Q4 2024 Stantec Inc Earnings Call
And Chief Executive Officer, and Vito Cumani, Executive Vice President and Chief Financial Officer.
Stan Tech invites those dialing in to view the slide presentation, which is available in the investors section at stay intact Dot com.
This call is also webcast. Please be advised that if you have dialed in while also viewing the webcast you shouldn't mute your computer as there is a delay between the call and the webcast. All information provided during this conference call is subject to the forward looking statement qualification set out on slide two detailed and Stan <unk>.
Operator: Welcome to Stantec's fourth quarter and full year 2024 results webcast and conference.
Operator: Leading the call today are Gord Johnston, President and Chief Executive Officer, and Vito Culmone, Executive Vice President and Chief Financial Officer. Stantec invites those dialing in to view the slide presentation, which is available in the investor section at stantec.com. Today's call is also web- Please be advised that if you have dialed in while also viewing the webcast, you should mute your computer as there is a delay between the call and the webcast.
Speaker Change: Management discussions and analysis and incorporate it 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 with that I'm pleased to turn the call over to Mr. Gordon Johnson.
Gordon Johnson: Good afternoon.
Speaker Change: Afternoon, and thank you for joining us today.
Speaker Change: We do and I are currently traveling which is why our conference call. So late in the day next quarter will return to the regular cadence of our earnings calls.
Operator: All information provided during this conference call is subject to the forward-looking statement qualifications set out on slide 2, detailed in Stantec's Management Discussions and 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: I am pleased to report that 2024 was another record year presented.
Speaker Change: We had a very strong finish to the year with double digit organic growth in the U S.
Speaker Change: And high single digit growth in Canada, and global in the fourth quarter.
Speaker Change: All of our business operating units also delivered organic growth in the quarter, including energy and resources, which returned to growth as expected in Q4.
Gordon Johnston: With that, I am pleased to turn the call over to Mr. Gordon Johnston. Good afternoon, and thank you for joining us today. Vito and I are currently traveling, which is why our conference call is so late in the day.
We continue to thrive in a resilient industry driven by macro factors such as water security aging infrastructure climate change emerging technology and the expansion of advanced manufacturing.
Gordon Johnston: Next quarter, we'll return to the regular cadence of our earnings calls. I'm pleased to report that 2024 was another record year for Stantec. We had a very strong finish to the year with double-digit organic growth in the U.S. and high single-digit growth in Canada and global in the fourth quarter. All of our business operating units also delivered organic growth in the quarter, including energy and resources, which returned to growth as expected in Q4. We continue to thrive in a resilient industry, driven by macro factors such as water security, aging infrastructure, climate change, emerging technology, and the expansion of advanced manufacturing.
Speaker Change: As a result for the full year, we delivered record net revenues of $5 9 billion.
Up 15, 8% compared to 2023.
Speaker Change: This was underpinned by seven 4% organic and seven 5% acquisition growth.
Speaker Change: With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA to $980 million up 18%.
Speaker Change: With an enhanced margin of 16, 7%, reflecting a 30 basis point increase.
Speaker Change: We also delivered adjusted EPS of $4 42.
Speaker Change: Up over 20% compared to 2023.
Vito Culmone: As a result, for the full year, we delivered record net revenues of $5.9 billion, up 15.8% compared to 2023. This was underpinned by 7.4% Organic and 7.5% Acquisition Group. With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA to $980 million, up 18%, with an enhanced margin of 16.7%, reflecting a 30 basis point increase. We also delivered adjusted EPS of $4.42, up over 20% compared to 2023.
Speaker Change: Looking at our results in each of our geographies.
Speaker Change: In the U S. We increased our Q4 net revenues 14, 1% driven primarily by 10, 3% organic growth.
Speaker Change: For the full year, our net revenues in the U S increased by 13, 3%.
Speaker Change: Through eight 6% organic and three 3% acquisition growth.
Speaker Change: Water delivered double digit organic growth through continued robust public sector and industrial project demand as well as large scale water security projects.
Speaker Change: Our buildings business also delivered double digit organic growth driven by solid investment across the healthcare industrial and science and technology sectors.
Gordon Johnston: looking at our results in each of our geographies. In the US, we increased our Q4 net revenues 14.1%, driven primarily by 10.3% organic growth. For the full year, our net revenues in the U.S. increased by 13.3% through 8.6% organic and 3.3% acquisition growth. Water delivered double-digit organic growth through continued robust public sector and industrial project demands, as well as large-scale water security projects. Our buildings business also delivers double-digit organic growth, driven by solid investment across the healthcare, industrial, and science and technology sectors. Momentum on major infrastructure projects continues to fuel strong organic growth, primarily in transit and rail projects in the West.
Speaker Change: Momentum on major infrastructure projects continues to fuel strong organic growth, primarily in transit and rail projects in the west.
Speaker Change: Roadway designs in the east and residential development in the cell.
Speaker Change: In Canada, we also had a very strong fourth quarter growing net revenue by 17, 6% with nine 1% organic growth.
Speaker Change: Acquisition growth was also very strong at eight 5% in the quarter coming for Morrison Hershfield.
Speaker Change: For the full year net revenue in Canada Rose 14, 5%.
Speaker Change: With 6% organic growth and eight 5% acquisition growth.
Speaker Change: Both our buildings and water businesses experienced double digit organic growth.
Gordon Johnston: Roadway Designs in the East and Residential Development in the South. In Canada, we also had a very strong fourth quarter, growing net revenue by 17.6%, with 9.1% organic growth. Acquisition growth was also very strong at 8.5% in the quarter coming from Morris & Hirschfield. For the full year, net revenue in Canada rose 14.5%, with 6% organic growth and 8.5% acquisition growth. Both our buildings and water businesses experience double-digit organic growth. Growth in our buildings business was driven by public sector investment in Western Canada, primarily in our civic, education, and healthcare sectors. and Momentum continued on significant wastewater solution projects in our water business.
Speaker Change: Growth in our buildings business was driven by public sector investment in Western Canada, primarily in our civic education and healthcare sectors.
Speaker Change: And momentum continued unsignalized water solution projects in our water business.
Speaker Change: Our infrastructure business delivered solid high single digit organic growth with the ramp up of roadway transit rail and land development projects.
Speaker Change: Finally in.
Speaker Change: In the fourth quarter, our global business delivered 32, 6% growth in net revenue was seven 3% organic growth and 21, 8% acquisition growth from zircon and hydraulic.
Speaker Change: For the full year global generated 23, 2% growth in net revenue, reflecting 16, 3% acquisition and five 8% organic growth.
Gordon Johnston: Our infrastructure business delivered solid, high single-digit organic growth with a ramp-up of roadway, transit, rail, and land development projects. Finally, in the fourth quarter, our global business delivered 32.6% growth in net revenue, with 7.3% organic growth and 21.8% acquisition growth from Zetcon and Hydrox. For the full year, Global generated 23.2% growth in net revenue, reflecting 16.3% acquisition and 5.8% organic growth. Our global buildings team achieved 20% 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. Our industry-leading water business saw double-digit organic growth through long-term framework agreements and public sector investment in water infrastructure.
Speaker Change: Our global buildings team achieved 20% organic growth is where continued to ramp up when the cancer center in Dubai and.
Speaker Change: And on the 4 billion pound battery cell manufacturing facility in the UK.
Speaker Change: Our industry, leading water business saw double digit organic growth through long term framework agreements and public sector investment in water infrastructure.
Speaker Change: And our environmental services business continued to see strong organic growth from energy transition projects in Europe.
Speaker Change: Before turning the call over to Vito I wanted to mention that I am very pleased that center continues to receive various public sustainability related accolades.
Speaker Change: We were once again recognized by corporate Knights as being one of the world's most sustainable companies.
Speaker Change: We placed eight overall and first amongst our industry peers.
Speaker Change: In addition time rigs dentex 14th on.
Speaker Change: On its 2020 for a list of the world's most sustainable companies.
Gordon Johnston: and our environmental services business continue to see strong organic growth from energy transition projects in Europe.
Speaker Change: This recognition reinforces our authentic commitment to environmental social and governance, which has solidified our position as a global leader in sustainability.
Gordon Johnston: Before turning the call over to Vito, I want to mention that I'm very pleased that Stantec continues to receive various public sustainability related accolades. We were once again recognized by corporate knights as being one of the world's most sustainable companies. We placed 8th overall and 1st amongst our industry peers. In addition, Time ranks Stantec 14th on its 2024 list of the world's most sustainable companies. This recognition reinforces our authentic commitment to environmental, social, and governance, which has solidified our position as a global leader in sustainability.
Speaker Change: On the same note I'd like to thank dawn Lowery for his many years of service to our board and rubbing chaired our sustainability and safety Committee.
Speaker Change: Don will not be standing for reelection in may of this year and retired from our board as of January 31.
Speaker Change: Don brought a wealth of knowledge and great insights to Santa and he'll be missed.
Speaker Change: Now I will turn the call over to Vito to review, our Q4 and full year 2024 financial results in more detail.
Vito: Thank you Gordon and Hello, everybody.
Vito: Our strong fourth quarter results include robust year over year net revenue growth of 19% to $1 5 billion.
Gordon Johnston: On the same note, I'd like to thank Don Lowry for his many years of service to our board and for having chaired our Sustainability and Safety Committee. Don will not be standing for re-election in May of this year and retired from our board as of January 31st. Don brought a wealth of knowledge and great insights to Stantec, and he'll be missed.
Vito: And that was driven by nine 3% organic and seven 6% acquisition growth.
Vito: We achieved organic growth in all of our regional and business operating units.
Vito: With double digit growth achieved in our U S region, and water and buildings businesses.
Vito: Profit margins in Q4 increased 21, 5% or $143 8 million.
