Stantec Inc. (TSX/NYSE: STN) delivered robust second quarter 2026 financial results that exceeded analyst expectations, reporting net revenue of $1.8 billion (specifically $1.781 billion), an 11.5% increase compared to the same period last year. The top-line performance beat the analyst consensus estimate of $1.695 billion by 5.06%. Growth was fueled by a combination of acquisition activity, primarily from its US operations following the acquisition of Page, and solid organic performance across its global regions.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 17.1% to $332.9 million. More significantly, the adjusted EBITDA margin expanded by 90 basis points to 18.7%, reflecting improved project execution and disciplined management of administrative and marketing costs. Diluted earnings per share (EPS) rose 10.9% to $1.32, while adjusted EPS increased 18.4% to $1.61, beating the analyst consensus estimate of $1.50 by 7.33%.

Operational Performance and Margin Expansion

The expansion in profitability was underpinned by a 30 basis point increase in project margin, which reached 54.5% of net revenue. Project margin dollars grew 12.3% to $970.7 million. This operational efficiency was further supported by a 110 basis point reduction in administrative and marketing expenses as a percentage of net revenue, despite higher amortization of intangible assets related to recent acquisitions.

Organic revenue growth stood at 3.7% for the quarter. The Global region was the primary driver, achieving 12.8% organic growth. In contrast, the US region saw no organic growth, with total revenue increases attributed entirely to acquisition contributions. Canada posted modest organic growth of 2.4%.

Backlog and Cash Flow Dynamics

Contract backlog reached a record $9.2 billion as of June 30, 2026, representing a 17.5% year-over-year increase. This growth included 7.8% from acquisitions and 7.0% organic growth. The Global region contributed significantly to this organic backlog expansion with nearly 25% growth, while the Water business line also saw over 10% organic backlog growth. The total backlog represents approximately 13 months of work.

Cash flows from operations decreased by $15.4 million to $118.6 million compared to Q2 2025. Management attributed this decline to required investments in net working capital resulting from revenue growth. Days sales outstanding (DSO) remained within target at 75 days, an increase of two days from the prior year. Net debt to trailing twelve-month adjusted EBITDA remained stable at 1.3x, well within the company’s internal target range of 1.0x to 2.0x.

What the Numbers Show

A notable divergence exists between the top-line growth drivers and the underlying organic momentum. While 7.1% of the total revenue growth was derived from acquisitions, the organic growth rate of 3.7% masks significant regional disparities. The Global region delivered high-single-digit organic revenue growth (12.8%), whereas the US region—the largest contributor to total revenue—reported zero organic growth. This suggests that near-term revenue stability is heavily dependent on the integration of recent acquisitions like Page, while future organic acceleration relies on the continued strength of the Global and Water segments.

2026 Outlook and Strategic Moves

Stantec reaffirmed its 2026 guidance but narrowed and raised its adjusted EBITDA margin target to a record range of 17.8% to 18.3%. The company expects organic net revenue growth to be in the mid-single digit range for the full year, with improvements anticipated in both the US and Canadian markets.

In strategic developments, Stantec acquired Niche, a 200-person engineering and environmental consultancy in Australia, on July 31, 2026, bolstering its Environmental Services operations. The Board of Directors declared a dividend of $0.245 per share, payable on October 15, 2026. Additionally, the company repurchased 1,667,292 common shares for an aggregate price of $175.9 million in the first two quarters of 2026.

Stantec, in partnership with Johnson, Mirmiran and Thompson (JMT), has been awarded a US$150 million joint venture contract by the U.S. Army Corps of Engineers, Charleston District (USACE) to design critical infrastructure for coastal storm risk management on the Charleston peninsula. Announced on July 30, 2026, the award strengthens Stantec’s position in major coastal metropolitan markets and addresses increasing vulnerability to storm surges in one of the United States’ historic communities.

The design contract is part of a broader program valued at US$1.2 billion. The team will lead the design of more than eight miles of integrated coastal infrastructure across Charleston’s waterfront. This multi-purpose system aims to protect public safety, preserve local history, and support environmental function for generations to come.

Project Scope and Design Elements

The proposed infrastructure combines traditional engineering with nature-based features to enhance long-term system performance. Key components include:

Chris Williams, senior vice president for Stantec’s US Federal Program, stated that the firm’s Water, Infrastructure, and Environmental Services teams will combine their expertise to strengthen resilience while respecting the region’s environmental and cultural fabric. Chris Mack, director of Resilience and Coastal Solutions at JMT, noted that the project pairs visionary local leadership with federal investment to advance sustainability initiatives across the peninsula.

Strategic Context

Charleston is home to more than 40,000 full-time residents and nationally significant historic landmarks. The city faces increasing vulnerability from storm surges, making this defense system critical for protecting life and infrastructure. The project underscores the growing demand for resilient infrastructure in coastal regions facing climate-related risks.

Stantec brings proven experience from multiple major U.S. coastal storm risk management programs. The firm served as the designer of record for three storm drainage pump stations, floodwalls, levees, and gates for USACE’s Permanent Canal Closures and Pumps Project in New Orleans. Additionally, Stantec provided adaptive designs for the Battery’s waterfront in New York City and engineered a 26.7-mile coastal levee and floodwall system near Galveston, Texas, following Hurricane Harvey.

What the Numbers Show

The US$150 million design contract represents approximately 12.5% of the total US$1.2 billion program value. This structure highlights the significant upfront investment required for complex coastal resilience planning before construction phases begin. The integration of nature-based features alongside traditional hard infrastructure suggests a shift toward hybrid solutions that balance immediate protection needs with long-term environmental sustainability, potentially reducing lifecycle maintenance costs compared to purely structural approaches.