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Highlights

  • Stantec’s Q2 2024 saw a 15.4% revenue increase and a 17.0% rise in project margin
  • The company’s income before tax fell to CAD 109.3 million due to higher expenses and impairment charges.
  • Stantec acquired Hydrock Holdings and declared a CAD 0.21 per share dividend payable on October 15, 2024

Stantec Inc (TSX:STN) is a firm specialising in sustainable engineering, architecture, and environmental consulting. It operates across three regions: Canada, the United States, and globally.

In Q2 2024, the company achieved a 15.4% year-over-year increase in gross revenue, largely due to improved contributions from all business units across the reportable segments. The project margin rose to CAD 811.7 million, reflecting a 17.0% increase compared to CAD 694 million in Q2 2023, driven by net revenue growth and effective project execution.

However, higher administrative, marketing expenses, and interest costs led to a decrease in income before income tax, which fell to CAD 109.3 million for Q2 2024. This decline, along with a non-cash impairment charge, resulted in a 3.9% drop in net earnings, which amounted to CAD 84.6 million for the quarter.

Recent Business Update

Recently, the company reported a notable 17.0% increase in its project margin, which rose by CAD 117.7 million to CAD 811.7 million. This growth reflects a good project execution performance, particularly in the water and buildings sectors, and resulted in a 10 basis point rise in project profit as a proportion of net revenue to 54.4%.

In line with its expansion strategy, the company acquired Hydrock Holdings Limited, a 950-person integrated engineering design firm based in Bristol, England, on April 30, 2024.

Additionally, the company's Board of Directors has declared a dividend of CAD 0.21 per share. This dividend will be payable on October 15, 2024, to shareholders who are on record as of September 27, 2024.

Company Outlook

For FY24, management expects net revenue to grow between 12% and 15%, driven by strong activity across all regions and bolstered by recent acquisitions. The company projects annual adjusted EBITDA margins to range from 16.5% to 16.9% and anticipates an adjusted net income margin of 8% or higher. These factors are expected to result in adjusted diluted EPS growth of 12% to 16%.

Top 10 Shareholders

The top 10 shareholders of Stantec collectively own approximately 31.56% of the company. Mackenzie Financial Corporation and Jarislowsky Fraser, Ltd. hold the largest stakes, at around 8.86% and 5.32%, respectively.

Price Information

The stock has experienced a 1.87% increase over the past week and a 4.86% decline over the past month. Additionally, it is currently trading above the average of its 52-week high of CAD 122.57 and 52-week low of CAD 82.50.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 16, 2024. The reference data in this report has been partly sourced from EODHD/Others.