Q2 2025 Stantec Inc Earnings Call

So conlon executive Vice President financial and Chief Financial Officer, Stan Tech invites those dialing in to view the slide presentation, which is available in the investors section at Stan Tech Dot com.

Vito Culmone: Welcome to Stantec's second quarter 2025 results webcast and conference call. Leading the call today are Gordon 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 webcast. 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. All information provided during the conference call is subject to the forward-looking statement qualification set out on slide two, detailed in Stantec's management discussion and analysis and incorporated in full for the purpose of today's call. Unless otherwise noted, dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded.

Speaker #2: Welcome to Stantec second quarter 2025 results webcast and conference call. Leading the call today are Gordon Johnston, President and Chief Executive Officer, and Vito Culmone, Executive Vice President and Financial and Chief Financial Officer.

Today's call is also webcast. Please be advised that if you have dialed in well also viewing the webcast you should mute your computer as there is a delay between the call and the webcast.

All information provided during the conference call is subject to the forward looking statement qualify occasion set out on slide two detailed and stay on tax management discussion and analysis and incorporated in full for the purpose of today's call.

Speaker #2: 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 webcast. 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.

Unless otherwise noted dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded.

Speaker #2: All information provided during the conference call is subject to the forward-looking statement qualification set out on Slide 2, detailed in Stantec's Management Discussion and Analysis and incorporated in full for the purpose of today's call.

With that I will turn the call over to Mr. Gordon Johnston.

Good morning.

And thank you for joining us today.

Before I get into our Q2 results.

I'm pleased to announce that on July 31, we closed the acquisition of page.

Speaker #2: Unless otherwise noted, dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded. With that, I will turn the call over to Mr. Gordon Johnston.

In early April we announced the acquisition and then in the interim period, we were working on various regulatory approvals prior to the formal close.

Vito Culmone: With that, I will turn the call over to Mr. Gordon Johnston.

Gordon Johnston: Good morning, and thank you for joining us today. Before I get into our Q2 results, I am pleased to announce that on July 31, we closed the acquisition of Page. In early April, we announced the acquisition, and in the interim period, we were working on various regulatory approvals prior to the formal close. Page is a very strong U.S.-based architecture and engineering firm headquartered in Washington, D.C. The acquisition complements our buildings business and helps bolster our services in key growth sectors, including health care, advanced manufacturing, data centers and mission-critical, academic, science and technology, and civic markets. In addition, I would also like to highlight that on June 27, we acquired Cosgroves, a 90-person firm expanding our buildings engineering capabilities in New Zealand.

Speaker #3: Good morning, and thank you for joining us today. Before I get into our Q2 results, I'm pleased to announce that on July 31st, we closed the acquisition of Page. In early April, we announced the acquisition, and in the interim period, we were working on various regulatory approvals prior to the formal close.

Pages, a very strong U S based architecture and engineering firm headquartered in Washington D C.

The acquisition complements our buildings business.

<unk> bolster our services in key growth sectors, including health care.

Manufacturing Datacenters and mission critical.

Academic science and technology and civic markets.

Speaker #3: Page is a very strong, US-based architecture and engineering firm headquartered in Washington, DC. The acquisition complements our buildings business, and helps bolster our services in key growth sectors, including healthcare, advanced manufacturing, data centers, and mission-critical, academic, science and technology, and civic markets.

In addition, I'd also like to highlight that on June 27, we acquired cause groups. Our 90 person firm expanding our buildings engineering capabilities in New Zealand.

And as we previously announced we acquired Ryan Hanley back in April bolstering our offerings in the Irish water sector.

I would like to welcome the 1500 talented individuals from page cause grooves and Ryan Hanley to the Santa Ana team, which has now grown to over 34000 employees.

Speaker #3: In addition, I'd also like to highlight that on June 27th, we acquired Cosgrooves, a 90-person firm expanding our buildings engineering capabilities in New Zealand.

Gordon Johnston: As we previously announced, we acquired Ryan Hanley back in April, bolstering our offerings in the Irish water sector. I would like to welcome the 1,500 talented individuals from Page, Cosgroves, and Ryan Hanley to the Stantec team, which has now grown to over 34,000 employees. I am also pleased to share that Stantec continues to earn recognition through a range of accolades from respected industry and media organizations. We are honored to be ranked the number one architecture firm in health care worldwide by Modern Healthcare's 2025 Construction and Design Survey. In addition, Time Magazine ranked us fifth on its 2025 list of Canada's best companies and among the top 50 of the world's 500 most sustainable companies. Now, let's focus on our results. Stantec has delivered very strong results in the first half of 2025, delivering organic growth across all of our regions and business operating units.

Okay.

Speaker #3: And, as we previously announced, we acquired Ryan Hanley back in April, bolstering our offerings in the Irish water sector. I'd like to welcome the 1,500 talented individuals from Page, Cosgrooves, and Ryan Hanley to the Stantec team, which is now grown to over 34,000 employees.

Im also pleased to share that <unk> continues to earn recognition through a range of accolades from respected industry and media organizations.

We are honored to be ranked the number one architecture firm in health care worldwide by modern Healthcare's 2025, construction and design survey.

In addition to.

Time magazine ranked US fifth on its 2025 list of Canada's best companies and among the top 50 of the world's 500, most sustainable companies.

Speaker #3: I'm also pleased to share that Stantec continues to earn recognition through a range of accolades from respected industry and media organizations. We are honored to be ranked the number one architecture firm in healthcare worldwide by Modern Healthcare's 2025 Construction and Design Survey.

Now, let's focus on our results.

<unk> has delivered very strong results in the first half of 2025, delivering organic growth across all of our regions and business operating units.

Speaker #3: In addition, Time Magazine ranked us fifth on its 2025 list of Canada's best companies, and among the top 50 of the world's 500 most sustainable companies.

Public infrastructure spending and private investment continues to be a key driver of growth in 2025 with strong demand across the water transportation mining energy transition and mission critical sectors.

Speaker #3: Now, let's focus on our results. Stantec has delivered very strong results in the first half of 2025, delivering organic growth across all of our regions, and business operating units.

In the second quarter, we delivered net revenue of $1 6 billion.

Up six 9% year over year, which was primarily driven by four 8% organic growth.

Gordon Johnston: Public infrastructure spending and private investments continue to be a key driver of growth in 2025, with strong demand across the water, transportation, mining, energy transition, and mission-critical sectors. In the second quarter, we delivered net revenue of $1.6 billion, up 6.9% year over year, which was primarily driven by 4.8% organic growth. Our energy and resources business delivered high single-digit organic growth, and water achieved 12.4% organic growth. With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA by 15%, with an enhanced margin of 17.8%. We also delivered adjusted EPS growth of over 21% compared to Q2 2024. Looking at our results in each of our geographies, in the U.S., our Q2 net revenue increased by 5.7%, which was supported by organic growth of 4.4%. From a trend perspective, we saw improvements in U.S. organic growth compared to the first quarter.

Speaker #3: Public infrastructure spending and private investments continue to be a key driver of growth in 2025, with strong demand across the water, transportation, mining, energy transition, and mission-critical sectors.

Our energy and resources business delivered high single digit organic growth and water achieved 12, 4% organic growth.

Speaker #3: In the second quarter, we delivered net revenue of $1.6 billion, up 6.9% year-over-year, which was primarily driven by $4.8% organic growth. Our energy and resources business delivered high single-digit organic growth, and water achieved 12.4% organic growth.

With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA by 15% with an enhanced margin of 17, 8%.

We also delivered EPS growth adjusted EPS growth of over 21% compared to Q2 2024.

Looking at our results in each of our geographies.

Speaker #3: With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA by 15%, with an enhanced margin of 17.8%. We also delivered EPS growth, adjusted EPS growth of over 21%, compared to Q2 2024.

In the U S. Our Q2 net revenue increased by five 7%.

Which was supported by organic growth of four 4%.

From a trend perspective, we saw improvements in U S organic growth compared to the first quarter.

Client demand for mission critical science, and technology and civic all contributed to growth in our buildings business.

Speaker #3: Looking at our results in each of our geographies, in the US, our Q2 net revenue increased by 5.7%, which was supported by organic growth of 4.4%.

Growth in environmental services was mainly different driven by our energy transition mining and industrial infrastructure sectors as well as the continued work for a large scale utility provider.

Speaker #3: From a trend perspective, we saw improvements in U.S. organic growth compared to the first quarter. Client demand for mission-critical, science and technology, and civic all contributed to growth in our buildings business.

Growth in water was driven by large public sector water supply and wastewater treatment projects.

Gordon Johnston: Client demand for mission-critical, science and technology, and civic all contributed to growth in our buildings business. Growth in environmental services was mainly driven by our energy transition, mining, and industrial infrastructure sectors, as well as the continued work for a large-scale utility provider. Growth in water was driven by large public sector water supply and wastewater treatment projects. Energy and resources growth saw the ramp-up of a major hydropower dam project in the southwest. In Canada, net revenue grew by 6.2%, underpinned completely by organic growth. The continued momentum on major wastewater projects contributed to over 30% organic growth in water. Consistent progress on major industrial process projects drove double-digit organic growth in energy and resources. Solid growth in infrastructure was supported by land development projects in Alberta, and public sector investment in Western Canada drove growth in our buildings business, primarily in our health care and civic markets.

And energy and resources growth so the ramp up of a major hydropower dam project in the southwest.

Speaker #3: Growth in environmental services was mainly driven by our energy transition, mining and industrial infrastructure sectors, as well as a continued work for a large-scale utility provider.

In Canada net revenue grew by six 2% underpinning to completely by organic growth.

Speaker #3: Growth in water, which was driven by large public sector water supply and wastewater treatment projects. Energy and resources growth saw the ramp-up of a major hydropower dam project in the Southwest.

The continued momentum on major wastewater projects contributed to over 30% organic growth in water.

Consistent progress on major industrial process projects drove double digit organic growth in energy and resources.

Speaker #3: In Canada, net revenue grew by 6.2%, underpinned completely by organic growth. The continued momentum on major wastewater projects contributed to over 30% organic growth in water.

Solid growth in infrastructure was supported by land development projects in Alberta and.

In public sector investment in Western Canada drove growth.

In our buildings business, primarily in our healthcare and civic markets.

Speaker #3: Consistent progress on major industrial process projects drove double-digit organic growth in energy and resources. Solid growth in infrastructure was supported by land development projects in Alberta, and public sector investment in Western Canada drove growth in our buildings business.

Finally, our global business delivered net revenue growth of 10, 5% in the second quarter with four 3% organic and three 6% acquisition growth as well as positive foreign exchange impacts.

Our industry, leading water business delivered double digit organic growth across the UK, Australia, and New Zealand through long term framework agreements and public sector investment in water infrastructure.

Speaker #3: Primarily in our healthcare, and civic markets. Finally, our global business delivered net revenue growth of 10.5% in the second quarter, with $4.3% organic, and $3.6% acquisition growth, as well as positive foreign exchange impacts.

Gordon Johnston: Finally, our global business delivered net revenue growth of 10.5% in the second quarter, with 4.3% organic and 3.6% acquisition growth, as well as positive foreign exchange impacts. Our industry-leading water business delivered double-digit organic growth across the U.K., Australia, and New Zealand through long-term framework agreements and public sector investment in water infrastructure. The ramp-up of new projects in Chile and Peru drove double-digit organic growth in energy and resources, as the growing need for energy transition solutions continues to drive demand in mining for copper. We also achieved double-digit organic growth in our German business due to continued momentum on a major public sector energy transportation project and increased volume on transit and rail projects. Now I'll turn the call over to Vito to review our Q2 financial results in more detail.

The ramp up of new projects in Chile, and Peru drove double digit organic growth in energy and resources as the growing need for energy transition solutions continues to drive demand in mining for copper.

Speaker #3: Our industry-leading water business delivered double-digit organic growth across the UK, Australia, and New Zealand, through long-term framework agreements and public sector investment in water infrastructure.

And we also achieved double digit organic growth in our German business due to continued momentum on our major public sector energy transportation project in.

Speaker #3: The ramp-up of new projects in Chile and Peru drove double-digit organic growth in energy and resources, as the growing need for energy transition solutions continues to drive demand in mining for copper.

And increased volume on transit and rail projects.

Now I will turn the call over to Vito to review, our Q2 financial results in more detail.

Thank you Gordon and good morning, everyone.

Speaker #3: And we also achieved double-digit organic growth in our German business, due to continual momentum on a major public sector energy transportation project, and increased volume on transit and rail projects.

<unk> positive momentum continues as seen with our second quarter results positioning us to deliver another exceptional year.

In Q2, we achieved gross revenue of approximately $2 billion in net revenue of $1 6 billion, an increase of six 9% compared to Q2 2024.

Speaker #3: Now I'll turn the call over to Vito, to review our Q2 financial results in more detail.

