speaker Change: To call out all the it all in order.

Maxim Sytchev: Okay, that's great. Thanks a lot, Vito. Yep, I believe you're...

Speaker Change: Okay. That's great. Thanks, a lot Peter.

Speaker Change: Yes, my pleasure.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you next question.

Jonathan Goldman: Our next question comes from the line of Jonathan Goldman of Scotiabank. Your line is now open. Hi, good morning and thanks for taking my questions, just one from me. I wanted to circle back to the question around the potential impacts of the recent elections. Gordon, has that changed your outlook for the water franchise in the U.S. and specifically the potential funding allocated to the PFAS renewal work and other water input programs? There is some funding for water program enhancement in the IIJA, and certainly that's there. Will there be changes to either PFAS regulatory limits or timeframes for work to be done?

Speaker Change: Our next question comes from the line of Jonathan Goldman from Scotiabank. Your line is now open.

Speaker Change: Hi, good morning, and thanks for taking my questions. Just one for me I wanted to circle back to the question around the potential impacts of the recent elections.

Speaker Change: Or does that change your outlook for the water franchise in the U S and specifically the potential funding allocated to the <unk> renewal work and other water and for programs.

Speaker Change: Yes.

Speaker Change: There is some funding for.

Speaker Change: For water program enhancement in the Iga and certainly that's there.

Speaker Change: There would be changes too.

Speaker Change: <unk> regulatory limits or Timeframes for.

Speaker Change: For work to be done all remains to be seen but what we've done and some of that work in the industry is starting to ramp up for that work that still has a couple of years down down down the road, so whether or not there is a change means that I don't see causing any impact on our on our water business in the next number of years huge amount of opportunity.

Gordon Johnston: All remains to be seen. But while we've done some of that work, and the industry is starting to wrap up for that work, that still is a couple of years down the road. So whether or not there's a change made to that, I don't see causing any impact on our water business in the next number of years.

Jonathan Goldman: Huge amount of opportunities still in water related to scarcity of water, Southern California, Southwestern US in general, flooding work in a number of the projects that we're doing in Texas and other areas. So there's just so much opportunity there, in addition to the number of advanced water and wastewater treatment that we're seeing with some of these new manufacturing facilities that are going in, whether they're semiconductors, solar panel manufacturing, and others. So no, I think really any impact from the election on our water business will be really muted. That's great color. Thanks. I'll get back in queue.

Speaker Change: Still in water related to <unk>.

Speaker Change: Scarcity of water Southern California, some western U S in general.

Speaker Change: Flooding work in a number of the projects that we're doing in Texas and other areas.

Speaker Change: So there's just so much opportunity there in addition to the number of advanced.

Speaker Change: Wastewater and wastewater treatment that we're seeing with some of these new manufacturing facilities are going and whether theres semiconductor solar panel manufacturing and others. So I think really any impact from from the election on our water business will be really muted.

Speaker Change: That's great color, thanks, I'll get back in queue.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you I'm showing no further questions at this time I would now like to hand back to core Johnston for closing remarks.

Operator: I'm showing no further questions at this time.

Gordon Johnston: I would now like to turn it back to Gordon Johnston for closing remarks. Well, thank you, operator. And thank you to everyone for joining us this morning. If you have any questions following today's call, please reach out to Jess Newkirk, our VP of Investor Relations. So thanks again, and we look forward to chatting with all of you again soon. Thank you for your participation in today's conference.

Speaker Change: Yes.

Okay, well, thank you operator, and thank you to everyone for joining us. This morning. If you have any questions. Following today's call. Please reach out to ingest newkirk, our VP of Investor Relations. So thanks, again, and we look forward to chatting with all of you again soon.

Speaker Change: Thank you for your presentation in today's conference. This does conclude the program you may now disconnect.

Operator: This does conclude the program. You may now disconnect.

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Operator: Thanks for watching!

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Operator: Welcome to Stantec's third quarter 2024 results webcast and conference call.

Speaker Change: Welcome to <unk> third quarter 2024 results webcast and conference call, leading the call today are Gordon Johnson, President and Chief Executive Officer Officer, and Peter Kumar Executive Vice President and Chief Financial Officer.

Operator: Leading the call today are Gordon Johnston, President and Chief Executive Officer, and Vito Culmone, Executive Vice President and Chief Financial Officer.

Operator: Stantec invites those dialing in to view the slides presentation, which is available in the investors section at stantec.com. Today's call is also webcast.

Speaker Change: <unk> dialing in to view the slide presentation, which is available in the investors section at <unk> Dot Com. Today's call is also webcast. Please be advised that if you have dialed in but also viewing the webcast you shouldn't compare as there's a delay between the call and the webcast.

Operator: Please be advised that if you have dialed in while also viewing the webcast, you should reconfigure as there is a delay between the call and the webcast.

Operator: All information provided during this conference call is subject to forward-looking statements, qualifications set out on Slide 2, detailed in Stantec's Management Discussion 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.

Speaker Change: All information provided during this conference call is subject to forward looking statement qualification set out replied to detailed authentic management discussing and assets and integrated in full for the purposes of today's call.

Speaker Change: Yes, otherwise noted dollar amounts discussed in today's call are expecting Canadian dollars and are generally rounded with that I'm pleased to turn the call over to Mr. Cor Jonathan.

Gordon Johnston: With that, I'm pleased to turn the call over to Mr. Gordon Johnston.

Speaker Change: Good morning, and thank you for joining us today.

Speaker Change: Im happy to report very solid third quarter results as we delivered another record quarter.

We continue to see strong demand in all of our geographies and across our business operating units.

Climate change aging infrastructure industry shifts reassuring and production and incremental and breakthrough technologies all continue to drive this demand.

