Stantec ((TSE:STN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Stantec’s Earnings Call Highlights Record Growth and Positive Outlook
Stantec’s recent earnings call painted a picture of robust growth and optimism for the future. The company reported a record year in terms of revenue and growth, with strong performance across multiple business units and geographies. Significant increases in EBITDA and EPS, along with a record backlog, highlight the robust demand for Stantec’s services. Despite some timing issues affecting organic backlog growth in the Global segment, the overall outlook remains positive, with strong guidance for 2025.
Record Net Revenue and Growth
Stantec delivered record net revenues of CAD5.9 billion for 2024, marking a 15.8% increase compared to 2023. This impressive growth was driven by a combination of 7.4% organic growth and 7.5% acquisition growth, showcasing the company’s ability to expand both organically and through strategic acquisitions.
Strong EBITDA and EPS Performance
The company’s financial strength was further underscored by an 18% increase in adjusted EBITDA, reaching CAD980 million, with an improved margin of 16.7%. Adjusted EPS also saw a significant rise, increasing by over 20% to CAD4.42 compared to the previous year, reflecting Stantec’s operational efficiency and profitability.
Significant Backlog Increase
Stantec’s backlog reached a record CAD7.8 billion, a 24.1% increase from December 2023. This growth was driven by 9.7% acquisition and 8.5% organic growth, indicating strong demand for the company’s services and a healthy pipeline of future projects.
Notable Global Business Growth
The Global business segment experienced remarkable growth, with net revenue increasing by 32.6% in Q4. This was fueled by 7.3% organic growth and 21.8% acquisition growth, driven by significant projects in the U.K. and Dubai, highlighting Stantec’s expanding international presence.
Water and Buildings Business Strength
Both the Water and Buildings businesses reported double-digit organic growth, driven by robust public sector demand and significant project wins in healthcare and water security. This underscores Stantec’s strong position in these critical sectors.
Dividend Increase
Reflecting its strong earnings growth, Stantec’s Board approved a 7.1% increase to the dividend, now at CAD0.90 per share on an annualized basis. This move demonstrates the company’s commitment to returning value to shareholders.
Flat Organic Backlog Growth in Global
While the Global business showed strong revenue growth, the organic backlog growth was relatively flat, primarily due to timing issues and high project burn rates in New Zealand. This indicates some challenges in maintaining backlog growth despite overall revenue increases.
Forward-Looking Guidance
Looking ahead, Stantec’s guidance for 2025 reflects expectations of continued robust growth across various metrics. The company anticipates net revenue growth of 7% to 10%, supported by strong organic and acquisition growth. Adjusted EBITDA margins are projected to be between 16.7% and 17.3%, with adjusted EPS growth expected in the range of 16% to 19%. The record backlog of CAD7.8 billion underscores strong demand across geographies, particularly in the U.S., Canada, and Global sectors. Stantec is optimistic about continued momentum in water security, infrastructure, and energy sectors, with additional opportunities anticipated from macroeconomic factors and policy shifts.
In summary, Stantec’s earnings call highlighted a year of record growth and a positive outlook for the future. The company’s strong financial performance, significant backlog, and strategic growth initiatives position it well for continued success. Investors can look forward to robust growth in 2025, supported by strong demand across key sectors and geographies.