Vito Culmone: Thank you, Gordon. Good morning, everyone. Stantec's positive momentum continues, as seen with our Q2 results, positioning us to deliver another exceptional year. In Q2, we achieved gross revenue of approximately $2 billion and net revenue of $1.6 billion, an increase of 6.9% compared to Q2 2024. This was primarily driven by 4.8% organic growth. As a percentage of net revenue, our project margins remained in line with our expectations at 54.2%. We achieved a very strong adjusted EBITDA margin of 17.8% in the quarter, a 120 basis point increase compared to last year. The increase in margin primarily reflects lower and mid-end marketing expenses as a percentage of net revenue due to lower claim provisions and discretionary spending. Our adjusted EPS in the quarter increased over 21% to $1.36.

Speaker #4: Thank you, Gordon. Good morning, everyone. Stantec's positive momentum continues, as seen with our second quarter results, positioning us to deliver another exceptional year. In Q2, we achieved gross revenue of approximately $2 billion.

This was primarily driven by four 8% organic growth.

As a percentage of net revenue our projects margins remained in line with our expectations at 54, 2%.

We achieved a very strong adjusted EBITDA margin of 17, 8% in the quarter of 120 basis point increase compared to last year.

Speaker #4: And net revenue of $1.6 billion. An increase of 6.9%, compared to Q2 2024. This was primarily driven by $4.8% organic growth. As a percentage of net revenue, our projects margins remained in line with our expectations at 54.2%.

The increase in margin, primarily reflects lower admin and marketing expenses as a percentage of net revenue due to lower claim provisions and discretionary spending.

And our adjusted EPS in the quarter increased over 21% to $1 36.

Speaker #4: We achieved a very strong adjusted EBITDA margin of 17.8% in the quarter, $120 basis point increase compared to last year. The increase in margin primarily reflects lower and mid-end marketing expenses as a percentage of net revenue, due to lower claim provisions, and discretionary spending.

Our Q2 results build on our strong first quarter and on a year to date basis, our adjusted EBITDA margin of 17% a full 1%.

Head of the first half of 2024.

In addition, our adjusted EPS is up a very robust 24, 9%.

Speaker #4: And our adjusted EPS in the quarter increased over 21% to $1.36. Our Q2 results build on a strong first quarter, and on a year-to-date basis, our adjusted EBITDA margin is 17%, a full 1% ahead of the first half of 2024.

With our year to date performance and the closure of the page acquisition, we are very well positioned to increase guidance across various metrics, which Gordon will speak to shortly.

Vito Culmone: Our Q2 results build on a strong first quarter, and on a year-to-date basis, our adjusted EBITDA margin is 17%, a full 1% ahead of the first half of 2024. In addition, our adjusted EPS is up a very robust 24.9%. With our year-to-date performance and the closure of the Page acquisition, we are very well positioned to increase guidance across various metrics, which Gordon will speak to shortly. Turning to our cash flow, liquidity, and capital resources, year-to-date operating cash flows are up 100% compared to 2024, from $117 million to $235 million, reflecting continued strong revenue growth, operational performance, and continued strong collection efforts. DSO at the end of the second quarter was 73 days, a decrease of four days compared to the first quarter of 2025. This is well below our internal target of 80 days or lower.

Turning to our cash flow liquidity and capital resources.

Speaker #4: In addition, our adjusted EPS is up a very robust 24.9%. With our year-to-date performance and the closure of the Page acquisition, we are very well positioned to increase guidance across various metrics, which Gordon will speak to shortly.

Year to date operating cash flows are up 100% compared to 2024 from $117 million to $235 million, reflecting continued strong revenue growth operational performance and continued strong collection efforts.

DSO at the end of the second quarter was 73 days a decrease of four days compared to the first quarter of 2025. This is well below our internal target of 80 days or lower.

Speaker #4: Turning to our cash flow liquidity and capital resources, year-to-date operating cash flows are up 100% compared to 2024 from $117 million to $235 million reflecting continued strong revenue growth, operational performance, and continued strong collection efforts.

Our net debt to adjusted EBITDA ratio at June 30 was one one times essentially in line with where we closed out the first quarter and remaining well within our internal target range of one to two times.

Speaker #4: The SO at the end of the second quarter was $73 days, a decrease of four days compared to the first quarter of 2025. This is well below our internal target of 80 days or lower.

I'd like to take a minute to highlight some recent financing transactions we completed in Q2.

I characterize these as being in a normal course of our business and reflecting the significant growth in our operations over the last few years.

Vito Culmone: Our net debt-to-adjusted EBITDA ratio at June 30th was 1.1 times, essentially in line with where we closed out the first quarter and remaining well within our internal target range of one to two times. I'd like to take a minute to highlight some recent financing transactions we completed in Q2. I characterize these as being in the normal course of our business and reflecting the significant growth in our operations over the last few years. On June 10th, we issued $425 million senior unsecured notes bearing an interest rate of 4.374% per annum for a seven-year term. These notes were assigned an investment grade credit rating of triple V by DBRS Limited. Also, in mid-June, we increased our unsecured revolver credit facility to $1.2 billion, up from $800 million, and we extended the maturity date out to June 30th.

Speaker #4: Our net debt to adjusted EBITDA ratio at June 30th was 1.1 times, essentially in line with where we closed out the first quarter, and remaining well within our internal target range of 1 to 2 times.

On June 10th we issued $425 million senior unsecured notes bearing an interest rate of four 374% per annum for a seven year term.

Speaker #4: I'd like to take a minute to highlight some recent financing transactions we completed in Q2. I characterize these as being in the normal course of our business and reflecting the significant growth in our operations over the last few years.

These notes were assigned an investment grade rating excuse me investment grade credit rating of Triple D by <unk> limited.

Also in mid June we increased our unsecured revolver credit facility to $1 2 billion up from $800 million.

Speaker #4: On June 10th, we issued $425 million senior unsecured notes bearing an interest rate of 4.374%, per annum, for a seven-year term. These notes were assigned an investment grade rating, excuse me, investment grade credit rating of triple D, by a DBRS Limited.

And we extended the maturity date out to June 30th.

Both of these financing transactions were well oversubscribed and reflect the credit communities deep understanding and confidence in our sector and company. We appreciate the continued support.

Speaker #4: Also in mid-June, we increased our unsecured Revolver credit facility to $1.2 billion, up from $800 million and we extended the maturity date out to June 30th.

As Gordon noted we closed the page acquisition on July 31, and post closing our remaining credit capacity is just over $1 billion.

Vito Culmone: Both of these financing transactions were well oversubscribed and reflect the credit community's deep understanding and confidence in our sector and company. We appreciate the continued support. As Gordon noted, we closed the Page acquisition on July 31st, and post-closing, our remaining credit capacity is just over $1 billion, and our balance sheet remains very strong. Gordon, I'll now hand the call back to you.

Speaker #4: Both of these financing transactions were well oversubscribed, and reflect the credit community's deep understanding and confidence in our sector and company. We appreciate the continued support.

And our balance sheet remains very strong.

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

Thanks Vito.

At the end of the second quarter, our contract backlog stood at $7 9 billion.

Speaker #4: As Gordon noted, we closed the Page acquisition on July 31st, and post-closing, our remaining credit capacity is just over $1 billion. And our balance sheet remains very strong.

Reflecting approximately 12 months of work or.

Our backlog underscores the continued strong demand to support our clients' most pressing challenges.

Year over year backlog has grown by almost 10%.

Speaker #4: Gordon, I'll now hand the call back to you.

Gordon Johnston: Thanks, Vito. At the end of the second quarter, our contract backlog stood at $7.9 billion, reflecting approximately 12 months of work. Our backlog underscores the continued strong demand to support our clients' most pressing challenges. Year over year, backlog has grown by almost 10%, reflecting robust organic growth of 9% across each of our geographies, and most notably, double-digit growth in our water and energy and resources businesses. I would also note that our U.S. organic backlog is up 9.8% year over year. This reflects the positive trend in organic growth and continued strength of our business in the region. Growth within our global operations was driven by new project awards in our infrastructure and environmental services business in Europe and APE project awards in our U.K. water business.

Speaker #3: Thanks, Vito. At the end of the second quarter, our contract backlog stood at $7.9 billion, reflecting approximately 12 months of work. Our backlog underscores the continued strong demand to support our clients' most pressing challenges.

Reflecting robust organic growth of 9% across each of our geographies and most notably double digit growth in our water and energy and resources businesses.

I'd also note that our U S organic backlog.

Is up nine 8% year over year.

Speaker #3: Year over year, backlog has grown by almost 10%, reflecting robust organic growth of 9% across each of our geographies, and most notably, double-digit growth in our water, and energy and resources businesses.

This reflects the positive trend in organic growth and continued strength of our business in the region.

Growth within our global operations was driven by New project awards in our infrastructure and environmental services business in Europe.

Speaker #3: I'd also note that our US organic backlog is up 9.8% year over year, this reflects the positive trend in organic growth, and continued strength of our business in the region.

<unk> project awards in our U K water business.

This growth was partially offset by a retraction in our Australian business buildings operations as well as high burn rates and our water business.

Speaker #3: Growth within our global operations was driven by new project awards in our infrastructure and environmental services business in Europe and AMP Aid project awards in our UK water business.

I'll now highlight a few of the projects that <unk> has recently been awarded.

<unk> joint venture was recently awarded a $150 million single award contract supporting the U S. Navy shipyard infrastructure optimization program focusing on the modernization of the Portsmouth Naval shipyard in Maine.

Gordon Johnston: This growth is partially offset by a retraction in our Australian business buildings operations, as well as high burn rates in our water business. I will now highlight a few of the projects that Stantec has recently been awarded. A Stantec joint venture was recently awarded a $150 million single award contract supporting the U.S. Navy Shipyard Infrastructure Optimization Program, focusing on the modernization of the Portsmouth Naval Shipyard in Maine. U.S. Navy shipyards were originally designed and built in the 19th and 20th centuries, and this program will support the upgrade of facilities, utilities, dry docks, equipment, and information technology infrastructure. In the U.K., our infrastructure team was awarded a four-year framework with Transport for Greater Manchester, where we will deliver a range of transport, design, engineering, and analysis services, as well as program and project management support.

Speaker #3: This growth is partially offset by a retraction in our Australian business buildings operations, as well as high burn rates in our water business. I'll now highlight a few of the projects that Stantec has recently been awarded.

U S. Navy shipyards were originally designed and built in the 19th and 20th centuries, and this program will support the upgrade of facilities utilities.

Speaker #3: A Stantec joint venture was recently awarded a $150 million single award contract supporting the US Navy's Shipyard Infrastructure Optimization Program, focusing on the modernization of the Portsmouth Naval Shipyard in Maine.

<unk> equipment and information technology infrastructure.

In the U K, our infrastructure team was awarded a four year framework with transport for Greater Manchester, where we will deliver a range of transport design engineering and analysis services as well as program and project management support.

Speaker #3: U.S. Navy shipyards were originally designed and built in the 19th and 20th centuries, and this program will support the upgrade of facilities, utilities, dry docks, equipment, and information technology infrastructure.

And lastly, <unk> water and environmental services teams are collaborating on Google's water replenishment project sourcing in Taiwan.

Speaker #3: In the UK, our infrastructure team was awarded a four-year framework with Transport for Greater Manchester, where we will deliver a range of transport, design, engineering, and analysis services as well as program and project management support.

This project is part of Google's global water replenishment initiative.

It also highlights dentex use of nature based solutions.

Which includes the <unk> will contact oxidation process for sustainable water treatment and watershed restoration.

Gordon Johnston: Lastly, Stantec's water and environmental services teams are collaborating on Google's water replenishment project sourcing in Taiwan. This project is part of Google's Global Water Replenishment Initiative. It also highlights Stantec's use of nature-based solutions, which includes a gravel contact oxidation process for sustainable water treatment and watershed restoration. On the strength of our performance year to date, the completion of two acquisitions within the second quarter, and with the recent closure of Page, we are increasing our outlook for 2025. We now expect to achieve net revenue growth of 10% to 12%, up from our previous guidance of 7% to 10%. Given our strong diversification across geographies, we continue to expect mid-to-high single-digit organic growth across the businesses. In Canada and in global, we continue to expect organic net revenue growth in the mid-to-high single digits.

Speaker #3: And lastly, Stantec's water and environmental services teams are collaborating on Google's water replenishment project, sourcing in Taiwan. This project is part of Google's Global Water Replenishment Initiative and also highlights Stantec's use of nature-based solutions.

On the strength of our performance year to date, the completion of two acquisitions within the second quarter and with the recent closure of page we are increasing our outlook for 2025.

We now expect to achieve net revenue growth of 10% to 12% up from our previous guidance of 7% to 10%.

Speaker #3: This includes a gravel contact oxidation process for sustainable water treatment and watershed restoration. Based on our performance year-to-date, the completion of two acquisitions within the second quarter, and with the recent closure of Page, we're increasing our outlook for 2025.

Given our strong diversification across geographies, we continue to expect mid.

To high single digit organic growth across the businesses.

In Canada and in global we continue to expect organic net revenue growth in the mid to high single digits.

Speaker #3: We now expect to achieve net revenue growth of 10 to 12%, up from our previous guidance of 7 to 10%. Given our strong diversification across geographies, we continue to expect mid to high single-digit organic growth across the businesses.

We continue to see strong momentum in both these regions with elevated backlog levels in Canada, particularly in infrastructure and energy and resources and through high levels of activity in our global water business.

