Slide 1: Investor Presentation September 2020
GROWTH PEOPLE INNOVATION Investor Presentation EXCELLENCE September 2020 Joint Venture with Snøhetta Temple University – Charles Library Philadelphia, Pennsylvania, USA Photo credit: Michael Grimm 1
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Certain statements contained in this presentation constitute forward-looking information and statements within the meaning of applicable GROWTH securities law (collectively, "forward-looking statements"). Forward-looking statements in this present
Slide 3: Diversified Global Footprint – Local Presence
Diversified Global Footprint – Local Presence GROWTH Distribution of Net Revenue PEOPLE 29% INNOVATION 54% $3.8B TTM Q2 2020 17% EXCELLENCE United States Canada Global 3
Slide 4: Stantec at a glance
Stantec at a glance GROWTH 22,000 6.6% STN PEOPLE Employees Globally 10-Year Adjusted Diluted TSX & NYSE EPS CAGR(1) INNOVATION EXCELLENCE 350 65 YEARS CDN $4.5B (2) Locations Worldwide Of Uninterrupted Profitability Market Capitalization (1) TTM Q2 2020 4 (2) As of October 7, 2020
Slide 5: Design & Engineering Services
Design & Engineering Services For everything from small local projects to iconic mega projects BUSINESS OPERATING UNITS (TTM Q2 2020 Net Revenue) GROWTH ENVIRONM ENTAL ENERGY & INFRASTRUCTURE BUILDINGS WATER SERVICES RESOURCES $1,066M $828M $754M $570M $542M PEOPLE INNOVATION EXCELLENCE Stantec is a
Slide 6: Infrastructure
Infrastructure Front-end design and engineering services and some construction management and inspection work for private and public sector clients GROWTH 28% % of Net Revenue Q2 2020 YTD PEOPLE Infrastructure Capability INNOVATION London, United Kingdom Net Revenue (C$ Millions) Net revenue by sect
Slide 7: Buildings
Buildings Pre-design, design, and construction administration services in planning, architecture, interior design, buildings engineering, and sustainability and building performance for vertical infrastructure, with greater weighting towards public vs private sector clients. GROWTH 22% % of Net Reve
Slide 8: Water
Water Traditional planning, engineering, design, and construction management services augmented with financial and enterprise management, program and asset management, and intelligent platforms for public and private sector clients GROWTH 21% % of Net Revenue Q2 2020 YTD PEOPLE King’s Scholars Pond
Slide 9: Environmental Services
Environmental Services Planning and permitting services for private sector clients, and remediation activities for private and public sector clients GROWTH 14% % of Net Revenue Q2 2020 YTD PEOPLE Barrow Island Vegetation Recognition INNOVATION Barrow Island, Australia Net Revenue (C$ Millions) Net r
Slide 10: Energy & Resources
Energy & Resources Industrial engineering services for private sector energy, resource, and power clients GROWTH 15% % of Net Revenue Q2 2020 YTD PEOPLE Dokie Wind Energy Project INNOVATION British Columbia Net Revenue (C$ Millions) Net revenue by sector Net revenue by geography Q2 2020 YTD Q2 2020
Slide 11: YTD Results and 2020 Outlook
GROWTH PEOPLE INNOVATION YTD Results and 2020 Outlook EXCELLENCE Brucejack Mine Stewart, British Columbia, Canada 11
Slide 12: YTD 2020 results
YTD 2020 results Net revenue & organic growth (retraction) ($ millions, %) 7.4% 5.3% 4.2% 2.3% (2.1)% YTD 20 YTD 19 Change % Year- (In millions of Canadian dollars, % of Net % of Net over-year except per share amounts and percentages) $ Revenue $ Revenue change Net revenue $954 $953 $955 $951 1,906.
