Welcome to Stantec's third quarter 2026 results webcast and conference call. Leading the call today are Susan Reisbord, 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's a delay between the call and webcast. All information provided during this conference call is subject to the forward-looking statements qualification set out on slide two, detailed in Stantec's management's discussion and analysis, and incorporated in full for the purposes of today's call. Unless otherwise noted, dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded. With that, I'll turn the call over to Susan Reisbord.
Please go ahead.
Good morning, everyone, and thank you for joining us today. This is my first earning call as CEO, and I want to begin by saying what an honor it is to lead this remarkable company. I step into this role with tremendous pride in the strength of our business, and even more importantly, in the people behind it. Our performance is the result of the extraordinary work being done every day by our colleagues around the world. I'm deeply grateful for their commitment and proud of what we continue to accomplish together. With that, let me turn to our third quarter results, demonstrating the strength of Stantec's diversified platform and the continued benefits of disciplined execution across our business. Net revenue increased 9.4% to approximately CAD 1.9 billion, supported by over 5% organic growth and nearly 3% acquisition growth. We achieved organic growth across every region and every business.
Our water business delivered double-digit organic growth. Adjusted EBITDA increased almost 17% to CAD 377 million, and adjusted EBITDA margin expanded 120 basis points to 20.2%. Adjusted net income increased roughly 22% to CAD 212 million, and adjusted EPS grew almost 24% to CAD 1.89. These results reflect broad-based growth, solid project execution, and continued discipline in managing our operations and discretionary spending. In the U.S., third quarter net revenue increased almost 11%, with almost 5% organic growth and 4.4% acquisition growth. The improvement in organic growth was consistent with our expectation, as project delays experienced in the first half of the year were largely resolved, and strong demand for our services drove projects forward. The Page acquisition helped drive double-digit net revenue growth in buildings, given integration synergies and the strength in mission-critical facilities.
Water delivered solid growth from continued demand in water treatment, conveyance, and advanced manufacturing. Infrastructure benefited from continued demand for critical infrastructure and favorable transportation project recoveries. Environmental services saw strong demand across oil and gas, power and energy, and mission-critical markets. Energy and resources benefited from work on a major hydropower dam. In Canada, third quarter organic net revenue growth was 4.1%. Water delivered double-digit organic growth, driven by biosolids projects and continued momentum in wastewater solutions. Energy and resources generated double-digit organic growth, supported by increased activity and project recoveries in the quarter. Both buildings and environmental services delivered steady growth, supported by public sector investment in civic markets and increased environmental planning activity in mining, respectively. This growth was partly offset by infrastructure, where certain significant transit and roadway projects continued to wind down in line with project cycle timelines.
Our global operations delivered 11% net revenue growth in the quarter, driven primarily by strong organic growth of 7.5%, further supported by acquisition growth. Water delivered robust double-digit organic growth, led by increased delivery under long-term U.K. framework programs. Energy and resources achieved double-digit organic growth, supported by increased activity across Latin America and the U.K., as demand for copper mining and hydropower solutions continued to grow. Environmental services benefited from increased activity in the Netherlands and the contribution from Niche, our recent acquisition in Australia. I will now turn the call over to Vito to review our third quarter financial results in more detail.
Thank you, Susan, and good morning, everyone. We are very pleased with our third quarter results, and they reflect solid operational execution and sustained demand across our diversified platform. Gross revenue was $2.4 billion, and net revenue was $1.9 billion, an increase of 9.4% compared to Q3 2025. Growth included 5.3% organic growth, 2.6% acquisition growth, and a 1.5% positive contribution from foreign exchange. Project margin increased 10.5% to just over $1 billion. As a percentage of our net revenue, project margin increased 60 basis points to 55%, reflecting continued strong project execution and favorable project recoveries. Adjusted EBITDA increased 16.6% to $377 million. Our adjusted EBITDA margin increased 120 basis points to 20.2%, driven by solid project margin and the continued decline of administrative and marketing expenses measured as a percentage of net revenue.
Our adjusted net income increased 21.8% to $212 million, or 11.4% of net revenue. Our adjusted EPS increased 23.5% to $1.89. On a year-to-date basis, our net revenue increased 10% to $5.3 billion, adjusted EBITDA increased 15.9% to $997 million, and adjusted EPS increased 19.3% to $4.83. In terms of our cash flow, liquidity, and capital resources, cash flow from operations was $392 million in the third quarter, an increase of $76 million compared with Q3 2025, reflecting strong revenue growth, continued solid focus on collections, and lower payments. On a year-to-date basis, our cash flow from operations is $509 million. Our strong free cash flow continues to give us meaningful flexibility.