<unk> continues to ramp up in the UK and other water frameworks in Australia, and New Zealand are ramping up as well.

Speaker #3: In Canada and in global, we continue to expect organic net revenue growth in the mid to high single digits. We continue to see strong momentum in both these regions, with elevated backlog levels in Canada, particularly in infrastructure and energy and resources, and through high levels of activity in our global water business.

Gordon Johnston: We continue to see strong momentum in both these regions, with elevated backlog levels in Canada, particularly in infrastructure, energy, and resources, and through high levels of activity in our global water business. APE continues to ramp up in the U.K., and other water frameworks in Australia and New Zealand are ramping up as well. In the U.S., we expect organic growth to accelerate in the second half of the year, and we have moderated our outlook slightly to mid-single digits. The U.S. administration has implemented significant shifts in policy, funding priorities, tariffs, and regulatory frameworks, most notably with the recent passage of the One Big Beautiful Bill Act. The ultimate driver of these initiatives is to stimulate investment in the U.S. across all sectors and to strengthen the U.S. economy. In fact, we are already seeing momentum starting to ramp up again.

In the U S.

We expect organic growth to accelerate in the second half of the year and we've moderated our outlook slightly to mid single digits.

The U S administration has implemented significant shifts in policy funding priorities tariffs and regulatory frameworks.

Speaker #3: AMP Aid continues to ramp up in the UK, and other water frameworks in Australia and New Zealand are ramping up as well. In the US, we expect organic growth to accelerate in the second half of the year, and we've moderated our outlook slightly to mid-single digits.

And most notably with the recent passage of the one Big Beautiful Bill Act the.

The ultimate driver of these initiatives is to stimulate investment in the U S across all sectors and to strengthen the U S economy. In fact, we're already seeing momentum starting to ramp up again.

Speaker #3: The US administration has implemented significant shifts in policy, funding priorities, tariffs, and regulatory frameworks, and most notably with the recent passage of the One Big Beautiful Bill Act.

Furthermore, we're also encouraged by our healthy backlog, which positions us for continued positive growth.

On the strength of our operations year to date, we have also increased and narrowed the range for adjusted EBITDA margin to 17% to 17, 4% up from $16 seven to 17, 3%.

Speaker #3: The ultimate driver of these initiatives is to stimulate investment in the US across all sectors, and to strengthen the US economy. In fact, we're already seeing momentum starting to ramp up again.

Gordon Johnston: Furthermore, we are also encouraged by our healthy backlog, which positions us for continued positive growth. On the strength of our operations year to date, we have also increased and narrowed the range for adjusted EBITDA margin to 17% to 17.4%, up from 16.7% to 17.3%. This reflects solid project execution and continued discipline in cost management. With this, we actually expect to hit our strategic plan target of 17% to 18% a year early, with the ability to continue building on this performance. We now expect to deliver 18.5% to 21.5% growth in adjusted EPS compared to 2024, up from 16% to 19%, once again driving earnings well above net revenue growth. Finally, adjusted ROIC is now expected to be greater than 12.5%. As we enter the second half of 2025, we remain firmly on track, excuse me, to deliver another record year.

Speaker #3: Furthermore, we're also encouraged by our healthy backlog, which positions us for continued positive growth. On the strength of our operations year-to-date, we've also increased and narrowed the range for adjusted EBITDA margin to 17 to 17.4%, up from 16.7% to 17.3%.

This reflects solid project execution and continued discipline in cost management with this we actually expect to hit our strategic plan target of 17% to 18% a year early with the ability to continue building on this performance.

We now expect to deliver 18, 5% to 21, 5% growth in adjusted EPS compared to 2024 up from 16% to 19% once again driving earnings well above net revenue growth.

Speaker #3: This reflects solid project execution and continued discipline in cost management. With this, we actually expect to hit our strategic plan target of 17% to 18% a year early, with the ability to continue building on this performance.

And finally, adjusted ROIC is now expected to be greater than 12, 5%.

Speaker #3: We now expect to deliver $18.5 to $21.5% growth in adjusted EPS, compared to 2024, up from 16 to 19%. Once again, driving earnings well above net revenue growth.

As we enter the second half of 2025, we remain firmly on track.

Excuse me to deliver another record year.

Macro trends of aging infrastructure data centers energy security water and wastewater treatment healthcare and reassuring all continued to drive our business.

Speaker #3: And finally, adjusted ROIC is now expected to be greater than 12.5%. As we enter the second half of 2025, we remain firmly on track, excuse me, to deliver another record year.

We will remain focused on delivering strong project execution and operational excellence and while we have already completed three acquisitions. This year the pipeline of opportunities remains full and we are extremely well positioned.

Gordon Johnston: Macro trends of aging infrastructure, data centers, energy security, water and wastewater treatment, healthcare, and reshoring all continue to drive our business. We will remain focused on delivering strong project execution and operational excellence, and while we have already completed three acquisitions this year, the M&A pipeline of opportunities remains full, and we are extremely well positioned, both from an integration and a financing standpoint, to do more. It's an exciting time for our industry and for Stantec. We'll continue to deliver compounded growth as we drive towards our 2024 to 2026 strategic plan goals. With that, I'll turn the call back to the operator for questions. Operator?

Speaker #3: Macro trends of aging infrastructure, data centers, energy security, water and wastewater treatment, healthcare and reshoring, all continue to drive our business. We will remain focused on delivering strong project execution and operational excellence, and while we have already completed three acquisitions this year, the pipeline of opportunities remains full, and we are extremely well positioned.

Both from an integration and a financing standpoint to do more.

It's an exciting time for our industry and for <unk> and will continue to deliver compounded growth as we drive towards our 2024 to 2026 strategic plan goals.

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

Greater.

Thank you.

Speaker #3: Both from an integration and a financing standpoint, we aim to do more. It's an exciting time for our industry and for Stantec, and we'll continue to deliver compounded growth as we drive towards our 2024 to 2026 strategic plan goals.

Ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, we ask that you. Please limit yourself to one question and one follow up before reentering the queue, one moment as we compile our Q&A roster.

Speaker #3: And with that, I'll turn the call back to the operator for questions. Operator?

Operator: Thank you. To ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. We ask that you please limit yourself to one question and one follow-up before reentering the queue. One moment as we compile our Q&A roster. Our first question is going to come from the line of Krista Friesen with CIBC. Your line is open. Please go ahead.

First question is going to come from the line of Christopher <unk> with <unk>.

Speaker #5: Thank you. To ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again.

CIBC. Your line is open. Please go ahead.

Hey, Thanks for taking my question.

Speaker #5: We ask that you please limit yourself to one question, one follow-up before re-entering the queue. One moment as we compile our Q&A roster. Our first question is going to come from the line of Krista Friesen with CIBC.

I was wondering if maybe you can just provide us with a little bit of additional color on what you're hearing from your U S customers specifically in the private sector as you called out maybe an elevated level of caution right now.

Speaker #5: Your line is open, please go ahead.

Yes, great Great question Christy.

Krista Friesen: Hey, thanks for taking my question. I was wondering if you can just provide us with a little bit of additional color on what you are hearing from your U.S. customers, specifically in the private sector, as you called out, maybe an elevated level of caution right now.

Speaker #6: Hey, thanks for taking my question. I was wondering if maybe you can just provide us with a little bit of additional color on what you're hearing from your US customers, specifically in the private sector as you called out.

We are seeing is it in the first half of the year, there was a little bit of trepidation to make that final investment decision and to move forward, but.

As we said in the prepared remarks, we really are looking to see are <unk>.

Speaker #6: Maybe an elevated level of caution right now.

Forecasting our U S organic growth to accelerate in the second half of this year.

Gordon Johnston: Yeah, great question, Krista. What we are seeing is that in the first half of the year, there was a little bit of trepidation to make that final investment decision and to move forward. As we said in the prepared remarks, we really are looking to see our forecasting our U.S. organic growth to accelerate in the second half of this year. Our U.S. backlog is up 9.8% organically year over year, and it is actually particularly strong in water, energy, and data centers, some of those private sector type work that you are talking about. In the private sector, interestingly, data centers, mission-critical, and so on, we are currently working on over 100 data center projects. It is interesting. We see our, even from our July results, we saw an increase in our U.S. organic growth to even that high single-digit range.

Speaker #3: Yeah, great question, Krista. You know, what we're seeing is that in the first half of the year, there was a little bit of trepidation to make that final investment decision and to move forward.

Our U S backlog is up 9% nine 8% organically year over year, and it's actually a particularly strong in water energy and data centers. Some of those private sector type of work that you are talking about so.

Speaker #3: But, you know, as we said in the prepared remarks, we really are looking to see our forecasting our US organic growth take to accelerate in the second half of this year.

In the private sector Interestingly Datacenters mission critical and so on we're currently working on over 100 data center projects and so.

Speaker #3: You know, our US backlog is up 9%, 9.8% organically year over year, and it's actually particularly strong in water, energy, and data centers, some of those private sector type work that you're talking about.

It's interesting we see from our even from our July results, we saw an increase in our <unk>.

Organic growth to the even at that high single digit range, but we also interesting saw continued acceleration even on an organic backlog.

Speaker #3: So, in the private sector, interestingly, data centers, mission-critical, and so on, we're currently working on over 100 data center projects. And so, it's interesting, we see our, from our, even from our July results, we saw an increase in our US organic growth to that, even at that high single-digit range, but we also interestingly saw continued acceleration even on our organic backlog in the July period.

In the July period, so we're actually feeling pretty good about that acceleration in organic growth both in public and in the private sector in the second half of the year.

Okay great.

And then maybe just on the acquisition front you guys have been busy with that with a couple of acquisitions recently.

Gordon Johnston: We also, interestingly, saw continued acceleration even on an organic backlog in the July period. So we are actually feeling pretty good about that acceleration in organic growth, both in public and in the private sector in the second half of the year.

How are you feeling on on the integration I appreciate Patriot side, just two weeks ago here, but just any update there.

Speaker #3: So, we're actually feeling pretty good about, you know, that acceleration in organic growth, both in public and in the private sector in the second half of the year.

Yes.

Krista Friesen: Okay, great. On the acquisition front, you guys have been busy with a couple of acquisitions recently. How are you feeling on the integration? I appreciate Page was just two weeks ago here, but any update there?

Global Jacqueline so.

Speaker #6: Okay, great. And then maybe just on the acquisition front, you guys have been busy with a couple of acquisitions recently. How are you feeling on the integration?

<unk>.

Ryan Hanley is affirming its smaller firm a couple of hundred people in Ireland. We've worked been working with them three years. So that integration is going very well, we had actually anticipated I think to be completed by the end of this year the financial integration cause Grove. Similarly, 90 person firm hundred person firmed out in New Zealand is continuing.

Speaker #6: I appreciate Page was just a two weeks ago here, but just any update there?

Gordon Johnston: Yeah, so, but I will let you go ahead. Ryan Hanley is a smaller firm, a couple hundred people in Ireland. We have been working with them for years. That integration is going very well. We actually anticipated, I think, to be completed by the end of this year, the financial integration. Cosgroves, similarly, a 90-person firm, a 100-person firm down in New Zealand. That one is continuing. Page is really interesting, 1,400, 1,500 people, but we have worked with them for a long time. Over the last number of months, we have been working on how we align leadership, starting to look already at the financial transformation. In fact, that is planned for Q4 of this year.

Speaker #3: Yeah, so a little bit on the, yeah, go ahead. So the Ryan Hanley, is a firm, it's smaller firm, a couple hundred people in Ireland.

Page is really interesting 14, or 100 1500 people, but we've worked with them for a long time and we've over the last number of months, we've been working on how do we align leadership starting to look already at the financial transformation and in fact, that's planned for Q4 of this year. So we think we.

Speaker #3: We've been working with them for years. So that integration is going very well. We actually anticipated, I think, to be completed by the end of this year, the financial integration.

Speaker #3: Cosgroove, similarly, 90-person firm, 100-person firm down in New Zealand. You know, that one is continuing. Page, is really interesting. 1,400, 1,500 people, but we've worked with them for a long time.

We're going to be in pretty good shape really having wrapped up the majority of the integration and the financial work by the end of these end to end of the year on all three of these.

Speaker #3: And we've, over the last number of months, been working on how to align leadership, starting to look already at the financial transformation, and in fact, that's planned for Q4 of this year.

That's great. Thank you I'll pass line congrats on the quarter.

Thank you.

Thank you one moment for our next question.

Gordon Johnston: We think we are going to be in pretty good shape, really having wrapped up the majority of the integration and the financial work by the end of the year on all three of these.

Our next question comes from the line of <unk> Khan with RBC capital markets. Your line is open. Please go ahead.

Speaker #3: So we think we're going to be in pretty good shape, really having wrapped up the majority of the integration in the financial work by the end of the year on all three of these.

Okay, great. Thanks, and good morning, I guess, just sticking with kind of the outlook commentary it looks like the margin guidance of mid <unk> kicked up a little bit maybe we can just get into some of the details around our the progress year to date on the margin side and just what are some of the contributors to the margin being pushed up higher for the full year.

