管理層發言
Welcome to Stantec's First 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 this conference call is subject to the forward-looking statement qualification set out on Slide 2, detailed in Stantec's Management's 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 Mr. Gord Johnston.
Good morning, and thank you for joining us today. Stantec had a very strong start to 2025, delivering organic growth in each of our regional and business operating units, most notably in Canada with double-digit organic growth. Amid a dynamic market environment, we continue to thrive in a resilient industry driven by macro factors, including water security, aging infrastructure, emerging technologies, and the expansion of advanced manufacturing. As a result, in the first quarter, we delivered net revenue of $1.6 billion, up 13.3% year-over-year. This was underpinned by 5.9% organic and 3.2% acquisition growth. With our focus on solid project execution and operational excellence, we grew our adjusted EBITDA by over 19% with an enhanced margin of 16.2%. We also delivered adjusted EPS growth of 29% compared to Q1 2024. I'm also pleased to announce that we started off the year strong on the M&A front with two strategic acquisitions.
In early April, Stantec entered into a definitive agreement to purchase Page, a 1,400 person architecture and engineering firm headquartered in Washington, D.C., which delivered over US$300 million in net revenue last year. The acquisition of Page will deepen Stantec's expertise and resources in key growth areas, such as advanced manufacturing, data centers, and health care, while adding new capabilities in cleanroom design and fabrication facilities. The acquisition will result in Stantec becoming the second largest architectural firm in North America. It also significantly strengthens our position as the largest integrated engineering and architecture firm. We expect the Page acquisition to close in Q3. We also announced the acquisition of Ryan Hanley, a 150-person engineering and environmental consultancy firm in Ireland, expanding our presence in the country. Consistent with over 145 acquisitions that we've completed over the last 30 years, these acquisitions will deliver strong shareholder value and contribute to the target that we set out in our 2024 to 2026 strategic plan.
And we look forward to welcoming over 1,500 talented individuals to the Stantec team. Looking at our results in each of our geographies. In the U.S., we increased our Q1 net revenues by 9.7%, reflecting positive foreign exchange and organic growth of 2.4%. Organic growth was in line with our expectations for the quarter as we had expected some project cycle timing in our Water segment. While we had a major project roll off, we have several new projects that are set to accelerate in Q2, and we are maintaining our mid- to high single-digit organic growth guidance for the year. Public and private sector investments across our health care, industrial, and science and technology sectors contributed to growth in Buildings. Growth in environmental services was mainly driven by our energy transition, mining, and infrastructure sectors as well as the continued work for a large-scale utility provider.
Momentum on major infrastructure projects continues to fuel strong organic growth, particularly in transit and rail projects in the West and railway design in the East. Overall, activity in the U.S. remains strong and our outlook for the full year remains intact. In Canada, we had a very strong first quarter, growing net revenue by 15% largely underpinned by 12.2% organic growth. The continued momentum on major wastewater solution projects contributed to double-digit organic growth in Water. We also delivered solid double-digit organic growth in Energy & Resources and Infrastructure. E&R was driven by the ramp-up of major power-intensive industrial process projects, and Infrastructure was spurred by transit and rail projects in Eastern Canada, airport sector projects in Quebec, and land development projects in Alberta. Our Buildings team delivered high single-digit organic growth through public investments in health care and civic sectors.
Finally, in the first quarter, our Global business delivered 20.3% growth in net revenue with 7.5% organic growth and 9.4% acquisition growth. Our industry-leading Water business delivered over 20% organic growth across the U.K., New Zealand, and Australia through long-term framework agreements and public sector investments. 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. Now, I'll call over to Vito to review our Q1 financial results in more detail.