During Q3, we amended our NCIB program to increase the maximum number of shares available for repurchase to 5% of our total shares outstanding. On a year-to-date basis, we have repurchased 3.4 million common shares for CAD 350 million, representing approximately 3% of total shares outstanding. Even with the significant deployment of cash to our stock buyback program, our net debt to adjusted EBITDA ratio at the end of Q3 was 1.2x. Well within and to the lower end of our internal target range of 1x-2x . Our capital allocation priorities remain unchanged. Disciplined, accretive acquisitions remain our top priority, while our strong balance sheet and free cash flow profile provides flexibility to invest in growth, return capital to shareholders, and maintain a sustainable dividend. I will now hand the call back to Susan to discuss our backlog, some recent project wins, and our outlook for 2026.
Thanks, Vito. at September 30th, our contract backlog stood at CAD 9.2 billion, an increase of almost 12% year-over-year, which represents approximately 13 months of work. Backlog grew almost 10% organically year-over-year, with organic growth across every region and business. Canada and Global delivered double-digit organic backlog growth of over 18% and almost 14%, respectively. Buildings, Water, and Energy and Resources each achieved double-digit organic backlog growth. Taken together, our backlog demonstrates the breadth of demand across our business and provides good visibility into future activity. I will now highlight a few projects secured during the quarter that demonstrate the breadth of opportunities across our regions and businesses. In Canada, our water team was selected by the City of Toronto to provide design and construction administration services for a CAD 70 million treatment facility.
The facility is designed to treat up to 600 million liters per day and will help reduce combined sewer overflows and improve regional water quality. In the U.S., our buildings team was selected by a confidential global technology company to design a data center facility in Arizona, supporting continued demand for critical infrastructure. In Global, England's Environment Agency selected our team to support a new GBP 17.8 million framework for groundwater modeling services across the country. Looking to the remainder of the year, our strong year-to-date performance and continued favorable demand environment gives us confidence in our outlook for 2026. We have narrowed our expected net revenue growth range to 9%-11%, from 8.5%-11.5%, reflecting our performance through the first nine months of the year.
At a regional level, we expect the improvement in organic growth that we saw in the U.S. and Canada during the third quarter to continue into Q4 and into 2027. In the U.S., our outlook continues to be supported by organic backlog growth across our business lines and healthy customer demand. Funding or accessibility to funding has also started to hit key projects, and we see this continuing to accelerate. In Canada, our outlook remains robust, supported by continued public sector investment and demand across water and buildings. We are also encouraged by the significant momentum behind the government's major projects and initiatives in defense, energy, and infrastructure, and the more than 150 projects coming out of Canada's Investment Summit, many of which we have a line of sight to. We expect all of this will provide additional opportunities and support sustained growth in the years ahead.
In Global, growth continues to be driven by robust water activity, including our long-term asset management programs and frameworks, as well as solid demand in energy and resources. Our year-to-date margin performance and continued discipline in managing operating costs have also allowed us to raise our profitability expectations. We now expect a record adjusted EBITDA margin of 18.3%-18.5%, compared to our previous guidance of 17.8%-18.3%. We increased our adjusted EPS growth to 17%-19%, up from 15%-18%. These improvements reflect strong project margins, effective operational execution, and continued discipline in managing administration and marketing costs. That includes the continued expansion of our global delivery center, optimization and consistency in our operational processes, and efficiencies from greater scale in key geographies.
Looking beyond this year, we remain very confident that our diverse business model, combined with strong market demand and operational excellence, will position us to continue delivering industry-leading results. We are very excited about our future and look forward to unveiling our next three-year strategic plan at Investor Day on December 8th, where we will outline our priorities, growth ambitions, and vision for Stantec's next chapter. We invite you to join us virtually for our live webcast as we share our strategy for the future and the opportunities that will drive our continued success. A link to the webcast will be made available on our website in the coming weeks. With that, let me turn the call over to the operator for questions. Operator?
Certainly. Our first question for today comes from the line of Sabahat Khan from RBC Capital Markets. Your question, please.
Great. Thanks, and good morning. Maybe just starting with the top line, if you can just share some thoughts around what are the trends you are seeing in the U.S. market, and maybe more importantly, the pipeline of opportunities as you get into 2027. I am not trying to get the guidance here, but just some color on how that market is trending, and then maybe any impact from the recent midterm elections that you might want to call out on the outlook. Thanks.