Vito Culmone: Now I'll turn the call over to Vito to review our Q4 and full year 2024 financial results in more detail. Thank you, Gordon. Hello, everybody. Our strong fourth quarter results include robust year-over-year debt revenue growth of 19% to $1.5 billion, and that was driven by 9.3% organic and 7.6% acquisition growth. We achieved organic growth in all of our regional and business operating units. with double-digit growth achieved in our U.S. region in water and buildings businesses. Profit margins in Q4 increased 21.5%, or $143.8 million, and increased 110 basis points as a percentage of net revenue from 53.9% to 55%.
Vito: And increased 110 basis points as a percentage of net revenue of 53, 9% to 55%.
Vito: This growth was primarily due to higher project recoveries and change order approvals during the fourth quarter as well as continued strong project execution.
Vito: Adjusted EBITDA increased 26, 7% to $246 $5 million and we achieved a 16, 7% adjusted EBITDA margin, an increase of 100 basis points year over year.
We also delivered 35, 4% growth in adjusted EPS to $1 11.
Vito: Looking at full year at the full year gross revenue in 2024 grew to $7 5 billion up.
Vito Culmone: This growth was primarily due to higher project recoveries and change order approvals during the fourth quarter, as well as continued strong project execution. Adjusted EBITDA increased 26.7% to $246.5 million, and we achieved a 16.7% adjusted EBITDA margin, an increase of 100 basis points year-over-year. We also delivered 35.4% growth in adjusted EPS to $1.11. Looking at full year, at the full year, gross revenue in 2024 grew to $7.5 billion, up almost 16% year over year, and net revenue of $5.9 billion is also up almost 16% compared to 2023. As a percentage of net revenue, our project margins came in at 54.5%, and that's an increase of 30 basis points compared to 2023, again, as a result of net revenue growth and strong project execution.
Vito: Up almost 16% year over year and net revenue of $5 9 billion is also up almost 16% compared to 2023.
Vito: As a percentage of net revenue our project margins came in at 54, 5%.
Vito: And that's an increase of 30 basis points compared to 2023 again as a result of net revenue growth and strong project execution.
Vito: We achieved a very solid adjusted EBITDA margin of 16, 7% in 2024, an increase of 30 basis points from 2023, and finally, our adjusted EPS in the year increased over 20%.
Vito: The $4 to 42.
Vito: Okay.
Vito: Turning to our cash flow liquidity and capital resources.
Vito: During 2024, our operating cash flows increased 16% from $520 million to $603 million.
Vito: That reflected continued strong cash flow generation growth of course and solid operational performance.
Vito Culmone: We achieved a very solid adjusted EBITDA margin of 16.7% in 2024, an increase of 30 basis points from 2023, and finally, our adjusted EPS in the year increased over 20%. with $4.42.
Vito: We also achieved greater than one times free cash flow to net income for the year.
Vito: Our DSO at the end of the fourth quarter stood at 77 days and Thats consistent with the prior year and remains well within our internal target of 80 days or lower.
Vito: Our net debt to adjusted EBITDA ratio at year end was one two times.
Vito Culmone: Turning to our cash flow, liquidity and capital resources. During 2024, our operating cash flow has increased 16%, from $520 million to $603 million. And that reflected continued strong cash flow generation, growth, of course, and solid operational performance. We also achieved greater than one times free cash flow to net income for the year. Our DSO at the end of the fourth quarter stood at 77 days, and that's consistent with the prior year and remains well within our internal target of 80 days or lower. Our net debt to adjusted EBITDA ratio at the year end was 1.2 times.
Vito: A further reduction from one five times at the end of Q3.
Vito: We remain well within our targeted range of one to two times leverage and our balance sheet continues to be in great shape.
Vito: As a result of our strong performance. The board has approved a seven 1% increase to our dividend.
Vito: Now at <unk> 90 per share on an annualized basis.
Vito: The dividend continues to be a key component of our capital allocation plan and with the strength and growth of our earnings we've been able to raise the dividend consistently while still lowering our overall payout ratio.
Vito: And ensuring we have a very strong balance sheet for M&A.
Vito Culmone: further reduction from 1.5 times at the end of Q3. We remain well within our target range of one to two times leverage, and our balance sheet continues to be in great shape.
Vito: With that I'll hand, the call back to you.
Vito: Great. Thanks Vito.
Speaker Change: At the end of 2024, our backlog reached a new record of $7 8 billion.
Vito Culmone: As a result of our strong performance, the board has approved a 7.1% increase to our dividends. now at $0.90 per share on an annualized basis. The dividend continues to be a key component of our capital allocation plan. And with the strength and growth of our earnings, we've been able to raise the dividend consistently while still lowering our overall payout ratio and ensuring we have a very strong balance sheet for M&A.
Speaker Change: This is truly remarkable and really highlight the demand for our services as backlog in Q4 is generally lower given seasonality.
Speaker Change: This represents a 24, 1% increase from December 2023, driven by nine 7% acquisition and eight 5% organic growth.
Speaker Change: Organic backlog growth was primarily achieved in our Canadian and U S operations with water, realizing an impressive 24% organic growth in backlog.
Gordon Johnston: Gordon, with that, I'll hand the call back to you. Great. Thanks, Vito.
Gordon Johnston: At the end of 2024, our backlog reached a new record of $7.8 billion. This is truly remarkable and really highlights the demand for our services as backlog in Q4 is generally lower given seasonality. This represents a 24.1% increase from December 2023, driven by 9.7% acquisition and 8.5% organic growth. Organic backlog growth was primarily achieved in our Canadian and U.S. operations, with water realizing an impressive 24% organic growth in backlog. Organic Growth and Global's backlog is relatively flat, but this is primarily due to timing. In New Zealand, we experienced a high project burn rate on some major water projects, and we've yet to convert new contracts into backlog.
Speaker Change: Organic growth in globals backlog was relatively flat, but this is primarily due to timing.
Speaker Change: In New Zealand, we experienced a high project burn rate on some major water projects and we have yet to convert new contracts into backlog and similarly, while some abbe contracts are currently in backlog. There are many more yet to come as that Beth officially doesn't start until April of this year.
Speaker Change: Our backlog represents approximately 13 months of work and underscores the sustained demand for our services to support our clients' most pressing challenges.
Speaker Change: Turning to some of the major projects, we were recently awarded.
Speaker Change: In the fourth quarter, we were appointed to terms waters 400 million pound asset capital and engineering framework for Amp, Inc.
Speaker Change: <unk> will provide asset strategy engineering design, environmental and program and project management support across the entire lifecycle.
Gordon Johnston: And similarly, while some AMP-8 contracts are currently in backlog, there are many more yet to come as AMP-8 officially doesn't start until April of this year. Our backlog represents approximately 13 months of work and underscores the sustained demand for our services to support our clients' most pressing challenges.
Speaker Change: In December awful lot announced at 104 billion pounds has been approved for the overall <unk> program of which we've won over 20 different frameworks significantly enhancing our leaders are leading water position in the UK.
Gordon Johnston: Turning to some of the major projects we were recently awarded. In the fourth quarter, we were appointed to Thames Water's 400 million pound asset, capital, and engineering framework for AmpAce. Stantec will provide asset strategy, engineering design, environmental, and program and project management support across the entire lifecycle. In December, Ofwat announced that £104 billion has been approved for the overall AmpAid program, of which we've won over 20 different frameworks, significantly enhancing our leading water position in the UK. And I'd like to highlight that AMP 8 is approximately 75% larger than AMP 7.
Speaker Change: And I'd like to highlight that <unk> is approximately 75% larger than <unk> seven.
Speaker Change: <unk> has been selected by the University of Texas at Dallas to provide design planning and programming for a new multi story multi building student housing project.
Speaker Change: Integrated services will include architecture building engineering landscape architecture, and the selection of furniture fixtures and equipment.
Speaker Change: This new project will bring 1000, new beds in apartment style units to the University.
Speaker Change: And with the vast need for student housing across the U S and Canada. We expect this to be another area of rapid growth for our buildings business.
Speaker Change: And finally with our specialty and advanced manufacturing, we were selected to provide design and engineering services for silicones boxes newest $3 2 billion Euro semiconductor Assembly and test facility in northern Italy.
Gordon Johnston: Stantec has been selected by the University of Texas at Dallas to provide design planning and programming for a new multi-story, multi-building student housing project. Integrated services will include architecture, building, engineering, landscape architecture, and the selection of furniture, fixtures, and equipment. This new project will bring 1,000 new beds in apartment-style units to the university. And with the vast need for student housing across the U.S. and Canada, we expect this to be another area of rapid growth for our buildings.
Speaker Change: Silicon boxes, and advanced semiconductor integration service provider in this project Mark since first global expansion outside of Singapore.
Speaker Change: The facility is scheduled to begin operations in 2028 and is expected to create approximately 600 jobs in the Navarro Piedmont region.
Speaker Change: Our strong diversification across multiple geographies sectors, and subsectors positions us well for another very strong year.
Gordon Johnston: And finally, with our specialty in advanced manufacturing, we were selected to provide design and engineering services for Silicone Box's new 3.2 billion euro semiconductor assembly and test facility in Northern Italy. Silicon Box is an advanced semiconductor integration service provider, and this project marks its first global expansion outside of Singapore. The facility is scheduled to begin operations in 2028 and is expected to create approximately 1,600 jobs in the Novara Piedmont region. Our strong diversification across multiple geographies, sectors, and subsectors positions us well for another very strong year. As we look forward to 2025 with our strong focus on operational excellence, we anticipate another great year of margin expansion and earnings growth.
Speaker Change: As we look forward to 2025 with our strong focus on operational excellence, we anticipate another great year of margin expansion and earnings growth.
Speaker Change: We expect organic net revenue growth to be in the mid to high single digits in each of our geographies.
Speaker Change: While there have been a number of recent developments that you the new U S administration has been clear that they are committed to driving economic growth.
