Stantec Inc. (STN) Income Statement

The 23.4% year-over-year revenue growth in 2026Q2 marks a sharp acceleration from the mid-single-digit rates seen in early 2025, suggesting that the IIJA-funded projects are converting into billings. However, the sequential decline from 2026Q1's $2.1B to $1.8B in Q2 indicates quarter-to-quarter volatility, likely due to project timing. The record backlog provides visibility, but investors should monitor whether the pace of backlog conversion can sustain this growth trajectory.

The 54.5% gross margin in 2026Q2 is a significant outlier compared to the 37-44% range seen over the past year, likely reflecting a favorable mix shift toward higher-value design work and pass-through cost reductions. This expansion, if sustainable, could indicate that Stantec is successfully leveraging its 'design-led' positioning to command premium pricing. However, the volatility in gross margins across quarters warrants caution, as it may be driven by project-specific factors rather than structural improvement.

The 14.4% operating margin in 2026Q2 is the highest in the provided data, indicating that Stantec is leveraging its fixed overhead base effectively as revenue scales. SG&A remained nearly flat at $648M despite a 23% revenue increase, suggesting disciplined cost control and successful integration of recent acquisitions. This operating leverage, if maintained, could drive further margin expansion, but the sustainability depends on continued revenue growth and stable labor costs.

The sharp decline in COGS ratio in 2026Q2 suggests that Stantec is effectively managing sub-consultant costs and improving billable utilization. However, the company's cost structure remains highly sensitive to wage inflation and skilled labor shortages, which could pressure margins on fixed-price contracts. The recent flag on cost overruns highlights the risk that project execution issues could reverse these gains.