You bet. Good morning, Saba. With regard to the U.S. market in particular, I think we shared with you last quarter that we were still confident in the market, that we had the backlog. What the challenge was accessibility to that, and we were seeing what we thought were projects finally breaking loose, very large programs that seemed to have gotten stuck, money that was not accessible, et cetera. What I think you saw in the third quarter is exactly what we told you you would see. We are thrilled that that feels like that the U.S. market is moving. From that perspective, I think we still see, when you ask about what is moving, water is robust demand.
It is not just the normal bread-and-butter water that would have been in backlog years ago relative to water and wastewater treatment, but you are seeing demands for advanced manufacturing, water scarcity, inundation issues. The water business, really robust. Environmental services, we are starting to see that. As we pivoted from permitting of renewables, let us say three years ago, where it was all hands on deck in the environmental business, there is a big pivot so that what we have seen now, though, is the refocus into oil and gas, power and energy, mission critical. Our infrastructure business is interesting because what we are seeing is, and this gets to your question about the Reauthorization Act and the midterms.
While we have the continuing resolution bill, and I think you are aware too that with regard to IIJA, funds were obligated, so we would always see a continued demand for, let us say, the next couple years. But transportation, and I am confident about this, has always been a bipartisan concern. What happens with different administrations is kind of which states get the money. We have been and continue to work closely with clients about accessibility to the funds to help advance the infrastructure that we need across the business. So we see good tailwinds in the U.S. across all the sectors. With regard to the midterm elections, it is kind of too early to tell, but again, confident that transportation has consistently been a bipartisan issue.
Great. Then on the margin side, good performance this quarter, the guidance been picked up. Maybe if you can just give us some of the building blocks on the margin in terms of the full-year contribution of sort of what is driving that and what are some of the offsets that you are seeing? Thanks.
Hi, Saba. You are absolutely right. Very pleased with our margins on a year-to-date basis now. Our adjusted EBITDA margins are 18.7%, about 100 basis points ahead of a year ago. The story in Q3 really is just a continuation of what we have seen year to date. Our admin and marketing costs as a percentage of our overall revenue continue to be favorable. On a year-to-date basis, 36.7%, 100 basis points lower than a year ago. In the quarter, 35.5%, just about 60 basis points lower. The drivers there, really several drivers. One is improved utilization. The business continues to do really, really well there. Overall, our year-to-date improvement in utilization is roughly 2% plus. That is very substantial. Reductions in occupancy costs and discretionary costs.
When you are growing and you have reductions in those items, or you are holding them at a rate lower than that, you get the scale effect of that. That is very significant. Our continued penetration and strategic utilization of global delivery centers, both in service of obviously our operations and in service of our back office, just continued penetration there and highly strategic value to our clients as well. Really, really pleased. In project margins, you would have seen a particular pop this quarter. We did have some project recoveries that contributed to that. Project recoveries are obviously a consistent aspect of our business that over the course of a year, I would say, normalize. In the quarter, we saw some outsized recoveries, if you will, that probably pumped our project margins to the tune of 50 basis points or so.
I think when we look at project margins going forward, in that 54%-54.5% range relative to the 55% we contributed here is probably more appropriate. The trend in overall margins will continue as we move forward, and we are very pleased, and just a shout-out to the operations.
Great. Just one last one on my part. There was an increase in provisions this quarter, I think about CAD 188 million. It notes that some of that amount is recoverable by insurance. Can you maybe just talk about what that is and sort of that recovery process you have noted in there? Thanks.
Oh, the provisions. Okay, sorry. I think you are referring to note nine in the financial statements. That is where we show continuity of our provisions. You are absolutely right. Including in that broader provision, you will see specifically claims provision. At the end of Q3, I am just flipping through the financials, that stood at roughly $260 million. Claims, as you know, is an ordinary part of our business. We constantly, excuse me, review our provisions in respect of possible deficiencies identified in the performance of past services. The increase in the quarter really reflects a series of related design deficiencies on multiple sites that have been alleged against Stantec. So that is what has given rise to the pop in the provision. These claims, including these referenced in Q3 here, in aggregate, are insured, and we have sufficient insurance policies available to cover the provisions that have been recognized.
There is no P&L effect, and effectively, we recognize an offsetting liability and receivable until the provision is settled. So you will see the receivable, I believe, in note seven, if I have got that accurately. So yeah, that is about Saba.
Great. Thanks very much.
Okay.
Thank you. Our next question comes from the line of Devin Dodge from BMO Capital Markets. Your question, please.
Yeah. Good morning. Thanks for taking my questions. The first one I was going to ask is about Canada. It seemed like there was really strong order intake during Q3. Susan, I think you mentioned that the backlog was up mid-teens year-over-year. Just wondering if you could talk about where you're seeing the most demand strength in Canada and if the duration of that backlog has lengthened.