We achieved record net revenue of $1 5 billion up almost 16% compared to Q3 2023.

Speaker Change: This was generated was six 5% organic and almost 8% acquisition growth.

Speaker Change: We delivered solid organic growth in each of our key geographies and we had organic growth in each of our business operating units with the exception of energy and resources.

Gordon Johnston: Our water and buildings businesses both realize double-digit organic growth. As a result of solid project execution, adjusted EBITDA for the quarter rose to $275 million, up almost 14%, with a very healthy margin of 18%, and we delivered adjusted EPS of $1.30, also up 14%.

Speaker Change: Our water and buildings businesses, both realized double digit organic growth.

Speaker Change: As a result of solid project execution adjusted EBITDA for the quarter Rose to 275 billion.

Speaker Change: Up almost 14% with a very healthy margin of 18% and we delivered adjusted EPS of $1 30 centers.

Speaker Change: So up 14%.

Speaker Change: In addition to our record results I want to highlight a recent accolades <unk> received.

Speaker Change: <unk> recently released their list of candidates.

Speaker Change: Sponsored companies for 2025 mm.

Speaker Change: I am very pleased to announce that stand deck was ranked number one for our commitment to climate, social welfare and responsible governance.

Speaker Change: Over 700.

Speaker Change: As largest private and public companies were evaluated at over 30 key performance indicators.

Speaker Change: And those results were coupled with a corporate social responsibility reputation survey of over 4000 Canadian consumers.

Speaker Change: The final rankings list included only 150 companies, where <unk> achieved the highest score and was the only firm in the rankings to achieve a score of 100 related to governance.

Gordon Johnston: We're honored to be recognized by organizations like Newsweek for our leadership and sustainability and for making a positive impact on society.

Speaker Change: We're honored to be recognized by organizations like Newsweek for our leadership in sustainability and for making a positive impact on society.

Gordon Johnston: Now I'll turn to our results in each of our geographies. Our U.S. business continues to perform well, delivering a 9% increase in net revenue from the third quarter, including 5.6% organic and approximately 2% acquisition growth. The public and private investments that we're seeing in the U.S. allowed all of our business operating units to achieve solid organic growth. significant transit, rail and roadway, and residential development projects contributed to double-digit organic growth and infrastructure. water capitalized on continued robust public sector industrial demands as well as large-scale water security projects. Our buildings business saw continued strong demand across most subsectors, including healthcare, industrial, and science and technology.

Speaker Change: Now I'll turn to our results in each of our geographies.

Speaker Change: Our U S business continues to perform well delivering a 9% increase in net revenue for the third quarter, including five 6% organic and approximately 2% acquisition growth.

The public and private investments that we're seeing in the U S allowed all of our business operating units to achieve solid organic growth.

Significant transit rail and roadway and residential development projects contributed to double digit organic growth in infrastructure.

Speaker Change: Water capitalize on continued robust public sector and industrial demands as well as large scale water security projects.

Speaker Change: Our buildings business saw continued strong demand across most sub sectors, including healthcare industrial and science and technology.

Gordon Johnston: In Canada, we grew our net revenue by almost 18%, with 9% organic growth and 8.5% acquisition growth. Each of our infrastructure, buildings, and water businesses experience double-digit organic growth. Our infrastructure team saw a significant ramp-up in work related to major roadway projects in western Canada, transit and rail projects in eastern Canada, and land development projects in Alberta. Our buildings business performed extremely well as they continued their leading work in health care. Civic and Education. And our water business continues to outperform, working on major wastewater projects across the country. The ramp-up of a major power-intensive industrial project this quarter helped our Canadian energy and resources business return to growth.

Speaker Change: In Canada.

Speaker Change: We grew our net revenue by almost 18%.

Speaker Change: With 9% organic growth and eight 5% acquisition growth.

Speaker Change: Each of our infrastructure buildings and water businesses experienced double digit organic growth.

Speaker Change: Our infrastructure team saw significant ramp up in work related to major Aruba projects in Western Canada Transit and rail projects in Eastern Canada, and land development projects in Alberta.

Speaker Change: Our buildings business performed extremely well as they continue their leading work in health care.

Speaker Change: Subic and education.

Speaker Change: And our water business continued to outperform working on major wastewater projects across the country.

Speaker Change: The ramp up of a major power intensive industrial project. This quarter helped our Canadian energy and resources business returned to growth.

Gordon Johnston: Our global operations generated over 30% growth and net revenue, reflecting 22% acquisition and close to 6% organic growth. Our industry-leading water business saw strong organic growth across the UK, New Zealand, and Australia through long-term framework agreements and public sector investment in water infrastructure. buildings achieved 16% organic growth as we continue to ramp up on the cancer center in Dubai and on the four billion pound battery cell manufacturing facility in the UK. and our environmental services business continue to see strong organic growth from energy transition projects in Europe. Our global energy and resources business, particularly in mining, saw a slight retraction again this quarter, offsetting growth in the U.S.

Speaker Change: Our global operations generated over 30% growth in net revenue, reflecting 22% acquisition included a 6% organic growth.

Speaker Change: Our industry, leading water business saw strong organic growth across the UK, New Zealand and Australia.

Speaker Change: Through long term framework agreements and public sector investment in water infrastructure.

Speaker Change: Buildings achieved 16% organic growth as work continued to ramp up on the cancer Center in Dubai and on the 4 billion pound battery cell manufacturing facility in the UK.

Speaker Change: And our environmental services business continued to see strong organic growth from energy transition projects in Europe.

Speaker Change: Our global energy and resources business, particularly in mining saw a slight retraction again this quarter offsetting growth in the U S and Canada.