Thank you, Gord, and good morning, everyone. We achieved very strong results in the first quarter, setting us up for another very successful year. Our gross revenue in Q1 grew to $1.9 billion, up almost 12% year-over-year, and net revenue of $1.6 billion is up 13.3% compared to Q1 of 2024. As a percentage of net revenue, our project margins came in at 54.3%, reflecting solid project execution and a 10 basis point increase over last year. We achieved a very solid adjusted EBITDA margin of 16.2% in the quarter, representing an increase of 70 basis points year-over-year. Our adjusted EPS in the quarter increased almost 29% to $1.16. Turning to our cash flow, liquidity, and capital resources. During the quarter, our operating cash flow increased almost 136% year-over-year from $43 million to $101 million, reflecting continued strong cash flow generation, growth, and solid operational performance. DSO at the end of the first quarter remained consistent at 77 days, remaining well within our internal target of 80 days or lower. Our net debt to adjusted EBITDA ratio at March 31 was 1.1 times, a further reduction from where our leverage sat at the end of the calendar year at 1.2 times. I'll note that upon closure of the Page acquisition, we expect our leverage to remain well within our internal target of 1 times to 2 times. Gord, with that, I'll now hand the call back to you.
Great. Thanks, Vito. At the end of the first quarter, our backlog reached a new all-time record of $7.9 billion. Year-over-year, backlog has grown overall by almost 13%, of which 7.5% was organic growth. Organic growth was achieved in each of our regional operating units with double-digit growth in our Water and Energy & Resources business. Our backlog represents approximately 12 months of work and underscores the continued strong demand to support our clients' most pressing challenges. Turning to some of the major projects we have recently won. In the first quarter, Stantec was awarded a $1.1 billion major upgrade at the Irving Pulp & Paper westside mill in New Brunswick. The upgrade is one of the largest investment projects in the Canadian forest products industry and is expected to increase production by almost 66%. We were also selected to lead the detailed design and contract administration on the Dundas Bus Rapid Transit Mississauga East Corridor, which includes over 7 kilometers of bus rapid transit with eight stations.
This BRT segment has an estimated project budget of $580 million, which includes design, construction, land acquisition, and additional regional utility upgrades to be coordinated to increase construction efficiency. Finally, I'm pleased to announce that Stantec was selected by the city of Vancouver, Washington, to design a treatment system to remove per- and polyfluoroalkyl substances, or PFAS, from a high-volume water station with the goal of providing cleaner and more reliable drinking water for the community. When complete, this PFAS filter system will treat up to 12.2 million gallons per day, making it the largest PFAS project in the Northwestern United States in terms of treatment capability. Despite heightened market uncertainty driven by tariffs, policy shifts, and regulatory changes, we remain confident in our ability to achieve our outlook for the year. Trends like aging infrastructure, energy security, water treatment, health care, data centers, and reshoring all continue to drive strong demand for our business.
Our diversified business model across different geographies and five business operating units, each with multiple subsectors, ensures that we're able to capitalize on this demand. Throughout each of our geographies, we continue to see steady levels of bidding activity and forecast mid- to high single-digit organic growth in each of them. In the U.S., we continue to see growth in Infrastructure with IIJA-funded projects, in Water with new projects ramping up in Q2, and we're seeing momentum on the health care front, especially in the Western U.S. In March, the American Society for Civil Engineers released its 2025 comprehensive infrastructure assessment, which highlights that increased funding is beginning to improve the conditions of infrastructure across the U.S. However, the report estimates that an additional $9.1 trillion in funding is needed across all infrastructure categories to achieve a state of good repair.
Even with current funding levels, including IIJA, a significant funding gap will remain over the next decade. As a result, while some government priorities are changing, we still expect steady investment from federal, state, and local governments as they continue to address these challenges. In Canada, major investments continue to be driven by large-scale water projects, transportation infrastructure, including roads and transit, and health care. The federal government's recent economic platform places further emphasis on infrastructure, energy, housing, community development, and critical health care. While it may take some time for these additional investments to materialize, we are well positioned to capitalize on the opportunities ahead. Globally, we continue to see significant opportunities. In the U.K., the GBP 104 billion AMP8 program is starting to ramp up in Q2, and the government's renewed focus on housing and community development is generating new opportunities.
