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Stantec Stantec continues momentum with record third quarter adjusted diluted EPS of $ 0.72 , a 16.1 % increase , and return to organic growth EDMONTON , Alberta and NEW YORK , Nov. 03 , 2021 ( GLOBE NEWSWIRE ) -- Stantec ( TSX , NYSE : STN ) , a global leader in sustainable design and engineering , today reported its results for the three and nine month periods ended September 30 , 2021 . Unless otherwise indicated , financial figures are expressed in Canadian dollars , and comparisons are to the prior periods ended September 30 , 2020 . Stantec delivered record quarterly earnings on the strength of a return to organic net revenue growth and a 200 basis points increase in gross margin . Organic net revenue growth for the quarter was 1.4 % ( 3.3 % without the impact of the descoped role on the Trans Mountain Expansion Project ( TMEP ) ) reflecting organic growth of 10.6 % in Global and 1.1 % ( 8.0 % excluding TMEP ) in Canada . The US demonstrated significant progress toward growth as the market continues to recover and notified awards began to move into backlog and revenue . " As demonstrated by our record Q3 results , our business continues to perform extremely well , " said Gord Johnston , President and CEO . " In Q3 , we returned to organic growth , with Canada and Global firing on all cylinders , while our US backlog climbed 5 % organically in the quarter to achieve a record level in native currency . This , coupled with the anticipated US Federal government infrastructure stimulus program and our recently announced acquisition of Cardno's North America and Asia Pacific engineering and consulting businesses , provides strong tailwinds as we move into 2022. " Q3 2021 Highlights Stantec reported record adjusted diluted EPS of $ 0.72 in Q3 2021 , a $ 0.10 per share or 16.1 % increase from $ 0.62 in Q3 2020 . This was driven by a continued focus on gross margin improvement , the ongoing execution of the 2023 Real Estate Strategy ( which is on track to deliver $ 0.10 per share in 2021 ) , lower interest expense from improved working capital management and the issuance of Senior Notes in October 2020 , and reduced taxes from the implementation of tax optimization strategies . The Canadian dollar has strengthened considerably relative to the US dollar year - over - year , with the average exchange rate shifting to $ 1.26 in Q3 2021 from USD / CAD $ 1.34 in Q3 2020. This reduced Q3 net revenues by $ 25.4 million . Stantec further estimates that the impact to adjusted EBITDA , adjusted net income and adjusted diluted EPS was approximately $ 2.5 million , $ 1.0 million and $ 0.01 , respectively . • Net revenue , on a constant currency basis , was in line with expectations , increasing 5.0 % , or $ 45.8 million , compared with Q3 2020 ; including the effects of foreign exchange , net revenue increased $ 16.4 million . Overall , organic net revenue and acquisition net revenue grew 1.4 % and 3.6 % respectively . • Gross margin increased $ 27.9 million or 5.8 % to $ 507 million as a result of solid project execution and shifts in project mix . As a percentage of net revenue , gross margin increased 200 basis points to 54.3 % from 52.3 % . • Adjusted EBITDA from continuing operations was $ 156.0 million , representing 16.7 % of net revenue compared to $ 158.2 million or 17.3 % of net revenue in the prior period . Increased gross margin was offset by higher administrative and marketing expenses , which included a $ 5.0 million impact from revaluing share - based compensation plans due to Stantec's increased share price ( 54 basis points as a percentage of net revenue ) . • Net income increased 12.7 % , or $ 7.9 million , to $ 70.0 million , and diluted EPS from continuing operations increased 14.5 % , or $ 0.08 , to $ 0.63 , mainly due to gross margin growth , and lower net interest and depreciation , including progress on the 2023 Real Estate Strategy , and income tax . • Adjusted net income grew 15.0 % , or $ 10.5 million , to $ 80.4 million , representing 8.6 % of net revenue , and adjusted diluted EPS increased 16.1 % to $ 0.72 from $ 0.62 in Q3 2020 . • Contract backlog increased 7.1 % ( 7.0 % organically ) from December 31 , 2020 , to $ 4.7 billion at September 30 , 2021 . Organic backlog growth was achieved in the Buildings , Energy & Resources and Environmental Services business units— with Energy & Resources and Environmental Services achieving organic backlog growth of more than 30 % and 40 % , respectively . Backlog drew down in Infrastructure as public clients continue to wait for US infrastructure stimulus , and in Water as the ramp up in work continues on Global water frameworks . Contract backlog represents approximately 12 months of work . • Operating cash flows from continuing operations decreased 38.3 % to inflows of $ 101.0 million compared with $ 163.8 million in the prior period , primarily related to a reduction in cash receipts due to the timing of collections and foreign exchange impacts . • Net debt to adjusted EBITDA ( on a trailing twelve - month basis ) at September 30 , 2021 was 0.8x , remaining below the 1.0x to 2.0x target range . • Days sales outstanding ( DSO ) was 81 days , reflecting a 1 - day improvement from 82 days at September 30 , 2020 . • The acquisition of Paleo Solutions was completed on September 30 , 2021. This 65 - person US - based firm specializing in paleontological and archaeological services will strengthen Stantec's Environmental Services presence in renewable energy , electrical generation , and transmission projects . It will also add depth to Stantec's current Archaeology team and new expertise in paleontology across the firm's US Pacific and Mountain Regions . • The acquisition of Cardno's US and Asia Pacific consulting businesses was announced on October 21 , 2021 , which is