You bet. Thanks, by the way. Thanks for calling in. We're really excited about the potential of the marketplace in Canada. We're seeing it, as you mentioned, in our backlog, but we're also seeing it relative to just the energy that's in Canada right now. I happened to be in Montreal right after leaders were in Halifax talking about the Investment Summit. With more than 150 projects representing CAD 600 billion of capital investment, what we see is really future-forward infrastructure and natural resource projects in the chute. The good news about that 150 projects, more like 167 projects in particular, is those are ones, as we read through the investment book, are ones that we have been on and/or have had in our pipeline of opportunities that we've been tracking. It's really exciting for us.
I got to tell you, the buzz in the room was different than what I've seen before, where people are talking not just if projects can happen, but how they will happen, and some of the consequences of them happening all at the same time and accessibility to funding. When we look at the Canadian market, we feel very strongly about it. One of the areas that we feel especially, we're seeing a lot of activity is in the north. We have offices in Whitehorse and Yellowknife. We have office in Nunavut, as well as Alaska for that matter. The activity that's happening in the north now is also really exciting.
Okay, excellent. Thanks for that. Second question, just wondering if you could talk about what you're seeing in the data center sector. I'm assuming Canada is picking up here, but I was wondering if you've seen any meaningful changes in the U.S. market over the last few months in terms of project and RFP activity.
Yep. I'd like to provide a little context for that. With regard to data centers in particular, our exposure, part of our net revenue is only about 2%-3%. That level of work has been very consistent over the last few months, but growing, quite frankly. Now, one of the things that we do in that space is we work for the hyperscalers on projects right now that are already permitted. We're seeing a lot of good, strong activity. There has been a lot of incoming when you think about RFP-related work, but we're very disciplined in accepting work and going after work with key accounts and relative to work that we believe that we can get done. We're seeing interesting data center activity across all of the U.S. We're seeing it in Canada, and we're seeing it in Europe.
Okay. Good to hear. Thank you. I'll turn it over.
Thank you. Our next question comes from the line of Chris Murray from ATB Cormark. Your question, please.
Yeah, thanks, folks. Good morning. Maybe turning back to Canada, just a couple quick questions there. With not only the announcement of the 150 major projects, but there was also the change in tax policy with the mega deduction. Can you talk a little bit about how your discussions with clients are starting to maybe change in terms of them putting projects that maybe we wouldn't have thought of before? Normally, you folks are very involved in the early stages of what these would look like. In particular, I'm kind of thinking about what that would look like for, say, the energy industry and chemicals industry. Historically, you guys have had a very active involvement with that, but I mean, the whole industry itself has been probably depressed for a decade. Just any thoughts around how you see the development progressing would be helpful.
You bet. We are seeing a lot of discussion about, again, about the projects that are possible to unlock here in Canada, given the moment that we have and the interest. I got to tell you, the discussions haven't been around directly with us about because there are tax policy changes. The discussions with us have been in and around accessibility to funds, getting the right funds on the project and unlocking them. Now, probably completely tied to tax policy as to where the funds can come from. The other thing that has been in discussion is, again, some of these projects we've been working on are in and around for 10 years. So some of them are more ready than others.
I think that there's also discussion in and about important work that needs to be done, but also that's early win because some of the planning that you're talking about, with our environmental business in particular, we're often in the upfront work, that some of that has been done or thought through, the relationships built that need to get them done. I would say that's the discussions we have, is how much of this, how ready is this project to roll? How much has it been thought through already?
Okay. Then just thinking about the balance of the business. I mean, Canada has been fairly sleepy for the last few years, and certainly your focus has been growing in the U.S. and globally. With some of the change that we're seeing, does that change your outlook and thoughts about the scale that you have relatively in Canada versus the other parts of the world? Is there anything that you think from an acquisition perspective or an organic development perspective that you have to add back into Canada as the environment shifts?
Yeah, you bet. Well, first thing is, from my perspective, it doesn't feel to me that Canada's been sleepy, based on the businesses that we're in and the work that we have been doing. Now, looking at the investment strategy forward, are there resources that are needed that might not have been needed if it was business as usual? So yeah, we always are looking because we're committed to organic growth and we're committed to M&A growth when it's the right firm at the right time and it's a good strategic fit. Right firm at right time does change when you have a backlog of work that's different than it has been. So, sure, we would always look across the Canadian portfolio and the marketplace to see what could be there.