In Germany, we continue to see work in infrastructure, specifically in roads and transit. With the EUR 500 billion fund for infrastructure, defense, and energy transition projects, we expect more opportunities to follow. Finally, new frameworks in Australia and New Zealand continue to drive growth in our Water business in these regions. With all of this in mind, we remain optimistic for 2025 and beyond. While we await the closing of the Page acquisition, we're maintaining our current outlook, which includes net revenue growth of 7% to 10% for the year, EBITDA margin in the range of 16.7% to 17.3%, which reflects our continued confidence in solid project execution and operational performance; and adjusted EPS growth to be in the range of 16% to 19%, once again, above our net revenue growth expectations. As we near the halfway mark of our 2024 to 2026 strategic plan, I'm extremely pleased with our performance.
We're tracking well against all of the targets set out in the plan, including growth from M&A. With the anticipated closing of the Page acquisition later this year, we will have completed five acquisitions since the start of 2024, welcoming nearly 4,500 new employees to Stantec, and we are just getting started. Our M&A pipeline remains full and our balance sheet remains strong. I'm confident that we can achieve our strategic plan target of 50% growth in net revenues to $7.5 billion by the end of next year. As we continue throughout the year, we remain committed to sustainable growth, strong project execution, operational excellence, and delivering sustained shareholder value for years to come. And with that, I'll turn the call back to the operator for questions.
分析師問答
Thank you. Our first question comes from Benoit Poirier with Desjardins. You may proceed.
Good morning, Gord. Good morning, Vito. Regarding organic growth in the U.S., you achieved a 2.4% increase, which is slightly below the overall consolidated level. There's some detail in the MD&A, but I wanted to know if this is primarily due to tough comparisons with last year's double-digit growth, or if you're noticing some uncertainty in the U.S. right now. The backlog appears strong, but I'd like to hear your perspective on the situation in the U.S.
Yes, that's a great question, Benoit. We view it from several angles. Firstly, as you mentioned, we are coming off a 10% comp from last year, where we completed a major water project for a semiconductor fabrication plant that caused a spike in numbers. That project has concluded, but we anticipate many more projects in the water sector and others emerging. Recently, we've dedicated a significant amount of time collaborating with our business unit leaders in North America to gauge their perspectives and sentiments. They remain confident that we will achieve mid- to high single-digit organic growth, which should strengthen throughout the year, allowing us to reach that goal by year's end. Additionally, our backlog is strong, reflecting organic growth in the low double digits, which is a bit lower than mid- to high single digits.
Okay. That's great. Thanks, Gord. And with respect to the guidance for the outlook for 2025, it was maintained despite the addition of two acquisitions and close to 1,600 people. Is there any reason why you haven't raised the guidance? Is it more a matter of closing or maybe some cautiousness?
No, Benoit. Hi, it's Vito. Regarding our core business, excluding the acquisitions, we are off to a fantastic start compared to our expectations in the guidance. The fact that we haven't changed the guidance reflects our normal process, and it is not connected to our level of confidence. We are awaiting the completion of those two transactions and need to have another three months of data with Q2. After Q2, we will evaluate our guidance and decide whether to narrow, expand, or adjust it as necessary. We just want to gather more information and ensure the transactions close on time before we update our guidance.
That's what I thought. Okay. Great color, Vito. And last one for me. If you look at the stock price, it's been a great performer year-to-date. Could you maybe remind us about the sensitivity for stock-based compensation and whether it's embedded in the guidance?
Yes. Now what we've done with our stock-based compensation, as you know, we've hedged a certain degree component of it. So on a go-forward basis, you should expect very little variability, if you will, or year-over-year variance related to stock price appreciation. In the quarter itself in Q1, I think the delta was close to $4 million year-over-year, where last year's LTIP would have been sort of a $7 million charge. And this year, we're in more the $3 million to $4 million. So you can see that it's becoming less noisy than it was in previous years.
That’s perfect. Okay. Thank you very much for the time.
