Episode Details

Stantec (STN) Q2 2026 — Q2 2026 (quarter ended June 30). The 6-K cleared EDGAR at 21:03 on Wednesday August 12, AFTER the close, so Thursday August 13 IS the reaction session: it opened -1.20 pct, fell as far as -4.59 pct intraday, then closed -0.32 pct on 1.60x volume. Stantec reported record net revenue, record adjusted EBITDA margin and a record CAD 9.2bn backlog, then raised its margin target. The United States - 51.9 pct of net revenue - grew organically by exactly zero. All figures Canadian dollars. THE CALL: HOLD (3/5, MEDIUM - A GOOD BUSINESS ALREADY PRICED FOR ITS GUIDANCE) — base-case value ~$69.36 vs ~$73.70 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value USD69.36 (CAD96.22) vs the USD73.70 close, -5.9 pct. Bear USD40.20 / base USD71.26 / bull USD108.35 weighted 30/50/20 on a free-cash-flow DCF: CAD600M normalised, 8.25 pct discount, 2.5 pct terminal. - GROWTH DECOMPOSED: net revenue CAD1,780.6M, +11.5 pct. Acquisition supplied 7.1 points and currency 0.7, leaving organic growth of just 3.7 pct. In FY2025 the ratio ran the other way: organic 5.0 pct against acquisition 3.9 pct. The mix has flipped. - THE UNITED STATES: net revenue CAD924.5M vs CAD819.6M, and organic growth of 0.0 pct. Every dollar of the CAD104.9M increase was the Page acquisition (CAD105.1M) less CAD0.2M of currency. Canada managed 2.4 pct; Global 12.8 pct. - WATER CARRIED IT: Water is 22.4 pct of net revenue and delivered CAD41.9M of the CAD58.8M of organic growth - 71.3 pct. Strip Water out and the other CAD1,381.6M of Stantec grew organically 1.4 pct. Infrastructure, the No.2 business, SHRANK 1.1 pct. - THE WIDENING WEDGE: adjusted EPS CAD1.61 vs IFRS diluted CAD1.32 - a CAD0.29 gap against CAD0.17 a year ago, up 71 pct. After-tax amortisation of acquired intangibles is CAD22.7M of it. IFRS net margin FELL to 8.4 pct from 8.5 pct. - GUIDANCE CUT INSIDE A RAISE: the adjusted EBITDA margin target went UP to 17.8-18.3 pct, but organic growth was cut from mid- to high-single digits (May filing) to mid-single digits, and the US and Canada with it. Only Global was raised. - CASH: first-half free cash flow was NEGATIVE CAD6.2M against positive CAD129.0M a year earlier; operating cash flow halved to CAD116.3M. Stantec still returned CAD231.4M via buybacks and dividends. Net debt CAD1,642.4M, leverage 1.3x. What to watch: UP: US organic growth turning visibly positive at the November 12 Q3 print, which would validate the deferred-work explanation and largely close our gap. DOWN: a second flat US quarter, which makes the full-year organic guide arithmetically unreachable, or backlog conversion slipping further. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.