Speaker Change: The work that we do today for the U S. Federal government is roughly 5% of our overall net revenues and a spread amongst various federal departments.
Speaker Change: This work is almost entirely in support of U S infrastructure and this work continues today.
Speaker Change: We have very limited exposure to U S AIB.
Speaker Change: While there may be some minor disruptions to projects to ensure funding is directed to the new administration's priorities, we have not seen any material impact to our projects to date.
Gordon Johnston: We expect organic net revenue growth to be in the mid to high single digits in each of our geographies.
Gordon Johnston: While there have been a number of recent developments, the new U.S. administration has been clear that they are committed to driving economic growth. The work that we do today for the U.S. federal government is roughly 5% of our overall net revenues and is spread amongst various federal departments. This work is almost entirely in support of U.S. infrastructure, and this work continues today. We have very limited exposure to USAID. While there may be some minor disruptions to projects to ensure funding is directed to the new administration's priorities, we have not seen any material impacts to our projects to date.
Speaker Change: To drive economic growth, we believe addressing macro factors of ageing infrastructure water infrastructure Datacenters in energy infrastructure will all still be needed and static is very well positioned to help drive this growth.
Speaker Change: The potential of more streamlined regulatory processes may into May in fact helped drive faster approvals and ultimately be a net benefit to <unk>.
Speaker Change: We strongly believe that there will continue to be significant new opportunities in the U S. As we move forward.
Speaker Change: Turning to Canada, our strong momentum as reflected in our backlog.
Speaker Change: We expect growth to be driven by continued activity in water, particularly in water wastewater treatment plants and in buildings through significant activity in healthcare.
Gordon Johnston: To drive economic growth, we believe addressing macro factors of aging infrastructure, water infrastructure, data centers and energy infrastructure will all still be needed, and Stantec is very well positioned to help drive this growth. The potential of more streamlined regulatory processes may in fact help drive faster approvals and ultimately be a net benefit to SEDDT. We strongly believe that there will continue to be significant new opportunities in the U.S. as we move forward.
Speaker Change: Vivek in data centers and in energy and resources, which has started to see the ramp up of new projects.
Speaker Change: And global we expect a continued high levels of activity in water under the <unk> program.
Speaker Change: And other water frameworks in Australia, and New Zealand to drive growth.
Speaker Change: Buildings also continues to see heightened levels of activity globally, as do our environmental services and energy and resources teams.
Gordon Johnston: Turning to Canada, our strong momentum is reflected in our backlog. We expect growth to be driven by continued activity in water, particularly in wastewater treatment plants and in buildings, through significant activity in health care, civic and data centers, and in energy and resources, which has started to see the ramp up of new projects. In global, we expect a continued high levels of activity in water under the AMP-8 program. and other water frameworks in Australia and New Zealand to drive growth.
Speaker Change: With that we've put forward the following guidance for the year.
Speaker Change: We expected to achieve net revenue growth of 7% to 10%.
Speaker Change: EBITDA margin for the year is expected to be in the range of $16 seven to 17, 3%, which reflects our continued confidence in solid project execution and operational performance.
Speaker Change: And finally, we expect adjusted EPS growth for 2025 to be in the range of 16% to 19%.
Gordon Johnston: Buildings also continues to see heightened levels of activity globally, as do our environmental services and energy and resources teams. With that, we've put forward the following guidance for the year. We expect it to achieve net revenue growth of 7 to 10 percent. EBITDA margin for the year is expected to be in the range of 16.7 to 17.3%, which reflects our continued confidence in solid project execution and operational performance. And finally, we expect adjusted EPS growth for 2025 to be in the range of 16% to 19%, once again, above our net revenue growth. These targets do not include any potential future acquisitions.
Once again above our net revenue growth.
Speaker Change: These targets do not include any potential future acquisition.
Speaker Change: I would note that our M&A pipeline remains very full with a lot of opportunities in front of us we're seeing a number of opportunities in the U S, which continues to consolidate and also globally.
Speaker Change: As Vito mentioned, our balance sheet is very strong right now so it will be able to move quickly when we land on the right opportunity.
Speaker Change: 2024 was a very strong year for static and has put us on track to deliver on our strategic plan in.
Speaker Change: In 2025, we expect another year of exceptional performance as we continue to drive organic growth and our robust M&A program.
Speaker Change: And with that I'll turn the call back to the operator for questions.
Gordon Johnston: I would note that our M&A pipeline remains very full, with a lot of opportunities in front of us. We're seeing a number of opportunities in the U.S., which continues to consolidate, and also globally. As Vito mentioned, our balance sheet is very strong right now, so we'll be able to move quickly when we land on the right opportunity.
Speaker Change: Later.
Speaker Change: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question Press Star One again, one moment, while we compile the Q&A roster.
Gordon Johnston: 2024 was a very strong year for Stantec and has put us on track to deliver on our strategic plan. In 2025, we expect another year of exceptional performance as we continue to drive organic growth and our robust M&A program.
And our first question will come from the line of <unk> Khan with RBC. Your line is open.
Khan: Great. Thanks, very much just for the first question that a lot of moving pieces in the operating backdrop.
Khan: Quite a bit of color on sort of your outlook. Maybe you can just dig into what are some of the things youre seeing in the demand environment. The conversations youre, having that give you confidence in that.
Operator: And with that, I'll turn the call back to the operator for questions. Thank you. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1 1 again. One moment while we compile the Q&A roster.
Khan: Total revenue growth that you laid out here for 2025.
Khan: Sure. Thanks have a great great question.
Khan: Some of the things we look at is just straight to the backlog.
Khan: And that that very very strong organic backlog growth over the year some of the main.
Sabahat Khan: And our first question will come from the line of Sabahat Khan with RBC. Your line is open. Great, thanks very much. Just for the first question, there's a lot of moving pieces in the operating backdrop. You provided a bit of color on sort of your outlook, but maybe you can just dig into what are some of the things you're seeing in the demand environment, the conversations you're having that give you confidence in the kind of total revenue growth that you laid out here for 2025.
Khan: Areas, where we see there firstly an R R.
Khan: Our buildings business continues to be very strong we saw.
Khan: Organic growth ramping up in the buildings business hitting almost 18% here in Q4, and we see a lot of really strong opportunities in the buildings business going forward, but when you look at water, which has been extremely strong for us over the years, 20% organic growth in 2023, another 14% organic growth here in 'twenty four.
Gordon Johnston: Thanks Sabahat, great question. Some of the things we look at is just straight to the backlog and that very, very strong organic backlog growth over the year. Some of the main areas where we see there, firstly, in our buildings business continues to be very strong. We saw organic growth ramping up in the buildings business, hitting almost 18% here in Q4, and we see a lot of really strong opportunities in the buildings business going forward. When you look at water, which has been extremely strong for us over the years, 20% organic growth in 2023, another 14% organic growth here in 2024, and a 24% backlog increase organically going in Canada and the US going into 2025, that certainly leaves us with a very, very that we have the leading water franchise there moving into AMP-8 with a 75% increase in the capital program there, and a lot of that work isn't yet in backlog.
Khan: And a 24% backlog increase organically going in Canada, and the U S going into 2025 that certainly drives us with leaves us with a very very high degree of confidence that we mentioned in the UK, where we've we've talked before that we have.
Khan: The leading water franchise, there moving into App eight with a 75% increase in the capital program, there and a lot of that work isn't yet in backlog so.
Khan: Our infrastructure business with transportation very very strong around the world also were seeing no continued engagement continued project pursuits in the pipeline and in the U S. So whether its really all of our different business lines and various geographies are feeling really strong there is always going to be a little pockets of weakness here or there.
Khan: But overall from a.
Khan: The overall company, we still feel very strong about the book going forward.
Speaker Change: And gorgeous just maybe if I can chime in on that.
Speaker Change: The last piece you mentioned I think is really important not only the backlog, but also the proposal activity. We're really see continued strong proposal activity right up to sort of.
Gordon Johnston: Our infrastructure business, you know, with transportation, very, very strong around the world. Also, we're seeing, you know, continued engagement, continued project pursuits in the pipeline in the U.S. So whether it's really all of our different business lines in various geographies are feeling really strong. There's always going to be little pockets of weakness here or there. But overall, from, you know, the overall company, we still feel very strong about going forward.
Speaker Change: The current times and that is a strong reflection of the demand environment continues to be quite robust.
Speaker Change: Okay, Great and then similarly on the on the margin guidance, let's say $16 seven to 17, 3% guidance range on the EBITDA line. The lower end seems to be in line with what you reported portfolio 24, maybe if you can just.
Vito Culmone: And Gord, just maybe if I can chime in on that. And the last piece you mentioned I think is really important, not only the backlog, but also the proposal activity. We're really seeing continued strong proposal activity right up to sort of the current times and that's a strong reflection of demand environment continuing to be quite robust. Okay, great.
Speaker Change: Sure some assumptions around.
Speaker Change: What moving parts would get you to the low end of the margin guide versus getting something closer to that 17, 3% range. Thanks.
Speaker Change: Yes, we feel really the progress we've made on EBIT margin.
Speaker Change: Continued obviously incredible focus for us.
Speaker Change: It's really about the quality of the work that we're doing and convert and then obviously the cash.
Gordon Johnston: And then similarly on the margin guidance, looks like, you know, 16.7 to kind of 17.3% guidance range on the EBITDA line. The low rent seems to be in line with what you reported for full year 24. Maybe if you can just... share some assumptions around what moving parts would get you to the low end of the margin guide versus getting something closer to that 17.3% range. Yeah, we feel really, you know, the progress we've made, Sabah, on even a margin, and continued, obviously, incredible focus for us. It's really about the quality of the work that we're doing and converting it, obviously, to cash.
Speaker Change: So I'd say, probably the biggest driver in the 16, 7% to 73 is really project margin and.