Gordon Johnston: and Canada.

Vito Culmone: Now I'll turn the call over to Vito to review our financial results in more detail.

Now I will turn the call over to Vito to review our financial results in more detail.

Vito Culmone: Thank you, Gordon.

Vito Culmone: Good morning, everyone. The very strong results we delivered in Q3 continues our solid track record thus far for the 2024 fiscal year. Gross revenue in Q3 grew to $1.9 billion, up almost 14% year-over-year, and net revenue of $1.5 billion is up almost 16%. On a year-to-date basis, net revenue is approximately $4.4 billion, up almost 15% compared to last year at this time. As a percentage of net revenue, projects came in at 54.3%, a decrease of 50 basis points compared to Q3 of 2023, reflecting a minor shift in project mix and, as previously stated, project recoveries and change order approvals in 2023 that were higher than normal for a single quarter.

Vito: Thank you Gordon and good morning, everyone.

Speaker Change: On the very strong results. We delivered in Q3 continues our solid track record thus far from the 2020 for fiscal year.

Speaker Change: Gross revenue in Q3 grew to $1 9 billion.

Speaker Change: Up almost 14% year over year and net revenue of one 5 billion is up almost 16%.

Speaker Change: On a year to date basis net revenue is approximately $4 4 billion up almost 15% compared to last year at this time.

Speaker Change: As a percentage of net revenue projects came in at 54, 3% a.

Speaker Change: A decrease of 50 basis points compared to Q3 of 2023.

Speaker Change: Reflecting a minor shift in project mix and as previously stated.

Speaker Change: Recoveries in chart change order approvals in 2023 that were higher than normal for a single quarter.

Speaker Change: As Gordon mentioned, we achieved a very solid adjusted EBITDA margin of 18% in Q3.

Speaker Change: Our year to date EBITDA margin now stands at 16, 7%.

Speaker Change: And our adjusted diluted EPS in the quarter increased 14% year over year to $1 30.

Speaker Change: This increase reflects strong operational performance along with the revaluation impacts of our long term incentive program due to strong share price depreciation in the prior period.

Vito Culmone: turning to our cash flow, liquidity and capital resource During the first nine months of the year, we generated very strong cash flows, achieving $296 million in operating cash flow. This reflects continued strong organic revenue growth, partially offset by an increased investment in networking capital in support of organic revenue growth. DSO at the end of the quarter stood at 80 days, which is within our target range. And as a reminder, DSO is typically a little higher in the third quarter as a result of the seasonal impact. Our net debt-to-adjusted EBITDA ratio at quarter end was 1.5 times, a reduction from 1.7 times at the end of Q2, which reflects the free cash flow we generated in the quarter.

Speaker Change: Turning to our cash flow liquidity and capital resources.

Speaker Change: During the first nine months of the year, we generated very strong cash flow was achieving $296 million in operating cash flow.

Speaker Change: This reflects continued strong organic revenue growth, partially offset by an increased investment in net working capital in support of organic revenue growth.

Vito Culmone: We continue to remain well within our target range of 1 to 2 times, and the balance sheet is in great shape.

Speaker Change: We continue to remain well within our target range of one to two times and the balance sheet is in great shape.

Vito Culmone: Lastly, one technical accounting matter I wanted to speak to briefly. Our 2-3 financial statements reflect adjustments emanating from clarifying guidance that the IFRS Interpretations Committee issued in April of this year. This guidance relates to how deferred acquisition consideration should be treated when it may also be contingent on the seller's continuing employment. No three of our Q3 financial statements fully summarizes the accounting impacts resulting from the updated guidance. However, in a nutshell, the adjustments aggregate to a non-cash charge, reducing goodwill by approximately $310 million, and a reduction in our retained earnings by approximately the same amount.

Lastly, one technical accounting matter I wanted to speak to briefly.

Speaker Change: Our Q3 financial statements reflect adjustments emanating from clarifying guidance that the IRS interpretations Committee issued in April of this year.

Speaker Change: This guidance relates to how deferred acquisition consideration should be treated when it may also be contingent on the sellers continued unemployment.

Note three of our Q3 financial statements fully summarized as the accounting impact, resulting from the updated guidance. However in a nutshell the adjustments aggregate to a non cash charge, reducing goodwill by approximately $310 million and a reduction and a reduction in our retained earnings by approximately the same amount.

I will highlight that this reduction was not in any way related to operating performance, but rather to how the terms of our past agreements were documented and we do not anticipate future impacts from this updated interpretation.

Speaker Change: Before handing the call back to Gordon with this being my first earnings call here at Symantec I just wanted to share how excited I am to be here. It's a true privilege to join <unk> Board My executive colleagues, a strong finance team and the rest of 10th Centex over 32000 employees.

Speaker Change: In my short time here, it's abundantly obvious to me that <unk> has truly build something special and with that comes significant value creation opportunities for years to come.

Gordon Johnston: Gordon, I'll hand the call back to you.

Speaker Change: I'll now hand, the call back to you.

Gordon Johnston: Great thanks, Vito. At the end of the third quarter, our backlog reached a record-setting $7.3 billion. Since December of 2023, this represents 9.5% acquisition and almost 5% organic growth, which was achieved across all of our regions.

Great. Thank you.

Speaker Change: At the end of the third quarter, our backlog reached a record setting seven 3 billion.

Speaker Change: Since December of 2023, this represents nine 5% acquisition and almost 5% organic growth, which was achieved across all of our regions.

Speaker Change: Backlog traditionally declined in the third quarter as we burned through a significant amount of work.

Speaker Change: However, this year. Despite our strong revenues, we have seen an increase in backlog sequentially from Q2, which really highlights the demand for our services.

