Welcome to Stantec's Third Quarter 2025 Results Webcast and Conference Call. Leading the call today are Gord Johnston, President and Chief Executive Officer; and Vito Culmone, Executive Vice President and Chief Financial Officer. Stantec invites those dialing in to view the slide presentation, which is available in the Investors section at stantec.com. Today's call is also webcast. Please be advised that if you have dialed in, while also viewing the webcast, you should mute your computer as there is a delay between the call and the webcast. All information provided during the conference call is subject to the forward-looking statements. qualifications set out on Slide 2, detailed in Stantec's management discussion and analysis and incorporated in full for the purposes of today's call. Unless otherwise noted, dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded. With that, I'll turn the call over to Gord Johnston.

Good morning, everyone, and thank you for joining us today. I'm pleased to announce that Stantec delivered robust performance in the third quarter, generating organic growth across all our regions and business operating units. Global trends across water, transportation, energy transition and mission-critical sectors continue to drive strong demand for our services. And our diversification across sectors and geographies creates resilience within our operations. Net revenue grew to $1.7 billion in the third quarter, an increase of almost 12% compared to Q3 of last year, driven by organic and acquisition growth, each over 5%. Most notably, our Water business delivered almost 13% organic growth, Energy & Resources delivered nearly 10%. We grew adjusted EBITDA by close to 18% year-over-year with a record margin of 19%. We also delivered adjusted EPS growth of 17.7% compared to Q3 2024. Looking at our results in each of our geographies. In the U.S., net revenue increased over 14% in the third quarter, which was driven by 4.6% organic growth and almost 9% acquisition growth. In our Buildings business, net revenue increased by more than 40% in Q3 and over 20% year-to-date, driven by our acquisition of Page and continued organic growth. The integration of Page is going very well, and already, we're seeing many revenue synergies from the acquisition. We expect to have completed the financial integration into our systems by year-end. Private and public sector investments, particularly in mission-critical, Science and technology and Civic supported growth in buildings. Organic growth was also driven by our Water and Environmental Services businesses. Large public sector water supply and wastewater treatment projects contributed to double-digit growth in water. In energy transition, mining and infrastructure sectors as well as the continued work for a large utility provider supported growth in environmental services. In Canada, net revenue grew…

Thank you, Gord, and good morning, everyone. We are very pleased with Stantec's third quarter financial results, which demonstrate the continued momentum of our business and the resilience of our operating model. Robust demand for our services, combined with favorable global trends allows us to continue achieving record-setting results. In Q3, we achieved gross revenue of $2.1 billion and net revenue of $1.7 billion, an increase of 11.8% compared to Q3 of 2024. This was driven by 5.6% organic growth and 5.2%, acquisition growth. As a percentage of net revenue, our project margins once again remained in line with our expectations at 54.4%. We achieved an all-time high adjusted EBITDA margin of 19% in the quarter, a 100 basis point increase compared to Q3 of last year. The increase in margin primarily reflects lower administration and marketing expenses as a percentage of net revenue due to our disciplined management of operations and higher utilization. And our adjusted EPS in the quarter increased 17.7% to $1.53. Turning to our cash flow, liquidity and capital resources. Our year-to-date operating cash flows are up 86% compared to 2024 from $296 million to $551 million, reflecting strong revenue growth, strong operational performance and continued strong collection efforts. DSO at the end of the third quarter was 73 days, a decrease of 4 days compared to year-end 2024 and in line with our Q2. Our net debt to adjusted EBITDA ratio at September 30 was 1.5x, reflecting the funding of our recent acquisition of Page. This remains within our internal range -- target range of 1 to 2x and positions us well for continued M&A. And as we have stated before, we are comfortable going above this range for a period of time for the right acquisition. Gord, I'll now hand the call back to you.