Krista Friesen: is great. Thank you. I will pass the line. Congrats on the quarter.

Speaker #6: That's great, thank you. I'll pass the line. Congrats on the quarter.

Gordon Johnston: Thank you.

Speaker #3: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #5: Thank you. One moment for our next question. Our next question comes from the line of Sabat Khan with RBC Capital Markets. Your line is open; please go ahead.

Sabahat Khan: Okay, great. Thanks and good morning. I guess just sticking with kind of the outlook commentary, it looks like the margin guidance mid-point has been kicked up a little bit. Maybe we can just get into some of the details around the progress here to date on the margin side and just what are some of the contributors to the margin being pushed up higher for the full year. Thanks.

Speaker #4: Okay, great. Thanks and good morning. I guess just sticking with kind of the outlook commentary You know, it looks like the margin guidance submit points have been kicked up a little bit.

Yes, we're really.

Really pleased with our progression.

Year to date, and what we see for the balance of the year with respect to EBIT margins.

Speaker #4: Maybe we can just get into some of the details around the progress year-to-date on the margin side, and just what are some of the contributors to the margin being pushed up higher for the full year.

Youre absolutely right.

Bumped up the emergence now from 16, 7% to 17, 3% to that 70% to 74 range year to date, we're at 17%, which is 100% 100 basis points ahead of where we were a year ago. I don't believe we'll be able to maintain that 100 basis points year over year improvement in H two.

Speaker #4: Thanks.

Vito Culmone: All right, Sabahat. It's Vito here. Good morning. We are really pleased with our progression year to date and what we see for the balance of the year with respect to EBITDA margins. You are absolutely right. We have bumped up the EBITDA margins now from 16.7% to 17.3% to that 17.3% to 17.4% range. Year to date, we are at 17%, which is 100 basis points ahead of where we were a year ago. I do not believe we will be able to maintain that 100 basis points year-over-year improvement in H2, obviously, because the guidance reflects moderation to the year-over-year side of things, but continue to see improvement in it. For us, it always starts with just strong project margins. Of course, we do not take that for granted. Your EBITDA margins always start with that, the right customer, right price, excellent execution.

Speaker #3: Hi, Saba. Yeah, we're really—it's Vito here. Good morning. We're really pleased with our progression year-to-date and what we see for the balance of the year with respect to EBITDA margins.

Speaker #3: You're absolutely right. You know, we have bumped up the EBITDA margins now from 167 to 173 to that 17 to 174 range. Year-to-date, we're at 17%, which is 100%, 100 basis points ahead of where we were a year ago.

Obviously, because the guidance reflects a moderation to the year over year side of things, but continue to see improvement in it for us. It always starts with just strong project margins of course, we don't take that for granted your EBIT margin is always start without the right customer right price excellent execution. So just a huge shout out to the operations teams.

Speaker #3: I don't believe we'll be able to maintain that 100 basis points year-over-year improvement in H2 obviously because the guidance reflects a moderation to the year-over-year side of things, but continue to see improvement in it.

<unk> focus on that our project margins in the quarter were 54, 2% with Jeff actually is.

2% lower than prior year, but that really reflects mixed <unk> global business was.

Speaker #3: You know, for us, it always starts with just strong project margins. Of course, we don't take that for granted your EBITDA margins always start with that.

A higher percentage of our overall business in Q2, and a profile and lower project margins. So in North America project margins were actually up year over year. So start with strong project margins, you saw that admin and marketing costs.

Speaker #3: The right customer, right price, excellent execution. So, just a huge shout out to the operations team's continued focus on that. Our project margins in the quarter were 54.2%, which is actually 0.2% lower than the prior year, but that really reflects mixed global business being a higher percentage of our overall business in Q2.

Vito Culmone: So just a huge shout out to the operations team to continue to focus on that. Our project margins in the quarter were 54.2%, which actually is 0.2% lower than prior year. But that really reflects mix. The global business was a higher percentage of our overall business in Q2, and they profiled at a lower project margin. So in North America, our project margins were actually up year-over-year. So it starts with strong project margins. You saw that admin and marketing costs, we target that as a lower percentage of overall net revenue. Utilization in the quarter was higher. That always contributes. Just the general nature of our operational scale and leveraging our back offices and growing that at a pace that is lower than our overall revenue growth continues to be a positive contributor, of course. We did call out claims in the quarter for particular Q2.

We target that as a lower percentage of overall net revenue utilization in the quarter. It was higher that always contributes just the general nature of our operational scale and leveraging our back offices and growing that at a pace that's lower than our overall revenue growth continues to be a positive <unk>.

Speaker #3: And they profile at a lower project margin. So in North America, our project margins were actually up year-over-year. So it'll start with strong project margins.

Speaker #3: You saw that admitted marketing costs, you know, we target that as a lower percentage of overall net revenue. Utilization in the quarter was higher, that always contributes.

<unk> of course.

We did call out the claims in the quarter for particularly to do claims is always a little bit lumpy, obviously, but in Q2, we did have favorable settlement.

Speaker #3: Just the general nature of our operational scale and leveraging our back offices and growing that at a pace that's lower than our overall revenue growth continues to be a positive contributor, of course.

Two claims in particular relative to the provisions we had and that contributed a call. It 30 to 40 basis points in the quarter.

But those are all the drivers very very pleased with it and.

Speaker #3: We did call out claims in the quarter for particularly Q2. Claims is always a little bit lumpy, obviously, but in Q2 we did have favorable settlement of two claims in particular relative to the provisions we had.

A continuation of a multi year story for us as Gordon referred to in his opening remarks here.

Vito Culmone: Claims is always a little bit lumpy, obviously, but in Q2, we did have a favorable settlement of two claims in particular relative to the provisions we had. That contributed, I will call it 30 to 40 basis points in the quarter. But those are all the drivers. Very, very pleased with it. It is a continuation of a multi-year story for us, as Gordon referred to in his opening remarks, hitting the 17, piercing the 17% mark one year earlier than our strap plan just is a strong indication of what we believe is to come here in the next several years.

Hitting the 17 Pearson to 17% Mark one year earlier than our strap plan just.

Speaker #3: And that contributed, I'll call it, 30 to 40 basis points in the quarter. But those are all the drivers. Very, very pleased with it.

As a strong indication of what we believe is to come here in the next several years.

Speaker #3: And you know, it's a continuation of a multi-year story for us, as Gordon referred to in his opening remarks. Hitting the 17 piercing the 17% mark one year earlier than our strap-platin, just is a strong indication of what we believe is to come here in the next several years.

Great. Thanks, Thanks for the color there and then maybe the second one for Gordon.

On the water side, it looks like about our 12, 5% organic growth this quarter.

The interesting thing there being it's been several years of good start to the wider market. So maybe if you can just help us think through.

What drove that the near term demand driver sounds like amp it might still be at the early stages. So assuming some of the other work is driving so maybe just give us a perspective on what's driving the strong growth there and maybe the opportunity in the data center side of some of those are types of water as well. Thanks.

Sabahat Khan: Great. Thanks for the color there. Maybe the second one for Gordon Johnston. On the water side, it looks like about 12.5% organic growth this quarter. The interesting thing there being, it has been several years of good strength in the water market. Maybe if you can just help us think through what drove that, the near-term demand drivers. It sounds like APE might still be at the early stages, so assuming some of the other work is driving. Maybe just give us perspective on what is driving the strong growth there and maybe the opportunities in the data center side if some of those are tied to water as well. Thanks.

Speaker #4: Great, thanks for the color there. And then maybe the second one for Gordon, you know, on the water side, it looks like about a 12.5% organic growth this quarter.

Speaker #4: And the interesting thing there being, you know, it's been several years of good strength in the water market. So maybe if you can just help us think through what drove that, the near-term demand drivers, it sounds like AMP Aid might still be at the early stages.

Right.

Great perspective.

As we've talked about before and I think everyone on the calls we're like we've had strong organic growth in water back to 2019 and every every quarter. It just continues to get stronger with our overall water business and so you're right. We're still early days with <unk>.

Speaker #4: So assuming some of the other work is driving, so maybe just give us perspective on, you know, what's driving the strong growth there, and maybe, you know, the opportunities in the data center side if some of those are tied to water as well.

Speaker #4: Thanks.

With an eight.

Gordon Johnston: Right. No, got great perspective. As we have talked about before, and I think everyone on the call is aware of it, we have had strong organic growth in water back to 2019. Every quarter, it just continues to get stronger with our overall water business. You are right, we are still early days with APE ramping up, although we are already at a level roughly about 50% higher this time of year than we were a year ago. That is already coming, and we are actively hiring people in the U.K., expanding our delivery centers in Pune, India, to continue to service that demand. I think we talked about, even in Canada, we had 30% organic growth on top of more and more of strong quarters year over year. There is just an enormous amount of work that we see in water treatment, wastewater treatment, advanced manufacturing facilities.

Speaker #3: Great. No, great perspective. You know, as we've talked about before, and I think everyone on the call is aware, like we've had strong organic growth in water back to 2019.

Wrapping up although we are already sort of at a level roughly about 50% higher this time of year than we were a year ago. So we're all of that is already coming in where we're actively hiring.

Speaker #3: And every quarter, it just continues to get stronger with our overall water business. And so, you're right, we're still early days, with AMP Aid ramping up.

People in the UK, expanding our delivery centers in <unk>.

In Pune, India to continue to to service that demand, but I think we talked about like even in Canada, we had 30% organic growth on top of more and more strong quarters.

Speaker #3: Although we are already sort of at a level roughly about 50% higher this time of year than we were a year ago. So we're all that is already coming, and we're we're actively hiring people in the UK, expanding our delivery centers in Pune India to continue to service that demand.

Year over year. So there's just an enormous amount of work that we see.

In water treatment wastewater treatment advanced manufacturing facilities, you mentioned the Datacenters, but also as we're talking to clients about reassuring. Some some of their facilities. It all starts with with water. So while our water business continues to strengthen our backlog is even up even.

Speaker #3: But you know, I think we talked about, like, even in Canada, we had 30% organic growth on top of more and more strong quarters year over year.

Speaker #3: So there's just an enormous amount of work that we see in water treatment, wastewater treatment, and advanced manufacturing facilities. You mentioned, you know, the data centers, but also, as we're talking to clients about reshoring some of their facilities, it all starts with water.

Further so we see continued strength in that water business.

For the remainder of 'twenty, five and really for the years to come.

Gordon Johnston: You mentioned the data centers, but also as we are talking to clients about reshoring some of their facilities, it all starts with water. While our water business continues to strengthen, our backlog is even up even further. We see continued strength in that water business for the remainder of 2025 and really for the years to come. No slowing down in the water space whatsoever.

No slowing down in the water space whatsoever.

Alright, thanks very much.

Thank you one moment for our next question.

Speaker #3: So, while our water business continues to strengthen, our backlog is even up even further. We see continued strength in that water business for the remainder of 2025 and really for the years to come.

Our next question comes from the line of Chris Murray with ATB capital markets. Your line is open. Please go ahead.

Yes, thanks folks.

Gordon turning back to thinking about the U S business.

Speaker #3: No slowing down in the water space whatsoever.

Maybe longer term.

Sabahat Khan: Right. Thanks very much.

Yes, it feels like a bit of a blip in the quarter.

Speaker #4: Great, thanks very much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Chris Murray with ATB Capital Markets. Your line is open. Please go ahead.

We're talking about.

Speaker #5: Thank you. One moment for our next question. Our next question comes from the line of Chris Murray with ATB Capital Markets. Your line is open; please go ahead.

Like high single digit type growth in the backlogs.

And your commentary a little bit of a recovery.

I go back a couple of quarters. Some of the discussion has been how long could the U S market continuing to support frankly, what are kind of above average single digit organic growth level.

Gordon Johnston: Thanks, folks. Gordon, maybe turning back to thinking about the U.S. business, maybe longer term. It definitely feels like a bit of a blip in the quarter because you are talking about, again, high single-digit type growth in the backlogs and your commentary a little bit about recovery. If I go back a couple of quarters, the discussion has been, how long could the U.S. market continue to support, frankly, what are kind of above-average single-digit organic growth levels? Any thoughts on how you are viewing kind of the next couple of years on what the spending pace looks like and your comfort level on where we are going? With that, is there any particular sectors that you think that you need to add in order to be able to accomplish or achieve some of that? Great questions.

Speaker #6: Yeah, thanks folks. You know, Gordon, maybe turning back to thinking about the US business, maybe longer term. I mean, I guess it feels like a bit of a blip in the quarter because you're talking about, you know, again, like high single-digit type growth in the backlogs, and you know, your commentary a little bit about recovery.

Just any thoughts on how you're viewing kind of the next couple of years.

On what that what the spending pace looks like in your comfort level on where we're going.

Speaker #6: If I go back a couple of quarters, you know, sort of the discussion has been, you know, how long could the U.S. market continue to support, you know, frankly, what are kind of above-average single-digit organic growth levels?

And with that I'm sorry.

Particular sectors that you think that you need to add in order to accomplish our exchange some of that.

Yeah, Great question, so as we as we look forward in the remainder of this year and the rest of next year, we mentioned already that we are.