Thanks, Benoit.
Thank you. Our next question comes from Chris Murray with ATB Capital Markets. You may proceed.
Hi. Thank you. Good morning.
Good morning, Chris.
Gord, you talked a little bit about the U.S. business. And I was wondering, there has been a lot of uncertainty around the U.S. government business. I know you've got some different aspects in there, certainly a lot of water work, also some other direct government work. Can you maybe give us some color on exactly what you guys are seeing at this particular point, not only on new contract awards but maybe some of the conversations that you folks are having around what to expect around contract renewals on a go-forward basis?
Yes. No, great question. So really, in the U.S., we aren't seeing any appreciable impact from this uncertainty. We've seen a little bit of slowing in procurement cycles in some areas in the government. In particular, that would be early in Q1 when they had to reshape their procurement practices a little bit by removing references to DE&I in both procurement documents and evaluation scoring. That sort of has worked through. So we see that we're back into a more normal cadence now. The groups that we're working with in the federal, state, and local government aren't those groups that are particularly impacted by some of the budget changes that are being made down there. So our groups are still feeling positive about the projects that we have on the books right now as well as what they foresee coming down the pipe. Interestingly, when we talk with some of our private sector clients there, there was a little bit of uncertainty earlier in the year.
Tariffs are on, tariffs are off, a little bit of heightened rhetoric, but that all seems to have calmed down a little bit. The temperature has seemed to have been reduced. So we're seeing a little bit better sense of it from our private sector clients. Again, we didn't see any appreciable uptick in projects that were postponed or canceled. But we're just seeing a little bit more positive sentiment from people. So I think that bodes well for the rest of the year. It makes us even feel better about maintaining our organic growth guidance, particularly in the U.S.
Thank you, that's helpful. My other question is about future acquisitions, and I would like to connect this with ZETCON for a moment. When you acquired ZETCON, it represented a new territory in Germany, providing a base for growth. Even with some other acquisitions underway, it seems you will remain within your 1 to 2 times range, likely towards the lower end. I have a couple of questions regarding this. First, how is the integration of ZETCON progressing, considering it has been more complex than usual? Second, does your presence in the German market now allow for growth as initially planned?
Yes. Absolutely. And so when we look at ZETCON, they're performing even better than we had initially anticipated when we brought them on. Great firm, extremely well run. The manufacturing market, of course, as you read in Germany is not as solid right now. But the infrastructure market, particularly with this EUR 500 billion infrastructure bill, is very, very robust. They have a lot of needs in transportation, rail, electrical distribution, and transmission. So we see a lot of opportunities there. But to your point, that exactly dovetails into our initial thesis when we acquired ZETCON is that we would use them as a platform to continue to build on and acquire additional firms in the German market. So we are absolutely looking at those, Chris.
Okay. Are you comfortable with the progress on the integration, or is there still more work to complete?
Yes. The integration of ZETCON, we're taking it a little bit slower, certainly German language issues, German GAAP, and so on. So we had initially planned to continue to go a bit slower or to go a bit slower on this one, and we're maintaining that philosophy.
Okay. I'll leave it there. Thank you.
Thank you.
Thank you. Our next question comes from Krista Friesen with CIBC. You may proceed.
Hi. Good morning.
Good morning.
Maybe if I could just dig a bit deeper on the M&A. I believe last quarter, you mentioned to us that you're happy with executing in your sweet spot of small- to medium-sized transactions, which clearly you've done since you last reported. Is that where you're still feeling comfortable or where you're still feeling the most interest? Or are you starting to maybe see larger transactions come to market?
I think the answer to that, Krista, would be yes to both of them. There continues to be a number of those sub 1,500-, 2,000-person firms out there that we're in active conversations with. But there are a number of those 5,000, 7,000-plus companies that we see that we're coming to market here later this year that we've already had some initial conversations with. So there are opportunities really at both the small and that larger size. From a balance sheet and a capital perspective, we'd be very comfortable with transacting on either of those.