Great. Thanks, Vito. At the end of the third quarter, our contract backlog stood at $8.4 billion, an almost 15% increase year-over-year, representing approximately 13 months of work. Backlog continues to grow organically and is up 5.6% year-over-year. Organic backlog growth has been driven primarily by our U.S. and global operations, which achieved 6.6% and 6.8% growth, respectively. The acquisitions we've completed in 2025 contributed to 6.8% growth in backlog, primarily within our Buildings and Water businesses. Over the quarter, Stantec was awarded a number of significant project wins across each of our 5 business verticals, each project varying in size, scope and complexity. I'll highlight just a few of these wins. Stantec was selected as owner's engineer for Manitoba Hydro's $7 billion high-voltage direct current reliability project. The project aims to secure continuous grid reliability for communities across the province. And we've worked with Manitoba Hydro on power delivery projects in the province for over 50 years, and we look forward to continuing our work with them. Stantec's Infrastructure team was selected for a $745 million project to widen the SC-90 corridor in South Carolina. Our team will be responsible for shaping the overall project vision and layout, focusing on traffic operations, access management, bicycle and pedestrian infrastructure and impact minimization. And in Western Australia, our buildings team was selected to deliver specialist engineering services for 2 hospitals, one of which will be over 94,000 square meters in size and valued at nearly $1 billion. The second project includes refurbishment and expansion work at the Osborne Park Hospital valued at over $250 million. These projects will enhance health care for women, children and families. Given our solid third quarter results, our net revenue growth guidance for the full year, while increasing our adjusted EBITDA margin outlook to 17.2% to…

[Operator Instructions] And our first question from today comes from the line of Sabahat Khan from RBC Capital Markets.

Knowing it's kind of close to the end of the year, a good organic print this quarter. Just wondering if you're able to share at a high level how you're thinking about 2026? Just maybe -- and I know you guys provide guidance at Q4, but just given some of the moving pieces this year, any color you can provide either by major end markets or by region would be helpful.

Great. Thanks, Saba. And certainly, this is something we spend a lot of time talking about as well. And you're right, we're going to provide our formal guidance for 2026 in February. But directionally, we see really strong momentum going into next year. In global, the AMP8 programs in the U.K. are going to continue to ramp up as well as the frameworks in Australia and New Zealand. So we see continued strong support in our water business going forward. The need for copper to support grid strengthening, energy transition keeps continuing to support growth in our mining teams, particularly in South America, where I actually was down and visited with our offices last month. here in Canada. The federal budget that was recently released provides continued support for infrastructure really across the company -- country, sorry. And we see a lot of opportunities in the major projects that Prime Minister Carney announced last week and even those that he announced previously. And we're already working on a number of those projects, and we're in discussions and participating on a whole bunch of other ones. In the U.S., a little period of uncertainty, but we see that the macro fundamentals really are still strong there. Aging infrastructure, climate-related impacts, reshoring of manufacturing, data centers, mission-critical facilities. So all of those things, whether it's global, Canada, the U.S. are strong. And then I think one thing that we've talked about a lot, too, is that around the globe, certainly a lot of discussion for increased spending on defense work. And for that, that's -- for us, that's ports, that's dry docks, that's aircraft hangers and runways, housing, all sorts of various types of infrastructure. So we're actually really positive on the prospects and the momentum going into 2026.

Great. And then maybe if you could just dig in on the Canadian side, obviously, a large part of your business. Obviously, we saw [indiscernible] come out thus far. Can you just share some thoughts on -- is it just kind of the broad infrastructure programs in Canada that the Prime Minister is announcing that you're getting involved with? Or is it more kind of the energy base I know historically, some of the pipeline work in Western Canada was a big part of your business. Are you seeing maybe some of those opportunities as being more meaningful? Just curious kind of where within those buckets is Stantec exposed?

Yes. Great. Thanks, Saba. I think in both of those fields, both the opportunities that Prime Minister Carney has announced, and we see great opportunities. But you've seen the really solid organic growth that we've seen in Canada all year, really 8.5% year-to-date organic growth in Canada. And that's, of course, absent any of those projects that Prime Minister Carney had mentioned. So when we look at Canada, we've seen a lot of strength actually in Western Canada, in particular, in land development. We've seen great opportunities in transportation. A number of the projects we're working on bridge jobs in Toronto and a lot of sort of roadway projects here in Western Canada. But water has been incredibly strong all year for us. And we see really no slowdown of the -- both public sector work that we're doing. We've talked about the work we're doing with Metro Van in Vancouver, in Winnipeg and other locations, but a lot of private sector work coming along as well, advanced manufacturing, data centers and that sort of work. So that's very, very robust. And then, of course, as you said, the energy sector, we've seen some opportunities there as well as that group working on a number of -- the work that we do on industrial projects also comes out of that. And we've talked in previous quarters about some work that we're doing in Eastern Canada on some industrial projects. So Canada, pretty strong, pretty broad-based. And we're feeling pretty good about Canada overall and as we go into next year.

