Prepared remarks
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. 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 7.6% in the quarter, driven completely by organic growth. We delivered double-digit growth in our Water and Energy & Resources businesses and high single-digit growth in infrastructure. The continued momentum on major wastewater projects contributed to over 20% organic growth in Water. Continued work on major industrial process projects also drove double-digit organic growth in Energy & Resources. Solid growth in infrastructure was supported by land development projects in Alberta, airport sector projects in Quebec, as well as transit and rail projects and bridge sector work in Eastern Canada. Public sector investment drove growth in buildings, primarily in our health care and civic markets. Finally, our global business delivered net revenue growth of almost 11% in the third quarter, achieving 5.5% organic and 2.8% acquisition growth, along with positive foreign exchange impacts.
Our industry-leading water business continued to deliver consecutive double-digit organic growth through long-term framework agreements and public sector investment in water infrastructure across the U.K., Australia, and New Zealand. The ramp-up of new projects in Chile and Peru drove double-digit organic growth in Energy & Resources as the growing need for energy transition solutions continues to drive demand in mining for copper. We also achieved double-digit organic growth in our German infrastructure business due to continued momentum on a major electrical transmission project and increased volume on transit and rail projects. Now I'll turn the call over to Vito to review our third quarter financial results in more detail.
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, robust operational performance, and continued strong collection efforts. Days Sales Outstanding 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 target range of 1 to 2x and positions us well for continued M&A. 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.
We have 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. 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, we are increasing our net revenue growth guidance for the full year while raising our adjusted EBITDA margin outlook to 17.2% to 17.5% on the strength of our operational performance and discipline in cost management.
We maintain our mid-single-digit guidance for U.S. organic growth, given persistent slower procurement cycles in the region. However, we remain optimistic that these are simply near-term challenges as we continue to see strong demand driven by the ongoing needs and priorities of our clients. In Canada and globally, we still expect organic net revenue growth in the mid- to high single digits. Growth in Canada is expected to be driven by continued strong demand and elevated backlog levels. Following the release of Budget 2025 last week, we're encouraged to see the federal government prioritize infrastructure investments across various sectors. While we don't expect immediate spending, the budget signals strong long-term support for our industry. In global, growth is supported by ongoing high levels of activity in our water business under the AMP8 program in the U.K. and other framework agreements in Australia and New Zealand.
Strong demand for infrastructure in Europe and positive demand fundamentals in Energy & Resources are also supporting growth in our global business. Considering all of these factors, we expect growth in adjusted EPS to be in the range of 18.5% to 21.5% for the year and adjusted ROIC is expected to be greater than 12.5%. Given our uniquely diversified business, Stantec remains resilient amid evolving market conditions across all of our regions. We continue to progress towards the targets we laid out in our 2024 to 2026 strategic plan, including delivering net revenue of $7.5 billion by the end of next year. With that, I'll turn the call back to the operator for questions.
Questions and answers
Our first question from today comes from Sabahat Khan at 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. 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 and 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 country. We see a lot of opportunities in the major projects that Prime Minister Carney announced last week and even those that he announced previously.
We're already working on a number of those projects, and we're in discussions and participating on a whole bunch of others. 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. All of those factors, whether it's global, Canada, or the U.S. are strong. One thing we've talked a lot about, too, is there’s certainly a lot of discussions for increased spending on defense work. For us, that's ports, dry docks, aircraft hangers and runways, housing, all sorts of infrastructure. So we're actually really optimistic about the prospects and the momentum going into 2026.
Great. Could you elaborate on the Canadian side of your business? We've noticed some developments recently. Are you getting involved primarily with the broad infrastructure programs announced by the Prime Minister, or are there more opportunities in the energy sector? Historically, pipeline work in Western Canada has been significant for you. Are you finding these opportunities to be more substantial now? I'm curious about where Stantec's exposure lies within these areas.