Speaker Change: Our backlog represents approximately 12 months work.

Gordon Johnston: Let me now highlight just some of the major projects we were awarded in Q3. First, I'll note that in the UK, we continue to secure our future workload related to amping in the regulated water business. During the quarter, we received a significant wind with Northern Ireland's water to provide feasibility, design, and climate change services for the next regulatory cycle. In addition, we continue to secure additional AMPEG-8 frameworks across the UK, with significant contracts being won with both Thames Water and United Utilities over the last quarter. This brings the total number of AMPH framework secured across the UK and Ireland to over 20.

Speaker Change: Let me let me now highlight just some of the major projects we were awarded in Q3.

Speaker Change: First I'll note that in the U K, we continue to secure our future workload related to Amp, Inc. In the regulated water business.

Speaker Change: During the quarter, we received a significant win with northern Ireland water to provide feasibility design and climate change services for the next regulatory cycle.

In addition, we continue to secure additional amping eight frameworks across the U K with two significant contracts being won with both Thames water and United utilities over the last quarter.

Speaker Change: This brings the total number of Abbvie framework secured across the UK and Ireland to over 20 <unk>.

Gordon Johnston: strengthening our position as the leading water firm in the UK and securing our market share in regulated water.

Speaker Change: Strengthening our position as a leading water perm in the U K and securing our market share in regulated water.

Gordon Johnston: Second, between community development and buildings, we've been awarded an MSA to assist a confidential data center client in selecting sites and providing design services for multiple data center campuses across Western Canada. In terms of scale, each site will equate to hundreds of megawatts. While data centers currently only account for 1-2% of our overall net revenue, it is one of the fastest growing areas within our buildings business. And given our strong expertise in the space, we see this business potentially tripling within just a couple of years.

Speaker Change: Second between community development and buildings, we've been awarded an MSA to assistant confidential data datacenter client and selecting sites.

Speaker Change: And providing dike design services for multiple data center campuses across Western Canada.

Speaker Change: In terms of scale each site liquid to hundreds of megawatts.

Speaker Change: While data centers currently only account for 1% to 2% of our overall net revenue. It is one of the fastest growing areas within our buildings business.

Speaker Change: And given our strong expertise in this space, we see this business potentially tripling within just a couple of years.

Gordon Johnston: Lastly, I'm pleased to highlight that we've just won our third master services agreement with Luma Energy in Puerto Rico. This MSA is part of a Federal Emergency Management Agency funded effort to continue to rebuild and strengthen the electrical grid in Puerto Rico following major hurricanes. We've done a lot of work with LUMA over the past few years, and over the next three years, this new MSA will allow Stantec's teams to continue engineering and grid reconstruction designs and upgrades to aging infrastructure, including multiple transmission lines, distribution feeders, and substations.

Speaker Change: Lastly, I'm pleased to highlight that we just want our third Master services agreement with <unk> energy in Puerto Rico.

Speaker Change: This MSA as part of our Federal Emergency management agency funded effort to continue to rebuild and strengthen the electrical grid in Puerto Rico following major hurricanes.

Speaker Change: We've done a lot of work with loom over the past few years and over the next three years. This new MSA will allow centex teams to continue engineering and grid reconstruction designs and upgrades to ageing infrastructure, including multiple transmission lines distributions theaters and substations.

Gordon Johnston: And now, turning to our guidance. Based on our strong performance in Q3 and outlook for Q4, we're expecting 2024 to be another record-setting year. With that, we're raising certain targets in our guidance and narrowing some ranges further. We're increasing the bottom end of our net revenue range for the year to 14.5% to 15%, up from 12% to 15%. We remain confident with our expectations of organic net revenue growth being in the mid to high single digits and acquisition growth being in the high single digits. In addition, we continue to expect the U.S. and global regions to deliver organic growth in the mid to high single digits and Canada to be in the mid single digits.

Speaker Change: And now turning to our guidance.

Speaker Change: Based on our strong performance in Q3 and outlook for Q4, we're expecting 2024 to be another record setting year.

Speaker Change: With that we are raising certain targets and our guidance and narrowing some ranges burden.

Speaker Change: We're increasing the bottom end of our net revenue range for the year for the year for 2014, 5% to 15% up from 12% to 15%.

Speaker Change: We remain confident with our expectations of organic net revenue growth being in the mid to high single digits and acquisition of growth being in the high single digits.

Speaker Change: In addition, we continue to expect the U S and global regions to deliver organic growth in the mid to high single digits and Canada to be in the mid single digits.

Gordon Johnston: we maintain our target for adjusted EBITDA margin for the year to 16.5% to 16.9%, which reflects our continued confidence in solid project execution and operational performance. With our increased expectations for net revenue growth, we now expect adjusted diluted EPS growth to be in the range of 16% to 18%, up from 12% to 16%, and our adjusted ROIC to now be above 12%. 2024 is shaping up to be another record-setting year for Stantec which puts us in a great position to continue to successfully execute on our 2024 to 2026 strategic plan. The demand fundamentals for our business remain strong, and I'm excited for what's to come in 2025 and beyond.

Speaker Change: We maintain our target for adjusted EBITDA margin for the year to $16 five to 16, 9%.

This reflects our continued confidence in solid project execution and operational performance.

Speaker Change: 2024 is shaping up to be another record setting year for center, which puts us in a great position to continue to successfully execute on our 2024 to 2026 strategic plan.

The demand fundamentals for our business remains strong and I'm excited for what's to come in 2025 and beyond.

Gordon Johnston: And with that, I'll turn the call back to the operator for questions.

Speaker Change: And with that I'll turn the call back to the operator for questions operator.

Operator: Operator? Thank you.