And our next question comes from the line of Yuri Lynk from Canaccord Genuity.

Gord, I just want to push a little bit more on the outlook. I understand things are strong right now, but that's generally reflecting work that was booked 12, 18 months ago in some cases. Can you just talk about some of your forward most looking indicators? And I'm thinking, if you look around Canada, I know there's lots of good headlines, but the current economic data is pretty weak. Australia is soft outside of water. AMP8, one of the biggest customers there is struggling financially. The U.S. government shutdown. There's a whole bunch of worrying signs out there. So are you seeing any of that in proposal or RFP or whatever you look at on the most leading edge of your outlook?

Yes. No, great question. Maybe I'll address a couple of them individually there. So in the U.S., without question, there's been a confluence of factors that we've seen there caused a little bit of uncertainty and kind of slowed that -- the procurement cycles. I mean, certainly, that's not unique to Stantec, and you've seen that throughout the industry. So in the U.S., we've -- and you'll see that our backlog in the U.S. has been flat year-to-date. And a lot of that is -- we've been verbally awarded a number of projects, but we haven't been able to get them signed and contracted. So they haven't showed up in backlog. A little bit slower start on some of the things. Environmental Services in the U.S. and maybe a little bit slower so far waiting for some of those things to pick up. We're encouraged by the fact that the government is back at work now. We're also keeping a pretty close eye on that, that might only be for a couple of months until we have to go through this again. But the macros haven't changed in the U.S., whether it is the aging infrastructure and roadways related to and support from IIJA, and we still see those supports coming to some of the reshoring that we're seeing in the private sector. So we see some positivity there. You talked about AMP8 and one of the largest customers there is certainly having some financial difficulty, and we all read about that in the papers. But that really has no impact on our business because the way that the AMP cycles work is the water company commits to doing certain amount of capital spend in order to justify rate increases and so on and improvements in the overall operations. So that work has to get done. And people have said, well, what if that particular client was to get nationalized? Well, for us, we wouldn't want to see that happen. But if it did, the work still has to get done. And we've worked with Thames Water and all -- and for a number of successor companies for the last 200 years in the region. So we do see that regardless of what shakes out there, that AMP8 work is going to continue. So it certainly is a little bit of a cloudy environment out there, not all rays of sunshine, but we do see the demand drivers in our business being pretty strong.

The only thing I'd add to that, Gord, is it's hard to argue with the points that you bring forward. But the diversity of our platform, I think, is an incredible asset and you're starting to -- you see it manifest itself through our year-to-date results and I think you'll continue to see that both geographically and across our segments. So notwithstanding, you're going to see pluses and minuses through it all. I think net debt to Gord's opening comments here, we will be positive moving into 2026, no doubt.

Okay. Good to hear. Second and last one for me. Just any update on the M&A pipeline? I understand over the last year or 2, there's been some large private players maybe working themselves towards a sale? Just any change in the pipeline?

Yes. It's a pretty robust industry right now, lots of discussions ongoing. You certainly read in the papers about some of these private firms coming to market. You also heard rumors about big firms in our space having discussions. And of course, we can't comment on any of those things other than to say we maintain very, very positive on M&A in general and specifically for Stantec. Our Board is supportive. The -- our investor community is supportive. We're supportive and the opportunity set is there. So we're continuing a number of conversations and look forward to bringing something forward at the appropriate time.

And our next question comes from the line of Ian Gillies from Stifel.

Following on some of the previous commentary and maybe just hit the nail on the head. With organic backlog growth in the U.S. supply year-to-date, you don't believe that impinges on your ability to generate some amount of organic growth in the U.S. as we go into next year?

Yes, that's absolutely correct, Ian. We do not envision our year-to-date backlog being flat as an indicator of organic growth going into next year. We'll be positive in organic growth next year. We'll give guidance again at the appropriate time, but our expectations at this time, and you heard Gord echo opening comments around the U.S., including the U.S., we feel pretty good about it. Factors that are contributing to the year-to-date. First of all, backlog is generally lumpy. And obviously, we expect it to build here as we move into the first half of the year. Our year-to-date backlog, though, even in the U.S., our year-to-date, which is probably a better comparison or equally important comparison -- excuse me, our year-over-year is up 6.6%, I believe it is or over 6%. So overall, notwithstanding the confluence of factors that we've talked about that our peers have talked about, we clearly expect organic growth in the U.S. as we move into next year.