And Krista, all I'd add there is I think it's not so much the size that is our starting point with our criteria. It really is strategic, cultural fit, geographic, and how it fits with our sectors and whatnot. That's the primary lens by which we look at things. And as Gord has alluded to, there's tremendous opportunity both in the tuck-ins, if you will, and some larger ones coming forth.
Could you provide more detail on whether there are specific areas you are focusing on for growth in your various operating units in the near term?
We're feeling pretty good actually about the overall spread of those business operating units. Now certainly having acquired Page, we probably will not focus on additional buildings or architectural for a while, but absolutely continuing to look for opportunities in the water space, in the infrastructure space, the environmental, and certainly even in our Energy & Resources space, good opportunities, certainly mining making a bit of a comeback there. We're seeing good opportunities. So really, we have a bit of a blank canvas as we're looking at opportunities based on service line. Even from a geography perspective, we see a lot of opportunities for us to continue consolidation in the U.S. But even in the markets outside that we've talked about being active in Australia, New Zealand, the U.K., still looking up in the Nordics a little bit. So a lot of opportunity for us from an M&A perspective.
All right. Thanks. Congrats on the quarter. I’ll jump back in the queue.
Thank you.
Thank you. Our next question comes from Michael Tupholme with TD Cowen. You may proceed.
Thank you. Good morning.
Good morning, Michael.
Maybe just to follow on to some of the other questions you've had about M&A. So thinking about some of the macro and trade-related uncertainty that's existed for a little while now, it certainly doesn't sound like that's having any kind of an impact on your outlook for your business. But I'm just wondering if in terms of M&A opportunities, has that affected the M&A landscape in any way, shape, or form, whether that be from a seller perspective or buyer perspective? And has it in any way changed your views on what regions you might be interested in? I realize you're taking a longer-term view here, but not sure if there's been anything going on in any particular regions or heightened uncertainty that's affected the views around regional M&A opportunities?
Yes, that's a great question. Your comment about the long term aligns with our thinking. We have partnered with many of the firms we've been discussing for years or even decades. We are considering strong firms and markets from a long-term perspective. While we've experienced some uncertainty over the last quarter, we haven't seen any rapid adjustments to valuations during that time. If there had been, we might observe some strengthening. Our outlook remains unchanged; we continue to focus on the long term, ensuring that our decisions are value-accretive, and we are committed to doing the right thing for the company we are acquiring and for Stantec as a whole.
And Michael, I would say from a seller's perspective, nothing fundamentally has changed. When you sit back and you look at why are companies coming to market, the themes around smaller firms and how this industry is going to evolve from a technology perspective and the investments required, clearly, smaller firms have a scale-related issue with that or challenges with respect to that. Valuation is still continuing to be robust in our industry, presenting dynamics for them as they think about succession. So bigger picture from a seller's perspective, nothing has really changed, perhaps even accelerating.
Okay. That's all very helpful. Thank you. Next question is just about the Energy & Resources business operating units. So that was an area that in 2024 you had seen some negative organic growth, and I think you were calling for it to turn positive in the first quarter, which it didn't. I think in the first quarter, it was actually your strongest unit from an organic growth perspective. Just wondering if you can talk a little bit about that shift and that change and exactly what's driving that now and how you see that evolving over the next coming quarters?
Yes, the Energy & Resources sector is developing as we anticipated. We achieved 8.3% organic growth in the first quarter, and our backlog has also increased organically in the low double digits year-over-year. We've observed significant strengthening, especially in the mining sector, and have undertaken several large projects related to industrial processes, energy transition, and grid strengthening, particularly in copper. There's been considerable movement on copper projects due to its demand in supporting the transition. We're optimistic about this area going forward. Our backlogs remain strong, and customer sentiment is positive, which contributes to our confidence. We expect robust organic growth in this business throughout the year, even though we are coming off some lower comparisons in the next couple of quarters; we still foresee strong organic growth.
Very pleased with that growth.