Now, the other thing, and I have talked about this a bit in the last month or so, is we also look for additional operational consistency across the platform, because this was one of those discussions, by the way, that we had in Montreal right after the Investment Summit. One of the concerns was, wow, all these projects coming online at the same time, what is that going to do to labor demand and wage inflation and then project cost inflation? The advantage, I think, of having a global platform and having operational consistency is that you can provide resources when markets are booming. You can certainly grow, but you can also provide resources from a whole global platform.
To answer your question, yeah, Canada, we see good tailwinds that suggest Canada will grow faster than it has in the past, and we are always looking for opportunities to augment our staff with the right M&A.
All right. I will leave it there. Thanks, folks.
Thanks, Chris.
Thank you. Our next question comes from the line of Maxim Sytchev from NBCCM. Your question, please.
Hi, good morning. I wanted to touch on global growth, if I may, because I feel the rate of growth slowed a little bit. I presume AMP8 is continuing to ramp up pretty aggressively. I am just wondering if you can maybe talk about, sort of put some takes in that bucket. Thanks.
You bet. Hey, Max. Thanks for that question. We are very happy, as you well know, relative to the growth in our global business, particularly the organic growth. While AMP8, particularly Scottish Water, by the way, has been growing and ramping up, we have seen really great opportunities as well in Latin America with the mining-related work. We have seen the turn, which I think you would have seen too, in Australia and New Zealand from a really depressed market. We are seeing really good green shoots across our entire global platform.
Max, you are not helping me out. Set a high bar for the organization. They delivered 7.5% this quarter, and you are saying slowing down. I mean, I get it. Obviously, the year-to-date, they are at 9.4%. I am chuckling because I can just see Kath sitting over in the U.K. saying, "Gosh." No, we are very, very pleased, and frankly, I think you will see an acceleration into Q4 and then as we move into 2027. So, very, very healthy profile there for the global business.
Yeah, no, rightfully so. Again, just sort of second to relative. Then I was wondering if it's possible to get a bit more color on the Page integration, how that's going, sort of maybe changes to kind of go-to-market strategies, sort of from a combined core perspective. Any color would be helpful. Thank you.
You bet. I think the Page integration has actually been a textbook integration. It was a unique opportunity of two firms coming together and actually having the opportunity to work together in partnership before the acquisition happened. So, when you think about acquisitions and integration, some of the integration activities of getting to know each other and work together on major projects happened well before the deal was inked. The integration of Page into Stantec has been remarkable. As a matter of fact, Jon Sylvie, who was a leader at Page, is now leading our buildings vertical in North America with a seamless team across the business. So, that to me has been actually textbook integration. You're seeing it in the results of how the buildings business is growing across the U.S.
Got you. Thank you so much.
Thanks, Max.
Thank you. Our next question comes from the line of Michael Tupholme from TD Cowen. Your question, please.
Thank you. You talked earlier on the call about U.S. organic growth and some of the drivers there. I know the Page acquisition has now been owned for a year, and therefore would have been a contributor to the U.S. organic growth in the quarter. I guess I am wondering if you can talk about the extent to which that now being included in inorganic growth was a driver in the quarter and what that contributed.
Yeah, it actually flipped over in August 1st. I think when you look at the Q3 organic in the U.S., it was actually, frankly, less about Page. I mean, Page obviously contributes. Our buildings practice is very healthy. We continue to see that moving forward in a very, very strong way. But when we think about the U.S. and the quarter, there was strength across the board. There was strength in water, there was strength in energy, and good strength all the way across all of our entire portfolio, and we expect that to continue. The Q3 pop in, and not to suggest that, what was it in the U.S. here, 4% organic, 4.9%, is a pop, but definitely a trend improvement as we had articulated, was not exclusively all about Page.
It was just the overall strength of the business, as Susan articulated, and the backlog starting to unlock across the business.
Okay. That's very helpful. Thank you. Obviously very strong margin improvement in the quarter. Vito, you did highlight the project recoveries and the impact that that would have had. Even outside of that, just overall margins were strong. I guess the question is just around pricing and the pricing environment. To what extent is that a factor in helping drive some of the margin improvement?
Yeah. Well, thank you for that. I mean, 120 basis points in the quarter, even if you exclude those project recoveries that I described, very, very, very healthy and consistent with our trajectory that we've delivered and what we'll talk more about at December 8th here with our Investor Day, what we think the business can going forward. Very strong deliveries there. Pricing is reflected in obviously our project margin. I would describe the pricing environment as quite balanced. When we think about how projects are developing, the value that we continue to add for our clients, the strategic nature of where we show up and the complexity of programs, I'm not overly concerned about the pricing environment.