Understood. That's very helpful. And maybe along similar lines and most of the other engineering firms have been asked about this, so I'll ask as well is, do you have any concerns about IIJA funds not being released like with some certainty, like, for instance, does your U.S. team still feel quite confident that the bulk of those funds will come out over the next, call it, 4 to 5 years and should continue to be that long-term tailwind and not be canceled?

Yes. And so I think our answer would be similar to what you've heard from some of our -- from the others who have reported as well that we have no indication that program like the IIJA would be canceled or funds would be withheld. We still see the continued momentum on that. And no, we think that, that program remains intact.

And our next question comes from the line of Krista Friesen from CIBC.

Maybe just thinking about your margin, obviously, a pretty impressive quarter and raising and narrowing the god for the remainder of the year. Can you speak to what's changed on that front relative to the beginning of the year when you first issued your guidance?

Krista, yes, it's Vito. You're absolutely right. We're really pleased with a lot of hard work across all of the teams, of course, across our organization in delivering an EBITDA margin. Year-to-date, 17.7%, 100 basis points ahead of prior year or more than that actually. So really, really pleased with it. It all -- I sound like a broken record a little bit with this, but it all starts with project margins. So right customer, right project, right pricing, right risk profile. We spend a lot of time with that, and our professionals are excellent in the delivery of that. So our project margins year-to-date are 0.1% ahead of where we were last year. So without that, that's the fundamental. And then what you're seeing, of course, is admin and marketing as a percentage of NSR come down. So on a year-to-date basis, 37.6% versus 38.6% last year, again, 100 basis point improvement. And that's driven by a number of things. Clearly, scale is a big part of that. So as we grow and organic growth is a significant component of that, the ability to obviously deliver against that base in a more efficient way, that's important for us, and that's contributed meaningful to our year-to-date results. Our utilization, our utilization is another area that has contributed positive to it. Our occupancy costs are also contributing positively on a year-to-date basis. So net-net, you've got -- this business has significant operational leverage attached to it. And with continued organic growth, continued acquisitions contributing to, obviously, the net revenue growth, it provides a continued opportunity for EBITDA margin expansion going forward. While at the same time, very importantly, ensuring we continue to invest, invest in our people, invest in our offerings and invest in the market. That's equally, if not more important as well as we move our way through here.

That's great color. And just a last one for me here. You mentioned the Page acquisition integration is progressing well and starting to realize some synergies there. Can you just provide us with a little bit more detail there? Yes.

Not much more to add to the Gord's commentary. We knew Page very, very well coming into this acquisition. We work with them. And we have to say that everything post that close of the acquisition has just reconfirmed just an incredible team and really hit the ground running from an integration perspective. I think the pace to which we're seeing some of the opportunities, both in market and some of the efficiency reflects the fact that we knew each other so well and had spent a fair bit of time in these sorts of discussions well in advance. But Gordon, any additional comment on Page?

No, it's as we've really started working through the integration, everything that we thought was there has really shown itself to be true and then some. So it's actually been very, very positive. A lot of great project-based and pursuit based synergies there. So actually feeling really good about Page. I wish we could find another 5 Pages to join us.

And our next question comes from the line of Benoit Poirier from Desjardins.

Yes. Great performance on the margin front and also great color that was provided on the previous question. So looking at 2026, could you provide maybe some comments whether the pace of improvement we've seen so far this year is sustainable going into 2026. And what are the puts and takes when looking at margins going into next year?

That's a sneaky way of asking me for guidance already there, Benoit. But so we'll do that in February. I mean, I think when you look at the last several years, there's been steady year-over-year improvement, 0.3, 0.4, 0.5 -- this year, to your point, a little bit outpacing our historical track record, which is wonderful. One of the big factors in EBITDA margin expansion clearly is connected to a lot of what this call has been about, which is the pace of organic revenue activity in the business. So that is a big driver of obviously what you can deliver bottom line. But when you sort of zoom out, notwithstanding where we may be here in 2026 and what, which, again, we feel fairly comfortable with at this point and you look at a 2- or 3- or 4-year picture with the macro demand and whatnot, I think you can expect obviously continued EBITDA margin expansion. We're just going through -- we're entering our third year of our 3-year strat plan where we committed to 17% to 18%. Obviously, we're in the higher end of that range as we sit here in 2025. We expect to be at these levels or better, obviously, as we move into 2026, and we'll refine that next year. But it's the commercial activity that enables in large part for us to really lean into these margin expansions, and we expect that to continue.