Speaker Change: Thank you at this time, we will conduct a question answer session to ask a question. The only compressed star one wondering if telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby alloy composite Q&A roster.

Speaker Change: Okay.

Benoit Poirier: Our first question comes from the line of Benoit Poirier of Disjardins.

Speaker Change: Our first question comes from the line of Ben Locke Korea Discharging. Your line is now open.

Benoit Poirier: Your line is now open. Yes, thank you very much. Good morning, everyone. Congrats for the results and welcome to the Stantec team, Vito.

Speaker Change: Yes. Thank you very much good morning, everyone. Congrats for the results and welcome to the <unk> team veto.

Gordon Johnston: Thank you, Benoit. Yeah, just in terms of organic growth, obviously very strong performance during the quarter, especially from water and building that reported the double digits. Any thoughts about the double digits sustainability for those two segments? And also if you could comment about the energy and resources, obviously you experienced some delays in the ramp up of new projects and the wind down of some projects late in 2023. So just wondering what we could expect in the coming quarter for this segment. Thank you.

Thank you Betty.

Speaker Change: Yes, just in terms of organic growth, obviously very strong performance during the quarter, especially from a water and building that reported the double digits.

Speaker Change: Any thoughts about the double digit sustainability for those two segments and also if you could comment about the energy and resources.

Gordon Johnston: Yeah, thanks, Benoit. You know, for water and buildings, you know, we see really strong tailwinds for both of them. You know, certainly our water franchise, extremely busy here in Canada, the US, Australia, New Zealand with the framework agreements there. And as we've mentioned, we've now won over 20 AMBAE frameworks in the UK and Ireland. So very, very strong growth going forward for the next couple years there. You know, buildings is another interesting one for us. You know, we all look at the ABI index and 20 quarters of success of, you know, a performance below 50, but yet for us, you can see, you know, the strong organic growth that we've had in buildings, you know, for the last couple of years, you know, 11, just a little over 11% year to date for us here now.

Speaker Change: Yes, thanks, Pamela for water and buildings, we see really strong tailwind for both of them certainly our water franchise extreme.

Speaker Change: Extremely busy here in Canada, the U S, Australia, New Zealand with with the framework agreements there and as we've mentioned we've now won over 20 and base frameworks in the UK and Ireland. So very very strong growth going forward for the next couple of years there.

Speaker Change: Buildings is another interesting one for US we all look at the Abi index in 20 quarters of successive performance below 15, but yet for US you can see the the strong organic growth that we've had in buildings.

Speaker Change: The last couple of years.

Speaker Change: Just a little over 11% year to date for US here now so we see good continued growth in the in the building section.

Gordon Johnston: So we see good continued growth in the building section. So to your comment on E&R, you're right. We've come off, you know, last year, you know, every quarter that we had in E&R in 2023 was, you know, pretty strong, particularly in the first part of the year. So, you know, we have seen some, so in Q3, Canada and the US, we both had some positive net revenue growth there, but it really was the global mining business that pulled things down a little bit. So, I think what we see is that we're still confident that we're going to return to organic growth in E&R in Q4.

Speaker Change: And to your comment on Anr Youre right, we've come off Bob last year every quarter that we had in <unk> in 2023 was pretty strong, particularly in the first part of the year. So we have seen some of that.

Speaker Change: So in Q3, Canada and the U S. We've always had some some positive net revenue grows there, but it really was the global mining business.

Speaker Change: <unk> down a little bit so I think what we see is that.

We're still confident that we're going to return to organic growth in <unk> in Q4.

Gordon Johnston: Just as an aside, the backlog in our energy and resources group is up about 9% year to date. So that really kind of supports that thesis of returning to backlog growth here in Q4 and certainly stronger performance going into 2025. Yeah, definitely an improving trend in E&R. Okay, that's great caller.

Speaker Change: Just as an aside the backlog in our energy and resources group is up about 9% year to date, so that really kind of supports that thesis of returning to backlog growth here in Q4, and certainly stronger performance going into 2025, yes, definitely an improving trend in.

Speaker Change: In Europe.

Speaker Change: Okay, that's great color and just with respect to the margin.

Benoit Poirier: And just with respect to the margin, a little bit down versus a year ago, even if you normalize with LTIPS, I'm looking at the admin and marketing expenses, percentage was up slightly versus a year ago. Is it just a matter of LTIPS? Or is there more cost to support the strong bidding activity that you see out there?

Speaker Change: But down versus a year ago, even if you normalize with LTE to I'm looking at the admin and marketing expenses percentage was up slightly.

Speaker Change: Versus a year ago is it just a matter of LTE absorbed.

Speaker Change: There are more costs to support the strong bidding activity that you see out there.

Vito Culmone: Benoit, you're absolutely right. As a percentage of NR, our 2.3 admin was 37.5% this year versus 37.3%. So up a little bit. That does reflect some benefit, actually, we had last year, the share based compensation would have been a headwind. Again, because we had share price appreciation, this year was fairly neutral. So when you adjust for that, you do have a bit more of a increase relative to what we're showing in the externals. And what that reflects really is labor, training and integration with respect to some of the acquisitions, and which is normal, all within our expectations.

Speaker Change: Meanwhile, Youre absolutely right as a percentage of of NR Q3 at man was 37, 5% this year versus 37, 3%, so up a little bit.

Speaker Change: It does reflect some benefit actually we had last year the share based compensation would have been a headwind.

Speaker Change: Because we had share price appreciation this year was fairly neutral so when you adjust for that.

Speaker Change: <unk> you do have a bit more of a.

Speaker Change: Increase.

Speaker Change: The increase relative to what we're showing in the externals and what that reflects really is it labor.