I think, as I look at this sector, particularly where Stantec shows up in these multi-billion dollar programs, I think there's tremendous opportunity for us to, I'll say, extract or ask for the appropriate return with respect to our services. My sense is everything's quite balanced at this point. Obviously, you're going to have puts and takes in different markets. Susan, anything from your end on pricing overall?
No.
No. Yeah. We get a lot of questions around AI and how's that affecting pricing. It's not, at the end of the day, at this point in time, and we don't expect it to be.
Okay, perfect. Just one more here. In the prepared remarks, it was suggested that acquisitions remains a top priority. We saw the Niche acquisition in the quarter, but you were obviously quite active with the buyback as well, and then increased the NCIB. I guess the question is, can you sort of run through your latest thoughts on capital allocation priorities at this time, and what does the M&A pipeline look like as well, and what are you seeing in terms of valuations on the private side relative to public sector valuations?
Yeah. Fundamentally, and Susan referenced it, I've referenced it in my prepared remarks, we continue to believe that strategic acquisitions really do present the highest value creation opportunity for us going forward. The environment is actually, you're starting to see the environment unlock a little bit. The pipeline continues to be quite robust. Valuations in the private sector and public, nowhere near converged, but they're not widening. They're maybe starting to converge a little bit, the early days of that. No, we're quite active. We've got a great team looking at these things, and we wouldn't be afraid, obviously, or prepared to dip our toe in the market. The key for us, it's always been this, it's really about discipline, it's about patience, and it's about not doing an acquisition for an acquisition's sake, right? It has to hit all the criteria, both quantitatively and qualitatively.
I think as you look at our 2026 activity, it would manifest our discipline in that approach, where obviously there was nothing there at the appropriate time for us, or nothing significant, if you will, from a dollars perspective, and we deployed flexibility with the share buyback. I just love our position in that, because it all starts with a healthy free cash flow, and as we look at our free cash flow, we're continuing to be really pleased as we move forward in that, and it just gives us flexibility for capital allocation decisions along those lines. But as I said, we continue to fundamentally believe that acquisitions present the highest value creation opportunity for us moving forward as an organization.
Okay, thank you. I'll leave it there.
Thank you. Our next question comes from the line of Frederic Bastien from Raymond James. Your question, please.
Good morning. I'd just like to build on Michael's question around M&A. Can you comment on the competitive side? I think we've seen a lot of pressure from private equity firms in the past, I'd say 12 months, but I think it's been much longer than that, and that's really driven valuations higher. We've seen interest rates move quite dramatically higher. Has that impacted in what you're seeing right now? Has that impacted the appetite for M&A on the private equity side? Are you seeing competition perhaps coming off a bit?
Hi, Frederic. I'd say there's always puts and takes in that, and the competitive side of things is always a consideration. But really, it's sort of a secondary consideration in most cases. For us, it always comes back to what I was describing really, which is the qualitative and the quantitative, and how does this work for us? If it's compelling, then generally the economics work, and we can get ourselves there with a counterparty. But to answer your question specifically, I think in the current environment, if I compared it to maybe two years ago, I would say that you're absolutely correct. I think private equities be more thoughtful about these things. Obviously, you've seen the public valuations come off their highs, and so that affects obviously private equity valuations as they think about exit strategies and whatnot.
I'm pleased to see how things have trended in that regard.
The other thing that's interesting to that end, Vito, is we've just been at several industry conferences. The maturity of the firms being aggregated and the leadership teams there, it's interesting to watch that maturation where the culture of the firm, when they are ready to go to a strategic, that's where the culture of the firm really matters. Again, I think it's secret sauce relative to what Stantec has to offer. We have a good reputation in the business as an employer, and that really matters in discussions with potential acquisition targets. Just absolutely reaffirmed in the last two industry meetings this past month.
Yeah, well said.
Thanks. Susan, I guess you're taking the reins at a good time here. You may be saving some for next month, but I'm going to try anyway. As you look to put your own stamp on the business, where do you see the greatest opportunity to perhaps do things differently or double down on what has been done in the past?
You bet. Thanks, Fred. From my standpoint, I've been asked, "Are any of our strategic priorities changing?" They're not, because I've been part of helping set the strategic priorities. So, I still believe and am absolutely committed to our five verticals and building out our footprint. Again, both through organic growth and through M&A, where it has to be a good, right strategic fit. It's not to be big for big's sake. What I am very excited about is what I referred to a little bit earlier, is the operational consistency, because I think it gives you the flexibility to meet client needs and to have Cath Schefer, our COO for Global, and Matt Travers, our COO for North America, working together so closely to, again, advance. We had operational consistency, but we can take it to the next level.