Okay. That's great color. And maybe, Gord, you made some great comments about the opportunities you foresee in terms of defense. So I would be curious if you could on what is your exposure to defense right now? And how material could it be given the opportunities you see out there? I would be curious to see how it would compare to the opportunities with data center, let's say?

Yes. No, that's great. The beauty of the Stantec model is in that diversification piece. And so when you look at even in the U.S., where we do a lot of dry docks and aircraft hangers and those sorts of things, our exposure to the U.S. federal government overall is still in that 5-ish percent range. And so it's-- that's the beauty of the diversification model. I think you would see in other countries around the world, it's probably sub-5%, what we would be doing in that. But again, a lot of this is just our bread-and-butter infrastructure work just with a little bit different instead of a hangar for a commercial aircraft, it's for a military aircraft. And so this is stuff that we're all very, very comfortable with. And we don't expect that while there's been a lot of commitments to increasing spending on defense and some of these infrastructure things, we don't expect it's going to pop right away. It's going to take a while to build. And that's fine. We're spending a lot of time with our clients and ensuring that when they get the budget and they're ready to go that they're thinking of us top of mind. So I think we'll see it continue to grow, but I'm not sure that it will be -- that we'll see it being material.

Okay. That's great. And maybe last one for me. In terms of free cash flow, Vito, very strong performance in the quarter. It looks like that you were able to maintain DSO while typically they go up a bit sequentially from Q2 to Q3. So just wondering what is the matter of a stronger collection efforts? Is it a matter of business mix? Or what about the expectation, let's say, for Q4? Was there some pull forward in terms of free cash flow? I would be curious to get some thoughts around the strong free cash flow performance.

Yes. And again, Benoit, I take you to there. You're right, free cash flow can be lumpy quarter-to-quarter, and this Q3 was outsized year-over-year gain. But clearly, the trend has been incredibly positive for us. As you heard in my commentary, our prepared commentary, our year-to-date numbers are up significantly. That's driven by, of course, the business and the expansion of the business, first and foremost. But clearly, our working capital management has -- it remains to be seen, but it looks like we've made a significant one-step onetime sort of move here that is continuing to stay with us. Our DSOs now are at 73, 74. We had an internal target of 80 for the longest time. I think we're getting pretty comfortable saying that perhaps the mid-70s is the new starting point for us. But we'll give ourselves another quarter before we do that. And I just need to -- we've made some changes internally. It's an area of focus for us primarily and just a huge shout out to all of our project managers across all of the entire network that are managing aggressively to that while obviously keeping our commitments to our clients and whatnot. So really, really pleased with it. Might give some back in Q4. I'm not worried about that in any way, shape or form. But full year will continue to be well ahead of where we were in the prior year. So very pleased with our working capital management.

[Operator Instructions] Our next question comes from the line of Michael Tupholme from TD Cowen.

Gord, you've talked a fair bit about the water business, obviously, over time, but also I mentioned it this quarter, very strong organic growth. Often talk about the contribution from the U.K. AMP program and what that's meaning for our organic growth. I'm wondering if you can talk a little bit more about what you're seeing in Canada and the U.S. I think you've touched on it a little bit, but I'd be curious what kind of organic growth rates you're seeing in Water in those regions? And maybe you can talk a little bit about the drivers you're seeing as well?

Yes. Well, so in the U.S., really, really strong growth in water as well. Just trying to look on the number here, but it's definitely well into the doubled. Was it 20% in the quarter, Vito?

In the U.S.?

But we'll grab that. Yes. No, I've got certainly double-digit growth in the U.S. in Water. And what's interesting whether it's -- and it's over 20% in Canada. But what's really interesting is that we've talked about it in sequential quarters, like we've had continued organic growth in our Water business, like all the way back to early 2019, and it just continues and continues to strengthen. So in...

It was 10%, Gordon, in the U.S.