That's helpful. Thank you very much. I have one final question. The margin performance this quarter was impressive, showing an increase of 70 basis points year-over-year in adjusted EBITDA margin. Is that in line with your expectations? Is it strengthening? How should we interpret this regarding your full year outlook?
Yes, Michael. When we provided guidance for our margin profile with our year-end results in February, we expanded the range and expect year-over-year improvement. We are very pleased with how this is developing early in the year, which is thanks to the entire organization, including the operations and support teams. The year-over-year improvement shows 16.2 basis points this year compared to 15.5 last year. The 70 basis points you mentioned stems from a few key areas. Project margin is essential, and it was up about 0.1, as you observed. We also saw lower administrative and marketing costs. It’s a fine balance involving utilization, labor, and discretionary spending. Additionally, we had a minor impact from a small gain on the sale of equities, which came to about $3 million year-over-year. Overall, we are satisfied with our performance regarding project margins and demand, and how we are delivering through our corporate services and discretionary spending. We are pleased with the start of the year.
Got it. I’ll leave it there. Thank you.
Thank you. Our next question comes from Maxim Sytchev with NBF. You may proceed.
I’m very pleased with our year-over-year performance, tracking about $3 million. Overall, we are executing well on project margins and meeting demand through our corporate services and discretionary spending. We have a positive start to the year.
Good morning.
Obviously, we're seeing federal elections in Canada and Australia seems to be sort of normalizing a little bit. How do you think about sort of continued demand from these two geographies as there still seems to be a lot of support for infrastructure spending? I guess my question is, can we actually see further acceleration, especially in Australia that's been a little bit more sluggish? Thanks.
Yes, you are correct. Several elections this year have brought about some changes for us. In Canada, Prime Minister Carney's platform, which focuses on supportive infrastructure, is promising for us. While our business infrastructure in Australia was a bit slower at the beginning of the year, we expect it to strengthen moving forward. As the year continues, we've heard similar sentiments from many of our peers. In the U.K., the recent introduction of the Planning and Infrastructure Bill, which has yet to be passed, could provide additional support for nationally significant infrastructure projects, such as the development of 1.5 million new homes and process enhancements that would streamline operations. These developments are all positively aligned for us. Whether in the U.K., Australia, or Canada, we have observed several encouraging announcements and progress recently.
And Gord, all I'll add is in Australia, Water continues to be really, really strong.
Oh, extremely strong in Australia and New Zealand, yes.
Okay. No, that's good to hear. And then in terms of U.K., the ramp-up around AMP programs, how is that tracking in terms of kind of the curvature of acceleration? Where we are in terms of that spending bucket? Thanks.
Yes, AMP8 officially began in April. You've likely noticed a significant increase in funding of over 75%. As we've mentioned in previous quarters, we are actively increasing our hiring, acquiring real estate, and preparing to handle the extra work that is coming our way. It's progressing as we expected, Max. Additional work orders are coming in, keeping our team very busy. Overall, the AMP8 program is developing just as we anticipated.
100%.
Okay. And Vito, I guess the follow-up question for you, because, again, as you were doing this hiring, I presume revenue was less robust from these programs. Does it mean that the operating leverage should start to kick in, in Q2 and Q3? Or am I just being too tactical here?
And you're referring to the U.K. in particular, Max?
Yes, yes, yes.
Yes, I think overall, and this relates back to the earlier question about our margin. As we continue to expand and grow organically through acquisitions, scale and operating leverage remain a significant focus for us. The entire organization is committed to this, and we expect to see it reflected in our results as we progress.
Okay. Excellent. Thank you so much. That’s it from me.
Thank you.
Thank you. Our next question comes from Devin Dodge with BMO Capital Markets. You may proceed.
Hi. Good morning, Gord. Good morning, Vito. I wanted to start with maybe data centers. There's been some questions about the growth outlook there after one of the large tech companies pulled back its CapEx budget. Look, from a Stantec perspective, I believe your backlog for data centers continues to increase. But just wondering if you've seen any evidence of slowing growth from this market when you look at earlier-stage bidding or RFP activity.