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. That's, of course, absent any of those projects that Prime Minister Carney had mentioned. When we look at Canada, we've seen a lot of strength actually in Western Canada, particularly in land development. We've seen great opportunities in transportation. Many projects we're working on are bridge jobs in Toronto and a lot of roadway projects here in Western Canada. Water has been incredibly strong all year for us. We see no slowdown in 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 there's 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, particularly in industrial projects. We've talked in previous quarters about some work that we're doing in Eastern Canada, which stems from that. So Canada is pretty strong and broadly based, and we're feeling pretty good about Canada overall 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-looking indicators? 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. 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 the procurement cycles. That’s not unique to Stantec, as you've seen that throughout the industry. So in the U.S., we’ve noticed that our backlog has been flat year-to-date. But 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 shown up in backlog. There’s a slightly slower start on some of the things, especially environmental services in the U.S. as we’re 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 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 aging infrastructure and roadways related to support from IIJA, we still see those supports coming, and some of the reshoring that we're seeing in the private sector. So we still see some positivity there. You talked about AMP8 and one of the largest customers there having some financial difficulty. We all read about that in the papers. But that really has no impact on our business because the way the AMP cycles work is the water company commits to doing a certain amount of capital spending in order to justify rate increases and improvements in the overall operations. So that work has to get done. People have said, well, what if that particular client was to get nationalized? Well, we'd not want to see that happen. But if it did, the work still has to get done. We've worked with Thames Water and all for a number of successor companies for the last 200 years in the region.
Regardless of what shakes out there, that AMP8 work is going to continue. So it’s a little bit of a cloudy environment out there, not all rays of sunshine, but we see the demand drivers in our business to be 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 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 by 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, but we can't comment on any of those things other than to say we maintain a very positive outlook on M&A in general and specifically for Stantec. Our Board is supportive, our investor community is supportive, we’re supportive and the opportunity set is there. 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, do you not 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. We expect it to build as we move into the first half of the year. Our year-to-date backlog, even in the U.S., our year-to-date, which is probably a better comparison or equally important comparison, our year-over-year is up 6.6%, I believe it is or over 6%. So overall, notwithstanding the confluence of factors we’ve talked about and that our peers have, 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, most of the other engineering firms have been asked about this, so I'll ask as well. Do you have any concerns about IIJA funds not being released with some certainty? Does your U.S. team still feel quite confident that the bulk of those funds will come out over the next 4 to 5 years and should continue to be that long-term tailwind and not be canceled?
Yes. Our answer would be similar to what you've heard from others who have reported as well. We have no indication that programs like the IIJA would be canceled or that funds would be withheld. We still see continued momentum on that. We think that this 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 guidance 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, you're absolutely right. We're pleased with the hard work across all of the teams in delivering an EBITDA margin year-to-date of 17.7%, 100 basis points ahead of the prior year or more than that actually. 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. Our project margins year-to-date are 0.1% ahead of where we were last year. Without that, that’s the fundamental. And 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, a 100 basis point improvement. This has been driven by a number of things. Clearly, scale is a big part of that. As we grow and organic growth is a significant component of that, the ability to deliver against that base in a more efficient way.
That's important for us and it has contributed meaningfully to our year-to-date results. Our utilization and occupancy costs are also contributing positively on a year-to-date basis. So net-net, this business has significant operational leverage attached to it. And with continued organic growth, continued acquisitions contributing to 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 in our people, offerings, and the market 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?
Not much more to add to Gord's commentary. We knew Page very well going into this acquisition. We have to say that everything post the close has reconfirmed the incredible team and we really hit the ground running from an integration perspective. I think the pace of seeing some of the opportunities, both in market and efficiency reflects the fact that we knew each other well and had spent 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. It's actually been very positive. A lot of great project-based and pursuit-based synergies there. We're 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. 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. We'll do that in February. 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. That’s a big driver of what you can deliver bottom line. When you zoom out, notwithstanding where we may be here in 2026 and what we feel comfortable with at this point, and you look at a 2, 3, or 4-year picture with macro demand and whatnot, I think you can expect continued EBITDA margin expansion. We’re in the third year of the 3-year strategic plan where we committed to 17% to 18%. Obviously, we are at the higher end of that range as we sit here in 2025. We expect to be at these levels or better as we move into 2026, and we’ll refine that next year. But it’s the commercial activity that enables 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. 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 centers, let's say.