Speaker Change: And with respect to project margin, then you're right the mix elements I mean, we're very pleased with the project margins across our entire businesses, both global skews, a little lower than North America and whatnot. So to the extent that mix is probably going to be the biggest driver of that.
Speaker Change: From a from a where we will be in the range side of things, but continued focus obviously on operational leverage.
Speaker Change: Use of our high value centers.
Speaker Change: Utilization.
Vito Culmone: So I'd say probably the biggest driver in the, you know, in the 16-7 and 17-3 is really project margin. And with respect to project margin, then you're into mixed elements. I mean, we're very pleased with the project margins across our entire businesses, but global skews a little lower than North America and whatnot. So to the extent that mix is probably going to be the biggest driver of that, from a where we'll be in the range side of things. But continued focus, obviously, on operational leverage, use of our high value centers, you know, utilization, the use of technology and driving productivity, all those continue to be very important levers for us as we move forward here.
Speaker Change: The use of technology and driving productivity all of those continue to be.
Speaker Change: Very important levers for us as we move forward here.
Speaker Change: <unk>.
Speaker Change: Obviously, our 2026 guidance was 17% to 18% and this is a nice step into into that range.
Speaker Change: Okay, and then last one you highlighted the balance sheet is in good shape and provide a little bit of color on your M&A outlook, maybe a two part question. There. One can you just talk about the mix of opportunities within the pipeline across large opportunities to something more smaller medium size and then secondly, as it operating backdrop.
Speaker Change: And some of the noise in the macro environment change that target's willingness to transact or the multiples that al Thanks, and I'll leave it at that.
Gordon Johnston: And, you know, obviously, our 2026 guidance was 17-18%, and this is a nice step into that range.
Speaker Change: Sure I'll start with the first part and.
Speaker Change: In terms of the firms that we're looking at our sweet spot is always kind of been in that.
Gordon Johnston: And then maybe the last one, you highlighted the balance sheet is in good shape and provided a little bit of color on your M&A outlook. Maybe a two-part question there. One, can you maybe just talk about a mix of opportunities within that pipeline, you know, across large opportunities to something more small or medium-sized? And then secondly, has that operating backdrop and some of the noise in the macro environment changed the target's willingness to transact or the multiples at all?
Speaker Change: Mid size too.
Speaker Change: 2000 person.
Speaker Change: Company and there is still lots of opportunity there.
Speaker Change: You heard Vito mentioned two balance sheet very very strong there are some other there are some larger ones that we see coming to market in the next six months 12 months 18 months and we will absolutely have a take a good look at those.
Speaker Change: But from globally.
Speaker Change: It's been primarily in the U S and other countries globally lots of opportunity in that 1000 2000 person company that we.
Gordon Johnston: Thanks, and I'll leave it at that.
Gordon Johnston: Sure, I'll start with the first part, and Sabah, we, in terms of the firms that we're looking at now, you know, our sweet spot has always kind of been in that mid-size, 1,000, 2,000 person company, and there's still lots of opportunity there, and, you know, and you heard Vito mention too, balance sheet very, very strong. There are some other, there are some larger ones that we see coming to market in the next 6, 12, 18 months, and we'll absolutely have a, take a good look at those. But from globally, you know, whether it's in primarily in the US and other countries globally, lots of opportunity in that, you know, that thousand two thousand person company that we, you know, that we're very, very comfortable with.
Speaker Change: We're very very comfortable with.
Speaker Change: Yes, it's up in respect to the second part of it might be too early at this point, but we are not seeing any discernible sort of change in the environment, both whether it's from a multiple perspective or whether it's from a funnel perspective related to the macro drop but it's interesting I think a little bit about that one and you can probably the.
Speaker Change: Land on both sides of that as far as either making it more ripe or maybe slowing it down a little bit but at this point, we're not seeing anything yet based on the plot them over.
Speaker Change: <unk>.
Speaker Change: Of our funnel and our opportunities and whatnot.
Speaker Change: We don't anticipate any challenges.
Speaker Change: <unk> continued our M&A.
Gordon Johnston: Yeah, so with respect to the second part, it might be too early at this point, but we are not seeing any discernible sort of change in the environment, both whether it's from a multiple perspective, or whether it's from a funnel perspective, related to the macro drop. But it's interesting to think a little bit about that one. And, and you can probably, you know, land on both sides of that as far as either making it more ripe, or maybe slowing it down a little bit. But at this point, we're not seeing anything. And based on the quantum of our, of our, of our funnel and our opportunities and whatnot, we don't anticipate any challenges and continue our M&A pursuits as we historically have.
Speaker Change: Pursuits, as we historically have.
Speaker Change: Alright, thanks very much.
Speaker Change: Thanks, Sean.
Speaker Change: One moment our next question.
Speaker Change: And then will come from the line of Christopher Friesan with CIBC. Your line is open.
Christopher Friesan: Hi, Thanks for taking my question.
Speaker Change: Congrats on the quarter.
Christopher Friesan: I was just wondering if you can speak to.
Christopher Friesan: A little bit more detail around energy and resources, obviously, a stronger quarter in Q4 than we'd seen earlier in the year.
Christopher Friesan: If you could just speak to that and then maybe also how we should think about.
Christopher Friesan: 2025, thank you.
Christopher Friesan: And so energy and resources as we had through the first part of the year, we have seen that organic retraction in energy and resources in part because of really high comps as we were finishing up projects in <unk>.
Krista Friesen: Great, thanks very much. Thank you. One moment for our next question.
Krista Friesen: And that will come from the line of Krista Friesen with CIBC. Your line is open. Hi, thanks for taking my question. Congrats on the quarter. I was just wondering if you can speak to a little bit more detail around energy and resources, obviously a stronger quarter in Q4 than we've seen earlier in the year. If you can speak to that, and then maybe also how we should think about 2025. Thank you. Yeah, and so energy and resources, you know, as we through the first part of the year, you know, we had seen that organic retraction in energy and resources, in part, because of really high comps, as we were finishing up projects in Q1, Q2 of last year.
Christopher Friesan: Q1, Q2 of last year, and so now we've returned to where we think is more sort of that middle ground on energy and resources, we've seen backlog in that group increased 14% year over year, which speaks to good opportunities for us going forward. So we've.
What we're seeing there is a lot of that growth is coming in Canada, and the U S and so a lot of it kind of split evenly between power and mining some copper projects, we've seen coming in Arizona, we have seen some opportunities for feasibility tradeoff studies for mining metallurgical site.
Christopher Friesan: Closures.
Gordon Johnston: And so now we've returned to where we think is more, you know, sort of that middle ground on energy and resources. We've seen backlog in that group increase 14% year over year, which speaks to good opportunities for us going forward. So we've, what we're seeing there is a lot of that growth is coming in Canada and the US. And so a lot of it, you know, kind of split evenly between power and mining, some copper projects we've seen coming in Arizona. We've seen some opportunities for, you know, feasibility trade-off studies for mine and metallurgical site closures.
Christopher Friesan: In Chile, our teams won a number of very very strong projects down therefore permanent management in the energy or engineer of record and so on so we're seeing mining coming back, but also power very being very very strong. So we do forecast that.
Christopher Friesan: We will return to positive.
Christopher Friesan: <unk> growth for the remainder of 2025.
Speaker Change: Thanks, I'll jump back in the queue.
Christopher Friesan: Thanks, Chris.
Christopher Friesan: Thank you one moment our next question.
Christopher Friesan: And that will come from the line of Chris Murray with ATB capital markets.
Gordon Johnston: In Chile, our teams won a number of very, very strong projects down there for permit management and the energy engineer record and so on. So we're seeing mining coming back, but also power being very, very strong. So, you know, we do forecast that ENR will return to positive organic growth for the remainder of 2025. Thanks. I'll jump back in the queue. Thanks, Chris. Thank you.
Chris Murray: Hi, folks just a couple of questions about maybe the EPS guidance.
Chris Murray: I'm just trying to add maybe slows a little bit I was just wondering if theres anything in there that would be kind of unusual couple of things we noticed.
Chris Murray: Was that the intangible amortization stepped down quite hard in Q4, So just wondering if things like that.
Chris Murray: And if there's any implication or thoughts around some.
Chris Murray: Some stock buyback around there just taken in share counts down.
Chris Murray: One moment for our next question. And that will come from the line of Chris Murray with ATB Capital Markets. Folks, just a couple questions about maybe the EPS guidance. I'm just trying to maybe spread this a little bit. I was just wondering if there's anything in there that would be kind of unusual. You know, a couple things we noticed was that the intangible amortization stepped down quite hard in Q4. So just wondering about things like that.
Chris Murray: Hi, Chris its veto thanks for the question.
Chris Murray: No I mean at the end of the day. The EPS guidance is driven by the strong fundamentals of the business. So thats back to net revenue. Obviously project brought strong project margin and EBIT margin expansion. So that's essentially the most significant component of that there are no modeling around any obviously no acquisitions are.
Chris Murray: Additional stock buybacks in that at all.
Chris Murray: A little bit of modeling there with respect to obviously, a lower interest rate environment vis vis 2024, and a lower debt level. So we've got some interest benefit interest expense benefit reflected in the.
Vito Culmone: And if there's any implication or thoughts around some stock buyback around there, just just take them in share accounts.
Vito Culmone: Hi, Chris, it's Vito. Thanks for the question. No, I mean, at the end of the day, the EPS guidance is driven by the strong fundamentals of the business. So that's back to net revenue, obviously, project, strong project margin, and even a margin expansion. So that's essentially the most significant component of that. There are no modeling around any, obviously, no acquisitions or additional stock buybacks in that at all. A little bit of modeling there with respect to obviously, a lowering interest rate environment vis-a-vis 2024 at a lower debt level. So we've got some interest benefit, interest expense benefit reflected in the in the guidance.
Chris Murray: In the guidance, but really it's driven by strong operating fundamentals.