Speaker Change: Training and integration with respect to some of the acquisitions and which is normal all within our expectations. We've got some slightly lower utilization as we move staff off over some major projects coming out of last year into this year.

Vito Culmone: We've got some slightly lower utilization as we move staff off over some major projects coming out of last year into this year. But all very much within our expectations.

Speaker Change: But all of them very much within our expectations and we really are as we look into Q4 and into 2025 pleased with the progress against that.

Benoit Poirier: And we really are, as we look into Q4 and into 2025, pleased with the progress against that. That's a great caller.

Speaker Change: That's great color I'll pass it over thank you.

Operator: I'll pass it over. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you our next question.

Okay.

Jacob Bout: Our next question comes from Jacob Bout of CIDC. Your line is now open. Good morning. Yeah, looking for maybe your thoughts around the election results. I know the view seems to be the Trump administration would be supportive of the IAJ and CHIPS Act, but we could see some changes to the IRA program and USAID. You know, what are your thoughts and any adjustments that you think you'll have to make? You know, I think as we've been thinking over the last year or so, what a change in administration, either change or same administration in the U.S.

Speaker Change: Our next question comes from the line of Jacob bout CIBC. Your line is now open.

Jacob Bout: Good morning.

Jacob Bout: Well, yes looking for.

Maybe your thoughts around the election results.

Jacob Bout: The view seems to be the Trump administration will be supportive of a chip socs, but that we could see some changes to the <unk> program and USAID.

Jacob Bout: What are your thoughts and any adjustments.

Speaker Change: Thank you <unk>.

I think as we were we've been thinking over the last year or so.

Speaker Change: And change administration, either change or same administration in the U S might look like for our business and our industry. Overall I think in general we feel pretty pretty neutral about whichever firm was in there. We've we've been around a long time performed well under Republican President and Democratic President So to your point I think.

Gordon Johnston: might look like for our business and our industry overall. You know, I think in general, we feel, you know, pretty neutral about whichever firm was in there. We've been around a long time, performed well under, you know, Republican presidents and Democratic presidents. So, you know, to your point, I think IAJ is good. I think CHIPS and science is good. Even IRA, you know, the majority of that funding has been dispersed to Republican states. So, you know, will there be a pullback there? Hard to say, Jacob. But, you know, if President Trump might bring tariffs in, certainly that might bring some onshoring of manufacturing facilities back.

Speaker Change: IAG is good I think chips in science is good even Irene the majority of that funding has been disbursed to Republican States. So will there be a pullback there are hard to say Jacob but if.

Speaker Change: If there if president Trump vice brain tariffs and certainly that might bring some some onshoring of manufacturing facilities back and we've actually already had some manufacturing clients, calling us asking about Jeff sighting and design should should that occur. So we actually feel pretty positive about the the economic.

Gordon Johnston: And we've actually already had some manufacturing clients calling us asking about siting and design should, you know, should that occur.

Gordon Johnston: So, you know, we actually feel pretty positive, you know, about the economic opportunities for us going forward.

Speaker Change: Opportunities for us going forward.

Gordon Johnston: Okay, and then maybe just going back to the investor day that we had last December. You know, you're talking in a 26 net revenue of 7.5 billion and even down margins that 17 to 18%. Does that feel about right? I mean, you know, you're taking up your revenue guidance here, or at least a midpoint. Does it feel like it's a bit more on the conservative side? Or how are you? I think we still feel really comfortable with that, Jacob. You know, recall, that was 50% net revenue growth in a three-year period of time. And so, you know, we're performing well.

Speaker Change: Okay, and then maybe just going back to the Investor day that we had last December.

Speaker Change: Youre talking end of 2006 net revenue of some $5 billion and EBITDA margin, so that 17% to 18% does that feel about right.

Looking up your revenue guidance here.

Speaker Change: Or at least the midpoint.

Speaker Change: Does it feel like it's a bit more on the conservative side or how you think about costs.

Speaker Change: I think we still feel really comfortable with that.

Speaker Change: Jacob you recall that was 50% net revenue growth and a three year period of time and so we're performing well. This year, we see that continued performance, but we're not putting out any changes to to the to that guidance at this point, yes, yes, Jacob on the margin side of things. Obviously, we are pleased with our year to date EBIT margin I think.

Gordon Johnston: This year, we see that continued performance.

Vito Culmone: But yeah, we're not putting out any changes to that guidance at this point. Yeah. Yeah, Jacob, on the margin side of things, obviously, we're pleased with our year-to-date EBITDA margin. I think we delivered a strong Q3 here, feel good about where we're tracking on a full-year basis. We'll obviously provide 2025 color here with our year-end results in February, and feel very confident that we can step into that 17-18% range. And then we'll take it from there, quite frankly. I think there's lots of opportunity.

Speaker Change: We delivered a strong Q3 here feel good about where we're tracking to a full year basis. We'll obviously provide 2025 color here with our year end results in February.

And feel very confident that we can step into that 17% to 18% range.

Speaker Change: And then we'll take it from there quite frankly, I think there is lots of opportunity.

Jacob Bout: Thanks a lot. Thank you.

Excellent. Thank you.

Operator: One moment for our next question. Our next question comes from the line of Frederic Bernstein of Raymond James. Your line is now open.

Speaker Change: Thank you for our next question.

Speaker Change: Our next question comes from line of Patrick Bernstein of Raymond James Your line is now open.

Frederic Bernstein: Good morning. I hope everyone's well.

Patrick Bernstein: Good morning, Alright, I hope everyone's well.

Frederic Bernstein: I just wanted to switch gears on M&A. And Gord, wondering if your pipeline is as busy or healthy as it was 12 months ago?

Speaker Change: Just wanted to switch gears on M&A and.

