STANTEC INC
For the period ended Dec 31, 2023. Filed Feb 28, 2024.
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The yearly report of certain Canadian companies, filed under a joint US and Canadian system. It is the main yearly account these companies give US investors, largely as filed in Canada.
FY2023 · Filed Feb 28, 2024
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EX-99.2 · Project Margin
Project Margin
Project marginis calculated as net revenue minus direct payroll costs. Direct payroll costs include salaries and related fringe benefits for labor hours directly associated with completing projects. Labor costs and related fringe benefits for labor hours not directly associated with completing projects are included in administrative and marketing expenses.
In general, project margin fluctuations depend on the particular mix of projects in progress and on project execution. The fluctuations reflect our business model, which is based on providing services across diverse geographic locations, business operating units, and all phases of the infrastructure and facilities project life cycle.
| Project Margin by Reportable Segment | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| (In millions of Canadian dollars, except percentages) | $ | % of Net Revenue | $ | % of Net Revenue |
| Canada | 667.4 | 53.6% | 611.0 | 53.1% |
| United States | 1,475.1 | 55.0% | 1,254.1 | 55.3% |
| Global | 602.2 | 53.0% | 552.2 | 53.1% |
| Total | 2,744.7 | 54.2% | 2,417.3 | 54.2% |
| Project Margin by Business Operating Unit | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| (In millions of Canadian dollars, except percentages) | $ | % of Net Revenue | $ | % of Net Revenue |
| Infrastructure | 740.4 | 53.7% | 690.3 | 54.1% |
| Water | 582.0 | 54.2% | 474.8 | 54.4% |
| Environmental Services | 580.4 | 56.5% | 512.1 | 56.8% |
| Buildings | 505.0 | 53.4% | 441.0 | 53.9% |
| Energy & Resources | 336.9 | 52.7% | 299.1 | 50.7% |
| Total | 2,744.7 | 54.2% | 2,417.3 | 54.2% |
Project margin increased $327.4 million, or 13.5%, and as a percentage of net revenue, project margin remained consistent at 54.2%. Net revenue growth driven by robust public and private investment contributed to the project margin increase. As a percentage of net revenue, project margin remained in line with our expectations as a result of our continued discipline in project execution, our ability to increase rates on certain projects to mitigate the impacts of wage inflation, and increased selectivity in project pursuits.
In Canada, project margin increased $56.4 million to $667.4 million, and as a percentage of net revenue, project margin increased 50 basis pointsdue primarily to strong volume on high margin archaeological work in Environmental Services and solid project performance, particularly in Energy & Resources. Additionally, certain project recoveries and change order approvals in Infrastructure contributed to project margin increases.
Project margin in the United States increased $221.0 million, and as a percentage of net revenue, decreased 30 basis points to 55.0%. Project margin as a percentage of net revenue remained consistent with expectations, decreasing slightly due to project mix across our business lines.
Project margin in our Global operations increased $50.0 million to $602.2 million and remained consistent as a percentage of net revenue as a resultof solid project execution, particularly in Water and Energy & Resources.
| Management's Discussion and Analysis | ||
|---|---|---|
| December 31, 2023 | M-15 | Stantec Inc. |
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