10%, okay. So like in Canada, the type of work that we're doing are big public sector wastewater projects and water projects in Metro Vancouver, where we're working on the Iona Island relocation there, big biosolids project in Winnipeg that we've talked about $1 billion. So there's just a lot of big projects like that. Toronto continues with basement flooding enhancements and such. In the U.S., we see the same. A lot of it is municipal type work, water supply, water treatment, water scarcity type issues and some areas. And in the Gulf, certainly, it's flooding in excess of water. And so it's all just that sort of that core fundamentals that just keeps going with our water business where -- so whether it's not enough water, and we're working on water reuse and recycle, too much water and flooding and so we're doing big projects like the big pump station we did in New Orleans several years ago. We're currently working on shoreline protection type work, sea-level rise type work. Regulation like PFAS continues to provide opportunities in the short, but more so in the longer term. And then just the advanced manufacturing and reshoring of some of that, that, of course, you read about in the papers all the time. And very often, the first thing that clients need is water, access to water, water allocations, the treatment of high-purity water for manufacturing processes. So really, really strong drivers in water, and we don't see them slowing down in any way.

That's very helpful. The second question I wanted to ask is just about data center activity. Wondering if you can provide a bit of an update on activity levels and in that area, I guess, also curious what percentage of the revenue of the company is that represented by today and how you see that evolving and looking into 2026 as far as share of revenue contribution relative to 2025?

Yes. So we're currently working on over 100 data centers, mission-critical facilities ranging in size from 20 megawatts all the way up to a gigawatt. So a lot of projects on the go, but a pretty robust pipeline as well. I think right now, it would represent, Vito, I'd say like 3% 2%, 3% of the overall net revenue of the company. And do we see that growing? Yes. I mean that's growing at a bit of an outsized, but would it get to 4%, maybe 5%, but we don't see that we'd want it to go a lot more than that. We don't want to become 15% exposed to any sort of a high-growth area like that because just in the -- as we've talked about our diversification over time. So we feel good in that 3% to 5% range if data center is mission-critical, we're in that area, but certainly a high-growth area for us.

And our next question comes from the line of Chris Murray from ATB Capital Markets.

Gordon, you mentioned earlier the 3-year financial targets hitting, I guess, the $7.5 billion by the end of next year. And so maybe just a couple of thoughts here. I mean, I'm looking at consensus right now, it's about 7.2, which means that you probably have to find some acquisition growth, I won't say in a hurry, but soon. But there's also, I guess, some questions. I think we kind of heard on the call about the whole idea behind being able to maintain a 7% CAGR because even if we go back a couple of years ago and what we've actually experienced over the last couple of years, hitting 7% next year on a 3-year CAGR is going to require just a stupid lift, which is probably not reasonable. So I guess the question I've got for you is the rest of the other metrics that we're seeing up and down, things like adjusted EBITDA, some of the financial metrics are all looking okay. Are you -- I guess the question I've got for you is like are you married to that 7.5% as a target? Or is it just more kind of aspirational and we can kind of think about how the game is going to play because the environment is shifting, and we could be heading into some choppy waters. So just thoughts on how those targets are set and how you're actually aiming at them.

Yes, Chris, maybe I'll take that one, and Gordon, you can jump in if you -- the $7.5 billion was established, $7.5 billion was established obviously years ago based on exactly what you're describing, Chris, it was based on a CAGR of 7% organic. And then obviously, the rest of it filled in by acquisition. You're right. When you look at that 7% CAGR now relative to obviously what we did -- we're doing here in 2025, it's going to be hard probably for us to get 7% CAGR. But obviously, again, we'll stop just short of 2026 at this point. We'll see how the next few years. clearly expect organic growth next year and expect a good year there. And so we're not married to the 7.5%. It's not something that at the end of the day, we're linked to. This company is all about just obviously continued diversification, organic growth and M&A strategy. When you look at the pace of our M&A, you sort of say we expect to obviously be in market, expect to continue to do acquisitions. And as a result, that's what contributed, I think, to Gord's comment around our ability to be in that 7.5% range. But I would say the number itself isn't driving our activity. It's our strategy that's driving the activity, and it's proved out really well at this point.

No, absolutely right, Vito. And Chris, while you're -- if organic growth does slip below that 7% CAGR, there's some great optionality on the acquisition side that we would never rush anything or do anything that we didn't feel was the right thing to do long term in order to hit that 7.5 target. But it's a pretty robust environment right now. So feeling optimistic about some things that could happen there.