Speaker Change: Okay. That's helpful. Thanks, I'll leave it there.
Chris Murray: Thank you one moment for our next question.
Chris Murray: And that will come from the line of Frederic Bastien with Raymond James Your line is open.
Speaker Change: Good afternoon guys.
Speaker Change: We saw organic growth reaccelerate quite nicely in the U S and I know you highlighted the water and billing segment as areas of strength, but I was wondering if you could unpack this a bit more for us if there is any particular projects or.
Speaker Change: Specific end markets that you saw a lot of strength.
Vito Culmone: But really, it's driven by strong operating fundamental Okay, that's helpful.
Speaker Change: Pretty broad based actually in the U S. We felt pretty good about it specifically in the quarter in fact.
Vito Culmone: Thanks, I'll leave it there.
Operator: Thank you.
Frederic Bastien: One moment for our next question. And that will come from the line of Frederic Bastien with Raymond James. Your line is open.
Speaker Change: In Q4, I think virtually all of our business lines in the <unk>.
Speaker Change: In the U S added organic growth, leading up to that strong as to over 10% every single one of them and many of them were double digits.
Gordon Johnston: Good afternoon, guys. We saw organic growth re-accelerate quite nicely in the U.S., and I know you highlighted the water and building segment as areas of strength, but I was wondering if you could unpack this a bit more for us, if there's any particular projects or specific end markets that you saw a lot of strength. You know, pretty broad-based, actually, in the US. We felt pretty good about it, you know, specifically in the quarter. In fact, you know, in Q4, I think virtually all of our business lines in the US had organic growth, you know, leading up to that strong, just over 10%.
Speaker Change: And so.
Speaker Change: We saw double digit growth in.
And water and buildings.
Speaker Change: In our <unk> business that are very strong and community development in terms of land development, So really pretty broad based.
Speaker Change: Frederic, but we also like to see that backlog continue to grow year over year in the U S, which is setting us up really well I think for a strong 2025.
Speaker Change: Okay. Thanks for that just turning back to.
Speaker Change: Some questions were asked about the pipeline for M&A and that stuff.
Gordon Johnston: Every single one of them did, and many of them were double digits. Yeah. And so, you know, we saw double-digit growth in, you know, in water and buildings, and in our E&R business, very strong in community development in terms of land development. So, really pretty broad-based, Frederic, but we also, you know, like to see that, you know, backlog continued to grow year over year in the US, which is setting us up really well, I think, for a strong 2025.
Speaker Change: You highlighted some regions, where you were focusing on and sort of the I.
Speaker Change: I guess the size of the acquisition will obviously, the pan and youll be opportunistic on that but any any specific disciplines, where you'd like to.
Speaker Change: Will become a little stronger just add add diversity to your offering.
Speaker Change: We're not looking at this point into getting to into any new law.
Speaker Change: Lines of business, we see an incredible runway in our current five business operating units to just to continue to grow those.
Gordon Johnston: Okay, thanks for that.
Gordon Johnston: Just turning back to some questions were asked about the pipeline for M&A and that stuff. You highlighted some regions where you were focusing on and sort of the, I guess the size of the acquisition will obviously depend and you'll be opportunistic on that, but any specific disciplines where you'd like to become a little stronger, just add diversity to your offering? You know, we're not looking at this point into getting into any new lines of business. You know, we see an incredible runway in our current five business operating units to just continue to grow those. And so I think as we look at it, we're looking at opportunities really in all of them, not not prioritizing any more than others and just really having a look at the set that comes along, those that we're pursuing.
Speaker Change: And so I think as we look at it we're looking at opportunities really in all of them not not prioritizing any more than others and just really having a look at that.
Speaker Change: That comes along those that we're pursuing.
Speaker Change: No I wouldn't say any particular areas of focus for US right now we have a lot of opportunities in really all of our business operating units.
Speaker Change: Okay. That's helpful. One last from me if I may.
Speaker Change: You guide for a lower tax rate what is behind that and wondering if theres anything we can read through to 2026 of that can be sustained into 2026 are showing should we expect the tax rate to get back to a slightly higher level. Thank you.
Speaker Change: Yes, I think I think the tax rate is essentially the same.
No material change 22, 5% as our effective tax rate that we're guiding to.
Gordon Johnston: So, no, I wouldn't say any particular areas of focus for us right now. We have a lot of opportunities in really all of our business operating units.
Speaker Change: And so no substantive changes in overall tax distributions, if you will <unk> planning 22, 5%.
Gordon Johnston: Okay, that's helpful.
Chris Murray: One last for me, if I may. You guide for a lower tax rate. What is behind that?
Speaker Change: Okay. Thank you.
Speaker Change: Youre welcome.
Vito Culmone: And wondering if there's anything that we can read through to 2026 that can be sustained into 2026, or should we expect the tax rate to get back to a slightly higher level? Thank you. Yeah, I think I think the tax rate is essentially the same. If no material change, 22 and a half percent is our effective tax rate that we're guiding to. And so no substantive changes in overall tax distributions, if you will, and or planning, 22 and a half percent. Okay, thank you. You're welcome.
Speaker Change: And one moment our next question.
Speaker Change: And that will come from the line of Yuri Lynk with Canaccord Genuity. Your line is open.
Yuri Lynk: Hey, good evening or good afternoon, guys.
Speaker Change: He retired.
Speaker Change: Wanted to dig in a little bit on an amp eight.
Speaker Change: Trying to.
Speaker Change: Put into context.
Speaker Change: That program being 75% larger than the <unk> seven can you give us a flavor for.
Speaker Change: <unk> overall contribution to your to your water business and.
Yuri Lynk: And one moment for our next question. And that will come from the line of Yuri Lynk with Canaccord Genuity. Your line is open. Hey, uh, good evening or good afternoon, guys. Yuri, hi, Yuri. I wanted to dig in a little bit on AMP-8. I'm trying to put into context, you know, that program being 75% larger than AMP7. Can you give us a flavor for... Amp 7's overall contribution to your water business and if you know program spending is up 75% you know and if you've got same market share or less or more. I don't know what the case is.
Speaker Change: If if program spending is up 75%.
Speaker Change: And if you've got.
Speaker Change: The same market share or less or more I don't know what the cases, but like how are you up 75% to like like how do we think about this.
Speaker Change: Yes, so as we look at it overall.
Speaker Change: The App seven overall spend the capital spend was in and around 59 billion.
Speaker Change: And the the budget for the spend for Abbvie is about a 104 billion pounds. So that's where that 75% increase comes from what's particularly interesting in that.
Speaker Change: Those areas that.
Speaker Change: Some of the water companies have actually launched appeals of the amount that they are.
They could spend an app.
Gordon Johnston: But like, how are you up 75 too? Like, like, how do we think about Yeah, so as we look at overall, the AMP 7 overall spend, the capital spend was in and around 59 billion pounds. And the budget for the spend for AMP 8 is about 104 billion pounds. So that's where that 75% increase comes from. What's particularly interesting in that though, Yuri, is that Some of the water companies have actually launched appeals of the amount that they could spend in AbbAid because they're saying with that spend that I've been given, I won't be able to meet the improvements in levels of service that you're asking me to do.
Speaker Change: Because they are saying with that spend that I have been given I won't be able to meet the improvements and levels of service that you are asking me to do so there is no guarantee whatsoever that it will increase above what it is currently there, but certainly I believe there is five of the water companies now that have launched appeals to actually.
Speaker Change: Get up larger capital spend in that base. So there's even additional upside to that and so when you think about.
Speaker Change: Our overall spend.
Speaker Change: Or are the potential benefit static it's not a one to one increase with <unk>.
Speaker Change: Increase in the capital spend but it's often not far off from that and so knowing that this was coming we've begin we began even last year to take some additional real estate and some locations in the U K, we have ramped up hiring both in the U K and in our Pune a delivery center, so that we would be available and ready.
Gordon Johnston: So there's no guarantee whatsoever that it will increase above what is currently there. But certainly I believe there's five of the water companies now that have launched appeals to actually get a larger capital spend in AbbAid. So there's even additional upside to that. And so when you think about our overall spend or the potential benefit to Stantec, it's not a one-to-one increase with the increase in the capital spend, but it's often not far off from that.
Speaker Change: Two to take on this.
Speaker Change: New assignments as they come so.
Speaker Change: Great great opportunities for us there and.
Speaker Change: In addition to the strength of the water business in North America that we talked about as well.
Speaker Change: Okay.
Speaker Change: K is obviously is our single largest revenue contributor in the global side of the business, but we don't give specific.
Gordon Johnston: And so knowing that this was coming, we began even last year to take some additional real estate in some locations in the UK. We've ramped up hiring both in the UK and in our Pune Delivery Center so that we would be available and ready to take on these new assignments as they come. You know, great, great opportunities for us there. And in addition to the strength of the water business in North America that we talked about as well. Yuri, the UK is, you know, obviously, is our single largest revenue contributor on the global side of the business.
Speaker Change: <unk> numbers, but the UK is and we saw really impressive both organic and acquisition growth but.
Speaker Change: Through the.
Speaker Change: Region that country last year.
Speaker Change: Seven obviously contributed strongly to that end, we expect that to continue moving forward.
Beth: And Beth kicks in.
Speaker Change: In April April.
Speaker Change: April 2025, although we have already started work on some programs. We were awarded some projects back in 24 on a strategic advisory.
Speaker Change: Consulted consultative process in order to start already planning in advance what the capital programs might be and kind of get a jump on it. So we hit the around the ground running here in April 25.
Gordon Johnston: We don't give specific country numbers, but the UK is and we saw really impressive both organic and acquisition growth. But through that region, that country last year, AMPEC 7 obviously contributed strongly to that, and we expect that to continue moving forward. Ampey kicks in. April. April 2025. Although we have already started work on some AMP programs, we were awarded some projects back in 24 on a strategic advisory sort of consultive process in order to start already planning in advance what the capital programs might be and kind of get a jump on it. So we hit the ground running here in April 2025.