Speaker #6: And just any thoughts on how you're viewing kind of the next couple years on, you know, what the spending pace looks like and your comfort level on where we're going?

<unk> organic growth.

Speaker #6: And with that, you know, is there any particular sectors that you think that you need to add in order to be able to accomplish or achieve some of that?

Backlog in the U S. But then you look at some of the other drivers we've done a lot of talking before us and the industry about Iga only about 40% of that less than 40% of that has been spent so theres a lot of opportunity to continue to come there in the next couple of years to allocate some of those funds before.

Speaker #3: Yeah, great question. So, you know, as we look forward in the remainder of this year and the rest of next year, you know, we mentioned already that we're 90% organic growth in backlog in the US.

Gordon Johnston: As we look forward in the remainder of this year and the rest of next year, we mentioned already that we are 80% organic growth in backlog in the U.S. Then you look at some of the other drivers. We have done a lot of talking before in the industry about IIJA. Only about 40% of that, less than 40% of that has been spent. So there is a lot of opportunity to continue to come there in the next couple of years to allocate some of those funds before they are not eligible for allocation at the end of 2026. That part feels strong. You look at the One Big Beautiful Bill, and there is some additional supports for infrastructure, state and local government there. Data centers, mission-critical, those continue to grow. It is interesting there.

They are not eligible for allocation at the end of 2026, so that part feels strong when you look at the one big beautiful Bill and there is some additional supports for infrastructure state and local government.

Speaker #3: But then you look at, you know, some of the other drivers, you know, we've done a lot of talking before as in the industry about IIJA.

Speaker #3: Only about 40% of that—less than 40% of that—has been spent. So, there's a lot of opportunity to continue to come there, you know, in the next couple of years, to allocate some of those funds before, you know, they're not eligible for allocation at the end of 2026.

Their datacenters mission critical those continue to grow and it's interesting there I mentioned two Christmas comments, we've been working on over 100 datacenter projects right now from 20 megawatts up to a gigawatt in size and now. The addition of page two our team even strengthens our already strong.

Speaker #3: So that part feels strong. You know, you look at the One Big Beautiful Bill, and there's some additional supports for infrastructure state and local government there.

Our group there so there is <unk>.

Speaker #3: Data centers, mission-critical, those continue to grow. And, you know, it's interesting there, you know, I mentioned to Krista's comments, we've been we're working on over 100 data center projects right now from 20 megawatts up to a gigawatt in size.

So just a lot of opportunity across whether it's transportation or water buildings.

Gordon Johnston: I mentioned Krista Friesen's comments, we are working on over 100 data center projects right now, from 20 megawatts up to a gigawatt in size. Now the addition of Page to our team even strengthens our already strong group there. So there is just a lot of opportunity across, whether it is transportation or water, buildings, energy, the transition, mining. We see really, really strong strength going forward. I think that what we are seeing in the first couple of quarters of this year, not just us, but the industry overall, is just a little bit transitory. We see good fundamentals going forward. We did lower our organic guidance for the year to 5%, but that is really just a function of mathematics. That, you know, we are sitting at 3.3% year to date, and so 3.4% year to date.

Energy transition mining, they're just we see really really strong strength going forward. So I think that what we've seen in the first couple of quarters of this year, not just us but the industry overall.

Speaker #3: And now the addition of Page to our team even strengthens our already strong group there. So there's, so just a lot of opportunity across, whether it's transportation or water, buildings, energy, the transition, mining.

A little bit transitory and we see good fundamentals going forward. So.

We did lower our organic guidance for the year to 5%, but that's really just a function of mathematics, yes.

Speaker #3: They're just, we see really, really strong strength going forward. So I think that what we're seeing in the first couple quarters of this year, not just us, but the industry overall, it's just a little bit transitory.

We're sitting at three 3%.

Year to date, and so were three 4% year to date.

As we thought about just wanting to be clear and state our expectations.

Speaker #3: And we see, you know, good fundamentals going forward. So, you know, we did lower our organic guidance for the year to 5%, but that's really just a function of mathematics.

When we were saying mid to high single digits and everyone goes to six to eight and if we're at three four for the first half of the year that means we would almost have to be double digit organic growth in Q3, and Q4 in order to get into that range.

Speaker #4: Yeah.

Speaker #3: That, you know, like

Speaker #3: we're sitting at 3.3% year-to-date, and so a 3.4% year-to-date, so as we thought about just wanting to be clear and state our expectations, just, you know, when we were saying mid to high single digits, you know, everyone goes to six to eight, and if we're at 3.4 for the first half of the year, that means we'd almost have to be double-digit organic growth in Q3 and Q4 in order to get into that range.

We see continued acceleration, but not not sure that we're going to get to 10% double digit organic growth in both garnered so we just wanted to be clear with everyone and confirm our expectations, but but just to confirm though we expect acceleration of organic growth in the U S for the second half of the year and through 2026 and beyond.

Gordon Johnston: As we thought about just wanting to be clear and state our expectations, when we were saying mid to high single digits, everyone goes to 6% to 8%. If we are at 3.4% for the first half of the year, that means we would almost have to be double-digit organic growth in Q3 and Q4 in order to get into that range. We see continued acceleration, but I am not sure that we are going to get to 10% double-digit organic growth in both quarters. We just wanted to be clear with everyone and confirm our expectations. Just to confirm, though, we expect acceleration of organic growth in the U.S. for the second half of the year and through 2026 and beyond.

Gordon I'll note that it'd be a couple of things there Chris asked whether there was any particular areas of potential gaps for us in the market or areas of focus Chris.

Speaker #3: We see continued acceleration, but not sure that we're going to get to 10% double-digit organic growth in both quarters. So we just wanted to be clear with everyone and confirm our expectations.

Chris we remain incredibly bullish about the U S market.

Speaker #3: But just to confirm, though, we expect acceleration of organic growth in the U.S. for the second half of the year, and through 2026 and beyond.

With aging infrastructure U S remains incredibly behind and then building resiliency to weather events, so on and so forth. The macro factors are just continue to be.

Vito Culmone: Yeah. Gordon, I will just add maybe a couple of things there. Chris asked whether there were any particular areas of potential gaps for us in the market or areas of focus. Chris, we remain incredibly bullish about the U.S. market. We, you know, aging infrastructure, U.S. remains incredibly behind in that, building resilience, heated weather events, so on and so forth. The macro factors just continue to be extremely buoyant. When you look at this administration's focus, frankly, and what they are investing in and what their areas of policy enforcement are with the OBBA and whatnot, it just speaks to increased focus and support for much of what we are describing.

Speaker #4: Yeah, Gordon, I'll just add maybe a couple of points there. Chris asked whether there were any particular areas of potential gaps for us in the market or areas of focus.

Extremely buoyant and when you look at this administration's focus frankly.

Speaker #4: Chris, we remain incredibly bullish about the US market. I just, and we, you know, aging infrastructure, you know, US is remains incredibly behind in that.

And what they are what they are investing in and what their areas of policy enforcement are with <unk>.

<unk> and whatnot. It just speaks to increase focus and support for for much of what we're describing.

Speaker #4: Building resilience, heated weather events, and so on and so forth. The macro factors are just continuing to be extremely buoyant. And when you look at this administration's focus, frankly, and what they're investing in, along with their areas of policy enforcement, such as the OBBA, it just speaks to an increased focus and support for much of what we're describing, so.

Anything on the gas.

Okay.

Thanks, Chris.

Yes, Thanks, and then one other question I just had on margins and this maybe goes back to the Investor day, and talking about sort of the implementation of technology across the platform.

And I'm kind of listening to some of the comments about SG&A leverage.

Gordon Johnston: Anything else to go through?

Speaker #3: Anything off the gas, Gordon, for you then?

You just talk to some of the AI and other technologies you guys are referencing and how they're playing into this margin profile. At this point are you actually seeing them have them.

Vito Culmone: No.

Speaker #4: Yeah, no, okay. Thanks, Chris.

Gordon Johnston: Okay.

Vito Culmone: Thanks, Chris.

Gordon Johnston: Yeah, thanks. One other question that I just had on margins, and this maybe goes back to the investor day and talking about the implementation of technology across the platform. I am kind of listening to some of the comments about SG&A leverage. Can you just talk to some of the AI and other technologies you guys were referencing and how they are playing into this margin profile at this point? Are you actually seeing them have any sort of impact or change, I guess, in the trend on revenue per head type metrics or earnings per head metrics at this particular point, or is it still kind of too early to be able to point to anything definite? I think, you know, overall in the industry and Stantec included, we are still early days. How far we can push this.

Speaker #6: Yeah, thanks. And then one other question I just had on margins, and this maybe goes back to the Investor Day and talking about sort of the implementation of technology across the platform.

Any sort of impact.

Or change I guess in the trend.

Speaker #6: And, you know, I'm kind of listening to some of the comments about SG&A leverage, but can you just talk to some of the AI and other technologies you guys were referencing?

Revenue per head.

Type metrics or earnings per head metrics at this particular point or is it kind of too early to be able to point to anything definite.

Speaker #6: And how they're playing into this margin profile at this point? Are you actually seeing them have any sort of impact or change, I guess, in the trend on revenue per head type metrics or earnings per head?

Yes, I think overall in the industry and <unk> is included we're still early days and serve so how far we can push us interestingly, though our entire C suites went down to the Microsoft campus in.

In Redmond, there a couple of weeks ago spent a day with their technology folks and our folks really talking about their journey. Our journey what are some of the areas that we believe that we could make use of AI and other digital tools and.

Speaker #6: Metrics at this particular point, or is it still kind of too early to be able to point to anything definite?

Speaker #3: Yeah, I think, you know, overall in the industry and Stantec has included we're still early days, and so how far we can push us.

Gordon Johnston: Interestingly, though, our entire C-suite went down to the Microsoft campus in Redmond there a couple of weeks ago, spent a day with their technology folks and our folks really talking about their journey, our journey, what are some of the areas that we believe that we could make use of AI and other digital tools. We are working very, very closely with them on some of some co-investment sort of ideas there. As we look at our inside at Stantec, you know, we have deployed over 10,000 licenses of Copilot, you know, throughout the organization. We are looking at it from a number of perspectives, Chris.

Speaker #3: Interestingly though, our entire C-suites went down to the Microsoft campus in Redmond, there a couple weeks ago. Spent a day with their technology folks and our folks really talking about their journey, our journey, what are some of the areas that we believe that we could make use of AI and other digital tools and so we're working very, very closely with them on some of some co-investment sort of ideas there.

So we're working very very closely with them on some of some co investment sort of ideas there.

As we look at.

At our <unk>.

In <unk>, we've deployed over 10000 licenses a copilot.

Throughout the organization and so we're looking at it from a number of perspectives. Chris one is like what can we do to make our back office more efficient whether thats HR or accounts payable expense account review those sorts of things that we can make the backup hosts more efficient <unk>.

Speaker #3: But as we look at our inside at Stantec, you know, we've deployed over 10,000 licenses of Copilot. You know, throughout the organization. And so we're looking at it from a number of perspectives, Chris.

<unk> some of the SG&A causes.

Proposal, writing how can we speed you'll get speed to market on those sorts of things and then also thinking about on the on the design side, where we can start.

Gordon Johnston: One is, like, what can we do to make our back office more efficient, whether that is HR or accounts payable, expense account review, those sorts of things that we can, you know, make the backup house more efficient, you know, reducing some of the SG&A costs, proposal writing, how can we speed, you know, get speed to market on those sorts of things. Also thinking about on the design side where we can start optimizing and automating some of the design processes. I think it is still early days. I am not sure that you are seeing it too much in that margin expansion yet, but certainly, I think we will see it playing more of a factor, you know, in the years to come. Okay, that is helpful. I will leave it there. Thanks.

Speaker #3: One is, like, what can we do to make our back office more efficient? Whether that's HR or accounts payable, expense account review, those sorts of things that we can make the back of house more efficient, reducing some of the SG&A costs.

Optimizing and automating some of the design process. So I think it's still early days.

I'm not sure that youre seeing it too much in that margin expansion, yet, but certainly I think we will see it playing more of a factor.

Speaker #3: Proposal writing: how can we speed up the time to market for those sorts of things? Additionally, we should consider the design side, looking for areas where we can start optimizing and automating some of the design processes.

In the years to come.

Okay. That's helpful I'll leave it there thanks.

Thank you.

And one moment for our next question.

Our next question comes from the line of Yuri Lynk with Canaccord Genuity. Your line is open. Please go ahead.

Speaker #3: I think it's still early days. I'm not sure that you're seeing it too much in that margin expansion yet, but certainly, I think we'll see it playing more of a factor in the years to come.

Good morning, guys.

Good morning.

Just back on the.

The acceleration in organic growth in the in the back half of the year.

Speaker #6: Okay, that's helpful. I'll leave it there. Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Yuri Lynk with Canaccord Genuity. Your line is open. Please go ahead.

Speaker #5: Thank you. One moment for our next question. Our next question comes from the line of Yuri Link with Canaccord Genuity. Your line is open, please go ahead.

The comps are kind of interesting in terms of what you are lapping their Q3 is.