Speaker Change: Gordon wondering if your pipeline is as busy are healthy as it was 12 months ago.

Gordon Johnston: Yeah, yeah. Thanks, Frederic.

Speaker Change: Yes, Thanks, Patrick Great. Great question, we actually do see a pipeline of M&A very full not just here in Canada, and the United States, but also in different countries around the world.

Speaker Change: And all sorts of different sizes from that sub 1000 firms sized to some that are a little bit larger than that so we feel really good about the overall pipeline, we're still feeling good about the competitive environment as to who we see out there in various processes. So no change to our <unk>.

Speaker Change: M&A.

Speaker Change: Thoughts no change to sort of what we're seeing out there in terms of competition or the amount of firms available.

Gordon Johnston: Okay, and when you think about adding new building blocks, I guess you mentioned a number of regions, but is there a specific end market where you would like to bolster your presence? Yeah, you know, I think we still have some opportunities for some tuck-ins here in Canada. But as I look at the US, I absolutely see the opportunity to even double our size in the US. UK, you know, we still have great opportunities to expand there while we're dominant in water. We're not dominant in some of the other areas that we have, buildings, transportation, and so on.

Okay, and then when you think about adding new building blocks.

Speaker Change: I guess, you mentioned a number of regions, but there is there a specific end market.

Speaker Change: Where you would like to bolster your presence.

Speaker Change: Yes, I think we still have some opportunities for some tuck ins here in Canada, but as I look at the U S.

Speaker Change: Absolutely and see the opportunity to do even double our size in the U S. UK, we still have great opportunity to expand there while we're dominant in water where non dominant in some of the other areas that we have buildings transportation and so on we've spoken previously about the Nordics I still would be interested in doing the right deal.

Speaker Change: I've been the Nordics and we're looking down in Australia, New Zealand, a little bit as well, but but really focusing on little bit Canada. The U S.

Speaker Change: U K Nordics, and then a little bit down Australia, New Zealand.

Vito Culmone: Gordon, maybe it's time for me to chime in, you know, as the new guy, we've been on the road a little bit, and I do get the questions around capital structure and our perspectives on M&A, and I just want to reiterate what Gordon has already articulated here. Historically, M&A has been one of the biggest sources of our value creation, and we continue to see significant opportunities. We'll obviously remain disciplined. Balance sheet's in great shape. We'll continue to be here through Q4 into the early part of the year. But significant growth ahead of us through the M&A channel.

Speaker Change: Greg maybe I'll just have a temporary decline.

Speaker Change: Bermuda, China as the new Guy.

Speaker Change: On the road, a little bit and I do get questions around capital structure, and our perspective on M&A and I just want to reiterate what God has already articulated here historically M&A has been one of the biggest sources of our value creation. We continue to see significant opportunities, where honestly remained disciplined balance sheets in great shape and continue to dig deeper here.

Speaker Change: Q4 into early part of the year.

Speaker Change: But.

Speaker Change: Significant growth ahead of us for best through the M&A channel.

Frederic Bernstein: Thank you both and welcome, Vito. Thank you.

Speaker Change: Thank you both and welcome Peter.

Speaker Change: Thank you.

Operator: Thank you one moment for our next question.

Speaker Change: Thank you next question.

Maxim Sytchev: Our next question comes from the line of Maxim Sytchev of MBS. Your line is now open. I was wondering if potentially you could comment around the UK market in general. It feels like there's a bit of a turning of the page on kind of austerity dynamic. I'm curious to see if and how that could translate for your business in the job.

Speaker Change: Our next question comes from the line of Maxim <unk> of MBS. Your line is now open.

Speaker Change: Okay.

Speaker Change: But I was wondering if potentially could comment around the U K market in general it feels like there is.

Speaker Change: Turning of the page on kind of austerity dynamic I'm curious to see if and how that could translate to for your business in that geography.

Gordon Johnston: Yeah, thanks, Max. Certainly in the UK, you know, we've talked a lot about the AMBAIT cycle, and certainly we're transitioning to that. It officially starts in April of 2025. The final ruling from OCWOD as to the size of the AMBAIT program is expected here in December. But, you know, as we've talked about before, all indications are a 40 to a 50% increase in funding availability. You know, I mentioned that we've, you know, we've secured over 20 new, you know, renewals or new AMPA frameworks there. So we've been, you know, growing by market share a little bit in addition to securing the existing.

Yeah. Thanks, Max certainly in the U K, we've talked a lot about the abbvie cycle.

Speaker Change: Certainly we're transitioning to that it officially starts in April of 2025, the final ruling from offline as to the size of the <unk> program is expected here in December but as we've talked about before all indications are up 40% to 50% increase in funding availability I mentioned that we've.

Speaker Change: We have secured over 20.

Speaker Change: New renewals or new <unk> framework there so.

Speaker Change: Growing by a market share a little bit in addition to securing the existing so water is really really strong we've already taken some additional real estate space. There were hiring people. They are scaling up our Pune, India operations already there for that.

Gordon Johnston: You know, from a housing perspective, you know, the new labour government has talked about, you know, reducing some of the regulatory burden on the permitting side and getting more new houses built up to 1.5 million new houses. We've mentioned, I think, previously that we have a four-year master services agreement with Homes England to support that. So, you know, maybe it does feel like some of those things are really positive tailwinds for us in the UK.

Speaker Change: From a housing perspective.

The new Labour government has talked about.

Speaker Change: Reducing some of the regulatory burden on the permitting side and getting more and more new houses built up to $1 5 million New houses. We mentioned I think previously that we have a four year Master services agreement with homes, England to support that so.

Speaker Change: Maybe it does feel like some of those things are all really positive tailwind for us in the U K.