Slide 13: Balance sheet strength
Balance sheet strength Net debt to adjusted EBITDA(1) (TTM) Net debt to adjusted EBITDA(1) 2 1.0x at June 30, 2020 1.5 1 0.5 Target range 1.0 - 2.0x Q2 2020 0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Days sales outstanding 95 Days sales outstanding 90 85 82 days at June 30, 2020 80 Target 75 90 days 70 Q2 19 Q
Slide 14: Liquidity and capital allocation
Liquidity and capital allocation Free cash flow(1) ($ millions) (Comparisons to YTD 2019) • $148.5 MM improvement in free cash flow (1) $204 $210 • 57% decrease in capital expenditures $115 $94 ($85) • >$330 million in undrawn credit capacity Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 2020 Cash flow from cont
Slide 15: 2020 Outlook
2020 Outlook Net Revenue and Adjusted Earnings • Full-year 2020 net revenue expected to be comparable to 2019 • Adjusted net income and adjusted diluted EPS comparable to 2019 • 55% of adjusted earnings in Q2 and Q3, and 45% in Q1 and Q4 2020 OUTLOOK Leverage • Net debt to adjusted EBITDA expected t
Slide 16: ESG leadership that drives value
ESG leadership that drives value GROWTH PEOPLE INNOVATION EXCELLENCE Maida Vale Flood Alleviation Scheme 16 North West London, United Kingdom
Slide 17: ESG governance at Stantec
ESG governance at Stantec Board Health, Safety, Security, Environment & Sustainability Committee Sustainability and our contributions to the UN’s Members include: sustainable development goals is a priority at the board GROWTH • Donald J. Lowry (chair) level, C-suite and throughout Stantec • Patrici
Slide 18: Stantec's ESG framework
Stantec’s ESG framework Stantec is a signatory to the UN Global Compact and has adopted the UN’s sustainable development goals (SDGs) GROWTH Member of the UN Global Compact CFO Taskforce for the SDGs PEOPLE INNOVATION our actions Impact through EXCELLENCE our project work In addition to UN SDGs, Sta
Slide 19: Environmental leadership
In 2019 we achieved a 39% Environmental leadership reduction in scope 1 and 2 emissions per employee from our 2013 baseline – We Stewardship and innovation that drives value expect to surpass our 2028 Stantec’s recognized leadership in sustainable design helps win projects reduction target of 40% GR
Slide 20: Social leadership
Stantec’s SaferTogether™ Social leadership culture encourages safe choices so our people return home safely each Embracing and engaging diverse groups day. Stantec’s safety improves the performance of our business and our ability to support clients. metrics continue to improve GROWTH STN is included
Slide 21: Strong governance
How Stantec’s people conduct Strong governance themselves has a direct impact on the integrity of both the Company and the A diverse board and values-based leadership institutions in the jurisdictions where we operate GROWTH Stantec’s board is dominated by independent directors from exceptional back
Slide 22: Our Strategic Plan
Our Strategic Plan (Launched December 3, 2019) GROWTH PEOPLE INNOVATION EXCELLENCE SEVA résidences – foot bridge and marsh development 22 Candiac, Québec
Slide 23: Our vision
Our vision To be a top 10 global design firm that maximizes long-term, sustainable value GROWTH PEOPLE Pure play Strong alignment Disciplined capital Earnings growth design focus with shareholders allocation INNOVATION EXCELLENCE Peace River Regional Reservoir 23 Bradenton/DeSoto County, Florida, Un
Slide 24: Our opportunity
Our opportunity Key Market Trends Climate change, Urbanization, Geopolitics and breakthrough technology GROWTH STRATEGIC GROWTH OPPORTUNITIES US$24T PEOPLE TOTAL SPEND IN THE NEXT DECADE INNOVATION US$2T ADDRESSABLE ENGINEERING AND EXCELLENCE DESIGN SPEND COASTAL RESILIENCE ECOSYSTEM SM ART CITIES A
Slide 25: Our strategy
Our strategy To grow and diversify sustainably for the benefit of GROWTH our clients, employees and shareholders. PEOPLE INNOVATION We will do this through Strong execution, efficient operations, and disciplined capital allocation while delivering a great client experience. EXCELLENCE We will measur
Slide 26: Our capital allocation philosophy
Our capital allocation philosophy Focused on achieving the best risk adjusted returns GROWTH Operating cash flow Our core PEOPLE Maintaining a strong commitments Sustaining CapEx balance sheet Base dividend INNOVATION Excess Cash Flow Competing capital Share buyback Growth for the best risk EXCELLEN
Slide 27: Our Targets
Our Targets GROWTH PEOPLE INNOVATION Ruwais Marina District Rumais, Abu Dhabi, UAE EXCELLENCE Net revenue Adjusted Adjusted Return on EBITDA margin earnings per share invested capital >10% 16-17% >11% >10% CAGR Of net revenue CAGR 27
Slide 28: Concluding Remarks
GROWTH PEOPLE INNOVATION Concluding Remarks EXCELLENCE Madison Street Park Tampa, FL, USA 28
Slide 29: Continuing to execute our strategy
Continuing to execute our strategy People • Our people’s health and safety comes first as we begin our phased office remobilization • Integrity of workforce is being preserved to work through record backlog and to position Stantec for economic recovery Excellence 2020 OUTLOOK • Continued focus on pr
Slide 30: Thank You!
30 EXCELLENCE INNOVATION PEOPLE GROWTH Thank You!