Okay. That's helpful. The other question, and I know this is something that we haven't looked at in a while, but Vito, I'll throw it out at you is just getting back into the market and maybe buying back stock again, we haven't really seen that. I know that the multiple has been fairly high, but now it's starting to come maybe back to what I would call a more normal range. Is maybe getting into a regular cadence on the NCIB is something that you guys are maybe more open to? Or is that something that you're just going to stay kind of full bore pressed on M&A as a use of capital?

Yes. No, I take you back to our capital structure objectives. Obviously, we're going to generate a significant amount of free cash flow. We will continue to do that. Our capital allocation priorities are obviously, first and foremost, funding our internal capital needs, which are fairly modest. Our capital expenditures have been in the area of $100 million on an annual basis. This year, we'll be actually fairly below that. And then obviously, we have a dividend in place. We'll continue to respect that dividend and likely grow it as we have in the last several years. And then the NCIB there and M&A -- and M&A is there. Again, we see an incredible opportunity for this organization going forward with the right acquisitions, a fragmented market to prioritize acquisitions. And that also contributes to organic growth, right? I mean acquisitions are a big part of also across revenue synergies and whatnot to drive inorganic growth. But M&A is lumpy. Like when you're looking at M&A, over the years, you can't sort of predict it. So clearly, we'll continue to use the NCIB. You're absolutely right. We have been muted on share buybacks in the last couple of years, I think, now. But we'll continue to use the NCIB and have it on the shelf as required. And opportunistically, we wouldn't hesitate to get in the market and buy back our shares if required. But M&A is, we think, a really significant value creator for this organization going forward as is our stock buyback program.

And our next question comes from the line of Maxim Sytchev from NBCM.

Gord, maybe the first question for you and just turning back to the U.S. I mean one of the things that we're hearing is that the procurement methodology has changed a little bit from the federal government that is a bit more book-and-burn sort of less visibility, but work is still coming through. Is this also something that perhaps explains that dichotomy between backlog and organic growth, which still remains pretty robust? So just any color you can provide with this, that would be so helpful.

Yes. Without question, the overall procurement cycle and process for a number of federal, state and local governments have changed with some of the executive orders that have come from President Trump. And so that was a little bit slowness there the first part of the year. Now we've been awarded a number of projects, and we're just waiting to get them signed. And certainly, the shutdown slowed things down there. So I think as we see, hopefully, folks start to come back and gain to work through the -- they work through the backlog of paper on their desk, we get some things signed and then they'll turn into backlog for us and others in the industry. So I think we're still long-term bullish on the U.S. market there, a lot of good opportunities, and we'll just keep working on it.

Yes, for sure. And then do you mind providing a bit of color in terms of the environmental services organic growth? I mean we're seeing a bit of a slowdown while water is actually accelerating. So do you mind maybe talking about the puts and takes in terms of what explains that divergence as well?

Yes, absolutely. So a couple of things there. One is that even more than other groups, our ES group has got a number of large U.S. federal projects that we've been awarded just waiting for signature. So we do see those coming. No question of discussion of cancellation or deferral. We just need to get some signs that we can get them going here early in the early in the new year. So I think longer term, we see both in Canada. Canada, we've got some good projects that are going to be starting up in the near term as well in the U.S., too. So I think we've seen a little bit of a slowness in ES this year or organic growth really quarter-over-quarter has been kind of low single digits. I do think we'll see a bit of an acceleration in that as we move into 2026.

Okay. Super helpful. And then last question, if I may. You called out the German market, which is obviously sort of a recent beachhead for you guys seeing very nice growth. Do you mind maybe talking about what is driving that? I presume some of that is defense, transport, but any incremental color would be more helpful.

Yes. So our group in Germany, incredibly well managed with lots of opportunity, particularly since the government took off the debt break there and investing another EUR 500 billion. So some of the work that we're doing now in addition to the typical work that we do, which is roadways and bridges and rail projects. We're working a lot of folks on right now on a big electrical transmission project. And there's a real north-south need for electrical transmission in Germany as well. So -- and that's a market that we've just begun to move into probably over the last 6 to 9 months. So I see a lot of growth there. So in addition to the strength of our existing business, which is growing really, really well. We're absolutely looking for other opportunities to bolt on to the beachhead the foothold that we've got now in Germany and continue to grow it. Good market, predictable well-run companies. So we're looking to look for opportunities to continue to expand.

Okay. And sorry, does that imply sort of inorganic growth as well. That's how we should be interpreting this?