Speaker Change: Okay.
Speaker Change: Last one for me.
Speaker Change: Just your Capex was only $3 million in the quarter.
Speaker Change: Normally low.
Speaker Change: Anything to call out there and any.
Speaker Change: How do we think about that number going forward.
Speaker Change: No I think you can get.
Speaker Change: That's just timing more than anything else.
Speaker Change: We probably had some stuff that didn't quite qualified capital ended up on the balance sheet, it sort of prepaid related stuff, but that would be more it related items that as you think about just normal accounting classifications, but nothing unusual at all in.
Gordon Johnston: Last one for me... Just your CapEx was only $3 million in the quarter. normally low.
Speaker Change: We don't guide to obviously Capex on an annual state as well we do actually we include the number and so youll see what we're guiding to.
Speaker Change: Next year to be.
Speaker Change: A very similar year from a pattern perspective, with the stroke, resulting strong free cash flow generation.
Vito Culmone: Anything to call out there and any How do we think about that number? No, I think you could. That's just timing more than anything else. We probably had some stuff that didn't quite qualify as capital. I ended up on the balance sheet and sort of prepaid related stuff. But that would be more IT related items, as you think about just normal accounting classifications, but nothing unusual at all.
Speaker Change: Okay. That's it from me. Thanks, that's great. Thank you.
Speaker Change: One moment for our next question.
Speaker Change: That will come from the line of Michael <unk> with TD Cowen Your line is open.
Michael <unk>: Thank you why don't we look at the the guidance range that you've provided and thinking specifically about organic growth are the sorts of factors that could lead you to the high end versus the low end of that range or are those factors materially different in the current environment.
Vito Culmone: And we don't guide to, obviously, CapEx on annual basis. Well, we do, actually. We include the number. And so you see what we're guiding to.
Vito Culmone: I expect next year to be a very similar year from a pattern perspective with strong resulting strong free cash flow generation.
Speaker Change: As you develop the guidance or would they be consistent generally speaking with the way you thought about things in the past.
Speaker Change: I think they are pretty consistent really there is so much volatility in the world. These days and no one really knows how things may shake out, but that's the beauty of our diversification model that we.
Operator: Okay, that's it for me, thanks. That's great, thank you.
Devin Dodge: And one moment for our next question. And that will come from the line of Michael Tupholme with TD Cowen, your line is open. Thank you. When we look at the guidance ranges you've provided and thinking specifically about organic growth, are the sorts of factors that could lead you to the high end versus the low end of that range, are those factors materially different in the current environment as you develop the guidance, or would they be consistent generally? I think they're pretty consistent really, you know, there is so much volatility in the world these days and no one really knows, you know, how things may shake out, but that's the beauty of our diversification model, that, you know, we feel that if, you know, one country or one line of business goes, gets a little bit stronger, a little bit weaker overall, you know, we feel really good about the guidance, it's generally consistent from what we've been thinking about.
Speaker Change: We feel that if one country or one line of business go as it gets a little bit.
Speaker Change: Stronger a little bit weaker overall, we feel really good about the guidance generally consistent from from what we've been thinking about.
Speaker Change: Great.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: Second question is just about the global regions. So.
Speaker Change: It does sound like you remain upbeat about organic growth for global I think you're talking about a similar similar level of mid to high single digit to what youre expecting in the other regions but.
Speaker Change: If we look at the backlog it was sort of flattish on a year over year basis. I know you did talk about some of the awards that you think will begin to contribute.
Speaker Change: We expect the cadence of the growth, we would see him back in and global should that kick in right at the beginning of the year or is there sort of a building of growth as we move through the year for modeling purposes.
Speaker Change: I think you should you can expect a little bit of a build up as we work our way through Abbe I mean, <unk> already referenced obviously that some of that activity that started but.
Devin Dodge: Okay, that's helpful. Thank you.
Gordon Johnston: Second question is just about the global region. It does sound like you remain upbeat about organic growth for global. I think you're talking about a similar level of mid to high single-digit to what you're expecting in the other regions. But if we look at the backlog, it was sort of flattish on a year-over-year basis. I know you did talk about some of the awards that you think will begin to contribute. Should we expect the cadence of the growth we would see in global? Should that kick in right at the beginning of the year? Or is there sort of a building of growth as...
Speaker Change: The UK will drive.
Speaker Change: We see some real strong performances across our global business, but.
Speaker Change: You should expect to see some increases in backlog as we make our way through 2025 related to the global operations.
Speaker Change: Alright, and then just in terms of the organic growth those similar similar cadence like it would start a little slower, but you would expect that to pick up in land you in that mid to high single as you get to the end of the year or is it or is it.
Speaker Change: Is that strength observed throughout the year.
Gordon Johnston: I think you should, you can expect a little bit of a build as we work our way through F8. I mean, Gordon's already referenced, obviously, that some of that activity has started, but the UK will drive, see some real strong performances across our global business, but you should expect to see some increases in backlog as we make our way through 2025 related to the global operation. Right, and then just in terms of the organic growth, those similar cadence, like it would start a little slower, but you'd expect that to pick up and land you in that mid to high single as you get to the end of the year?
Speaker Change: Yes, I think thats.
Speaker Change: That's right and that they'd sort of ramps.
Speaker Change: Probably back half loaded I would say.
Calendar year perspective.
Speaker Change: Okay got it. Thank you and then just lastly, I think Chris touched on this but I'm not sure.
Speaker Change: <unk>.
Speaker Change: I'm not sure I got the full answer here just in terms of amortization of intangibles. It did it did come down in the fourth quarter relative to what we'd seen in prior quarters through 2024.
Speaker Change: We assume no further acquisitions, what does that look like on a quarterly basis as we move through 2025.
Speaker Change: I, probably can take that one offline with you guys and get and get you a more defined range I don't have it at my fingertips here, but happy to obviously provide that.
Gordon Johnston: to that strength. Yeah, I think that's, that's right. And then they'd sort of ramps, probably back half loaded, I would say, from a calendar year All right.
Speaker Change: Okay. Thanks.
Speaker Change: Okay.
Speaker Change: And one moment our next question.
Gordon Johnston: Thank you.
Chris Murray: And then just lastly, I think Chris touched on this, but I'm not sure. I'm not sure I got the full answer here. Just in terms of amortization of intangibles, it did come down in the fourth quarter relative to what we'd seen in prior quarters throughout 2024. If we assume no further acquisitions, what does that look like on a quarterly basis? I probably can take that one offline with you guys and get and get you a more defined range. I don't have it at my fingertips here, but happy to obviously provide that. Okay, thanks.
Speaker Change: And that will come from the line of Ben <unk> with Baird.
Speaker Change: Yes, good afternoon, everyone. Congrats for the very solid quarter.
Ben: Just with respect to the California fires, we've been getting some inbound calls from clients on that and given your dominant position in the water space. We were wondering if you had seen any incremental customer inbounds following the.
Speaker Change: Fires.
Speaker Change: Yes, absolutely been well and more than just in the water space. This.
Benoit Poirier: One moment for our next question. And that will come from the line of Benoit Poirier with Desjardins. Yeah, good afternoon, everyone. Congrats for the very solid quarter. Just with respect to the California fires, we've been getting some inbound calls from client on that. And given your dominant position in the water space, we were wondering if you have seen any incremental customer inbounds following the the fire. Yeah, absolutely, Benoit. And more than just in the water space, you know, this is where we, our environmental people are in early, you know, there's, and there, we've had a number of clients reach out to us for everything from, you know, response plans, recovery plans, there'll be, a lot of work will be required and, you know, things, even things like characterizing the ash, you know, in terms of toxicity, how do you remove it?
Speaker Change: This is where we are environmental people are in early.
Speaker Change: There is and we've had a number of clients reach out to us for everything from.
Speaker Change: Response plans recovery plans.
Speaker Change: There'll be a lot of work will be required in.
Speaker Change: Things, even things like characterizing the ash in terms of toxicity, how do you remove it where do you remove it too. So we do expect an uptick of work required there and was positive in terms of the how quickly. We can respond is we do have master services.
Speaker Change: <unk> in place with a number of the utilities and public sector agencies in California. So we can respond to their requests very quickly rather than waiting for a request for proposal process to go through.
Speaker Change: Okay, and just with respect to the overall tariff obviously theres a lot of question on the USAID Federal work, but you you provided a lot of granularity and I'm just wondering whether we should be thinking that it could even turn to be out a net positive for <unk>.
Gordon Johnston: Where do you remove it to? So, you know, we do expect an uptick of work required there. And what's, you know, positive in terms of the, how quickly we can respond is, we do have master services agreements in place with a number of the utilities and public sector agencies in California. So we can respond to their requests very quickly rather than waiting for a request for proposal process to go through. Okay, and just with respect to the overall tariff, obviously, there's a lot of question on the USA federal work, but you you provide a lot of granularity.
Speaker Change: <unk> got some clients may look to relocate to the U S and on top of that you also have the FX tailwind. So I'm just wondering if.
Speaker Change: We should be thinking about being a net positive rather than a potential negative with respect to the overall tariff situation.
Speaker Change: Yes.
Speaker Change: We're certainly not looking to benefit from from any tariffs that might come in into play, but I think from from your perspective, there is very similar to how we're seeing things.
Benoit Poirier: I'm just wondering whether we should be thinking that it could even turn to be out a net positive for Stantec as some clients may look to relocate to the US. And on top of that, you also have the FX tailwind.
Speaker Change: We have been talking for a couple of quarters that we have been getting some inbounds from clients that may be looking to move relocate manufacturing capacity into the United States. So those are the sorts of things that we absolutely are having.