Yes, we haven't seen any significant changes at this point, Devin. We believe the data center market remains strong for us. It's important to mention that, as we stated in our previous call, data centers account for 2% to 3% of our total revenue. This aligns with Stantec's overall diversification strategy. If opportunities arise, we would certainly consider taking on more work, and it’s possible we could double that size. However, if a downturn occurs, it won’t substantially impact us as it might for other firms that are significantly more exposed to this market. We feel confident about the situation. While we want to take advantage of growth, we don't expect any slowdown to be a burden for us.
Okay. Good context. Thanks for that. And then just second question, it might be early days here, but there seems to be an improving backdrop for energy-related investments in Western Canada. Just wondering if you started to see more RFPs or inquiries from some of your midstream customers?
Absolutely. Yes. We're having a number of discussions and ongoing talks about this project or that project or which one might be supported or come back to market. Still early days, but certainly, that increasing sentiment and those ongoing discussions, we feel very positive about.
Okay. Thanks for that. I’ll turn it over.
Thank you. Our next question comes from Jonathan Goldman with Scotiabank. You may proceed.
Hi, good morning, team and thanks for taking my questions. Maybe just circling back to the margin conversation coming at it a different way. You maintained the guidance, which seems to apply back a nine months improvement of 10 bps year-on-year. You just did 70 in the first quarter. And it seems like the reasons you described were just solid execution, things that can actually be maintained for the balance of the year while we're adding a utilization of labor. So is there some conservatism baked in there? Or why wouldn't we think improvements could be sustainable through the balance of the year?
Yes. I mean, again, any time you're providing full year guidance at the outset, a lot of moving pieces. But I think from an overall sentiment perspective, Jonathan, what you're describing, we don't expect to be giving any gains back in a way. It doesn't mean we'll carry 70 bps all the way through the year sort of thing. But I would look at Q1 and consider that an indication of the pacing of the business, for sure. And again, we'll get another three months under our belt. We've got meaningful acquisitions coming through the back half that we'll need to obviously digest and understand. The cost structure of that and how it moves through, we got a pretty good handle on that already. Obviously, we understand that well. So just be patient for the update here at midyear. But by all means, I share your enthusiasm around what's possible.
No. Fair enough. And that's good color. And we did have a pretty fulsome discussion already about M&A, but on sellers, have you noticed them being a little more hesitant to consummate a deal? So maybe the environment is still the same valuations, incentive to close, but things getting drawn out a bit longer?
No, we haven't experienced that at all. The two announcements we made this year were executed exactly as scheduled. In fact, we discussed the timing of our first announcement, which coincided with President Trump's Liberation Day. We considered delaying it to avoid that day, but ultimately decided to stick to our original schedule for the long-term perspective.
No great. And it's good to see. And then maybe, I guess, one more, Gord, I guess, from a high-level perspective. Have you had a chance to look at Trump's proposed mini budget? And did you have any takeaways for the IIJA or infrastructure spending in general in the U.S.?
Interestingly, regarding IIJA, we have mentioned in previous calls that we have been involved in discussions about what an IIJA 2.0 might entail. These discussions have slowed somewhat recently as people assess the current situation and the new administration's priorities. In our prepared remarks today, we noted that while the state of infrastructure has improved slightly since the last report card, the funds needed to continue making improvements have risen to over $9 trillion. Clearly, the need for funding is significant. However, discussions have somewhat slowed in the early months, but I expect they will resume momentum later in the year.
Okay. That’s great color. Thanks again, guys. Good results. I’ll get back in queue.
Thank you.
Great. Well, thanks to everyone for joining us this morning. Thanks, operator. So in summary, we started the year off really very, very positively here in Q1. We feel good about our forecast for the rest of the year. If you have any follow-up questions following today's call, please reach out to Jess Nieukerk, our VP of Investor Relations. And have a great day, everyone. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.