Five 5% and then 10% comp in Q4 so.

Sabahat Khan: Good morning, guys.

Speaker #4: Good Good morning, guys.

Gordon Johnston: Morning.

Speaker #3: Morning.

Sabahat Khan: Just back, Gordon, on the acceleration in organic growth in the back half of the year. The comps are kind of interesting in terms of what you are lapping there. Q3 is 5.5% and then a 10% comp in Q4. Fair to say that that should help shape our expectations for more organic growth and bigger organic growth improvement in Q3 versus Q4.

Speaker #4: Just Just back, Gordon, on the acceleration in organic growth in the back half of the year. The comps are kind of interesting. In terms of what you're lapping there, you know, Q3 is five and a half percent, and then 10% comp in in Q4.

Fair to say that that should help shape our expectations for.

More organic growth.

Organic growth improvement in Q3 versus Q4.

I think thats exactly right and when you look at the Q4 comp already up 10% in there.

Again, one of the reasons why we why we lowered our guidance to that fiber.

Speaker #4: So fair to say that that should help shape our expectations for more organic growth and bigger organic growth improvement in Q3 versus Q4.

5% type range is just because the comp in Q4 is a bit tough and we just wanted to set reasonable expectations of where we saw it but we do see I think we mentioned back in July and of course, one one period.

Gordon Johnston: That is exactly right. When you look at the Q4 comp, already up 10%. That is again one of the reasons why we lowered our guidance to that 5%, that mid-5% type range, just because the comp in Q4 is a bit tough. We just wanted to set reasonable expectations of where we saw it. We do see, I think we mentioned in July, and of course one period does not make a quarter, but it is a very, very positive trend that we saw high single-digit organic growth in the U.S. in the quarter, sorry, in the period in July, as well as a backlog, organic backlog acceleration as well. We are still feeling really good about that. Of course, consolidated, we still have mid to high single digits. It is just we only made that one adjustment on the U.S. side.

Speaker #3: You know, I think that's exactly right. And when you look at the Q4 comp, it's already up 10%. And you know, that's again one of the reasons why we lowered our guidance to that 5%, you know, mid 5% type range.

It does not make a quarter, but it's a very very positive trend that we saw.

High single digit organic growth in the U S in the quarter Im sorry in the period in July as well as our backlog organic backlog acceleration as well. So we're still feeling really good about that and then.

Speaker #3: It's just because the comp in Q4 is a bit tough, and we just wanted to set reasonable expectations of where we saw it. But we do see, you know, I think we mentioned in July, and of course, one period does not make a quarter, but it's a very, very positive trend that we saw, you know, high single-digit organic growth in the U.S. in the quarter, sorry, in the period in July.

Course, consolidated we still have a.

Mid to high single digits.

They've made that one adjustment on the U S side and.

And just I mean, I think that the fact that.

Obviously, the U S represents half of our business, but on the consolidated.

Speaker #3: As well as, you know, a backlog organic backlog acceleration as well. So we're still feeling really good about that. And then, you know, of course, consolidated, we still have mid to high single digits.

We're still at mid to high just reflects I think Gordon and listeners the diversity and strength of our global business.

And of course North America.

Speaker #3: It's just we only made that one adjustment on the US side.

Vito Culmone: Yeah, and just, I mean, I think the fact that obviously the U.S. represents half of our business, but on the consolidated, we're still at mid to high just reflects, I think, Gordon and our listeners, the diversity and strength of our global business, including, of course, North America.

Okay.

Speaker #4: Yeah, and just, I mean, I think the fact that obviously the U.S. represents half of our business, but on the consolidated, we're still at mid to high just reflects, I think, Gordon, and our listeners, you know, the diversity and strength of our global business, including, of course, North America.

Just thinking about.

U S water business and one of your customers.

Financial difficulties there.

Wondering if.

It might have any impact.

Or over the next year or so.

Sabahat Khan: Okay. Just thinking about the U.S. water business and one of your customers in financial difficulties there, wondering if that might have any impact over the next year or so.

Yes, and so in particularly Youre thinking talking about Thames water in the UK.

Speaker #4: Okay. Just thinking about the U.S. water business and one of your customers in financial difficulties there. I'm wondering if that might have any impact over the next year or so.

Yeah, Yeah, no exactly and that's pretty public I think for everyone to see that they are in financial difficulty, but what's interesting with Thames water as we've worked for tims water in their predecessor organizations for almost 200 years in the in the U K and so discussions that we're having is.

Gordon Johnston: Yeah, and so in particular, you are thinking, talking about Thames Water in the U.K.?

Speaker #3: Yeah, and so in particular, you're thinking talking about Thames Water in the UK?

Sabahat Khan: Exactly.

Whether that the government and we have no indication of anything would happen, but if that were to be national and for some period of time the work still needs to be done.

Speaker #4: Yeah, exactly, yeah.

Gordon Johnston: Yeah, no, exactly. That is pretty public, I think, for everyone to see that they are in financial difficulty. What is interesting with Thames Water is we have worked for Thames Water and their predecessor organizations for almost 200 years in the U.K. Discussions that we are having are whether the government, and we have no indication of anything would happen, but if that were to be nationalized for some period of time, the work still needs to be done. We are, all of our discussions with our client are the work needs to be done, can continue. We are having no payment issues at this point. So we do not see that really as an impact to our business from a negative perspective.

Speaker #3: Yeah, no, exactly. And that's pretty public, I think, for everyone to see that they are. And in financial difficulty. But what's interesting with Thames Water is we've worked for Thames Water and their predecessor organizations for almost 200 years.

So we're all of our discussions with our client or the work needs to be done can continue we're having no payment issues at this point.

Speaker #3: In the UK. And so you know, discussions that we're having is, you know, whether the government, and we have no indication of anything would happen, but if that were to be nationalized for some period of time, the work still needs to be done.

So we don't.

We don't see that really as a as an <unk>.

Impact to our business from a negative perspective not at all.

Okay. Good to hear I'll turn it over thanks for the time.

Speaker #3: And so, we're all of our discussions with our client are the work needs to be done, continue we're having no payment issues at this point.

Thanks Sharon.

One moment for our next question or.

Our next question is going to come from the line of Michael <unk> with TD Cowen. Your line is open. Please go ahead.

Speaker #3: So we don't see that really as an impact to our business from a negative perspective.

Thank you good morning.

Good morning.

Sabahat Khan: Yeah, not at all. Okay, good to hear. I'll turn it over. Thanks for the time.

Speaker #4: Yeah, not at all. Okay, good to hear. I'll turn it over. Thanks for the time.

Court, it's pretty clear from your comments.

That you expect an acceleration in U S organic growth, which is great to hear I guess my question is the factors that you called out that that I.

Gordon Johnston: Thanks, Yuri.

Speaker #3: Thanks, Jordan.

Operator: Thank you. One moment for our next question. Our next question is going to come from the line of Michael Tupholme with TD Cowen. Your line is open. Please go ahead.

Speaker #5: Thank you. One moment for our next question. Our next question is going to come from the line of Michael de Palm with TD Cowan.

Speaker #5: Your line is open; please go ahead.

I guess in the shorter nearer term here have been weighing on organic growth. So in the public sector side you talked about.

Sabahat Khan: Thank you. Good morning.

Speaker #4: Thank you. Good morning.

Gordon Johnston: Morning.

Speaker #3: Morning.

Sabahat Khan: Gordon, it is pretty clear from your comments that you expect an acceleration in U.S. organic growth, which is great to hear. My question is, the factors that you called out that, I guess, in the shorter, nearer term here have been weighing on organic growth. So, on the public sector side, you talked about some slower procurement, and on the private sector side, some of the issues in the larger capital project side within the private sector. I guess, have you overcome all of these, or are you seeing hiccups in other areas that are allowing you to offset those headwinds? I am just trying to get a sense if you have sort of fully moved past all those issues and those are now behind you and behind the industry, or if those are still there, but you are seeing strength elsewhere.

Hum.

Speaker #4: Gordon, it's pretty clear from your comments that you expect an acceleration in US organic growth, which is great to hear. I guess my question is, the factors that you called out that I guess in the shorter, nearer term here have been weighing on organic growth.

Slower procurement and on the private sector side.

Some of the issues in the larger capital project side within that within private sector. I guess like have you overcome all of these or are you seeing.

Pick ups in other areas that are allowing you to offset those headwinds.

Speaker #4: So, on the public sector side, you talked about some slower procurement, and on the private sector side, some of the issues in the larger capital project side within the private sector.

Trying to get a sense of if.

Fully move past all those issues and those are those are now behind you and by the industry or if those are still there, but youre seeing strength elsewhere.

Speaker #4: I guess, like, have you overcome all of these, or are you seeing hiccups in other areas that are allowing you to offset those headwinds?

Yes, I think what we're seeing is that the issues are diminishing a little bit I don't think that the.

That we've that their past Michael its interesting one thing that we've been hearing from some of our our business leaders is that from some of the agencies that we're working with particularly in the U S. A number of people took early retirement when it was offered in those sorts of things. So it's taking a little bit longer sometimes for them to get new people in those <unk>.

Speaker #4: And just trying to get a sense if you've sort of fully moved past all those issues and those are now behind you and behind the industry, or if those are still there, but you're seeing strength elsewhere.

Gordon Johnston: Yeah, I think what we are seeing is that the issues are diminishing a little bit. I do not think that they are past, Michael. It is interesting. One thing that we have been hearing from some of our business leaders is that from some of the agencies that we are working with, particularly in the U.S., a number of people took early retirement when it was offered and those sorts of things. So it is taking a little bit longer sometimes for them to get new people in those roles, to get the projects out the door and such. But we see that diminishing. I think we saw, not just Stantec, but the industry overall, a little slower organic growth in the U.S., Q1, Q2, as we are working through some of these items. But I think that they are diminishing.

Speaker #3: Yeah, I think what we're seeing is that the issues are diminishing a little bit. I don't think that we've that they're past. Michael, it's interesting.

Rolls to get the projects out the door and such but we see that diminishing I think we saw much is best with the industry overall little slower organic growth in the U S. Q1, Q2, as we're working through some of these items, but I think that they are diminishing.

Speaker #3: One thing that we've been hearing from some of our business leaders is that, from some of the agencies that we're working with, particularly in the U.S., a number of people took early retirement when it was offered and those sorts of things.

Speaker #3: So it's taking a little bit longer sometimes for them to get new people in those roles, to get the projects out the door and such.

But in no way, what I would say that Theyre also but.

As we think about the acceleration of organic growth in the U S going forward.

Speaker #3: But we see that diminishing. I think we saw not just us, but the industry overall, a little slower organic growth in the US Q1, Q2, as we're working through some of these items.

We still feel very positive about it even even with the.

The diminishing issue that we have.

Called out there previously.

Speaker #3: But I think that they're diminishing. I don't, but in no way would I say that they're all solved. But you know, as we think about acceleration of organic growth in the US going forward, we still feel very positive about it.

Michael five sectors, I mean, thousands of projects thousands of clients across multiple industries. Obviously, so I'd just echo under percentage of what God has described.

Gordon Johnston: In no way would I say that they are all solved. As we think about the acceleration of organic growth in the U.S. going forward, we still feel very positive about it, even with the diminishing issues that we have called out there previously.

You still see pockets of it but overall diminishing as we move forward and.

Speaker #3: Even with the, you know, the diminishing issues that we've called out there previously.

And very few cancellations, if any re craft Coors moving these aren't these aren't cancellations. We're talking about we're just talking about some some delays and pausing.

Vito Culmone: Yeah, Michael, five sectors, thousands of projects, thousands of clients across multiple industries, obviously. I just echo 100% of what Gordon has described. You still see pockets of it, but overall diminishing as we move forward. Very few cancellations, if any, right? I mean, these are not cancellations we are talking about. We are just talking about some delays and pausing.

Speaker #4: Yeah, Michael, five sectors, I mean, thousands of projects, thousands of clients across multiple industries, obviously. So I just echo 100% of what Gordon has described.

Right. That's very helpful. Thank you and then I guess as we as we look beyond this year, maybe you can just comment on how you are feeling about.

Speaker #4: You still see pockets of it, but overall, it is diminishing as we move forward. And very few cancellations, if any, right? Correct, Gordon? I mean, these aren't cancellations we're talking about.

The multi year organic growth guidance, you put out for over 7% organic growth and extended through 2026 and then.

Speaker #4: We're just talking about some delays and pausing, right? That's very helpful, thank you. And then I guess as we look beyond this year, maybe you can just comment on how you're feeling about the multi-year organic growth guidance you'd put out for over 7% organic growth that extends through 2026. And then, you know, is this level of activity that you're seeing here, including the pickup in the U.S., how does that make you feel about sort of the period beyond 2026 as you're getting closer, I guess, to the point where you're going to start to think about your next three-year plan?

Is this level of activity that youre seeing here, including the pick up and pick up in the U S.

Sabahat Khan: Right. That is very helpful. Thank you. Then, I guess as we look beyond this year, maybe you can just comment on how you are feeling about the multi-year organic growth guidance you had put out for over 7% organic growth that extends through 2026. Then, is this level of activity that you are seeing here, including the pickup in the U.S., how does that make you feel about sort of the period beyond 2026 as you are getting closer, I guess, to the point where you are going to start to think about your next three-year plan?