I think it is a really strong opportunity for us to even operate with more discipline and make careers more interesting too, because it gives you some interoperability relative to staff. I am excited about all that. The other thing that I would say is, with the industry changing the way it is, like the speed of the market, the tailwinds that we have, it is not the way. Where we are today, what leaders need is not the same as what leaders needed five or 10 years ago. We are also very committed to the leadership development, the financial acumen, the commercial acumen, and building that broader inside the company. I guess I would think of it as a leadership readiness strategy across the whole organization, deeper and broader. Those are the big things.
Thank you so much. See you next month.
See you.
Thank you. Our next question comes from the line of Ian Gillies of Stifel. Your question, please.
Good morning, everyone.
Hi, Ian.
Hey.
Susan, I am just curious, as you think about now being CEO, and this kind of falls on Fred's question, do you see any immediate need to change the organizational structure in any way to improve the efficiencies, or are you pretty happy with the way everything is? I am just curious on that front, given it is such a people-centric business.
You bet. I am very happy with the way that we are structured from an organizational structure standpoint, and very committed to the way we have run our business, both in North America and in our global operations. I am not looking for any significant org changes.
Okay. And maybe switching gears to Canada, if you go back many years ago, you always had a large presence in the oil patch in Western Canada, and it's looking like it's going to be reasonably strong again, at least for the next number of years. Can you talk about your appetite to re-enter that market, how big you might want it to be as an overall piece, and just some of your thoughts around getting back to doing perhaps a bit more oil and gas?
You bet. There are a couple things is that we still have a very significant presence in Western Canada, and absolutely committed to continued growth. I can tell you based on what's in our pipeline, that the pipeline is very strong of opportunities in this space that are not just projects, but projects with the right clients at the right margin. So, I'm very positively about our presence in Western Canada. The other thing I would say is we never left our oil and gas clients. So, from a standpoint of we've always served that market, we have key accounts in that market, and have been committed to that market. So, it's not a pivot for us. It's following our clients' investment strategies wherever they take us.
Perfect. Thank you very much. I'll hold off on any of the longer-dated questions, because I guess we'll learn about them in a month.
Thanks.
Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Jonathan Goldman from Scotiabank. Your question, please.
Hey, good morning, team, and thanks for taking my questions. Maybe just circling back to the U.S. Good morning, Vito. Maybe just circling back to the U.S. Maybe in the quarter, did you observe any bifurcation of performance between different regions or states throughout the country?
Thanks for that question. Hi, Jonathan. What I would say is that the answer is yes-ish. What we saw, there is still, listen, there is major coastal protection work in the Southeast, and there are major projects. Some of that funding was still a little slower. As I had mentioned, coming out of Q2, we started to see things start to open up, so that started to open up a little later than others. The West Coast is always a robust environment for us. Texas, Florida. Am I seeing things sort of out of scale to the regular pace of business? The only thing I would say that I have seen that was a little slower were the large federally funded coastal programs. Not that they got canceled, it is just that the movement of money was slower.
Okay, that is good color. Maybe speaking of the movement of money, that kind of been hearing from peers about a slower pace of project conversion from maybe award to disbursement and actual move forward. Has that project delivery timeline extended, or does it kind of remain status quo, I guess, relative to last quarter or last year, or maybe recently?
Well, I would say we are actually starting to see things pick up again. I would say that the delay in funding did not cause projects to cancel, or they just moved to the right. So they did not get compressed either. They moved to the right more than anything in my experience over the major projects that I have seen. For some clients, if they have to hit a certain season, there is a little bit of acceleration, but not anything market.
Okay. That is interesting and encouraging. I will get back with you.
Thank you. Our next question comes from the line of Krista Friesen from CIBC. Your question, please.
Hi. Good morning. Thanks for taking my questions. Maybe if I could just follow up on the global region. Obviously, some strong growth there in the U.K. and Latin America. You commented on how we are starting to continue to see that turnaround in Australia. Are we seeing growth on a quarter-over-quarter basis there, or is it still maybe just kind of trending closer to the bottom? Thank you.
Yeah, Krista, we are starting to see growth, which is wonderful. I mean, obviously, still everything is relatively modest, if you will, but we are really pleased as to how that operations and that business is progressing.
Hi, good morning, Krista. The other thing that I'm excited about in particular is the power sector demand that's happening in Australia. We're seeing things that we hadn't seen before. From the power business standpoint, it's expected to grow the transmission and distribution part of it anyway, from, let's say, AUD 10 billion now to about AUD 15 billion in 2030. When you see that kind of growth over that size of market, you actually feel it when you're there. It's an exciting time.