Vito Culmone: So I'm just wondering if we should be thinking about being a net positive rather than a potential negative with respect to the overall tariff situation.
Speaker Change: Having a look at.
Speaker Change: Okay, and maybe just for Vito could you provide maybe more color about the free cash flow for 2025 are there some moving parts with respect to either a free cash flow conversion Dsos and maybe if you could provide the right now given you were talking about <unk> you could.
Speaker Change: The the current head count in your Global Technology Center.
Speaker Change: That would be great.
Speaker Change: In Pune, where are we now.
Speaker Change: 100, <unk> hundred that's where we're at in banana.
Speaker Change: That's a combination of obviously service delivery folks on the front end of our business.
Vito Culmone: Okay, and maybe just for Vito, could you provide maybe more color about the free cash flow for 2025? Are there some moving parts with respect to either free cash flow conversion, DSOs? And maybe if you could provide right now, given you were talking about Pune, if you could provide the current ad count in your global technology center, that would be great. In Pune, where are we now, Gord? 1,200, 1,300. That's where we're at in Boonee. And that's a combination of obviously service delivery folks on the front end of our business and support, admin support, if you will, or corporate services support.
Speaker Change: And support.
Speaker Change: Admin support if you will or a corporate services support really pleased with the continued penetration there that continued.
Speaker Change: Growth.
Speaker Change: These are just amazing people doing amazing work for us across our entire network and we expect that number to continue to grow obviously as we move forward here and it's a key pillar of our EBIT margin expansion of course with respect to free cash flow nothing.
Speaker Change: And I think.
Speaker Change: Strange if you will <unk> or different relative to 2024, you see our guidance there which is a function of net income we definitely expect to be there again, we guide to one times or greater up net income.
Gordon Johnston: Really pleased with the continued penetration there, the continued growth. These are just amazing people doing amazing work for us across our entire network. And we expect that number to continue to grow, obviously, as we move forward here. And it's a key pillar of our EBITDA margin expansion, of course. With respect to free cash flow, nothing strange, if you will, and or different relative to 2024. You see our guidance there, which is a function of net income. We definitely expect to be there again. We guide to one time or greater of net income. Really pleased with the operating cash flow generated by the business, working capital, of course, DSO management.
Speaker Change: Sure.
Speaker Change: Really pleased with the operating cash flow.
Speaker Change: Generally by the business working capital of course, DSO management, just a shadow until all the project managers and the entire network that continues to focus on that.
Speaker Change: $1.
Speaker Change: Associated with that and as key accountability for folks and Theyre doing a great job delivering that so we expect to obviously you saw our year end number was at 77 days on a consolidated basis and continues to be a focus for us to continue to get better at that if you will and lower that.
Speaker Change: If you have sort of mapped obviously free cash flow relative to where we are today and impact on leverage again. It just goes back to the tremendous operating cash flow generative.
Speaker Change: Capacity in this business.
Vito Culmone: And just a shout out to all the project managers in the entire network that continues to focus on that. That's a lot of dollars associated with that. And it's a key accountability for folks and they're doing a great job delivering that. So we expect that, obviously, you saw our year-end number was at 77 days on a consolidated basis and continues to be a focus for us to continue to get better at that, if you will, and lower that. If you sort of map, obviously, free cash flow relative to where we are today and impact on leverage, again, it just goes back to the tremendous operating cash flow capacity in this business.
Speaker Change: We will obviously continue to from a capital structure pay our dividend and look at look to that but just an incredible capacity with respect to obviously balance sheet.
Speaker Change: Possibilities moving forward and obviously supporting our M&A strategy.
Speaker Change: Thanks, very much for the time.
Noah: Thanks Noah.
Thank you one moment our next question.
Speaker Change: And that will come from the line of Devin Dodge with BMO capital markets. Your line is open.
Speaker Change: Yes, thanks, good afternoon.
Devin Dodge: Good morning, depending on where you are here, but I just wanted to ask.
Benoit Poirier: We'll obviously continue to, from a capital structure, pair dividend and look to that, but just incredible capacity with respect to, obviously, balance sheet possibilities moving forward and obviously supporting our M&A strategy. Thanks very much for the time. Thanks, Benoit.
Speaker Change: Can you remind us.
Speaker Change: There is static on the evaluation of AI technology, and where you're most optimistic about.
Speaker Change: The opportunity to leverage these capabilities in your visits.
Speaker Change: Yes, we.
Speaker Change: We do have a AI task force that we set up last year, that's really looking at the details of how can we use AI and other technologies to both improve our speed of delivery internally on both chargeable work that we deliver for clients, but also.
Devin Dodge: Thank you. One moment for our next question. And that will come from the line of Devin Dodge with BMO Capital Markets. Your line is open. Yeah, thanks. Good afternoon, or good morning, depending on where you are here.
Speaker Change: <unk>, whether it's financial analysis proposal generation these sorts of things and so that group has been with the way we've structured it Devin as we people submit.
Devin Dodge: But I just want to ask, can you remind us, where is Stantec on the evaluation of AI technology and where you're most optimistic about the opportunity to leverage these capabilities in your Yeah, so we, we do have a, an AI task force that we set up last year, that's really looking at the details of how can we use AI and other technologies to both improve our speed of delivery internally on both chargeable work that we deliver for clients, but also internally, whether it's financial analysis, proposal generation, these sorts of things. And so that group has been, well, the way we've structured it, Devin, is we, people.
Speaker Change: <unk> <unk> inquiries to that group, saying, Hey, this is what I would like to try with our with using these new AI tools and.
Speaker Change: And so then so we don't have 33000 people around the world all trying different things and duplicating.
Speaker Change: We're trying to centralize that get some economies of scale in terms of the work that we're doing so it's actually working out really well.
Speaker Change: We're looking at things like proposal generation financial analysis.
Speaker Change: Using various AI and VR tools in the design process already just to both speed our ability to deliver the product, but also for how the client might want to review at many of our clients arent engineers or technical people by training. So if we go to their office and rollout a set of.
Gordon Johnston: submit inquiries to that group saying, hey, this is what I'd like to try with using these new AI tools. And so we don't have 33,000 people around the world all trying different things and duplicating. You know, we're trying to centralize that, get some economies of scale in terms of the work that we're doing. So it's actually working out really well. You know, we're looking at things like proposal generation, financial analysis. We're using various AI and VR tools in the design process already just to both speed our ability to deliver the product, but also for how the client might want to review it.
Speaker Change: Blueprints that you'd see typically engineers carrying around underneath their arms.
Speaker Change: Sometimes it's hard for them to visualize what might this look like how would I interact with it and so that's where we find using some of these AI virtual augmented reality tools really are beneficial.
Speaker Change: Okay. Good context, there thanks for that and then just a quick one in the MD&A I think I've talked about.
Speaker Change: Project margin benefited from some recoveries and change orders I think we all recognize that that's a normal part of your business but.
Gordon Johnston: You know, many of our clients aren't engineers or technical people by training. So if we go to their office and roll out a set of, you know, blueprints that you see typically engineers carrying around underneath their arms, sometimes it's hard for them to visualize it. What might this look like? How would I interact with it? And so that's where we find using some of these AI virtual augmented reality tools really are beneficial. Okay, good context there. Thanks for that.
Speaker Change: Are you able to provide some color on how meaningful these were to Q4 results.
Speaker Change: No David.
Speaker Change: It is normative sort of.
Speaker Change: Got.
Speaker Change: Impacts if you will they all relate to sort of 2024. So I think when you just sort of blend it all in it's just a normal timing related items, we call it out because obviously.
Speaker Change: It was a factor, but I would not let that take away at all from just really strong operating fundamentals.
Vito Culmone: And then just a quick one. In the MD&A, I think it talked about Project Margie benefited from some recoveries and change orders. I think we all recognize it. That's a normal part of your business. But are you able to provide some color on how meaningful these were to Q4? No, Devin, it is normative, sort of. impacts, if you will, they all relate to sort of 2024. So I think when you just sort of blend it all in, it's just a normal timing related items. We call it out because obviously, you know, it's a, it was a factor, but I would not let that take away at all from just really the strong operating fundamentals into this.
Speaker Change: In the business.
Speaker Change: And you see that reflected obviously youll see that reflected in our 2025 guidance.
Speaker Change: <unk>, given a little bit of color with respect to quarters in Q1 and Q.
Speaker Change: Q4, NIM went up just the seasonal impact of guiding to EBITDA margin for the quarter, but.
Speaker Change: All very strong.
Speaker Change: Okay. Thanks for that congrats on the good closeout here to 2024 I'll turn it over.
Speaker Change: Thanks, Dan.
Speaker Change: Our next question.
Speaker Change: And that will come from the line of Maxim <unk> with MBS. Your line is open.
Devin Dodge: And we see that reflected in our 2025 guidance, be given a little bit of color with respect to quarters and Q1 and Q4 and whatnot from just the seasonal impact of guiding to even a margin for the quarter, but all very, very strong. Okay, thanks so much. Congrats on the good close out here to 2024. I'll turn it over. Thanks, Bill.
Speaker Change: Hi, John.
Speaker Change: Gentlemen.
Speaker Change: Hi.
Speaker Change: Maybe the first question for you if I may in terms of some of the policy shifts how are you guys thinking internally around.
Counter specifically any potential tariffs impact.
Speaker Change: Impacts and then in the U S.
Speaker Change: If you don't mind, providing a bit of an update in terms of how are you.
Speaker Change: Thank the corporate share of IAG spending is landing.
Speaker Change: Kind of like around the peak intensity is that still kind of 322007 2028, just wondering if visibility has evolved.
Maxim Sytchev: One moment for our next question. And that will come from the line of Maxim Sytchev with NBF. Your line is open. Hi, ladies and gentlemen. Hi.
Speaker Change: Thank you.
Speaker Change: Yes, no great. Thanks, Thanks, guys. When we think about the impact of tariffs in the U S.