How does that make you feel about sort of a peer beyond 2026 as you are.

We're getting closer I guess and you start to think about your next three year plan.

Yeah, Michael I'll, maybe I'll chime in and encourage your sentiments on that obviously, we'll come out with our three year plan.

Updated three year plan post 2026 in due course, but there is absolutely nothing that we are seeing.

Wood.

Be fundamental in nature.

And I think across all of our markets, including of course, the U S. Those macro factors that were describing support that level of growth activity for what we believe at this point in several years to come and when you look at some of the recent funding programs that have been announced around the world.

Vito Culmone: Yeah, Michael, maybe I will chime in and Gordon, you can add your sentiments on that. Obviously, we will come up with our three-year plan, our updated three-year plan post-2026 in due course. But there is absolutely nothing that we are seeing that would be fundamental in nature. I think across all of our markets, including, of course, the U.S., those macro factors that we are describing support that level of growth activity for what we believe at this point in several years to come.

Speaker #3: Yeah, Michael, I'll maybe chime in. And Gordon, you can add your sentiments on that. Obviously, you know, we'll come out with our three-year plan.

Speaker #3: Our updated three-year plan post-2026 is due course. But there is absolutely nothing that we are seeing that would, you know, be fundamental in nature.

The UK put out another 10 year infrastructure plan 700, 725 billion pounds very supportive of an additional tailwind for us in Ireland, where we just acquired Brian Hanley, Another 102 billion 101, hundreds or $200 billion.

Speaker #3: And I think across all of our markets, including of course the US, those macro factors that were describing support in that level of growth activity for what we believe at this point in several years to come.

Gordon Johnston: When you look at some of the recent funding programs that have been announced around the world, the UK put out another 10-year infrastructure plan, 725 billion pounds, very supportive, an additional tailwind for us. In Ireland, where we just acquired Ryan Hanley, another 100 to 200 billion there from infrastructure. So again, very, very supportive. We feel, when you look at the One Big Beautiful Bill and some of the supports that that does, certainly, the increase in defense spending around the world. Again, for everyone on the line, we do not do anything related to hot weapons, but the work that we do would be infrastructure in support of hangars for aircraft, docks, and ports, and improvements to barracks and hospitals and such.

Speaker #3: And when you look at some of the recent funding programs that have been announced around the world, you know, the UK put out another 10-year infrastructure plan, 725 billion pounds.

They're from infrastructure, so again very very supportive so we feel.

When you look at the one big beautiful Bill and some of the support that that does certainly the the increase in defense spending around the world and again.

Speaker #3: Very supportive and additional tailwind for us. In Ireland, where we just acquired Ryan Hanley, another 102 to 200 billion there from infrastructure. So again, very, very supportive.

For everyone's on the line, we don't do anything related to hot weapons, but the work that we do would be infrastructure in support of.

Hangars for aircraft docks and ports and.

Speaker #3: So, we feel, you know, when you look at the One Big Beautiful Bill and some of the supports that that does, certainly the increase in defense spending around the world.

And in improvements to barrick's and hospitals and such so again, whether its defense spending increases or just increased infrastructure spending around the world.

Speaker #3: And again, you know, for everyone's on the line, you know, we don't do anything related to hot weapons. But the work that we do would be infrastructure in support of hangars for aircraft, docks and ports, and in improvements to barracks and hospitals and such.

I'll point to a pretty.

Solid multiyear macro for for the overall industry.

Thank you for that I'll turn the line over.

Thanks, Michael Thank you and as a reminder, if you would like to ask a question. Please press star one.

Gordon Johnston: Again, whether it is defense spending increases or just increased infrastructure spending around the world, that all point to a pretty solid multi-year macro for the overall industry.

Speaker #3: So again, whether it's defense spending, increases, or just increased infrastructure spending around the world, you know, that all point to a pretty solid multi-year macro for the overall industry.

Our next question is going to come from the line of Maxim <unk> with MBS. Your line is open. Please go ahead.

Jonathan.

Sabahat Khan: Thank you for that. I will turn the line over.

Good morning.

Speaker #4: Thank you for that. I'll turn the line over.

But if it's possible to get a bit more of an update in terms of sun.

Gordon Johnston: Thanks, Michael.

Speaker #3: Thanks, Michael.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one-one. Our next question is going to come from the line of Maxim Sytchev with NBF. Your line is open. Please go ahead.

Speaker #5: Thank you. And as a reminder, if you would like to ask a question, please press star one-one. Our next question is going to come from the line of Maxim Saichev with NBF.

What you guys are seeing on the <unk>.

When it comes to FEMA.

And what are some of the federal work is just being shifted to state and local just trying to get a second day. Thank you.

Speaker #5: Your line is open, please go ahead.

Maxim Sytchev: Good morning, Jordan.

Gordon Johnston: Morning.

Yeah, absolutely as you look at some of the disaster preparedness work in particular, Max that is looking to be shifted to some of the states and local governments. So.

Speaker #3: Morning.

Maxim Sytchev: If it is possible to get a bit more of an update in terms of what you guys are seeing on the ground when it comes to FEMA and whether, I mean, some of the federal work is just being shifted to kind of state and local, just trying to get your perspective there. Thank you.

Speaker #7: Yes, it's possible to get a bit more of an update in terms of what you guys are seeing on the ground when it comes to FEMA.

We had a number of those are those on calls with FEMA at a national level and we absolutely are in discussions now with with a number of other.

Speaker #7: And whether, I mean, some of the federal work is just being shifted to kind of state and local, just trying to get the perspective there.

Speaker #7: Thank you.

Gordon Johnston: Yeah, you know, absolutely. As you look at some of the disaster preparedness work in particular, Maxim Sytchev, that is looking to be shifted to some of the states and local governments. We had a number of those on-calls with FEMA at a national level, and we absolutely are in discussions now with a number of other local state and local government agencies about how we could respond to support them. But that still is in a transition phase. But we are absolutely engaged in those discussions.

Local state and local government agencies about how we could respond to support them, but that still is.

Speaker #3: Yeah, you know, absolutely. As you look at some of the disaster preparedness work in particular, Max, that is looking to be shifted to some of the states and local governments.

The transition phase, but.

We're absolutely engaged in those discussions.

Speaker #3: So you know, we had a number of those on-calls with FEMA at a national level, and we absolutely are in discussions now with a number of other local, state, and local government agencies about how we could respond to support them.

Okay. That's great to hear and then is it possible to provide a bit more of an update when it comes to the M&A landscape.

Obviously, you mentioned your capital capacity, but what are you guys are sort of seeing on the ground from a source perspective et cetera. Thank you.

Speaker #3: But that still is, you know, in a transition phase. But we're absolutely engaged in those discussions.

Yes.

Environment is actually.

I would say becoming increasingly active over the last quarter and I think will be for the second the second half of the year.

Maxim Sytchev: That's great to hear. Is it possible to provide a bit more of an update when it comes to the M&A landscape? I mean, obviously, you mentioned your capital capacity, but what are you guys seeing on the ground from a seller's perspective, et cetera? Thank you.

Speaker #7: Okay, that's great to hear. And then, is it possible to provide a bit more of an update when it comes to the M&A landscape?

Speaker #7: Like, I mean, obviously you mentioned your, you know, capital capacity, but what are you guys sort of seeing on the ground from a seller's perspective, et cetera?

Certainly within North America, but we're seeing globally as well so there is.

There is a number of assets that we've been talking for a while that we thought were going to be coming to market in the kind of a 12 to 18 month timeframe and I think those are probably shortened by by half a year now probably in the next six months to a year.

Speaker #7: Thank you.

Gordon Johnston: The environment is actually, I would say, becoming increasingly active over the last quarter, and I think will be for the second half of the year, certainly within North America, but we are seeing globally as well. There is a number of assets that we have been talking for a while that we thought were going to be coming to market in kind of a 12 to 18-month timeframe. I think those are probably shortened by half a year now. Probably in the next six months to a year, some of these assets will be coming to market. Wherever possible, we are having proactive meetings with individuals before our process would start just to be sure that we are well positioned. I think you will see increased activity over the next 6 to 12 months.

Speaker #3: Yeah, the environment is actually I would say becoming increasingly active over the last quarter and I think will be for the second half of the year.

These assets will be coming to market and wherever possible, we're having proactive meetings with with individuals up before a process. We start just to be sure that we're well positioned so.

Speaker #3: Certainly within North America, but we're seeing globally as well. So there's a number of assets that, you know, we've been talking for a while that we thought were going to become into market in kind of a 12 to 18-month timeframe.

Youll see increased activity over the next six to 12 months.

Speaker #3: And I think those are probably, you know, shortened by half a year now, probably in the next six months to a year.

Okay, great to hear I think.

So much less frequently.

Great. Thanks, Matt.

Speaker #3: Some of these assets will become into market and, you know, wherever possible, we're having proactive meetings with individuals before a process would start just to be sure that we're well positioned.

One moment for our next question.

Our next question comes from the line of <unk> <unk> with.

It does Chardan. Your line is open. Please go ahead.

Yes. Thank you good morning, Gordon and good morning veto.

Speaker #3: So I think you'll see increased activity over the next 6 to 12 months.

We saw an update on the section 174 being removed.

Maxim Sytchev: Okay, great to hear. Thank you so much, Krista.

Speaker #7: Okay, great to hear. Thank you so much, that's it from me.

Gordon Johnston: Great, thanks, Maxim.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Benoit Poirier with Desjardins. Your line is open. Please go ahead.

Speaker #3: Great, thanks, Max.

Knowing the approval of the Big Beautiful de Vito could you talk a little bit about the boost we might expect on free cash flow going forward and with respect to the delays that we are seeing temporarily in the U S. I'm just wondering if customers.

Speaker #5: And one moment for our next question. Our next question comes from the line of Benoit Pourrier with Desjardins. Your line is open, please go ahead.

Gordon Johnston: Yeah, thank you. Good morning, Gordon, and good morning, Vito. We saw an update on Section 174 being removed following the approval of the Big Beautiful Day. Vito, could you talk a little bit about the boost we might expect on free cash flow going forward and with respect to the delays that we are seeing temporarily in the U.S.? I am just wondering if customers were waiting for interest rates to decline and whether lower interest rates that could come could accelerate spending when talking to customers. Thank you.

Speaker #8: Yeah, thank you. Good morning, Gordon, and good morning, Vito. We saw an update on Section 174 being removed following the approval of the Big Beautiful Day.

We're waiting for interest rates to decline and wetter lower interest rates that could come could accelerate spending when talking to customers.

Speaker #8: Vito, could you talk a little bit about the boost we might expect on free cash flow going forward? With respect to the delays that we are seeing temporarily in the U.S., I just wonder if customers are waiting for interest rates to decline and whether lower interest rates could come to accelerate spending when talking to customers.

Okay.

Yes no.

With respect to the recent changes been one good morning.

With the tax deductibility on R&D I believe that's what you're referring to that's overall a positive factor of course. These are domestic R&D expenses incurred in the United States.

Speaker #8: Thank you.

Sure.

Vito Culmone: Yeah, no, with respect to the recent changes, Benoit Poirier, good morning, with tax deductibility on R&D, I believe that is what you are referring to. That is overall a positive factor. Of course, these are domestic R&D expenses incurred in the United States that basically affect it for 2025 and now are 100% deductible in the year incurred. Actually, the provisions allow you to go back to 2022 through to 2024 and accelerate that deduction as well. Overall positive. Too early to tell at this point on our end what the impact would be from a timing perspective for free cash flow. We are modeling that through. There are some complexities, particularly being obviously a foreign jurisdiction and other taxes such as B taxes and whatnot that we need to work our way through.

Basically effective for 2025, and now are 100% deductible in the year incurred and actually the provision to allow you to go back to 2022 and through to 2024 and accelerate that.

Speaker #3: Yeah, no, with respect to the recent changes, Benoit, good morning. With tax deductibility on R&D, I believe that's what you're referring to. That's overall a positive factor.

Deduction as well so overall positive too early to tell at this point on our end.

Speaker #3: Of course, these are domestic R&D expenses, incurred in the United States that basically affected for 2025. And now we're 100% deductible in the year incurred.

What the impact would be from a.

On a timing perspective for two cash flow.

We're modeling that through there are some complexity, particularly b and obviously.

Speaker #3: And actually, the provisions allow you to go back to 2022 through to 2024. And they accelerate that deduction as well. So overall, positive. Too early to tell at this point on our end.

Sure.

<unk>.

Jurisdiction and other taxes, such as beat taxes, and whatnot that we need to work our way through but I would say neutral at worst and positive.

Speaker #3: What the impact would be from a timing perspective for cash flow, we're modeling that through. There are some complexity, particularly being obviously a foreign jurisdiction and other taxes such as B taxes and whatnot that we need to work our way through.

From a cash flow perspective for us pretty well.

Okay, and just for a follow up with respect to the global Technology Center in Q&A could you maybe provide an update on how many employees right now and maybe how do you track and whether there's a potential to exceed the target of 2000 people.