Okay, great. That's good to hear. Then maybe just to one of the earlier comments, Vito, I think you said you're not really seeing AI have an impact on pricing, but maybe just on the other side of it, are you able to implement AI? Are you seeing much in terms of productivity enhancements there? Thank you.
Yeah. Krista, I'll field that one. We are seeing productivity enhancements relative, like on a broad scale. We do some pulse surveys on administrative tasks across the business, and we're implementing, like many people in our industry and others, for example, certain AI tools that can help you put proposals together faster. But relative to seeing sort of any material impacts to the business, we're still in early days.
Thanks. Appreciate the color. I'll jump back in the queue and see you next month.
Thanks.
Thank you. Our next question is a follow-up from the line of Michael Tupholme from TD Cowen. Your question, please.
Yeah, thank you. Just a quick follow-up. There were some slight restatements to your historical backlog details. Just wondering if you can explain what drove those changes.
Yeah. Hi, Michael. That was just an error. We had noted a small error in our reports there, and we corrected that. We identified that, we corrected it, and we just wanted to be totally transparent and get all those four quarters cleaned up. Immaterial in the context of obviously backlog, but it reflects the updated and adjusted backlog as it stands.
Okay, understood. Thank you.
Yeah.
Thank you. Our next question comes from the line of Benoit Poirier from Desjardins. Your question, please.
Yeah. Good morning, everyone. Thanks for taking my question. On Canada, Susan, you mentioned that the growth will likely surpass what you've been achieved in the past. You called for low single digit to mid single digit this year, but when I look back at the last four years, you've been able to average a quite impressive performance at 7.5%. I am just wondering whether you are calling Canada to go above 7.5% or double-digit territory on the back of all the nation-building project, all the strong activity that you see across Canada.
Good morning, Benoit. What I would say is that I see the potential for a more robust growth market based on the projects that are being talked about. But it will actually take them coming online to deliver what you are talking about relative to organic growth. We are seeing, again, good green shoots about it. We are seeing a lot of proposal activity. But as you can imagine, with the nation-building projects as well as the projects identified in the Investment Summit, those are big projects that the liftoff can take a while. So, I see it trending up. Whether it will hit that, or when it would hit that, will depend on a lot of things all landing at the right place.
Benoit, we will talk more about this again in Washington, D.C. here on December 8th. It is the beauty of the portfolio and the breadth of our market, right? Both geographically, but across our sectors. Just real strong tailwinds, excuse me, across our entire markets. When we think about what that could contribute to on a consolidated basis over a reasonable period of time here, it is reasonably attractive.
Yeah. Just to come back on a previous question around oil and gas, you had a much higher exposure in the old days. You've been quite good diversifying over time. What would be your exposure to oil and gas right now in terms of specific exposure?
Well, you're testing my—
I was going to say, I don't have exactly—
Yeah.
—that number. Do you, Vito?
We'll get that to you. It's actually in our listing there, in our material. But relatively small, I would say. 5% of what the team is sharing. Benoit, 5% of what the team is sharing. Yeah. Thank you.
Okay. Thank you very much. Maybe last question. Obviously, margin has been quite impressive with 120 basis points of margin improvement. You've been calling this discussion around the project margin some outsized recovery. As we go forward, I'm just wondering if project margin might come back down to more a sustainable level of 54%-54.5%. How should we be thinking, let's say, about 2027? Would it be fair to expect maybe somewhat of a tough compare or still improvement, but at a more moderate pace, let's say?
Yeah, I think the latter, Benoit. Overall, there's a lot of initiatives. The thing I'm most excited about when we think about either project margins or bottom line EBITDA margins improvements is processes and whatnot. There's so many things that go into it, but ultimately, a lot of it drops to the bottom line. Just as importantly, if not more importantly, it really goes into us continuing to reinvest in our services for the benefit of our clients and the development of our people, and really perpetuates the long-term health of this organization over the longer term and from a sustainable perspective and all aspects of that. But I think you'll get our margin guidance as we move forward here, and we've telegraphed that pretty clearly in the past.
Project margins is a key component of bottom line margins, and so we'll give you a little bit more color here in a month's time.
Okay. Thank you very much, and congrats again.
Thanks, Benoit.
Thank you.
Thank you. This does conclude the question- and- answer session of today's program. I'd like to hand the program back to management for any further remarks.
Hey, thank you, operator, and thanks for everyone joining the call this morning. If you have any follow-up questions, please reach out to Jess Nieukerk, our VP of Investor Relations. Thanks very much.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.