Speaker Change: Ananda sorry, what that might mean for manufacturing capacity one thing that we reflect on is that a lot of that.
Gordon Johnston: Gordon, maybe the first question for you, if I may, in terms of, you know, some of the policy shifts, how are you guys thinking internally around, I guess, you know, Canada specifically, you know, any potential tariffs, you know, impact, and then in the US, if you don't mind providing a bit of an update in terms of how you think the curvature of IGA spending is landing, kind of like around the peak intensity, is it still kind of, you know, 2027, 2028, just wondering if visibility has evolved at all? Yeah, no, great. Thanks. When we think about the impacts of tariffs in the US and Canada, sorry, what that might mean for, you know, manufacturing capacity, you know, one thing that we reflect on is that a lot of that, you know, the segments that might be the most impacted aren't segments that we are particularly active in, you know, steel, aluminum, some of the big, auto manufacturing and so on.
Speaker Change: Segments that'd be it.
Speaker Change: It might be the most impacted arent segments that we are particularly active.
Speaker Change: Steel aluminum.
Speaker Change: Some of the big auto manufacturing and so on so we see that impact.
Speaker Change: Honest would be you would be minimal you might have seen that there was a globe article.
Speaker Change: There are a couple of weeks ago above firms in Canada on the <unk> that might be least impacted by the impact of.
Speaker Change: Tariffs and so that I think they kind of called out a little bit of that as well and so we feel.
Speaker Change: We feel.
Speaker Change: That we will be not impacted significantly in Canada, if we.
Speaker Change: If that were to hit us.
Speaker Change: We still hope it does not from from an overall economic perspective, but.
Gordon Johnston: So we see that impact, you know, on us would be, it would be minimal. You know, you might have seen that there was a Globe article a couple of weeks ago about, you know, firms in Canada on the TSX that might be least impacted by the impacts of tariffs. And so that, you know, I think they kind of called out a little bit of that as well. And so we feel, you know, we feel that we will be not impacted significantly in Canada, if, you know, if that were to hit us. We still hope it does not from, you know, from an overall economic perspective, but, you know, we, we think that we'd be not significantly impacted.
Speaker Change: We think that we'd be not significantly impacted.
Speaker Change: And then your question about Iga and such down in the U S.
Speaker Change: We've seen it through 2024, our overall U S transportation business, we saw high single digit.
Speaker Change: Net revenue growth there so things are coming we're seeing still a lot of <unk>.
Speaker Change: Large transportation procurements that are moving forward, Tennessee, Austin and another locations, we haven't seen any impact there.
Speaker Change: We've seen a few task orders related to EV charging infrastructure on some of our projects.
Speaker Change: <unk> bin bin Council, but nothing material from an overall transportation perspective, as we're talking to our clients their thought is still there.
Gordon Johnston: And then your question about IIGA and such down in the U.S., you know, we. We've seen it through 2024, our overall U.S. transportation business. We saw high single-digit organic net revenue growth there, so things are coming. We're seeing still a lot of large transportation procurements that are moving forward, Tennessee, Austin, and other locations. We haven't seen any impact there. We've seen a few task orders related to EV charging infrastructure on some of our projects have been cancelled, but nothing material from an overall transportation perspective. As we're talking to our clients, their thought is still The work that needs to be done to improve the state of repair of the U.S.
Speaker Change: The work that needs to be done to improve the state of repair of the U S. Transportation network is still there and so theyre not looking to fight too to scale back at this point I mean, we will we will learn more as things go forward, but at this point everybody still feeling very very good about it.
Speaker Change: Well that's excellent color.
Speaker Change: Just one follow up question in terms of building something that inflection on growth.
Speaker Change: Much of that is driven by like the semi and the data center space if it's possible.
Speaker Change: Yeah. So certainly there is some of it in their Max.
Speaker Change: Max but a lot of it is just the general.
Speaker Change: The type of work that our guys do day in day out so we're looking at things like hospitals.
Gordon Johnston: transportation network is still there. And so, you know, they're not looking to scale back at this point. I mean, we'll learn more as things go forward, but at this point, everybody's still feeling very, very good about it. You know, that's excellent color.
Speaker Change: Which is really big for us in both Canada and the U S. We're seeing a lot of work.
Speaker Change: In Canada in Civic and education, No certainly health care in the U S. A lot of work in industrial a lot of science and technology, there and certainly a lot of health care. So.
Gordon Johnston: And then I just have one follow up question in terms of buildings. I mean, that inflection and growth, how much of that is driven by like the semis and the data center space, if it's possible? Yeah, so certainly there is some of it in there, Max, but a lot of it is just the general type of work that our guys do day in, day out.
Speaker Change: Datacenters are absolutely, we're seeing that there, but that's not the main driver.
Speaker Change: Okay interesting.
Speaker Change: Got it.
Speaker Change: A bit of an update on on Germany.
Speaker Change: And the question is going.
Gordon Johnston: So we're looking at things like hospitals, which is really big for us in both Canada and the U.S. You know, we're seeing a lot of work in Canada in civic and education, certainly health care in the U.S., a lot of work in industrial, a lot of science and technology there, and certainly a lot of health care. Data centers, absolutely. We're seeing that there, but that's not the main driver. Interesting.
Speaker Change: Yes.
Speaker Change: Yeah and.
Speaker Change: We actually just finished reviewing all of the the financials of all of our acquired firms in Germany in particular is performing extremely well.
Speaker Change: The work and in fact, even a little bit above our expectations and what we find there is it certainly manufacturing in Germany, you read about it in the paper all the time is in a difficult situation, but the work that we're doing roads bridges. The railway network is all continues to be very very strong our backlogs are up.
Gordon Johnston: Is it possible to get a bit of an update on on Germany, how that If the question is going, yeah, that would be great. Thanks. Yeah, and we actually just finished reviewing all of the financials of all of our acquired firms, and Germany in particular is performing extremely well. The work, in fact, even a little bit above our expectations. And what we find there is that certainly manufacturing in Germany, you read about it in the paper all the time, is in a difficult situation, but the work that we're doing, roads, bridges, the railway network, all continues to be very, very strong.
Speaker Change: Our margins are even better than we had thought so.
Speaker Change: Extremely pleased by the by the operations and the zircon there in Germany.
Speaker Change: Okay excellent. Thank you so much.
Speaker Change: Thanks, Matt.
Speaker Change: And one moment our next question.
Speaker Change: And that will come from the line of Jonathan Goldman with Scotiabank. Your line is open.
Jonathan Goldman: Hi, good evening, Thanks for taking my questions most of them have been asked but just one more.
Speaker Change: And maybe for your gourd, what are the factors that can get you to the higher low end of the organic growth guidance in the U S and 25 or maybe asked a different way.
Gordon Johnston: Our backlogs are up, our margins are even better than we had thought. So we're extremely pleased by the operations of Zetcon there in Germany.
Speaker Change: Do you see anything changing in the circumstances from the point you just put out in Q4 going into 25 do you think these levels might be sustainable.
Gordon Johnston: Okay, excellent.
Operator: That's it for me. Thank you so much. Thanks, Matt.
Speaker Change: Yes, we actually feel really good about it in that guidance of that kind of mid to high single digits.
Jonathan Goldman: And one moment for our next question. and that will come from the line of Jonathan Goldman with Scotiabank. Your line is open. Hi, good evening. Thanks for taking my questions.
Speaker Change: When we look at the overall increase in backlog that we've seen sort of across the board in the U S. We think it sets us up really well for us.
Gordon Johnston: Most of them have been asked, but I'll just get one more, maybe for you, Gord. What are the factors that can get you to the high or low end of the organic growth guidance in the U.S. in 2025? Or maybe ask a different way. Do you see anything changing in the circumstances from the print you just put out in Q4 going into 2025? Do you think these levels might be sustainable? Yeah, we actually feel really good about it. And that that guidance of that kind of mid to high single digits, you know, when we look at the overall increase in in backlog that we've seen sort of across the board, in the US, we think it sets us up really well for for 2025 being a particularly strong year for us in the U.S.
Speaker Change: For 2025 being.
Speaker Change: A particularly strong year for us in the U S backlog growth of almost.
Speaker Change: 10% on an annual basis, so really driving and pretty broad based so really driving strong support for us.
Speaker Change: That's great color, thanks, I'll get back in queue.
Speaker Change: Thanks, Jonathan.
Speaker Change: Thank you that is all the time, we have for a question and answer session I would now like to turn the call back over to Mr. Gore Johnston for any closing remarks.
Speaker Change: Great well, thanks, operator, and thank you for to everyone for joining us.
Speaker Change: Feel really good about the performance Q4 in 2024, and certainly how we're set up for a strong performance here in 2025. So if you have any follow up questions. Following today's call. Please feel free to reach out to Jeff Newkirk, our VP of Investor Relations.
Gordon Johnston: You know, backlog growth of almost 10% on an annual basis. So, you know, really driving and pretty broad based. So really driving strong support for us. Great color. Thanks.
Speaker Change: Thanks, again, everyone and we look forward to connecting with you again soon.
Operator: I'll get back. Thank you. Thanks, Charlie. Thank you.
Speaker Change: This concludes today's program. Thank you all for participating you may now disconnect.
Gordon Johnston: That is all the time we have for our question and answer session.
Gordon Johnston: I would now like to turn the call back over to Mr. Gordon Johnston for any closing remarks. Well, thanks, Operator, and thank you to everyone for joining us. We feel really good about the performance Q4 in 2024, and certainly how we're set up for a strong performance here in 2025. So if you have any follow-up questions following today's call, please feel free to reach out to Jess Newkirk, our VP of Investor Relations.
Gordon Johnston: So thanks again, everyone, and we look forward to connecting with you again soon.
Operator: This concludes today's program. Thank you all for participating. You may now disconnect.