Yes. The beauty of the Stantec model is in that diversification piece. 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 is still in that 5% range. That’s the beauty of the diversification model. I think you would see in other countries around the world, it's probably sub-5% of what we would be doing. A lot of this is just our bread-and-butter infrastructure work, just with a bit different focus; instead of a hangar for a commercial aircraft, it’s for a military aircraft. We don't expect that while there’s been a lot of commitments to increasing defense spending that it’ll pop right away. It will take a while to build. That’s fine. We’re spending a lot of time with our clients and ensuring that when they get the budget and are ready to go, they're thinking of us top of mind. We believe this will continue to grow, but I'm not sure it'll be 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 it is: a matter of stronger collection efforts? Is it a matter of business mix? What about the expectation for Q4? Was there some pull forward in terms of free cash flow? I'd be curious to get your thoughts around the strong free cash flow performance.
Yes. And again, Benoit, I take you there. You’re right; free cash flow can be lumpy quarter to quarter, and this Q3 was an outsized year-over-year gain. The trend has been incredibly positive for us. As you heard in my prepared commentary, our year-to-date numbers are up significantly, driven by the growth of the business. Our working capital management, it remains to be seen, but it looks like we've made a significant step forward that is continuing to stay with us. Our Days Sales Outstanding now are at 73 days, having previously targeted 80 for the longest time. I think we're getting comfortable saying that perhaps the mid-70s is our new starting point, but we'll give ourselves another quarter before we say that. We've made some changes internally in an area of focus for us. Huge shout out to our project managers across our entire network that are managing aggressively to that while keeping our commitments to clients. I’m really pleased with it. We could give some back in Q4, but full year will continue to be ahead of where we were in the prior year. So very pleased with our working capital management.
Our next question comes from 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. Can you talk a bit 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 about the drivers you're seeing as well?
Yes. In the U.S., also strong growth in water. Trying to look on the number here but it's certainly well into the double digits. Was it 20% in the quarter, Vito?
In the U.S.?
Yes. No, I've got definitely double-digit growth in the U.S. in Water. Interestingly, we’ve had continued organic growth, like all the way back to early 2019, and it just continues and strengthens. In Canada, the type of work we’re doing includes big public sector wastewater projects and water projects in Metro Vancouver, where we're working on the Iona Island relocation there, and a big biosolids project in Winnipeg that we’ve spoken about worth $1 billion. There’s just a lot of big projects like that. Toronto continues with basement flooding enhancements and such. In the U.S., we see similar demand with municipal type work on water supply, treatment, and scarcity issues in some areas. The Gulf region, certainly, it’s flooding in excess of water. It’s all about the core fundamentals that keep going with our water business; not enough water, water reuse and recycle, too much water and flooding leading to big projects like the big pump station we did in New Orleans several years ago. We're currently working on shoreline protection type work for sea-level rise. Regulation like PFAS continues to provide opportunities in the short but more so in the longer term, and just the advanced manufacturing and reshoring that you read about all the time. Often the first thing that clients need is access to water.
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 that area. Also curious what percentage of revenue the company that represents today and how you see that evolving into 2026 relative to 2025?
Yes. We are currently working on over 100 data centers and mission-critical facilities ranging in size from 20 megawatts all the way up to a gigawatt. We have a lot of projects on the go, but a robust pipeline as well. Right now, that would represent 2% to 3% of the overall net revenue of the company. Do we see that growing? Yes, that’s growing at a bit of an outsized rate, but would it get to 4%, maybe 5%? We don’t want to become 15% exposed to any sort of high-growth area like that as part of our diversification over time. We feel good in that 3% to 5% range for mission-critical work.