Vito Culmone: I would say neutral at worst and positive from a cash flow perspective for us, Benoit Poirier.

Speaker #3: But I would say neutral at worst and positive. From a cash flow perspective for us, Benoit.

By this the three year period.

Gordon Johnston: Okay. Just for follow-up, with respect to the Global Technology Center in Pune, could you maybe provide an update on how many employees right now and how you track and whether there is a potential to exceed the target of 2,000 people by the three-year period?

Speaker #8: Okay. And just for a follow-up, with respect to the global technology center in Pune, could you maybe provide an update on how many employees there are right now and how you track that? Is there a potential to exceed the target of 2,000 people by the three-year period?

Yes, we're about $14 500 people right now been well, we're really pleased with the progress we see huge opportunity such an engaged.

Knowledgeable.

Motivated team over there working across not only supporting our corporate functions, but importantly, obviously supporting our our operations as well.

Vito Culmone: Yeah, we're about 1,400, 1,500 people right now, Benoit. We're really pleased with the progress. We see huge opportunity. Such an engaged, knowledgeable, motivated team over there working across not only supporting our corporate functions, but importantly, obviously supporting our operations as well. We see huge opportunity, continued opportunity across both those layers and both those segments. In fact, we've got trips planned for the business here in the back half of this year where they'll get up and close and personal. We are optimistic, continue to be optimistic about the growth of the global delivery centers and in servicing. Obviously, that continues to be a lever not only in margin expansion, but importantly in high-quality delivery for our customers on a timely basis as we continue to see across several of our markets very robust demand.

Speaker #3: Yeah, we're about 1,400 to 1,500 people right now, Benoit. We're really pleased with the progress. We see huge opportunities with such an engaged, knowledgeable, motivated team over there working across not only supporting our corporate functions, but importantly, obviously supporting our operations as well.

Huge opportunity continued opportunity across both those layers and in both those segments in fact.

We've got trips planned for the business here in the back half of this year, we will get up and close and personal so optimistic continue to be optimistic both the growth of the.

Our global delivery centers.

In servicing and obviously that continues.

Speaker #3: And we see huge opportunity continued opportunity across both those layers. And both those segments, in fact, you know, we've got trips planned for the business here in the back half of this year where they'll get up and close and personal so optimistic.

Continues to be a lever not only in margin expansion, but importantly, and high quality of delivery for our customers on a timely basis as we continue to see across several of our markets very robust demand I'll stop short of whether we're going to hit the 2000 and whatnot because I don't have my fingers, but overall, obviously it continues to be.

Speaker #3: Continue to be optimistic about the growth of the global delivery centers and in servicing. And obviously that's a, you know, that continues to be a lever not only in margin expansion, but importantly in high-quality delivery for our customers on a timely basis as we continue to see across several of our markets very robust demand.

Some very important strategic part of our of our efforts.

Okay. Thank you very much for the fund.

Yes.

Thank you.

One moment for our next question.

Vito Culmone: I'll stop short on whether we're going to hit the 2,000 and whatnot because I don't have that tip of my fingers, but overall, obviously, it continues to be a very important strategic part of our efforts.

Our next question will come from the line of Devin Dodge with BMO capital markets. Your line is open. Please go ahead.

Speaker #3: I'll stop short of whether we're going to hit the 2,000 and whatnot because I don't have that tip of my fingers, but overall, obviously it continues to be a very important strategic part of our efforts.

Alright. Thank you good morning I.

I wanted to start with.

Question on page.

Gordon Johnston: Thank you very much for this line. Thank you.

Speaker #8: Thank you very much for the time.

Purchase price was I think a bit more than we had expected just wondering if you could provide a bit of color on.

Speaker #3: Thank you.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Devin Dodge with BMO Capital Markets. Your line is open. Please go ahead.

Speaker #5: Thank you. One moment for our next question. Our next question will come from the line of Devin Dodge with BMO Capital Markets. Your line is open; please go ahead.

Let's say the revenue of the business generates organic revenue growth that's been it's been having the last couple of years and how maybe margin stack up to the Stan Tech company average.

Sabahat Khan: All right. Thank you. Good morning. I wanted to start with a question on Page. The purchase price was, I think, a bit more than we had expected. Just wondering if you could provide a bit of color on, say, the revenue the business generates, organic revenue growth it has been having the last couple of years, and how maybe margins stack up to the Stantec company average.

Speaker #4: All right, thank you. Good morning. I wanted to start with a question on Page. The purchase price was, I think, a bit more than we had expected.

Yes, you would see us disclose we disclosed the purchase price is 525 U S.

So that in the notes to our financial statements.

Speaker #4: Just wondering if you could provide a bit of color on, say, the revenue, the business generates organic revenue growth, it's been having the last couple of years, and how maybe margin stack up to the Stantec company average.

I'm surprised to hear you say it was a little more than you would expect that I think when the reports of.

The analyst community sort of reported out I think it was in that range, obviously translated to Canadian dollars.

Vito Culmone: You would see us disclose, we disclose the purchase price as $525 US. You saw that in the notes to our financial statements. I am surprised to hear you say it was a little more than you would have expected. I think when the reports of what the analyst community sort of reported out, I think it was in that range.

No.

Speaker #3: Yeah, you would see us disclose. We disclosed the purchase price as 525 US. You saw that in the notes to our financial statements. I'm surprised to hear you say it was a little more than you would expect.

We'll stop short of but also just speaking to what our revenue did page bring to the table.

Obviously, we closed the deal at July 31, the teams are incredibly excited about the strategic value we're happy with.

Speaker #3: That I think when the reports of, you know, what the analyst community sort of reported out, I think it was in that range. Obviously, it translates to Canadian dollars.

Operator: obviously translated to Canadian dollars. You know, we will, you know, it was spot short about, you know, also just speaking to what revenue does Page bring to the table. We obviously closed the deal July 31st. The teams are incredibly excited about the strategic value. We are happy with the multiple, and the value that that business will bring forward to us. Vito, I do not know if you had much more to add to that.

The multiple.

Speaker #3: You know, we'll, you know, stop short about, you know, also just speaking to what are revenue that Page brings to the table. We'll obviously, we closed the deal July 31st.

And the value that <unk> will bring forward to us, but I don't know if you had much more to add to that.

There are roughly.

$300 million U S net revenue company, Hi, Hi.

Average net revenue generation per per employee and we also are really impressed with them in terms of just the amount of synergy that we've already seen from a client perspective, and a project perspective.

Speaker #3: The teams are incredibly excited about the strategic value. We're happy with the multiple in the value that Denver's this will bring forward to us.

Speaker #3: Gordon, I don't know if you had much more to add to that. No, you

Vito Culmone: Yeah, no, they are roughly $300 million U.S. in net revenue company, a high average net revenue generation per employee. We also are really impressed with them in terms of just the amount of synergy that we have already seen from a client perspective and a project perspective. Certainly on track or even a little bit better than we thought we were going to see. Particularly pleased with that one.

Certainly on track or even a little bit better than we thought we're going to see so, particularly pleased with without one.

Speaker #8: Yeah.

Speaker #3: know, they're roughly a 300 million US in that revenue company. A high, high, you know, average net revenue generation per employee. And we also really impressed with them in terms of just the amount of synergy that we've already seen from a client perspective and a project perspective.

Okay. Thanks for that.

Question Gordon I think you've mentioned in the past about.

Capping our exposure to the more cyclical end markets I think it was around 15% of revenues.

Historically, I think that cyclical exposure to be more focused on oil and gas and mining, but I think you've also hinted that may be data centers can be part of that cyclical Baskin. Just wondering if you could provide an update on where you view your cyclical market exposure now and just based on backlog and bidding activity, where you think this could be over the next couple of years.

Gordon Johnston: Okay, thanks for that. Second question, Gordon, I think you have mentioned in the past about capping your exposure to the more cyclical end markets. I think it was around 15% of revenues. Historically, I think that cyclical exposure has been more focused on oil and gas and mining, but I think you have also hinted that maybe data centers could be part of that cyclical basket. Just wondering if you could provide an update on where you view your cyclical market exposure now and just based on backlog and bidding activity, where you think this could be over the next couple of years.

Yeah.

Great question.

Data centers for us are at 2% to 3%.

Of the net revenue.

Are they increasing.

But I think that we see.

Still feel really comfortable that we're that sub 15% when you look at.

Mining.

He said the as you say oil and gas and data centers.

Vito Culmone: Yeah, great question. Our data centers for us are at 2% to 3% of net revenue. Are they increasing? Yeah, they're going up. I think that we still feel really comfortable that we're that sub 15% when you look at mining. You said that, as you say, oil and gas and data centers, right now we're seeing pretty continuous growth there. But again, it's only 2% to 3% of the overall. I think that we're still well within that 15% range that we've talked about. And yeah, I think we're comfortable where we're at.

Right now, we're seeing pretty continuous growth there, but again its only two to three presented the overall so I think that we're still well within that 15% range that we've that we've talked about in.

Yes, I think we're comfortable where we're at.

All right excellent I'll turn it over.

Thanks, Kevin. Thank you one moment for our next question.

Our next question comes from the line of Jonathan Goldman with Scotiabank. Your line is open. Please go ahead.

Yeah.

Hi, good morning team and thanks for taking my questions. Maybe just to start off is there any risk with the slower growth environment in the U S. Even if it does prove temporary rate that could be some pressure on pricing.

Gordon Johnston: Excellent. I will turn it over.

Vito Culmone: Thanks, Devin.

Vito Culmone: Thank you. One moment for our next question. Our next question comes from the line of Jonathan Goldman with Scotiabank. Your line is open. Please go ahead.

We haven't really seen that yet.

Even though things are organic growth has been a little bit slower for industry over the first half of the year, we haven't seen a deterioration in pricing in any way now.

Operator: Hi, good morning, team, and thanks for taking my questions. Maybe just to start off, is there any risk with the slower growth environment in the U.S., even if it does prove temporary, that there could be some pressure on pricing?

Should it go on for a couple of years that we might we might see that but we're not expecting that to be the case as we said, we see accelerated organic growth going forward. We're still actively hiring as are others in the industry. So yes, we haven't seen pricing pressure at this point, which would then translate to project margin pressure, but.

Vito Culmone: You know, we haven't really seen that yet. Even though things are, organic growth has been a little bit slower for industry over the first half of the year, we haven't seen a deterioration in pricing in any way. Should it go on for a couple of years, we might see that, but we're not expecting that to be the case. As we said, we see accelerated organic growth going forward. We're still actively hiring, as are others in the industry. So, we haven't seen pricing pressure at this point, which would then translate to project margin pressure. But as Vito Culmone said, that's really been holding up well for us.

As Vito said, that's really been holding up well for us.

We very much see it in market.

Strong demand market.

They were picked in our customers and many of them have been with us for obviously several decades and whatnot. So.

Don't anticipate on at all.

Okay. That's good color and you did talk about the M&A environment previously in the call, but the activity levels, but on valuations have you seen any change in multiples, but the higher or lower.

Operator: Now, we very much see a market, strong demand market where, frankly, we are picking our customers, and many of them have been with us for obviously several decades and whatnot. So, don't anticipate that at all.

I think it's very similar to how we've seen in the market for for the last little while that if.

Larger firms have a little bit of a higher multiple for.

Operator: Okay, that is good color. You did talk about the M&A environment previously in the call about the activity levels. On valuations, have you seen any change in multiples, whether higher or lower?

Firms in power in data centers have a little bit of a higher multiple but.

In general we haven't seen trends.

Either moving higher or unfortunately, lower over the last little bit so pretty we're seeing some.

Vito Culmone: You know, I think it is very similar to how we have seen in the market for the last little while, that if larger firms have a little bit of a higher multiple, firms in power and data centers have a little bit of a higher multiple. But, in general, we haven't seen trends either moving higher or unfortunately lower over the last little bit. So, we are seeing some just really things being stable, really from where I would say that they were even a year ago.

Just really things being stable really some from where I would say that they were even a year ago.

And I guess that just.

That just reflects the continued strength of the overall markets and the macro factors that we've been speaking to.

Good point.

Understood. Thanks for taking my questions.

Thank you.

Thank you and I'm showing no further questions at this time I would like to hand, the conference back over to Gordon Johnson for closing remarks.

Operator: That just reflects the continued strength of the overall markets and the macro factors that we have been speaking to.

Great well, thank you operator, and thank you to everyone for joining us this morning.

You have any follow up questions. After today's call. Please reach out to just newkirk, our VP of Investor Relations. So thanks again for your time and look forward to connecting with many of you soon.

Vito Culmone: Okay, good point.

Operator: Understood. Thanks for taking my questions.

Vito Culmone: Thank you.

Vito Culmone: Thank you. I am showing no further questions at this time. I would like to hand the conference back over to Gordon Johnston for closing remarks.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Vito Culmone: Well, thank you, operator, and thank you to everyone for joining us this morning. If you have any follow-up questions after today's call, please reach out to Jess Newkirk, our Vice President of Investor Relations. Thanks again for your time and look forward to connecting with many of you soon.

Vito Culmone: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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