Yes. I think we -- certainly was going to see a lot of organic growth, and we're absolutely looking at inorganic opportunities as well.

Our next question comes from the line of Jonathan Goldman from Scotiabank.

If we think back to the commentary on the last call, I think in the U.S., you called out in July, you had seen high single-digit organic growth. I'm just curious how things progress sequentially through August, September, October and November? And if there's been any reversal in the trend because, I guess, with the 4.6% in the quarter, it does seem like it's deteriorated August and September.

Yes, Jonathan, you're absolutely right. We did call out, obviously, that July number. We ended up where we ended up, which was just under 5% there. So it wasn't a big drop from July. And I wouldn't say there's further deterioration at this point. All the commentary with respect to the U.S., we sort of made it here today. I don't have anything else to add. The only other thing, one small tidbit here, it's not a bigger picture -- piece is -- clearly, as we go into Q4, we have a very significant comp that we're cycling here with Q4 for the year, and U.S. organic was a part of that where I believe we were 10% or so last year or just under 10%. So that's just the reality of what we need to cycle. But overall, no additional commentary in the U.S., as we've mentioned, and we wouldn't say there's actually deteriorating. If anything, over the last little bit, the last few weeks, a month or whatnot, maybe just a bit more buoyancy, quite frankly, and you've seen that reflected in our commentary.

Okay. That's good color. And then I guess maybe switching to the margin guidance. If you take the full year guide and by my math, if you back it out, it looks like you're implying Q4 margins would be down year-on-year, something in the range of 30 to 40 basis points. Clearly, that's not year-to-date trend. And obviously, there's moving pieces. But why would margins be down year-to-date given all the improvements in the business you've undertaken?

Yes. I don't know that margins are going to be down going into next year. That's not what necessarily what we're predicting. Obviously, you do have we will see the page integration manifest itself fully next year with next quarter with our with our financial integration, you always can have some ups and downs with the financial integration. Again, nothing concerning, but that could impact margins. And the only other thing I'd say is back to that or the consolidated organic growth that we had last year, clearly, depending on where we're at, just cycle in a big quarter, that ends up manifesting itself through a margin back to operational scale and one up. But no, we're very, very pleased with our margins and don't expect any significant pullback in the trends and thematics that we've talked about when it comes to EBITDA margin expansion.

Okay. That's helpful color. And I guess last one. If we're looking at M&A, at this point, I guess, maybe relative to other periods, what would be the main bottleneck at the moment? Is it valuations culture fit, maybe a paucity of attractive targets? And how does the cycle time from identification to closing late now versus other historical periods?

Yes, sure. I'll start and then Vito will be able to chime in if you like. But I think, Jonathan, we there's really nothing slowing the process down right now. It's just very robust, a lot of conversations on the go. Cycle times vary from discussion to discussion. Sometimes we work with a client or a company partner with them for 5 or more years before we finally decide, hey, you want to do this? And then because we know each other really well, it can proceed pretty quickly. Other times, there's an established process that can take 3, 4, 6 months. 6 would be an outlier, I would think. But -- so they're really -- they're all over where -- in terms of timing and where we would see them. But certainly, a number of ongoing discussions and both exclusive and through processes that are in play right now. So yes, I think it's just a normal cadence here. And when the time is right, if the stars aligned, we'll be glad to share news with you guys.

Not much more to add there, Gord. Each one has a life of its own. That's it.

Anything to say on valuations. I think you referenced maybe store organic growth could also translate into a silver lining on valuations. But how have those trended year-to-date versus, I guess, last year or maybe the last couple of years.

Yes. No major changes on valuation. I mean, obviously, it's sometimes a little bit sector dependent and significant areas of growth in one sector obviously have a higher valuation, which is quite obviously expected and implicit obviously in the valuations of us and our peer groups. So I don't think valuations in any way, shape or form are an issue. We look at these things clearly from a strategic perspective, always above value creation over a reasonable period of time, revenue synergies, the valuation isn't getting in the way at this point for us.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Gord Johnston for any further remarks.

Great. Well, thank you, operator, and thanks to everyone for joining us this morning. We're really pleased with our Q3 results. And certainly, if you have any follow-up questions following the call today, please read out to Jess Nieukerk Newkirk, our VP of Investor Relations. So thanks again, and look forward to catching up with everybody in the next little while.

Thank you. Ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.