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 the $7.5 billion by the end of next year. 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. There are also some questions. I think we kind of heard on the call about the whole idea behind being able to maintain a 7% CAGR. Hitting 7% next year on a 3-year CAGR is going to require an unreasonable lift. Are you married to that 7.5% as a target? Or is it just more aspirational and we can think about how the game is going to play because the environment is shifting and we are heading into some choppy waters?
Yes, Chris, maybe I'll take that one, and Gordon, you can jump in if you like. The $7.5 billion was established years ago based on exactly what you're describing; it was based on CAGR of 7% organic growth and the rest filled in by acquisitions. You're right; the 7% CAGR will be hard to reach. We expect to have a good year next year, and we’re not married to the 7.5%. It’s not something at the end of the day that’s driving our activity. Our strategy drives the actions we take, and that has proved out well.
Absolutely right, Vito. While if organic growth slips below that 7% CAGR, there’s great optionality on the acquisition side. We would never rush anything or do anything that we didn’t feel was the right thing to do long term to hit that 7.5 target. It’s a robust environment right now, so we’re feeling optimistic about some things that could happen there.
That's helpful. The other question, getting back into the market and maybe buying back stock again, is that something that you guys are more open to? Or will you stay full bore pressed on M&A as a use of capital?
Going back to our capital structure objectives, we will continue to generate significant free cash flow. Our capital allocation priorities are first and foremost covering 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 below that. We have a dividend in place, and we’ll continue to respect that dividend and likely grow it as we have in the past few years. The NCIB and M&A are both there. We see an incredible opportunity for this organization forward with the right acquisitions, and this contributes to organic growth and revenue synergies. Acquisitions are lumpy, and we cannot predict them; we will continue to use the NCIB and will not hesitate to get in the market if required. But M&A is a 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, just turning back to the U.S. One of the things that we're hearing is the procurement methodology has changed a little bit from the federal government; it is a bit more book-and-burn about less visibility, but work is still coming through. Is this something that perhaps explains the dichotomy between backlog and organic growth, which remains pretty robust? Any color you could provide on this would be helpful.
Yes. Without question, the overall procurement cycle and process for federal, state, and local governments have changed with some executive orders from President Trump, causing a little bit of slowness at the start of the year. Now we've been awarded a number of projects, and we're just waiting to get them signed. The shutdown slowed things down there. As we see hopefully all the folks coming back and working through the backlog, we get things signed and they’ll turn into a backlog for us and others in the industry. We're still long-term bullish on the U.S. market with many good opportunities, and we’ll keep working on it.
Okay. Super helpful. Can you provide a bit of color on the organic growth of environmental services? We are seeing a bit of a slowdown, while water is accelerating. Can you talk about the reasons for that divergence?
Absolutely. Our ES group has several large U.S. federal projects that we've been awarded, just waiting for signature. We do see those coming but have experienced a slowdown in ES organic growth this year, which has been kind of low single digits. I expect we'll see a bit of an acceleration in that as we move into 2026.
Sure. The German market has been noted as a recent beachhead for you guys, seeing nice growth. Can you talk about what is driving that? I presume it includes defense and transport, but any incremental color would be helpful.
Our team in Germany is well-managed with many opportunities, particularly since the government took off the debt break and is investing another EUR 500 billion. We’re currently working with many folks on a big electrical transmission project. There’s a real north-south need for electrical transmission in Germany. It is a recent market for us, growing fabulously in the last 6 to 9 months. I expect continued growth, looking for organic and inorganic opportunities as well.
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. Thank you, operator, and thanks to everyone for joining us this morning. We're really pleased with our Q3 results. If you have any follow-up questions following the call today, please reach out to Jess Nieukerk Newkirk, our VP of Investor Relations. Thanks again, and I look forward to catching up with everybody soon.
Thank you. Ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.