Maxim Sytchev: And then just shifting gears to, I think, in the past couple of quarters, you said that, you know, recent M&A sort of in the short term is constraining the margins somewhat.

Speaker Change: Okay.

Speaker Change: Thanks, So much and then just shifting gears to I think in the past.

Speaker Change: Of course, we saw that in our recent M&A sort of in the short term is constraining the margins somewhat.

Vito Culmone: And I'm just wondering if you can maybe provide an update, you know, here and potentially link it to, you know, some of the design center opportunity that, you know, could be coming through. Yeah.

Speaker Change: Wondering if you can maybe provide an update.

Speaker Change: <unk> and potentially linkage to some of the design center opportunity that could be.

Speaker Change: Coming through.

Yes. Thanks.

Vito Culmone: Yeah, Max, it's Vito here. You know, honestly, from an acquisitions perspective and the integration, we're very, very pleased with the four that we're integrating at this point. We've got our normal sort of impact related to that, but nothing to call out. Really pleased with the margins, really pleased with how admin costs are performing as a percentage of NR. So really, I think it provides a bit of a tailwind as we move through Q4 and into 2025. But nothing really abnormal relative to other acquisitions we've had to call out. All in order.

Speaker Change: Yes, Max its Vito here.

Speaker Change: Honestly.

Speaker Change: From an acquisitions perspective, and the integration, we're very very pleased with the four that were.

Integrated at this point, we've got our normal sort of impact related to that but nothing to call out.

We're really pleased with the margins really pleased with how admin costs are performing as a percentage of EBITDAR. So really I think it provides a bit of a tailwind as we move through Q4 into 2025, but nothing really abnormal relative to other acquisitions we've had.

Speaker Change: To call out already on order.

Maxim Sytchev: Okay, that's great. Thanks a lot, Vito.

Speaker Change: Okay. That's great. Thanks, a lot Peter.

Operator: Yep, I believe you.

Speaker Change: Yes, my pleasure.

Jonathan Goldman: Thank you. One moment for our next question. Our next question comes from the line of Jonathan Goldman of Scotiabank. Your line is now open. Hi, good morning, and thanks for taking my questions. Just one for me.

Speaker Change: Thank you for next question.

Speaker Change: Our next question comes from the line of Jonathan Goldman with Scotiabank. Your line is now open.

Hi, good morning, and thanks for taking my questions. Just one for me I wanted to circle back to the question around the potential impacts of the recent elections.

Jonathan Goldman: I want to circle back to the question around the potential impacts of the recent elections. Or does that change your outlook for the water franchise in the US and specifically the potential funding allocated to the PFAS renewal work and other water infor program? There's some funding for water program enhancement in the IIJA, and certainly that's there. Will there be changes to either PFAS regulatory limits or timeframes for work to be done? All remains to be seen, but while we've done some of that work and the industry is starting to wrap up for that work, that still is a couple of years down the road.

Speaker Change: Or does that change your outlook for the water franchise in the U S and specifically the potential funding allocated to the <unk> renewal work and other watering for programs.

Speaker Change: Yes.

Speaker Change #100: There is some funding for.

Speaker Change #100: For water program enhancement in the Iga and certainly that's there.

Speaker Change #100: There'll be changes too.

Speaker Change #100: <unk> regulatory limits or Timeframes for.

Speaker Change #100: For work to be done all remains to be seen but what we've done and some of that work in the industry is starting to ramp up for that work that still has a couple of years down down down the road, so whether or not there is a change means that I don't see causing any impact on our on our water business in the next number of years huge amount of opportunity.

Gordon Johnston: So whether or not there's a change made to that, I don't see causing any impact on our water business in the next number of years.

Gordon Johnston: Huge amount of opportunities still in water related to scarcity of water, Southern California, Southwestern US in general, flooding work in a number of the projects that we're doing in Texas and other areas. So there's just so much opportunity there, in addition to the number of advanced water and wastewater treatment that we're seeing with some of these new manufacturing facilities that are going in, whether they're semiconductors, solar panel manufacturing, and others. So no, I think really any impact from the election on our water business will be really muted. That's great color. Thanks. I'll get back in queue.

Speaker Change #100: Still in water related too.

Speaker Change #100: Scarcity of water Southern California, some western U S in general.

Flooding work in a number of the projects that we're doing in Texas and other areas.

Speaker Change #100: So there's just so much opportunity there in addition to the FSA number of advanced.

Speaker Change #100: Wastewater wastewater treatment that we're seeing with.

Speaker Change #100: Some of these new manufacturing facilities are going and whether theres semiconductor solar panel manufacturing and others. So I think really any impact from from the election on our water business will be really muted.

Speaker Change #101: That's great color, thanks, I'll get back in queue.

Speaker Change #102: Okay. Thank you.

Operator: I'm showing no further questions at this time.

Speaker Change #103: Thank you I'm showing no further questions at this time I would now like to hand back to <unk> for closing remarks.

Gordon Johnston: I would now like to turn it back to Gordon Johnston for closing remarks. Well, thank you, Operator, and thank you to everyone for joining us this morning.

Sure.

Speaker Change #104: Great well, thank you operator, and thank you to everyone for joining us. This morning. If you have any questions. Following today's call. Please reach out to adjust newkirk, our VP of Investor Relations. So thanks, again, and we look forward to chatting with all of you again soon.

Operator: If you have any questions following today's call, please reach out to Jess Newkirk, our VP of Investor Relations. So thanks again, and we look forward to chatting with all of you again soon. Thank you for your participation in today's conference.

Thank you for your presentation in today's conference. This does conclude the program you may now disconnect.

Operator: This does conclude the program.

Operator: You may now disconnect.

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